2013 Maryland Code
HOUSING AND COMMUNITY DEVELOPMENT
§ 4-233 - Pledges securing local obligations

§4-233.

(a) Each issuance of a local obligation under § 4-230 of this subtitle shall be secured by, at the discretion of the Administration, a pledge of the faith and credit of the issuer or a pledge of specific revenue of the issuer or the facility being financed as designated and described in the authorizing ordinance or resolution.

(b) If a local obligation is secured by a pledge of the faith and credit of the issuer to make prompt payment from the tax and other revenues described in the enabling resolution or ordinance:

(1) the pledge is a covenant to levy taxes sufficient to pay the principal of and interest on the local obligation when due:

(i) on all real and tangible personal property that is within the issuer’s corporate limits and subject to assessment for unlimited ad valorem taxation; and

(ii) in each year in which the local obligation is outstanding;

(2) if at the time of issuance of a local obligation there is a charter or statutory limit on the power of the issuer to levy property taxes, the pledge is a covenant to levy ad valorem taxes, within that limit, sufficient to pay the principal of and interest on the local obligation:

(i) on all real and tangible personal property that is within the issuer’s corporate limits and subject to assessment for ad valorem taxation; and

(ii) in each year in which the local obligation is outstanding;

(3) a local obligation may not be issued if the issuance would cause the issuer to exceed any limit set by the charter of the issuer or by statute on the power of the issuer to incur indebtedness; and

(4) notwithstanding item (3) of this subsection:

(i) a limit on the power to incur indebtedness imposed after the issuance of a local obligation does not affect that obligation; and

(ii) outstanding local obligations of an issuer are not affected by the issuance of a new local obligation if the new obligation is consistent with an increase in or the elimination of a limit on the power to incur indebtedness.

(c) (1) An issuer of a local obligation under § 4-230 of this subtitle may secure payment by the pledge of specific revenues of the issuer.

(2) If a local obligation issued under § 4-230 of this subtitle is secured by the pledge of specific revenue, the specific revenue may include:

(i) payments to the issuer from the State or federal government;

(ii) special benefit assessments, taxes, fees, or service charges that the issuer has authority to impose, levy, or charge; or

(iii) revenue expected to be generated by the facility to be financed.

§ 4-233 - 1. Capital reserve fund

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) "Capital reserve fund" means a reserve fund created under this section.

(3) "Minimum capital reserve requirement" means the minimum capital reserve amount established by the Administration for a capital reserve fund in connection with the issuance of bonds, notes, or other obligations of the Administration in connection with the financing of one or more infrastructure projects.

(b) Established. -- The Administration may establish one or more capital reserve funds in connection with the financing of one or more infrastructure projects.

(c) Use of money. -- Money in a capital reserve fund shall be used solely to pay the principal of, and premium and interest on, the bonds, notes, or other obligations of the Administration:

(1) secured by the capital reserve fund; and

(2) issued in connection with financing infrastructure projects.

(d) Composition. -- A capital reserve fund may consist of:

(1) money appropriated in the State budget for the purposes of the capital reserve fund;

(2) proceeds of a sale of bonds, notes, or other obligations of the Administration or the State;

(3) investment earnings of the capital reserve fund; and

(4) any other money from any other source accepted for the benefit of a capital reserve fund.

(e) Funds below minimum requirement; replenishment of fund. --

(1) If the balance of a capital reserve fund is less than the minimum capital reserve requirement established by the Administration for that fund, the Administration:

(i) may not use money from the fund for the optional purchase or redemption of a bond, note, or other obligation of the Administration; and

(ii) shall replenish the fund from available operating revenue generated by infrastructure projects or funds provided by the State.

(2) If available operating revenue generated by infrastructure projects and funds provided by the State are insufficient to replenish a capital reserve fund as required under paragraph (1) of this subsection, the Administration shall request that the Comptroller advance the contingent funding to replenish the capital reserve fund as provided in the Local Government Infrastructure Financing Program Capital Reserve Fund Loan of 2009 (Chapter 719 (S.B. 932/H.B. 1330) of the Acts of the General Assembly of 2009) or any other bond bill enabling act for this purpose.

(f) Limitation of issuance of bonds, notes, and other obligations; exception. --

(1) Except as provided in paragraph (2) of this subsection, the Administration may not issue bonds, notes, or other obligations secured in whole or in part by a capital reserve fund if on issuance the amount in the capital reserve fund will be less than the minimum capital reserve requirement.

(2) The limitation under paragraph (1) of this subsection does not apply if at the time of issuance an amount is deposited in the capital reserve fund so that on issuance the total amount in the capital reserve fund will be at least equal to the minimum capital reserve requirement.