2017 South Carolina Code of Laws
Title 31 - Housing and Redevelopment
CHAPTER 13 - MODERATE TO LOW INCOME HOUSING
Section 31-13-200. Notes and bonds.

Whenever the Authority shall have determined by resolution that sufficient persons or families of either beneficiary class are unable to pay the amounts at which private enterprise is providing decent, safe and sanitary housing and that through the exercise of one or more of the programs authorized by this chapter, decent, safe and sanitary housing will become available to members of the class in need therefor:

(1) The Authority is authorized to issue notes and bonds within the limitations and under the conditions hereinafter set forth in this section provided the proceeds of any notes or bonds issued under any of the programs authorized by paragraphs (a), (b), (c), (d) and (e) shall be utilized for such programs only.

(a) Upon obtaining the approval of the State Fiscal Accountability Authority pursuant to Section 31-13-220 and in order to provide funds for any of its corporate purposes, the Authority is authorized to issue from time to time its notes and bonds, the proceeds of which must be used by the Authority to make loans to mortgage lenders upon the agreement of such mortgage lenders to make mortgage loans to persons and families of the intended beneficiary classes or to housing sponsors. Such notes and bonds must be issued in such principal amount without limitation as the Authority determines to be necessary to provide sufficient funds for achieving its corporate purposes as hereinafter prescribed, including notes in anticipation of the issuance of such bonds and including refunding notes and bonds as more fully set forth in Sections 31-13-260 and 33-13-270. The Authority must require that loans to lenders made pursuant to Section 31-13-200(1)(a) must be additionally secured as to payment of both principal and interest by a pledge of collateral security, or secured by securities, certificates of deposit, or other obligations issued by mortgage lenders which have been insured or guaranteed by the federal government, in such amounts as the Authority determines. Such collateral security is subject to the approval of the Authority and may consist of: (1) direct obligations or obligations guaranteed by the United States of America; (2) bond debentures, notes, or other evidences of indebtedness issued by any of the following: Bank for Cooperatives, Federal Intermediate Credit Bank, Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation, Export-Import Bank, Federal Land Banks, Federal National Mortgage Association, Government National Mortgage Association, or Farmers Home Administration; (3) general obligations to the State of South Carolina; (4) federally insured or federally guaranteed mortgages; (5) other mortgages on housing within the State without regard as to whether such housing is for persons or families of either beneficiary class; (6) securities, certificates of deposit, or other obligations issued by mortgage lenders which have been insured or guaranteed by the federal government; and (7) such other security as the Authority determines to be sufficient to insure protection of the bonds. The program authorized by this subitem is known as the "Loan to Lender Program".

(b) Upon obtaining the approval of the State Fiscal Accountability Authority pursuant to Section 31-13-220 and in order to provide funds for its corporate purposes, the Authority is authorized to issue from time to time its notes and bonds for the purpose of obtaining funds with which to make:

(i) construction loans secured by mortgages of housing sponsors or of persons or families of either beneficiary class;

(ii) permanent mortgage loans to housing sponsors or to persons or families of either beneficiary class who agree to and must be required to provide for construction or rehabilitation of residential housing for rental or purchase by persons or families of either beneficiary class. However, with respect to any particular issue of notes or bonds, one of the following conditions must be met:

a. If there is a public distribution of the notes or bonds, the issue must be rated by one or more of the national rating agencies, and one or more of the following conditions must be met:

i. There must be in effect a federal program providing assistance in the repayment of the loans.

ii. The proceeds must be used to acquire either federally insured mortgages or mortgages insured by a private mortgage insurer authorized to do business in this State.

iii. The payment of the notes or bonds to the purchasers and holders of them must be assured by the maintenance of adequate reserves or insurance or a guaranty from a responsible entity which has been determined to be sufficient by the Authority and by the State Fiscal Accountability Authority.

b. If the notes or bonds are sold or placed either as "mortgage bonds sold as a unit", in "transactions with banks, institutional buyers, or other nonregistered persons" as provided in Section 35-1-202(11)(A), the documents pursuant to which the notes or bonds are issued must permit the authority to avoid a default by it by completing an assignment of, or foregoing its rights with respect to, any collateral or security pledged to secure the notes or bonds.

(c) Upon obtaining the approval of the State Fiscal Accountability Authority pursuant to Section 31-13-220, the authority may issue its notes and bonds, the proceeds of which must be used to purchase federally insured or guaranteed mortgages or mortgages insured by a private mortgage company authorized to do business in this State from mortgage lenders upon the agreement of the mortgage lenders to use the proceeds of the sale of the mortgages to the authority to originate new mortgage loans to housing sponsors or to such persons or families of either beneficiary class as the authority determines. The notes and bonds must be secured both as to principal and interest by a pledge of the proceeds of the mortgages so purchased. The program authorized by this subitem is known as the "Mortgage Purchase Program".

(d) Upon obtaining the approval of the State Fiscal Accountability Authority pursuant to Section 31-13-220 and in order to provide funds for its corporate purposes, the Authority is authorized to issue from time to time its notes and bonds, the proceeds of which must be used to make construction loans secured by mortgages of housing sponsors or persons or families of either beneficiary class where there is in effect a commitment for permanent financing through the means of a federal mortgage, a federally insured or guaranteed mortgage, or a mortgage insured by a private mortgage insurance company authorized to do business in this State. The program authorized by this subitem is known as the "Construction Loan Program".

(e) Upon obtaining the approval of the State Fiscal Accountability Authority pursuant to Section 31-13-220 and in order to provide funds for its corporate purposes, the Authority is hereby authorized to issue from time to time its notes and bonds for the purpose of obtaining funds with which to acquire, cause to be constructed and thereafter operate public rental projects in order to provide decent, safe and sanitary housing accommodations to the members of either beneficiary class. The program authorized by this item shall be known as the "Public Rental Project Program".

(2) Notes and bonds shall be authorized by resolutions of the Authority, shall bear such dates and shall mature at such times as the resolutions provide, except that no notes or bonds shall mature more than forty-five years from the date of their issue. Notes or bonds may be issued in such principal amount, without limitation, as the Authority shall determine and the proceeds thereof shall be used for the program for which issued but the proceeds may also be used for the establishment of such reserves as may be deemed necessary to properly secure the payment of the principal and interest of the notes or bonds and for the payment of any expenses in connection with the issuance thereof. Notes of the Authority shall mature on such occasion as may be fixed by the Authority. Bonds of the Authority may be issued as serial bonds payable in annual installments or as term bonds or a combination thereof. Notes and bonds shall bear interest at such rates, subject to the limitations of Section 11-9-360, shall be in such denominations, shall be executed in such manner, shall be payable in such medium of payment, at such places, and shall be subject to such terms of prepayment or redemption as the resolutions may provide. The bonds shall be in such form, either coupon or registered, and shall carry such registration or conversion privileges and the notes shall be in such form, either fully registered, payable to the order of a named payee or payable to bearer and carry such registration and conversion privileges as the resolutions may provide. The notes and bonds of the Authority may be sold by the Authority, at public or private sale, at such prices as the Authority shall determine.

(3) Any resolutions authorizing any notes or bonds or any issue thereof may contain provisions which shall be a part of the contracts with the holders thereof as to:

(a) pledging revenues of the Authority to secure the payment of the notes or bonds of any issue thereof subject to the provisions of this chapter and to such agreements with noteholders or bondholders as may then exist;

(b) pledging assets of the Authority, including mortgages and obligations secured by the same, to secure the payment of the notes or bonds or of any issue of notes or bonds, subject to such agreements with noteholders or bondholders as may then exist;

(c) mortgaging real or personal property of the Authority then owned or thereafter acquired;

(d) prescribing the use and disposition of payments of principal and income derived from mortgages owned by the Authority;

(e) providing for the creation of reserves or sinking funds and the regulation and disposition thereof;

(f) imposing limitations on the purpose to which the proceeds of sale of notes or bonds may be applied;

(g) imposing limitations on the issuance of additional notes or bonds, the terms upon which additional notes or bonds may be issued and secured, and the refunding of outstanding or other notes or bonds;

(h) prescribing the procedure, if any, by which the terms of any contract with noteholders or bondholders may be amended, the amount of notes or bonds the holders of which must consent thereto, and the manner in which such consent may be given;

(i) imposing limitations on the amount of moneys to be expended by the Authority for operating expenses of the Authority;

(j) vesting in trustees such property, rights, powers and duties in trust as the Authority may determine, which may include any or all of the rights, powers and duties of the trustees appointed by the bondholders pursuant to this chapter and limiting or abrogating the right of the bondholders to appoint a trustee under this chapter or limiting the rights, powers and duties of such trustee;

(k) defining the acts and omissions to act which shall constitute a default in the obligations and duties of the Authority to the holders of the notes or bonds and providing for the rights and remedies of the holders of the notes or bonds in the event of such default, including as a matter of right the appointment of a receiver; provided, however, that such rights and remedies shall not be inconsistent with the general laws of the State;

(l) providing for other matters of like or different character which in any way affect the security or protection of the holders of the notes or bonds.

(4) Any pledge made by the Authority shall be valid and binding from the time when the pledge is made; the revenues, moneys or property so pledged and thereafter received by the Authority shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Authority, irrespective of whether such parties have notice thereof.

Neither the resolution nor any other instrument by which a pledge is created need be recorded but a transcript of proceedings shall be filed in compliance with Section 11-15-20 of the 1976 Code.

(5) Neither the commissioners of the Authority nor any other person executing such notes or bonds shall be subject to any personal liability or accountability by reason of the issuance thereof.

(6) The Authority, subject to such agreements with noteholders or bondholders as may then exist, shall have power out of any funds available therefor to purchase notes or bonds of the Authority, which shall thereupon be cancelled, at a price not exceeding:

(a) if the notes or bonds are then redeemable, the redemption price then applicable plus accrued interest, or

(b) if the notes or bonds are not then redeemable, the redemption price applicable on the first date after such purchase upon which the notes or bonds become subject to redemption plus accrued interest.

(7) In the discretion of the Authority, the bonds may be secured by a trust indenture by and between the Authority and a corporate trustee, which may be any trust company or bank having the power of a trust company within or without the State. The trust indenture may contain such provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including convenants setting forth the duties of the Authority in relation to the exercise of its corporate powers and functions and the custody, safeguarding and application of all moneys. The Authority may provide by the trust indenture for the payment of the proceeds of the bonds and the revenues to the trustee under the trust indenture or other depository, and for the method of disbursement thereof, with such safeguards and restrictions as it may determine. All expenses incurred in carrying out the trust indenture may be treated as a part of the operating expenses of the Authority.

(8) Whether or not the notes and bonds are of such form and character as to be negotiable instruments under the terms of the Uniform Commercial Code, the notes and bonds are hereby made negotiable instruments within the meaning of and for all the purposes of the Uniform Commercial Code, subject only to the provisions of the notes and bonds for registration.

(9) In case any of the commissioners or officers of the Authority whose signatures appear on any notes or bonds or coupons shall cease to be commissioners or officers before the delivery of the notes or bonds, the signatures shall, nevertheless, be valid and sufficient for all purposes, the same as if the commissioners or officers had remained in office until delivery.

(10) The Authority may exercise in connection with the issuance of any of its obligations, including notes, bonds, bond anticipation notes and refunding notes or bonds, all or any part or combination of the powers granted herein or in Section 31-3-1580, and may make convenants other than and in addition to the covenants herein and therein expressly authorized, of like or different character and make such covenants and do any and all such acts and things as may be necessary or convenient or desirable in order to secure its notes or bonds or, in the absolute discretion of the Authority, as will tend to make the notes or bonds more marketable notwithstanding that such covenants, acts or things may not be enumerated herein or in Section 31-3-1580.

(11) Notwithstanding the limitations set forth in the first sentence of subsection (1) of this section, any earnings, fees or charges derived by the Authority from any of the programs authorized by items (a), (b), (c), (d) and (e) not required by the proceedings pursuant to which notes or bonds were issued to be used for the payment of such notes or bonds or for any reserves required therefor are to be used by the Authority for any of its corporate purposes including the promotion of any program which the Authority is authorized to undertake.

HISTORY: 1977 Act No. 76, Section 5; 1983 Act No. 31, Sections 1-4; 1988 Act No. 538, Section 1; 1990 Act No. 370, Section 1; 2005 Act No. 110, Section 2.

Code Commissioners Note

The Code Commissioner changed the reference in item (2) from Section 11-9-350 to Section 11-9-360.

Code Commissioner's Note

At the direction of the Code Commissioner, references in this section to the offices of the former State Budget and Control Board, Office of the Governor, or other agencies, were changed to reflect the transfer of them to the Department of Administration or other entities, pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, Section 5(D)(1), effective July 1, 2015.