S 1365 Session 111 (1995-1996)
S 1365 General Bill, By Land, Leatherman, Rankin and Saleeby
Similar(H 4902)
A Bill to amend Title 11, Code of Laws of South Carolina, 1976, relating to
public finance by adding Chapter 42 so as to establish the South Carolina
Transportation Infrastructure Bank Act and to provide for its powers and
duties; to authorize the bank to provide loans and other financial assistance
to government units and private entities to finance public highway and transit
projects; to authorize the Department of Transportation to fund the bank with
up to five percent of funds appropriated for the construction and maintenance
of state highways to allow federal grants, loan repayments, and other
available amounts to be credited to the bank; and to authorize lending to and
borrowing by government units and private entities through the bank.
04/16/96 Senate Introduced, read first time, placed on calendar
without reference SJ-10
04/30/96 Senate Read second time SJ-47
04/30/96 Senate Ordered to third reading with notice of
amendments SJ-47
INTRODUCED
April 16, 1996
S. 1365
Introduced by SENATORS Land, Saleeby, Leatherman and
Rankin
S. Printed 4/16/96--S.
Read the first time April 16, 1996.
A BILL
TO AMEND TITLE 11, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO PUBLIC FINANCE BY
ADDING CHAPTER 42 SO AS TO ESTABLISH THE SOUTH
CAROLINA TRANSPORTATION INFRASTRUCTURE BANK
ACT AND TO PROVIDE FOR ITS POWERS AND DUTIES; TO
AUTHORIZE THE BANK TO PROVIDE LOANS AND OTHER
FINANCIAL ASSISTANCE TO GOVERNMENT UNITS AND
PRIVATE ENTITIES TO FINANCE PUBLIC HIGHWAY AND
TRANSIT PROJECTS; TO AUTHORIZE THE DEPARTMENT
OF TRANSPORTATION TO FUND THE BANK WITH UP TO
FIVE PERCENT OF FUNDS APPROPRIATED FOR THE
CONSTRUCTION AND MAINTENANCE OF STATE
HIGHWAYS TO ALLOW FEDERAL GRANTS, LOAN
REPAYMENTS, AND OTHER AVAILABLE AMOUNTS TO BE
CREDITED TO THE BANK; AND TO AUTHORIZE LENDING
TO AND BORROWING BY GOVERNMENT UNITS AND
PRIVATE ENTITIES THROUGH THE BANK.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. The General Assembly finds that:
(1) Adequate transportation facilities are an important element
in the ability of a community to provide for the health and welfare
of its citizens and the continuing economic growth and development
that will provide jobs for the citizens of South Carolina.
(2) Traditional transportation financing methods in South
Carolina cannot generate the resources necessary to fund the cost of
transportation facilities which are required for continued economic
viability and future economic expansion.
(3) The State of South Carolina has the ability to provide for
alternative methods of financing highway and transportation
projects.
(4) Loans and other financial assistance to government units and
private entities can play an important part in meeting transportation
needs, and this assistance is in the public interest, for the public
benefit and good as a matter of legislative intent.
(5) This chapter provides an instrumentality to assist
government units and private entities in constructing and improving
highway and transportation facilities by providing loans and other
financial assistance.
SECTION 2. Title 11 of the 1976 Code is amended by adding:
"CHAPTER 42
South Carolina Transportation Infrastructure Bank
Act
Section 11-42-10. This chapter may be referred to as the `South
Carolina Transportation Infrastructure Bank Act'.
Section 11-42-20. (A) There is created a body corporate and
politic and an instrumentality of the State to be known as the South
Carolina Transportation Infrastructure Bank.
(B) The bank is governed by a board of directors as provided in
this chapter.
(C) The corporate purpose of the bank is to provide loans and
other financial assistance to government units and private entities
for constructing and improving highway and transportation facilities
necessary for public purposes including economic development.
The exercise by the authority of a power conferred in this chapter is
an essential public function.
(D) The bank shall establish and maintain at least the four
following accounts: state highway account, state transit account,
federal highway account, and federal transit account.
(E) The board will ensure that the bank maintains on a
continuing basis a sufficient investment grade rating on its debt
issuances or has a sufficient level of bond or debt instrument
insurance to maintain the viability of the bank.
Section 11-42-30. As use in this chapter, the following words,
unless the context clearly indicates otherwise, must be construed as
follows:
(1) `Bank' means the South Carolina Transportation
Infrastructure Bank established pursuant to the provisions of this
chapter.
(2) `Board' means the board of directors of the bank.
(3) `Bonds' means bonds, notes, or other evidence of
indebtedness.
(4) `Department of Transportation' means the South Carolina
Department of Transportation, an agency of the State, and its
successors.
(5) `Eligible cost' means as applied to a qualified project to be
financed from the federal accounts, the costs that are permitted
under applicable federal laws, requirements, procedures, and
guidelines in regard to establishing, operating, and providing
assistance from the bank. As applied to a qualified project to be
financed from the state highway account, these costs include the
costs of preliminary engineering, traffic and revenue studies,
environmental studies, right-of-way, legal and financial services
associated with the development of the qualified project,
construction, construction management, facilities, and other costs
necessary for the start up of the qualified project. As applied to
any qualified project to be financed from the state transit account,
eligible project costs are limited to capital expenditures for transit
equipment and facilities.
(6) `Eligible project' means a highway or transit project which
provides public benefits by either enhancing mobility and safety,
promoting economic development, or increasing the quality of life
and general welfare of the public.
(7) `Federal accounts' means collectively, the separate account
for federal highway funds and federal transit funds.
(8) `Financing agreement' means any agreement entered into
between the bank and a qualified borrower pertaining to a loan or
other financial assistance. This agreement may contain, in addition
to financial terms, provisions relating to the regulation and
supervision of a qualified project, or other provisions as the board
may determine. The term `financing agreement' shall include,
without limitation, a loan agreement, trust agreement, trust
indenture, security agreement, reimbursement agreement, guarantee
agreement, bond or note, ordinance or resolution, or similar
instrument.
(9) `Government obligations or governmental obligations'
means bonds, notes, or other evidence of indebtedness issued by a
government unit to evidence a loan.
(10) `Government unit' means a municipal corporation, county,
special purpose district, special service district, commissioners of
public works, or another public body, instrumentality or agency of
the State including combinations of two or more of these entities
acting jointly to construct, own, or operate a qualified project, and
any other state or local authority, board, or other political
subdivision created by the General Assembly or pursuant to the
Constitution and laws of the State which may construct, own, or
operate a qualified project.
(11) `Loan' means an obligation subject to repayment which is
provided by the bank to a qualified borrower for all or a part of the
cost of a qualified project. A loan may be disbursed in anticipation
of reimbursement for or direct payment of costs of a qualified
project.
(12) `Loan obligation' means a bond, note, or other evidence of
obligation issued by a qualified borrower.
(13) `Other financial assistance' means, but is not limited to,
credit enhancement, capital or debt reserves for bonds or debt
instrument financing, interest rate subsidies, provision of letters of
credit and credit instruments, provision of bond or other debt
financing instrument security, and other lawful forms of financing
and methods of leveraging funds that are approved by the board,
and in the case of federal funds, as allowed by federal law.
(14) `Private entity' means a private person or entity that has
entered into a contract with a government unit to design, finance,
construct, and operate a highway bridge, tunnel, or approach that is
within the jurisdiction of the government unit that is responsible for
complying with applicable federal requirements.
(15) `Project revenues' means all rates, rents, fees, assessments,
charges, and other receipts derived or to be derived by a qualified
borrower from a qualified project or made available from a special
source, and, if provided in the applicable financing agreement,
derived from any system of which the qualified project is a part of
from any other revenue producing facility under the ownership or
control of the qualified borrower including, without limitation,
proceeds or grants, gifts, appropriations and loans, including the
proceeds of loans made by the bank, investment earnings, reserves
for capital and current expenses, proceeds of insurance or
condemnation and proceeds from the sale or other disposition of
property.
(16) `Qualified borrower' means any government unit or private
entity which is authorized to construct, operate, or own a qualified
project.
(17) `Qualified project' means an eligible project which has been
selected by the bank to receive a loan or other financial assistance
from the bank to defray an eligible cost.
(18) `Regional government unit' means a government unit which
is authorized to construct, own, or operate an eligible project on
behalf of two or more government units, or designated parts of it.
(19) `Revenues' means when used with respect to the bank, any
receipts, fees, income, or other payments received or to be received
by the bank including, without limitation, receipts, and other
payments deposited in the bank and investment earnings on its
funds and accounts.
(20) `State accounts' means, collectively, the separate account for
state highway funds and state transit funds.
Section 11-42-40. The board of directors is the governing board
of the bank. The board shall consist of five voting members as
follows: the Deputy Director of Finance and Administration of the
Department of Transportation in an ex officio capacity; two
members appointed by the Department of Transportation, one of
which the Department of Transportation will designate as chairman;
one member appointed by the State Treasurer; and one member
appointed by the Governor. All appointed members shall serve
two-year terms, terminable at the will of the appointing agency or
officer. However, the initial appointees of the Department of
Transportation shall serve an initial three-year term.
Section 11-42-50. (A) In addition to the powers contained
elsewhere in this chapter, the bank shall have all power necessary,
useful, or appropriate to fund, operate and administer the bank, and
to perform its other functions including, but not limited to, the
power to:
(1) have perpetual succession;
(2) adopt, promulgate, amend, and repeal bylaws, subject to
the approval of the Department of Transportation, not inconsistent
with this chapter for the administration of its affairs and the
implementation of its functions;
(3) sue and be sued in its own name;
(4) have a seal and alter it at its pleasure, although the failure
to affix the seal does not affect the validity of an instrument
executed on behalf of the bank;
(5) make loans to qualified borrowers to finance the eligible
costs of qualified projects and to acquire, hold, and sell loan
obligations at prices and in a manner as the board determines
advisable;
(6) provide qualified borrowers with other financial assistance
necessary to defray eligible costs of a qualified project;
(7) enter into contracts, arrangements, and agreements with
qualified borrowers and other persons and to execute and deliver all
financing agreements and other instruments necessary or convenient
to the exercise of the powers granted in this chapter;
(8) enter into agreements with a department, agency, or
instrumentality of the United States or of this State or another state
for the purpose of planning and providing for the financing of
qualified projects;
(9) establish:
(a) policies and procedures for the making and
administering of loans and other financial assistance; and
(b) fiscal controls and accounting procedures to ensure
proper accounting and reporting by the bank, government units, and
private entities.
(10) acquire by purchase, lease, donation, or other lawful
means and to sell, convey, pledge, lease, exchange, transfer, and
dispose of all or any part of its properties and assets of every kind
and character or any interest in it, to further the public purpose of
the bank;
(11) expend funds to obtain accounting, management, legal,
financial consulting, and other professional services necessary to the
operations of the bank;
(12) expend funds credited to the bank as the board determines
necessary for the costs of administering the operations of the bank,
provided the costs of administering the operations are approved by
the Department of Transportation;
(13) establish advisory committees as the board determines
appropriate, which may include individuals from the private section
with banking and financial expertise;
(14) procure insurance against losses in connection with its
property, assets, or activities including insurance against liability for
its acts or the acts of its employees or agents or the employees or
agents of the Department of Transportation, or to establish cash
reserves to enable it to act as a self-insurer against any and all such
losses;
(15) collect fees and charges in connection with its loans or
other financial assistance;
(16) apply for, receive and accept from any source, aid, grants,
and contributions of money, property, labor, or other things of
value to be used to carry out the purposes of this chapter subject to
the conditions upon which the aid, grants, or contributions are
made;
(17) enter into contracts or agreements for the servicing and
processing of financing agreements;
(18) do all other things necessary or convenient to exercise
powers granted or reasonably implied by this chapter.
(B) The bank is not authorized or empowered to be or to
constitute a bank or trust company within the jurisdiction or under
the control of the State or an agency of it or the Comptroller of the
Currency or the Treasury Department of the United States, or a
bank, banker or dealer in securities within the meaning of, or
subject to the provisions of, any securities, securities exchange or
securities dealers' law of the United States or the State of South
Carolina.
Section 11-42-60. The following sources may be used to
capitalize the bank:
(1) an annual contribution from the Department of
Transportation of up to five percent of the funds appropriated for
the construction and maintenance of state highways, the contribution
must be used to match federal capitalization grants to the bank and
provide capital for the state accounts of the bank;
(2) federal funds made available to the State for the bank;
(3) contributions and donations from public authorities,
government units, and private entities;
(4) all monies paid or credit to the bank, by contract or
otherwise, payments of principal and interest on loans or other
financial assistance made from the bank, and interest earnings
which may accrue from the investment or reinvestment of the bank
monies; and
(5) other lawful sources as determined appropriate by the board.
Section 11-42-70. (A) Earnings on balances in the federal
accounts must be credited and invested according to federal law.
Earnings on state accounts must be credited to the state highway
account or state transit account that generates the earnings. The
bank may establish accounts and subaccounts within the state
accounts and federal accounts as considered desirable to effectuate
the purposes of this chapter, or to meet the requirements of any
state or federal programs. All accounts must be held in trust by the
State Treasurer.
(B) For necessary and convenient administration of the bank, the
board shall direct the State Treasurer to establish federal and state
accounts and subaccounts within the bank necessary to meet any
applicable federal law requirements or as the bank shall determine
necessary or desirable in order to implement the provisions of this
chapter.
(C) The bank shall comply with all applicable federal laws and
regulations prohibiting the commingling of certain federal funds
deposited in the bank.
Section 11-42-80. (A) The bank may provide loans and other
financial assistance to a government unit or private entity to pay for
all or part of the eligible cost of a qualified project. The term of
the loan or other financial assistance shall not exceed forty years.
The bank may require the government unit or private entity to enter
into a financing agreement in connection with its loan obligation.
The board shall determine the form and content of loan
applications, financing agreements, and loan obligations including
the term and rate or rates of interest on a financing agreement. The
term and conditions of a loan or other financial assistance from
federal account shall comply with applicable federal requirements.
(B) The board shall determine which projects are eligible
projects and then select from among the projects, the projects
qualified to receive from the bank a loan or other financial
assistance. In selected qualified projects, the board shall consider
the projected feasibility of the project and the amount and degree of
risk assumed by the bank. The board may also consider, but must
not be limited to, the following criteria in making its determination
that an eligible project is a qualified project:
(1) the local support of the project, expressed by resolutions
by the governing bodies in the areas in which the project will be
located, and the financial or in kind contributions to the project;
(2) whether the project is consistent with the:
(a) adopted transportation plan of the appropriate
metropolitan planning organization, if applicable; and
(b) transportation plan for the Department of
Transportation.
(3) whether the existing highway system of the area served
by the project is adversely affected by the project; and
(4) whether the governing bodies of the county or the
incorporated municipality in which the project is to be located
provides to the bank a resolution which makes a finding that the
project is essential to economic development in the political
subdivisions, or the bank receives a resolution or certificate from
the Advisory Coordinating Council for Economic Development of
the South Carolina Department of Commerce that the project is
essential to economic development in the State, or both, at the
option of the board.
Section 11-42-90. (A) Qualified borrowers are authorized to
obtain loans or other financial assistance from the bank through
financing agreements. Qualified borrowers entering into financing
agreements and issuing loan obligations to the bank may perform
any acts, take any action, adopt any proceedings, and make and
carry out any contracts or agreements with the bank as may be
agreed to by the bank and any qualified borrower for the carrying
out of the purposes contemplated by this chapter.
(B) In addition to the authorizations contained in this chapter, all
other statutes or provisions permitting qualified borrowers to
borrow money and issue obligations may be utilized by any
qualified borrower in obtaining a loan or other financial assistance
from the bank to the extent determined necessary or useful by the
qualified borrower in connection with any financing agreement and
the issuance, securing, or sale of loan obligations to the bank.
Notwithstanding the foregoing, obligations secured by ad valorem
taxes may be issued by a government unit and purchased by the
bank without regard to any public bidding requirement.
(C) A qualified borrower may receive, apply, pledge, assign, and
grant security interest in project revenues, and, in the case of a
governmental unit, its project revenues, revenues derived from a
special source or ad valorem taxes, to secure its obligations as
provided in this chapter, and may fix, revise, charge, and collect
fees, rates, rent, assessments, and other charges of general or special
application for the operation or services of a qualified project, the
system of which it is a part, and any other revenue producing
facilities from which the qualified borrower derives project
revenues, to meet its obligations under a financing agreement or to
provide for the construction and improving of a qualified project.
Section 11-42-100. The bank is performing an essential
governmental function in the exercise of the powers conferred upon
it and is not required to pay taxes or assessments upon property or
upon its operations or the income from them, or taxes or
assessments upon property of other loan obligations acquired or
used by the bank or upon the income from them.
Section 11-42-110. (A) If a government unit fails to collect and
remit in full all amounts due to the bank on the date these amounts
are due under the terms of any note or other obligation of the
government unit or private entity, the bank shall notify the State
Treasurer who, subject to the withholding of amounts under Article
X, Section 14 of the State Constitution, shall withhold all or a
portion of the funds of the State and all funds administered by the
State, its agencies, boards, and instrumentalities allotted or
appropriated to the government unit and apply an amount necessary
to the payment of this amount.
(B) Nothing contained in this section mandates the withholding
of funds allocated to a government unit or private entity which
would violate contracts to which the State is a party, the
requirements of federal law imposed on the State, or judgments of a
court binding on the State.
Section 11-42-120. Neither the board nor any officer, employee,
or committee of the bank acting in behalf of it, nor an officer or
employee of the Department of Transportation, while acting within
the scope of this authority, is subject to any liability resulting from
carrying out any of the powers given in this chapter.
Section 11-42-130. Notice, proceeding, or publication except
those required in this chapter are not necessary to the performance
of any act authorized in this chapter, nor is any act of the bank
subject to referendum.
Section 11-42-140. All money of the bank, except as authorized
by law or provided in this chapter, must be deposited with and
invested by the State Treasurer. Funds of the bank not needed for
immediate use or disbursement may be invested by the State
Treasurer in obligations or securities which are declared to be legal
obligations by the provisions of Section 11-9-660. All federal
funds must be invested as required by applicable federal law.
Section 11-42-150. Following the close of each state fiscal year,
the bank shall submit an annual report of its activities for the
preceding year to the Governor and to the General Assembly. The
bank shall also submit an annual report to the appropriate federal
agency in accordance with requirements of any federal program.
An independent certified public accountant shall perform an audit of
the books and accounts of the bank at least once in each state fiscal
year.
Section 11-42-160. The Department of Transportation shall
provide staff and assist the bank in the administration of the
program and the performance of the bank under this chapter. In
providing that assistance, the Department of Transportation may:
(1) assist in the formulation, establishment, and structuring of
programs undertaken by the bank pursuant to this chapter;
(2) provide government units or private entities information as
to the bank and the procedures for obtaining the assistance intended
by the chapter;
(3) assist government units and private entities in making
application to state and federal agencies including the bank as may
be necessary or helpful in order to avail themselves of these
programs;
(4) assist the bank in analyzing and evaluating government unit
or private entity requests for assistance pursuant to this chapter;
(5) assist in the structuring and negotiation of financing
agreements;
(6) administer the fund, including any accounts in it;
(7) administer the bank's accounts, loans, and other financial
assistance, including monitoring compliance by government units or
private entities with any rules, regulations, or other requirements of
the bank with respect to the programs and compliance with
covenants and agreements made by government units or private
entities with respect to a financing agreement; and
(8) provide other assistance and perform other duties as may be
requested or directed by the bank.
Section 11-42-170. This chapter, being for the welfare of this
State and its inhabitants, must be liberally construed to effect the
purposes specified in this chapter. However, nothing in this chapter
must be construed as affecting any proceeding, notice, or approval
required by law for the issuance by a government unit or private
entity of the loan obligations, instruments, or security for loan
obligations.
Section 11-42-180. If any provision of this chapter is held or
determined to be unconstitutional, invalid, or otherwise
unenforceable by a court of competent jurisdiction, it is the
intention of the General Assembly that the provision is, or is
determined to be, severable from the remaining provisions of the
chapter and that the holding does not invalidate or render
unenforceable another provision of the chapter."
SECTION 3. This act takes effect upon approval by the
Governor.
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