H 3067 Session 112 (1997-1998)
H 3067 General Bill, By Limehouse, Altman, Bailey, Cotty, Harrell and Whatley
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.
12/18/96 House Prefiled
12/18/96 House Referred to Committee on Labor, Commerce and Industry
01/14/97 House Introduced and read first time HJ-36
01/14/97 House Referred to Committee on Labor, Commerce and
Industry HJ-36
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 shall 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 also may 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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