Bond Basics for Library Districts and Other Municipal Libraries in New York State

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Table Of Contents

Chapter 1. Introduction . . . 1

Chapter 2. Constitutional Requirements . . . 5

Loan of Credit Prohibition . . . 5

Valid Purpose Requirement . . . 6

Pledge of Faith and Credit . . . 6

Annual Appropriation . . . 6

Debt Limits . . . 7

Tax Limits . . . 7

Chapter 3. General Implementing Statutory Provisions . . . 9

Protection of Holders of Local Government Debt in the State . . . 10

Contract Remedies . . . 10

The State Aid Intercept . . . 11

Chapter 4. The Library District Referendum Process . . . 13

Procedural Rules Regarding Bond Resolutions . . . 13

Coordination of Proposition Language and Bond Resolution Language/Problem Language . . . 13

Proposition Language . . . 14

Referenda In School Districts . . . 15

Referenda In Towns and Villages . . . 15

Referenda In Cities and Counties . . . 15

Referenda In Joint Public Libraries . . . 16

Projects To Be Financed Through The Dormitory Authority . . . 16

Library Improvements Without An Increase In The Tax Levy . . . 16

Chapter 5. After The Referendum Process . . . 17

Chapter 6. Anatomy of a Bond Resolution and Its Adoption . . . 19

Bond Resolutions . . . 19

Elements of a Bond Resolution . . . 20

Temporary Advances of Non-Borrowed Moneys/Bond Resolutions for Planning . . . 23

Additional Money Bond Resolutions / Phased Projects . . . 24

Bond Resolutions and Contingencies to Utilization . . . 25

Repeal of a Bond Resolution . . . 25

Chapter 7. Certain Legal Elements of a Financed Capital Project . . . 27

Periods of Probable Usefulness . . . 27

Specific Object or Purpose or Classes of Objects or Purposes . . . 28

Policing a Class of Objects or Purposes . . . 29

Further Aggregation of Items . . . 29

Special Super Period of Probable Usefulness For School Districts . . . 30

Maximum Estimated Cost . . . 31

Plan of Financing . . . 32

Some Peculiar PPU Rules . . . 32

Chapter 8. Estoppel . . . 35

Chapter 9. Types of Debt . . . 39

BANs and BARNs . . . 41

Serial Bonds . . . 42

Statutory Installment Bonds . . . 45

BANs or Bonds for a Capital Project . . . 49

Tax Anticipation Notes . . . 49

Revenue Anticipation Notes . . . 52

TAN and RAN Resolutions Format . . . 54

Budget Notes . . . 55

Specialized Bond Types . . . 57

Capital Notes . . . 57

Refunding Bonds (Refinancing Outstanding Bonds) . . . 58

Steps in an Advance Refunding Transaction . . . 60

Qualified Zone Academy Bonds (QZABs) . . . 60

Joint Projects and Cooperative Debt . . . 62

Mortgage Notes of a Library District . . . 62

Chapter 10. Amortization Structures . . . 69

The “Two Year Rule” for Bond Anticipation Notes . . . 70

The “Two Year Rule” for Bond Issues . . . 70

The 50% Rule . . . 70

The 50% Rule and Seeming Violations . . . 71

Level Debt Service . . . 73

Relationship of Bond Anticipation Notes to Bonds: The “Five-Year” Rule . . . 74

Series Financings . . . 74

Chapter 15. Federal Disclosure Law Issues . . . 115

The Official Statement (“OS”) . . . 115

Background of the Rule . . . 115

1994 Amendments . . . 116

The Amendments in Detail . . . 117

Exemptions . . . 120

Compliance . . . 121

Responsibilities and Liabilities . . . 121

Chapter 16. Post-Issuance Responsibilities, Issues and Problems . . . 123

Responsibility: Investment of Borrowed Proceeds . . . 123

Responsibility: Compliance with Federal Reporting, Arbitrage and Arbitrage Rebate Regulations . . . 125

Responsibility: Compliance with Federal Disclosure Rules . . . 125

Responsibility: State Oversight Reporting . . . 126

Post-Issuance Issues: Insufficient Funds . . . 126

Post-Issuance Issues: Too Much Money Authorized . . . 127

Post-Issuance Issues: Reimbursement Issues . . . 127

Post-Issuance Issues: Change in Capital Project Elements . . . 128

Chapter 17. Lease-Purchase Agreements, Energy Performance Contracts and

Certificates of Participation . . . 131

The State Comptroller’s Rules . . . 134

Energy Performance Contracts . . . 139

Chapter 18. Bond Insurance and Section 168.00 of the Local Finance Law . . . 143

Chapter 19. Financings for School District Affiliated Public Libraries—Commonly Asked Questions . . . 145

Chapter 20. Capital Financings for Free Association Libraries . . . 151

Section 145 . . . 152

Who Can Issue The Debt? . . . 153

Section 501(c)(3) . . . 154

Relevant State Law . . . 154

Initial Steps To A Free Association Library Financing . . . 156

Industrial Development Authority Financings . . . 158

Dormitory Authority Financings . . . 159

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