KRS 154.10-035: Issuance of economic development revenue bonds and anticipation

notes -- Uses -- Treatment.

(1) Notwithstanding any other provisions of the Kentucky Revised Statutes, the board

is authorized to exercise the following power:

(a) The board may provid e for the issuance of economic development revenue

bonds by the cabinet, for the purpose of providing funds and moneys to enable

the cabinet to exercise and fulfill the powers and authority set forth in KRS

154.10-030, to enter into agreements with governm ental agencies and private

companies, corporations, partnerships, and other such entities, acquire and

lease projects to governmental agencies and private companies, corporations,

cabinets, and other such entities, purchase obligations of governmental

agencies issued for economic development projects, and make loans or grants

for economic development projects, and to enable the cabinet generally to

carry out and effectuate its proper purposes under this chapter. In anticipation

of the issuance of the revenu e bonds, the board may provide for the issuance

at one (1) time, or from time to time, of revenue bond anticipation notes

pursuant to the general laws of the state. The principal of and the interest on

the revenue bonds or notes shall be payable solely fro m revenues made

available to the cabinet for bond purposes. Any such notes may be made

payable from the proceeds of bonds or renewal notes, or in the event bond or

renewal note proceeds are not available, or should the board deem it

financially practicable to pay the notes directly from revenues made available

to the cabinet for bond purposes, the notes may be paid from any revenues

made available to the cabinet for bond purposes. Prior to the issuance of the

bonds or notes, the cabinet shall submit any pro posed issue to the Capital

Projects and Bond Oversight Committee for its review and determination in

accordance with provisions of KRS 45.810.

(b) The revenue bonds or notes of the cabinet shall be dated and may be

redeemable prior to maturity at the optio n of the board at prices and under

terms and conditions determined by the board. Any bonds or notes shall bear

interest at the rate or rates, shall be payable annually or at shorter intervals,

and may bear conversion privileges determined by the board. Not es shall

mature at the time or times not exceeding five (5) years from their date or

dates, and revenue bonds shall mature at the time or times not exceeding forty

(40) years from their date or dates as may be determined by the board. The

board shall determine the form and manner of execution of the bonds or notes,

and shall fix the denomination or denominations and the place or places of

payment of principal and interest, which may be any bank or trust company

within or without the state. In case any officer of the board whose signature or

facsimile of whose signature shall appear on any revenue bonds or notes shall

cease to be such officer before the delivery thereof, the signature of the

facsimile shall be valid and sufficient for all purposes, the same a s if the

officer had remained in office until the delivery. At the time of issuance of

variable rate revenue bonds, the board may designate individuals or

institutions which, in the sole judgment of the board, have financial market

expertise to serve as ag ent for the board for establishing and changing from

time to time, while the variable rate revenue bonds remain outstanding, the

rate of interest to be borne by and the price to be paid for the revenue bonds.

The rate-setting procedures and authority of ea ch agent shall be set forth in

writing, and may include a formula or an index or indices based upon market

factors, and shall be established by the board at the time of issuance of the

revenue bonds. At the time of the issuance of the revenue bonds, the bo ard

shall establish the maximum interest rate to be borne by the revenue bonds.

The board shall retain the right to remove or replace any agent at any time and

for any reason. The board may provide that said bonds or notes may be

executed only with the fac simile signatures of its officers, but said bonds or

notes shall be executed with the manual signature of a bank or trust company

designated by the board as registrar and paying agent.

(c) All revenue bonds or notes issued under the provisions of this chap ter shall

have and are hereby declared to possess all of the qualities and incidents of

negotiable instruments under the laws of the state. The board may sell the

revenue bonds or notes in the manner, either at public or private negotiated

sale, and for th e price, as it may determine will best effect the purpose of this

chapter. If revenue bonds are sold at public, competitive sale, the revenue

bonds shall be sold after newspaper advertising conforming to the

requirements of KRS Chapter 424 and competitive bids for the sale of the

revenue bonds shall be opened and read publicly by the board at a designated

place, day and hour, all of which shall be announced in the advertising made

relative thereto.

(d) In its proceedings authorizing the issuance of revenue bonds or notes, the

board shall fix and determine contractual provisions with the bondholders

relating to the receipt, allocation, pledging, and disbursement of revenues

made available to the cabinet for bond purposes, and may enact and determine

terms, conditions, and restrictions pursuant to which additional revenue bonds

of the cabinet may be authorized and issued from time to time. The

proceedings, determinations, and enactments of the board shall specify that

the payment of principal of and interest on all cabinet revenue bonds and notes

shall constitute a first charge and lien against all revenues made available to

the cabinet for bond purposes before any such revenues are used, applied, and

disbursed for any other valid purposes of the cabinet, including the payment of

operation and maintenance costs incident to the operation of the cabinet.

(e) The proceeds of all revenue bonds or notes shall be used solely for the

purpose of enabling the cabinet to enter into agreements or interim financing

agreements with governmental agencies and private companies, corporations,

partnerships, and other entities, to acquire and lease projects to governmental

agencies, private companies, corporations, partnerships and other entities, to

purchase obligations of governm ental agencies issued for economic

development projects, to make loans or grants to governmental agencies,

private companies, corporations, partnerships, and other such entities for

economic development projects, or for any purpose authorized in this chapt er.

Revenue bond or note proceeds may also be used and applied for the payment

of ordinary and necessary expenses in connection with issuance of the revenue

bonds or notes, including, but not by way of limitation, a sum equal to any

discount in the sale th ereof, if discount bids are authorized and permitted by

the board, administrative expenses, including the preparation of revenue

bonds or notes, publication of notices, printing and other costs, attorneys' fees,

and other ordinary and necessary costs of fi nancing, including the payment of

fees to fiscal agents for advice and assistance in the preparation and marketing

of revenue bonds or notes.

(f) Prior to the preparation of definitive revenue bonds or notes, the board may,

under like restrictions, issue i nterim receipts or temporary bonds,

exchangeable for definitive revenue bonds or notes when the revenue bonds or

notes shall have been executed, and are available for delivery. The board shall

also provide for the replacement of any revenue bonds or notes that shall have

become mutilated or shall have been destroyed or lost. Revenue bonds or

notes may be issued under the provisions of this chapter directly by the board

without obtaining the consent or acquiescence of any cabinet, division,

commission, board, department, or agency of the state other than the Finance

and Administration Cabinet, and as provided in KRS 42.420, and without any

other proceedings or the happening of any other conditions or things except as

specifically required by this chapter and the provisions of the resolution or

resolutions of the board authorizing the issuance of the revenue bonds or

notes.

(2) The board shall assume all bond issuance and refunding authority, power, duties,

and obligations as existed on July 14, 1992, for the K entucky Development Finance

Authority, and the Kentucky Rural Economic Development Authority; the ability of

any of the foregoing organizations to issue industrial revenue bonds under KRS

Chapter 103; and the ability of any of the foregoing authorities to issue economic

development revenue bonds as provided in this chapter. The board shall also have

the authority and power to issue revenue bonds for any other economic development

activity as set forth in this chapter.

(3) The board shall for purposes of the Kentucky Revised Statutes be deemed to be the

successor issuer for all of the currently issued and outstanding bond issues by the

organizations set forth in subsection (2) of this section. The board shall have the

authority and the power to reaffirm all e xisting bond obligations of the

organizations in subsection (2) of this section and shall perform all duties,

obligations, and requirements as may be necessary and required under the bond

documents relating to each and every such issue. The board shall als o, in regard to

each and every such issue, exercise its authority and power as set forth in this

chapter.

(4) In the discretion of the board, any revenue bonds or notes issued under the

provisions of this chapter may be secured by a trust indenture by and between the

cabinet and corporate trustee which may be any trust company or bank having the

powers of a trust company within or without the Commonwealth. A trust indenture,

or the resolution of the board providing for the issuance of revenue bonds or notes ,

may pledge or assign for the security of the revenue bonds or notes, all or any part

of the totality of revenues made available to the cabinet for bond purposes received

and to be received. The trust indenture or resolution of the board may contain

provisions for protecting and enforcing the rights and remedies of the bondholders

which may be reasonable and proper, and not in violation of law, including, but not

limited to, covenants and provisions setting forth the duties of the cabinet in relation

to th e purposes to which revenue bonds and note proceeds may be applied; the

disposition or pledging of assets and revenues made available to the cabinet for

bond purposes; and the custody, safeguarding, and application of all such revenues.

It shall be lawful for any bank or trust company incorporated under the laws of the

Commonwealth which may act as depository of the proceeds of revenue bonds,

notes, or revenues made available to the cabinet for bond purposes, to furnish such

indemnifying bonds, or to pledge such securities as may be required by a trust

indenture or resolution of the board. Any trust indenture or board resolution may set

forth the rights and remedies of the bondholders and of the trustee, and may restrict

the individual right of action by bon dholders, where a trust indenture has been

entered into. In addition to the foregoing, any trust indenture or board resolution

may contain other provisions which the board determines to be reasonable and

proper for the further security of the holders of an y revenue bonds or notes. All

expenses incurred in carrying out the provisions of a trust indenture or bond

proceedings may be treated as a part of the cost of operating the cabinet, and may be

paid from revenues pledged or assigned to the payment of the p rincipal of and the

interest on revenue bonds or notes, or from any other funds properly available to the

cabinet for bond purposes. However, the payment of operational costs from

revenues made available to the cabinet for bond purposes shall, as provided in

subsection (1) of this section, be subordinate to the payment of principal of and

interest on cabinet revenue bonds or notes from revenues made available to the

cabinet for bond purposes, it being intended that these principal and interest

requirements shall be secured by a prior and paramount lien on gross revenues made

available to the cabinet for bond purposes.

(5) Notwithstanding any other provision to the contrary, any trust indenture or board

resolution shall provide that, except to the extent the rights afforded to bondholders

by this section shall be enforceable and enforced by a trustee under a trust indenture

rather than by the bondholders, any holder of revenue bonds or notes issued by the

cabinet or any of the coupons appurtenant thereto, may, either at law or in equity, by

suit, action, mandamus, or other proceedings, protect and enforce any and all rights

generally arising under the laws of the Commonwealth, or granted under this

chapter, or under a trust indenture, or by the resolution of th e board authorizing the

issuance of revenue bonds or notes, and may specifically enforce and compel by

mandamus the performance of all duties required by this chapter, or by trust

indenture, or board resolution, to be performed by the cabinet or by any off icer or

employee thereof, including, but not limited to, the prompt and full enforcement of

the terms and conditions of all assistance agreements to which the cabinet is a party.

(6) The cabinet is hereby authorized to provide for the issuance of refunding revenue

bonds or notes for the purpose of refunding any revenue bonds or notes then

outstanding, whether issued by the cabinet under the provisions of this chapter or

one (1) of the agencies, authorities or organizations referenced in subsections (2)

and (3) of this section, including the payment of any redemption premium thereon

and any interest accrued or to accrue to the date of redemption of these revenue

bonds or notes, and, if determined advisable by the board, for the additional purpose

of providing further funds for the carrying out of the proper public and

governmental purposes of the cabinet. The issuance and sale of the refunding

revenue bonds or notes, the maturities and other details thereof, the rights of the

holders thereof, and the rights, d uties, and obligations of the cabinet in respect of

the same, shall be governed by the provisions of this chapter which relate to the

issuance of revenue bonds or notes, insofar as these provisions may be applicable.

(7) Refunding revenue bonds or notes ma y be sold or exchanged directly for

outstanding revenue bonds or notes of the cabinet, and if sold, the proceeds thereof

shall be applied, in addition to any other authorized purposes, to the purchase,

redemption, or payment of these outstanding revenue bo nds or notes. Pending the

application of the proceeds of any refunding revenue bonds, with any other

available funds, to the payment of the principal, accrued interest, and any

redemption premium on the revenue bonds or notes being refunded (and if so

provided or permitted in the board resolution authorizing the issuance of the

refunding revenue bonds or notes, or in the trust indenture securing the same, to the

payment of any interest on the refunding revenue bonds or notes and any expenses

in connection w ith the refunding), the proceeds may be invested in direct

obligations of, or obligations the principal of and interest on which are

unconditionally guaranteed by the United States of America which shall mature or

which shall be subject to redemption by th e holders thereof at the option of such

holders not later than the respective dates when the proceeds, together with the

interest accruing thereon, will be required for the purposes intended.

(8) Revenue bonds and notes issued by the cabinet under the prov isions of this chapter

are hereby declared and deemed to be securities in which all public officers and

public bodies of the Commonwealth and its political subdivisions, all insurance

companies, trust companies, banking associations, investment companies,

executors, administrators, trustees, and other fiduciaries may properly and legally

invest funds, including capital in their control or belonging to them. These

obligations of the cabinet are hereby declared and determined to be securities which

may properly and legally be deposited with and received by any state or municipal

officer or any agency or political subdivision of the Commonwealth, for the purpose

for which the deposit of bonds, notes, or obligations of the Commonwealth is now,

or may hereafter be, authorized by law.

(9) Revenue bonds or notes issued by the cabinet under the provisions of this chapter

shall not be deemed to constitute a debt of the Commonwealth or of any political

subdivision thereof, or a pledge of the faith and cred it of the Commonwealth or of

any political subdivision thereof; but the bonds shall be payable as to principal and

interest solely from revenues made available to the cabinet for bond purposes

provided therefor under the provisions of this chapter. All suc h revenue bonds or

notes shall contain on the face thereof a statement to the effect that neither the

Commonwealth nor the cabinet shall be obligated to pay the same, or the interest

thereon, except from revenues made available to the cabinet for bond purp oses, as

defined in this chapter; and that neither the faith and credit, nor the taxing power of

the Commonwealth or any political subdivision thereof is pledged to the payment of

the principal of and interest on such revenue bonds or notes.

(10) The Commonwealth, for the specific use and benefit of the cabinet, may cause to be

submitted to the voters of the state in a manner provided by Sections 49 and 50 of

the Constitution of Kentucky, from time to time, propositions for the incurring of

state indebtedness represented by general obligation bonds of the Commonwealth,

the proceeds of which are to be made available to the cabinet and used and

employed by the cabinet for all proper purposes.

(11) Subject to the provisions of KRS 56.870 to 56.873, the State Property and Buildings

Commission or the Kentucky Turnpike Authority may issue bonds for which debt

service originates with an appropriation of the General Assembly, and may make

the proceeds available to the cabinet for all proper purposes.

(12) Funds appro priated to the cabinet by the General Assembly, including but not

limited to repayments of revolving funds established with appropriations of the

General Assembly or established with bond issues for which the debt service,

issuance costs, reserve fund requ irements, insurance premiums or any other

expenditures associated with bond issuance are appropriated by the General

Assembly, shall not be commingled with other funds made available to the cabinet

and shall only be expended for the purposes specified by t he General Assembly

when the appropriation is made or as approved in subsequent actions of the General

Assembly.