Councilmember Adrian Fenty
Councilmember
Vincent C. Gray
Councilmember Kwame R. Brown
A BILL IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
Councilmembers Adrian Fenty, Vincent C. Gray, and Kwame
R. Brown introduced the following bill, which was referred to the
Committee on Finance and Revenue.
To provide for the issuance, sale, and delivery of up to
$1 billion in revenue bonds, in one or more series, to finance the
reconstruction, renovation, and emergency maintenance of public school
facilities; to require the Board of Education to adopt a Multi-Year
Facility Plan to guide the expenditure of monies generated from the
Bonds; to require the District of Columbia Auditor to report to the
public on annual progress with respect to the MultiYear Facility Plan;
and to amend the Law to Legalize Lotteries, Daily Numbers Games, and
Bingo and Raffles for Charitable Purposes in the District of Columbia to
dedicate up to $60,000,000 per annum to the repayment of Bonds issued
pursuant to this act.
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA,
That this act may be cited as the "School Modernization
Financing Act of 2005".
Sec. 2. Definitions.
For the purpose of
this act, the term:
(1) “Board” means the District of Columbia Lottery
and Charitable Games Control Board established by the Lottery Act.
(2) “Bond Counsel” means a firm or firms of attorneys
designated as bond counsel from time to time by the Mayor.
(3) “Bonds” means the District of Columbia revenue
bonds, notes, or other obligations (including refunding bonds, notes,
and other obligations), in one or more series, authorized to be issued
pursuant to this act.
(4) “Closing Documents” means all documents and
agreements other than Financing Documents that may be necessary and
appropriate to issue, sell, and deliver the Bonds contemplated
thereby, and includes agreements, certificates, letters, opinions,
forms, receipts, and other similar instruments.
(5) “District” means the District of Columbia.
(6) “Financing Documents” means the documents other
than Closing Documents that relate to the financing or refinancing of
transactions to be effected through the issuance, sale, and delivery
of the Bonds, including any offering document, and any required
supplements to any such documents.
(7) “Home Rule Act” means the District of Columbia
Home Rule Act, approved December 24, 1973 (87 Stat. 774; D.C. Official Code §
1-201.01 et seq.).
(8) “Lottery Act” means the Law to Legalize
Lotteries, Daily Numbers Games, and Bingo and Raffles for Charitable
Purposes in the District of Columbia, effective March 10, 1981 (D.C.
Law 3-172; D.C. Official Code § 3-1301 et seq.), as amended.
Sec. 3. Findings.
The Council finds that:
(1) Section 490 of the Home Rule Act provides that the
Council may by act authorize the issuance of District revenue bonds,
notes, or other obligations (including refunding bonds, notes, or other obligations) to borrow money to finance, refinance, or reimburse
and to assist in the financing, refinancing, or reimbursing of
undertakings in certain areas designated in section 490 where the ultimate obligation to repay such revenue bonds, notes or other
obligations is that of one or more governmental persons or entities.
(2) Section 490 of the Home Rule Act provides that
revenue bonds may be issued to finance capital projects for elementary and secondary educational
purposes.
(3) Across the District of Columbia, the lack of
sufficient, stable capital funds available for public school
renovation and construction has contributed to the aging and
deterioration of school facilities into a generally unacceptable
condition that often impedes education and undermines safety. As a
result, there exists a critical need for an infusion of capital funding
to modernize public school facilities in the District.
(4) The issuance of Bonds is in accordance with the
intent of section 490 of the Home Rule Act and will promote the education and general welfare of
District residents.
Sec. 4. Bond authorization.
(a) Pursuant to Section 490 of the Home Rule Act, the
Mayor is authorized, beginning October 1, 2006, to issue up to one
billion dollars ($1,000,000,000) in bonds to assist in financing,
refinancing, or reimbursing costs of undertakings by the District to
modernize, renovate, or construct public school facilities in
accordance with the Multi-Year Facilities Plan developed pursuant to section 14.
(b) The Bonds may be issued from time to time, in one or
more series, and shall be tax-exempt or taxable as the Mayor shall determine. The Bonds
shall be secured by and solely payable from monies deposited in the Lottery and Charitable Game
Fund established under section 4 of the Lottery Act; provided that the
total amount of monies allocated annually to pay debt service on such Bonds shall not exceed sixty million dollars ($60,000,000) per annum.
(c) The Mayor is authorized to pay from the proceeds of
the Bonds the costs and expenses of issuing and delivering the Bonds,
including, but not limited to, underwriting, legal, accounting, financial advisory, bond insurance or other credit enhancement,
marketing and selling the Bonds, printing costs and expenses, and
direct costs of preparing the annual report issued by the District of Columbia Auditor pursuant to section 14 of this act.
(d) Except as provided in subsection (c) of this section,
all proceeds from the issuance of the Bonds shall be transferred to
the Board of Education to finance, pursuant to section 14 of this act,
the renovation, reconstruction, or modernization of public school
facilities or capital improvements to remedy deferred maintenance,
including the replacement of roofs, windows, and systems for heating, cooling, or ventilating school facilities.
Sec. 5. Bond details.
(a) The Mayor is authorized to take any action reasonably
necessary or appropriate in accordance with this act in connection
with the preparation, execution, issuance, sale, delivery, security
for, and payment of the Bonds of each series, including, but not limited
to, determinations of
(1) The final form, content, designation, and terms of
the Bonds, including a determination that such Bonds may be issued in
certificated or book-entry form;(2) The principal amount of the Bonds to be issued and
denominations of the Bonds;
(3) The rate or rates of interest or the method for
determining the rate or rates of interest on the Bonds;(4) The date or dates of issuance, sale, and delivery of,
and the payment of interest on the Bonds, and the maturity date or dates of such Bonds;(5) The terms under which the Bonds may be paid,
optionally or mandatorily redeemed, accelerated, tendered, called, or
put for redemption, repurchase, or remarketing before their respective
stated maturities;(6) Provisions for the registration, transfer, and
exchange of the Bonds and the replacement of mutilated, lost, stolen, or destroyed
Bonds;(7) The creation of any reserve fund, sinking fund, or
other fund with respect to the Bonds;(8) The time and place of payment of the Bonds;
(9) Procedures for monitoring the use of the proceeds
received from the sale of the Bonds to ensure that the proceeds are
properly applied and used to accomplish the purposes of the Home Rule
Act and this act;(10) Actions necessary to qualify the Bonds under blue
sky laws of any jurisdiction where the Bonds are marketed; and(11) The terms and types of credit enhancement under
which the Bonds may be secured.
(b) The Bonds shall contain a legend, which shall provide
that the Bonds are special obligations of the District, are without
recourse to the District, are not a pledge of, and do not involve the
faith and credit or the taxing power of the District, do not constitute
a debt of the District, and do not constitute lending of the public
credit for private undertakings as prohibited in section 602(a)(2) of the Home Rule Act.
(c) The Bonds shall be executed in the name of the
District and on its behalf by the manual or facsimile signature of the
Mayor, and attested by the Secretary of the District by the
Secretary’s manual or facsimile signature. The Mayor’s execution
and delivery of the Bonds shall constitute conclusive evidence of the
Mayor’s approval, on behalf of the District, of the final form and
content of the Bonds.
(d) The official seal of the District, or a facsimile of
it, shall be impressed, printed, or otherwise reproduced on the Bonds.
(e) The Bonds of any series may be issued in accordance
with the terms of a trust instrument to be entered into by the
District and a trustee to be selected by the Mayor, and may be subject
to the terms of one or more agreements entered into by the Mayor
pursuant to section 490(a)(4) of the Home Rule Act.
(f) The Bonds may be issued at any time or from time to
time in one or more issues and in one or more series.
Sec. 6. Sale of the Bonds.
(a) The Bonds of any series may be sold at negotiated or
competitive sale at, above, or below par, to one or more persons or
entities, and upon terms that the Mayor considers to be in the best interest of the District.
(b) The Mayor or an Authorized Delegate may execute, in
connection with each sale of the Bonds, offering documents on behalf
of the District, may deem final any such offering document on behalf
of the District for purposes of compliance with federal laws and
regulations governing such matters and may authorize the distribution
of the documents in connection with the Bonds being sold.
(c) The Mayor is authorized to deliver the executed and
sealed Bonds, on behalf of the District, for authentication, and, after the Bonds have
been authenticated, to deliver the Bonds to the original purchasers of the Bonds upon payment of the
purchase price.
(d) The Bonds shall not be issued until the Mayor
receives an approving opinion from Bond Counsel as to the validity of
the Bonds of such series and, if the interest on the Bonds is expected
to be exempt from federal income taxation, the treatment of the
interest on the Bonds for purposes of federal income taxation.
(e) The District of Columbia Procurement Practices Act of
1985, effective February 21, 1986 (D.C. Law 6-85; D.C. Official Code
§ 2-301.01 et seq.)(“Procurement Act”), and the Financial
Institutions Deposit and Investment Amendment Act of 1998, effective
March 18, 1998 (D.C. Law 12-56; D.C. Official Code § 47-351.01 et
seq.)(“Deposit and Investment Act”), shall not apply to any
contract the Mayor may from time to time enter into for purposes of this
act or the Mayor may determine to be necessary or appropriate for
purposes of this act to place, in whole or in part:
(1) An investment or obligation of the District as
represented by the Bonds;
(2) An investment or obligation of program of investment;
or
(3) A contract or contracts based on the interest rate,
currency, cash flow, or other basis, including without limitation
interest rate swap agreements; currency swap agreements; insurance
agreements; forward payment conversion agreements; futures contracts
providing for payments based on levels of, or changes in, interest
rates, currency exchange rates, or stock or other indices; contracts
to exchange cash flows or a series of payments; and contracts to hedge payment, currency, rate, spread or similar exposure, including,
without limitation, interest rate floors, or caps, options, puts, and
calls. The contracts or other arrangements may also be entered into
by the District in connection with, or incidental to, entering into or
maintaining any agreement that secures the Bonds. The contracts or other
arrangements shall contain whatever payment security, terms, and
conditions as the Mayor may consider appropriate and shall be entered
into with whatever party or parties the Mayor may select, after giving
due consideration, where applicable, to the creditworthiness of the
counterparty or counterparties, including any rating by a nationally
recognized rating agency or any other criteria as may be appropriate. In
connection with, or incidental to, the issuance or holding of the
Bonds, or entering into any contract or other arrangement referred to
in this section, the District may enter into credit enhancement or
liquidity agreements, with payment, interest rate, termination date,
currency, security, default, remedy, any other terms and conditions as
the Mayor determines. Proceeds of the Bonds and any money set aside
and pledged to secure payment of the Bonds or any contract or other
arrangement entered into pursuant to this section may be pledged to and
used to service any contract or other arrangement entered into
pursuant to this section.
Sec. 7. Payment and security.
(a) Except as otherwise provided by law, the principal
of, premium, if any, and interest on the Bonds shall be payable
solely from proceeds received from the sale of the Bonds, income realized from the temporary investment of those proceeds, up to
$60,000,000 per annum in receipts and revenues realized by the
District from the Lottery and Charitable Games Fund, income realized
from the temporary investment of those receipts and revenues prior to
payment to the Bond owners, other moneys that, as provided in the
Financing Documents, may be made available to the District for the
payment of the Bonds, and other sources of payment (other than the
District), all as provided for in the Financing Documents.
(b) Payment of the Bonds shall be secured as provided in
the Financing Documents and by an assignment by the District for the
benefit of the Bond owners of certain of its rights under the Financing Documents and Closing Documents, including a
security interest in certain collateral, if any, to the trustee for the Bonds pursuant to the
Financing Documents.
(c) The trustee is authorized to deposit, invest, and
disburse the proceeds received from the sale of the Bonds pursuant to the Financing Documents.
Sec. 8. Financing and Closing Documents.
(a) The Mayor is authorized to prescribe the final form
and content of all Financing Documents and all Closing Documents to
which the District is a party that may be necessary or appropriate to
issue, sell, and deliver the Bonds. Each of the Financing Documents and
each of the Closing Documents to which the District is not a party
shall be approved, as to form and content, by the Mayor.
(b) The Mayor is authorized to execute, in the name of
the District and on its behalf, the Financing Documents and any
Closing Documents to which the District is a party by the Mayor’s manual or facsimile signature.
(c) If required, the official seal of the District, or a
facsimile of it, shall be impressed, printed, or otherwise reproduced
on the Bonds, the other Financing Documents, and the Closing Documents to which the District is a party.
(d) The Mayor’s execution and delivery of the Financing
Documents and the Closing Documents to which the District is a party
shall constitute conclusive evidence of the Mayor’s approval, on
behalf of the District, of the final form and content of the executed
Financing Documents and the executed Closing Documents, including
those Financing Documents and Closing Documents to which the District
is not a party.
(e) The Mayor is authorized to deliver the executed and
sealed Financing Documents and Closing Documents, on behalf of the District, prior to or
simultaneously with the issuance, sale, and delivery of the Bonds, and
to ensure the due performance of the obligations of the District
contained in the executed, sealed, and delivered Financing Documents
and Closing Documents.
Sec. 9. Authorized delegation of authority.
To the extent permitted by District and federal laws, the
Mayor may delegate to any Authorized Delegate the performance of any
function authorized to be performed by the Mayor under this act.
Sec. 10. Limited liability.
(a) The Bonds shall be special obligations of the
District. The Bonds shall be without recourse to the District. The
Bonds shall not be general obligations of the District, shall not be a pledge of or involve the faith and credit or the taxing power of the
District, shall not constitute a debt of the District, and shall not
constitute lending of the public credit for private undertakings as prohibited in section 602(a)(2) of the Home Rule Act.
(b) The Bonds shall not give rise to any pecuniary
liability of the District and the District shall have no obligation
with respect to the purchase of the Bonds.
(c) Nothing contained in the Bonds, in the Financing
Documents, or in the Closing Documents shall create an obligation on
the part of the District to make payments with respect to the Bonds
from sources other than those listed for that purpose in section 7.
(d) All covenants, obligations, and agreements of the
District contained in this act, the Bonds, and the executed, sealed,
and delivered Financing Documents and Closing Documents to which the District is a party, shall be considered to be the covenants,
obligations, and agreements of the District to the fullest extent
authorized by law, and each of those covenants, obligations, and
agreements shall
be binding upon the District, subject to the limitations
set forth in this act.
(e) No person, including, but not limited to any Bond
owner, shall have any claims against the District or any of its
elected or appointed officials, officers, employees, or agents for
monetary damages suffered as a result of the failure of the District
to perform any covenant, undertaking, or obligation under this act,
the Bonds, the Financing Documents, or the Closing Documents, nor as a result of the incorrectness of any representation in or omission from
the Financing Documents or the Closing Documents, unless the District
or its elected or appointed officials, officers, employees, or agents
have acted in a willful and fraudulent manner.
Sec. 11. District officials.
(a) Except as otherwise provided in section 10(e), the
elected or appointed officials, officers, employees, or agents of the
District shall not be liable personally for the payment of the Bonds or
be subject to any personal liability by reason of the issuance of the
Bonds, or for any representations, warranties, covenants,
obligations, or agreements of the District contained in this act, the
Bonds, the Financing Documents, or the Closing Documents.
(b) The signature, countersignature, facsimile signature,
or facsimile countersignature of any official appearing on the Bonds,
the Financing Documents, or the Closing Documents shall be valid and
sufficient for all purposes notwithstanding the fact that the individual
signatory ceases to hold that office before delivery of the Bonds,
the Financing Documents, or the Closing Documents.
Sec. 12. Maintenance of documents.
Copies of the specimen Bonds and of the final Financing
Documents and Closing Documents shall be filed in the Office of the
Secretary of the District.
Sec. 13. Information reporting.
Within 3 days after the Mayor’s receipt of the
transcript of proceedings relating to the issuance of the Bonds, the
Mayor shall transmit a copy of the transcript to the Secretary to the
Council and to the Board of Education.
Sec. 14. Multi-Year Facilities Plan.
(a) No later than October 1, 2006, the Board of Education
shall adopt a Multi-Year Facilities Plan to guide the modernization of
District of Columbia Public School facilities. For each proposed
project, the Multi-Year Facilities Plan shall include the scope of work
to be done, the estimated project cost, the construction start date,
and project completion date.
(b) No funds transferred to the Board of Education
pursuant to this act shall be spent except in accordance with the
Multi-Year Facilities Plan. The Board of Education may revise the
Multi-Year Facilities Plan.
(c) No later than October 1, 2007, and each year
thereafter until the completion of all projects designated in the
Multi-Year Facilities Plan, the District of Columbia Auditor shall
prepare an annual report to the public on the use of the funds during
the preceding fiscal year of the District of Columbia Public Schools.
The report shall include an audit of all expenditures of Bond proceeds
and an assessment of whether the District has met the objectives,
including the starting and ending dates for each phase of
construction and the completion of each project within its appropriated
budget and according to technical specifications, established by the
Multi-Year Facilities Plan. The report shall note all changes to the
Multi-Year Facilities Plan that alter the objectives or scope of any
project.
Sec. 15. Conforming amendments.
Subsection 4(c) of the Law to Legalize Lotteries, Daily
Numbers Games, and Bingo and Raffles for Charitable Purposes in the
District of Columbia, effective March 10, 1981 (D.C. Law 3-172; D.C.
Official Code § 3-1301 et seq.) is amended to read as follows:
“(c) From the Fund, the Board shall first pay for the
operation, administration, and capital expenses of the specific forms
of gambling operated and licensed by the Board as authorized by this chapter, including the payment of prizes to winners of games, as
specified in this chapter pursuant to regulations promulgated by the
Board. The Board shall next transfer funds, not to exceed $60,000,000
per annum, necessary for the repayment of any Bonds issued pursuant to
the School Modernization Financing Act of 2005. The remainder shall be
paid over by the Board, on a monthly basis promptly after the 1st of
the month for the preceding month, into the General Fund of the District
of Columbia as general purpose revenue funds of the District of
Columbia.”.
Sec. 16. Fiscal impact statement.
The Council adopts the fiscal impact statement in the
committee report as the fiscal impact statement required by section
602(c)(3) of the District of Columbia Home Rule Act, approved
December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(3)).
Sec. 17. Effective date.
This act shall take effect following approval by the
Mayor (or in the event of veto by the Mayor, action by the Council to
override the veto), a 30-day period of Congressional review as provided in section 602(c)(1) of the District of Columbia Home Rule Act,
approved December 24, 1973 (87 Stat. 813; D.C. Official Code §
1-206.02(c)(1)), and publication in the District of Columbia
Register.