§632a. Reserve and pledged equity funds

Link to law: http://legislature.vermont.gov/statutes/section/10/025/00632a
Published: 2015

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Title

10

:
Conservation and Development






Chapter

025

:
VERMONT HOUSING FINANCE AGENCY






Subchapter

004
:
FORM AND NATURE OF BONDS AND NOTES










 

§

632a. Reserve and pledged equity funds

(a) The Agency

may create and establish one or more special funds, herein referred to as

"debt service reserve funds" or "pledged equity funds."

(b) The Agency

shall pay into each debt service reserve fund:

(1) Any monies

appropriated and made available by the State for the purpose of such fund.

(2) Any proceeds

of the sale of notes, bonds, or other debt instruments to the extent provided

in the resolution or resolutions of the Agency authorizing their issuance.

(3) Any other

monies or financial instruments such as surety bonds, letters of credit, or

similar obligations which may be made available to the Agency for the purpose

of such Fund from any other source or sources. All moneys or financial

instruments held in any debt service reserve fund created and established under

this section except as hereinafter provided shall be used, as required, solely

for the payment of the principal of the bonds, notes, or other debt instruments

secured in whole or in part by such fund or of the payments with respect to the

bonds, notes, or other debt instruments specified in any resolution of the

Agency as a sinking fund payment, the purchase or redemption of the bonds, the

payment of interest on the bonds, notes, or other debt instruments, or the

payment of any redemption premium required to be paid when the bonds, notes, or

other debt instruments are redeemed prior to maturity, or to reimburse the

issuer of a liquidity or credit facility, bond insurance, or other credit

enhancement for the payment by such party of any of the foregoing amounts on

the Agency's behalf; provided, however, that the monies or financial

instruments in any such debt reserve fund shall not be drawn upon or withdrawn

therefrom at any time in such amounts as would reduce the amount of such funds

to less than the debt service reserve requirement established by resolution of

the Agency for such fund as provided in this section except for the purpose of

paying, when due, with respect to bonds secured in whole or in part by such

fund, the principal, interest, redemption premiums, and sinking fund payments

and of reimbursing, when due, the issuer of any credit enhancement for any such

payments made by it, for the payment of which other monies of the Agency are not

available. Any income or interest earned by or increment to any debt service

reserve fund due to the investment thereof may be transferred by the Agency to

other funds or accounts of the Agency to the extent it does not reduce the

amount of such debt service reserve fund below the debt service reserve

requirement for such fund.

(c) The Agency

shall pay into each pledged equity fund:

(1) Any monies

appropriated and made available by the State for the purpose of such fund.

(2) Any proceeds

of the sale of notes, bonds, or other debt instruments to the extent provided

in the resolution or resolutions of the Agency authorizing the issuance

thereof.

(3) Any other

monies or financial instruments such as surety bonds, letters of credit, or

similar obligations which may be made available to the Agency for the purpose

of such fund from any other source or sources. All monies or financial

instruments held in any pledged equity fund created and established under this

section except as provided in this section shall be used, as required, solely

to provide pledged equity or over-collateralization of any trust estate of the

Agency to the issuer of a liquidity or credit facility, bond insurance, or

other credit enhancement obtained by the Agency; provided, however, that the monies

or financial instruments in any pledged equity fund shall not be drawn upon or

withdrawn from such fund at any time in such amounts as would reduce the amount

of such funds to less than the pledged equity requirement established by

resolution of the Agency for such fund as provided in this section except for

the purposes set forth in and in accordance with the governing resolution. Any

income or interest earned by or increment to any pledged equity fund due to the

investment thereof may be transferred by the Agency to other funds or accounts

of the Agency to the extent it does not reduce the amount of such pledged

equity fund below the requirement for such fund. Anything in this subdivision

to the contrary notwithstanding, upon the defeasance of the bonds, notes, or

other debt instruments with respect to which the pledged equity requirement was

established, the Agency may transfer amounts in such fund to another fund or

account of the Agency proportionately to the amount of such defeasance;

provided that the Agency shall repay to the State any amount appropriated by

the State pursuant to subsection (f) of this section.

(d) The debt

service reserve and pledged equity requirements for any fund established under

this section shall be established by resolution of the Agency prior to the

issuance of any bonds, notes, or other debt instruments secured in whole or in

part by a debt service reserve fund or prior to entering into any credit

enhancement agreement and shall be the amount determined by the Agency to be

reasonably required in light of the facts and circumstances of the particular

debt issue or credit enhancement; provided that the maximum amount of the

State's commitment with respect to any Pledged equity fund shall be determined

by the Agency at or prior to entering into any credit enhancement agreement

related to such pledged equity fund. The Agency shall not at any time issue

bonds, notes, or other debt instruments secured in whole or in part by a debt

service reserve fund or enter into any credit enhancement agreement that

requires establishment of a pledged equity fund created and established under

this section unless:

(1) the Agency

at the time of such issuance or execution shall deposit in such fund from the

proceeds of such bonds, notes, or other debt instruments or from other sources

an amount which, together with the amount then in such fund, will not be less

than the requirement established for such fund at that time;

(2) the Agency

has made a determination at the time of the authorization of the issuance of

such bonds, notes, or other debt instruments or at the time of entering into

such credit enhancement agreement that the Agency will derive revenues or other

income from the mortgage loans that secure such bonds, notes, or other debt

instruments or that relate to any credit enhancement agreement sufficient to

provide, together with all other available revenues and income of the Agency

other than any amounts appropriated by the State pursuant to this section for

the payment or purchase of such bonds, notes, and other debt instruments and

reimbursement to the issuer of any credit enhancement the payment of any

expected deposits into any pledged equity fund established with respect to such

credit enhancement, and the payment of all costs and expenses incurred by the

Agency with respect to the program or purpose for which such bonds, notes, or

other debt instruments are issued; and

(3) the State

Treasurer or his or her designee has provided written approval to the Agency

that the Agency may issue such bonds, notes, or other debt instruments and

enter into any related credit enhancement agreement.

(e) In computing

the amount of the debt service reserve or pledged equity funds for the purpose

of this section, securities in which all or a portion of such funds shall be

invested shall be valued at par if purchased at par or at amortized value, as

that term is defined by resolution of the Agency, if purchased at other than

par.

(f) In order to

ensure the maintenance of the debt service reserve fund requirement in each

debt service reserve fund established by the Agency under this section, there

may be appropriated annually and paid to the Agency for deposit in each fund a

sum as shall be certified by the Chair of the Agency to the Governor, the

President of the Senate, and the Speaker of the House as is necessary to

establish or restore each such debt service reserve fund to an amount equal to

the requirement for each such fund. The Chair shall annually, on or about

February 1, make, execute, and deliver to the Governor, the President of the

Senate, and the Speaker of the House a certificate stating the sum required to

restore each such fund to the amount required by this section, and the Governor

shall, on or before March 1, submit a request for appropriations in the amount

so certified, and such amount may be appropriated and, if appropriated, shall

be paid to the Agency during the then current State fiscal year. In order to

ensure the funding of the pledged equity fund requirement in each pledged

equity fund established by the Agency under this section at the time and in the

amount determined at the time of entering into any credit enhancement agreement

related to a pledged equity fund, there may be appropriated and paid to the

Agency for deposit in each fund a sum as shall be certified by the Chair of the

Agency to the Governor, the President of the Senate, and the Speaker of the

House as is necessary to establish each pledged equity fund to an amount equal

to the amount determined by the Agency at the time of entering into any credit

enhancement agreement related to a pledged equity fund; provided that the

amount requested, together with any amounts previously appropriated pursuant to

this subsection for a particular pledged equity fund, shall not exceed the

maximum amount of the State's commitment as determined by the Agency pursuant

to subsection (d) of this section. The Chair shall, on or about the February 1

next following the designated date for fully funding a pledged equity fund,

make, execute, and deliver to the Governor, the President of the Senate, and

the Speaker of the House a certificate stating the sum required to bring each

fund to the amount required by this section or to otherwise satisfy the State's

commitment with respect to each fund, and the Governor shall, on or before

March 1, submit a request for appropriations in the amount so certified, and

such amount may be appropriated and, such amount, if appropriated, shall be

paid to the Agency during the then current State fiscal year. The combined

principal amount of bonds, notes, and other debt instruments outstanding at any

time and secured in whole or in part by a debt service reserve fund established

under this section and the aggregate commitment of the State to fund pledged

equity funds pursuant to this subsection shall not exceed $155,000,000.00 at

any time, provided that the foregoing shall not impair the obligation of any

contract or contracts entered into by the Agency in contravention of the

Constitution of the United States. Notwithstanding anything in this section to

the contrary, the State's obligation with respect to funding any pledged equity

fund shall be limited to its maximum commitment, as determined by the Agency

pursuant to subsection (d) of this section, and the State shall have no other

obligation to replenish or maintain any pledged equity fund. (Added 2009, No. 1

(Sp. Sess.), § H.14, eff. June 2, 2009; amended 2011, No. 40, § 55, eff. May

20, 2011.)
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