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The Vermont Statutes Online
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instruments in any such debt reserve fund shall not be drawn upon or withdrawn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.)
