Amendment SSA1-SB40

SB40-SSA1,59,17 c. The aspects of risk exposure associated with the agreements.

SB40-SSA1,59,18 d. The standards and procedures for counterparty selection.

SB40-SSA1,59,20 e. The standards for the procurement of, and the setting aside of reserves, if any, in connection with, the agreements.

SB40-SSA1,59,22 f. The provisions, if any, for collateralization or other requirements for securing any counterparty's obligations under the agreements.

SB40-SSA1,59,24 g. A system for financial monitoring and periodic assessment of the agreements.

SB40-SSA1, s. 142 Section 142. 18.06 (8) (ar) of the statutes is created to read:

SB40-SSA1,60,3 18.06 (8) (ar) 1. Subject to subd. 2., the terms and conditions of an interest exchange agreement under par. (a) shall not be structured so that, as of the trade date of the agreement, both of the following are reasonably expected to occur:

SB40-SSA1,60,8 a. The aggregate expected debt service and net exchange payments relating to the agreement during the fiscal year in which the trade date occurs will be less than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable during that fiscal year if the agreement is not executed.

SB40-SSA1,60,12 b. The aggregate expected debt service and net exchange payments relating to the agreement in subsequent fiscal years will be greater than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable in those fiscal years if the agreement is not executed.

SB40-SSA1,60,13 2. Subd. 1. shall not apply if either of the follow occurs:

SB40-SSA1,60,17 a. The commission receives a determination by the independent financial consulting firm under par. (am) 1. that the terms and conditions of the agreement reflect payments by the state that represent on-market rates as of the trade date for the particular type of agreement.

SB40-SSA1,60,22 b. The commission provides written notice to the joint committee on finance of its intention to enter into an agreement that is reasonably expected to satisfy subd. 1., and the joint committee on finance either approves or disapproves, in writing, the commission's entering into the agreement within 14 days of receiving the written notice from the commission.

SB40-SSA1,60,25 3. This paragraph shall not limit the liability of the state under an agreement if actual contracted net exchange payments in any fiscal year are less than or exceed original expectations.

SB40-SSA1, s. 143 Section 143. 18.06 (8) (b) of the statutes is amended to read:

SB40-SSA1,61,4 18.06 (8) (b) The commission may delegate to other persons the authority and responsibility to take actions necessary and appropriate to implement agreements and ancillary arrangements under par. pars. (a) and (am).

SB40-SSA1, s. 144 Section 144. 18.06 (8) (d) of the statutes is created to read:

SB40-SSA1,61,10 18.06 (8) (d) Semiannually, during any year in which the state is a party to an agreement entered into pursuant to par. (a) (intro.), the department of administration shall submit a report to the commission and to the cochairpersons of the joint committee on finance listing all such agreements. The report shall include all of the following:

SB40-SSA1,61,12 1. A description of each agreement, including a summary of its terms and conditions, rates, maturity, and the estimated market value of each agreement.

SB40-SSA1,61,14 2. An accounting of amounts that were required to be paid and received on each agreement.

SB40-SSA1,61,16 3. Any credit enhancement, liquidity facility, or reserves, including an accounting of the costs and expenses incurred by the state.

SB40-SSA1,61,17 4. A description of the counterparty to each agreement.

SB40-SSA1,61,19 5. A description of the counterparty risk, the termination risk, and other risks associated with each agreement.

SB40-SSA1, s. 145 Section 145. 18.08 (1) (a) of the statutes is renumbered 18.08 (1) (a) (intro.) and amended to read:

SB40-SSA1,62,2 18.08 (1) (a) (intro.) All moneys resulting from the contracting of public debt or any payment to be received with respect to any agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt shall be credited to a separate and distinct fund, established in the state treasury, designated as the capital improvement fund, except that such:

SB40-SSA1,62,6 1. Such moneys which represent premium and accrued interest on bonds or notes issued, or are for purposes of funding or refunding bonds pursuant to s. 18.06 (5), shall be credited to one or more of the sinking funds of the bond security and redemption fund or to the state building trust fund.

SB40-SSA1, s. 146 Section 146. 18.08 (1) (a) 2. of the statutes is created to read:

SB40-SSA1,62,12 18.08 (1) (a) 2. Any such moneys that represent premium or any payments received pursuant to any agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt may be credited to one or more of the sinking funds of the bond security and redemption fund or to the capital improvement fund, as determined by the commission.

SB40-SSA1, s. 147 Section 147. 18.08 (2) of the statutes is amended to read:

SB40-SSA1,62,20 18.08 (2) The capital improvement fund may be expended, pursuant to appropriations, only for the purposes and in the amounts for which the public debts have been contracted, for the payment of principal and interest on loans or on notes, for the payment due, if any, under an agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt, for the purposes identified under s. 20.867 (2) (v) and (4) (q), and for expenses incurred in contracting public debt.

SB40-SSA1, s. 148 Section 148. 18.08 (4) of the statutes is amended to read:

SB40-SSA1,63,5 18.08 (4) If at any time it appears that there will not be on hand in the capital improvement fund sufficient moneys for the payment of principal and interest on loans or on notes or for the payment due, if any, under an agreement or ancillary arrangement that has been entered into under s. 18.06 (8) (a) with respect to any public debt and that has been determined to be payable from the capital improvement fund under s. 18.06 (8) (a) 2., the department of administration shall transfer to such fund, out of the appropriation made pursuant to s. 20.866, a sum sufficient which, together with any available money on hand in such fund, is sufficient to make such payment.

SB40-SSA1, s. 149 Section 149. 18.09 (2) of the statutes is amended to read:

SB40-SSA1,63,13 18.09 (2) Each sinking fund shall be expended, and all moneys from time to time on hand therein are irrevocably appropriated, in sums sufficient, only for the payment of principal and interest on the bonds giving rise to it and, premium, if any, due upon refunding redemption of any such bonds, and payment due, if any, under an agreement or ancillary arrangement that has been entered into under s. 18.06 (8) (a) with respect to any such bonds and that has been determined to be payable from the bond security and redemption fund under s. 18.06 (8) (a) 2.

SB40-SSA1, s. 150m Section 150m. 18.52 (1c) of the statutes is created to read:

SB40-SSA1,63,16 18.52 (1c) "Aggregate expected debt service and net exchange payments" means the sum of the following:

SB40-SSA1,63,18 (a) The aggregate net payments expected to be made and received under a specified interest exchange agreement under s. 18.55 (6) (a).

SB40-SSA1,63,20 (b) The aggregate debt service expected to be made on obligations related to that agreement.

SB40-SSA1,63,23 (c) The aggregate net payments expected to be made and received under all other interest exchange agreements under s. 18.55 (6) (a) relating to those obligations that are in force at the time of executing the agreement.

SB40-SSA1, s. 151 Section 151. 18.55 (6) (a) of the statutes is amended to read:

SB40-SSA1,64,12 18.55 (6) (a) At Subject to pars. (d) and (e), at the time of, or in anticipation of, contracting revenue obligations and at any time thereafter while the revenue obligations are outstanding, the commission may enter into agreements and ancillary arrangements relating to the revenue obligations, including trust indentures, liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. Any payment made or received pursuant to any such agreements or ancillary arrangements shall be made from or deposited into a fund relating to the relevant revenue obligation, as determined by the commission. The determination of the commission included in an interest exchange agreement that such an agreement relates to a revenue obligation shall be conclusive.

SB40-SSA1, s. 151c Section 151c. 18.55 (6) (d) of the statutes is created to read:

SB40-SSA1,64,15 18.55 (6) (d) With respect to any interest exchange agreement or agreements specified in par. (a), all of the following shall apply:

SB40-SSA1,64,18 1. The commission shall contract with an independent financial consulting firm to determine if the terms and conditions of the agreement reflect a fair market value, as of the proposed date of the execution of the agreement.

SB40-SSA1,64,22 2. The interest exchange agreement must identify by maturity, bond issue, or bond purpose the obligation to which the agreement is related. The determination of the commission included in an interest exchange agreement that such agreement relates to an obligation shall be conclusive.

SB40-SSA1,65,2 3. The resolution authorizing the commission to enter into any interest exchange agreement shall require that the terms and conditions of the agreement reflect a fair market value as of the date of execution of the agreement, as reflected by the determination of the independent financial consulting firm under subd. 1., and shall establish guidelines for any such agreement, including the following:

SB40-SSA1,65,3 a. The conditions under which the commission may enter into the agreements.

SB40-SSA1,65,4 b. The form and content of the agreements.

SB40-SSA1,65,5 c. The aspects of risk exposure associated with the agreements.

SB40-SSA1,65,6 d. The standards and procedures for counterparty selection.

SB40-SSA1,65,8 e. The standards for the procurement of, and the setting aside of reserves, if any, in connection with, the agreements.

SB40-SSA1,65,10 f. The provisions, if any, for collateralization or other requirements for securing any counterparty's obligations under the agreements.

SB40-SSA1,65,12 g. A system for financial monitoring and periodic assessment of the agreements.

SB40-SSA1, s. 151h Section 151h. 18.55 (6) (e) of the statutes is created to read:

SB40-SSA1,65,16 18.55 (6) (e) 1. Subject to subd. 2., the terms and conditions of an interest exchange agreement under par. (a) shall not be structured so that, as of the trade date of the agreement, both of the following are reasonably expected to occur:

SB40-SSA1,65,21 a. The aggregate expected debt service and net exchange payments relating to the agreement during the fiscal year in which the trade date occurs will be less than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable during that fiscal year if the agreement is not executed.

SB40-SSA1,65,25 b. The aggregate expected debt service and net exchange payments relating to the agreement in subsequent fiscal years will be greater than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable in those fiscal years if the agreement is not executed.

SB40-SSA1,66,1 2. Subdivision 1. shall not apply if either of the follow occurs:

SB40-SSA1,66,5 a. The commission receives a determination by the independent financial consulting firm under par. (d) 1. that the terms and conditions of the agreement reflect payments by the state that represent on-market rates as of the trade date for the particular type of agreement.

SB40-SSA1,66,10 b. The commission provides written notice to the joint committee on finance of its intention to enter into an agreement that is reasonably expected to satisfy subd. 1., and the joint committee on finance either approves or disapproves, in writing, the commission's entering into the agreement within 14 days of receiving the written notice from the commission.

SB40-SSA1,66,13 3. This paragraph shall not limit the liability of the state under an agreement if actual contracted net exchange payments in any fiscal year are less than or exceed original expectations.

SB40-SSA1, s. 151p Section 151p. 18.55 (6) (f) of the statutes is created to read:

SB40-SSA1,66,18 18.55 (6) (f) Semiannually, during any year in which the state is a party to an agreement entered into pursuant to par. (a), the department of administration shall submit a report to the commission and to the cochairpersons of the joint committee on finance listing all such agreements. The report shall include all of the following:

SB40-SSA1,66,20 1. A description of each agreement, including a summary of its terms and conditions, rates, maturity, and the estimated market value of each agreement.

SB40-SSA1,66,22 2. An accounting of amounts that were required to be paid and received on each agreement.

SB40-SSA1,66,24 3. Any credit enhancement, liquidity facility, or reserves, including an accounting of the costs and expenses incurred by the state.

SB40-SSA1,66,25 4. A description of the counterparty to each agreement.

SB40-SSA1,67,2 5. A description of the counterparty risk, the termination risk, and other risks associated with each agreement.

SB40-SSA1, s. 151s Section 151s. 18.71 (1) of the statutes is renumbered 18.71 (1m).

SB40-SSA1, s. 151v Section 151v. 18.71 (1d) of the statutes is created to read:

SB40-SSA1,67,6 18.71 (1d) "Aggregate expected debt service and net exchange payments" means the sum of the following:

SB40-SSA1,67,8 (a) The aggregate net payments expected to be made and received under a specified interest exchange agreement under s. 18.73 (5) (a).

SB40-SSA1,67,10 (b) The aggregate debt service expected to be made on notes related to that agreement.

SB40-SSA1,67,13 (c) The aggregate net payments expected to be made and received under all other interest exchange agreements under s. 18.73 (5) (a) relating to those notes that are in force at the time of executing the agreement.

SB40-SSA1, s. 152 Section 152. 18.73 (5) of the statutes is created to read:

SB40-SSA1,68,2 18.73 (5) Agreements and arrangements; delegation; use of operating notes. (a) Subject to pars. (d) and (e), at the time of, or in anticipation of, contracting operating notes and at any time thereafter while the operating notes are outstanding, the commission may enter into agreements and ancillary arrangements relating to the operating notes, including liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. Any payment received pursuant to any such agreements or ancillary arrangements shall be deposited in, and any payments made pursuant to any such agreements or ancillary arrangements will be made from, the general fund or the operating note redemption fund, as determined by the commission. The determination of the commission included in an interest exchange agreement that such an agreement relates to an operating note shall be conclusive.

SB40-SSA1,68,5 (b) The commission may delegate to other persons the authority and responsibility to take actions necessary and appropriate to implement agreements and ancillary arrangements under par. (a).

SB40-SSA1,68,7 (c) Any operating notes may include operating notes contracted to fund interest, accrued or to accrue, on the operating notes.

SB40-SSA1,68,9 (d) With respect to any interest exchange agreement or agreements specified in par. (a), all of the following shall apply:

SB40-SSA1,68,12 1. The commission shall contract with an independent financial consulting firm to determine if the terms and conditions of the agreement reflect a fair market value, as of the proposed date of the execution of the agreement.

SB40-SSA1,68,15 2. The interest exchange agreement must identify the note to which the agreement is related. The determination of the commission included in an interest exchange agreement that such agreement relates to a note shall be conclusive.

SB40-SSA1,68,20 3. The resolution authorizing the commission to enter into any interest exchange agreement shall require that the terms and conditions of the agreement reflect a fair market value as of the date of execution of the agreement, as reflected by the determination of the independent financial consulting firm under subd. 1., and shall establish guidelines for any such agreement, including the following:

SB40-SSA1,68,21 a. The conditions under which the commission may enter into the agreements.

SB40-SSA1,68,22 b. The form and content of the agreements.

SB40-SSA1,68,23 c. The aspects of risk exposure associated with the agreements.

SB40-SSA1,68,24 d. The standards and procedures for counterparty selection.

SB40-SSA1,69,2 e. The standards for the procurement of, and the setting aside of reserves, if any, in connection with, the agreements.

SB40-SSA1,69,4 f. The provisions, if any, for collateralization or other requirements for securing any counterparty's obligations under the agreements.

SB40-SSA1,69,6 g. A system for financial monitoring and periodic assessment of the agreements.

SB40-SSA1,69,13 (e) 1. Subject to subd. 2., the terms and conditions of an interest exchange agreement under par. (a) shall not be structured so that, as of the trade date of the agreement, the aggregate expected debt service and net exchange payments relating to the agreement during the fiscal year in which the trade date occurs will be less than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable during that fiscal year if the agreement is not executed.