KRS § 56.513 — KY Code / Title VII / Chapter 56 / Section 56.513
56.513 Interim financing -- Revenue bond anticipation notes -- Loan agreements -- Tax status
Status: in_force

56.513 Interim financing -- Revenue bond anticipation notes -- Loan agreements --

Tax status.

(1) When the State Property and Buildings Commission makes a determination, in

accordance with the provisions of this chapter, that one (1) or more building

projects or industrial development projects will be financed by the issuance of

revenue bonds, then in anticipation of such financing the commission may borrow

money to provide interim financing therefor and issue in evidence thereof its

revenue bond anticipation notes, bearing interest at a rate or rates not exceeding the

maximum rate permitted for the issuance of such bonds. Such interim financing

may be entered into for the commission's own projects, for those of the University

of Kentucky and the state colleges or universities or for any other agency of the

Commonwealth where approval by the commission is required regarding the

issuance of revenue bonds of such an agency. In instances where the revenue bonds

involved are to be issued by other agencies, such agencies, with the prior approval

of the commission, may borrow money in the same manner and for the same

purpose and issue in evidence thereof their own revenue bond anticipation notes,

according to rules and regulations promulgated by the commission.

(2) The commission shall solicit proposals for such interim financing from at least three

(3) responsible lenders, and shall select in its discretion the best of such proposals

consistent with sound financial practices. A selection may be made even though less

than three (3) proposals are received. The term of any such revenue bond

anticipation note shall not exceed five (5) years; and the same may be renewed, if

necessary.

(3) Each revenue bond anticipation note may include prepayment provisions which will

allow the commission or other borrowing agency to prepay the loan after giving

reasonable notice to the lender; shall identify the revenue bond issue from the

proceeds of which the note or notes and any interest thereon are to be paid; and

shall include a statement that the note is being issued in anticipation of the

identified revenue bond issue, and that neither the note, nor the interest thereon,

shall constitute or evidence an indebtedness of the Commonwealth of Kentucky.

Each such note and the interest thereon (to any extent not previously paid from

other sources) shall be paid from the proceeds of the identified revenue bond issue,

when such proceeds have been received and are available.

(4) Instead of borrowing money and issuing revenue bond anticipation notes in the full

amount necessary for construction contract purposes, the commission (or such

agencies with the prior approval of the commission and according to its rules and

regulations), may enter into loan agreements with one (1) or more lenders

(determined by the commission to be responsible) according to the terms of which it

may be agreed:

(a) That the lender will continuously make available to the borrowing agency a

stated maximum amount of money for a stated period of time;

(b) That the borrowing agency may demand and obtain cash advances against

such commitment from time to time upon reasonable and agreed notice, and

upon issuing in evidence of each advance a bond anticipation note which will

bear an agreed rate of interest, not exceeding the maximum rate permitted for

the issuance of the proposed bonds; and

(c) That in consideration of the making of such loan agreement the borrowing

agency will pay to the lender or lenders a commitment fee determined by the

commission to be reasonable according to financial conditions existing at the

time the loan agreement is made.

Such loan agreements may be recorded as receivables upon the books of account of

the commission, the secretary of the Finance and Administration Cabinet, or other

borrowing agency, and construction contracts may be awarded against the same to

the amount of money which the lender contractually agrees to make available to the

borrowing agency, the same as in the case of loan agreements made with

departments or agencies of the United States government.

(5) Each revenue bond anticipation note issued according to this section, and the receipt

of interest thereon, shall be exempt from all taxation by the Commonwealth and all

of its subdivisions, municipalities, and taxing authorities; and this may be stated as

a representation in the text of each such revenue bond anticipation note.

(6) The State Property and Building Commission and other state agencies authorized to

issue revenue bond anticipation notes under the terms of this section may, as an

alternative and if authorized to do so by the governing body of such commission or

agency, adopt the procedures for interim financing established for counties, cities,

and other municipal corporations, or their agencies, by KRS 58.150.