AS Title 37, Chapter 16: Alaska Pension Obligation Bond Corporation

Chapter 16. Alaska Pension Obligation Bond Corporation. Sec. 37.16.010. Alaska Pension Obligation Bond Corporation. There is established the Alaska Pension Obligation Bond Corporation. The corporation is a public corporation and government instrumentality in the Department of Revenue managed by a board of directors. The purpose of the corporation is to finance prepayment of all or a portion of a governmental employer's share of unfunded accrued actuarial liability of retirement systems. Sec. 37.16.020. Board of directors. The directors of the corporation are the commissioner of commerce, community, and economic development, the commissioner of administration, and the commissioner of revenue. If a director is absent or otherwise unable to act, the director's designee in the department shall act as a director of the corporation in the director's place. Sec. 37.16.030. Bond authorization. (a) For purposes of financing prepayment of all or a portion of a governmental employer's share of unfunded accrued actuarial liability of retirement systems, including the costs of issuance and administration, the issuance and sale of bonds by the corporation is authorized as provided in this section and AS 37.16.040 — 37.16.900, but only after submitting a proposal to the Legislative Budget and Audit Committee under (e) of this section and if the state bond rating is the equivalent of AA- or better. The net proceeds of the sale of the bonds remaining after payment of costs of issuance and administration shall be transferred to the commissioner of administration for the account of the governmental employer whose share of unfunded accrued actuarial liability is to be prepaid for application to that liability. Accrued interest paid on the bonds shall be paid into the reserve fund. (b) The total unpaid principal amount of bonds, including refunding bonds, but excluding refunded bonds, is limited as provided in AS 37.15.903 . The bonds do not constitute a general obligation of the state. Authorization by the voters of the state or the legislature is not required. (c) The corporation may enter into agreements with other state agencies as necessary or convenient to implement this section and AS 37.16.040 — 37.16.900. (d) The corporation may contract for the services of underwriters, paying agents, trustees, bond printers, rating agencies, bond insurance, credit enhancement providers, accountants, financial advisors, and bond counsel, and other services as are necessary to accomplish the bond issuance and sale. (e) Before the issuance and sale of bonds under this section, the corporation shall submit a proposal to the Legislative Budget and Audit Committee for review, and 45 days shall elapse before bonds are issued and sold, unless the Legislative Budget and Audit Committee earlier recommends that the corporation proceed with the issuance. Should the Legislative Budget and Audit Committee recommend within the 45-day period that the corporation not proceed with the issuance and sale of bonds, the corporation shall again review the proposal, and, if the corporation decides to issue and sell the bonds, the corporation shall provide the Legislative Budget and Audit Committee with a statement of the corporation's reasons for doing so before issuance under this section. Sec. 37.16.040. Reserve fund. (a) The corporation may establish and maintain a special fund called the Alaska Pension Obligation Bond Corporation reserve fund in which there shall be deposited or transferred (1) all money appropriated by the legislature for the purpose of the fund in accordance with the provisions of (g) of this section; (2) all proceeds of bonds required to be deposited in the fund by terms of a contract between the corporation and its bondholders or a resolution of the corporation with respect to the proceeds of bonds; (3) all other money appropriated by the legislature to the reserve fund; and (4) any other money or funds of the corporation that it decides to deposit in the fund. (b) Subject to the provisions of (h) of this section, money in the reserve fund shall be held and applied solely to the payment of the interest on and principal of bonds of the corporation as the interest and principal become due and payable to the retirement of bonds, or to the payment or prepayment of a portion of the participating governmental employer's share of the accrued actuarial liabilities of retirement systems. Money may not be withdrawn if a withdrawal would reduce the amount in the reserve fund to an amount less than the required debt service reserve except for payment of interest then due and payable on bonds and the principal of bonds then maturing and payable and for the retirement of bonds in accordance with the terms of a contract between the corporation and its bondholders and for which payments of other money of the corporation is not then available. (c) Money in the reserve fund in excess of the required debt service reserve as defined in (b) of this section, whether because of investment or otherwise, may be withdrawn at any time by the corporation to pay or prepay a portion of a participating governmental employer's share of the accrued actuarial liabilities of retirement systems or transferred to another fund or account of the corporation subject to the provision of (h) of this section. (d) Money in the reserve fund may be invested in the same manner and on the same conditions as permitted for investment of funds belonging to the state or held in the treasury under AS 37.10.070 ; however, the corporation may agree with the bondholders to further limit these investments. (e) For purposes of valuation, investments in the reserve fund shall be valued at par or, if purchased at less than par, at cost unless otherwise provided by resolution of the corporation. Valuation on a particular date shall include the amount of interest then earned or accrued to that date on the money or investments in the reserve fund. (f) Notwithstanding any other provision of this chapter, bonds may not be issued by the corporation unless there is in the reserve fund the required debt service reserve for all bonds then issued and outstanding and for the bonds to be issued; however, the corporation may satisfy this requirement by depositing as much of the proceeds of the bonds to be issued, on their issuance, as is needed to meet the required debt service reserve. The corporation may at any time issue its bonds or notes for the purpose of increasing the amount in the reserve fund to the required debt service reserve, or to meet whatever higher or additional reserve that may be fixed by the corporation with respect to the fund. (g) To assure the maintenance of the required debt service reserve in the reserve fund, the legislature may appropriate annually to the corporation for deposit in the fund the sum, certified by the chair of the corporation to the governor and to the legislature, that is necessary to restore the fund to an amount equal to the required debt service reserve. The chair annually, before January 30, shall make and deliver to the governor and to the legislature a certificate stating the sum required to restore the fund to that amount, and the certified sum may be appropriated and paid to the corporation during the then current state fiscal year. Nothing in this subsection creates a debt or liability of the state. (h) All amounts received because of money appropriated to the reserve fund shall be held and applied in accordance with (b) of this section. (i) All references to the reserve fund in this section include special accounts within the reserve fund that may be created by the corporation to secure the payment of particular bonds. (j) The commissioner of revenue may, subject to appropriation, lend surplus money in the general fund to the corporation for deposit to any account in the reserve fund in an amount equal to the required debt service reserve. The loans shall be made on the terms and conditions that may be agreed on by the commissioner of revenue and the corporation, including, without limitation, terms and conditions providing that the loans need not be repaid until the obligations of the corporation secured and to be secured by the account in the reserve fund are no longer outstanding. (k) In this section, “required debt service reserve” means, on the date of computation, the amount required to be on deposit in the reserve fund as provided by resolution of the corporation. Sec. 37.16.050. Bond terms. (a) The bonds may be issued and sold at public or negotiated sale in the manner, in the amounts or series, and at the time or times that the corporation determines the bonds, or each series of them, shall be sold at the price and on the terms, conditions, and covenants set by the corporation after considering market conditions. Interest rates may be fixed or variable. (b) The bonds mature at the time or times fixed by the corporation. The bonds may be subject to redemption before their fixed maturities, as determined by the corporation, with or without a premium or premiums. The bonds may be in denominations determined by the corporation; may be issued in fully or partially registered form; must be payable as to principal and interest at the place or places determined by the corporation; must be signed in the manner provided by the corporation; and must be issued under and subject to the terms, conditions, covenants, and protective features safeguarding payment of the bonds as found necessary by the corporation. (c) If the corporation finds it reasonably necessary, the corporation may select a trustee or trustees for the holders of the bonds, or any series of them, for the safeguarding and disbursement of any of the money in the bond reserve fund or for duties with respect to the enforcement, authentication, delivery, payment, and registration of the bonds as the corporation may determine. The corporation shall fix the rights, duties, powers, and obligations of the trustee or trustees. (d) In its determination of all matters and questions relating to the issuance and sale of the bonds and the fixing of their maturities, terms, conditions, and covenants as provided in (a) of this section, the decisions of the corporation shall be those that are reasonably necessary for the best interests of the state and its inhabitants and that will accomplish the most advantageous sale of the bonds. Decisions of the corporation, as expressed in a bond resolution, are final and are conclusively considered to comply with the requirements of this chapter. Sec. 37.16.060. Bond resolution. The corporation shall authorize the issuance of bonds by adopting a resolution and shall prepare all other documents and proceedings necessary for the issuance, sale, and delivery of the bonds or any part or series of them. The bond resolution must fix the principal amount, denominations, date, maturities, manner of sale, place or places of payment, rights of redemption, if any, terms, form, conditions, and covenants of the bonds or each series of them. Sec. 37.16.070. Enforcement by bond owner. (a) The owner or owners of not less than 10 percent of the aggregate principal amount of any series or issue of bonds or the trustee for the owners of the bonds or any series of them may, by appropriate proceedings in state court, require and compel the transfer, setting aside, and payment of money and the enforcement of all of the terms, conditions, and covenants as required and provided in this chapter, as appropriate, and the bond resolution. (b) A proceeding under (a) of this section may be commenced and conducted only in the Superior Court for the State of Alaska, First Judicial District at Juneau. Sec. 37.16.080. Purposes and sufficiency of revenue. The proceeds of bonds may be used for the purposes described in AS 37.16.030 (a), as appropriate. Bonds may not be issued unless the corporation first finds that the actuarially assumed rate of return on the funds managed by the Alaska Retirement Management Board is projected to exceed the true interest cost to be paid on the bonds by at least 1.5 percent annually. Sec. 37.16.090. Refunding. (a) The corporation may refund the bonds or any part of them at or before their maturities or redemption dates by the issuance of refunding bonds of the corporation if the state bond rating is the equivalent of AA- or better and if, in the opinion of the corporation, refunding is advantageous to and in the best interest of the state and its inhabitants. (b) The issuance of refunding bonds need not be authorized by the voters of the state or by an act of the legislature. The corporation shall adopt the resolution or resolutions and prepare all other documents and proceedings necessary for the issuance, exchange or sale, and delivery of the refunding bonds. All provisions of this chapter are applicable to the refunding bonds and to the issuance, sale, or exchange of them, except as otherwise provided in this section. (c) Refunding bonds may be issued in a principal amount sufficient to provide money for the advance or current refunding of all bonds to be refunded and interest on the refunded bonds and, in addition, for the payment of all costs of issuance and administration of the refunding bonds. These expenses also include the difference in amount between the par value of the refunding bonds and any amount less than par for which the refunding bonds are sold; the premium, if any, necessary to be paid to call or retire the outstanding bonds and the interest accruing on them to the date of the call or retirement; and other of these costs. The corporation is authorized to incur expenses to carry out this section. (d) The corporation may contract with a refunding trustee to hold the proceeds of refunding bonds in trust until the proceeds, together with earnings on the proceeds, are applied to pay the principal of premium, if any, and interest on the bonds to be refunded. Until the refunding bond proceeds are applied, the proceeds may be invested in direct obligations of, or obligations guaranteed by, the United States or an agency or corporation of the United States whose obligations constitute direct obligations of, or obligations guaranteed by, the United States. Sec. 37.16.100. Bonds as legal investments. The bonds are legal investments for all banks, trust companies, savings banks, savings and loan associations, and other persons carrying on a banking business, all insurance companies and other persons carrying on an insurance business, and all executors, administrators, trustees, and other fiduciaries. The bonds may be accepted as security for deposits of all money of the state and its political subdivisions. Sec. 37.16.110. Debt service repayment contracts. The corporation shall enter into contracts with governmental employers for the purpose of recouping amounts paid as debt service on bonds issued by the corporation for the benefit of governmental employers. The corporation may pledge the revenue of the contracts as security for the bonds issued by the corporation. Sec. 37.16.800. Statutory construction. This chapter shall be liberally construed to carry out the purposes for which it was enacted. Sec. 37.16.810. Regulations. The corporation may adopt regulations necessary to implement the provisions of this chapter. Sec. 37.16.900. Definitions. In this chapter, (1) “bond resolution” means the resolution or resolutions adopted by the corporation under AS 37.16.060 authorizing the issuance of bonds; (2) “bonds” means the pension obligation bonds authorized in this chapter; (3) “corporation” means the Alaska Pension Obligation Bond Corporation created in AS 37.16.010 ; (4) “costs of issuance and administration” means all costs associated with issuance and administration of pension obligation bonds and refunding bonds, including costs of bond printing, official statements, financial advisors, travel costs, rating agencies, bond insurance, letters and lines of credit for credit enhancement, underwriters, legal services, paying agents, bonds registrars, bond and escrow trustees, arbitrage rebate, and all other costs, including administrative costs, both direct and indirect; (5) “reserve fund” means the Alaska Pension Obligation Bond Corporation reserve fund established in AS 37.16.040 .