Section 18.06. Procedures.

 

(1)   Authorizing resolution. No public debt may be contracted nor evidence of indebtedness issued by the state except pursuant to an authorizing resolution. Each authorizing resolution shall state each purpose of the debt it authorizes, which need not be more specific but shall not be more general than those purposes in or pursuant to law, and the maximum principal amount of debt authorized for each such purpose. The commission may amend at any time any purpose authorized by a resolution if the amendment does not cause the total amount of debt for that purpose to exceed the statutory limit on the issuance of debt for that purpose.

(2)   Loan. An authorizing resolution may authorize the negotiation of a loan or loan agreement of any type, upon any terms, with any bank, savings and loan association, savings bank or credit union, or with any agency of the United States.

(3)   Notes. An authorizing resolution may authorize the issuance and sale of notes. Such a sale may be public or private as provided in the authorizing resolution.

(4)   Bonds. An authorizing resolution may authorize the issuance and sale of bonds. Except as provided in subs. (5) , (7) and (9) and except for any bond authorized and issued under this subchapter and designated by the commission under s. 18.82 as a higher education bond, the sale of bonds shall be public and noticed as provided in the authorizing resolution. Any or all bids received may be rejected and the sale canceled, or the sale of all or any part of the bonds negotiated, after bids at public sale have been rejected.

(5)   Funding and refunding. An authorizing resolution may authorize, for any one or more of the purposes described in s. 18.04 (1) , the issuance and sale of notes as provided in sub. (3) or the issuance and sale of bonds as provided in sub. (4) . That sale may be public or private as provided in the authorizing resolution, and public debt may be exchanged in payment of or for the acquisition of other public debt.

(6)   Exercise of authority. Public debt may be contracted and evidence of indebtedness issued therefor under one or more authorizing resolutions, unless otherwise provided in the resolution, at any time and from time to time, for any combination of purposes, in any specific amounts, at any rates of interest, at any price or percentage of par value, for any term, payable at any intervals, at any place, in any manner and having any other terms or conditions deemed necessary or useful. A resolution authorizing the contracting of public debt may provide that the public debt bear interest at variable or fixed rates, bear no interest, bear interest payable at any time or bear interest payable only at maturity or upon redemption prior to maturity. Unless sooner exercised and unless a shorter period is provided in such resolution, every authorizing resolution shall expire one year after the date of its adoption.

(7)   Special procedures. Notwithstanding subs. (2) to (5) , the following procedures apply to public debt contracted for any of the purposes under s. 18.04 (5) or contracted for the purpose of making funds available for veterans housing loans:

(a) The public debt may be sold at public or private sale.

(b) The public debt may be exchanged publicly or privately in payment of or for the acquisition of other public debt.

(c) The public debt may be sold for par value or at a premium or discount from par value.

(d) The public debt may bear interest at variable or fixed rates as provided in or pursuant to the resolution authorizing the contracting of the public debt or, if the resolution so provides, may bear no interest, bear interest payable at any time or bear interest payable only at maturity or upon redemption prior to maturity.

(8)   Public debt, agreements.

(a) Subject to pars. (am) and (ar) , at the time of, or in anticipation of, contracting public debt and at any time thereafter while the public debt is outstanding, the commission may enter into agreements and ancillary arrangements relating to the public debt, including liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. The commission shall determine all of the following, if applicable, with respect to any such agreement or ancillary arrangement:

1. For any payment to be received with respect to the agreement or ancillary arrangement, whether the payment will be deposited into the bond security and redemption fund or the capital improvement fund.

2. For any payment to be made with respect to the agreement or ancillary arrangement, whether the payment will be made from the bond security and redemption fund or the capital improvement fund and the timing of any transfer of funds.

(am) With respect to any interest exchange agreement or agreements specified in par. (a) , all of the following shall apply:

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.

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

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:

a. The conditions under which the commission may enter into the agreements.

b. The form and content of the agreements.

c. The aspects of risk exposure associated with the agreements.

d. The standards and procedures for counterparty selection.

e. The standards for the procurement of, and the setting aside of reserves, if any, in connection with, the agreements.

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

g. A system for financial monitoring and periodic assessment of the agreements.

(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:

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.

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.

2. Subdivision 1. shall not apply if either of the following occurs:

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.

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.

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.

(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 pars. (a) and (am) .

(c) Any public debt may include public debt contracted to fund interest, accrued or to accrue, on the public debt.

(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:

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

2. An accounting of amounts that were required to be paid and received on each agreement.

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

4. A description of the counterparty to each agreement.

5. A description of the counterparty risk, the termination risk, and other risks associated with each agreement.

(9)   Clean water fund program bonds. Notwithstanding sub. (4) , the sale of bonds under this subchapter to provide revenue for the clean water fund program may be a private sale to the environmental improvement fund under s. 25.43 , if the bonds sold are held or owned by the environmental improvement fund, or a public sale, as provided in the authorizing resolution.

1977 c. 317 ; 1979 c. 107 ; 1981 c. 336 ; 1983 a. 368 ; 1985 a. 6 ; 1987 a. 27 ; 1989 a. 31 , 46 , 68 , 366 ; 1991 a. 39 , 221 ; 1993 a. 16 ; 1995 a. 27 ; 1997 a. 27 ; 2005 a. 22 ; 2007 a. 20 ; 2009 a. 180 .