We wrote about Senate Bill 99 back in March, and a new version of that bill is back on the move in the General Assembly.

As we said back in March, no one in the legislature needs to care what we think is good policy about bond referenda. But as bond lawyers, we want legislation that “works” – that tells us and our clients what we need to do and when we need to do it. We think the current bill has too much ambiguity and a lack of precision in drafting. If the proponents of the legislation spent an hour with any bond lawyer, we could get better statutory language to address what they’re looking for. Instead, we’re left with provisions like the following –

  • Before the required public hearing, the finance officer has to create a “summary sheet” that includes “the current financial state of the [unit], including any outstanding bonds held by the unit”

What the heck is the “financial state?” Is that the audit? That seems inconsistent with the idea a “summary sheet.” The proposal talks about outstanding bonds “held” by the unit, but it almost certainly means outstanding bonds issued by the unit. What do you do about that?

  • We covered this one in March – the ballot question needs to state the estimated cumulative cost over the life of the bond, using the highest interest rate charged for “similar debt” over the last “maximum bond issuance term.”

By statute the “maximum bond issuance term” is at least 40 years. So we have to look back at the highest interest rate over the past 40 years? And what is “similar debt”?

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My list goes on. It will be left to the LGC staff and the rest of the public finance community to figure out how to comply with all this, and I hope none of us ever has to find out, through litigation, what any of it actually means.

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