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  • Acts
  • 1998
  • Chapter 121 AN ACT PROVIDING FOR THE USE OF CERTAIN TYPES OF SECURITIES IN THE FINANCING OF THE CENTRAL ARTERY/TED WILLIAMS TUNNEL PROJECT.

Whereas , The deferred operation of this act would tend to defeat its purpose, which is forthwith to provide for the use of certain types of securities in the financing of the Central Artery/Ted Williams Tunnel Project, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.


Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:


SECTION 1. Chapter 11 of the acts of 1997 is hereby amended by striking out sections 9 and 10 and inserting in place thereof the following six sections:-

Section 9. The state treasurer may borrow from time to time on the credit of the commonwealth such sums of money as may be necessary for the purpose of meeting payments authorized by section 2A and may issue and renew from time to time notes of the commonwealth therefor bearing interest payable at such times and at such rate or rates, including rates variable from time to time according to an index, banker's loan rate or otherwise, as the state treasurer shall fix or determine; provided, that the amount of such notes outstanding at any time shall not exceed, in the aggregate, the sum of $1,500,000,000 with respect to item 6036-9716 of said section 2A; provided, however, that not more than $1,000,000,000 in such notes may be issued unless additional spending is authorized pursuant to said item 6036-9716, whether by amendment of said item or otherwise; and provided further, that the amount of notes issued pursuant to this section and secured by the Federal Highway Grant Anticipation Note Trust Fund established by section 10 shall not exceed, in the aggregate, the sum of $1,500,000,000. Such notes shall be issued and may be renewed one or more times for such maximum terms as the governor may recommend to the general court in accordance with Section 3 of Article LXII of the Amendments to the Constitution of the Commonwealth, but the final maturity of the notes, whether original or renewal, shall be not later than June 30, 2015.

Except as otherwise provided in this paragraph, notes and the interest thereon issued under the authority of this section shall be general obligations of the commonwealth; provided, however, that the state treasurer may determine to issue any notes as special obligations pursuant to section 2 O of chapter 29 of the General Laws if the notes or renewals thereof are to be paid from the proceeds of special obligation bonds to be issued pursuant to said section 2 O of said chapter 29. In addition, at the request of the governor, the state treasurer shall instead issue such notes as special obligations secured by the Federal Highway Grant Anticipation Note Trust Fund in accordance with this act. Notwithstanding any provisions of this act to the contrary, in no event shall the principal amount of notes issued under the authority of this section as general obligations of the commonwealth exceed $900,000,000; provided, however, that not more than $450,000,000 in such notes shall be issued as general obligations of the commonwealth or as special obligations pursuant to said section 2 O of said chapter 29 prior to the enactment of federal legislation as a successor to or reauthorization of the Intermodal Surface Transportation Act of 1991, PL 102-240; and provided further, that any such notes issued as general obligations may be renewed one or more times as general obligations of the commonwealth as provided in the first paragraph.

All payments on account of principal of any notes issued as general obligations of the commonwealth or special obligations of the commonwealth pursuant to said section 2 O of said chapter 29 and allocable to the Highway Capital Projects Fund shall be repaid from said fund; provided, however, that to the extent federal financial participation allocable to such notes is received, the state comptroller shall perform adjusting accounting entries from the Federal Highway Construction Program Fund to the Highway Capital Projects Fund in the appropriate amounts.

Section 10. There is hereby established and set up on the books of the commonwealth a separate fund to be known as the Federal Highway Grant Anticipation Note Trust Fund for the purpose of receiving federal highway construction trust funds, as hereinafter defined, and paying trust agreement obligations, as hereinafter defined, with respect to notes issued in accordance with section 9 and secured by said Federal Highway Grant Anticipation Note Trust Fund. Federal highway construction trust funds pledged by a trust agreement executed in accordance with section 10B, any other funds hereafter appropriated to said Federal Highway Grant Anticipation Note Trust Fund and investment earnings on any funds held or credited to the Federal Highway Grant Anticipation Note Trust Fund or on the proceeds of any notes issued pursuant to section 9 and secured by the Federal Highway Grant Anticipation Note Trust Fund shall be received and held by the state treasurer or his designee as the trustee of said fund and not on account of the commonwealth and, as set forth in section 10A, may be expended without further appropriation for payment of trust agreement obligations. Any federal highway construction trust funds received by the commonwealth prior to the initial date of issuance of any notes authorized by said section 9 and secured by said Federal Highway Grant Anticipation Note Trust Fund or returned to the commonwealth by the trustee at any time in accordance with the terms of said trust or agreement or upon termination of the trust established in this section shall be deposited into the operating fund or capital fund to which they would have been deposited in the absence of such trust agreement or trust. The trust established in accordance with this section and said Federal Highway Grant Anticipation Note Trust Fund shall terminate on the date of the final payment or defeasance in full by the commonwealth of all trust agreement obligations.

Section 10A. In order to increase the marketability of any notes issued by the commonwealth as special obligations of the commonwealth and secured by the Federal Highway Grant Anticipation Note Trust Fund and thereby ensure the issuance of such notes at the lowest possible cost to the commonwealth, all federal highway construction reimbursements and any other federal highway assistance received from time to time by the commonwealth with respect to projects financed by the issuance of such notes or with respect to any other federal highway project previously undertaken or to be undertaken at any time hereafter while any such notes are outstanding as part of the commonwealth's program of transportation development and improvements, as it may be provided for from time to time, hereinafter referred to as the federal highway construction program, or received from time to time by the commonwealth under any successor program established under federal law, hereinafter collectively referred to as the federal highway construction trust funds, any other funds hereafter appropriated to the Federal Highway Grant Anticipation Note Trust Fund and investment earnings on any funds held or credited to said Federal Highway Grant Anticipation Note Trust Fund or on the proceeds of any notes issued pursuant to section 9 and secured by said Federal Highway Grant Anticipation Note Trust Fund are hereby impressed with a trust for the benefit of the owners from time to time of such notes and such funds may be applied without appropriation solely for the purposes of paying the principal or purchase price of, redemption premium, if any, and interest on such notes in the fiscal year of the commonwealth in which such funds are received or in any subsequent fiscal year of the commonwealth as such amounts come due or as such amounts may be paid or deemed paid prior to maturity in accordance with their terms and satisfying the terms and conditions of any trust agreement or credit enhancement agreement entered into with respect to such notes including, without limitation, the payment of any fees and expenses related to the notes, maintaining reserves, if any, under any trust agreement or credit enhancement agreement and paying reimbursement amounts in respect of any credit enhancement agreement. The principal or purchase price of, redemption premium, if any, and interest on such notes, the fees and expenses related to such notes, deposits to reserves, if any, under any trust agreement or credit enhancement agreement and any such reimbursement amounts shall hereinafter be referred to collectively as trust agreement obligations.

Section 10B. Notwithstanding any general or special law to the contrary in connection with the issuance of any notes authorized pursuant to section 9, the state treasurer may, at the request of the governor and with the concurrence of the secretary for administration and finance and the secretary of transportation and construction, enter into a trust agreement containing terms and conditions as set forth herein. Such trust agreement may pledge or assign all or any part of any funds credited to the Federal Highway Grant Anticipation Note Trust Fund and the funds specified in section 10C to secure the trust agreement obligations; provided, however, that such trust agreement shall include a provision substantially to the effect that on and after July 1, 2002, except to the extent necessary to pay trust agreement obligations due and payable in any fiscal year of the commonwealth or to maintain the debt service coverage percentage, as defined in said section 10C, or otherwise to maintain compliance with other terms and provisions of such trust agreement, not more than 50 per cent of federal highway construction trust funds apportioned by the United States Congress to the commonwealth in any federal fiscal year shall be applied in the fiscal year of the commonwealth ending on June 30 of such federal fiscal year or in the fiscal year of the commonwealth commencing on July 1 of such federal fiscal year to the payment of trust agreement obligations including, without limitation, the redemption, tender, payment or defeasance prior to maturity of the principal or purchase price of, redemption premium, if any, and interest on all or any portion of notes authorized pursuant to section 9 and secured by said Federal Highway Grant Anticipation Note Trust Fund.

The state treasurer may, with the concurrence of the secretary for administration and finance and the secretary of transportation and construction, purchase or enter into agreements for liquidity, additional security, insurance or other forms of credit enhancement which may be secured on a parity with the notes or on a subordinate basis. In the event that the state treasurer enters into a credit enhancement agreement, references to trust agreement in sections 9 to 10D, inclusive, shall be deemed to include any such credit enhancement agreement and such credit enhancement agreement shall include all terms and conditions required to be contained in such trust agreement. A pledge in a trust agreement or credit enhancement agreement shall be valid and binding from the time such pledge shall be made without any physical delivery or further act and the lien of such pledge shall be valid and binding against all persons or entities of any kind having claims of any kind in tort, contract or otherwise, irrespective of whether such persons or entities have notice thereof, and shall secure all trust agreement obligations on a parity basis except as otherwise provided in the trust agreement or credit enhancement agreement. Notwithstanding any general or special law to the contrary, as long as a trust agreement or credit enhancement agreement authorized by section 10B shall be in effect and except as may be permitted by such trust agreement or credit enhancement agreement, no person or entity other than the commonwealth shall have or acquire any right, title or interest in federal highway construction trust funds or any of the portion of the tax per gallon imposed pursuant to chapter 64A of the General Laws. Any such pledge shall be perfected by the filing of the trust agreement or credit enhancement agreement in the records of the state treasurer and no filing shall be necessary under chapter 106 of the General Laws or any other general or special law. Any such trust agreement or credit enhancement agreement may establish provisions defining defaults and establishing remedies and other matters relating to the rights and security of the holders of the notes or other secured parties as determined by the state treasurer, including provisions relating to the establishment of reserves, the issuance of additional or refunding notes, whether or not secured on a parity basis, the application of receipts, monies or funds pledged pursuant to such agreement, the defeasance or redemption of all or any portion of such notes prior to maturity and other matters deemed necessary or desirable by the state treasurer for the security of such notes and may also regulate the custody, investment and application of monies. The scheduled amortization of the principal of any notes issued pursuant to section 9 and secured by the Federal Highway Grant Anticipation Note Trust Fund shall be as determined by the state treasurer, with the concurrence of the secretary for administration and finance and the secretary of transportation and construction, based upon such factors as the state treasurer shall determine in his discretion including, without limitation the expected receipt of federal highway construction trust funds and may also defer the commencement of amortization of such principal as the state treasurer, with such concurrence, shall determine to be necessary, convenient or desirable. Said secretary for administration and finance and said secretary of transportation and construction may enter into such agreements or covenants with respect to any trust agreement or credit enhancement agreement authorized hereby or with respect to said Federal Highway Grant Anticipation Note Trust Fund as either of them may determine to be necessary, convenient or desirable to effectuate the purposes of sections 9 to 10D, inclusive.

In deciding whether to request that the state treasurer enter into a trust agreement with respect to any particular notes and, if applicable, to issue such notes as special obligations secured by said Federal Highway Grant Anticipation Note Trust Fund, the governor shall take into account: (i) generally prevailing financial market conditions; (ii) the impact of such issuance on the overall capital financing plans and needs of the commonwealth; (iii) any ratings assigned to outstanding bonds and notes of the commonwealth and any ratings expected to be assigned by a nationally recognized credit rating agency to the notes proposed to be issued; and (iv) applicable provisions of a trust agreement or credit enhancement agreement to be entered into pursuant to this section.

Section 10C. Notwithstanding any general or special law to the contrary and in order further to enhance the marketability of notes issued pursuant to section 9 that are secured by the Federal Highway Grant Anticipation Note Trust Fund and to thereby ensure the issuance of such notes at the lowest possible cost to the commonwealth in the event appropriations from the Federal Highway Trust Fund for carrying out the provisions of Title 23 of the United States Code with respect to federal-aid highways or any successor federal program thereto for any federal fiscal year are less than 75 per cent of $22,800,000,000, and the amount of federal highway construction trust funds expected to be available in the then current federal fiscal year to pay the trust agreement obligations due in the fiscal year of the commonwealth commencing on July 1 in such federal fiscal year is projected to be less than 120 per cent, of such trust agreement obligations, as certified by the state treasurer pursuant to this section, all monies received or to be received by the commonwealth in such fiscal year of the commonwealth from that portion of the tax per gallon imposed pursuant to chapter 64A of the General Laws and credited to the Highway Fund equal to ten cents per gallon, which amount shall not include any amount of such tax pledged to the payment of special obligation bonds of the commonwealth pursuant to section 2 O of chapter 29 of the General Laws, shall be deposited with the trustee under the trust agreement authorized pursuant to section 10B and shall be applied, subject to appropriation and as provided in said trust agreement, to pay the trust agreement obligations.

The trust agreement or credit enhancement agreement to be entered into pursuant to section 10B shall provide substantially to the effect that, not later than December 15 of each year, the state treasurer, after consultation with the secretary for administration and finance and the secretary of transportation and construction, shall certify to the governor, the speaker of the house of representatives and the president of the senate: (i) the aggregate amount appropriated by law with respect to the federal highway construction program, or a successor thereto, for the then current federal fiscal year; and (ii) the projected debt service coverage percentage for the following fiscal year of the commonwealth. If the amount of federal appropriations so certified is less than 75 per cent of $22,800,000,000 and such projected debt service coverage percentage is less than 120 per cent, the governor shall include in the operating budget to be submitted to the general court in accordance with section 7H of chapter 29 of the General Laws a recommendation to appropriate an amount equal to the trust agreement obligations to be due in the following fiscal year of the commonwealth less the sum of (x), the amount of any available funds on deposit in the Federal Highway Grant Anticipation Note Trust Fund as of the date of the certification of the state treasurer, minus (y), the portion of such amount expected to be expended prior to the beginning of such following fiscal year on such trust agreement obligations, plus (z), any amount of federal highway construction trust funds expected to be received prior to the beginning of such following fiscal year. The trust agreement or credit enhancement agreement to be entered into pursuant to section 10B shall further provide substantially to the effect that at any time prior to the enactment of the general appropriation act, the state treasurer shall, if necessary, after consultation with the secretary for administration and finance and the secretary of transportation and construction, amend such certification to reflect any changed circumstances known to the state treasurer with respect to the amount of federal highway construction trust funds expected to be available to pay trust agreement obligations in the applicable fiscal year. Such trust agreement or credit enhancement agreement shall further provide substantially to the effect that if the certifications specified above were given and indicated a need for an appropriation of funds by the general court, then, unless the state treasurer, after consultation with the secretary for administration and finance and the secretary of transportation and construction, certifies to the governor, the speaker of the house of representatives, the president of the senate and the trustee under the trust agreement not later than July 20 of each fiscal year that the amount of funds in the Federal Highway Grant Anticipation Note Trust Fund as of the end of the immediately preceding fiscal year of the commonwealth is sufficient to pay the trust agreement obligations due during the then current fiscal year, the receipts derived from that portion of the tax per gallon imposed pursuant to chapter 64A of the General Laws and credited to the Highway Fund equal to ten cents per gallon, which amount shall not include any amount of such tax pledged to the payment of special obligation bonds of the commonwealth pursuant to section 2 O of chapter 29 of the General Laws, shall be deposited thereafter with the trustee as specified in such trust agreement or credit enhancement agreement. Notwithstanding the foregoing provisions to the contrary, in the event an appropriation is enacted into law with respect to a fiscal year from any available funds of the commonwealth including, without limitation, receipts derived from the tax per gallon imposed pursuant to said chapter 64A, in an amount sufficient, together with other available funds in the Federal Highway Grant Anticipation Note Trust Fund as of the end of the immediately preceding fiscal year of the commonwealth, to pay the trust agreement obligations during such fiscal year, the state treasurer may, to the extent permitted under the trust agreement or credit enhancement agreement, deposit the amount of such appropriation with the trustee under the trust agreement or credit enhancement agreement and direct the trustee to transfer all or any portion of the receipts derived from the tax per gallon imposed pursuant to said chapter 64A to the state treasurer for credit to the Highway Fund to be applied as provided by law; provided, however, that no such transfer shall be made unless the amount then held by the trustee under the trust agreement or credit enhancement agreement is sufficient to pay all trust agreement obligations during such fiscal year of the commonwealth.

Section 10D. In order to further increase the marketability of notes issued by the commonwealth pursuant to section 9 which are secured by the Federal Highway Grant Anticipation Note Trust Fund and in consideration of the acceptance of payment for any such notes, the commonwealth covenants with the purchasers and all subsequent owners and transferees of any such notes that while any such note shall remain outstanding, and so long as any trust agreement obligation shall remain unpaid: (i) federal highway construction trust funds shall not be diverted from the purposes identified herein except as provided in the trust agreement or credit enhancement agreement relating thereto nor shall the trusts with which they are hereby impressed be broken, and the pledge and dedication in trust of such funds shall continue unimpaired and unabrogated; (ii) in any fiscal year of the commonwealth with respect to which the certifications referenced in section 10C were given and indicated a need for an appropriation of funds by the general court, unless such an appropriation has been made which is sufficient to pay the trust agreement obligations due during such fiscal year, no receipts derived from the portion of the tax per gallon imposed pursuant to chapter 64A of the General Laws and credited to the Highway Fund equal to ten cents per gallon, other than any amount of such tax pledged to the payment of special obligation bonds of the commonwealth pursuant to section 2 O of chapter 29 of the General Laws, shall be applied to any other use; (iii) until the state treasurer, after consultation with the secretary for administration and finance and the secretary of transportation and construction, determines that available funds in the Federal Highway Grant Anticipation Note Trust Fund, as of the date of such determination, shall be sufficient to pay all trust agreement obligations with respect to such notes, the rate of the tax per gallon imposed pursuant to said chapter 64A shall not be reduced below the sum of ten cents per gallon plus any amount pledged to the payment of special obligation bonds of the commonwealth pursuant to said section 2 O of said chapter 29; and (iv) at least ten cents of said tax per gallon specified in said chapter 64A shall remain free and clear of any superior or equal pledge, lien, charge or encumbrance thereon or with respect thereto, other than the pledge securing the trust agreement obligations, and shall remain credited to the Highway Fund except as may be permitted by the trust agreement or credit enhancement agreement entered into pursuant to section 10B; provided, however, that any such funds shall be available for appropriation in any fiscal year for any other lawful purpose unless the state treasurer shall have provided the certifications specified in section 10C to the effect that such funds shall be necessary to pay any trust agreement obligations in such fiscal year.

SECTION 2. The second paragraph of section 54 of said chapter 11 is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- In furtherance of the foregoing purposes, the department, as appropriate, shall apply for and accept any federal funds available for projects authorized in sections 2 and 2A, and such federal funds when received shall be credited: (i) to the Federal Highway Grant Anticipation Note Trust Fund, if any notes authorized by section 9 are issued and secured by said fund; provided, however, that any funds not pledged to, or released from said fund in accordance with the provisions of the trust agreement or credit enhancement agreement referred to in section 10B shall be credited to the Federal Highway Construction Program Fund; and (ii) otherwise to the Federal Highway Construction Program Fund.

Approved May 18, 1998.