La. Admin. Code tit. 71 § III-301

Current through Register Vol. 50, No. 11, November 20, 2024

Section III-301 - General

A. The following rules and regulations concerning the tax B exempt financing of nontraditional use projects are made complementary to other rules and regulations contained herein which may be applicable to a particular financing.

1. The Bond Commission shall require that each issuer of nontraditional purpose bonds establish criteria to be met by the beneficiaries of the financing as a condition precedent to its undertaking of the financing of a project and file such criteria with the Bond Commission.

2. Nontraditional purpose bonds are bonds issued to finance facilities or enterprises not under the control, operation, management, and administration of traditional governmental subdivisions or authorities and not used in providing essential or necessary governmental services. Traditional governmental subdivisions or authorities for the purpose of this report shall mean the state, parish, municipality, or other political subdivision of the state.

3. The following information concerning a project should be furnished to the Bond Commission in connection with its approval of nontraditional purpose bonds:

a. a detailed description and scope of project, including nature of business and qualifications of applicant to undertake the project;

b. budget, including any pertinent information regarding acquisition costs and new construction costs;

c. estimated time schedule;

d. estimated number of construction jobs and permanent jobs, with estimated permanent annual payroll;

e. relationship of project to other businesses owned and/or operated by same entity which may be a guarantor of the obligation;

f. certificate of the applicant that there are no detriments of the project to the health, safety, or environmental considerations of the community;

g. independent professional certification as to the feasibility and total cost of the project, if required by the commission;

h. certification by the applicant that the total amount of financing will be used to pay for the specific project being financed;

i. authorization of the project by appropriate parties and/or company officials;

j. all other contracts that relate to the sale or security of the bonds, the disposition of bond proceeds, or the operation of the project or undertaking as may be required by the commission.

4. The commission shall only consider the application for the sale of bonds of a project, the nature and type of which is enumerated in the law, and for which the applicant has clearly established the legal authority for the issuance of tax-exempt bonds. If such authority is not clear, but the applicant wishes to proceed then the commission shall request an Attorney General's opinion for use by the commission.

5. The commission shall not approve any bonds issued for the sole purpose of refinancing existing debt of any for-profit corporation or private company, other than for hospitals, at a lower rate of interest unless the outstanding existing debt bears tax-exempt interest.

6. The commission shall not approve the issuance of bonds for nontraditional purposes unless the bonds are rated at least investment grade (BBB/Baa) by either Standard and Poor's Corporation or Moody's Investors Service, or will be privately sold to financial institutions or specific authority is granted for a public offering after a hearing by the Bond Commission.

7. The commission shall schedule for its consideration a preliminary presentation for all nontraditional use projects. This presentation will consist of a complete report of progress to date and future plans. The commission will either preliminarily authorize or disapprove proceeding with the project. Industrial projects of publicly-held companies and all industrial projects financed by parishes, cities, industrial districts, or port commissions pursuant to R.S. 39:991 et seq. and all pollution control projects are specifically excepted from the preceding requirement.

8. Publicly-held companies must furnish five years' audits and profit and loss statements, if possible, or satisfactory financial statements. In addition, such companies must furnish either a letter from an investment banker or financial institution indicating that the proposed bonds are marketable or a commitment from an investment banker or financial institution to purchase or to underwrite the bonds and a copy of the latest annual report.

9. Entities other than publicly-held companies must furnish five years' audits and profit and loss statements, if possible, or make available for review and study without becoming a part of the public record satisfactory financial statements, where applicable, and a preliminary letter of intent from an investment banker or a financial institution that the bonds can be placed or sold. In addition, the commission may require an investment letter (wherein the bond purchaser agrees that the bonds are being purchased and intends to keep the bonds for his own account and intends that the bonds will not be sold to the general public at the time of issuance) where public sale of the bonds is deemed inappropriate, or if a start-up company cannot obtain an investment grade rating.

10. The commission shall not approve an application for the issuance of nontraditional bonds if a resolution or ordinance of the governing body of a municipality (where the project is within the municipality or parish; where the project does not lie within a municipality) is received objecting to the issuance of said bonds, until a public hearing of the commission is held, after due notice is made to the governing authority.

11. The local governing authority shall be notified timely of the agenda of the commission that will reflect the pending application of a project in that municipality or parish.

12. Any applicant seeking the commission's approval of a non-traditional application previously rejected by the commission at a regular or special meeting shall only be docketed for reconsideration after meeting anew all applicable state laws, rules, regulations, policies, and procedures of the commission.

13. All prospective issuers of non-traditional purpose bonds (as previously defined herein) must provide at least five days' notice prior to their initial consideration of application for non-traditional purpose bonds to state legislators representing the geographical area in which the project is contemplated to be located. Thereafter, at least 24 hours notice of subsequent consideration(s) of non-traditional purpose bonds must be provided to the legislators. The notice(s) will include the following information:

a. name of issuer;

b. financing beneficiary:

i. proprietorship, partnership, publicly held corporation, closely held corporation, non-profit corporation, other (explain);

ii. state of organization;

iii. principals and addresses of beneficiary;

c. estimated amount of issue;

d. guarantor;

e. bond counsel;

f. legal authority to issue bonds;

g. location of project: street, city, parish: in lieu of tax payment;

h. description of project;

i. if historical building, age of building;

j. employment impact information:

i. temporary construction jobs;

ii. new permanent jobs/annual payroll;

iii. present jobs retained or transferred/annual payroll;

iv. total jobs/annual payroll of 10(a) and 10(b);

k. date, time, location, and any other pertinent information related to the meeting(s) at which the project will be considered.

La. Admin. Code tit. 71, § III-301

Promulgated by the Department of the Treasury, Bond Commission, LR 5:365 (November 1979), amended LR 9:254 (April 1983), LR 10:409 (May 1984), LR 10:948 (November 1984), LR 12:538 (August 1986), LR 15:630 (August 1989), LR 27:1706 (October 2001).

AUTHORITY NOTE: Promulgated in accordance with R.S. 49:950 et seq.