D.C. Code § 1-204.67

Current through codified legislation effective September 18, 2024

Section 1-204.67 - Authority to create security interests in District revenues

(a)In general. - An act of the Council authorizing the issuance of general obligation bonds or notes under § 1-204.61(a), § 1-204.71(a), § 1-204.72(a), or § 1-204.75(a) may create a security interest in any District revenues as additional security for the payment of the bonds or notes authorized by such act.

(b)Contents of acts. - Any such act creating a security interest in District revenues may contain provisions (which may be part of the contract with the holders of such bonds or notes):

(1) Describing the particular District revenues which are subject to such security interest;

(2) Creating a reasonably required debt service reserve fund or any other special fund;

(3) Authorizing the Mayor of the District to execute a trust indenture securing the bonds or notes;

(4) Vesting in the trustee under such a trust indenture such properties, rights, powers, and duties in trust as may be necessary, convenient, or desirable;

(5) Authorizing the Mayor of the District to enter into and amend agreements concerning:

(A) The custody, collection, use, disposition, security, investment, and payment of the proceeds of the bonds or notes and the District revenues which are subject to such security interest; and

(B) The doing of any act (or the refraining from doing any act) that the District would have the right to do in the absence of such an agreement;

(6) Prescribing the remedies of the holders of the bonds or notes in the event of a default; and

(7) Authorizing the Mayor to take any other actions in connection with the issuance, sale, delivery, security, and payment of the bonds or notes.

(c)Timing and perfection of security interests. - Notwithstanding Article 9 of Title 28 of the District of Columbia Code, any security interest in District revenues created under subsection (a) of this section shall be valid, binding, and perfected from the time such security interest is created, with or without the physical delivery of any funds or any other property and with or without any further action. Such security interest shall be valid, binding, and perfected whether or not any statement, document, or instrument relating to such security interest is recorded or filed. The lien created by such security interest is valid, binding, and perfected with respect to any individual or legal entity having claims against the District, whether or not such individual or legal entity has notice of such lien.

(d)Obligations and expenditures not subject to appropriation. - Section 1-204.46(c) shall not apply to any obligation or expenditure of any District revenues to secure any general obligation bond or note under subsection (a) of this section.

D.C. Code § 1-204.67

Dec. 24, 1973, 87 Stat. 806, Pub. L. 93-198, title IV, § 467; as added Dec. 23, 1981, 95 Stat. 1496, Pub. L. 97-105, § 10; enacted, Apr. 9, 1997, D.C. Law 11-254, § 2, 44 DCR 1575; Aug. 5, 1997, 111 Stat. 770, Pub. L. 105-33, § 11505; July 25, 2013, D.C. Law 19-321, § 2(h), 60 DCR 1724.

Request for Congressional action: Pursuant to § 501(a) of D.C. Law 10-188, the Council for the District of Columbia requested that Congress amend subsection (d), § 467(d) of the District of Columbia Self-Government and Governmental Reorganization Act, to read as follows:

"(d) The fourth sentence of § 47-304 ( § 1-204.46 , 2001 Ed.) shall not apply to any obligation or expenditure of any District revenues to secure any general obligation bond under subsection (a) of this section or any revenue bond or other obligation under subsection (a-1) of this section or for repair, maintenance, and capital improvements. Other operating obligations or expenditures shall not be exempt from the fourth sentence of § 47-304 ( § 1-204.46 , 2001 Ed.), except that if the operating obligations or expenditures are incurred prior to October 1, 1995, they shall be approved pursuant to the procedures set forth in §47-304.1 ( § 1-204.53 , 2001 Ed.)."

Applicability of D.C. Law 19-321: Section 3 of D.C. Law 19-321 provided that section 2 of the act shall apply as of January 1, 2014.

D.C. Law 19-321 was declared invalid by the United States District Court for the District of Columbia in a memorandum opinion dated May 19, 2014, Civil Action No. 2014-0655. The court held that although the Council of the District of Columbia, the Mayor, and United States District Court for the District of Columbia are powerless to grant to the residents of the District of Columbia full budget autonomy, the United States Congress and the President of the United States are empowered to do so; and concluded that the Budget Autonomy Act was unlawful. See Council of the Dist. of Columbia v. Gray, 42 F. Supp. 3d 134, 2014 U.S. Dist. LEXIS 68055 (2014).

On May 27, 2015, the United States Court of Appeals for the District of Columbia Circuit issued Order No. 14-7067, vacating the lower court's judgment, dismissing the appeal, and remanding the case to the District Court with instructions to remand the case to the Superior Court of the District of Columbia. See Council of the Dist. of Columbia v. Bowser, 2015 U.S. App. LEXIS 8881 (2015). The amendments contained in D.C. Law 19-321 are codified in this section.