Section 1783-A - Commonwealth indebtedness(a) Borrowing authorized.--(1) If the electorate approves a referendum question, in accordance with the provisions of the Assistance Act, for incurring indebtedness in the amount and for the purposes prescribed in the Assistance Act and this article, the issuing officials, pursuant to the provisions ofsection 7(a) (3) of Article VIII of the Constitution of Pennsylvania, are authorized and directed to borrow, on the credit of the Commonwealth, money not exceeding in the aggregate the sum of $400,000,000, in increments of not more than $150,000,000 every year over a three-year period after the effective date of this section, not including money borrowed to refund outstanding bonds, notes or replacement notes, as may be found necessary to carry out the purposes of the Assistance Act.(2) As evidence of the indebtedness, general obligation bonds of the Commonwealth shall be issued to provide money necessary to carry out the purposes of the Assistance Act for the total amounts, in the form, in the denominations and subject to the terms and conditions of issue, redemption and maturity, rate of interest and time of payment of interest, as the issuing officials direct, except that the latest stated maturity date shall not exceed 20 years from the date of the first obligation issued to evidence the debt.(3) All bonds and notes issued under the authority of the Assistance Act must bear facsimile signatures of the issuing officials and a facsimile of the Great Seal of the Commonwealth and must be countersigned by an authorized officer of an authorized loan and transfer agent of the Commonwealth.(4) All bonds and notes issued in accordance with the provisions of this section shall be direct obligations of the Commonwealth, and the full faith and credit of the Commonwealth is pledged for the payment of the interest on them, as it becomes due, and for the payment of the principal at maturity. The principal of and interest on the bonds and notes shall be payable in lawful money of the United States.(5) All bonds and notes issued under the provisions of this section shall be exempt from taxation for State and local purposes.(6) The bonds may be issued as coupon bonds or registered as to both principal and interest as the issuing officials determine. If interest coupons are attached, they shall contain the facsimile signature of the State Treasurer.(7) The issuing officials shall provide for amortization of the bonds in substantial and regular amounts over the term of the debt so that the bonds of each issue allocated to the project to be funded from the bond issue shall mature within a period not to exceed the appropriate amortization period for each project as specified by the issuing officials, but in no case in excess of 20 years. The first retirement of principal shall be stated to mature prior to the expiration of a period of time equal to one-tenth of the time from the date of the first obligation issued to evidence the debt to the date of the expiration of the term of the debt. Retirements of principal shall be regular and substantial if made in annual or semiannual amounts, whether by stated serial maturities or by mandatory sinking fund retirements.(8) The issuing officials are authorized to provide by resolution for the issuance of refunding bonds for the purpose of refunding any debt issued under the provisions of the Assistance Act and this article and outstanding, either by voluntary exchange with the holders of the outstanding debt or by providing funds to redeem and retire the outstanding debt with accrued interest, any premium payable on the debt and the costs of issuance and retirement of the debt, at maturity or at any call date. The issuance of the refunding bonds, the maturities and other details of the refunding bonds, the rights of the holders of the refunding bonds and the duties of the issuing official in respect to the refunding bonds shall be governed by the applicable provisions of this section. Refunding bonds, which are not subject to the aggregate limitation of $400,000,000 of debt to be issued under the Assistance Act, may be issued by the issuing officials to refund debt originally issued or to refund bonds previously issued for refunding purposes.(9) If action is to be taken or decision made by the issuing officials and the issuing officials are not able unanimously to agree, the action or decision of the Governor and either the Auditor General or the State Treasurer shall be binding and final.(b) Sale of bonds.--(1) When bonds are issued, they shall be offered for sale at not less than 98% of the principal amount and accrued interest and shall be sold by the issuing officials to the highest and best bidder or bidders after due public advertisement on the terms and conditions and upon open competitive bidding as the issuing officials direct. The manner and character of the advertisement and the time of advertising shall be prescribed by the issuing officials. No commission shall be allowed or paid for the sale of any bonds issued under the authority of the Assistance Act and this article.(2) Any portion of any bond issue so offered and not sold or subscribed for at public sale may be disposed of by private sale by the issuing officials in the manner and at prices, not less than 98% of the principal amount and accrued interest, as the Governor directs. No commission shall be allowed or paid for the sale of any bonds issued under the authority of the Assistance Act.(3) When bonds are issued, the bonds of each issue shall constitute a separate series to be designated by the issuing officials or may be combined for sale as one series with other general obligation bonds of the Commonwealth.(4) Until permanent bonds can be prepared, the issuing officials may issue, in lieu of permanent bonds, temporary bonds in the form and with the privileges as to registration and exchange for permanent bonds as determined by the issuing officials.(5) The proceeds realized from the sale of bonds and notes, except refunding bonds and replacement notes, under the provisions of the Assistance Act and this article shall be paid into the fund. The proceeds shall be paid by the State Treasurer periodically to those Commonwealth officers and Commonwealth agencies authorized to expend them at the times and in the amounts necessary to satisfy the funding needs of those Commonwealth agencies. The proceeds of the sale of refunding bonds and replacement notes shall be paid to the State Treasurer and applied to the payment of principal, any accrued interest and premium and the cost of redemption of the bonds and notes for which the obligations shall have been issued.(6) Pending application for the purposes authorized, money held or deposited by the State Treasurer may be invested or reinvested as are other funds in the custody of the State Treasurer in the manner provided by law. All earnings received from the investment or deposit of the funds shall be paid into the State Treasury to the credit of the fund. The earnings in excess of bond discounts allowed, expenses paid for the issuance of bonds and notes and interest arbitrage rebates due to the Federal Government shall be transferred annually to the fund. Any interest or investment income shall be applied to assist in the payment of the debt service incurred in connection with the Assistance Act and this article.(7) The Auditor General shall prepare the necessary registry book to be kept in the office of the authorized loan and transfer agent of the Commonwealth for the registration of any bonds, at the request of owners of the bonds, according to the terms and conditions of issue directed by the issuing officials.(8) There is appropriated to the State Treasurer from the fund as much money as may be necessary for all costs and expenses in connection with the issue of and sale and registration of the bonds and notes in connection with the Assistance Act and this article and the payment of interest arbitrage rebates or proceeds of the bonds and notes.(c) Temporary financing authorization.-- (1) Pending the authorized issuance of bonds of the Commonwealth, the issuing officials are authorized, in accordance with the provisions of the Assistance Act and this article and on the credit of the Commonwealth, to make temporary borrowings not to exceed three years in anticipation of the issue of bonds in order to provide funds in the amounts deemed advisable prior to the issue of bonds. In order to provide for and in connection with the temporary borrowings, the issuing officials are authorized in the name and on behalf of the Commonwealth to enter into any purchase, loan or credit agreement or other agreement with any bank, trust company or other lending institution, investment banking firm or person, in the United States having power to enter into the agreement. The agreement may contain provisions which are not inconsistent with the provisions of the Assistance Act or this article and authorized by the issuing officials.(2) All temporary borrowings made under this section shall be evidenced by notes of the Commonwealth, which shall be issued for amounts not exceeding in the aggregate the applicable statutory and constitutional debt limitation in the form and denominations and subject to terms and conditions of sale and issue, prepayment or redemption and maturity, rate of interest and time of payment of interest as the issuing officials authorize and direct in accordance with the Assistance Act and this article. The authorization and direction may provide for the subsequent issuance of replacement notes to refund outstanding notes or replacement notes. The replacement notes shall, upon issuance, evidence the borrowing and may specify other terms and conditions with respect to the notes and replacement notes as the issuing officials determine and direct.(3) If the authorization and direction of the issuing officials provide for the issuance of replacement notes, the following shall apply:(i) The issuing officials may, on behalf of the Commonwealth, issue, enter into or authorize and direct the State Treasurer to enter into an agreement with any bank, trust company, investment banking firm or other institution or person, in the United States having the power to enter the agreement:(A) To purchase or underwrite an issue or series of issues or notes.(B) To credit, enter into a purchase, loan or credit agreement, draw money pursuant to the agreement on the terms and conditions set forth in the agreement and issue notes as evidence of borrowings made under the agreements.(C) To appoint an issuing and payment agent or agents with respect to the notes.(D) To do other acts necessary or appropriate to provide for the payment, when due, of the interest on and the principal of the notes.(ii) The agreements may provide for the compensation of purchasers or underwriters of notes or replacement notes by discounting the purchase price of the notes or by payment of a fixed fee or commission at the time of issuance. All other costs and expenses, including fees for agreements related to the notes, issuing and paying agent costs and costs and expenses of issuance, may be paid from the proceeds of the notes.(4) If the issuing officials provide for the issuance of replacement notes all subject to the authorization and direction of the issuing officials, the following apply: (i) At or prior to the time of delivery of the notes or replacement notes, the State Treasurer shall determine the principal amount, date of issue, interest rate or procedure for establishing interest rate, rate of discount, denominations and all other terms and conditions relating to the issuance.(ii) The State Treasurer shall perform all acts necessary to pay or cause to be paid, when due, all principal of and interest on the notes being refunded by replacement notes and to assure that the replacement notes may draw upon any money available for that purpose pursuant to any purchase, loan or credit agreement established with respect to the replacement notes.(5) Outstanding notes evidencing the borrowings may be funded and retired by the issuance and sale of the bonds of the Commonwealth as authorized in this subarticle. The refunding bonds shall be issued and sold no later than a date three years after the date of issuance of the first notes evidencing the borrowings to the extent that payment of the notes has not otherwise been made or provided for by sources other than proceeds of replacement notes.(6) The proceeds of all the temporary borrowing shall be paid to the State Treasurer to be held and disposed of in accordance with the provisions of the Assistance Act and this article.(d) Debt retirement.--(1) All bonds issued under the Assistance Act and this article shall be redeemed at maturity, together with all interest due on the bonds; and these principal and interest payments shall be paid from the Water and Sewer Systems Assistance Bond Sinking Fund, which is created. For the specific purpose of redeeming the bonds at maturity and paying all interest on the bonds in accordance with the information received from the Governor, the General Assembly shall appropriate money to the Water and Sewer Systems Assistance Bond Sinking Fund for the payment of interest on the bonds and notes and their principal at maturity. All money paid into the Water and Sewer Systems Assistance Bond Sinking Fund and all of the money not necessary to pay accruing interest shall be invested by the State Treasurer in the securities as are provided by law for the investment of the sinking funds of the Commonwealth.(2) The State Treasurer, with the approval of the Governor, may use any of the money in the fund not necessary to conduct the referendum authorizing the indebtedness necessary to carry out the Assistance Act and this article to purchase and retire all or part of the bonds and notes issued pursuant to the Assistance Act and this article. If all or part of the bonds and notes are purchased, they shall be canceled and returned to the loan and transfer agent as canceled and paid bonds and notes. Following the purchase, all payments of interest on the bonds and notes shall cease. The canceled bonds, notes and coupons, together with any other canceled bonds, notes and coupons, shall be destroyed as promptly as possible, but no later than two years after cancellation. A certification evidencing the destruction of the canceled bonds, notes and coupons shall be provided by the loan and transfer agent to the issuing officials. All canceled bonds, notes and coupons shall be marked to make the canceled bonds, notes and coupons nonnegotiable.(3) The State Treasurer shall determine and report to the Secretary of the Budget by November 1 of each year the amount of money necessary for the payment of interest on outstanding obligations and the principal of the obligations, if any, for the following fiscal year and the times and amounts of the payments. The Governor shall include in every budget submitted to the General Assembly full information relating to the issuance of bonds and notes under the Assistance Act and this article and the status of the Water and Sewer Systems Assistance Bond Sinking Fund for the payment of interest on the bonds and notes and their principal at maturity.(4) The General Assembly shall appropriate an amount equal to the sums necessary to meet repayment obligations for principal and interest for deposit into the Water and Sewer Systems Assistance Bond Sinking Fund.(e) Expiration.--Authorization to issue bonds and notes, not including refunding bonds and replacement notes, for the purpose of the Assistance Act and this article shall expire October 9, 2024.Amended by P.L. TBD 2019 No. 20, § 7, eff. 7/1/2019.1929, April 9, P.L. 343, No. 176, art. XVII-A, § 1783-A, added 2009, Oct. 9, P.L. 537, No. 50, § 3.2, imd. effective.