Section 62.62 - Appropriation bonds for payment of employee retirement system liability in 1st class cities(1) DEFINITIONS. In this section:(a) "Appropriation bond" means a bond issued by a city to evidence its obligation to repay a certain amount of borrowed money that is payable from all of the following: 1. Moneys annually appropriated by law for debt service due with respect to such appropriation bond in that year.2. Proceeds of the sale of such appropriation bonds.3. Payments received for that purpose under agreements and ancillary arrangements described in s. 62.621.4. Investment earnings on amounts in subds. 1. to 3.(b) "Bond" means any bond, note, or other obligation of a city issued under this section.(c) "City" means a 1st class city.(d) "Common Council" means the common council of a city.(e) "Refunding bond" means an appropriation bond issued to fund or refund all or any part of one or more outstanding pension-related bonds.(1m) LEGISLATIVE FINDING AND DETERMINATION. Recognizing that a city, by prepaying part or all of the city's unfunded prior service liability with respect to an employee retirement system of the city, may reduce its costs and better ensure the timely and full payment of retirement benefits to participants and their beneficiaries under the employee retirement system, the legislature finds and determines that it is in the public interest for the city to issue appropriation bonds to obtain proceeds to pay its unfunded prior service liability.(2) AUTHORIZATION OF APPROPRIATION BONDS. (a) A common council shall have all powers necessary and convenient to carry out its duties, and to exercise its authority, under this section.(b) Subject to pars. (c) and (d), a common council may issue appropriation bonds under this section to pay all or any part of the city's unfunded prior service liability with respect to an employee retirement system of the city, or to fund or refund outstanding appropriation bonds issued under this section. A city may use proceeds of appropriation bonds to pay issuance or administrative expenses, to make deposits to reserve funds, to pay accrued or funded interest, to pay the costs of credit enhancement, to make payments under other agreements entered into under s. 62.621, or to make deposits to stabilization funds established under s. 62.621.(c) Other than refunding bonds issued under sub. (6), all bonds must be issued simultaneously.(d)1. Before a city may issue appropriation bonds under par. (b), its common council shall enact an ordinance that establishes a 5-year strategic and financial plan related to the payment of all or any part of the city's unfunded prior service liability with respect to an employee retirement system of the city. The strategic and financial plan shall provide that future annual pension liabilities are funded on a current basis. The strategic and financial plan shall contain quantifiable benchmarks to measure compliance with the plan. The common council shall make a determination that the ordinance meets the requirements of this subdivision and, absent manifest error, the common council's determination shall be conclusive. The common council shall submit to the governor and to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172(2), a copy of the strategic and financial plan.2. Annually, the city shall submit to the governor, the department of revenue, and the department of administration, and to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172(2), a report that includes all of the following: a. The city's progress in meeting the benchmarks in the strategic and financial plan.b. Any proposed modifications to the plan.c. The status of any stabilization fund that is established under s. 62.622(3).d. The most current actuarial report related to the city's employee retirement system.e. The amount, if any, by which the city's contributions to the employee retirement system for the prior year is less than the normal cost contribution for that year as specified in the initial actuarial report for the city's employee retirement system for that year.f. The amount that the actuary determines is the city's required contribution to the employee retirement system for that year.(2m) PENALTY FOR INADEQUATE CONTRIBUTION. If the city's contributions to the employee retirement system for the prior year is less than the lower of the required contribution for that year, as described in sub. (2) (d) 2. f., or the normal cost for that year, the department of revenue shall reduce and withhold the amount of the shared revenue payments to the city under subch. I of ch. 79, in the following year, by an amount equal to the difference between the required cost contribution for that prior year and the city's actual contribution in that prior year. The department of revenue shall deposit the amount of the reduced and withheld shared revenue payment into the city's employee retirement system.(3) TERMS. (a) A city may borrow moneys and issue appropriation bonds in evidence of the borrowing pursuant to one or more written authorizing resolutions under sub. (4). Unless otherwise provided in an authorizing resolution, the city may issue appropriation bonds at any time, in any specific amounts, at any rates of interest, for any term, payable at any intervals, at any place, in any manner, and having any other terms or conditions that the common council considers necessary or desirable. Appropriation bonds may bear interest at variable or fixed rates, bear no interest, or bear interest payable only at maturity or upon redemption prior to maturity.(b) The common council may authorize appropriation bonds having any provisions for prepayment the common council considers necessary or desirable, including the payment of any premium.(c) Interest shall cease to accrue on an appropriation bond on the date that the appropriation bond becomes due for payment if payment is made or duly provided for.(d) All moneys borrowed by a city that is evidenced by appropriation bonds issued under this section shall be lawful money of the United States, and all appropriation bonds shall be payable in such money.(e) All appropriation bonds owned or held by a fund of the city are outstanding in all respects, and the common council or other governing body controlling the fund shall have the same rights with respect to an appropriation bond as a private party, but if any sinking fund acquires appropriation bonds that gave rise to such fund, the appropriation bonds are considered paid for all purposes and no longer outstanding and shall be canceled as provided in sub. (7) (d).(f) A city shall not be generally liable on appropriation bonds, and appropriation bonds shall not be a debt of the city for any purpose whatsoever. Appropriation bonds, including the principal thereof and interest thereon, shall be payable only from amounts that the common council may, from year to year, appropriate for the payment thereof.(4) PROCEDURES. (a) No appropriation bonds may be issued by a city unless the issuance is pursuant to a written authorizing resolution adopted by a majority of a quorum of the common council. The resolution may be in the form of a resolution or trust indenture, and shall set forth the aggregate principal amount of appropriation bonds authorized thereby, the manner of their sale, and the form and terms thereof. The resolution or trust indenture may establish such funds and accounts, including a reserve fund, as the common council determines.(b) Appropriation bonds may be sold at either public or private sale and may be sold at any price or percentage of par value. All appropriation bonds sold at public sale shall be noticed as provided in the authorizing resolution. Any bid received at public sale may be rejected.(5) FORM. (a) As determined by the common council, appropriation bonds may be issued in book-entry form or in certificated form. Notwithstanding s. 403.104(1), every evidence of appropriation bond is a negotiable instrument.(b) Every appropriation bond shall be executed in the name of and for the city by the president of the common council and city clerk, and shall be sealed with the seal of the city, if any. Facsimile signatures of either officer may be imprinted in lieu of manual signatures, but the signature of at least one such officer shall be manual. An appropriation bond bearing the manual or facsimile signature of a person in office at the same time the signature was signed or imprinted shall be fully valid notwithstanding that before or after the delivery of such appropriation bond the person ceased to hold such office.(c) Every appropriation bond shall be dated not later than the date it is issued, shall contain a reference by date to the appropriate authorizing resolution, shall state the limitation established in sub. (3) (f), and shall be in accordance with the appropriate authorizing resolution in all respects.(d) An appropriation bond shall be substantially in such form and contain such statements or terms as determined by the common council, and may not conflict with law or with the appropriate authorizing resolution.(6) REFUNDING BONDS. (a)1. A common council may authorize the issuance of refunding appropriation bonds. Refunding appropriation bonds may be issued, subject to any contract rights vested in owners of the appropriation bonds being refunded, to refund all or any part of one or more issues of appropriation bonds notwithstanding that the appropriation bonds may have been issued at different times or issues of general obligation promissory notes under s. 67.12(12) were issued to pay unfunded prior service liability with respect to an employee retirement system. The principal amount of the refunding appropriation bonds may not exceed the sum of: the principal amount of the appropriation bonds or general obligation promissory notes being refunded; applicable redemption premiums; unpaid interest on the refunded appropriation bonds or general obligation promissory notes to the date of delivery or exchange of the refunding appropriation bonds; in the event the proceeds are to be deposited in trust as provided in par. (c), interest to accrue on the appropriation bonds or general obligation promissory notes to be refunded from the date of delivery to the date of maturity or to the redemption date selected by the common council, whichever is earlier; and the expenses incurred in the issuance of the refunding appropriation bonds and the payment of the refunded appropriation bonds or general obligation promissory notes.2. A common council may authorize the issuance of general obligation promissory notes under s. 67.12(12) (a) to refund appropriation bonds, notwithstanding s. 67.01(9) (intro.).(b) If a common council determines to exchange refunding appropriation bonds, they may be exchanged privately for, and in payment and discharge of, any of the outstanding appropriation bonds being refunded. Refunding appropriation bonds may be exchanged for such principal amount of the appropriation bonds being exchanged therefor as may be determined by the common council to be necessary or desirable. The owners of the appropriation bonds being refunded who elect to exchange need not pay accrued interest on the refunding appropriation bonds if and to the extent that interest is accrued and unpaid on the appropriation bonds being refunded and to be surrendered. If any of the appropriation bonds to be refunded are to be called for redemption, the common council shall determine which redemption dates are to be used, if more than one date is applicable and shall, prior to the issuance of the refunding appropriation bonds, provide for notice of redemption to be given in the manner and at the times required by the resolution authorizing the appropriation bonds to be refunded.(c)1. The principal proceeds from the sale of any refunding appropriation bonds shall be applied either to the immediate payment and retirement of the appropriation bonds or general obligation promissory notes being refunded or, if the bonds or general obligation promissory notes have not matured and are not presently redeemable, to the creation of a trust for, and shall be pledged to the payment of, the appropriation bonds or general obligation promissory notes being refunded.2. If a trust is created, a separate deposit shall be made for each issue of appropriation bonds or general obligation promissory notes being refunded. Each deposit shall be with a bank or trust company authorized by the laws of the United States or of a state in which it is located to conduct banking or trust company business. If the total amount of any deposit, including moneys other than sale proceeds but legally available for such purpose, is less than the principal amount of the appropriation bonds or general obligation promissory notes being refunded and for the payment of which the deposit has been created and pledged, together with applicable redemption premiums and interest accrued and to accrue to maturity or to the date of redemption, then the application of the sale proceeds shall be legally sufficient only if the moneys deposited are invested in securities issued by the United States or one of its agencies, or securities fully guaranteed by the United States, and only if the principal amount of the securities at maturity and the income therefrom to maturity will be sufficient and available, without the need for any further investment or reinvestment, to pay at maturity or upon redemption the principal amount of the appropriation bonds or general obligation promissory notes being refunded together with applicable redemption premiums and interest accrued and to accrue to maturity or to the date of redemption. The income from the principal proceeds of the securities shall be applied solely to the payment of the principal of and interest and redemption premiums on the appropriation bonds or general obligation promissory notes being refunded, but provision may be made for the pledging and disposition of any surplus.3. Nothing in this paragraph may be construed as a limitation on the duration of any deposit in trust for the retirement of appropriation bonds or general obligation promissory notes being refunded that have not matured and that are not presently redeemable. Nothing in this paragraph may be constructed to prohibit reinvestment of the income of a trust if the reinvestments will mature at such times that sufficient moneys will be available to pay interest, applicable premiums, and principal on the appropriation bonds or general obligation promissory notes being refunded.(7) FISCAL REGULATIONS.(a) All appropriation bonds shall be registered by the city clerk or city treasurer of the city issuing the appropriation bonds, or such other officers or agents, including fiscal agents, as the common council may determine. After registration, no transfer of an appropriation bond is valid unless made by the registered owner's duly authorized attorney, on the records of the city and similarly noted on the appropriation bond. The city may treat the registered owner as the owner of the appropriation bond for all purposes. Payments of principal and interest shall be by electronic funds transfer, check, share draft, or other draft to the registered owner at the owner's address as it appears on the register, unless the common council has otherwise provided. Information in the register is not available for inspection and copying under s. 19.35(1). The common council may make any other provision respecting registration as it considers necessary or desirable.(b) The common council may appoint one or more trustees or fiscal agents for each issue of appropriation bonds. The city treasurer may be designated as the trustee and the sole fiscal agent or as cofiscal agent for any issue of appropriation bonds. Every other fiscal agent shall be an incorporated bank or trust company authorized by the laws of the United States or of the state in which it is located to conduct banking or trust company business. There may be deposited with a trustee, in a special account, moneys to be used only for the purposes expressly provided in the resolution authorizing the issuance of appropriation bonds or an agreement between the city and the trustee. The common council may make other provisions respecting trustees and fiscal agents as the common council considers necessary or desirable and may enter into contracts with any trustee or fiscal agent containing such terms, including compensation, and conditions in regard to the trustee or fiscal agent as the common council considers necessary or desirable.(c) If any appropriation bond is destroyed, lost, or stolen, the city shall execute and deliver a new appropriation bond, upon filing with the common council evidence satisfactory to the common council that the appropriation bond has been destroyed, lost, or stolen, upon providing proof of ownership thereof, and upon furnishing the common council with indemnity satisfactory to it and complying with such other rules of the city and paying any expenses that the city may incur. The common council shall cancel the appropriation bond surrendered to the city.(d) Unless otherwise directed by the common council, every appropriation bond paid or otherwise retired shall be marked "canceled" and delivered to the city treasurer, or to such other fiscal agent as applicable with respect to the appropriation bond, who shall destroy them and deliver a certificate to that effect to the city clerk.(8) APPROPRIATION BONDS AS LEGAL INVESTMENTS. Any of the following may legally invest any sinking funds, moneys, or other funds belonging to them or under their control in any appropriation bonds issued under this section:(a) The state, the investment board, public officers, municipal corporations, political subdivisions, and public bodies.(b) Banks and bankers, savings and loan associations, credit unions, trust companies, savings banks and institutions, investment companies, insurance companies, insurance associations, and other persons carrying on a banking or insurance business.(c) Personal representatives, guardians, trustees, and other fiduciaries.(9) MORAL OBLIGATION PLEDGE. If the common council considers it necessary or desirable to do so, it may express in a resolution authorizing appropriation bonds its expectation and aspiration to make timely appropriations sufficient to pay the principal and interest due with respect to such appropriation bonds, to make deposits into a reserve fund created under sub. (4) (a) with respect to such appropriation bonds, to make payments under any agreement or ancillary arrangement entered into under s. 62.621 with respect to such appropriation bonds, to make deposits into any stabilization fund established or continued under s. 62.622 with respect to such appropriation bonds, or to pay related issuance or administrative expenses.(10) APPLICABILITY. This section does not apply if a city does not issue appropriation bonds as authorized under sub. (2).