7507 - Borrowing authorized.
§ 7507. Borrowing authorized. (a) Aggregate limitation.--Pursuant to the provisions of section 7(a)(3) of Article VIII of the Constitution of Pennsylvania and the referendum approved by the electorate on November 3, 1981, the issuing officials are authorized and directed to borrow, on the credit of the Commonwealth, bonds not exceeding in the aggregate the sum of $300,000,000, not including refunding bonds, as may be found necessary to carry out the purposes of this chapter. (b) Authorization to issue notes.--Pending the issuance of bonds of the Commonwealth as authorized in this chapter, the issuing officials are authorized in accordance with this chapter and on the credit of the Commonwealth to make temporary borrowing not to exceed three years in anticipation of the issue of bonds with the latest stated maturity date to be set forth in the notes, in order to provide funds in such amounts as may from time to time be deemed advisable to carry out the purposes of this chapter prior to the issue of bonds. In order to provide for and in connection with such temporary borrowings, the issuing officials are authorized in the name and on behalf of the Commonwealth to enter into any loan or credit agreement or agreements or other agreements with any banks or trust companies or other lending institutions or persons in the United States having power to enter into them, which agreements may contain such provisions not inconsistent with the provisions of this chapter as may be customary in such instruments and as may be authorized by the issuing officials. (c) Issuance of notes and renewal notes.--All temporary borrowings made under the authorization of this section shall be evidenced by notes of the Commonwealth, which shall be issued from time to time for such amounts that together with the notes outstanding and bonds issued pursuant to this chapter do not exceed $300,000,000, in such form and in such denominations, and subject to such terms and conditions of sale and issue, renewal, prepayment or redemption and maturity, rate or rates of interest and time of payment of interests, as the issuing officials shall direct and in accordance with this chapter. Such direction may provide for the subsequent issuance of the notes (referred to as "renewal notes") to refund the notes or renewal notes, which renewal notes shall, upon issuance thereof, evidence the borrowing, and may specify such other terms and conditions with respect to the notes and renewal notes thereby authorized for issuance as the issuing officials may determine and direct. Any issue of renewal notes may be in a principal amount sufficient to repay the principal of and accrued interest on, if any, the issue or issues of notes being refunded and to pay the financial costs relating to the renewal notes. (d) Funding bonds.--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 chapter. The funding bonds must be issued and sold not later than a date three years after the date of the 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 renewal notes. (e) Issuance of general obligation bonds.--As evidence of the indebtedness authorized in this chapter, general obligation bonds of the Commonwealth shall be issued from time to time to fund and retire notes issued pursuant to this chapter (referred to as "funding bonds") or to provide moneys necessary to carry out the purposes of this chapter, or both, for such total amounts, in such form, in such denominations and subject to such 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 30 years from the date of the debt first issued for each series. (f) Execution of bonds.--All bonds and notes issued under the authority of this chapter shall bear facsimile signatures of the issuing officials and a facsimile of the great seal of the Commonwealth and shall be countersigned by a duly authorized officer of a duly authorized loan and transfer agent of the Commonwealth. (g) Direct obligation of Commonwealth.--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 are hereby pledged for the payment of the interest thereon as it becomes due and 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 of America. (h) Exemption from taxation.--All bonds and notes issued under the provisions of this section shall be exempt from taxation for State and local purposes. (i) Form of bonds.--The bonds may be issued as coupon bonds or registered as to both principal and interest as the issuing officials may determine. If interest coupons are attached, they shall contain the facsimile signature of the State Treasurer. (j) Bond amortization.--The issuing officials shall provide for the amortization of the bonds in substantial and regular amounts over the term of the debt. 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. (k) Refunding bonds.--The issuing officials are authorized to provide, by resolution, for the issuance of refunding bonds for the purpose of refunding any bonds issued under the provisions of this chapter and then outstanding, either by voluntary exchange with the holders of the outstanding bonds, or to provide funds to redeem and retire the outstanding bonds with accrued interest, any premium payable thereon and the costs of issuance and retirement of bonds, at maturity or at any call date. The issuance of the refunding bonds, the maturities and other details thereof, the rights of the holders thereof and the duties of the issuing officials in respect to the same shall be governed by the provisions of this section, insofar as they may be applicable. Refunding bonds, which are not subject to the aggregate limitation of $300,000,000 of bonds to be issued pursuant to this chapter, may be issued by the issuing officials to refund bonds originally issued or to refund bonds previously issued for refunding purposes. (l) Quorum.--Whenever any action is to be taken or decision made by the Governor, the Auditor General and the State Treasurer acting as issuing officials and the three officers are not able unanimously to agree, the action or decision of the Governor and either the Auditor General or State Treasurer shall be binding and final.