County Bond Financing Review.

Ala. Code tit. 11, tit. 1, ch. 8A

in effect

Ala. Code § 11-8A-1 Definitions.

11-8A-1. Definitions. As used in this chapter, the following words shall have the following meanings: (1) BOND FINANCING AGREEMENT. An agreement or other document relating to the sale or issuance of bonds including, but not limited to, a bond purchase agreement, a loan agreement, a refinancing agreement, or documents providing for bonds sold or issued on a competitive sale basis. (2) BONDS. Bonds, bond anticipation notes, warrants, warrant anticipation notes, or indebtedness issued or entered into on behalf of the county or by the county commission for a term of at least three years or more. (3) BUSINESS DAY. A day, other than a Saturday or a Sunday, on which commercial banking institutions are open for business in the State of Alabama and a day on which the payment system of the Federal Reserve System is operational. (4) CAPITAL EXPENDITURE. Any cost or expense of a type that is properly chargeable to a capital account under general federal income tax principles. (5) GENERAL OBLIGATION INDEBTEDNESS. A bond financing agreement which, according to its terms, will be repaid from any funds at the disposal of the county commission. (6) GENERAL OPERATING EXPENSES. Any expense incurred by a county in the general operation and function of the county. The term includes salaries and other associated expenses, but does not include a capital expenditure or expense. (7) LIMITED OBLIGATION INDEBTEDNESS. Bonds which, according to their terms, are required to be paid solely from the proceeds of a specific tax, fee, license, charge, or other specific revenue stream. (8) NET PRESENT VALUE SAVINGS. The projected cost savings to the county from refinancing any bonds, by comparing the net present value of the costs of the bonds proposed for refunding, including the original costs of issuance and the payment of principal and interest on the bonds proposed for refunding, with the net present value of the costs of the proposed bonds, including the costs of issuance and refinancing and the payment of principal and interest on the proposed bonds. (9) SWAP AGREEMENT. A swap agreement as defined in Article 3, commencing with Section 41-1-40, of Chapter 1 of Title 41. (Act 2009-757, p. 2287, §1.)

Ala. Code § 11-8A-2 Compliance with Chapter.

11-8A-2. Compliance with Chapter. Notwithstanding any other law, after October 1, 2009, no county commission may enter into any bond financing agreement or other transaction related to establishing bonded indebtedness that constitutes or creates an obligation, debt, or charge against the credit or taxing power of the county until and unless the county has satisfied the requirements of this chapter. (Act 2009-757, p. 2287, §2.)

Ala. Code § 11-8A-3 County Government Bond Financing Review Form.

11-8A-3. County Government Bond Financing Review Form. (a) In addition to any and all other documents presented for examination and execution of a bond financing agreement which, for the purposes of this chapter, takes place at the time a county commission makes an official award of the bonds, the county commission shall execute a county government bond financing review form. The standard review form shall be prepared by the Department of Examiners of Public Accounts and shall include statements to the effect that: (1) The county commission has considered whether it can satisfy its financial obligations for the life of the bonds. (2) In the case of limited obligation indebtedness, the county commission has identified the source for the debt service payments for the life of the bonds, and in the case of general obligation indebtedness, the county commission has indicated that the full faith and credit of the county has been pledged for the debt service payments for the life of the bonds. (3) The county commission has considered the period of usefulness of the improvement or property for which the bonds are to be issued in light of the duration of the term of the bonds under the bond financing agreement. (4) The county commission acknowledges that bond proceeds shall not be used for general operating expenses of the county. (5) The county commission has received from the bond underwriter, bond counsel, issuer’s counsel, trustee, and any others associated with the issuance of bonds an itemized listing of their respective fees and all other costs which shall not be subject to change prior to the sale or issuance of bonds. (6) The county commission has received from the bond underwriter a clear and understandable written proposal explaining all details of the proposed bond issue, its repayment schedule, and any external factors which could affect the total cost to the county if it issues the bonds. (7) The county commission has considered the effect, if any, that the bonds will have on the county’s constitutional debt limit. (8) The county commission has received from the bond underwriter information demonstrating that the estimated interest rate on the bonds is reasonable and, that if information regarding similar recent issuances is available, the interest rates are comparable with other similar issuances based on current bond market conditions on the date of execution of the bond financing agreement. (b) If the proceeds of the proposed bonds are to be used in whole or in part for the purpose of refinancing or refunding outstanding bonds, the county government bond financing review form shall also include statements to the effect that: (1) The county commission understands how the issuance of refunding bonds may extend the county’s initial debt repayment period and the total cost paid by the county by the end of the refunding period. (2) The county commission has considered whether the refunding bonds will create net present value savings for the county, including the costs of refinancing. (c) In connection with a swap agreement, the county government bond financing review form shall include statements to the effect that: (1) The county commission has complied with paragraph a. of subdivision (2) of Section 41-1-42. (2) The county commission has reviewed or had explained by the adviser selected as provided in Section 11-8A-5 all documentation provided pertaining to the swap agreement as required in subsection (d). (3) The county commission has designated an employee or official who will have primary responsibility for the consideration, execution, and monitoring of interest rate swaps and financial hedges entered into by the county. (4) The county commission has determined whether the county’s obligations under the swap agreement constitute a general obligation indebtedness of the county and whether the source of payment is sufficient. (5) The county commission has sought and received specific information disclosing the potential risks inherent in the swap agreement including those risks commonly referred to in the derivatives industry as basis risk, tax risk, interest rate risk, counterparty risk, termination risk, market-access risk, rollover or anticipation risk, and credit risk. (d) The county government bond financing review form shall also include a statement acknowledging that all enumerated items on the review form have been considered by the county commission, and that the county commission has voted to enter into the bond financing agreement or swap agreement by an affirmative vote of a majority of the members of the county commission. The statement of acknowledgment shall be signed by the chair of the county commission or another commission member designated by the county commission and the adviser or consultant utilized by the county commission pursuant to Section 11-8A-5. (e) A copy of the county government bond financing review form shall be forwarded to the Department of Examiners of Public Accounts within 10 business days of the issuance of the bonds or swap agreement. All county government bond financing review forms shall be kept on file at the department and shall be available for public inspection for a period of seven years. (Act 2009-757, p. 2287, §3.)

Ala. Code § 11-8A-4 Required Documentation.

11-8A-4. Required Documentation. (a) In addition to the requirements of Section 11-8A-3, the bond financing agreement documents shall include a detailed itemization of the costs and fees which will be paid directly by the county commission or from bond proceeds under the bond financing agreement. This itemization shall include a statement acknowledging that the amounts of these costs and fees have been presented and explained to all members of the county commission prior to the sale of bonds. The acknowledgement statement shall be signed by the chair of the county commission or another commission member designated by the county commission and by the authorized signatory for the bond underwriter. (b) In connection with a swap agreement, the documentation necessary to effectuate the swap agreement shall also include a statement from the authorized signatory for the bond underwriter or authorized signatory of the provider of the swap agreement to the effect that: (1) It has provided the county commission with a disclosure of the potential risks inherent in the swap agreement. (2) It has disclosed all fees associated with the swap agreement. (3) It has provided the county commission with documentation necessary to effectuate the swap agreement including master agreements, schedules, credit support annexes, confirmations, legal opinions, fairness opinions, and any other information necessary to comply with subdivisions (3) and (5) of subsection (c) of Section 11-8A-3. (Act 2009-757, p. 2287, §4.)

Ala. Code § 11-8A-5 Preparatory Advice and Consultation.

11-8A-5. Preparatory Advice and Consultation. In preparing the county government bond financing review form, the county commission shall consult with and obtain advice from either an attorney for the county, the county administrator, or, at the option of the county commission, a certified public accountant regarding any and all bond or swap proposals received by the county. The person or persons utilized by the county commission for advice and consultation shall review all documents to be included at the execution of the bond financing agreement or swap agreement. (Act 2009-757, p. 2287, §5.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026