WSR 14-06-107 PERMANENT RULES OFFICE OF THE STATE TREASURER (State Finance Committee) [Filed March 5, 2014, 10:33 a.m., effective April 5, 2014] Effective Date of Rule: Thirty-one days after filing.
Purpose: The purpose of the proposed rules is to update and amend the administrative rules relating to the school bond guarantee program. The administrative rules relating to this program have not been amended since the creation of the program in 2000. The proposed amended rules will clarify the eligibility requirements placed on school districts for participation in the program and will update outdated information. In order to allow the office of the state treasurer to fulfill its guarantee obligations, the amended rules clarify and extend to school districts the notification process required when a county treasurer, acting as treasurer for a school district, is unable to make a debt service payment when due.
Citation of Existing Rules Affected by this Order: Amending chapter 210-02 WAC.
Statutory Authority for Adoption: RCW 39.98.040.
Adopted under notice filed as WSR 14-04-068 on January 29, 2014.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 3, Amended 14, Repealed 5.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 3, Amended 14, Repealed 5.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: March 5, 2014.
Ellen Evans
Deputy Treasurer
for Debt Management
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-010 Definitions.
For purposes of this rule, the following definitions shall apply:
"Act" means the Washington State School District Credit Enhancement Program Act, pursuant to chapter 39.98 RCW.
"Application" means an application requesting the state treasurer to issue a certificate of eligibility pursuant to RCW 39.98.040.
"Authorized district official" means ((the chairperson of the board, the superintendent, or business manager for the school district, or other designee of the board, as designated)) any individual designated as such by resolution provided for in WAC 210-02-020.
"Bond" means any voted general obligation bond issued by a school district holding a certificate issued pursuant to the act, and any general obligation bond issued by a school district holding a certificate issued pursuant to the act to refund outstanding voted general obligation bonds of that school district.
"Capital projects fund" means the fund created pursuant to RCW 28A.320.330.
"Certificate of eligibility" means a certificate issued by the state treasurer pursuant to RCW 39.98.040.
(("Credit enhancement program" means the school district bond guarantee program established by the act.))
"County assessor" means the county assessor(s) in the county or counties in which the requesting school district is located.
"County treasurer" means the county treasurer of the requesting school district.
(("Fiscally solvent," when used for the purposes of any certification required by the act and these rules with respect to the financial condition of a school district seeking to participate in the guarantee program, means that, in the opinion of the person making such certification after giving due consideration to:
• The principal and interest requirements of all outstanding voted general obligation bonds of the school district and of all outstanding bonds issued to refund voted general obligation bonds of the school district;
• The school district's past record of collecting voter-approved excess property taxes and reasonable expectations concerning future collections of voter-approved excess property taxes as required to meet those principal and interest requirements; and
• Such additional financial circumstances, if any, of the school district that such person considers to be material, it is reasonably expected that the school district will be able to satisfy all principal and interest requirements of bonds guaranteed and proposed to be guaranteed by the state under the guarantee program.))
"Guarantee program" means the Washington state school district credit enhancement program established by the act.
"Nationally recognized bond counsel firm" means a bond counsel firm listed in the most recent publication of The Bond Buyer's Municipal Market Place.
"Paying agent" means the paying agent selected, from time to time, for a bond issue pursuant to state law.
"School district" or "district" means any school district or its successor under the laws of the state.
"State" means the state of Washington.
((Terms not otherwise defined shall have the meanings ascribed to them in the act.))
((APPLYING TO THE PROGRAM))
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-020 ((Request)) Application for certificate of eligibility.
School districts may ((request)) apply for a certificate of eligibility at any time during the year by filing the ((request)) application with the state treasurer. Such ((requests)) an application, however, must be submitted to the state treasurer no less than thirty days prior to sale of bonds for which the guarantee, if granted, will apply. ((Requests)) Applications, and all other written communications pursuant to the guarantee program, shall be addressed to the ((Debt Management Division)) School Bond Guarantee Program, Office of the State Treasurer, Legislative Building, 2nd Floor, P.O. Box 40200, Olympia, Washington 98504-0200. The ((request)) application shall include:
((•)) (1) The name, county, and district number (if applicable) of the requesting school district;
((•)) (2) The name of the authorized district official for the requesting school district;
((•)) (3) The name of the underwriter, if known, financial advisor (if any) and bond counsel assigned to the financing of the requesting school district to which the guarantee will apply;
((•)) (4) The mailing address, phone number, fax number, and e-mail address (if applicable) of the requesting school district;
((• A statement of whether any of the school district's previously issued debt is covered by the guarantee program;
•)) (5) A copy of the district's ballot proposition resolution, showing details of the special election (date, amount, ballot title) at which the bonds were ((or are expected to be)) approved by the voters;
((•)) (6) The not-to-exceed amount the district is currently requesting be guaranteed pursuant to its application;
(7) An allocation report in the form provided by the state treasurer, identifying, by ballot issue, the principal amount of any bonds previously issued pursuant to the ballot proposition resolution(s) authorizing the bonds, plus any net original issue premium associated with such previously issued bonds that was deposited in the capital projects fund and any remaining authority to issue bonds pursuant to such ballot proposition resolution(s);
(8) A copy of the resolution passed by the ((requesting)) school district's board of directors (which may be the same resolution as the district's ballot proposition resolution) authorizing the ((request)) application for a certificate of eligibility;
((•)) (9) A certificate signed by an authorized district official:
((-)) (a) Stating whether the ((requesting)) school district has any bonds, the principal of or interest on which has been paid by the state under the act, and for which there remain outstanding any payment obligations of the district to the state;
((-)) (b) Stating that the ((requesting)) school district is, and will remain, in compliance with these administrative rules as currently set forth or later amended; and
((-)) (c) Attesting to the accuracy and completeness of the materials provided.
((•)) (10) A nonrefundable application processing fee of one hundred dollars; and
((•)) (11) Any additional materials that may be required by the office of the state treasurer in support of the ((request)) application for participation in the guarantee program.
In addition to the above requirements, any application that includes bonds to be refunded must also provide a copy of the ballot resolution(s) relating to each series of bonds to be refunded.
((STATE REVIEW AND APPROVAL UNDER THE PROGRAM))
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-030 Review of ((request)) application for certificate of eligibility.
Upon receipt of ((a request)) an application for a certificate of eligibility, the state treasurer ((shall)) will determine whether all items listed in WAC 210-02-020 have been provided and will notify the district no later than five business days after receipt if the application is incomplete.
In determining the school district's eligibility under the guarantee program, the office of the state treasurer may request additional information from the school district, as well as from any other person or entity ((that collects information pertaining to an evaluation that the requesting school district is fiscally solvent)).
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-040 Issuance of certificate of eligibility.
Upon determining that a school district is eligible to participate in the guarantee program, the state treasurer ((shall)) will issue a certificate of eligibility to the school district((, no later than one business day prior to the bond sale)). The certificate of eligibility shall:
((•)) (1) Evidence the school district's immediate qualification for the guarantee program ((for each bond issue contemplated for guarantee under the act));
((•)) (2) Be valid for one year from the date of its issuance; and
((•)) (3) Be ((applied only to the)) valid only for those bonds approved under the certified special election(s) specified by the school district in its ((request)) application for a certificate of eligibility.
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-050 Denial of eligibility/determination of ineligibility.
The state treasurer may deny a school district's ((request)) application for a certificate of eligibility and issue a determination of ineligibility pursuant to RCW 39.98.040, if:
((•)) (1) The school district fails to meet the provisions outlined in the act or any of the requirements outlined in ((this)) these rules; or
((The state treasurer may also deny a school district's request for a certificate of eligibility and issue a determination of ineligibility pursuant to RCW 39.98.040, if))
(2) The state has ever paid, pursuant to the guarantee program, any principal of or interest on any of the school district's bonds; and((:
•)) (a) The associated payment obligations of the district to the state are not satisfied; or
((•)) (b) The state treasurer ((or)) and the state superintendent of public instruction are unable to certify, in writing, that the school district is fiscally solvent.
The state treasurer may deny a district's application at his or her sole discretion.
NEW SECTION
WAC 210-02-055 Determination of fiscal solvency.
"Fiscally solvent" when used for the purposes of any certification required by the act and these rules with respect to the financial condition of a school district seeking to participate in the guarantee program, means that, in the opinion of the person making such determination after giving due consideration to:
(1) The principal and interest requirements of all outstanding voted general obligation bonds of the school district and of all outstanding bonds issued to refund voted general obligation bonds of the school district;
(2) The school district's past record of collecting voter-approved excess property taxes and reasonable expectations concerning future collections of voter-approved excess property taxes as required to meet those principal and interest requirements; and
(3) Such additional financial circumstances, if any, of the school district that such person considers to be material,
it is reasonably expected that the school district will be able to satisfy all principal and interest requirements of bonds guaranteed and proposed to be guaranteed by the state under the guarantee program.
((USING THE CERTIFICATE TO ISSUE BONDS))
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-060 ((Using the certificate of eligibility to obtain the state guarantee.)) Information to be provided to the state treasurer before issuance of a final certificate.
The school district shall provide a copy of the final official statement for the bonds to which the guarantee was applied, promptly upon its publication. The school district shall provide to the state treasurer at the time of closing:
((•)) (1) A copy of the bond resolution as adopted by the board of directors of the school district, or a bond purchase agreement that states the final terms of the bonds;
((• A copy of the final official statement for the bonds to which the guarantee was applied, promptly upon its publication;
•)) (2) An allocation report, identifying by ballot issue, the principal amount of any bonds issued pursuant to the ballot proposition resolution(s) authorizing the bonds, plus any net original issue premium associated with such issued bonds that was deposited in the capital projects fund and any remaining authority to issue bonds pursuant to the ballot proposition resolution(s); and
(3) A letter addressed to the state treasurer signed by the school district's nationally recognized bond counsel firm stating that the state treasurer may rely upon such firm's approving legal opinion with respect to the bonds as if that opinion were addressed to the state treasurer.
If all of the above information has been received, on the date of the bond closing, the state treasurer will provide a certificate evidencing the state's guarantee for use by the school district that reflects its compliance with these requirements.
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-080 Reference to guarantee in school district bond documents.
School districts ((with a valid)) that issue bonds under a certificate of eligibility, ((and that have complied with WAC 210-02-060 and all other sections of this rule,)) shall evidence the state's guarantee of the school district's bonds ((by including a description of the state's guarantee)) in a form to be provided by the state treasurer and placed:
((•)) (1) On the cover of the school district's preliminary official statement(s) and official statement(s), or other offering document(s), for the applicable bond(s); ((and
•)) (2) On the face of the school district's applicable bond(s); and
(3) As an appendix within the official statement(s), or other offering document(s), for the applicable bond(s).
((• The description of the state's guarantee supplied by)) The state treasurer will provide, and any school district relying on the state's guarantee must ((be used in its entirety and may not be modified or amended)) use the description of the state's guarantee in the school district's offering document. The description must be used in its entirety and may not be modified or amended.
Any modification or amendment may result in a denial of future applications for eligibility by the district. It is incumbent upon each district to check the state treasurer's web site for the most current description.
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-090 Ratings.
The office of the state treasurer will undertake to have the Washington school bond guarantee program rated by at least one of the following: Standard & Poor's, Moody's Investors Service, ((and)) or Fitch ((IBCA)) Ratings. Any school district proposing to issue bonds under the guarantee program may:
((•)) (1) Engage, at its own expense, one or more of the rating agencies to apply the rating of the guarantee program to its bonds; and
((•)) (2) At its discretion, and at its own expense, choose to obtain an underlying rating on the bonds.
((REPAYMENT OF SCHOOL DISTRICT DEBT ISSUED UNDER THE PROGRAM))
((STATE PAYMENT ON BONDS))
NEW SECTION
WAC 210-02-115 Notification by district of insufficient funds.
At least seven business days before a scheduled debt service payment is due, a district that has issued bonds under a certificate of eligibility must confirm that sufficient funds will be available to make the scheduled debt service payment. If the district determines that insufficient funds are available to make the scheduled debt service payment, the district must notify the office of the state treasurer at least seven business days prior to its due date. Such notice shall be made to the office of the state treasurer as follows:
(1) By telephone: 360-902-9000; and
(2) By e-mail: SchoolBondGuarantee@tre.wa.gov.
Failure to make this notification may result in a denial of future applications for eligibility.
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-120 County treasurer notice to state treasurer of insufficient funds.
((A)) Upon determining that a timely transfer of all required funds to the paying agent for scheduled debt service payments on guaranteed bonds cannot be made, the county treasurer ((who is unable to transfer to the paying agent funds required to make scheduled debt service payments on guaranteed bonds of a school district on or prior to the payment date, due to the lack of adequate funds,)) shall immediately provide notice to the state treasurer and to the paying agent pursuant to RCW 39.98.050. Such notice shall be made to the office of the state treasurer as follows:
((•)) (1) By telephone: (((360) 902-9050)) 360-902-9000; and
((•)) (2) By facsimile: (((360))) 360-902-9045 or by e-mail: SchoolBondGuarantee@tre.wa.gov; and
((•)) (3) By first class mail: Attn: ((Deputy Treasurer, Debt Management Division)) School Bond Guarantee Program, Office of the State Treasurer, Legislative Building, 2nd Floor, P.O. Box 40200, Olympia, Washington 98504-0200.
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-130 Paying agent notice to state treasurer of insufficient funds.
If sufficient funds are not transferred to the paying agent at the time or times required to make scheduled debt service payments on guaranteed bonds of a school district, the paying agent shall immediately notify the state treasurer as follows:
((•)) (1) By telephone: (((360) 902-9050)) 360-902-9000; ((and
•)) (2) By facsimile: (((360))) 360-902-9045 or by e-mail: SchoolBondGuarantee@tre.wa.gov; and
((•)) (3) By first class mail: Attn: ((Deputy Treasurer, Debt Management Division)) School Bond Guarantee Program, Office of the State Treasurer, Legislative Building, 2nd Floor, P.O. Box 40200, Olympia, Washington 98504-0200.
((SCHOOL DISTRICT REPAYMENT TO STATE))
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-150 Repayment to the state by school districts.
Each school district is responsible for paying in full the principal of and interest on its bonds guaranteed by the state under the guarantee program. The state treasurer shall recover from the district any funds paid by the state on behalf of a school district under the guarantee program ((in a manner consistent with chapter 39.98 RCW)) along with any interest or penalties by any means authorized pursuant to the act or any other method permitted by law.
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-160 Interest on school district obligations to state.
The state treasurer ((will)) may charge interest in connection with the recovery of funds under chapter 39.98 RCW. Any interest charged will be in a manner consistent with chapter 39.98 RCW. ((The interest charged will be what the funds used to make the guarantee payment would otherwise earn in the state treasury.)) Interest will be determined after taking certain factors into account such as: The circumstances of any prior draws by the district on the state, market interest and penalty rates, and the cost of funds or opportunity cost of investments.
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-170 Penalty for state payment under guarantee program.
((In addition to charging interest,)) The state treasurer may, after taking into account the circumstances giving rise to the failure of the district to make payments on its bonds in a timely manner, impose a penalty ((on a school district for which the state made a payment under the guarantee program, which penalty shall not be more than five percent of the amount paid by the state pursuant to its guarantee for each instance in which a payment by the state is made. Any penalty imposed will be)) consistent with ((chapter 39.98)) RCW 39.98.060.
((OTHER))
NEW SECTION
WAC 210-02-195 Failure to comply with this chapter.
Failure to comply with the provisions of this chapter may result in denial of a future application for eligibility under the guarantee program.
AMENDATORY SECTION (Amending WSR 00-11-023, filed 5/9/00, effective 6/9/00)
WAC 210-02-200 Exceptions.
The state treasurer may, in his or her discretion, waive any or all provisions of this ((rule)) chapter to the extent provided by law.
REPEALER
The following sections of the Washington Administrative Code are repealed:
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