House Bill hb1079

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    Florida House of Representatives - 2001                HB 1079

        By Representative Atwater






  1                      A bill to be entitled

  2         An act relating to the tobacco settlement;

  3         amending ss. 17.41 and 215.56005, F.S.;

  4         deleting the requirement of prior approval of

  5         the Legislature for the sale of all or part of

  6         the state's right, title, and interest in and

  7         to the tobacco settlement agreement and for the

  8         issuance of bonds by the Tobacco Settlement

  9         Financing Corporation which are payable from

10         and secured by tobacco settlement proceeds;

11         amending s. 215.5601, F.S.; changing amounts to

12         be transferred to the Lawton Chiles Endowment

13         Fund from the Department of Banking and Finance

14         Tobacco Settlement Clearing Trust Fund;

15         providing an effective date.

16

17  Be It Enacted by the Legislature of the State of Florida:

18

19         Section 1.  Paragraph (a) of subsection (3) of section

20  17.41, Florida Statutes, is amended to read:

21         17.41  Department of Banking and Finance Tobacco

22  Settlement Clearing Trust Fund.--

23         (3)(a)  Subject to approval of the Legislature, All or

24  any portion of the state's right, title, and interest in and

25  to the tobacco settlement agreement may be sold to the Tobacco

26  Settlement Financing Corporation created pursuant to s.

27  215.56005.  Any such sale shall be a true sale and not a

28  borrowing.

29         Section 2.  Paragraphs (c), (d), and (e) of subsection

30  (2) and paragraph (a) of subsection (3) of section 215.56005,

31  Florida Statutes, are amended to read:

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    Florida House of Representatives - 2001                HB 1079

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  1         215.56005  Tobacco Settlement Financing Corporation.--

  2         (2)  CORPORATION CREATION AND AUTHORITY.--

  3         (c)  The corporation shall have all the powers of a

  4  corporate body under the laws of this state, including, but

  5  not limited to, the powers of corporations under chapter 617,

  6  to the extent not inconsistent with or restricted by the

  7  provisions of this section, including, but not limited to, the

  8  power to:

  9         1.  Adopt, amend, and repeal bylaws not inconsistent

10  with this section.

11         2.  Sue and be sued.

12         3.  Adopt and use a common seal.

13         4.  Acquire, purchase, hold, lease, and convey real and

14  personal property, contract rights, general intangibles,

15  revenues, moneys, and accounts as may be proper or expedient

16  to carry out the purposes of the corporation and this section,

17  and to assign, convey, sell, transfer, lease, or otherwise

18  dispose of such property.

19         5.  Elect or appoint and employ such officers, agents,

20  and employees as the corporation deems advisable to operate

21  and manage the affairs of the corporation, which officers,

22  agents, and employees may be employees of this state or of the

23  state officers and agencies represented on the board of

24  directors of the corporation.

25         6.  Make and execute any and all contracts, trust

26  agreements, trust indentures, and other instruments and

27  agreements necessary or convenient to accomplish the purposes

28  of the corporation and this section, including but not limited

29  to investment contracts, swap agreements, or liquidity

30  facilities.

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    Florida House of Representatives - 2001                HB 1079

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  1         7.  Select, retain, and employ professionals,

  2  contractors, or agents, which may include the Division of Bond

  3  Finance of the State Board of Administration, as necessary or

  4  convenient to enable or assist the corporation in carrying out

  5  the purposes of the corporation.

  6         8.  Do any act or thing necessary or convenient to

  7  carry out the purposes of the corporation subject to approval

  8  of the Legislature where required in this section.

  9         (d)  The corporation is authorized to enter into one or

10  more purchase agreements with the department pursuant to which

11  the corporation purchases any or all of the state's right,

12  title, and interest in and to the tobacco settlement agreement

13  and to execute and deliver any other documents necessary or

14  desirable to effectuate such purchase. Sale of all or part of

15  the state's right, title, and interest in and to the tobacco

16  settlement agreement is subject to approval by the Legislature

17  in a regular, extended, or special session. The tobacco

18  settlement agreement moneys received pursuant to the purchase

19  agreements may be used for the costs and expenses of

20  administration of the corporation.

21         (e)1.  The corporation may issue bonds payable from and

22  secured by amounts payable to the corporation pursuant to the

23  tobacco settlement agreement. Issuance of bonds by the

24  corporation is subject to approval by the Legislature in a

25  regular, extended, or special session. In addition, the

26  corporation is authorized to issue bonds to refund previously

27  issued bonds and to deposit the proceeds of such bonds as

28  provided in the documents authorizing the issuance of such

29  bonds.  The corporation is authorized to do all things

30  necessary or desirable in connection with the issuance of the

31  bonds, including, but not limited to, establishing debt

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  1  service reserves or other additional security for the bonds,

  2  providing for capitalized interest, and executing and

  3  delivering any and all documents and agreements.  The total

  4  principal amount of bonds issued by the corporation shall not

  5  exceed $3 billion.  The principal amount of bonds issued in

  6  any single fiscal year shall not exceed $1.5 billion,

  7  beginning with the 2000-2001 fiscal year.  The limitation on

  8  the principal amount of bonds issued by the corporation shall

  9  not apply to bonds issued to refund previously issued bonds.

10  No series of bonds issued shall have a true interest cost rate

11  of more than 4 percent over the yield on U.S. Treasury

12  obligations which have a maturity approximately equal to the

13  average life of such series of bonds.  Satisfaction of the

14  foregoing interest rate limitation shall be determined on the

15  date such bonds are sold or a definitive agreement to sell

16  such bonds at specified prices or yields is executed and

17  delivered.  The corporation may sell bonds through competitive

18  bidding or negotiated contracts, whichever method of sale is

19  determined by the corporation to be in the best interest of

20  the corporation.

21         2.  The corporation does not have the power to pledge

22  the credit, the general revenues, or the taxing power of the

23  state or of any political subdivision of the state. The

24  obligations of the department and the corporation under the

25  purchase agreement and under any bonds shall not constitute a

26  general obligation of the state or a pledge of the faith and

27  credit or taxing power of the state.  The bonds shall be

28  payable from and secured by payments received under the

29  tobacco settlement agreement, and neither the state nor any of

30  its agencies shall have any liability on such bonds.  Such

31  bonds shall not be construed in any manner as an obligation of

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    Florida House of Representatives - 2001                HB 1079

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  1  the state or any agency of the state, the department, the

  2  State Board of Administration or entities for which the State

  3  Board of Administration invests funds, or board members or

  4  their respective agencies. The corporation shall not be

  5  authorized to expend moneys for payment of debt service on

  6  bonds from any source other than revenues received under the

  7  tobacco settlement agreement or reserves, funds, or accounts

  8  established pursuant to documents authorizing the issuance of

  9  such bonds.

10         3.  The corporation may validate any bonds issued

11  pursuant to this paragraph and the security for payment for

12  such bonds, as provided in chapter 75. The validation

13  complaint shall be filed only in the circuit court for Leon

14  County. The notice required under s. 75.06 shall be published

15  in Leon County, and the complaint and order of the circuit

16  court shall be served only on the State Attorney for the

17  Second Judicial Circuit. The provisions of ss. 75.04(2) and

18  75.06(2) shall not apply to a validation complaint filed as

19  authorized in this paragraph. The validation of the first

20  bonds issued pursuant to this paragraph may be appealed to the

21  Supreme Court, and such appeal shall be handled on an

22  expedited basis.

23         4.  The state hereby covenants with the holders of

24  bonds of the corporation that the state will not limit or

25  alter the authority or the rights under this section vested in

26  the corporation to fulfill the terms of any agreement,

27  including the terms of any purchase agreement, or in any way

28  impair the rights and remedies of such bondholders until at

29  least 1 year and 1 day after which no such bonds remain

30  outstanding unless adequate provision has been made for the

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    Florida House of Representatives - 2001                HB 1079

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  1  payment of such bonds pursuant to the documents authorizing

  2  such bonds.

  3         5.  The corporation shall not take any action which

  4  will materially and adversely affect the rights of holders of

  5  any bonds issued under this paragraph as long as such bonds

  6  are outstanding.

  7         6.  Until at least 1 year and 1 day after which no

  8  bonds of the corporation remain outstanding, the corporation

  9  shall not have the authority to file a voluntary petition

10  under chapter 9 of the federal Bankruptcy Code or such

11  corresponding chapter or sections as may be in effect, from

12  time to time, and neither any public officer nor any

13  organization, entity, or other person shall authorize the

14  corporation to be or become a debtor under chapter 9 of the

15  federal Bankruptcy Code or such corresponding chapter or

16  sections as may be in effect, from time to time, during any

17  such period. The state hereby covenants with the holders of

18  bonds of the corporation that the state will not limit or

19  alter the denial of authority to file bankruptcy under this

20  paragraph until at least 1 year and 1 day after which no bonds

21  of the corporation remain outstanding.

22         7.  The corporation may contract with the State Board

23  of Administration to serve as trustee with respect to bonds

24  issued by the corporation as provided by this paragraph and to

25  hold, administer, and invest proceeds of such bonds and other

26  funds of the corporation and to perform other services

27  required by the corporation.  The State Board of

28  Administration may perform such services and may contract with

29  others to provide all or a part of such services and to

30  recover the costs and expenses of providing such services.

31         (3)  POWERS OF THE DEPARTMENT.--

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    Florida House of Representatives - 2001                HB 1079

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  1         (a)  The department is authorized, on behalf of the

  2  state, to do all things necessary or desirable to assist the

  3  corporation in the execution of the corporation's

  4  responsibilities, including, but not limited to, processing

  5  budget amendments against the Department of Banking and

  6  Finance Tobacco Settlement Clearing Trust Fund, subject to the

  7  requirements of s. 216.177, for the costs and expenses of

  8  administration of the corporation in an amount not to exceed

  9  $500,000; entering into one or more purchase agreements to

10  sell to the corporation any or all of the state's right,

11  title, and interest in and to the tobacco settlement

12  agreement; executing any administrative agreements with the

13  corporation to fund the administration, operation, and

14  expenses of the corporation from moneys appropriated for such

15  purpose; and executing and delivering any and all other

16  documents and agreements necessary or desirable in connection

17  with the sale of any or all of the state's right, title, and

18  interest in and to the tobacco settlement agreement to the

19  corporation or the issuance of the bonds by the corporation.

20  The department's authority to sell any or all of the state's

21  right, title, and interest in and to the tobacco settlement

22  agreement is subject to approval by the Legislature in a

23  regular, extended, or special session.

24         Section 3.  Subsection (7) of section 215.5601, Florida

25  Statutes, is amended to read:

26         215.5601  Lawton Chiles Endowment Fund.--

27         (7)  ENDOWMENT PRINCIPAL.--The endowment shall receive

28  moneys from the sale of the state's right, title, and interest

29  in and to the tobacco settlement agreement and from amounts

30  transferred from the Department of Banking and Finance Tobacco

31  Settlement Clearing Trust Fund.  Amounts to be transferred

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    Florida House of Representatives - 2001                HB 1079

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  1  from the clearing trust fund shall be in the following amounts

  2  for the following fiscal years:

  3         (a)  For fiscal year 1999-2000, $1.1 billion;

  4         (b)  For fiscal year 2000-2001, $200 million;

  5         (c)  For fiscal year 2001-2002, $247.7 $200 million;

  6  and

  7         (d)  For fiscal year 2002-2003, $125 $200 million.

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  9  Amounts to be transferred pursuant to paragraphs (b), (c), and

10  (d) may shall be reduced by an amount equal to the lesser of

11  the amount specified in the paragraph for that fiscal year

12  $200 million or the amount the endowment receives in that

13  fiscal year pursuant to the sale of the state's right, title,

14  and interest in and to the tobacco settlement agreement.

15         Section 4.  This act shall take effect upon becoming a

16  law.

17

18            *****************************************

19                          HOUSE SUMMARY

20
      Deletes the requirement of prior approval of the
21    Legislature for the sale of all or part of the state's
      right, title, and interest in and to the tobacco
22    settlement agreement and for the issuance of bonds by the
      Tobacco Settlement Financing Corporation which are
23    payable from and secured by tobacco settlement proceeds.
      Changes amounts to be transferred to the Lawton Chiles
24    Endowment Fund from the Department of Banking and Finance
      Tobacco Settlement Clearing Trust Fund. See bill for
25    details.

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