1989-1990 Bill 1522: Auxiliary facilities revenue bonds for Clemson University

South Carolina General Assembly
108th Session, 1989-1990

Bill 1522

                    Current Status

Bill Number:               1522
Ratification Number:       599
Act Number                 502
Introducing Body:          Senate
Subject:                   Auxiliary facilities revenue bonds for
                           Clemson University

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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A502, R599, S1522)

AN ACT TO AMEND CHAPTERS 119 AND 117 OF TITLE 59, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO CLEMSON UNIVERSITY AND THE UNIVERSITY OF SOUTH CAROLINA, BY ADDING ARTICLES 7 AND 3 RESPECTIVELY SO AS TO AUTHORIZE THE BOARDS OF TRUSTEES OF EACH UNIVERSITY TO ISSUE AUXILIARY FACILITIES REVENUE BONDS IN ORDER TO PROVIDE FUNDS FOR THE ACQUISITION, CONSTRUCTION, RENOVATION, OR EQUIPPING OF AUXILIARY FACILITIES, TO PROVIDE THAT THE BONDS MUST BE SECURED BY A LIEN ON AND PLEDGE OF REVENUES DERIVED FROM THE FACILITIES AND OPERATIONS, TO PROVIDE PROCEDURES RELATING TO THE AUTHORIZATION OF THE BONDS, AND TO PROVIDE THAT NO TIME LIMIT IS SET FOR THE ISSUANCE OF BONDS; TO DESIGNATE SECTIONS 59-117-10 THROUGH 59-117-100 AS ARTICLE 1, CHAPTER 117, TITLE 59 AND ENTITLED "GENERAL PROVISIONS"; AND TO AUTHORIZE THE BOARD OF TRUSTEES OF THE COLLEGE OF CHARLESTON TO BORROW ONE MILLION, TWO HUNDRED THOUSAND DOLLARS TO ISSUE BONDS OR NOTES FOR THE RENOVATION AND EXPANSION OF THE COLLEGE'S CAFETERIA FACILITIES.

Be it enacted by the General Assembly of the State of South Carolina:

Auxiliary facilities revenue bonds for Clemson University

SECTION 1. Chapter 119 of Title 59 of the 1976 Code is amended by adding:

"Article 7

Auxiliary Facilities Revenue Bonds

Section 59-119-710. (A) The General Assembly finds that it is desirable to provide continuing and general statutory authority for Clemson University to incur debt for, among other things, the purposes of providing funds to acquire, construct, renovate, and equip certain revenue-producing auxiliary facilities, which debt is secured by a pledge of the revenues derived from the operation of some or all of the facilities. Clemson University has demonstrated need for additional funds to provide for acquisition, construction, renovation, and equipping of these facilities. These facilities are needed to replace or renovate aging facilities and to provide additional facilities all to the end that the educational environment at Clemson University will be enhanced for the benefit of present and potential students at Clemson University.

(B) Consideration has been given to this need and to the methods of funding it. It has been determined to be in the best interests of the people of this State to authorize Clemson University to acquire, construct, renovate, and equip additional facilities and to incur indebtedness for these purposes which is payable from the revenues derived from the operation of these facilities to the extent and under the conditions provided for in this article.

Section 59-119-720. As used in this article:

(1) Bond' or bonds' means any note, bond, installment contract, or other evidence of indebtedness issued pursuant to this chapter.

(2) Clemson' means Clemson University.

(3) Facilities' means any or all of the following facilities operated to provide for the students, faculty, or staff at Clemson: dining or food service facilities; laundry facilities; canteen facilities; vending machines; convenience stores; any other facilities for the sale of sundry items; health services; book stores; parking lots and vehicle registration; and all furniture, furnishings and equipment in them, which are now owned by Clemson, or which may be acquired by Clemson for any of these purposes.

(4) Revenues' of any facilities means the entire receipts of Clemson from the operation of the facilities. Net revenues' means these receipts reduced by the necessary expenses for operation and maintenance of the facilities.

(5) Board' means the State Budget and Control Board.

(6) Trustees' means the Board of Trustees of Clemson or any successor body.

Section 59-119-730. The trustees are authorized to acquire additional facilities and to improve and renovate existing facilities to the extent they determine to be necessary; and the proceeds of bonds authorized by this article are made available for that purpose. The trustees also are authorized to refund bonds that may from time to time be outstanding pursuant to this article by exchange or otherwise.

Section 59-119-740. Upon receiving the approval of the board and upon review by the Joint Bond Review Committee, the trustees may from time to time borrow such sums as may be necessary to accomplish the purpose of this article and to evidence these borrowings by bonds issued pursuant to this article in such aggregate principal amount as they determine, except that other provisions of this article to the contrary notwithstanding, there may not be outstanding at any time bonds issued pursuant to this article in excess of twenty-five million dollars.

Section 59-119-750. Bonds issued pursuant to this article must be payable from the revenues or the net revenues derived by Clemson from these facilities as designated by the trustees with respect to the bonds. The trustees may abandon the use of any portion of the facilities or sell or dispose of any portion of the facilities upon receipt of a written recommendation by the chief financial officer of Clemson to the effect that the action will not adversely affect the ability of Clemson to discharge its obligations to the holders of bonds issued pursuant to this article and upon the further conditions as prescribed in the resolution of the trustees providing for the issuance of bonds. The bonds issued pursuant to this article may be further secured by the additional pledges of other revenues or fees of Clemson as it may be authorized to grant pursuant to other laws of this State.

Section 59-119-760. The faith and credit of the State may not be pledged for the payment of the principal and interest of the bonds, and there must be on the face of each bond a statement plainly worded to that effect. Neither the trustees nor any other person signing the bonds is personally liable for them.

Section 59-119-770. In order to avail themselves of the authorizations set forth in this article, the trustees shall adopt resolutions providing for the issuance of bonds of Clemson, within the limitations mentioned in this article which must prescribe the tenor, terms, and conditions of the bonds. The bonds must be issued as serial or term bonds, maturing in equal or unequal amounts, at such times and on such occasions as the trustees determine. The last maturing bonds of any issue must be expressed to mature not later than fifty years from their date, and the first maturing bonds of any issue, issued pursuant to this article, falls due within five years from their date. They must bear such rates of interest, payable on such occasion, as the trustees prescribe, and the bonds must be in such denominations, payable in such medium of payment, and at such place as such resolutions prescribe. All bonds may be issued with a provision permitting their redemption on any interest payment date before their respective maturities. Bonds made subject to redemption before their stated maturities may contain a provision requiring the payment of a premium for the privilege of exercising the right of redemption, in such amount or amounts as the trustees prescribe in the resolutions authorizing their issuance. All bonds that are subject to redemption must contain a statement to that effect on the face of each bond. The resolutions authorizing their issuance must contain provisions specifying the manner of call and the notice of call that must be given.

Section 59-119-780. The bonds authorized by this article and all interest to become due on them have the tax exempt status prescribed by Section 12-1-60.

Section 59-119-790. It is lawful for all executors, administrators, guardians, and fiduciaries, all sinking fund commissions, the board, as trustee of the South Carolina Retirement System, and all other governmental entities within this State to invest any monies in their hands in the bonds.

Section 59-119-800. The bonds and coupons, if any, attached to the bonds, are executed manually or by facsimile in the name of Clemson in the manner and by persons as the trustees from time to time determine, and the seal of Clemson must be affixed to or impressed or reproduced on each bond. Any coupons attached to the bonds must be authenticated by the facsimile signature of one or more of the persons signing the bonds. The bonds, in the discretion of the trustees, may be registerable as to principal and interest on books kept for them by or on behalf of Clemson, including by a corporate registrar. The delivery of the executed bonds is valid notwithstanding changes in officers or in the seal occurring after the execution. Notwithstanding the foregoing, the bonds, in the discretion of the trustees, may be issued as fully registered noncertificated book-entry securities.

Section 59-119-810. The bonds must be disposed of in such manner as the trustees determine, except that no sale, privately negotiated without public advertisement, may be made unless the approval of the board is obtained. If the trustees elect to sell the bonds at public sale, at least one advertisement of them must appear in some newspaper of general circulation in this State not less than seven days before the date fixed for the opening of bids. The bonds may be sold at such discount or for such premium as may be determined by the trustees or their designee as being in the best interest of Clemson.

Section 59-119-820. To the end that the payment of the principal and interest of the bonds authorized by this article is secured adequately, the trustees of Clemson may:

(1) issue bonds in such amount within the limitations provided for in this article, as the trustees consider necessary. It is lawful for the trustees to use a portion of the principal proceeds derived from any sale of bonds, except bonds issued to effect refunding of outstanding bonds, to meet the payment of interest on the bonds for a period equal to the period of construction of the facilities to be financed with the proceeds of such bonds, plus a period not exceeding six months. It is recognized by the General Assembly that until the facilities to be constructed with the proceeds of the loan are completed an undue burden may be imposed upon the existing revenues at that time;

(2) pledge the revenues or the net revenues of the facilities as designated by the trustees in connection with the issuance of the bonds, whether then or after that time to be existing and to pledge any otherwise available gifts, grants, or donations to Clemson for the payment of the principal of and interest on the bonds as they respectively mature. However, any surplus of the revenues or net revenues available after the payment of costs of operation and maintenance of the facilities and of debt service on the bonds, and the establishment of any debt service reserve obligation under the proceedings providing for the issuance of the bonds, is placed in a contingency and improvement fund for the facilities in order to restore depreciated or obsolete items of the facilities, to make improvements to the facilities, to defray the cost of unforeseen contingencies with regard to the facilities, to prevent defaults under such bonds, or to redeem any of the bonds;

(3) further secure the bonds with a pledge of any additional revenues or fees of Clemson as may be authorized under other laws of this State;

(4) covenant that no facilities owned by Clemson may be used free of charge, or to specify and limit the facilities which may be used free of charge;

(5) covenant to establish and maintain a system of rules as will insure the continuous use and occupancy of the facilities, whose revenues are pledged to secure any bonds;

(6) covenant that an adequate schedule of charges be established and maintained for the facilities designated by the trustees, whose revenues or net revenues are pledged to secure the bonds, to the extent necessary to produce sufficient revenues to:

(a) pay the cost of operating and maintaining the facilities, whose revenues or net revenues are pledged for the payment of the bonds, including the cost of fire, extended coverage and use, and occupancy insurance;

(b) pay the principal and interest of the bonds as they respectively become due;

(c) create and at all times maintain an adequate debt service reserve fund to meet the payment of the principal and interest; and

(d) create and at all times maintain an adequate reserve for contingencies and for major repairs and replacement.

(7) covenant against the mortgaging or disposing of the facilities designated by the trustees, whose revenues or net revenues are pledged for the payment of the bonds, and against permitting or suffering any lien to be created on them, equal or superior to the lien created for the benefit of such bonds. The trustees are empowered to discontinue the use of or demolish obsolete facilities and to reserve the right, under the terms they prescribe, to issue additional bonds on a parity with the bonds authorized by this article, if at some later date they obtain legislative authorization for the issuance of additional bonds;

( 8) covenant as to the use of the proceeds derived from the sale of any bonds issued pursuant to this article;

( 9) provide for the terms, form, registration, exchange, execution and authentication of bonds, and for the replacement of lost, destroyed, or mutilated bonds;

(10) make covenants with respect to the use of the facilities, to be constructed with the proceeds of the bonds authorized by this article, and of the other facilities, whose revenues must be pledged for the payment of the bonds;

(11) covenant that all revenues or net revenues of the particular facilities pledged for the payment of the bonds must be segregated into special funds and that the funds must be used solely for the purposes for which they are intended and for no other purpose;

(12) covenant for the mandatory redemption of bonds on the terms and conditions as the resolutions authorizing the bonds prescribe;

(13) provide for early defeasance of bonds through the establishment of special escrow accounts maintained by a corporate trustee, which may be the State Treasurer, of cash or United States government obligations, or obligations of agencies of them, which escrows may be funded with proceeds of bonds issued under the provisions of this article or revenues or other funds available to Clemson;

(14) prescribe the procedure, if any, by which the terms of the contract with the bondholders may be amended, the number of bonds whose holders must consent to it, and the manner in which consent is given;

(15) covenant as to the maintenance of the facilities, whose revenues must be pledged for the payment of the bonds, the insurance to be carried on them, and the use and disposition of proceeds from any insurance policy;

(16) prescribe the events of default and the terms and conditions upon which all or any bonds become or may be declared due before maturity and the terms and conditions upon which the declaration and its consequences may be waived;

(17) impose a statutory lien upon the facilities designated by the trustees, the revenues or net revenues of which must be pledged to secure the bonds. The lien must extend to the facilities, to their appurtenances and extension, to their additions, improvements and enlargements to the extent specified in the resolutions and must inure to the benefit of the holders of the bonds secured by the lien. The facilities remain subject to the statutory lien until the payment in full of the principal and interest of the bonds. A holder of a bond, or any of the coupons representing interest on them, either at law or in equity, by suit, action, mandamus, or other proceedings, may protect and enforce the statutory lien, and by suit, action, mandamus, or other proceedings may enforce and compel performance of all duties of the trustees, including the fixing of sufficient rates, the proper segregation of the revenues, and the proper application of them. However, the statutory lien may not be construed to give the bond or coupon holder authority to compel the sale of any of the facilities or any part of them;

(18) covenant that if there is a default in the payment of the principal of or interest upon any of the bonds, a court having jurisdiction in any proper action may appoint a receiver to administer and operate the facilities designated by the trustees, whose revenues or net revenues are pledged for the payment of the bonds, with power to fix rates and charges for the facilities, sufficient to provide for the payment of the expense of operating and maintaining the facilities, and to apply the income and revenues of the facilities to the payment of the bonds, and the interest on them;

(19) establish on or before the delivery of any bonds issued pursuant to this article a debt service reserve fund and to cause it to be deposited with a corporate trustee, who may be the State Treasurer, and to that end, the trustees are empowered to utilize any monies available for that purpose, including revenues previously accumulated from the facilities before the issuance of bonds. In the discretion of the trustees, in lieu of cash, the debt service reserve fund may be funded with a surety bond, insurance policy, letter of credit, line of credit, or similar guarantee. At the discretion of the trustees, Clemson may purchase an insurance policy insuring payment of both principal and interest on any issuance of bonds under the provisions of this article;

(20) appoint a corporate trustee, who may be the State Treasurer, or paying agent to whom must be paid all or any portion of the revenues or net revenues pledged to the payment of the bonds or derived from the operation of the facilities, and to prescribe the manner in which these revenues or net revenues must be utilized and disposed of. The corporate trustee shall serve in a fiduciary capacity as trustee for the bondholders under the resolutions of the trustees authorizing the issuance of bonds.

Section 59-119-830. No time limit is set for the issuance of bonds pursuant to this article."

Trustees of College of Charleston authorized to borrow

SECTION 2. The Board of Trustees for the College of Charleston, as the governing body of the College of Charleston, may borrow, at public or private sale, not exceeding one million two hundred thousand dollars, upon terms and conditions as the board, with the approval of the State Budget and Control Board, determines to issue its bonds or notes evidencing the borrowing. The board may use the proceeds to defray the cost of issuing the bonds or notes and the cost of the renovation and expansion of the College of Charleston's cafeteria facilities, including the retirement of indebtedness issued for that purpose. For the payment of the loan and the interest on the loan, there must be pledged certain revenues derived by the board from the sale of meals at the cafeteria facilities at the College of Charleston, and no other funds may be used. In the proceedings providing for the issuance of the bonds or notes the board shall impose, or require the imposition of, charges for meals at the College of Charleston's cafeteria facilities adequate to defray the cost of the meals and to meet the payment of principal and interest on the bonds or notes as they become due. The borrowing must be evidenced by one or more bonds or notes of the board payable as to principal and interest solely from the revenues to be pledged for the authorized bonds or notes. The bonds or notes and the interest to become due on them have the tax-exempt status prescribed in Section 12-1-60 of the 1976 Code and may be issued on a parity with, or junior to, any other bonds or notes secured by a pledge of the revenues.

Code sections designated

SECTION 3. Sections 59-117-10 through 59-117-100 of the 1976 Code are designated as Article 1, Chapter 117, Title 59 and entitled "General Provisions".

Auxiliary facilities revenue bonds for University of South Carolina

SECTION 4. Chapter 117 of Title 59 of the 1976 Code is amended by adding:

"Article 3

Auxiliary Facilities Revenue Bonds

Section 59-117-210. (A) The General Assembly finds that it is desirable to provide continuing and general statutory authority for the University of South Carolina to incur debt for, among other things, the purposes of providing funds to acquire, construct, renovate, and equip certain revenue-producing auxiliary facilities, which debt is secured by a pledge of the revenues derived from the operation of some or all of the facilities. The University of South Carolina has demonstrated need for additional funds to provide for acquisition, construction, renovation, and equipping of these facilities. These facilities are needed to replace or renovate aging facilities and to provide additional facilities all to the end that the educational environment at the University of South Carolina will be enhanced for the benefit of present and potential students at the University of South Carolina.

(B) Consideration has been given to this need and to the methods of funding it. It has been determined to be in the best interests of the people of this State to authorize the University to acquire, construct, renovate, and equip additional facilities and to incur indebtedness for these purposes which is payable from the revenues derived from the operation of these facilities to the extent and under the conditions provided for in this article.

Section 59-117-220. As used in this article:

(1) Bond' or bonds' means any note, bond, installment contract, or other evidence of indebtedness issued pursuant to this article.

(2) University' means the University of South Carolina.

(3) Facilities' means any or all of the following facilities operated to provide for the students, faculty, or staff at the University: dining or food service facilities; laundry facilities; canteen facilities; vending machines; convenience stores; any other facilities for the sale of sundry items; health services; book stores; parking lots and vehicle registration; and all furniture, furnishings and equipment in them, which are now owned by the University, or which may be acquired by the University for any of these purposes.

(4) Revenues' of any facilities means the entire receipts of the University from the operation of the facilities. Net revenues' means these receipts reduced by the necessary expenses for operation and maintenance of the facilities.

(5) Board' means the State Budget and Control Board.

(6) Trustees' means the Board of Trustees of the University or any successor body.

Section 59-117-230. The trustees are authorized to acquire additional facilities and to improve and renovate existing facilities to the extent they determine to be necessary, and the proceeds of bonds authorized by this article are made available for that purpose. The trustees also are authorized to refund bonds that may from time to time be outstanding pursuant to this article by exchange or otherwise.

Section 59-117-240. Upon receiving the approval of the board and upon review by the Joint Bond Review Committee, the trustees may from time to time borrow such sums as may be necessary to accomplish the purpose of this article and to evidence these borrowings by bonds issued pursuant to this article in such aggregate principal amount as they determine, except that other provisions of this article to the contrary notwithstanding, there may not be outstanding at any time bonds issued pursuant to this article in excess of twenty-five million dollars.

Section 59-117-250. Bonds issued pursuant to this article must be payable from the revenues or the net revenues derived by the University from these facilities as designated by the trustees with respect to the bonds. The trustees may abandon the use of any portion of the facilities or sell or dispose of any portion of the facilities upon receipt of a written recommendation by the chief financial officer of the University to the effect that the action will not adversely affect the ability of the University to discharge its obligations to the holders of bonds issued pursuant to this article and upon the further conditions as prescribed in the resolution of the trustees providing for the issuance of bonds. The bonds issued pursuant to this article may be further secured by the additional pledges of other revenues or fees of the University as it may be authorized to grant pursuant to other laws of this State.

Section 59-117-260. The faith and credit of the State may not be pledged for the payment of the principal and interest of the bonds, and there must be on the face of each bond a statement plainly worded to that effect. Neither the trustees nor any other person signing the bonds is personally liable for them.

Section 59-117-270. In order to avail themselves of the authorizations set forth in this article, the trustees shall adopt resolutions providing for the issuance of bonds of the University, within the limitations mentioned in this article which must prescribe the tenor, terms, and conditions of the bonds. The bonds must be issued as serial or term bonds, maturing in equal or unequal amounts, at such times and on such occasions as the trustees determine. The last maturing bonds of any issue must be expressed to mature not later than fifty years from their date, and the first maturing bonds of any issue, issued pursuant to this article, falls due within five years from their date. They must bear such rates of interest, payable on such occasion, as the trustees prescribe, and the bonds must be in such denominations, payable in such medium of payment, and at such place as such resolutions prescribe. All bonds may be issued with a provision permitting their redemption on any interest payment date before their respective maturities. Bonds made subject to redemption before their stated maturities may contain a provision requiring the payment of a premium for the privilege of exercising the right of redemption, in such amount or amounts as the trustees prescribe in the resolutions authorizing their issuance. All bonds that are subject to redemption must contain a statement to that effect on the face of each bond. The resolutions authorizing their issuance must contain provisions specifying the manner of call and the notice of call that must be given.

Section 59-117-280. The bonds authorized by this article and all interest to become due on them have the tax exempt status prescribed by Section 12-1-60.

Section 59-117-290. It is lawful for all executors, administrators, guardians, and fiduciaries, all sinking fund commissions, the board, as trustee of the South Carolina Retirement System, and all other governmental entities within this State to invest any monies in their hands in the bonds.

Section 59-117-300. The bonds and coupons, if any, attached to the bonds, are executed manually or by facsimile in the name of the University in the manner and by persons as the trustees from time to time determine, and the seal of the University must be affixed to or impressed or reproduced on each bond. Any coupons attached to the bonds must be authenticated by the facsimile signature of one or more of the persons signing the bonds. The bonds, in the discretion of the trustees, may be registerable as to principal and interest on books kept for them by or on behalf of the University, including by a corporate registrar. The delivery of the executed bonds is valid notwithstanding changes in officers or in the seal occurring after the execution. Notwithstanding the foregoing, the bonds, in the discretion of the trustees, may be issued as fully registered noncertificated book-entry securities.

Section 59-117-310. The bonds must be disposed of in such manner as the trustees determine, except that no sale, privately negotiated without public advertisement, may be made unless the approval of the board is obtained. If the trustees elect to sell the bonds at public sale, at least one advertisement of them must appear in some newspaper of general circulation in this State not less than seven days before the date fixed for the opening of bids. The bonds may be sold at such discount or for such premium as may be determined by the trustees or their designee as being in the best interest of the University.

Section 59-117-320. To the end that the payment of the principal and interest of the bonds authorized by this article is secured adequately, the trustees of the University may:

(2) pledge the revenues or the net revenues of the facilities as designated by the trustees in connection with the issuance of the bonds, whether then or after that time to be existing and to pledge any otherwise available gifts, grants, or donations to the University for the payment of the principal of and interest on the bonds as they respectively mature. However, any surplus of the revenues or net revenues available after the payment of costs of operation and maintenance of the facilities and of debt service on the bonds, and the establishment of any debt service reserve obligation under the proceedings providing for the issuance of the bonds, is placed in a contingency and improvement fund for the facilities in order to restore depreciated or obsolete items of the facilities, to make improvements to the facilities, to defray the cost of unforeseen contingencies with regard to the facilities, to prevent defaults under such bonds, or to redeem any of the bonds;

(3) further secure the bonds with a pledge of any additional revenues or fees of the University as may be authorized under other laws of this State;

(4) covenant that no facilities owned by the University may be used free of charge, or to specify and limit the facilities which may be used free of charge;

(5) covenant to establish and maintain a system of rules as will insure the continuous use and occupancy of the facilities, whose revenues are pledged to secure any bonds;

(b) pay the principal and interest of the bonds as they respectively become due;

(c) create and at all times maintain an adequate debt service reserve fund to meet the payment of the principal and interest; and

(d) create and at all times maintain an adequate reserve for contingencies and for major repairs and replacement.

(8) covenant as to the use of the proceeds derived from the sale of any bonds issued pursuant to this article;

(9) provide for the terms, form, registration, exchange, execution and authentication of bonds, and for the replacement of lost, destroyed, or mutilated bonds;

(12) covenant for the mandatory redemption of bonds on the terms and conditions as the resolutions authorizing the bonds prescribe;

(19) establish on or before the delivery of any bonds issued pursuant to this article a debt service reserve fund and to cause it to be deposited with a corporate trustee, who may be the State Treasurer, and to that end, the trustees are empowered to utilize any monies available for that purpose, including revenues previously accumulated from the facilities before the issuance of bonds. In the discretion of the trustees, in lieu of cash, the debt service reserve fund may be funded with a surety bond, insurance policy, letter of credit, line of credit, or similar guarantee. At the discretion of the trustees, the University may purchase an insurance policy insuring payment of both principal and interest on any issuance of bonds under the provisions of this article;

Section 59-117-330. No time limit is set for the issuance of bonds pursuant to this article."

Time effective

SECTION 5. This act takes effect upon approval by the Governor.

Approved the 29th day of May, 1990.