Agenda - Council - 10/22/1996 - Laserfiche WebLink

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PUBLIC INDEBTEDNESS 475.76 acd/tor in cooperation with the commissioner of commerce shall prescribe. All certifi- catas and interest thereon shall be payable from taxes levied within existing limitations or from other available revenueL The certificates shall not be included in the net debt of the issuing city, county or town. History: 7973 c 67 s I; 1973 c 723 art 5 s 7; 7973 c 492 s 7; 1983 c 289 s 774 subd i: I984 c 655 art 7 s 92; 1Sp7985 c 74 art 4 s 94; 75p7989 c 7 art 5 s 44 475.76 REVERSE REPURCHASE AGREEMENTS. Subdivision 1. A reverse repurchase agreement may be entered into by a munici- pality, subject to the provisions of this section, only with (I) a bank qualified as depository of funds of the municipality; (2) any national or state bank in the United States which is a member of the Fed- eral Reserve System and whose combined capital and surplus equals or exceeds $10,000,000; (3) a primary reporting dealer in United States government securities to the fed- eral reserve bank of New York; or (4) a securities broker-dealer described in section 475.66, subdivision I. Subd. 2. Reverse repurchase agreements shall not be included in computing the net debt of a municipality, and may be made without an election or public sale, and the interest payable thereon shall not be subject to the limitation in section 475.55. The interest shall not be deducted or excluded from gross income of the recipient for the purpose of state income, corporate franchise, or bank excise taxes or, if so provided by federal law, for the purpose of federal income tax. Subd. 3. Reverse repurchase agreements shall be made on behalfofthe municipal- ity only by its treasurer or other officer designated pursuant to law or charter as custo- dian of funds and securities held by it, or by a deputy of the officer, when authorized by a resolution of its governing body, and subject to any limitations imposed by the governing body. They may be made in writing or orally, provided that confirmation of an oral agreement is made by the other party by wire or in writing transmitted or mailed within one business day thereafter. The agreement or confirmation shall state the sale date and price, the repurchase date and price, and the issuer, designation, principal amount, coupon interest rate, if any, maturity date, and redemption date, if any, of the secur/ty. Subd. 4. In the event of failure by a bank or dealer to redeliver a security under a reverse repurchase agreement upon tender of the repurchase price by the municipality at the repurchase date, the obligation of the municipality to repurchase shall cease, and the bank or dealer shall be liable to the municipality for any amount by which the mar- ket price of the security at that date exceeds the repurchase price. [n the event of failure by a municipality to tender the repurchase price when due under an agreement, the obligation of the bank or dealer to redeliver shall cease, and the municipality shall be liable to the bank or dealer for any amount by which the repurchase price exceeds the market price of the security at the repurchase date. The market price of a security for the purpose of this subdivision shall be deemed to be the average of bid prices quoted, as of the pertinent date, by two or more banks or dealers referred to in subdivision 1, other than the purchaser. Any amount for which either party to a reverse repurchase agreement is liable under the provisions of this subdivision shall be recoverable by action, and may be offset against any existing or subsequent liability owed to the defaulting party, other than a liability of a bank as trustee, custodian, paying agent, or other fiduciary. Any amount for which the municipality becomes liable shall be included in computing its net debt, whether or not it causes the net debt of the munici- pality to exceed any limit otherwise applicable. Subd. 5. [Repealed, 1984 c 563 s 7] History: 1977 c 259 s 2; 1985 c 239 s 5; 1986 c 473 s 14