AMENDMENT FOR SENATE STATE AFFAIRS COMMITTEE ENGROSSED BILL
85ja
_________________ moved that SB 85 be amended as follows:
On the Senate State Affairs committee engrossed bill,
delete everything after the enacting
clause and insert:
"
Section
1.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
Terms used in this Act mean:
(1) "Authority," the South Dakota Health and Educational Facilities Authority, a body
corporate and politic, organized and existing under chapter 1-16A;
(2) "Bonds," bonds, bond anticipation notes, notes, certificates of ownership or
indebtedness, or other obligations issued, incurred, or otherwise created pursuant to
this Act and payable directly or indirectly out of or representing an interest in tobacco
settlement revenues or other rights under or with respect to the master settlement
agreement;
(3) "Corporation," the special purpose body corporate and politic established by the
authority by resolution as provided in section 3 of this Act;
(4) "Master settlement agreement," the master settlement agreement entered into on
November 23, 1998, by attorneys general from the several states, including the State
of South Dakota, and various tobacco companies, as amended, supplemented, or
restated;
(5) "Master settlement escrow agent," the escrow agent under the master settlement
agreement;
(6) "Net proceeds of bonds," the proceeds of bonds issued by the corporation under this
Act less any amounts applied or to be applied to pay transaction and administrative
expenses and to fund any reserves deemed necessary or appropriate by the
corporation;
(7) "Net proceeds of sale of tobacco settlement revenues," the funds and other
consideration received by the State of South Dakota from any sale, conveyance, or
other transfer pursuant to section 2 of this Act less any amounts applied or to be
applied to pay transaction and administrative expenses and to fund any reserves;
(8) "Permitted investments," any investment authorized by
§
§
4-5-23 and 4-5-26 and
noncollateralized direct obligations of any bank or savings institution, insurance
company, or bank or insurance holding company if such institution or holding
company is rated in the highest two quality categories by a nationally recognized
rating agency;
(9) "Tobacco settlement revenues," any amount now or hereafter payable to the State of
South Dakota under or in connection with the Master Settlement Agreement;
(10) "Tobacco settlement trust fund," the State of South Dakota tobacco settlement trust
fund created pursuant to section 22 of this Act;
(11) "Tobacco settlement interest fund," the fund created by section 23 of this Act.
Section
2.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
All or any portion of the right, title, and interest of the State of South Dakota in, to and
under the master settlement agreement, to receive or collect tobacco settlement revenues, may
be sold, conveyed, or otherwise transferred by the state to the authority or to a corporation
established by the authority pursuant to this Act so long as the net proceeds of sale of tobacco
settlement revenues are:
(1) Deposited to the tobacco settlement trust fund;
(2) Deposited with or for the benefit of the authority for the purpose of paying all or any
part of the cost of one or a combination of facilities permitted under chapter 1-16A;
(3) Deposited with or for the benefit of the authority for the purpose of paying all or any
part of the cost of one or a combination of projects permitted under chapter 5-12; or
(4) Paid to or for the benefit of the tobacco settlement trust and its assets.
No project may be undertaken by the authority with funds deposited pursuant to subdivision
(2) of this section or by the South Dakota Building Authority with funds deposited pursuant to
subdivision (3) of this section unless the facilities or project have been approved by the
Legislature. If any proceeds of the sale are deposited with or for the benefit of the South Dakota
Health and Educational Facilities Authority or the South Dakota Building Authority pursuant
to subdivision (2) or (3) of this section, then the South Dakota Health and Educational Facilities
Authority shall submit a written report to the Legislature advising the Legislature of the deposit.
Any sale, conveyance, or other transfer of tobacco settlement revenues shall be evidenced by
an instrument or agreement in writing signed on behalf of the state by the Governor. The
Governor shall file a certified copy of any instrument or agreement, together with a report
indicating the application of the net proceeds of the sale of tobacco settlement proceeds with the
Legislature. Each instrument or agreement may include an irrevocable direction to the master
settlement escrow agent to pay all or a specified portion of amounts due to the State of South
Dakota under or in connection with the master settlement agreement, including, without
limitation, the tobacco settlement revenues, as have been sold, conveyed, or otherwise
transferred directly to or upon the order of the authority or corporation or any trustee under an
indenture or other agreement securing any bonds of the corporation or the authority issued,
incurred, or created for the purpose of raising funds to pay the purchase price to the state. Upon
the filing, the sale, conveyance, or other transfer is a true sale and absolute conveyance of all
right, title, and interest therein described in accordance with the terms thereof, valid, binding, and
enforceable in accordance with the terms thereof and the instrument or agreements and any
related instrument, agreement, or other arrangement, including any pledge, grant of security
interest, or other encumbrance made by the corporation or the authority to secure any bonds
issued, incurred, or created by the corporation or the authority, are not subject to disavowal,
disaffirmance, cancellation, or avoidance by reason of insolvency of any party, lack of
consideration or any other fact, occurrence, or rule of law.
Section
3.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
The authority may establish by resolution a special purpose corporation which shall be body
corporate and politic and instrumentality of, but separate and apart from, the State of South
Dakota and the authority. The corporation shall be established for the express limited public
purposes set forth in this Act and no part of the net earnings of the corporation may inure to any
private individual.
Section
4.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
The corporation shall be governed by a board of directors consisting of the members of the
authority and two additional directors appointed by the Governor, which directors shall be
independent from the state. The resolution establishing the corporation shall serve as the charter
of the corporation and may be amended from time to time by the authority, but the resolution
shall provide that the power and the authority of the corporation is subject to the terms,
conditions, and limitations of this Act and any applicable covenants or agreements of the
corporation in any indenture or other agreement relating to any then outstanding bonds. The
corporation may enter into contracts regarding any matter connected with any corporate purpose
within the objects and purposes of this Act.
Section
5.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
The authority and corporation may delegate by resolution to one or more officers or
employees of the authority or corporation any powers and duties as it may deem proper.
Section
6.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
The corporation may pledge as security for any bonds the rights under the master settlement
agreement held by the corporation, including the rights to receive or collect tobacco settlement
revenues, the proceeds thereof, or moneys or other funds deposited with or held by the
corporation. Any pledge made by the corporation is valid and binding from the time the pledge
is made. The property, revenues, moneys, and other funds so pledged and thereafter held or
received by the corporation shall immediately be subject to the lien of such pledge without any
physical delivery thereof or further act and subject only to the provisions of prior agreements.
The lien of such pledge shall be valid and binding as against all parties having claims of any kind
in tort, contract, or otherwise against the corporation irrespective of whether the parties have
notice thereof. No ordinance, resolution, trust agreement, or other instrument by which the
pledge is created need be filed or recorded except in the records of the corporation.
Section
7.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
In connection with the issuance of bonds, the corporation may enter into arrangements to
provide additional security and liquidity for the bonds. The arrangements may include, without
limitation, bond insurance, letters of credit, and lines of credit by which the corporation may
borrow funds to pay or redeem its bonds and purchase or remarketing arrangements for assuring
the ability of owners of the bonds to sell or have redeemed their bonds. The corporation may
enter into contracts and may agree to pay fees to persons providing the arrangements, including
from bond proceeds.
Section
8.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
The resolution authorizing the issuance of its bonds or the indenture or other agreement
approved by the resolution may provide that interest rates may vary from time to time depending
upon criteria established by the corporation, which may include, without limitation, a variation
in interest rates as may be necessary to cause the bonds to be remarketable from time to time at
a price equal to their principal amount, and may provide for appointment of a national banking
association, bank, trust company, investment banker, or other financial institution to serve as a
remarketing agent in that connection. The indenture or other agreement with respect to the
bonds may provide that alternative interest rates or provisions do apply during such times as the
bonds are held by a person providing a letter of credit or other credit enhancement arrangement
for the bonds.
Section
9.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read as
follows:
In connection with the bonds under this Act, the corporation may enter into contracts that
it determines necessary or appropriate to permit it to manage payment or interest rate risk. These
contracts may include interest rate exchange agreements, contracts providing for payment or
receipt of funds based on levels of or changes in interest rates, contracts to exchange cash flows
or series of payments, and contracts incorporating interest rate caps, collars, floors, hedges, or
locks.
Section
10.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The corporation shall not have the authority to file a voluntary petition under or be or
become a debtor or bankrupt under the federal bankruptcy code or any other federal or state
bankruptcy, insolvency, or moratorium law or statute. Nor may any public officer, organization,
entity or other person authorize the corporation to be or become a debtor or bankrupt under the
federal bankruptcy code or any other federal or state bankruptcy, insolvency, or moratorium law
or statute.
Section
11.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The corporation may not guarantee the debts of another. No indebtedness, bonds or
obligation, issued, incurred, or created by the State of South Dakota or any state agency or
instrumentality may be or become a lien, charge, or liability against the corporation or the
property or funds of the corporation except for debts incurred directly by the corporation.
Section
12.
That chapter 1-16A be amended by adding thereto a NEW SECTION to
read as follows:
The purposes of the corporation established by the authority pursuant to this Act are to:
(1) Purchase, acquire, own, pledge, encumber, or otherwise transfer all right, title, and
interest of the state in, to, and under the master settlement agreement, including all
right, title, and interest to receive or collect tobacco settlement revenues;
(2) Raise funds through the issuance of bonds or other obligations or evidences of
indebtedness or ownership or through the sale, transfer, pledge, encumbrance,
securitization, factoring, or other conveyance of the rights described above in
subdivision (1) of this section for the purposes described in this Act;
(3) Serve the Legislature by making reports concerning the foregoing;
(4) Sue and be sued and to prosecute and defend, at law or in equity, in any court having
jurisdiction of the subject matter and of the parties;
(5) Have and to use a corporate seal and to alter the same at pleasure;
(6) Maintain an office at any place the authority by resolution may designate; and
(7) Do all things necessary and convenient to carry out the purposes of this Act.
Section
13.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
In addition to the grant of power and authority contained elsewhere in this Act, the
corporation is vested with the same power and authority and is subject to the same limitations
and conditions, as are applicable to the authority pursuant to chapter 1-16A, except such power
and authority shall be exercised with respect to and shall be limited to the purposes of the
corporation set forth in section 12 of this Act. The corporation may not engage in any unrelated
activities.
Section
14.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
No bond of the corporation issued, incurred, or created under this Act may be or become a
lien, charge, or liability against the State of South Dakota or the authority, nor against the
property or funds of the State of South Dakota or the authority within the meaning of the
Constitution or statutes of South Dakota.
Section
15.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The State of South Dakota pledges to and agrees with the holders of the bonds, notes,
certificates, or other obligations issued, incurred, or created by the corporation under this Act
that the state will not limit or alter the rights and powers vested in the corporation by this Act
so as to impair the terms of any contract made by the corporation with those holders or in any
way impair the rights and remedies of those holders until the bonds, notes, certificates, or other
obligations, together with interest thereon, interest on any unpaid installments of interest, and
all costs and expenses in connection with any action or proceedings by or on behalf of those
holders are fully met and discharged. In addition, the state pledges to and agrees with the holders
of the bonds, notes, certificates, or other obligations issued, incurred, or created by the
corporation under this Act that the state will not limit or alter the basis on which tobacco
settlement revenues are to be paid to the corporation or the authority so as to impair the terms
of any such contract. The corporation is authorized to include these pledges and agreements of
the state in any contract with the holders of bonds, notes, certificates, or other obligations issued,
incurred, or created by the corporation under this Act.
Section
16.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
Neither the State of South Dakota nor the authority is liable on bonds, notes, certificates, or
other obligations issued, incurred, or created by the corporation under this Act. Such bonds,
notes, certificates, or other obligations are not a debt of the state or the authority, and this Act
may not be construed as a guarantee by the state or the authority of the debts of the corporation.
The bonds, notes, certificates, or other securities shall contain a statement to this effect on the
face of the bonds, notes, certificates, or other obligations.
Section
17.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The authority is not liable for any bond, note, certificate, or other obligation issued, incurred,
or created by the corporation under this Act or for any act or failure to act of the corporation
and the corporation is not liable for any obligation of the authority or for any act or failure to act
by the authority.
Section
18.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The corporation is hereby declared to be performing a public function on behalf of the state
and to be a public instrumentality of the state. Accordingly, the income of the corporation, and
all properties at any time owned by the corporation, are exempt from all taxation in the State of
South Dakota.
Section
19.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
For purposes of chapter 47-31A, any bonds, notes, certificates, or other obligations issued,
incurred, or created by the corporation under this Act are deemed to be securities issued by a
public instrumentality of the State of South Dakota.
Section
20.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The corporation may employ attorneys, accountants, tobacco industry consultants and
financial experts, managers, and such other employees and agents as may be necessary and fix
their compensation.
Section
21.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The corporation and authority may charge participating health institutions, participating
educational institutions, and other public bodies the reasonable expenses of the corporation and
authority incurred in connection with the exercise of the powers and authority provided in
chapter 1-16A.
Section
22.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The tobacco settlement trust fund is hereby established in the state treasury. The net proceeds
of sale of tobacco revenues less any amounts deposited with or for the benefit of the authority
or the South Dakota Building Authority pursuant to the provisions of section 2 of this Act, shall
be deposited in the tobacco settlement trust fund. In addition, any residual interest in or to
tobacco settlement revenues or other rights under the master settlement agreement, to the extent
not required to make payments with respect to any bonds of the corporation, are payable to or
for the benefit of the tobacco settlement trust fund. The principal of the tobacco settlement trust
fund may not be expended except for costs and expenses incurred in investing or otherwise
administering the tobacco settlement trust and its assets. The amounts in the tobacco settlement
trust fund shall be invested in permitted investments and otherwise pursuant to
§
§
4-5-23 and
4-5-26. An amount equal to the interest or other investment income earned on money in the trust
fund each fiscal year shall be transferred to the tobacco settlement interest fund created in section
23 of this Act.
Section
23.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The tobacco settlement interest fund is established in the state treasury. The money in the
tobacco settlement interest fund shall remain in the fund until appropriated by the Legislature.
The amounts in the tobacco settlement interest fund shall be invested in permitted investments
and otherwise pursuant to
§
§
4-5-23 and 4-5-26.
Section
24.
That chapter 1-16A be amended by adding thereto a NEW SECTION to read
as follows:
The Legislature hereby finds and declares that the state has a public purpose and goal of
reduction of smoking and improvement of the public health of its citizens which purpose and
goal may generally result in a direct or indirect reduction of tobacco consumption and the
potential reduction of tobacco settlement revenues. The Legislature hereby further declares that
it is a valid governmental purpose and in the best interest of the state and its citizens to transfer
the investment risks inherent in the master settlement agreement, including the risk described
above in this section, to third parties by a sale, conveyance, or other transfer of all or a portion
of the state's right, title, and interest in the right to receive or collect state tobacco revenues
under, in connection with or with respect to the master settlement agreement and the issuance
of bonds to finance such a transaction.
Section
25.
Whereas, this Act is necessary for the support of the state government and its
existing public institutions, an emergency is hereby declared to exist, and this Act shall be in full
force and effect from and after its passage and approval.
"