Nevada § 350.820 - Agreements for exchange of interest rates

§ 350.820. Agreements for exchange of interest rates

1. A municipality that has issued or proposes to issue municipal securities in the

amount of $10,000,000 or more may enter into an agreement for an exchange of interest

rates as provided in this section if it finds that such an agreement would be in the

best interests of the municipality. 2. A municipality may enter into an agreement to exchange interest rates only if: (a) The long-term debt obligations of the person with whom the municipality enters

the agreement are rated “A” or better by a nationally recognized rating agency; or (b) The obligations pursuant to the agreement of the person with whom the municipality

enters the agreement are either: (1) Guaranteed by a person whose long-term debt obligations are rated “A” or better

by a nationally recognized rating agency; or (2) Collateralized by obligations deposited with the municipality or an agent of the

municipality which would be legal investments for the State pursuant to NRS 355.140 and which have a market value at the time agreement is made of not less than 100

percent of the principal amount upon which the exchange of interest rates is based. 3. A municipality may agree, with respect to securities that the municipality has

issued or proposes to issue bearing interest at a variable rate, to pay sums equal

to interest at a fixed rate or rates or at a different variable rate determined pursuant

to a formula set forth in the agreement on an amount not to exceed the principal amount

of the municipal securities with respect to which the agreement is made, in exchange

for an agreement to pay sums equal to interest on the same principal amount at a variable

rate determined pursuant to a formula set forth in the agreement. 4. A municipality may agree, with respect to securities that the municipality has

issued or proposes to issue bearing interest at a fixed rate or rates, to pay sums

equal to interest at a variable rate determined pursuant to a formula set forth in

the agreement on an amount not to exceed the outstanding principal amount of the municipal

securities with respect to which the agreement is made, in exchange for an agreement

to pay sums equal to interest on the same principal amount at a fixed rate or rates

set forth in the agreement. 5. The term of an agreement entered into pursuant to this section must not exceed

the term of the municipal securities with respect to which the agreement was made. 6. An agreement entered into pursuant to this section is not a debt or indebtedness

of the municipality for the purposes of any limitation upon the indebtedness of the

municipality or any requirement for an election with regard to the issuance of securities

that is applicable to the municipality. 7. Limitations upon the rate of interest on a municipal security do not apply to interest

paid pursuant to an agreement entered into pursuant to this section. 8. A municipality which has entered into an agreement pursuant to this section with

respect to those securities may treat the amount or rate of interest on the securities

as the amount or rate of interest payable after giving effect to the agreement for

the purpose of calculating: (a) Rates and charges of a revenue-producing enterprise whose revenues are pledged

to or used to pay municipal securities; (b) Statutory requirements concerning revenue coverage that are applicable to municipal

securities; (c) Tax levies to pay debt service on municipal securities; and (d) Any other amounts which are based upon the rate of interest of municipal securities. 9. Subject to covenants applicable to the securities, any payments required to be

made by the municipality under the agreement may be made from money pledged to pay

debt service on the securities with respect to which the agreement was made or from

any other legally available source.