Vermont § 2867 - Reserve and pledged equity funds

§ 2867. Reserve and pledged equity funds

• (a) The Corporation may create and establish one or more special funds, referred to in
  this section as “debt service reserve funds” or “pledged equity funds.” (b) The Corporation shall pay into each debt service reserve fund: (1) Any monies appropriated and made available by the State for the purpose of such fund. (2) Any proceeds of the sale of notes, bonds, or other debt instruments, to the extent
  provided in the resolution or resolutions of the Corporation authorizing the issuance
  thereof. (3) Any other monies or financial instruments such as surety bonds, letters of credit,
  or similar obligations, that may be made available to the Corporation for the purpose
  of such fund from any other source or sources. All monies or financial instruments
  held in any debt service reserve fund created and established under this section,
  except as provided in this section, shall be used, as required, solely for the payment
  of the principal of the bonds, notes, or other debt instruments secured in whole or
  in part by such fund or of the payments with respect to the bonds, notes, or other
  debt instruments specified in any resolution of the Corporation as a sinking fund
  payment, the purchase or redemption of the bonds, the payment of interest on the bonds,
  notes, or other debt instruments, or the payment of any redemption premium required
  to be paid when the bonds, notes, or other debt instruments are redeemed prior to
  maturity, or to reimburse the issuer of a liquidity or credit facility, bond insurance,
  or other credit enhancement for the payment by such party of any of the foregoing
  amounts on the Corporation’s behalf; provided, however, that the monies or financial
  instruments in any such debt reserve fund shall not be drawn upon or withdrawn at
  any time in such amounts as would reduce the amount of such funds to less than the
  debt service reserve requirement established by resolution of the Corporation for
  such fund as provided in this section except for the purpose of paying, when due,
  with respect to bonds secured in whole or in part by such fund, the principal, interest,
  redemption premiums, and sinking fund payments and reimbursing, when due, the issuer
  of any credit enhancement for any such payments made by it, for the payment of which
  other monies of the Corporation are not available. Any income or interest earned by,
  or increment to, any debt service reserve fund due to the investment thereof may be
  transferred by the Corporation to other funds or accounts of the Corporation to the
  extent it does not reduce the amount of such debt service reserve fund below the debt
  service reserve requirement for such fund. (c) The Corporation shall pay into each pledged equity fund: (1) Any monies appropriated and made available by the State for the purpose of such fund. (2) Any proceeds of the sale of notes, bonds, or other debt instruments, to the extent
  provided in the resolution or resolutions of the Corporation authorizing the issuance
  thereof. (3) Any other monies or financial instruments such as surety bonds, letters of credit,
  or similar obligations, that may be made available to the Corporation for the purpose
  of such fund from any other source or sources. All monies or financial instruments
  held in any pledged equity fund created and established under this section, except
  as provided in this section, shall be used, as required, solely to provide pledged
  equity or over-collateralization of any trust estate of the Corporation to the issuer
  of a liquidity or credit facility, bond insurance, or other credit enhancement obtained
  by the Corporation; provided, however, that the monies or financial instruments in
  any such pledged equity fund shall not be drawn upon or withdrawn from such fund at
  any time in such amounts as would reduce the amount of such funds to less than the
  pledged equity requirement established by resolution of the Corporation for such fund
  as hereafter provided except for the purposes set forth in, and in accordance with,
  the governing resolution. Any income or interest earned by, or increment to, any pledged
  equity fund due to the investment thereof may be transferred by the Corporation to
  other funds or accounts of the Corporation to the extent it does not reduce the amount
  of such pledged equity fund below the requirement for such fund. Anything in this
  subdivision to the contrary notwithstanding, upon the defeasance of the bonds, notes,
  or other debt instruments with respect to which the pledged equity requirement was
  established, the Corporation may transfer amounts in such fund to another fund or
  account of the Corporation proportionately to the amount of such defeasance, provided
  that the Corporation shall repay to the State any amount appropriated by the State
  pursuant to subsection (f) of this section. (d) The debt service reserve and pledged equity requirements for any fund established
  under this section shall be established by resolution of the Corporation prior to
  the issuance of any bonds, notes, or other debt instruments secured in whole or in
  part by a debt service reserve fund or prior to entering into any credit enhancement
  agreement and shall be the amount determined by the Corporation to be reasonably required
  in light of the facts and circumstances of the particular debt issue or credit enhancement;
  provided that the maximum amount of the State’s commitment with respect to any pledged
  equity fund shall be determined by the Corporation at or prior to entering into any
  credit enhancement agreement related to such pledged equity fund. The Corporation
  shall not at any time issue bonds, notes, or other debt instruments secured in whole
  or in part by a debt service reserve fund or enter into any credit enhancement agreement
  that requires establishment of a pledged equity fund created and established under
  this section unless: (1) the Corporation at the time of such issuance or execution shall deposit in such fund
  from the proceeds of such bonds, notes, or other debt instruments, or from other sources,
  an amount that, together with the amount then in such fund, will not be less than
  the requirement established for such fund at that time; (2) the Corporation has made a determination at the time of the authorization of the issuance
  of such bonds, notes, or other debt instruments, or entering into such credit enhancement
  agreement that the Corporation will derive revenues or other income from the education
  loans that secure such bonds, notes, or other debt instruments or that relate to any
  credit enhancement agreement sufficient to provide, together with all other available
  revenues and income of the Corporation, other than any amounts appropriated by the
  State pursuant to this section, for the payment of such bonds, notes, and other debt
  instruments and reimbursement to the issuer of any credit enhancement, the payment
  of any expected deposits into any pledged equity fund established with respect to
  such credit enhancement and the payment of all costs and expenses incurred by the
  Corporation with respect to the program or purpose for which such bonds, notes, or
  other debt instruments are issued; and (3) the State Treasurer or his or her designee has provided written approval to the Corporation
  that the Corporation may issue such bonds, notes, or other debt instruments and enter
  into any related credit enhancement agreement. (e) In computing the amount of the debt service reserve or pledged equity funds for the
  purpose of this section, securities in which all or a portion of such funds shall
  be invested shall be valued at par if purchased at par or at amortized value, as such
  term is defined by resolution of the Corporation, if purchased at other than par. (f) In order to ensure the maintenance of the debt service reserve fund requirement in
  each debt service reserve fund established by the Corporation under this section,
  there may be appropriated annually and paid to the Corporation for deposit in each
  such sum as shall be certified by the Chair of the Corporation to the Governor, the
  President of the Senate, and the Speaker of the House as is necessary to establish
  or restore each such debt service reserve fund to an amount equal to the requirement
  for each such fund. The Chair shall annually, on or about February 1, make, execute,
  and deliver to the Governor, the President of the Senate, and the Speaker of the House,
  a certificate stating the sum required to restore each such fund to the amount equal
  to the requirement for each such fund, and the Governor shall, on or before March
  1, submit a request for appropriations in the amount so certified, and such amount
  may be appropriated, and if appropriated, shall be paid to the Corporation during
  the then current State fiscal year. In order to ensure the funding of the pledged
  equity fund requirement in each pledged equity fund established by the Corporation
  under this section at the time and in the amount determined at the time of entering
  into any credit enhancement agreement related to a pledged equity fund, there may
  be appropriated and paid to the Corporation for deposit in each such fund, such sum
  as shall be certified by the Chair of the Corporation, to the Governor, the President
  of the Senate, and the Speaker of the House, as is necessary to establish each such
  pledged equity fund to an amount equal to the amount determined by the Corporation
  at the time of entering into any credit enhancement agreement related to a pledged
  equity fund, provided that the amount requested, together with any amounts previously
  appropriated pursuant to this subsection for a particular pledged equity fund, shall
  not exceed the maximum amount of the State’s commitment, as determined by the Corporation
  pursuant to subsection (d) of this section. The Chair shall, on or about the February
  1 next following the designated date for fully funding a pledged equity fund, make,
  execute, and deliver to the Governor, the President of the Senate, and the Speaker
  of the House a certificate stating the sum required to bring each such fund to the
  amount equal to the requirement for each such fund or to otherwise satisfy the State’s
  commitment with respect to each such fund, and the Governor shall, on or before March
  1, submit a request for appropriations in the amount so certified, and such amount
  may be appropriated, and if appropriated, shall be paid to the Corporation during
  the then-current State fiscal year. The combined principal amount of bonds, notes,
  and other debt instruments outstanding at any time and secured in whole or in part
  by a debt service reserve fund established under this section and the aggregate commitment
  of the State to fund pledged equity funds pursuant to this subsection shall not exceed
  $50,000,000.00, provided that the foregoing shall not impair the obligation of any
  contract or contracts entered into by the Corporation in contravention of the Constitution
  of the United States. Notwithstanding anything in this section to the contrary, the
  State’s obligation with respect to funding any pledged equity fund shall be limited
  to its maximum commitment, as determined by the Corporation pursuant to subsection
  (d) of this section and the State shall have no other obligation to replenish or maintain
  any pledged equity fund. (Added 2009, No. 2, § 1, eff. March 31, 2009; amended 2011, No. 40, § 55a, eff. May 20, 2011; 2019, No. 131 (Adj. Sess.), § 103.)