# Local Government (GLG) ## Title 19. Public Debt ### Subtitle 2. Public Securities #### Section 19-201 (a) In this subtitle the following words have the meanings indicated. (b) (1) "Bond" means an obligation for the payment of money, by whatever name known or source of funds secured, issued by a governmental entity under general or special statutory authority. (2) "Bond" includes: (i) a bond; (ii) a certificate of indebtedness; (iii) an interim certificate; and (iv) a note. (c) "Enabling act" means a law that authorizes a governmental entity to create a debt and sell bonds to evidence that debt. #### Section 19-204 (a) This section applies only to the following governmental entities: (1) a county; (2) a municipality; (3) a public corporation of the State; (4) a sanitary commission or district; and (5) a unit, public corporation, or other instrumentality of a county or a municipality. (b) Notwithstanding any other law, a governmental entity authorized to issue bonds may issue bonds in a form that qualifies as a registered form under Sec.Sec. 103 and 149 of the Internal Revenue Code or a regulation adopted under those sections. (c) Whenever a governmental entity provides for the sale of bonds in registered form, the governmental entity may: (1) establish procedures for the registration and transfer of the bonds; (2) appoint any agent, including an authenticating trustee, corporate trustee, paying agent, registrar, or transfer agent; (3) in connection with the establishment and maintenance of a central depository system for the transfer or pledge of the bonds, make agreements with: (i) custodian banks and their nominees; or (ii) financial intermediaries and their nominees; and (4) exercise any other power that relates to issuance of bonds in registered form. #### Section 19-205 (a) (1) Except as provided in paragraph (2) of this subsection, this section applies only to the following governmental entities: (i) a county; (ii) a public corporation or other political subdivision of the State; or (iii) an instrumentality or agency of a county, public corporation, or other political subdivision of the State. (2) This section does not apply to the following governmental entities: (i) Baltimore City; (ii) a municipality; or (iii) a housing authority under Division II of the Housing and Community Development Article. (b) (1) This section does not apply if the total principal amount of the authorized issue is $25,000 or less. (2) This section does not apply to a bond that: (i) matures within 1 year after the date of issue and is issued: (1) in anticipation of taxes; (2) to meet current expenses; or (3) to meet an emergency; (ii) is sold to the United States or a unit or instrumentality of the United States; (iii) is issued under a plan of composition approved in a proceeding under Chapter IX of the United States Bankruptcy Act; or (iv) is issued under any other plan to refund or refinance in exchange, bond for bond, for an outstanding maturing debt, other than: (1) a current or floating debt; or (2) a bond under item (i) of this paragraph. (3) This section does not apply if: (i) the proceeds of the sale of bonds are to be used with a grant from the United States or a unit or instrumentality of the United States to finance public works; and (ii) in the opinion of the Attorney General, the agreement or other writing referring to the grant conditions the grant on the prior execution, by the governmental entity and a prospective buyer, of a contract for the sale of the bonds when issued. (4) This section does not apply to bond or grant anticipation notes issued under Part III of this subtitle. (5) This section does not apply to a bond issued under an enabling act that: (i) states that this section does not apply; or (ii) provides a different method for the sale of the bonds. (c) A governmental entity shall offer bonds at a public sale. (d) (1) A governmental entity shall give notice of a public sale of bonds at least twice in at least one newspaper of general circulation in the area in which the governmental entity is located. (2) The first publication shall appear at least 10 days before the date of the sale. (3) The notice shall: (i) be in the form required in the ordinance or resolution that authorizes the issuance of the bonds; (ii) state the date, time, and place of the public sale; (iii) reference the enabling act that authorized the bonds; (iv) state the date of issue; (v) state the total principal amount; (vi) state the schedule of maturities; (vii) state the interest payable or the manner of determining the interest; (viii) state the purpose for which the proceeds will be used; (ix) describe the general form of the bonds, including whether the bonds will be: (1) in coupon or registered form; and (2) registrable as to principal or interest or both; (x) state that each bid must be made in writing by sealed proposal; and (xi) state the amount of the good faith deposit that the governmental entity has determined must accompany the bid. (4) The notice may reserve to the governmental entity the right to reject any or all bids. (e) Except as provided in subsection (f) of this section, the governmental entity shall sell the bonds to the highest bidder or bidders at the public sale. (f) (1) If the governmental entity has reserved the right to reject bids and does reject all bids, the governmental entity, within 30 days after rejecting all the bids, may sell the bonds at a private sale for not less than the highest amount bid by an acceptable bidder at the public sale. (2) If the governmental entity fails to sell the bonds at a private sale within the 30-day period under paragraph (1) of this subsection, the governmental entity may sell the bonds only at another public sale after notice as required in subsection (d) of this section. #### Section 19-206 (a) (1) Except as provided in paragraph (2) of this subsection, this section applies only to the following governmental entities: (i) a county; (ii) a public corporation or other political subdivision of the State; or (iii) an agency or instrumentality of a county, public corporation, or other political subdivision of the State. (2) This section does not apply to the following governmental entities: (i) Baltimore City; (ii) a municipality; or (iii) a housing authority under Division II of the Housing and Community Development Article. (b) (1) This section does not apply to a bond that: (i) matures within 1 year after the date of issue and is issued: (1) in anticipation of taxes; (2) to meet current expenses; or (3) to meet an emergency; (ii) is sold to the United States or a unit or instrumentality of the United States; (iii) is issued under a plan of composition approved in a proceeding under Chapter IX of the United States Bankruptcy Act; or (iv) is issued under any other plan to refund or refinance in exchange, bond for bond, for an outstanding maturing debt, other than: (1) a current or floating debt; or (2) a bond under item (i) of this paragraph. (2) This section does not apply to bond or grant anticipation notes issued under Part III of this subtitle. (3) This section does not apply to a bond issued under an enabling act that: (i) states that this section does not apply; or (ii) provides a different method for establishing the maturity of the bond. (c) (1) A governmental entity shall issue bonds on a serial maturity plan. (2) The governmental entity may: (i) vary the amounts of the series; and (ii) provide for the maturity of a series in consecutive annual installments or at longer intervals. (d) (1) The maturity date of the final series shall be based on the purpose for which the bonds are issued: (i) within the time limit that applies under the schedule in paragraph (2) of this subsection; or (ii) if more than one time limit applies, within the shortest applicable time limit. (2) The schedule of maturity dates is as follows: Limit on Purpose of Issue Maturity of Issue Paving existing highways or streets 10 years Airports and buildings constructed or to be constructed thereon 15 years Highway construction 20 years Electric light and power systems 25 years Gas systems 25 years Grade crossing eliminations 25 years Harbor improvements 25 years School construction 25 years All other permanent structures of durable materials 25 years Bridges 30 years Land acquired for permanent improvements 40 years Sewerage installation 40 years Water systems 40 years #### Section 19-207 (a) This section applies only to the following governmental entities: (1) a county; (2) a municipality; (3) a public corporation of the State; (4) a sanitary commission or district, but not including the Washington Suburban Sanitary Commission; and (5) a unit, public corporation, or other instrumentality of a county or municipality. (b) (1) Subject to the limitations in this section, a governmental entity authorized to issue bonds may issue new bonds to refund its outstanding bonds. (2) A single county, bicounty, or multicounty agency or instrumentality may not issue refunding bonds without the prior approval of the governing body of each county involved. (c) (1) The power to issue bonds under this section is in addition to any other power to borrow. (2) If bonds to be refunded are secured as unconditional general obligations with a pledge of the full faith and credit and unlimited taxing power of the governmental entity, the governmental entity may secure an issue of refunding bonds as unconditional general obligations with a pledge of the full faith and credit and unlimited taxing power of the governmental entity in the same manner and, with respect to the application of any public general and public local law and otherwise, with the same force and effect as the original pledge. (d) A governmental entity may issue bonds under this section only for the public purpose of: (1) realizing for the governmental entity a savings in the total cost of debt service on a direct comparison or present value basis; (2) debt restructuring that reduces the total cost of debt service; or (3) debt restructuring that the governmental entity determines: (i) is in its best interests; (ii) is consistent with its long-term financial plan; and (iii) realizes a financial objective of the governmental entity, including improvement of the relationship of debt service to any source of payment such as taxes, assessments, or other charges. (e) A governmental entity may: (1) provide that bonds under this section be in one or more series; and (2) vary the amount of the series. (f) (1) The total principal amount of the bonds issued under this section may exceed the total principal amount of the bonds that are being refunded. (2) To determine whether the bonds under this section are within any limit on debt that applies to the governmental entity: (i) the amount of the bonds that are being refunded shall be subtracted from its total outstanding debt; and (ii) the amount of the bonds issued under this section shall be added to the difference. (g) (1) Except as provided in paragraphs (2) and (3) of this subsection, a governmental entity shall issue bonds under this section in accordance with the procedures that applied to issuance of the bonds that are being refunded. (2) If, at a public meeting, the governmental entity determines that it would be in the public interest, the governmental entity may sell bonds issued under this section at a private sale, without soliciting bids. (3) Baltimore City may issue bonds to the extent authorized by the Maryland Constitution, to refund obligations previously issued in accordance with the procedures set forth in Article XI, Sec. 7 of the Maryland Constitution without repeating or further complying with those procedures in the issuance of the refunding bonds. (h) Bonds that are being refunded and that are subject to redemption before their stated dates of maturity may be called for redemption: (1) on the earliest redemption date; or (2) at a later date that the governmental entity determines. (i) (1) A governmental entity shall invest and apply proceeds of a sale of bonds issued under this section to ensure that the principal and redemption premium of, and interest on, the bonds that are being refunded will be paid in full when due. (2) The governmental entity may deposit any part of the proceeds of the sale of bonds issued under this section in a trust fund with a trust company or other banking institution, in the name of the governmental entity. (3) The trustee may invest and reinvest money in the trust fund in: (i) obligations of the United States; (ii) obligations guaranteed by the United States; (iii) certificates of deposit or time deposits secured by an obligation of the United States; or (iv) certificates of deposit or time deposits secured by an obligation guaranteed by the United States. (4) Interest, income, and profits on the investment may be: (i) considered to be revenue of a revenue project; and (ii) applied in any lawful manner, including to the payment of: (1) the bonds that are being refunded; and (2) the bonds issued under this section. (5) The trustee shall make money in the trust fund available, as the governmental entity requires, for the payment of: (i) the principal and redemption premium of, and interest on, the bonds that are being refunded; (ii) the principal and redemption premium of, and interest on, the bonds issued under this section; or (iii) any other related costs. (j) All or any part of the bonds issued under this section may be made payable from and secured by: (1) money in the trust fund; or (2) other money or security that the governmental entity provides. #### Section 19-208 (a) (1) Except as provided in paragraph (2) of this subsection, this section applies only to the following governmental entities: (i) a county; (ii) a municipality; (iii) a public corporation of the State; and (iv) a political subdivision or an agency or instrumentality of a political subdivision of the State. (2) This section does not apply to Baltimore City. (b) A governmental entity authorized to issue bonds: (1) subject to the limitations in this section and notwithstanding any other law, if the governmental entity determines that it is in the public interest, may issue and sell bonds in denominations of $1,000 or less, in any form; (2) may sell the bonds in integral multiples; and (3) subject to any other provision of law, may set the prices for and the interest rates to be paid on the bonds. (c) (1) A governmental entity may not have bonds outstanding under this section in excess of a total principal amount of the greater of: (i) $1,000,000; or (ii) 10% of the total outstanding bonded indebtedness of the governmental entity at the time the bonds are issued. (2) The total debts of a governmental entity, including bonds under this section, may not exceed a limit set by law. (d) A governmental entity may sell bonds issued under this section in any manner that the governmental entity considers appropriate, notwithstanding Sec.Sec. 19-205 and 19-206 of this subtitle or any other law that requires the solicitation of competitive bids or the public sale of bonds to the highest bidder or bidders or that regulates the manner in which the sale shall be advertised or the bonds sold. (e) (1) A governmental entity that issues bonds under this section shall approve a disclosure document that includes: (i) a description of the security for the bonds; (ii) a statement of the purposes for which the proceeds of the bonds will be used; (iii) a description of the financial condition of the governmental entity; (iv) a statement of the prices for and the interest rates to be paid on the bonds; and (v) a statement of the times and places of payment of the principal of and interest on the bonds. (2) A governmental entity shall make the disclosure document available to buyers of the bonds. #### Section 19-211 (a) Except as provided in subsection (b) of this section, this part applies only to the following governmental entities: (1) a county; (2) a municipality; (3) a public corporation or other political subdivision of the State; or (4) an instrumentality or agency of a county, public corporation, or other political subdivision of the State. (b) This part does not apply to a housing authority under Division II of the Housing and Community Development Article. #### Section 19-212 (a) A governmental entity authorized to issue bonds may issue and sell bond anticipation notes if, in the ordinance, resolution, or other form of official action that authorizes the notes, the governmental entity covenants to: (1) pay from the proceeds of the bonds in anticipation of the sale of which the notes are issued: (i) the principal of the notes; and (ii) to the extent that the interest on the notes is not paid from the proceeds of the sale of the notes, the interest on the notes; and (2) issue the bonds as soon as there is no longer a reason for deferring their issuance. (b) A governmental entity may issue and sell grant anticipation notes in anticipation of the receipt of a grant from the United States, the State, or any of their units if, in the ordinance, resolution, or other form of official action that authorizes the notes, the governmental entity covenants to pay from the proceeds of the grant in anticipation of the receipt of which the notes are issued: (1) the principal of the notes; and (2) the interest on the notes. #### Section 19-213 (a) Bond and grant anticipation notes issued under this part shall be authorized by ordinance, resolution, or other form of official action customarily used by the governmental entity. (b) (1) The ordinance, resolution, or other form of official action that authorizes the bond or grant anticipation notes shall state: (i) the authority for the notes and, if the notes are bond anticipation notes, the authority for the bonds; (ii) the amount of notes authorized; and (iii) the terms of the notes. (2) The ordinance, resolution, or other form of official action shall specify that the notes: (i) be sold in a certain manner, at public sale or, if the governmental entity considers private negotiation to be in its best interest, at private sale; (ii) mature at certain times; (iii) bear interest at certain rates or at rates to be determined in the manner stated in the ordinance, resolution, or other form of official action; and (iv) be sold for certain prices or for prices to be determined in the manner stated in the ordinance, resolution, or other form of official action, which may be at, above, or below par. (3) The ordinance, resolution, or other form of official action may provide that the notes: (i) be in one or more series, as money is required; and (ii) be renewable at maturity with or without resale. #### Section 19-214 (a) A governmental entity may not issue bond anticipation notes under this part in a total principal amount that exceeds the authorized amount of the bonds in anticipation of the sale of which the notes are issued and sold. (b) A governmental entity may not issue grant anticipation notes under this part in a total amount, including interest, that exceeds the amount of the grant in anticipation of the receipt of which the notes are issued and sold. #### Section 19-215 Grant anticipation notes may not be sold under this part until the governmental entity receives from the grantor a written commitment for the grant. #### Section 19-216 (a) A bond anticipation note may not be issued under this part unless it is signed, endorsed, or guaranteed in the manner required by law for the bonds in anticipation of which the note is issued. (b) A bond or grant anticipation note is valid and binding in accordance with its terms notwithstanding that: (1) an official whose signature appears on the note is no longer an official when the note is delivered; or (2) an official whose signature appears on the note became an official after the note was issued. #### Section 19-217 (a) (1) The principal of and interest on bond anticipation notes under this part shall be payable from: (i) the first proceeds of sale of the bonds; or (ii) the tax or other revenue that the governmental entity has pledged to the payment of the bonds. (2) One year's interest on the notes, or on any renewal of the notes, accounting from the date of the initial issue of the notes, may be paid from the proceeds of sale of the notes. (b) (1) Subject to paragraphs (2) and (3) of this subsection, the principal of and interest on grant anticipation notes under this part shall be payable from the proceeds of the grant. (2) The governmental entity may make the grant anticipation notes payable only from the proceeds of the grant and need not pledge the faith and credit or taxing power of the governmental entity. (3) If the governmental entity does not pledge its faith and credit or taxing power, the grant anticipation notes are not a debt or charge against the general credit or taxing power of the governmental entity under any constitutional provision, charter provision, or statutory limitation. #### Section 19-218 The proceeds of sale of bond anticipation notes shall be spent: (1) first, for payment of the expenses of issuance of the notes; and (2) then, subject to Sec. 19-217(a)(2) of this subtitle, only for the public purposes for which the bonds are authorized. #### Section 19-219 (a) (1) Except for the provisions of this section, each governmental entity shall comply with the provisions, requirements, and limitations in the enabling act. (2) If a governmental entity is unable to sell bonds to pay the bond anticipation notes under this part when due because of an interest rate limitation in the enabling act, the governmental entity may: (i) issue bonds in a total principal amount sufficient to pay the principal of and not more than 1 year's interest on the notes; and (ii) provide for payment of interest on the bonds at a rate that is higher than the interest rate limitation in the enabling act. (3) This section is supplemental authority for a governmental entity to issue bonds free of an interest rate limitation to pay outstanding bond anticipation notes under this part. (b) The ordinance, resolution, or other form of official action that authorizes the issuance of bonds under subsection (a)(2) of this section shall refer to: (1) the enabling act; and (2) this section. #### Section 19-220 (a) A governmental entity may issue bond or grant anticipation notes under this part as notes in the nature of commercial paper. (b) A bond or grant anticipation note issued as a note in the nature of commercial paper may be secured by: (1) a trust indenture with a trust company, or a bank with powers of a trust company, in or outside the State; and (2) a letter of credit, line of credit, or other credit arrangement from or with a lending institution. (c) (1) For bond anticipation notes, the credit arrangement may be made payable out of: (i) the first proceeds of sale of the bonds; or (ii) the tax or other revenue that the governmental entity has pledged to payment of the principal of and interest on the bonds. (2) For grant anticipation notes, the credit arrangement may be made payable out of the proceeds of the grant. #### Section 19-221 The following obligations are exempt from State and local taxation: (1) a bond or grant anticipation note issued under this part; (2) a bond issued to pay the notes issued under item (1) of this section; and (3) the interest on the obligations. #### Section 19-224 (a) This section applies only to the following governmental entities: (1) a county; (2) a municipality; (3) a public corporation or other political subdivision of the State; and (4) any instrumentality or agency of a county, municipality, public corporation, or other political subdivision of the State. (b) (1) A bond or grant anticipation note issued under Part III of this subtitle shall be considered investment securities to the extent set forth in this section. (2) If a bond issued by a governmental entity otherwise complies with the requirements of the Commercial Law Article for investment securities, the bond shall be considered to be an investment security notwithstanding that: (i) the ordinance, resolution, or other authority under which the bond is issued subjects the bond to an indenture or agreement that is separate from the ordinance, resolution, or authority; (ii) the ordinance, resolution, or other authority under which the bond is issued limits payment of principal and interest to: (1) the proceeds of limited sources of revenue; or (2) a special fund established for that purpose; (iii) any law limits payment of principal and interest to a certain amount or rate of tax that may be imposed; or (iv) principal or interest are registrable. (c) A bond that is considered to be an investment security under subsection (b) of this section has all the attributes of an investment security that are possessed by a bond that is: (1) issued on the full faith and credit of the governmental entity; (2) payable to bearer; and (3) secured as to the payment of principal and interest by the unlimited taxing power of the governmental entity. #### Section 19-227 (a) In this part the following words have the meanings indicated. (b) "Chief executive officer" means the county executive, mayor, president, chairman, or similar official of a governmental entity. (c) "Financial officer" means the controller, the director of finance, or similar official of a governmental entity. (d) "Internal Revenue Code" means the Internal Revenue Code of 1986 and includes regulations and rulings issued under that Code. (e) (1) "Proceeds" means money received from the sale of bonds. (2) "Proceeds" includes any money deemed to be proceeds of bonds under the Internal Revenue Code. #### Section 19-228 This part applies only to the following governmental entities: (1) a county; (2) a municipality; (3) a public corporation of the State; (4) a sanitary commission or district; and (5) a unit, public corporation, or other instrumentality of a county or a municipality. #### Section 19-229 (a) The financial officer may establish and maintain funds and accounts for the administration, management, investment, and accounting of proceeds, including any investment earnings on proceeds, that may be necessary or appropriate to comply with the Internal Revenue Code and to establish or maintain the exclusion from gross income for federal income tax purposes of interest on the bonds. (b) (1) The financial officer may manage and invest proceeds, including any investment earnings on proceeds, in a manner so as to maintain the exclusion from gross income for federal income tax purposes of interest on the bonds. (2) The financial officer may restrict the yields on investments of proceeds if and to the extent necessary to maintain the exclusion from gross income for federal income tax purposes of interest on the bonds. (c) The financial officer may prepare and maintain records of the receipt, deposit, investment, management, disbursement, and application of proceeds, including any investment earnings on proceeds, that may be necessary or appropriate from time to time to comply with the Internal Revenue Code and to maintain or verify the exclusion from gross income for federal income tax purposes of interest on the bonds. #### Section 19-230 (a) The financial officer may establish a separate rebate fund to be used to make any payments to the United States with respect to investment earnings on proceeds that may be required by the Internal Revenue Code. (b) There may be separate accounts within the rebate fund. (c) Amounts deposited to the rebate fund shall be used only for the purpose of making rebate payments, and no appropriation will be required before payment of any required rebates from the rebate fund to the United States. (d) The financial officer may make payments from the rebate fund as required in order to: (1) comply with the Internal Revenue Code; and (2) maintain the exclusion from gross income for federal income tax purposes of interest on the bonds. (e) Any excess money held in the rebate fund with respect to an issue of bonds after all required rebate payments for that issue have been made, as certified by the financial officer, shall be applied in a manner consistent with the Internal Revenue Code. #### Section 19-231 The financial officer may prepare and file with the appropriate agency of the United States any forms, information, and reports with respect to the bonds and the expenditure and investment of proceeds that may be required under the Internal Revenue Code. #### Section 19-232 For purposes of doing whatever is necessary or appropriate to comply with the Internal Revenue Code and to establish or maintain the exclusion from gross income for federal income tax purposes of interest on the bonds, the financial officer and the chief executive officer may each: (1) take any other or further actions; (2) enter into any agreement or covenant regarding the use of proceeds, including any investment earnings on proceeds, the deposit of money to the rebate fund, and the making of rebate payments; and (3) provide certifications of facts and estimates. #### Section 19-233 This part does not prevent the governing authority of a governmental entity from authorizing the issuance and sale of bonds the interest on which is not excludable from gross income for federal income tax purposes. #### Section 19-236 (a) Notwithstanding any other law and in addition to any other authority, to improve the management of debt service or interest rate risks on its bonds or to reduce the cost of servicing its bonds, the governing body of a county may enact, by local law or resolution, authority for the county to: (1) enter into interest rate exchange agreements providing for payments based on levels of or changes in interest rates; and (2) appoint any agents necessary to implement and administer the agreements. (b) (1) A county that proposes to enter into one or more interest rate exchange agreements shall enact a local law or resolution that authorizes the transaction on the terms and conditions established by the county in the local law or resolution. (2) (i) In the local law or resolution that authorizes the transaction or in a separate resolution, the county may provide for the final form and the final terms and provisions of the agreement, after giving due consideration to the creditworthiness of the counterparty. (ii) The county may delegate to an officer, an official, a board, or an agency of the county specified in the local law or resolution the power to provide for the final form and the final terms and provisions of the agreement, after giving due consideration to the creditworthiness of the counterparty. (c) An interest rate exchange agreement may be entered into in connection with, or incidental to, any bonds of the county. --- Md. Code Ann., Local Gov't (as displayed at mgaleg.maryland.gov, October 16, 2026)