In this subtitle the following words have the meanings indicated, unless the context clearly requires otherwise. “Bond” means an obligation for the payment of money, by whatever name known or source of funds secured, issued by a State unit under general or special statutory authority. “Bond” includes: a bond; a certificate of indebtedness; an interim certificate; and a note. “Enabling act” means a law that authorizes a State unit to create a debt and to sell bonds to evidence that debt. “Resolution” means a resolution or other evidence of official action customarily used by a State unit. “State unit” means a unit or instrumentality of the State. “State unit” does not include the State.

This subtitle does not apply to an entity that is governed by Title 19, Subtitles 1, 2, and 9 and Subtitle 6, Part I of the Local Government Article.

A State unit authorized to issue bonds may issue bonds: in coupon form; or notwithstanding any other provision of law, in a form that qualifies as a registered form under §§ 103 and 149 of the Internal Revenue Code or a regulation proposed or adopted under those sections. Whenever a State unit provides for the sale of bonds in registered form, the State unit may: establish procedures for the registration and transfer of the bonds; appoint any agent, including an authenticating trustee, corporate trustee, paying agent, registrar, or transfer agent; in connection with the establishment and maintenance of a central depository system for the transfer or pledge of the bonds, make agreements with: custodian banks and their nominees; or financial intermediaries and their nominees; and exercise any other power that relates to issuance of bonds in registered form.

This section does not apply if the total principal amount of the authorized issue is $25,000 or less. This section does not apply to a bond that: matures within 1 year after the date of issue and is issued: in anticipation of tax receipts; to meet current expenses; or to meet an emergency; is sold to the United States or a unit or instrumentality of the United States; is issued under a plan of composition approved in a proceeding under Chapter IX of the United States Bankruptcy Act; or is issued under any other plan to refund or refinance in exchange, bond for bond, an outstanding maturing debt, other than: a current or floating debt; or a bond under item (i) of this paragraph. This section does not apply if: 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 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 State unit and a prospective buyer, of a contract for the sale of the bonds when issued. This section does not apply to bond or grant anticipation notes issued under Part III of this subtitle. This section does not apply to bonds issued under an enabling act that specifically states that this section does not apply or that provides a different method for the sale of the bonds. A State unit shall offer bonds at a public sale. A State unit shall give notice of a public sale of bonds at least twice in at least 1 newspaper with a general circulation in the State. The 1st publication shall appear at least 10 days before the date of sale. The notice shall: be in the form required in the resolution that authorizes the issuance of the bonds; state the date, time, and place of the public sale; describe the bonds by reference to the enabling act under which they are authorized; state the date of issue; state the total principal amount; state the schedule of maturities; state the interest payable or the manner of determining the interest; state the purpose for which the proceeds will be used; describe the general form of the bonds, including: whether the bonds will be in coupon or registered form; and whether the principal or interest or both will be registrable; state that each bid must be made in writing by sealed proposal; and state the amount of the good faith deposit that the State unit has determined must accompany the bid. The notice may reserve to the State unit the right to reject any or all bids. Except as provided in subsection (e) of this section and § 8-207 of this subtitle, the State unit shall sell the bonds to the highest bidder or bidders at the public sale. If the State unit has reserved the right to reject bids and does reject all bids, the State unit, 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. If the State unit has reserved the right to reject all bids and does reject all bids and fails to sell the bonds at a private sale within the 30-day period under paragraph (1) of this subsection, the State unit may sell the bonds only at another public sale after notice as required in subsection (c) of this section.

This section does not apply to bonds issued under an enabling act that specifically states that this section does not apply. Whenever a State unit simultaneously issues bonds authorized under 2 or more enabling acts, the State unit may allow submission of a bid that: is for bonds authorized under 1 enabling act; and is conditioned on the acceptance of 1 or more companion bids for bonds authorized under 1 or more of the other enabling acts. Whenever, as a whole, a set of bids under subsection (b) of this section yields to the State unit more than individual bids, the State unit shall accept the set even if 1 or more of the bids in the set yields less than the individual bids.

This section does not apply to a bond that: matures within 1 year after the date of issue and is issued: in anticipation of tax receipts; to meet current expenses; or to meet an emergency; is sold to the United States or a unit or instrumentality of the United States; is issued under a plan of composition approved in a proceeding under Chapter IX of the United States Bankruptcy Act; or is issued under any other plan to refund or refinance in exchange, bond for bond, an outstanding maturing debt, other than: a current or floating debt; or a bond under item (i) of this paragraph. This section does not apply to bond or grant anticipation notes issued under Part III of this subtitle. This section does not apply to bonds issued under an enabling act that specifically states that this section does not apply or that provides a different method for establishing the maturity of the bonds. A State unit shall issue bonds on a serial maturity plan. The State unit may: vary the amounts of the series; and provide for the maturity of a series in consecutive annual installments or at longer intervals. The maturity date of the final series shall be based on the purpose for which the bonds are issued: within the time limit that applies under the schedule in paragraph (2) of this subsection; or if more than 1 time limit applies, within the shortest applicable time limit. The schedule of maturity dates is as follows: Limit on Maturity Purpose of Issue                                of Issue Paving existing highways or streets …………………      10 years Airports and buildings constructed or to be constructed on airports …………………………………      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 unscheduled 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 All other unscheduled proprietary or public purposes     40 years

Subject to the limitations in this section, with the approval of the Board of Public Works, a State unit authorized to issue bonds may issue new bonds to refund its outstanding bonds. The power to issue bonds under this section is in addition to any other power to borrow. A State unit may issue bonds under this section only for: the public purpose of realizing for the State unit a savings in the total cost of debt service on a direct comparison or present value basis; the public purpose of debt restructuring that reduces the total cost of debt service; or the public purpose of debt restructuring that the State unit determines: is in its best interests; is consistent with its long term financial plan; and realizes a financial objective of the State unit, including improvement of the relationship of debt service to any source of payment such as taxes, assessments, or other charges. A State unit may: provide that bonds under this section be in 1 or more series; and vary the amount of the series. The total principal amount of the bonds issued under this section may exceed the total principal amount of the bonds that are being refunded. To determine whether the bonds under this section are within any limit on debt that applies to the State unit: the amount of the bonds that are being refunded shall be subtracted from its total outstanding debt; and the amount of the bonds issued under this section shall be added to the difference. Except as provided in paragraph (2) of this subsection, a State unit shall issue bonds under this section in accordance with the procedures that applied to issuance of the bonds that are being refunded. If, at a public meeting, the State unit determines that it would be in the public interest, the State unit may sell bonds issued under this section at a private sale, without soliciting bids. Bonds that are being refunded and that are subject to redemption before their stated dates of maturity may be called for redemption: on the earliest redemption date; or at a later date that the State unit determines. A State unit 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. The State unit 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 State unit. The trustee may invest and reinvest money in the trust fund in: obligations of the United States; obligations guaranteed by the United States; certificates of deposit or time deposits secured by an obligation of the United States; or certificates of deposit or time deposits secured by an obligation guaranteed by the United States. Interest, income, and profits on the investment may be: considered to be revenue of a revenue project; and applied in any lawful manner, including to the payment of: the bonds that are being refunded; and the bonds issued under this section. The trustee shall make money in the trust fund available, as the State unit requires, for the payment of: the principal and redemption premium of, and interest on, the bonds that are being refunded; the principal and redemption premium of, and interest on, the bonds issued under this section; or any other related costs. All or any part of the bonds issued under this section may be made payable from and secured by: money in the trust fund; or other money or security that the State unit provides.

A State unit authorized to issue bonds: subject to the limitations in this section and notwithstanding any other law, if the State unit determines that it is in the public interest, may issue and sell the bonds in denominations of less than $1,000, in any form; and subject to any other provision of law, may set the prices for and the interest rates to be paid on the bonds. A State unit may not have bonds outstanding under this section in excess of a total principal amount of $1,000,000. The total debts of a State unit, including bonds under this section, may not exceed a limit set by law. A State unit may sell bonds issued under this section in any manner that the State unit considers appropriate, notwithstanding §§ 8-206 and 8-208 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. A State unit that issues bonds under this section shall approve a disclosure document that includes: a description of the security for the bonds; a statement of the purposes for which the proceeds of the bonds will be used; a description of the financial condition of the State unit; a statement of the prices for and the interest rates to be paid on the bonds; and a statement of the times and places of payment of the principal of and interest on the bonds. The State unit shall make the disclosure document available to buyers of the bonds.

In this section the following words have the meanings indicated. “Code” means the Internal Revenue Code of 1986 and includes regulations and rulings issued under that Code. “Financial officer” means the Controller, the director of finance or similar official of a unit of the State government or a political instrumentality of the State that has authority to issue bonds. “Financial officer” includes, to the extent necessary, the Treasurer and the Comptroller. “Proceeds” means money received from the sale of bonds, and includes any money deemed to be proceeds of bonds under the Code. 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 from time to time to comply with the Code and to establish or maintain the exclusion from gross income for federal income tax purposes of interest on the bonds. 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. 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. 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 Code and to maintain or verify the exclusion from gross income for federal income tax purposes of interest on the bonds. 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 from time to time by the Code. There may be separate accounts within the rebate fund. Amounts deposited to the rebate fund shall be used only for the purpose of making rebate payments to the United States. The financial officer may make payments from the rebate fund as may be required from time to time in order to: comply with the Code; and maintain the exclusion from gross income for federal income tax purposes of interest on the bonds. 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 Code. The financial officer may prepare and file from time to time 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 Code. The financial officer and other officers of a State unit may: take any other or further actions; 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 provide certifications of facts and estimates, that may be necessary or appropriate from time to time to comply with the Code and to establish or maintain the exclusion from gross income for federal income tax purposes of interest on the bonds. Nothing in this section shall prevent the State unit from authorizing the issuance and sale of bonds the interest on which is not excludable from gross income for federal income tax purposes.

A State unit authorized to issue bonds may issue and sell bond anticipation notes if, in the resolution that authorizes the notes, the State unit covenants to: pay from the proceeds of the bonds in anticipation of the sale of which the notes are issued: the principal of the notes; and to the extent that the interest on the notes is not paid from the proceeds of sale of the notes, the interest on the notes; and issue the bonds as soon as there is no longer a reason for deferring their issuance. A State unit 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 resolution that authorizes the notes, the State unit covenants to pay from the proceeds of the grant in anticipation of the receipt of which the notes are issued: the principal of the notes; and the interest on the notes.

Bond and grant anticipation notes issued under this Part III of this subtitle shall be authorized by resolution of the State unit. The resolution shall state: the authority for the notes and, if the notes are bond anticipation notes, the authority for the bonds; the amount of notes authorized; and the terms of the notes. The resolution shall specify that the notes: be sold in a certain manner, at public sale or, if the State unit considers private negotiation to be in its best interest, at private sale; mature at certain times; bear interest at certain rates or at rates to be determined in the manner stated in the resolution; and be sold for certain prices or for prices to be determined in the manner stated in the resolution, which may be at, above, or below par. The resolution may provide that the notes: be in 1 or more series, as money is required; and be renewable at maturity with or without resale.

A State unit may not issue bond anticipation notes under this Part III of this subtitle 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. A State unit may not issue grant anticipation notes under this Part III of this subtitle 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.

Grant anticipation notes may not be sold under this Part III of this subtitle until the State unit receives from the grantor a written commitment for the grant.

A bond anticipation note may not be issued under this Part III of this subtitle unless it is signed, endorsed, or guaranteed in the manner required by law for the bonds in anticipation of which the note is issued. A bond or grant anticipation note is valid and binding in accordance with its terms notwithstanding that: an official whose signature appears on the note is no longer an official when the note is delivered; or an official whose signature appears on the note became an official after the note was issued.

The principal of and interest on bond anticipation notes under this Part III of this subtitle shall be payable from: the 1st proceeds of sale of the bonds; or the tax or other revenue that the State unit has pledged to the payment of the bonds. 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. Subject to paragraphs (2) and (3) of this subsection, the principal of and interest on grant anticipation notes under this Part III of this subtitle shall be payable from the proceeds of the grant. The State unit 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 State unit. If the State unit does not pledge its faith and credit or taxing power, the grant anticipation notes are not a debt or a charge against the general credit or taxing power of the State unit under any constitutional provision or statutory limitation.

The proceeds of sale of bond anticipation notes shall be spent: 1st, for payment of the expenses of issuance of the notes; and then, subject to § 8-218(a)(2) of this subtitle, only for the public purposes for which the bonds are authorized.

Except for the provisions of this section, each State unit shall comply with the provisions, requirements, and limitations in the enabling act. If a State unit is unable to sell bonds to pay the bond anticipation notes under this Part III of this subtitle when due because of an interest rate limitation in the enabling act, the State unit may: 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 provide for payment of interest on the bonds at a rate that is higher than the interest rate limitation in the enabling act. This section is supplemental authority for a State unit to issue bonds free of an interest rate limitation to pay outstanding bond anticipation notes under this Part III of this subtitle. A resolution that authorizes the issuance of bonds under subsection (a)(2) of this section shall refer to: the enabling act; and this section.

A State unit may issue bond or grant anticipation notes under this Part III of this subtitle as notes in the nature of commercial paper. A bond or grant anticipation note issued as a note in the nature of commercial paper may be secured by: a trust indenture with a trust company, or a bank with powers of a trust company, in or outside the State; and a letter of credit, line of credit, or other credit arrangement from or with a lending institution. For bond anticipation notes, the credit arrangement may be made payable out of: the 1st proceeds of sale of the bonds; or the tax or other revenue that the State unit has pledged to payment of the principal of and interest on the bonds. For grant anticipation notes, the credit arrangement may be made payable out of the proceeds of the grant.

The following obligations are exempt from State and local taxation: a bond or grant anticipation note issued under this part; a bond issued to pay the notes issued under item (1) of this section; and the interest on the obligations.