Transportation (GTR) — Title 3. Financing by Department

Has the meaning stated in § 5-101 of this article; and

Includes any one or more or combination of air navigation facilities, as defined in § 5-101 of this article.

All “State highway construction bonds, second issue” and “State highway construction bonds, third issue” issued and sold under Article 89B of the Code of 1957; and

All bonds issued and sold under Article 62B of the Code of 1957, evidencing the “Maryland Port Authority Loan of 1958”, “Maryland Port Authority Second Loan of 1961”, and “Maryland Port Authority Loan of 1967”.

All property acquired in connection with it;

Financial, architectural, consulting, engineering, and legal services;

Plans, specifications, surveys, estimates, feasibility reports, and direct and indirect labor, material, equipment, and administrative expenses; and

Financing the facility, including financing charges and interest before, during, and for 1 year after completion of construction.

In this definition, “highway” and “State highway system” have the meanings stated in § 8-101 of this article.

“Highway facility” includes any one or more or combination of projects involving the rehabilitation and reconstruction of highways in the State highway system to meet present and future needs and the development and construction in new locations of new highways necessitated by traffic demands to become parts of the State highway system, including federally aided highway projects partially funded by this State and all incidental property rights, materials, facilities, and structures.

Bonds purchased and held in sinking funds by or for the Department; or

If the money for their payment or redemption has been provided:

“Railroad facility” includes any one or more or combination of:

“Railroad facility” does not include any transit facility.

Airport facilities;

Highway facilities;

Port facilities;

Railroad facilities; and

Transit facilities.

In this section the following words have the meanings indicated.

“Bonds” means bonds, notes, or other evidences of obligation issued by the Department, including both consolidated transportation bonds and county transportation bonds.

“Code” means the Internal Revenue Code and includes regulations and rulings issued under that Code.

“Proceeds” means moneys received from the sale of the Department’s bonds, and includes any moneys deemed to be proceeds of the Department’s bonds under the Code.

The Secretary and the Treasurer shall 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 Department’s bonds.

The Secretary and the Treasurer shall 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 Department’s bonds.

The Secretary, the Treasurer, and the Comptroller shall 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 Secretary, the Treasurer, and the Comptroller shall make payments from the rebate fund as may be required from time to time in order to comply with the Code and to maintain the exclusion from gross income for federal income tax purposes of interest on the Department’s bonds.

Any excess moneys held in the rebate fund with respect to an issue of the Department’s bonds after all required rebate payments for that issue have been made, as certified by the Secretary and the Treasurer, shall be applied in compliance with the Code.

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 moneys to the rebate fund and the making of rebate payments; and

Provide certifications of facts and estimates.

In this section the following words have the meanings indicated.

“Credit instrument” means a letter of credit, bond insurance policy, guaranty, line of credit, surety bond, or similar agreement or commitment securing an issue of consolidated transportation bonds or county transportation bonds.

“Credit instrument provider” means an issuer of a credit instrument the unsecured indebtedness of which, or indebtedness insured by which, is rated on the date of issuance of the credit instrument by a nationally recognized rating agency in 1 of its 2 highest rating categories.

“Maximum annual debt service” means, as of any particular date of computation:

There shall be deposited with or held for the paying agent for the bonds a credit instrument under which the credit instrument provider is obligated to pay an amount at least equal to the maximum annual debt service on the bonds of that issue; or

The bonds shall be issued without a credit instrument if, in the Secretary’s judgment, the absence of a credit instrument will not adversely affect the credit rating of the bonds.

There shall be deposited with or held for the paying agent for the bonds a credit instrument under which the credit instrument provider is obligated to pay an amount at least equal to the maximum annual debt service on the bonds of that issue; or

The bonds shall be issued without a credit instrument if, in the Secretary’s judgment, the absence of a credit instrument will not adversely affect the credit rating of the bonds.

The Secretary determines that extraordinary credit market conditions exist that warrant the use of this method rather than a public, competitive sale; and

The Secretary determines that the terms and conditions, including price, interest rates, and payment dates, that can be achieved by a private negotiated sale are more advantageous to the State.

Shall be established each year by the General Assembly in the State budget; and

May not exceed the limit established in subsection (b) of this section.

Describe generally the transportation facilities the cost of which is proposed to be financed by the sale of bonds;

State the estimated cost of financing these facilities; and

Determine and specify:

The resolution may provide that the Secretary may postpone the time for receipt of proposals for the bonds without republishing the form of advertisement for the bonds.

Consolidated transportation bonds shall be executed on behalf of the Department by the manual or facsimile signature of the Secretary.

Other signatures on the bonds may be either manual or facsimile.

For the purpose of paying the principal of and interest on consolidated transportation bonds as they become due and payable, there is hereby levied and imposed an annual tax that consists of the taxes specified in this section and, to the extent necessary and except as otherwise provided in this subsection, that shall be used and applied exclusively for that purpose.

The required use and application of the tax under paragraph (1) of this subsection is subject only to the prior use and application of one or all or any combination of the taxes specified in this section to meet the debt service on all of the following bonds while they are outstanding and unpaid and to the payment of which any part of those taxes has been pledged:

The motor fuel tax revenue distributed under §§ 2–1103(2), 2–1103(3), and 2–1104(a)(3) of the Tax – General Article;

The motor fuel tax revenue attributable to the sales and use tax equivalent rate imposed under § 9–306 of the Tax – General Article and distributed under § 2–1103(4) of the Tax – General Article;

The income tax revenue distributed under § 2–614 of the Tax – General Article;

The excise tax imposed on vehicles by Part II of Title 13, Subtitle 8 of this article;

The sales and use tax revenues distributed under § 2–1302.1 of the Tax – General Article; and

The transportation network company impact fee revenues allocated under § 3–216(d)(5)(i)1 of this subtitle.

The bonds and the interest on them have become due and fully paid; or

Adequate and complete provision for payment of the principal and interest has been made.

In this subsection “government obligations” means direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America.

Adequate and complete provision for payment of the principal and interest of any issue or series of consolidated transportation bonds may be made by the Secretary and the State Treasurer by making a transfer of government obligations from the Transportation Trust Fund to the State Treasurer or to a bank or trust company as escrow fund agent in an amount which, together with the income due thereon, will be sufficient to pay in full when due the maturing principal of and interest on the consolidated transportation bonds.

To the extent that adequate and complete provision has been made for the payment of consolidated transportation bonds under this title those bonds shall no longer be deemed to be outstanding and unpaid under this title.

There shall be maintained in the Transportation Trust Fund one or more sinking fund accounts to which shall be credited and from which shall be paid, from the proceeds of the taxes levied and imposed for that purpose or from any other funds of the Department, amounts sufficient at all times to meet the debt service on all bonds of prior issues and consolidated transportation bonds from time to time outstanding and unpaid.

After meeting its debt service requirements, the Department may use the funds in the Transportation Trust Fund for any lawful purpose related to the exercise of its rights, powers, duties, and obligations.

Expenditures under this subsection shall be made in accordance with any appropriation provided for in any applicable budget bill or supplementary appropriation bill. However, an appropriation proposed to be made to any unit in the Department or proposed to be made for any designated transportation activity, function, or undertaking that has been reduced by the General Assembly may not be restored, for the same purpose as originally proposed, except in an emergency, by the budget amendment procedure of § 7–209 of the State Finance and Procurement Article, or otherwise if the General Assembly in striking or reducing the appropriation, prohibited its restoration. However, except for emergency capital projects, if the General Assembly explicitly reduces in the budget bill an appropriation proposed for a major capital project as defined in § 2–103.1(a)(4) of this article, the appropriation may not be restored for the same purpose as originally proposed by the budget amendment procedure of § 7–209 of the State Finance and Procurement Article or otherwise unless the General Assembly, in striking or reducing the appropriation, expressly authorized its restoration.

For each fiscal year, the Department shall use the funds in the Transportation Trust Fund for the purposes specified in subsection (c)(2)(ii) of this section, which may include construction and maintenance of:

Each year, before the General Assembly considers the proposed Maryland Transportation Plan and the Consolidated Transportation Program, the Department shall report to the General Assembly, in accordance with § 2–1257 of the State Government Article, on:

Except as otherwise provided in this subsection, this section is effective notwithstanding any other provision of law.

Nothing in this section may adversely affect in any way the security of any of the following bonds while they are outstanding and unpaid:

It is the intent of the General Assembly that, as long as any of the bonds listed in paragraph (2) of this subsection are outstanding and unpaid:

Except as provided in paragraphs (3) and (6) of this subsection, no part of the Transportation Trust Fund may be transferred or diverted to the General Fund of the State unless approved by the General Assembly through legislation passed by a three–fifths majority vote of the full standing committee assigned the legislation in each of the two Houses of the General Assembly and enacted into law.

Except as provided in paragraphs (3) and (6) of this subsection, no part of the Transportation Trust Fund may be transferred or diverted to a special fund of the State, unless approved by the General Assembly through legislation passed by a three–fifths majority vote of the full standing committee assigned the legislation in each of the two Houses of the General Assembly and enacted into law. No part of the Transportation Trust Fund may be transferred or diverted to a special fund of the State pursuant to the provisions of § 7–209(e)(2) of the State Finance and Procurement Article, unless the requirements of this paragraph have been satisfied.

Funds in the Transportation Trust Fund may be used for defense or relief purposes only if:

Before the enactment of legislation under paragraph (1) or (2) of this subsection or the issuance of an emergency declaration under paragraph (3) of this subsection to transfer or divert funds from the Transportation Trust Fund to the General Fund or a special fund, the Treasurer shall advise the Governor and the General Assembly of the potential impact of the transfer or diversion on the credit rating of bonds or other debt instruments issued by the Department.

This subsection does not apply to a distribution of highway user revenues to counties, municipalities, and Baltimore City under § 8–403 of this article.

This subsection applies only to a bill or an amendment that would:

When submitting a proposed bill or amendment for introduction in the General Assembly on behalf of the Administration, an executive department, or any other unit of State government, the Governor shall provide to the General Assembly, in accordance with § 2–1257 of the State Government Article, a detailed analysis of the effect the proposed bill or amendment will have on the Transportation Trust Fund and the funding of projects specified in the Consolidated Transportation Program, including an analysis of whether the reduction of available funds will result in the elimination of any project or the alteration of the scope, design, or scheduling of any project.

At least 10 percent of a transfer or diversion in a fiscal year shall be repaid in the first fiscal year after the transfer or diversion;

A cumulative total of at least 30 percent of a transfer or diversion in a fiscal year shall be repaid within 2 fiscal years after the transfer or diversion;

A cumulative total of at least 55 percent of a transfer or diversion in a fiscal year shall be repaid within 3 fiscal years after the transfer or diversion;

A cumulative total of at least 80 percent of a transfer or diversion in a fiscal year shall be repaid within 4 fiscal years after the transfer or diversion; and

A cumulative total of 100 percent of a transfer or diversion in a fiscal year shall be repaid within 5 fiscal years after the transfer or diversion.

Borrow money and evidence the borrowing by the issuance and sale of its bonds in substantially the form and manner and subject to the same general provisions and tax exemption applicable to consolidated transportation bonds under §§ 3-203 through 3-207, 3-212, and 3-213 of this title;

Disburse the proceeds of the borrowing pursuant to agreements with participating counties; and

Pay the principal of and interest on the bonds.

Its desire to participate in the proceeds of the next series of bonds to be issued by the Department; and

The proposed amount of its participation.

The bonds to be issued on behalf of the county will be repaid, with interest, within 15 years after their date of issue;

Each issue of bonds on behalf of the county shall be approved by resolution of the Board of Public Works before they are issued;

Unless the county elects to deposit the amount with the State Comptroller under item (4) of this subsection, and except as provided in § 3-104 of this title, the State Comptroller may withhold and deposit money to the credit of a sinking fund maintained to pay the principal of and interest on the bonds from funds allocable to the county under Title 8, Subtitle 4 of this article, after first providing for sinking fund requirements on outstanding and unpaid county highway construction bonds issued pursuant to Chapter 657 of the Laws of 1953, until an amount equal to the debt service payable in the current fiscal year and the next succeeding fiscal year is accumulated and, thereafter, an amount equal to debt service on the bonds in the succeeding fiscal year, but no part of the funds that have been previously pledged for debt service on outstanding and unpaid bonds of the county, as provided in Title 8, Subtitle 4, may be withheld;

In any year in which any bonds covered by the agreement are outstanding and unpaid, the county may make an annual levy on its taxable basis in the rate and amount sufficient to provide a sum equal to the amount to be withheld by the State Comptroller, as provided in item (3) of this subsection, in which event the State Comptroller may not withhold any more of the highway user revenues of the county than necessary to assure payment of the principal of and interest on the bonds in the current fiscal year and the next succeeding fiscal year;

At regular intervals, the State Comptroller shall pay from the sinking fund to the Department amounts sufficient to pay the principal of and interest on the bonds; and

The county shall use and invest its share of the proceeds of the bonds within the parameters established by the Department and take, or refrain from taking, such other and further actions as may be required of it by the Department to maintain the exemption from federal income taxation of interest on the bonds.

Issue revenue bonds on behalf of and for the benefit of participating counties;

Loan the proceeds of those bonds to the participating counties for use in paying the counties’ cost of transportation facilities; and

Provide for the payment of the principal of and interest on the bonds solely from the revenues pledged for that purpose by the counties participating in an issue of bonds under this subtitle.

The date or dates of issue;

The date or dates and amount or amounts of maturities, which need not be in equal principal amounts or consecutive annual installments, but a bond may not be issued to mature later than 30 years after the date of its issue;

The rate or rates of interest payable on the bonds, or the manner of determining the rate or rates of interest, and the date or dates of payment of interest;

The tenor, form or forms, denomination or denominations, manner of execution, and place or places of payment of the principal of and interest on the bonds, which may be by any bank or trust company within or without this State;

Whether the bonds are to be issued in coupon, registered or book entry form and whether provision is to be made for the registration of the principal only of coupon bonds, for the reconversion of fully registered bonds into coupon form, and for the replacement of bonds that are mutilated, lost, or destroyed;

Whether the bonds are to be sold at public or private sale, as determined by the Secretary;

If the bonds are to be sold at public sale, the form of notice of sale, which shall outline the terms and conditions of the sale, and the form of advertisement of a summary notice of sale, which shall be published at least once in an appropriate newspaper of general circulation as determined by the Secretary;

Whether all or any part of the bonds are redeemable before maturity and, if so, the terms, conditions, and prices of redemption; and

Any other matter relating to the form, terms, conditions, issuance, sale, and delivery of the bonds.

The resolution may provide that the Secretary may postpone the time for receipt of proposals for the bonds without republishing the form of advertisement for the bonds.

Bonds shall be executed by the manual or facsimile signature of the Secretary.

Other signatures on the bonds may be either manual or facsimile.

Subject to then existing agreements with bondholders or noteholders, provisions pledging or assigning all or any part of the revenues of the participating counties, mortgages or loans made by the participating counties or the security therefor, the proceeds of any bonds issued under this subtitle, or any combination of these and any other assets of the participating counties to secure payment of bonds;

Provisions protecting and enforcing rights and remedies of bondholders, including restrictions on the rights of holders, and covenants setting forth duties of or restrictions on the Department and the participating counties;

Provisions appointing one or more trust companies or banks with trust powers to act as depositaries of the proceeds of any bonds or notes. Any depositary bank or trust company incorporated in the State may furnish indemnifying bonds or pledge securities, as required by the Department;

Provisions as to custody, safeguarding, application, and investment of funds credited pursuant to this subtitle;

Provisions establishing and controlling all aspects of reserve funds, including debt service reserve funds;

Provisions for the payment of debt service on bonds and refunding bonds, including redemption premiums and interest; or

Any other provisions deemed reasonable and proper for the security of bondholders.

Neither the State nor the Department is obligated to pay the principal of or the interest on them; and

Neither the faith and credit nor the taxing power of the State or the Department is pledged to the payment of the principal of or the interest on them.

Its desire to participate in the proceeds of the next series of bonds to be issued under this subtitle;

The proposed amount of its participation; and

A description of the revenues to be pledged by the county to pay debt service on the bonds.

After making all necessary determinations, the Department shall notify the counties of the amount of bonds of the next series that the Department will issue on behalf of the counties.

The Department shall then issue and sell that amount of bonds under this subtitle as a part of the next series of bonds and shall disburse the net proceeds of that amount of the bonds pursuant to appropriate agreements with the participating counties, after deducting the counties’ proportionate share of the cost of the issuance of the bonds and the appropriate share of the Department’s costs of administering the program established under this subtitle which is attributable to each bond issue.

The county’s participation in the program has been approved by a local ordinance or resolution enacted after public notice and public hearings as required in accordance with State and local public laws, charters, or ordinances; and

A list of projects which may be undertaken under the local program has been available for review by the public at the public hearing.

Any referendum requirements of the charter or other local law of the counties; and

Any limitation of the charter or local law on the rate of taxation or the aggregate amount of taxes that may be levied within the counties.

Specify that the bonds to be issued on behalf of the county will be repaid by the county under such terms and conditions as the Department and the counties deem appropriate;

Describe the source and nature of revenues the county will pledge to the repayment of the bonds, which revenues may include highway user revenues under § 8-401 of this article or any other revenues of the county; and

Describe any other terms or conditions that the Department deems necessary or appropriate to assure prompt and full repayment of the bonds.

In order to enhance the security or the marketability of the bonds, a county may agree with the Department to pledge any moneys that the county is entitled to receive from the county’s share of highway user revenues, but a county may not pledge moneys that are pledged or dedicated to another purpose by State law.

In the event of such pledge, the State Comptroller and the State Treasurer may cause in accordance with the terms of such agreement such moneys to be paid to the Department or any trustee designated by the Department.

A general obligation of the county to which its full faith and credit and unlimited taxing power is pledged and which may not be subject to annual appropriation by the county; or

Any other obligation which the county is authorized to undertake.

Is a limited obligation of the county repayable from assets and revenues as provided in the agreement; or

Is subject to annual appropriation by the county.

Refunding any bonds issued under this subtitle, including the payment of any redemption premium on the bonds and any interest accrued or to accrue to the date of redemption of the bonds; and

Refunding any bonds issued under Subtitle 3 of this title.

Pledge and use existing and anticipated federal funds paid to or expected to be paid to the Department for transportation purposes for the payment of the principal of and interest on the Department’s bonds or other debt obligations issued under this subtitle to finance the costs of transportation facilities; and

The aggregate outstanding and unpaid principal amount of debt issued under this subtitle or Title 4, Subtitle 3 of this article that is secured by a pledge of future federal aid may not exceed $1,000,000,000 as of June 30 of any fiscal year, provided that the proceeds may be used only for:

The date of maturity may not be later than 15 years after the date of issue; and

No part of the tax levied under § 3–215 of this title may be repealed, diminished, or applied to any other purpose until:

By resolution of the Secretary, the Department may:

Payment of the principal of or interest on revenue–backed bonds issued under this subtitle may not be supported directly or indirectly by State tax revenues pledged to meet debt service on Consolidated Transportation Bonds as prescribed under § 3–215 of this title.

Describe generally the transportation facilities to be financed by the sale of bonds;

State the estimated cost of financing these transportation facilities; and

With respect to the bonds, specify:

The resolution may provide that the Secretary may postpone the time for receipt of proposals for the bonds without republishing the form of advertisement for the bonds.

Special transportation project revenue bonds shall be executed on behalf of the Department by the manual or facsimile signature of the Secretary.

Other signatures on the bonds may be either manual or facsimile.

If an individual whose manual or facsimile signature appears on any bond or coupon ceases to serve in an authorized capacity before the delivery of the bond, the signature nevertheless is as valid and sufficient for all purposes as if the individual had remained in that capacity until delivery of the bond.

Bonds issued under this subtitle may be secured by a trust agreement between the Department and a corporate trustee, which may be any trust company or bank having trust powers within or without the State.

The trust agreement may pledge or assign:

The trust agreement may not pledge or assign any State tax revenues pledged to meet debt service on Consolidated Transportation Bonds as prescribed under § 3–215 of this title.

Contain provisions for the protection and enforcement of the rights and remedies of bondholders as are considered reasonable and proper, including covenants setting forth the duties of the Department as to the financing or development of any transportation facility, the extension, enlargement, improvement, maintenance, operation, repair, and insurance of the transportation facility, and the custody, safeguarding, and application of money;

Provide for the employment of consulting engineers in connection with the construction or operation of any transportation facility;

Set forth the rights and remedies of the bondholders and of the trustee;

Restrict the individual right of action by bondholders; and

Contain any other provisions that the Department considers reasonable and proper for the security of the bondholders.

Any revenues;

Any rights to receive revenues; or

Any moneys or securities in the funds and accounts pledged to the bonds, notes, or other evidence of obligation of the Department.