In this subtitle the following words have the meanings indicated. “Bonds” means bonds issued under this subtitle. “Highway user revenues” has the meaning stated in § 8-401 of this article.

The purposes of this subtitle are to enable the counties of this State to: Accelerate programs of road construction and reconstruction; Provide local participating funds for federally aided transportation projects; Make major road repairs as necessary to eliminate damage caused to county roads by severe and unforeseen weather conditions; and Generally finance the capital cost of transportation facilities.

Subject to the limitations of this subtitle, the Department from time to time may: 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. The bonds shall be known as “Department of Transportation -- County Transportation Bonds -- First Issue”.

Subject to the provisions of § 3-307 of this subtitle, any county in this State may participate in the proceeds of the sale of bonds issued under this subtitle. On the date designated by the Department, a county that desires to participate shall notify the Department of: 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 Department may extend the date for notification when appropriate.

After notification by the county, the Department shall determine the total proceeds of the highway user revenues allocable to the county under Title 8, Subtitle 4 of this article, exclusive of any amounts distributed to any municipalities in the county. The Department next shall determine the total amount of bonds that it could issue under this subtitle on behalf of the county, with adequate annual debt service coverage, from the annual amount of the highway user revenues so allocated to the county after providing for the debt service on all outstanding and unpaid bonds that have been previously issued on behalf of the county and to which its share of the highway user revenues has been pledged. After making all necessary determinations, the Department shall notify the county of the amount of bonds of the next series that the Department will issue on behalf of the county. The Department then shall issue and sell that amount of its 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 an agreement with the county, after deducting the county’s proportionate share of the cost of the issuance of the bonds.

The Department may not issue bonds on behalf of a county if the county’s share of highway user revenues for the latest fiscal year is less than twice its annual debt service on county highway construction bonds and county transportation bonds. Subject to annual recomputation, the maximum amount of the bonds that the Department may issue on behalf of a county, as computed under this section and § 3-304 of this subtitle, is the limit of participation for the county. In its discretion, the Department may limit the participation of any county in any series of bonds. In determining the amount of participation of a county, the Department shall consider the highway maintenance and other transportation needs of the county and any other factors that the Department considers appropriate.

Before it sells any bonds, the Department and the county shall enter into an agreement as required by this section. The agreement shall specify that: 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. If a county violates its agreement with the Department in a manner that causes the bonds to lose their tax-exempt status, the Department may prohibit the county from participating in the Department’s county bond program for 3 years from the date the violation is discovered.

In any fiscal year, if the county fails to levy the tax authorized in its agreement with the Department and if the county’s share of highway user revenues is insufficient to meet the debt service on bonds in that year, the State Comptroller, notwithstanding the provisions of Title 8, Subtitle 4 of this article on the distribution of highway user revenues, may withhold from the share of highway user revenues payable to municipalities in the county an amount sufficient to pay the debt service on the bonds in that year.

Bonds issued under this subtitle are the obligations of the Department and may not be considered to constitute a debt of the county for the purpose of determining its debt limitations.

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