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Chairman Linda Cropp at the request of the Mayor
A BILL IN THE COUNCIL OF THE DISTRICT OF
COLUMBIA
To amend the Tobacco Settlement Trust
Fund Establishment Act of 1999 to authorize and otherwise provide for the transfer of
certain monies to the Tobacco Settlement Financing Corporation and to amend
the Tobacco Settlement Financing Act of 2000 to authorize the Tobacco Settlement
Financing Corporation to issue additional bonds to finance the costs of the National
Capital Medical center or other capital projects.
BE IT ENACTED BY THE COUNCIL OF THE
DISTRICT OF COLUMBIA, That this act may be cited as "Tobacco
Settlement Trust Fund and Tobacco Settlement Financing Amendment Act of 2006".
Sec. 2. Amendments.
(A) Subsection (a)(1) of section 2302
of the Tobacco Settlement Trust Fund Establishment Act of 1999, effective October 20, 1999
(D.C. Law 13-38; D.C. Official Code 7-1811.01(a)(1))
is amended to read as follows:
"(a)(1) There is established a
trust fund designated as the Tobacco Settlement Trust Fund ("Fund"), to which
shall be credited, without regard to fiscal year limitation:
(A) All revenue owed and accruing to
the District from the payments under the tobacco litigation settlement
agreement entered into on November 23, 1998 by the District of Columbia and leading United States
tobacco product manufacturers ("Settlement Agreement") except:
(i) The first $16.05 million
recognized as general fund revenue and 4 already included in the base
budget in Fiscal Year 2000;
(ii) All payments under the Settlement
Agreement sold to the District of 6 Columbia Tobacco Settlement
Financing Corporation under §7-1831.02; and
(iii) All payments under the Residual
Bond sold to the District of 8 Columbia Tobacco Settlement Financing
Corporation under §7-1831.02;
(B) If the Residual Bond has not been
sold by the Fund, all payments received with respect to the Residual
Interest, as the term is defined in §7-1831.01(9);
(C) If the Residual Bond has been
sold by the Fund, all payments received under the
Remainder Certificate, if any; and
(D) All other funds which are
directed to be deposited into the Fund by law, which shall include funds to be
deposited into a Reservation 13 Benefit Area ("R13BA") Health Care account ("R13BA fund")
pursuant to Chapter 15 of Title 10."
(B) Subsection (d) of section 2302a
of the Tobacco Settlement Trust Fund Establishment Act of 1999, effective
October 1, 2002 (D.C. Law 14-190; D.C. Official Code 7-1811.02(d)) is amended by striking
the word "quarter" and inserting "year".
(C) Subsection (b) of section 2302b
of the Tobacco Settlement Trust Fund Establishment Act of 1999, effective
October 1, 2002 (D.C. Law 14-190; D.C. Official Code 7-1811.03(b))
is amended to read as follows:
"(b) Unless otherwise directed
by the Council, the funds of the Fund shall be used as
follows:
(1) Fifty percent of the sum of the
residual interest received by the Fund plus the annual savings from debt defeasance or
prepayment shall be spent for purposes specified in
local law;
(2) Fifty percent of the sum of the residual interest
received by the Fund plus the annual savings from debt defeasance or
prepayment shall be invested by the Board in accordance
with the standards of §7-1811.02(h)(1);
(3) All of the investment earnings of
the Fund shall be reinvested by the Board in accordance with the standards
of §7-1811.02(h)(1);
(4) Any funds not spent in accordance
with paragraph (1) of this subsection shall be invested in
accordance with paragraph (2) of this subsection;
(5)(A) All residual funds
accumulated from fiscal years 2001 and 2002 shall be allocated to the General
Fund during Fiscal Year 2003. Beginning October 1, 2002 through September 30, 2004, 100% of
the residual shall be spent for purposes specified in local law. For Fiscal Year 2003, 100% of
the residual shall be transferred to the General Fund, and 100% of the annual savings from debt
defeasance and prepayment, after being reduced by $1 million to be allocated to the
General Fund, shall be allocated to the Medicaid and Special Education Reform Fund ("Reform
Fund") established by §4-204.53. For Fiscal Year 2004, 100% of the residual shall be
transferred to the General Fund, and 100% of the annual savings from
debt defeasance and prepayment shall be allocated to the Reform Fund.
Funds deposited in the Reform Fund shall be disbursed to the
Department of Human Services, the Child and Family Services Agency, the Department of
Mental Health, the Department of Health, and the District of Columbia Public Schools only for
spending pressures associated with the Medicaid, Medicare, Foster Care and Adoption Assistance,
and Special Education programs and in accordance with §4-204.55. For fiscal year 2005, 100%
of the residual and 100% of the annual savings from debt defeasance and prepayment shall be
transferred to the General Fund. Unless otherwise directed by the Council, commencing in fiscal
year 2006, 100% of the residual (unless the Residual Bond has been
sold) and 100% of the annual savings from debt defeasance and prepayment
shall be transferred to the General Fund.
Unless the Residual Bond has been sold by the Fund, the Council may direct all or a portion of
the residual to be transferred to the Fund;
(B) For the purposes of this
paragraph, the term:
(i) "Foster Care and Adoption
Assistance" means the programs authorized by Part E of Title IV of
the Social Security Act, approved June 17, 1980 (94 Stat. 501;
42 U.S.C.S. §670 et seq.).
(ii) "Medicaid" means the
medical assistance programs authorized by Title XIX of the Social Security
Act, approved July 30, 1965 (79 Stat. 343; 42 U.S.C.S. §1396 et seq.), or by D.C. Code §1-307.02, and administered by the Department of Health.
(iii) "Medicare" means the
health insurance programs authorized by Title XVIII of the Social Security
Act, approved July 30, 1965 (79 Stat. 290; 42 U.S.C.S. §1395
et seq.).
(iv) "Special Education"
means services provided under D.C. Code §38-2501 to students who are
classified as having a disability, as defined in 20 U.S.C.S. §1401(a)(1)
or in 29 US.C.S. §706(8);
(6) Beginning October 1, 2002, $
16,627,000 of programming funds shall be reinvested
by the Board; and
(7) If the Residual Bond has been sold
by the Fund, 100% of the residual shall be payable to the
Corporation for so long as the Bonds issued to purchase the Residual
Bond are Outstanding.".
(D) Section 2302b of the Tobacco
Settlement Trust Fund Establishment Act of 1999, effective October 1, 2002 (D.C.
Law 14-190; D.C. Official Code 7-1811.03) is amended by adding new subsections (d) and (e) to
read as follows:
"(d) For the purpose of financing
the costs of the National Capital Medical Center or other capital projects, and
repayment of outstanding indebtedness issued for certain capital projects and other
undertakings of the District, the Fund may sell to the Corporation all
of the Fund's right, title, and interest
in and to the Residual Bond, including all the moneys, and any interest thereon, payable to or
received by the Fund thereunder, in exchange for: (1) a cash payment in the amount of the net sales proceeds of the
Bonds (other than the Residual Bond) and (2) the
Remainder Certificate, if any.
(e) Subject to the authorization and
restrictions of this subchapter, the terms and conditions of the Residual Bond
Purchase Agreement shall be determined by the Mayor, which determination shall be conclusively
evidenced by his execution of the Residual Bond Purchase Agreement.
The Mayor may execute and deliver any administrative or other documents
or agreements which are necessary or
desirable relating to the sale of the Fund's right, title, and interest in and to the Residual Bond
or in connection with the issuance of the Bonds. Proceeds from the
sale of the Bonds and other moneys received by the Corporation pursuant
to the Residual Bond Purchase Agreement will
be used to repay certain outstanding indebtedness of the District, to finance or refinance the
National Capital Medical Center or other capital projects or undertakings of the District, to pay
costs of issuance of the Bonds, to establish and fund reserve funds, and to pay other expenses and
fees related to the issuance of the Bonds.".
(E) Subsection (1) of section 3702 of
the Tobacco Settlement Financing Act of 2000, effective October 19, 2000 (D.C.
Law 13-172; D.C. Official Code §7-1831.01(1)) is amended
to read as follows:
"(1) "Bonds" means the
taxable or tax-exempt revenue bonds, notes, or other obligations (including refunding
bonds, notes, and other obligations), which may be issued on a senior or subordinate basis and would
include any instrument evidencing the Corporation's obligations relating to the Residual
Interest, authorized to be issued by the Corporation pursuant to this subchapter.".
(F) Section 3702 of the Tobacco
Settlement Financing Act of 2000, effective October 19, 2000 (D.C. Law 13-172;
D.C. Official Code §7-1831.01) is amended by amending subsections (6) and (7) and adding
subsections (8) and (9) to read as follows:
"(6) "Remainder
Certificate" means a certificate evidencing an interest in the payments to be made under the
Residual Bond after payment in full of all outstanding Bonds secured
thereby.
(7) "Residual Bond" means a
Bond evidencing the Residual Interest.
(8) "Residual Bond Purchase
Agreement" means a contract, as authorized under §7-1831.03, between the Corporation
and the Fund, under which the Fund sells to the Corporation all or a portion of the
Fund's right, title, and interest in and to the Residual Bond, including all the moneys, and any
interest thereon, payable to or received by the Fund thereunder, in exchange for a cash payment from the
net proceeds of the sale of the Bonds (other than
the Residual Bond) and the Remainder Certificate, if any.
(9) "Residual Interest"
means that portion of any payments received by the Corporation under the Master
Settlement Agreement which is not annually required to:
(A) Defease certain indebtedness of
the District pursuant to the provisions of the Purchase Agreement;
(B) Repay the holders of the Bonds
(other than the Residual Bond);
(C) Establish, maintain, or replenish
any reserve funds created in connection with the issuance of the Bonds
(other than the Residual Bond);
(D) Pay any other obligations of the
Corporation (other than the Residual Bond) incurred in connection with the
issuance of the Bonds; or
(E) Pay the actual, reasonable, and
necessary expenses of the Corporation.".
(G) Section 3703 of the Tobacco
Settlement Financing Act of 2000, effective October 19, 2000 (D.C. Law 13-172; D.C. Official Code
§7-1831.02) is amended by amending subsections (a)
and (b) and adding subsection (c) to read as follows:
"(a) For the purpose of
financing the costs of the National Capital Medical Center or other capital projects, and the
repayment of outstanding indebtedness issued for certain capital projects and other undertakings of
the District, the District may sell to the Corporation all of the District's right, title, and interest
in and to the Master Settlement Agreement, including all the moneys, and any interest thereon,
payable to or received by the District thereunder (except for the first payment of $16.05 million
which has already been received by the District), in exchange for: (1) a cash payment in
the amount of the net sales proceeds of the Bonds (other than the Residual Bond or Bonds
secured thereby); (2) the Residual Bond; and (3) the agreement of the Corporation to repay certain
indebtedness of the District.
(b) For the purpose of financing the
costs of the National Capital Medical Center or other capital projects, and
repayment of outstanding indebtedness issued for certain capital projects and other undertakings of the
District, the Fund may sell to the Corporation all of the Fund's right, title, and interest in
and to the Residual Bond, including all the moneys, and any interest thereon, payable to or
received by the Fund thereunder, in exchange for: (1) a cash payment in the amount of the net sales proceeds of
Bonds secured by the Residual Bond and (2) the
Remainder Certificate, if any.
(c) Subject to the authorization and
restrictions of this subchapter, the terms and conditions of the Purchase Agreement or the Residual
Bond Purchase Agreement shall be determined by the Mayor, which
determination shall be conclusively evidenced by his execution of the Purchase Agreement or the
Residual Bond Purchase Agreement. The Mayor may execute and deliver any administrative or
other documents or agreements which are necessary or desirable relating to the sale of the
District's right, title, and interest in and to the Master Settlement Agreement or in connection with the
issuance of the Bonds. The Mayor may execute and
deliver any administrative or other documents or agreements which are
necessary or desirable relating to the sale of the
Fund's right, title, and interest in and to the Residual Bond or in connection with the issuance of
the Bonds. Proceeds from the sale of the Bonds and other moneys
received by the Corporation pursuant to the Purchase Agreement or the
Residual Bond Purchase Agreement will be used to
repay certain outstanding indebtedness of the District, to finance or refinance the National
Capital Medical Center or other capital projects or undertakings of the District, to pay
costs of issuance of the Bonds, to establish and fund reserve funds, and to pay other expenses and
fees related to the issuance of the Bonds.".
(H) Subsection (b) of section 3704 of
the Tobacco Settlement Financing Act of 2000, effective October 19, 2000 (D.C.
Law 13-172; D.C. Official Code §7-1831.03(b)) is 3 amended
to read as follows:
"(b) The purpose of the
Corporation is to purchase all of the District's right, title, and interest in (i) the Master
Settlement Agreement, including all the moneys, and any interest thereon, payable to or received by the
District thereunder (except for the first payment of $16.05 million which has already been
received by the District) and (ii) the Residual Bond, issuing Bonds to pay the purchase price
therefor, and to repay certain of the outstanding indebtedness of the District issued for capital
projects and other undertakings. The Corporation may enter into the Purchase Agreement, the Residual Bond Purchase
Agreement and may perform any acts necessary or convenient to effectuate
their respective purposes, including financing the costs of the National Capital Medical Center
or other capital projects, repayment, refinancing, or defeasance of certain indebtedness
issued for capital projects and other undertakings.".
(1) Subsection (c) of section 3704 of
the Tobacco Settlement Financing Act of 2000, effective October 19, 2000 (D.C. Law
13-172; D.C. Official Code §7-1831.03(c)) is amended by adding the
words "finance or" before "refinance" and the words
"financing or" before
"refinancing" in the first
sentence of paragraph (1), and by amending paragraph (2) to read as follows:
"(2) Pursuant to §1-204.90,
subject to the restrictions of this subchapter, the Council delegates to the Corporation
the power to issue revenue bonds, notes, and other obligations, including refunding
revenue bonds at or before maturity, to finance or refinance, or assist in the financing or
refinancing of, the National Capital Medical Center or other capital projects or undertakings of the
District, which obligations shall be payable solely from, and secured by, the payments under the
Residual Bond sold under §7-1831.02, including the power to provide for the authorization,
securing, sale, and issuance of the Bonds consistent with this subchapter. This delegation is not
exclusive and does not restrict, impair, or supersede the authority otherwise vested by law in
any District instrumentality.".
(J) Paragraph (2) of subsection (c) of
section 3704 of the Tobacco Settlement Financing Act of 2000, effective
October 19, 2000 (D.C. Law 13-172; D.C. Official Code §7-1831.03(c)) is renumbered as paragraph
"(3)" and the new paragraph (3) is amended by striking the word "and" at the end of
subparagraph (B)(i) and inserting "and" at the end of
subparagraph (B)(ii), and adding a new subparagraph (B)(iii)
to read as follows:
"(iii) Whether the Bonds are
intended to be issued on a senior or subordinate basis.".
(K) Paragraph (3) of subsection (c) of section 3704 of
the Tobacco Settlement 13 Financing Act of 2000, effective October 19,
2000 (D.C. Law 13-172; D.C. Official Code §7-1831.03(c)) is
renumbered as paragraph "(4)" and the new paragraph (4) is
amended to read as follows:
"(4) The board may delegate to
the Chief Financial Officer as a member of the board the authority to prescribe the
terms and conditions of the Bonds, including those referred to in §7-1831.03(c)(3), except that
(i) the terms and conditions of the Residual Bond shall be consistent with the provisions of the
Purchase Agreement and shall provide that the Residual Interest shall be paid to the Tobacco
Settlement Trust Fund established by subchapter II of this chapter and (ii) the terms and
conditions of the Remainder Certificate, if any, shall be consistent with the provisions of the Residual
Bond Purchase Agreement and shall provide that the payments under the Master Settlement
Agreement after payment in full of all Bonds outstanding shall be paid to the Tobacco
Settlement Trust Fund established by subchapter II of this
chapter.".
(L) Paragraphs (4) and (5) of
subsection (c) of section 3704 of the Tobacco Settlement Financing Act of 2000,
effective October 19, 2000 (D.C. Law 13-172; D.C. Official Code §7-1831.03(c)) are renumbered
as paragraphs "(5)" and "(6)" respectively.
(M) Paragraph (6) of subsection (c) of
section 3704 of the Tobacco Settlement Financing Act of 2000, effective
October 19, 2000 (D.C. Law 13-172; D.C. Official Code §7-1831.03(c)) is renumbered as paragraph
"(7)" and the new paragraph (7) is amended to read as follows:
"(7) The Bonds shall not
constitute an indebtedness of the District. The Bonds are not general obligations of the
District and are not secured by a pledge of the full faith and credit of the District and the holders of
the Bonds may not require the levy or imposition of taxes. The Bonds issued to purchase the
District's right, title and interest in the Master Settlement Agreement are special obligations of
the Corporation payable solely from, and secured by, the payments received under the Master
Settlement Agreement. The Bonds issued to purchase the Fund's right, title and interest in
the Residual Bond are obligations of the Corporation payable solely from, and secured by, the
payments received under the Residual Bond. The Corporation has no taxing power. The Bonds shall
contain on their face a statement containing all of the above. Nothing contained in the
Bonds, or in the related financing or closing documents, shall create an obligation on the part of
the Corporation or the District to make payments with respect to the Bonds from sources other than
the payments received by the Corporation under the Master Settlement Agreement or under the
Fund under the Residual Bond, respectively.".
(N) Paragraphs (7), (8), (9), (10),
(11) and (12) of subsection (c) of section 3704 of the Tobacco Settlement Financing Act of 2000, effective
October 19, 2000 (D.C. Law 13-172; D.C. Official Code
§7-1831.03(c)) are renumbered as paragraphs (8), (9), (10), (11), (12)
and (13) respectively, and the new paragraph
(10) is amended to read as follows:
"(10) The District pledges to the
Corporation and the holders of the Bonds that the District will (i) continue to
diligently enforce the Model Statute against all tobacco product manufacturers selling tobacco products
in the District that are not signatories to the Master Settlement Agreement, (ii) enforce the
District's rights to receive the payments to be made to the District pursuant to the Master
Settlement Agreement to the full extent permitted by the terms of the
Master Settlement Agreement, (iii) not amend the Master Settlement
Agreement in any way that would materially impair the
rights of the holders of Bonds, (iv) not limit or alter rights vested in the Corporation to fulfill
agreements made with holders of the Bonds, or (v) not in any way impair the rights and remedies of
the holders of the Bonds until the Bonds, together with the interest thereon, with interest on
any unpaid installments of interest, and all costs and expenses in connection with any action or
proceedings by or on behalf of the holders of the Bonds are fully met and discharged. The Corporation
may include this pledge of the District in any agreement with
the holders of the Bonds.".
(O) Section 3705 of the Tobacco
Settlement Financing Act of 2000, effective October 19, 2000 (D.C. Law 13-172;
D.C. Official Code §7-1831.04) is amended by designating the first paragraph as subsection (a)
and adding a new subsection (b) to read as follows:
"(b) The transfer of the Fund's
right, title, and interest in and to the Residual Bond to the Corporation or any assignee which the
parties have in the governing documentation expressly
stated to be a sale or other absolute transfer shall be treated as an
absolute transfer of all of the Fund's right, title, and
interest, as in a true sale, and not as a pledge or other financing, of the Fund's right, title, and
interest in and to the Residual Bond, including the moneys payable or received thereunder and any
interest thereon. The grant to the holders of the Bonds of a security interest in, and a lien on,
all of the Fund's right, title, and interest in and to the Residual Bond, including the moneys payable or
received thereunder and any interest thereon, the provision by the Fund or the District
of any credit enhancement with respect to the Bonds (other than the Residual Bond), or the
characterization of the transaction for accounting purposes or securities regulation shall not impair
or negate the characterization of any transfer as a true sale. The transfer of the Fund's right,
title, and interest in and to the Residual Bond to the Corporation or any assignee shall be deemed
perfected as against third persons having claims in tort, contract, or otherwise, including any judicial
lien creditors, when a sale or transfer of the right, title, and interest in and to the Residual Bond
in writing has been executed and delivered by the Fund to the
Corporation or any assignee.".
(P) Section 3707 of the Tobacco Settlement Financing
Act of 2000, effective 15 October 19, 2000 (D.C. Law 13-172; D.C.
Official Code §7-1831.06) is amended to read as follows:
"This subchapter shall expire on
September 30, 2001, if the Bonds (other than the Residual Bond) are not sold and
issued. In the event of such expiration, all the assets of the Corporation
shall vest in the District.".
Sec. 3. Severability.
As provided in the General Rule of
Severability Adoption Act of 1983, effective March 14, 1984 (D.C. Law 5-56; D.C. Official
Code §45-201), if any provision of this act or the application of this act to any person or circumstance
is held to be unconstitutional or beyond the statutory authority of the Council, or otherwise invalid,
the invalidity shall not affect the other provisions or applications of the act that can be
given effect without the invalid provisions or application, and to this end the provisions of this act
are declared to be severable.
Sec. 4. Transmittal.
The Secretary to the Council shall
transmit a copy of this act, upon its adoption, to the Mayor.
Sec. 5. Fiscal impact statement.
The Council adopts the fiscal impact statement in the
committee report as the fiscal impact statement required by §602(c)(3) of the District of Columbia Home Rule Act, approved December
24, 1973 (87 Stat. 813; D.C. Official Code §1-206(c)(3)).
Sec. 6. Effective date.
This act shall take effect following
approval by the Mayor (or in the event of veto by the Mayor, action by the Council to
override the veto), a 30-day period of Congressional review as provided in § 602(c)(1) of the
District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 788; D.C. Official
Code §1-602.02(c)(1)) and publication in the District of Columbia
Register.
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