DIVISION 3. - TAX AND REVENUE ANTICIPATION NOTES

The following words, terms and phrases, when used in this division, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Department means the department of finance of the city.

Note ordinance means the ordinance passed by the council of the city pursuant to this division authorizing the issuance of a series of tax and revenue anticipation notes.

Person means any person, including individuals, firms, partnerships, associations, societies, trusts, public or private corporations, or other legal entities, including public or governmental bodies.

Tax and revenue anticipation notes or notes means general obligation notes of the city authorized pursuant to this division and secured by a pledge of taxes or revenues, or both, to be received by the city during the period such notes are outstanding. References in this division to tax and revenue anticipation notes include also tax anticipation notes and revenue anticipation notes.

(Code 1968, § 30-64)

Cross reference— Definitions and rules of construction generally, § 1-2.

Sec. 2-398. - Legislative findings and policy.

(a)

It is hereby determined and declared as a matter of legislative finding that:

(1)

Even though the taxes and other revenues received by the city in a given period equal or exceed the expenditures made by the city during such period, the differences in timing between the receipt of such revenues and the making of such expenditures may at certain times cause the city's cash balances to be undesirably low.

(2)

If such differences in timing would result in the city not having sufficient cash on hand to meet its current expenses, the city, without the passage of this division, would not have the power to borrow money to relieve such a temporary cash flow shortfall.

(3)

Such a shortfall might force the city to defer certain expenditures, to the detriment of the city.

(4)

To insure fiscal responsibility, no funds shall be borrowed pursuant to this division unless secured by anticipated taxes or other revenues.

(b)

Therefore, it is hereby declared to be the policy of the city to promote the financial integrity of the city and the general welfare of its people by providing for the issuance of tax and revenue anticipation notes, shortterm obligations secured by a pledge of taxes and/or other revenues to be received during the fiscal year in which the notes mature, for the purpose of promoting flexibility in the city's financial planning and avoiding possible harm to its credit reputation caused by a temporary inability to make expenditures when planned. Proceeds of the notes will supplement the tax and revenue receipts of the city and be available to pay the expenses of the city when taxes and other revenues are insufficient for such purpose. Such are hereby determined to be the public purposes for which tax and revenue anticipation notes may be issued.

(Code 1968, § 30-62; Ord. No. 94-027, § 1, 5-12-94)

Sec. 2-399. - Authorization.

This division is enacted pursuant to the provisions of 22 Del. C. ch. 8 (§ 801 et seq.), as effectuated by qualified voters in the adoption of the city charter.

(Code 1968, § 30-63)

Sec. 2-400. - Severability of article and of notes, coupons, etc.

In case any one or more of the provisions contained in this division, in any note ordinance or in any tax and revenue anticipation note or coupon issued pursuant to this division shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this division, such note ordinance or such note or coupon; and this division, such note ordinance or such note or coupon shall be construed and enforced as if such invalid, illegal or unenforceable provisions had never been contained in this division, note ordinance, or such note and coupon.

(Code 1968, § 30-67)

Sec. 2-401. - Power to issue tax and revenue anticipation notes; note ordinance.

The city shall have the power and authority to borrow money from time to time in any fiscal year in anticipation of the receipt of taxes or revenues, or both, to evidence the obligation by notes, appropriately designated, and to authorize, issue and sell such notes in the manner and subject to the limitations provided therefor in this division. Tax and revenue anticipation notes issued by the city pursuant to this division shall be authorized by a note ordinance passed by the council. Each note ordinance shall state in brief and general terms the object or purpose for which the notes are to be issued, the maximum aggregate principal amount of the notes to be issued, the method by which the notes shall be sold, and the maximum rate or rates or variable rate or rates of interest to be borne by the notes. All matters not required to be determined by such note ordinance may be determined by subsequent resolutions passed by council.

(Code 1968, § 30-68; Ord. No. 94-027, § 2, 5-12-94)

Sec. 2-402. - Obligation of notes.

Tax and revenue anticipation notes authorized pursuant to this division shall be current obligations for the full payment of which current taxes or revenues, or both, shall be appropriated. As such, the notes shall not constitute indebtedness within the meaning of any constitutional provision, statutory limitation or provision of the city charter.

(Code 1968, § 30-69)

Sec. 2-403. - Limitation on amount of notes.

The council shall not authorize the issuance of tax and revenue anticipation notes for any fiscal year which in the aggregate shall exceed 50 percent of:

(1)

In the case of notes solely payable from and secured by a pledge of taxes, the amount of such taxes levied for the fiscal year during which the notes mature;

(2)

In the case of notes solely payable from and secured by a pledge of revenues other than tax revenues, the amount of such revenues pledged; or

(3)

In the case of notes payable from and secured by a pledge of taxes and other revenues, the sum of such taxes levied and revenues pledged;

which, in all three cases, are certified, pursuant to section 2-407 as remaining to be collected or received in the fiscal year during the period when the notes will mature. The certificate shall be as of a date not more than 30 days prior to, and no later than the date of the adoption of the note ordinance authorizing the issuance of the tax and revenue anticipation notes.

(Code 1968, § 30-70; Ord. No. 91-033, § 1(30-70), 6-6-91)

Sec. 2-404. - Limitation on stated maturity date of notes; time of payment of interest.

No tax and revenue anticipation notes shall be stated to mature beyond the period ending 13 months after the date such notes were issued. Nothing in this division shall be construed to prevent the passage of a note ordinance or the issuance of notes prior to the beginning of the fiscal year during which such notes mature. Interest on tax and revenue anticipation notes shall be payable at the maturity of such notes or payable in installments at such earlier dates and at such rate or rates or variable rate or rates as the council may determine or approve.

(Code 1968, § 30-71; Ord. No. 91-033, § 2(30-71), 6-6-91)

Sec. 2-405. - Other terms of notes.

Tax and revenue anticipation notes shall be issued in such denominations, shall be subject to such rights of prior redemption, shall have such privileges of interchange and registration, shall be dated, shall be stated to mature, subject to the provisions of section 2-404, on such dates and in such amounts, shall be in registered or bearer form with or without coupons, and shall be payable in such coin or currency as at the place and at the time of payment shall be legal tender for the payment of public and private debts, and shall be payable at such place or places, one of which shall be within the city, as the council may determine in the note ordinance or by subsequent resolutions.

(Code 1968, § 30-72)

Sec. 2-406. - Security for notes; sinking fund.

All tax and revenue anticipation notes issued in any fiscal year shall be equally and ratably secured by the pledge of, security interest in and a lien and charge on, the taxes or revenues, or both, of the city to be received during the period when the notes will be outstanding. Such pledge, lien and charge shall be fully perfected as against the city, all creditors thereof, and all third parties, from and after the filing of a financing statement or statements in accordance with the Uniform Commercial Code (6 Del. C. § 1-101 et seq.). For the purposes of such filing, the sinking fund depository, if any, otherwise the paying agent designated in the notes, may act as the representative of the noteholders and, in such capacity, execute and file the financing statement and any continuation or termination statements as secured party. The note ordinance or subsequent resolutions may establish one or more sinking funds and provide for periodic or other deposits therein, and may contain such covenants or other provisions as the city shall determine. The amount of any tax and revenue anticipation notes issued in compliance with this division shall be general obligations of the city and, if the same shall not be paid within the fiscal year in which such notes were issued, shall be deemed to be indebtedness enforceable in the manner of a general obligation which shall be included in the budget of the city for the ensuing fiscal year and shall be payable from the taxes and revenues of such ensuing year.

(Code 1968, § 30-73; Ord. No. 91-033, § 3(30-73), 6-6-91)

Sec. 2-407. - Certification as to anticipated cash flow.

Prior to each authorization of tax and revenue anticipation notes, the mayor, in consultation with the director of finance of the city, shall make an estimate of the expenditures to be made and the moneys to be received from taxes and revenues, including subsidies or reimbursements, during the period when the notes will be outstanding. Such estimate shall take due account of the past and anticipated collection experience of the city and of current economic conditions. The estimate shall be certified by the mayor and his written certificate shall be dated as of a date not more than 30 days prior to the date of the authorization of the notes.

(Code 1968, § 30-74)

Sec. 2-408. - Sale of notes.

Tax and revenue anticipation notes may be sold at public sale or private sale by negotiation or upon invitation and at such price as the council may approve. Notes sold at public sale shall be sold upon receipt of sealed proposals after at least ten days' notice published at least once in a newspaper published in the city and upon such other terms, conditions and regulations as the council shall prescribe.

(Code 1968, § 30-75)

Sec. 2-409. - Filing of proceedings with the department.

Certified copies of the note ordinance, and any subsequent resolutions passed by council with respect to the notes, the certificate as to anticipated cash flow, and a true copy of the accepted proposal for the purchase of the tax and revenue anticipation notes shall be filed with the department.

(Code 1968, § 30-76)

Sec. 2-410. - No liability of officers.

Neither the members of council, employees of the department nor other representatives of the city shall be liable personally on the notes by reason of the issuance thereof, their execution thereof or any certification in connection therewith.

(Code 1968, § 30-77)

Secs. 2-411—2-430. - Reserved.