New Law and Regulations Bring Changes for Issuers of Public Debt in RI

Rhode Island's Public Finance Management Board (PFMB), the agency tasked with overseeing public debt in the State, approved amendments to its rules and regulations in response to recent statutory changes that will impact future borrowing by state agencies and local governments. The amendments also broaden PFMB's oversight and advisory duties to a wider array of public financing instruments and a larger group of governmental entities.

One of the major changes to the statute and regulations is the imposition of a fee, payable to PFMB by the lead underwriter or purchaser of debt of "all state departments, any city or town, any state, municipal and regional authorities, agencies, boards, commissions, public or quasi-public corporations, and fire districts and other special districts." Previously, the fee was only required for debt issued by state agencies, while municipal issuers and special districts were exempt from the fee unless they requested the advice or assistance of PFMB. Additionally, the fee is now required for issuances of taxable debt and re-fundings whereas, prior to the amendments, only the issuance of new money tax-exempt debt would trigger the fee. The rate of the fee will remain unchanged at one-fortieth of one percent (1/40%) of the issued principal amount of the issue.

Furthermore, the amendments have added potential penalties of up to $250 per day for issuers who fail to submit the requisite report of proposed debt (no later than thirty days prior to the sale) and report of final sale (within thirty days after closing). Issuers are also now required to submit annual reports to PFMB within ninety days after the end of each fiscal year, which describe the issuer's outstanding debt and use of bond proceeds during that year.

The amendments also explicitly broaden PFMB's oversight over additional types of debt instruments-including Grant Anticipation Revenue Vehicles (GARVEE) bonds or notes, various types of conduit debt, and financing leases-and now explicitly authorize supervision over additional governmental entities, such as fire and special districts. Finally, the amendments require PFMB to undertake a biennial debt affordability study and grant the Board authority to issue non-binding advisory opinions.

For more information on these changes or other matters concerning public or 501(c)(3) financing, contact attorney David DiSegna at 401-824-5100 or ddisegna@pldolaw.com.We welcome your comments, questions and suggestions.

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