§ 168.00 Agreements for credit enhancement. a. The finance board of
any municipality, school district or district corporation (herein a
"public body") is hereby authorized and empowered to enter into such
agreements as it deems reasonable and appropriate, with any department
or agency of the United States of America, the state, or any other
financially responsible party, to facilitate the issuance, sale, resale
and payment of bonds, notes, or other evidences of indebtedness of such
public body, including, but not limited to letters of credit, lines of
credit, revolving credit, bond insurance or other credit enhancements.
Such agreements may provide for (i) the advance or advances of funds on
behalf of such public body to pay the interest on and principal and
premium of bonds, notes or other evidences of indebtedness of such
public body on their date or dates of maturity or redemption or when
interest is otherwise due, and (ii) the reimbursement of such advance or
advances by such public body.

b. Such agreements may be executed on or before the date of issuance
of the obligations to be paid pursuant thereto, provided, however, that
any reimbursement obligation of such public body arising from such
agreements shall be deemed indebtedness of such public body (i) only as
of the date that the corresponding advance is made pursuant to paragraph
a of this section, and (ii) only in the amount of the advance made
pursuant to such paragraph. Such agreements may include a pledge by such
public body of its faith and credit for the payment of principal of and
interest on any indebtedness deemed to be contracted as set forth in
this paragraph, and may provide that any such indebtedness arising from
a reimbursement obligation contracted pursuant to this section shall be
paid in accordance with the terms of such agreement. Such indebtedness
shall be excluded in ascertaining the power of such public body to
contract indebtedness pursuant to title eight and title nine of this
article. Such agreements shall also include such terms and conditions as
the finance board shall deem appropriate, including provisions for the
payment of reasonable fees and expenses by such public body in return
for a commitment to advance funds pursuant to such agreement. Such fees
and expenses shall be deemed part of the cost of the object or purpose
in connection with which they are incurred.

c. Prior to procurement of any credit or liquidity enhancements, such
public body shall, to the extent practicable:

(1) consider the ability of the credit or liquidity enhancement
provider to make required payments as and when due under the terms of
the appropriate governing instruments;

(2) consider the business reputation of the credit or liquidity
enhancement provider;

(3) consider the maximum term of the credit or liquidity enhancement
relative to the maturity of the bonds, notes or other obligations being
credit or liquidity enhanced;

(4) provide for the right of substitution for the credit or liquidity
enhancement provider in all agreements, including a provision permitting
such substitution when the rating of the credit or liquidity enhancement
provider falls below the probable credit rating of the issue without
considering the credit or liquidity enhancer; and

(5) consider the cost of the credit or liquidity enhancement relative
to the savings or other benefit likely to be achieved through the
utilization of the credit or liquidity enhancement.

d. Where the credit or liquidity enhancement procured is an
irrevocable letter of credit or an acquisition arrangement with a
banking organization, such instrument shall be:

(1) issued or confirmed by a bank holding company or its direct
subsidiaries, a federally chartered bank or its subsidiaries, or a state
chartered bank or its subsidiaries, licensed or authorized to do
business in this state or

(2) issued or confirmed by an agency or branch of a foreign banking
institution licensed to do business in this state with total worldwide
assets in excess of five billion dollars.

e. Any such issuing banking organization referred to in paragraph d of
this section shall meet the regulatory guidelines for capital adequacy
as promulgated by the appropriate federal banking agency as defined in
the Federal Deposit Insurance Act, 12 U.S.C. 1813(q).

f. (1) Where the credit or liquidity enhancement procured is provided
by an insurance company, such insurer shall be licensed to write
financial guarantee insurance in this state.

(2) Where the credit or liquidity enhancement procured is from other
than an entity described in paragraph d of this section or subdivision
one of this paragraph, the provider shall be a financially responsible
party, incorporated or authorized to do business in this state and
having total assets in excess of ten billion dollars.

g. The failure of a public body to comply with paragraphs c through f
of this section shall not invalidate or impair any credit or liquidity
enhancement contract or instrument.

h. The finance board may, by resolution, delegate its authority under
this section to the chief fiscal officer of such public body in which
event the chief fiscal officer shall exercise such power until the
finance board, by resolution, shall elect to reassume the same.