(a) As used in this section:

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(1) “Bonds” means bonds, bond anticipation notes, notes or other evidences of indebtedness issued pursuant to this section and, unless otherwise indicated, any bonds issued to refund such bonds pursuant to this section.

(2) “Debt service requirements” means, for any period, the sum of (A) the principal and interest accruing during such period with respect to bonds and, subject to the provisions of this section and the proceedings authorizing the issuance of such bonds, the unrefunded principal accruing during such period with respect to bond anticipation notes, (B) the purchase price of bonds which are subject to purchase or redemption at the option of the bondowner or noteowner, (C) the amounts, if any, required during such period to establish or maintain reserves, sinking funds or other funds or accounts at the respective levels required to be established or maintained therein, in accordance with the proceedings authorizing the issuance of bonds, (D) expenses of issuance and administration with respect to bonds, as determined by the Treasurer, (E) the amounts, if any, becoming due and payable under a reimbursement agreement or similar agreement entered into pursuant to authority granted under the proceedings authorizing the issuance of bonds, and (F) any other costs or expenses deemed by the Treasurer to be necessary or proper to be paid in connection with the bonds, including, without limitation, the cost of any credit facility, including but not limited to, a letter of credit or policy of bond insurance, issued by a financial institution pursuant to an agreement approved by the proceedings authorizing the issuance of bonds.

(3) “Department” means the Department of Transportation.

(4) “Federal transportation funds” means funds paid or reimbursed to the department by the United States Department of Transportation including, without limitation, future obligational authority, reimbursement funds and any other moneys payable under Title 23 or Title 49 of the United States Code, as amended from time to time.

(5) “Federal share of principal, interest and costs” means the portion of the principal of and interest on the bonds, and the costs associated with the issuance and administration of such bonds, that may be paid from federal transportation funds pursuant to federal law and any agreement between the United States Department of Transportation and the department.

(6) “Grant Anticipation Transportation Fund” means the fund established pursuant to subsection (b) of this section.

(7) “Pledged revenues” means, for any year, receipts of the state, including federal transportation funds, credited to the Grant Anticipation Transportation Fund during such year pursuant to the provisions of this section.

(8) “Proceedings” means the proceedings of the State Bond Commission authorizing or relating to the issuance of bonds pursuant to subdivision (5) of subsection (d) of this section, the provisions of any indenture of trust securing bonds, which provisions are incorporated into such proceedings, the provisions of any other documents or agreements which are incorporated into such proceedings and, to the extent applicable, a certificate of determination filed by the Treasurer in accordance with subdivision (3) of subsection (d) of this section.

(9) “Qualified federal-aid transportation project” means any transportation cost or transportation project that may be financed, in whole or in part, with federal transportation funds.

(10) “State Bond Commission” means the commission established under section 3-20.

(11) “State transportation costs” means (A) any and all capital costs incurred in furtherance of the purposes set forth in this section, including any costs, expenses and other amounts related to qualified federal aid transportation projects and state transportation projects, (B) payment of principal of and interest on bonds, (C) creation and maintenance of reserves for the payment of the principal of and interest on any such bonds, (D) payment of expenses of administration properly chargeable to the construction or acquisition of programs or projects included in subparagraph (A) of this subdivision, including, without limitation, legal, architectural and engineering expenses and fees and costs of audits, (E) payment of costs, fees and expenses which the Treasurer may deem necessary or advantageous in connection with the authorization, sale and issuance of bonds, including, but not limited to, underwriters’ discount, and (F) payment of all other items of expense not elsewhere specified or incurred in connection with a project or program included in subparagraph (A) of this subdivision.

(12) “State transportation project” means any planning, capital or operating project with regard to transportation undertaken by the state.

(b) There is established a fund to be known as the “Grant Anticipation Transportation Fund”. The fund may contain any moneys required or permitted by the proceedings to be deposited in the fund, and shall be held by the Treasurer, or the trustee under a trust indenture or trust agreement, separate and apart from all other moneys, funds and accounts. If held by the Treasurer, investment earnings credited to the assets of said fund shall become part of the assets of said fund, and any balance remaining in said fund at the end of any fiscal year shall be carried forward in said fund for the fiscal year next succeeding.

(c) (1) (A) Prior to consideration by the State Bond Commission to authorize bonds pursuant to this section, the Secretary of the Office of Policy and Management and the Treasurer shall make a written determination that the issuance of bonds pursuant to this section shall be in the best interests of the state. Once such written determination has been provided to the State Bond Commission, the State Bond Commission shall be authorized to issue bonds from time to time in one or more series and in principal amounts determined by the State Bond Commission, but not to exceed $1,300,000,000 in the aggregate, for the purpose of financing any qualified federal aid transportation project or state transportation costs or state transportation projects secured by a pledge of and payable from any of the following: (i) Federal transportation funds that are appropriated on an annual basis for such purpose by the state; (ii) any proceeds of such bonds and any earnings from the investment of such bond proceeds pledged for such purpose; or (iii) other revenues, funds or other security, if any, pledged or appropriated for such purpose under state law.

(B) Upon authorization of bonds by the State Bond Commission pursuant to subparagraph (A) of this subdivision, the principal amount of the bonds authorized therein for transportation costs with respect to such projects and costs shall be deemed to be an appropriation and allocation of such amount for such projects or costs, respectively, and, subject to approval by the Governor of allotment thereof and to any authorization for such projects or costs that may otherwise be required, contracts may be awarded and obligations incurred with respect to any such projects or costs in amounts not in the aggregate exceeding the principal amount authorized therefor, notwithstanding that such contracts and obligations may at a particular time exceed the amount of the proceeds from the sale of such bonds theretofore received by the state.

(C) The proceeds of bonds, including any premium received on the sale of such bonds, shall be used to pay costs of any qualified federal aid transportation project or state transportation cost or project or any other transportation costs, plus an amount for issuance costs, capitalized interest, reserve funds, and other financing expenses, including, without limitation, any original issue discount. The proceeds of bonds may be used together with any federal, local, or private funds which may be made available for such purpose.

(2) (A) If federal transportation funds are not sufficient to pay the federal share of principal, interest and costs, as defined in subsection (a) of this section, when due, the state may temporarily pay the federal share of principal, interest and costs with state funds that the state has appropriated for this purpose.

(B) Notwithstanding the provisions of subparagraph (A) of this subdivision, any state funds paid under subparagraph (A) of this subdivision may, if required by the original state appropriation, be reimbursed from federal transportation funds that the state determines are not needed in the future to pay the federal share of principal, interest and costs.

(d) (1) Bonds issued pursuant to this section are determined to be issued for valid public purposes in exercise of essential governmental functions. Such bonds shall be special obligations of the state and shall not be payable from or charged upon any funds other than the pledged revenues or other receipts, funds or moneys pledged therefor as provided in this section, nor shall the state or any political subdivision thereof be subject to any liability thereon, except to the extent of such pledged revenues or other receipts, funds or moneys pledged as provided in this section. As part of the contract of the state with the owners of said bonds, all amounts necessary for punctual payment of the debt service requirements with respect to such bonds shall be deemed to be appropriated, but only from the sources pledged therefor pursuant to this section, upon the authorization of issuance of such bonds by the State Bond Commission, or the filing of a certificate of determination by the Treasurer in accordance with the provisions of this section, and the Treasurer shall pay such principal and interest as the same shall accrue, but only from such sources. The issuance of bonds issued under this section shall not directly or indirectly or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation therefor, or to make any additional appropriation for their payment. Such bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the state or of any political subdivision thereof other than the pledged revenues or other receipts, funds or moneys pledged therefor as provided in this section, and the substance of such limitation shall be plainly stated on the face of each such bond and bond anticipation note. Bonds issued pursuant to this section shall not be subject to any statutory limitation on the indebtedness of the state, and, when issued, shall not be included in computing the aggregate indebtedness of the state in respect to and to the extent of any such limitation.

(2) Bonds issued pursuant to this section may be executed and delivered at such time or times and shall be dated, bear interest at such rate or rates, including variable rates to be determined in such manner as set forth in the proceedings authorizing the issuance of the bonds, provide for payment of interest on such dates, whether before or at maturity, be issued at, above or below par, mature at such time or times not exceeding thirty years from their date, have such rank or priority, be payable in such medium of payment, be issued in such form, including, without limitation, registered or book-entry form, carry such registration and transfer privileges and be made subject to purchase or redemption before maturity at such price or prices and under such terms and conditions, including the condition that such bonds be subject to purchase or redemption on the demand of the owner thereof, all as may be provided by the State Bond Commission. The State Bond Commission shall determine the form of the bonds, the manner of execution of the bonds, the denomination or denominations of the bonds and the manner of payment of principal and interest. Prior to the preparation of definitive bonds, the State Bond Commission may, under similar restrictions, authorize the issuance of interim receipts or temporary bonds, exchangeable for definitive bonds when such bonds have been executed and are available for delivery. If any of the officers whose signatures appear on the bonds cease to be officers before the delivery of any such bonds, such signatures shall, nevertheless, be valid and sufficient for all purposes, the same as if such officers had remained in office until delivery. Nothing in this subdivision shall prevent any series of bonds issued under the provisions of this section from being issued in coupon form, in which case references to the bonds in this subdivision also shall refer to the coupons attached thereto where appropriate, and references to owners of bonds shall include holders of such bonds where appropriate.

(3) Any bonds issued pursuant to this section may be sold at public sale on sealed proposals or by negotiation in such manner, at such price or prices, at such time or times and on such other terms and conditions of such bonds and the issuance and sale thereof as the State Bond Commission may determine to be in the best interests of the state, or the State Bond Commission may delegate to the Treasurer all or any part of the foregoing powers, in which event the Treasurer shall exercise such powers unless the State Bond Commission, by adoption of a resolution prior to the exercise of such powers by the Treasurer shall elect to reassume the same. Such powers shall be exercised from time to time in such manner as the Treasurer shall determine to be in the best interests of the state and he or she shall file a certificate of determination setting forth the details thereof with the secretary of the State Bond Commission on or before the date of delivery of such bonds, the details of which were determined by him or her in accordance with such delegation.

(4) The debt service requirements with respect to any bonds issued pursuant to this section shall be secured by (A) a first call upon the pledged revenues as they are received by the state and credited to the Grant Anticipation Transportation Fund established pursuant to subsection (b) of this section, and (B) a lien upon any and all amounts held to the credit of said Grant Anticipation Transportation Fund from time to time. Any obligation of the state secured by said lien to pay the unrefunded principal of bond anticipation notes, including for this purpose any obligation of the state under a reimbursement agreement entered into in connection with a credit facility providing for payment of the unrefunded principal of bond anticipation notes, shall be subordinate to any obligation of the state secured by said lien to pay (i) the debt service requirements with respect to bonds, excluding bond anticipation notes, or (ii) any debt service requirements with respect to bond anticipation notes other than debt service requirements relating to unrefunded principal of bond anticipation notes or to obligations under a credit facility for the payment of such unrefunded principal. The debt service requirements with respect to bonds also may be secured by a pledge of reserves, sinking funds and any other funds and accounts, including proceeds from investment of any of the foregoing, established pursuant to this section or the proceedings authorizing the issuance of such bonds, and by moneys paid under a credit facility, including, but not limited to, a letter of credit or policy of bond insurance issued by a financial institution pursuant to an agreement authorized by such proceedings.

(5) The proceedings under which bonds are authorized to be issued may, subject to the provisions of the general statutes, contain any or all of the following: (A) Provisions respecting custody of the proceeds from the sale of the bonds, including any requirements that such proceeds be held separate from or not be commingled with other funds of the state; (B) provisions for the investment and reinvestment of bond proceeds until used to pay transportation costs and for the disposition of any excess bond proceeds or investment earnings thereon; (C) provisions for the execution of reimbursement agreements or similar agreements in connection with credit facilities, including, but not limited to, letters of credit or policies of bond insurance, remarketing agreements and agreements for the purpose of moderating interest rate fluctuations, and of such other agreements entered into pursuant to section 3-20a; (D) provisions for the collection, custody, investment, reinvestment and use of the pledged revenues or other receipts, funds or moneys pledged therefor, as provided in this section; (E) provisions regarding the establishment and maintenance of reserves, sinking funds and any other funds and accounts as shall be approved by the State Bond Commission, in such amounts as may be established by the State Bond Commission, and the regulation and disposition thereof, including requirements that any such funds and accounts be held separate from or not be commingled with other funds of the state; (F) covenants for the issuance of additional bonds or the establishment of pledged revenue coverage requirements for the bonds; (G) covenants for the establishment of maintenance requirements with respect to state transportation facilities and properties; (H) provisions for the issuance of additional bonds on a parity with bonds theretofore issued, including establishment of additional bonds and coverage requirements with respect thereto as provided in this subdivision; (I) provisions regarding the rights and remedies available in case of a default to the bondowners, noteowners or any trustee under any contract, loan agreement, document, instrument or trust indenture, including the right to appoint a trustee to represent their interests upon occurrence of an event of default, as defined in said proceedings, provided if any bonds shall be secured by a trust indenture, the respective owners of such bonds shall have no authority except as set forth in such trust indenture to appoint a separate trustee to represent them; and (J) provisions or covenants of like or different character from the foregoing which are consistent with this section, and which the State Bond Commission determines in such proceedings are necessary, convenient or desirable in order to better secure the bonds, or will tend to make the bonds more marketable, and which are in the best interests of the state. Any provision which may be included in proceedings authorizing the issuance of bonds hereunder may be included in an indenture of trust duly approved in accordance with subdivision (7) of this subsection which secures the bonds and any notes issued in anticipation thereof, and in such case the provisions of such indenture shall be deemed to be a part of such proceedings as though they were expressly included therein.

(6) Any pledge made by the state shall be valid and binding from the time when the pledge is made, and any revenues or other receipts, funds or moneys so pledged and thereafter received by the state shall be subject immediately to the lien of such pledge without any physical delivery thereof or further act. The lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the state, irrespective of whether such parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be recorded.

(7) In the discretion of the State Bond Commission, bonds issued pursuant to this section may be secured by a trust indenture by and between the state and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the state. Such trust indenture may contain such provisions for protecting and enforcing the rights and remedies of the bondowners and noteowners as may be reasonable and proper and not in violation of law, including covenants setting forth the duties of the state in relation to the exercise of its powers pursuant to the provisions of this section and the custody, safeguarding and application of all moneys. The state may provide by such trust indenture for the payment of the pledged revenues or other receipts, funds or moneys to the trustee under such trust indenture or to any other depository, and for the method of disbursement thereof, with such safeguards and restrictions as it may determine. All expenses incurred in carrying out such trust indenture may be treated as state transportation costs, as defined in subsection (a) of this section.

(8) The Treasurer shall have power to purchase bonds of the state issued pursuant to this section out of any funds available therefor. The Treasurer may hold, pledge, cancel or resell such bonds subject to and in accordance with agreements with bondowners or noteowners.

(9) Whether or not the bonds issued pursuant to this section are of such form and character as to be negotiable instruments under the terms of the Uniform Commercial Code, such bonds are hereby made negotiable instruments within the meaning of and for all purposes of the Uniform Commercial Code, subject only to the provisions of such bonds for registration.

(10) The proceeds of bonds issued pursuant to this section may be used to pay only state transportation costs. Costs incurred relating to any of the purposes for which bonds may be issued pursuant to the provisions of this section shall be deemed state transportation costs. Nothing in this subsection shall limit the issuance of refunding bonds pursuant to this section.

(11) Any moneys held by the Treasurer or by a trustee pursuant to a trust indenture with respect to bonds issued pursuant to this section, including pledged revenues, other pledged receipts, funds or moneys and proceeds from the sale of such bonds, may, pending the use or application of the proceeds thereof for an authorized purpose, be (A) invested and reinvested in such obligations, securities and investments as are set forth in subsection (f) of section 3-20, and in participation certificates in the Short Term Investment Fund created under section 3-27a, or (B) deposited or redeposited in such bank or banks as shall be provided in the resolution authorizing the issuance of such bonds, the certificate of determination authorizing issuance of bond anticipation notes, or in the indenture securing such bonds. Proceeds from investments authorized by this subparagraph, less amounts required under the proceedings authorizing the issuance of bonds for the payment of transportation costs relating to such bonds, shall be credited to the Grant Anticipation Transportation Fund created under subsection (b) of this section.

(12) Any bonds issued under the provisions of this section, and at any time outstanding may, at any time and from time to time, be refunded by the state by the issuance of its refunding bonds in such amounts as the State Bond Commission may deem necessary, but not to exceed an amount sufficient to (A) refund the principal of the bonds to be so refunded, (B) pay any unpaid interest on such bonds and any premiums and commissions necessary to be paid in connection with such bonds, and (C) pay costs and expenses which the Treasurer may deem necessary or advantageous in connection with the authorization, sale and issuance of refunding bonds. Any such refunding may be effected whether the bonds to be refunded shall have matured or shall thereafter mature. All refunding bonds issued under this subdivision shall be payable solely from the revenues or other receipts, funds or moneys out of which the bonds to be refunded thereby are payable, and shall be subject to and may be secured in accordance with the provisions of this section.

(13) Whenever the issuance of bonds has been authorized pursuant to this section, the Treasurer may, pending the issuance thereof, and, subject to any applicable terms or provisions of the proceedings authorizing such issuances, issue, in the name of the state, bond anticipation notes and any renewals thereof. Notes evidencing such borrowings shall be designated “bond anticipation notes” and shall be signed by the Treasurer or his or her deputy. The principal of and interest on any bond anticipation notes issued pursuant to this subdivision may be repaid from pledged revenues or other pledged receipts, funds or moneys, to the extent not paid from the proceeds of renewals thereof or of the bonds. Upon the sale of the bonds, the proceeds thereof, to the extent required, shall be applied forthwith to the payment of the principal of and interest on any bond anticipation notes or shall be deposited in trust for such purpose. The date or dates of such bond anticipation notes, the maturities, denominations, form, details and other particulars of such bond anticipation notes, including the method, terms and conditions for the issue and sale thereof, shall be determined by the Treasurer in the best interest of the state. The Treasurer shall file with the secretary of the State Bond Commission on or before the date of delivery of such bond anticipation notes a certificate of determination setting forth the specific details and particulars of each issue of bond anticipation notes, including renewals thereof.

(14) The State Bond Commission may make representations and agreements for the benefit of the holders of bonds issued pursuant to this section which are necessary or appropriate to ensure the exemption of interest on such bonds from taxation under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended including agreements to pay rebates to the federal government of investment earnings derived from the investment of the proceeds of bonds, or may delegate to the Treasurer the authority to make such representations and agreements on behalf of the state. Any such agreement may include (A) a covenant to pay rebates to the federal government of investment earnings derived from the investment of the proceeds of bonds, (B) a covenant that the state will not limit or alter its rebate obligations until its obligations to the holders or owners of such bonds are finally met and discharged, and (C) provisions to (i) establish trust and other accounts which may be appropriate to carry out such representations and agreements, (ii) retain fiscal agents as depositories for such funds and accounts, and (iii) provide that such fiscal agents may act as trustee of such funds and accounts. The State Bond Commission may also authorize, by a vote of a majority of the members of said commission, bonds issued pursuant to the provisions of this section in such form and manner that the interest on such bonds may be includable under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, in the gross income of the holders or owners of such bonds upon the finding by said commission that the issuance of such taxable bonds is in the public interest.

(e) (1) The state covenants with the purchasers and all subsequent owners and transferees of bonds issued by the state pursuant to this section in consideration of the acceptance of and payment for the bonds, that the principal and interest of such bonds shall be free at all times from taxation, except for estate and gift taxes, imposed by the state or by any political subdivision thereof. The Treasurer is authorized to include this covenant of the state in any agreement with the owner of any such bonds.

(2) Bonds issued pursuant to this section are hereby made securities in which all public officers and public bodies of the state and its political subdivisions, all insurance companies, credit unions, building and loan associations, investment companies, banking associations, trust companies, executors, administrators, trustees and other fiduciaries and pension, profit-sharing and retirement funds may properly and legally invest funds, including capital in their control or belonging to them. Such bonds are hereby made securities which may properly and legally be deposited with and received by any state or municipal officer or any agency or political subdivision of the state for any purpose for which the deposit of bonds or obligations of the state is now or may hereafter be authorized by law.

(3) The state covenants with the purchasers and all subsequent owners and transferees of bonds issued by the state pursuant to this section, in consideration of the acceptance of the payment for the bonds, until such bonds, together with the interest thereon, with interest on any unpaid installment of interest and all costs and expenses in connection with any action or proceeding on behalf of such owners, are fully met and discharged, or unless expressly permitted or otherwise authorized by the terms of each contract and agreement made or entered into by or on behalf of the state with or for the benefit of such owners, that the state will collect and apply the pledged revenues and other receipts, funds or moneys pledged for the payment of debt service requirements as provided in this section, in such amounts as may be necessary to pay such debt service requirements in each year in which bonds are outstanding and further, that the state: (A) Will not limit or alter the duties imposed on the Treasurer and other officers of the state by the provisions of this section and by the proceedings authorizing the issuance of bonds with respect to application of pledged revenues or other receipts, funds or moneys pledged for the payment of debt service requirements as provided by the provisions of this section; (B) will not issue any bonds, notes or other evidences of indebtedness, other than the bonds, having any rights arising out of this section or secured by any pledge of or other lien or charge on the pledged revenues or other receipts, funds or moneys pledged for the payment of debt service requirements as provided in this section; (C) will not create or cause to be created any lien or charge on such pledged amounts, other than a lien or pledge created thereon pursuant to this section, provided nothing in this section shall prevent the state from issuing evidences of indebtedness (i) which are secured by a pledge or lien which is and shall on the face thereof be expressly subordinate and junior in all respects to every lien and pledge created by or pursuant to this section; (ii) for which the full faith and credit of the state is pledged and which are not expressly secured by any specific lien or charge on such pledged amounts; or (iii) which are secured by a pledge of or lien on moneys or funds derived on or after such date as every pledge or lien thereon created by or pursuant to this section shall be discharged and satisfied; (D) will carry out and perform, or cause to be carried out and performed, each and every promise, covenant, agreement or contract made or entered into by the state or on its behalf with the owners of any bonds; (E) will not in any way impair the rights, exemptions or remedies of such owners; and (F) will not limit, modify, rescind, repeal or otherwise alter the rights or obligations of the appropriate officers of the state to collect the receipts constituting the pledged revenues as may be necessary to produce sufficient revenues to fulfill the terms of the proceedings authorizing the issuance of the bonds. The State Bond Commission is authorized to include this covenant of the state in any agreement with the owner of any such bonds.