Florida Regulations 19A-3.003: Sale and Award of Bonds
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(1) Bonds shall be sold at public sale at such place or places within the State as the Governing Board shall determine to receive proposals for the purchase of such Bonds. Notice of such sale shall be published at least once at least 10 days prior to the date of sale in one or more newspapers or financial journals published within or without the State and shall contain such terms as the Governing Board shall deem advisable and proper under the circumstances; provided, that if no bids are received at the time and place called for by such notice of sale, or if all bids received are rejected, such Bonds may again be offered for sale upon a shorter period of reasonable notice provided for by resolution of the Governing Board.
(2) All proposals for the purchase of any Bonds offered for sale by the Division shall be opened in public. By resolution of the Division, such Bonds shall be awarded to the lowest Bidder. The basis of award may be either the lowest net interest cost or the lowest true interest cost, as set forth in the resolution authorizing the issuance or sale of the Bonds. The Secretary, or an Assistant Secretary, of the Governing Board is hereby authorized to award the Bonds and such award shall be final without any further action required by the Governing Board. Further, pursuant to Section 215.68(5)(b), F.S., the Secretary or an Assistant Secretary of the Governing Board is authorized to reject all bids received and such rejections shall be final without further action required by the Governing Board. The Director of the Division shall report the results of the award of the Bonds or the rejection of all bids received at the next meeting of the Governing Board.
(3)(a) Notwithstanding the provisions of subsections (1) and (2), in the event the Governing Board determines by resolution that a negotiated sale of bonds is in the best interest of the state, and the Governing Board has approved the form and substance of the purchase contract except for any details unique to the particular issue of bonds, the Director or Secretary or any Assistant Secretary of the Governing Board is authorized to negotiate and execute a purchase contract for the sale and award of the bonds, without further action by the Governing Board, subject to any restrictions set forth in the resolution authorizing the negotiated sale. In making a determination that the negotiated sale of bonds is in the best interest of the state, the Governing Board shall provide in the resolution authorizing the negotiated sale specific findings of the reasons requiring the negotiated sale and the basis for the specific findings. In making such specific findings, the Governing Board shall consider the following factors:
1. Unstable market conditions which require the flexible pricing or the precise timing of the sale of the bonds to a degree which would not be expected through a competitive sale;
2. Concerns regarding the credit quality of the state, the agency for which the bonds are being issued, or any source of revenue pledged to the bonds which require more extensive or aggressive marketing of the bonds than would be expected through a competitive sale;
3. An unusually large bond issue which, if sold at competitive sale, would require the formation of larger than usual underwriting syndicates resulting in the expectation of fewer bids than would be necessary for sufficient price competition;
4. A bond issue for a new entity or a new program which would require more extensive or aggressive marketing of the bonds than would be likely through a competitive sale;
5. Use of an innovative or unusual structure or security which would require the underwriting of the bonds in a manner not likely to be available in a competitive sale; and
6. Changes or anticipated changes in laws or regulations which would make the prompt sale of the bonds desirable.
(b) Prior to the pricing of the bonds in a negotiated sale the Division shall have retained the services of a financial advisor who shall, at a minimum, review and advise the Division as to the reasonableness of the timing of the sale, the gross underwriting spread and the price of the bonds. Immediately subsequent to the sale of the bonds the financial advisor shall provide a written opinion concerning the fairness or reasonableness of the timing of the sale, the gross underwriting spread and the price of the bonds.
(c) On or before the time that the Governing Board authorizes the sale of bonds by a negotiated sale, the Governing Board shall determine: the percentage distribution of the management fee among underwriters; the percentage of participation among underwriters; and any special instructions regarding the distribution of bonds, which determinations and instructions shall be binding upon the underwriters. In addition, if requested by the Division, the underwriters shall be bound by the following:
1. When there are three or more underwriters selected by the Governing Board, all designated orders must be filled by a minimum of three underwriters designated by the purchaser of the bonds and no one underwriter may receive more than 50% of any individual designated order.
2. During the order period, the senior bookrunning underwriter shall provide the following information to the Division on a continual basis, as soon as it becomes available: the size and type of the orders received, the name of the underwriter placing the order and the purchaser of the bonds, and the time of receipt of each order.
(4)(a) In the event the Division negotiates the sale of bonds, the senior bookrunning underwriter shall provide to the Division at least five business days, unless a shorter time period is approved by the Director of the Division, prior to the award of such bonds to the bond underwriters, a disclosure statement containing the following information:
1. The names, addresses, and estimated amounts of compensation of any finders connected with the issuance of the bonds.
2. An estimate of:
a. Any expense component of the gross underwriting spread.
b. Any management fee component of the gross underwriting spread.
c. Any takedown component of the gross underwriting spread.
d. Any risk component of the gross underwriting spread.
For purposes of sub-subparagraph 2.a. above, the senior bookrunning underwriter must also provide an itemized list setting forth the nature and estimated amounts of expenses to be incurred by the bond underwriters in connection with the issuance of such bonds. Notwithstanding the foregoing, any such list may include an item for miscellaneous expenses, provided it includes only minor items of expense which in total shall not exceed more than $2,500 and which cannot be easily categorized elsewhere in the statement.
3. Any other fee, retainer, bonus, or compensation estimated to be paid by the bond underwriters in connection with the bonds issued to any person not regularly employed or retained by it.
4. The name and address of each underwriter in the syndicate or selling group for the bonds.
(b) At least three business days, unless a shorter time period is approved by the Director of the Division, prior to the pricing of the bonds in a negotiated sale, the Division and the underwriters must reach final agreement on:
1. The expense component of the gross underwriting spread; provided that in the negotiation of the expense component of the gross underwriting spread, the Division will not consider any expenses for underwriter’s legal counsel which exceed the amount to be paid to bond counsel by the Division for the bond issue, unless an increased amount is authorized by a vote of the Governing Board due to extraordinary circumstances such as unusual complexity of the bond issue; provided, however, that this provision should not be construed to limit in any way the compensation paid by the underwriter to underwriter’s counsel,
2. The management fee component of the gross underwriting spread,
3. The maximum amount for the takedown component of the gross underwriting spread,
4. The maximum amount for the risk component of the gross underwriting spread, and
5. The level of participation by each of the underwriters involved in the transaction.
(5) The Director of the Division shall report at a meeting of the Governing Board the results of a negotiated sale and award of the bonds or the reasons the Division was unable to negotiate a sale. If a negotiated sale is made the report shall include, at a minimum:
(a) The price of the bonds,
(b) The allocation of the bonds and an explanation of the gross underwriting spread, and
(c) The actual or estimated amount of all fees paid by the Division including, but not limited to, the fees of bond counsel and any financial advisor.
(6) No violation of any provision of this section shall affect the validity of any bond issue.
Rulemaking Authority Florida Statutes § 215.62(5). Law Implemented 215.68(5)(b), (c) FS. History-New 3-27-84, Formerly 13K-3.03, Amended 10-8-90, 12-3-91, Formerly 13K-3.003.
Terms Used In Florida Regulations 19A-3.003
- Contract: A legal written agreement that becomes binding when signed.
(3)(a) Notwithstanding the provisions of subsections (1) and (2), in the event the Governing Board determines by resolution that a negotiated sale of bonds is in the best interest of the state, and the Governing Board has approved the form and substance of the purchase contract except for any details unique to the particular issue of bonds, the Director or Secretary or any Assistant Secretary of the Governing Board is authorized to negotiate and execute a purchase contract for the sale and award of the bonds, without further action by the Governing Board, subject to any restrictions set forth in the resolution authorizing the negotiated sale. In making a determination that the negotiated sale of bonds is in the best interest of the state, the Governing Board shall provide in the resolution authorizing the negotiated sale specific findings of the reasons requiring the negotiated sale and the basis for the specific findings. In making such specific findings, the Governing Board shall consider the following factors:
1. Unstable market conditions which require the flexible pricing or the precise timing of the sale of the bonds to a degree which would not be expected through a competitive sale;
2. Concerns regarding the credit quality of the state, the agency for which the bonds are being issued, or any source of revenue pledged to the bonds which require more extensive or aggressive marketing of the bonds than would be expected through a competitive sale;
3. An unusually large bond issue which, if sold at competitive sale, would require the formation of larger than usual underwriting syndicates resulting in the expectation of fewer bids than would be necessary for sufficient price competition;
4. A bond issue for a new entity or a new program which would require more extensive or aggressive marketing of the bonds than would be likely through a competitive sale;
5. Use of an innovative or unusual structure or security which would require the underwriting of the bonds in a manner not likely to be available in a competitive sale; and
6. Changes or anticipated changes in laws or regulations which would make the prompt sale of the bonds desirable.
(b) Prior to the pricing of the bonds in a negotiated sale the Division shall have retained the services of a financial advisor who shall, at a minimum, review and advise the Division as to the reasonableness of the timing of the sale, the gross underwriting spread and the price of the bonds. Immediately subsequent to the sale of the bonds the financial advisor shall provide a written opinion concerning the fairness or reasonableness of the timing of the sale, the gross underwriting spread and the price of the bonds.
(c) On or before the time that the Governing Board authorizes the sale of bonds by a negotiated sale, the Governing Board shall determine: the percentage distribution of the management fee among underwriters; the percentage of participation among underwriters; and any special instructions regarding the distribution of bonds, which determinations and instructions shall be binding upon the underwriters. In addition, if requested by the Division, the underwriters shall be bound by the following:
1. When there are three or more underwriters selected by the Governing Board, all designated orders must be filled by a minimum of three underwriters designated by the purchaser of the bonds and no one underwriter may receive more than 50% of any individual designated order.
2. During the order period, the senior bookrunning underwriter shall provide the following information to the Division on a continual basis, as soon as it becomes available: the size and type of the orders received, the name of the underwriter placing the order and the purchaser of the bonds, and the time of receipt of each order.
(4)(a) In the event the Division negotiates the sale of bonds, the senior bookrunning underwriter shall provide to the Division at least five business days, unless a shorter time period is approved by the Director of the Division, prior to the award of such bonds to the bond underwriters, a disclosure statement containing the following information:
1. The names, addresses, and estimated amounts of compensation of any finders connected with the issuance of the bonds.
2. An estimate of:
a. Any expense component of the gross underwriting spread.
b. Any management fee component of the gross underwriting spread.
c. Any takedown component of the gross underwriting spread.
d. Any risk component of the gross underwriting spread.
For purposes of sub-subparagraph 2.a. above, the senior bookrunning underwriter must also provide an itemized list setting forth the nature and estimated amounts of expenses to be incurred by the bond underwriters in connection with the issuance of such bonds. Notwithstanding the foregoing, any such list may include an item for miscellaneous expenses, provided it includes only minor items of expense which in total shall not exceed more than $2,500 and which cannot be easily categorized elsewhere in the statement.
3. Any other fee, retainer, bonus, or compensation estimated to be paid by the bond underwriters in connection with the bonds issued to any person not regularly employed or retained by it.
4. The name and address of each underwriter in the syndicate or selling group for the bonds.
(b) At least three business days, unless a shorter time period is approved by the Director of the Division, prior to the pricing of the bonds in a negotiated sale, the Division and the underwriters must reach final agreement on:
1. The expense component of the gross underwriting spread; provided that in the negotiation of the expense component of the gross underwriting spread, the Division will not consider any expenses for underwriter’s legal counsel which exceed the amount to be paid to bond counsel by the Division for the bond issue, unless an increased amount is authorized by a vote of the Governing Board due to extraordinary circumstances such as unusual complexity of the bond issue; provided, however, that this provision should not be construed to limit in any way the compensation paid by the underwriter to underwriter’s counsel,
2. The management fee component of the gross underwriting spread,
3. The maximum amount for the takedown component of the gross underwriting spread,
4. The maximum amount for the risk component of the gross underwriting spread, and
5. The level of participation by each of the underwriters involved in the transaction.
(5) The Director of the Division shall report at a meeting of the Governing Board the results of a negotiated sale and award of the bonds or the reasons the Division was unable to negotiate a sale. If a negotiated sale is made the report shall include, at a minimum:
(a) The price of the bonds,
(b) The allocation of the bonds and an explanation of the gross underwriting spread, and
(c) The actual or estimated amount of all fees paid by the Division including, but not limited to, the fees of bond counsel and any financial advisor.
(6) No violation of any provision of this section shall affect the validity of any bond issue.
Rulemaking Authority Florida Statutes § 215.62(5). Law Implemented 215.68(5)(b), (c) FS. History-New 3-27-84, Formerly 13K-3.03, Amended 10-8-90, 12-3-91, Formerly 13K-3.003.