(1) 1989 Water Bonds means the Government of Guam
Water System Revenue Bonds, Series 1989.

(2) 1992 Highway Bonds means the Government of
Guam Limited Obligation Highway Bonds, 1992 Series A.

(3) Prior Bonds means the 1989 water bonds and the
1992 highway bonds, to be redeemed or otherwise retired with the proceeds of refunding bonds and investment earnings thereon.

(4) Refunding Bond means a bond issued pursuant to this Section for the purpose of providing moneys to redeem and otherwise retire prior bonds, funding any necessary bond reserves and capitalized interest allocable to the refunding bonds and paying expenses incurred in connection with the issuance of such refunding bonds.

(5) Yield shall have the same meaning as when used in
§ 148 of the Internal Revenue Code of 1986, as amended. That is, ‘yield’ means the annual discount rate which, when used to discount all payments of debt service on an issue of bonds to the date of issuance of the bonds, using a semiannual compounding interval, results in the aggregate present value of such payments being equal to the re-offering price to the public of such bonds.

(6) Debt service means the scheduled principal of and interest on bonds plus fees to be paid for credit enhancement of such bonds.

(7) Debt Service Savings means the percentage by which the present value of debt service on refunding bonds, not including capitalized interest, is less than the present value of the remaining debt service on the prior bonds refunded by such refunding bonds. Present value shall be
calculated for this purpose using the yield on the refunding bonds as the discount rate.

(8) 1986 Bonds means the Government of Guam General Obligation Bonds, Series 1986, that are no longer outstanding.

(9) Section 30 Revenues means the revenues derived by the government of Guam under 48 U.S.C. § 1421h (§ 30 of the Organic Act of Guam).

(b) Authorization of Issuance of Bonds. I Maga’lahen Guåhan is authorized to issue on behalf of the government of Guam one (1) or more issues of bonds of the government consisting of refunding bonds, subject to the following requirements and limitations:

(1) the issuance of the bonds shall not cause a violation of the debt limitation provisions of 48 U.S.C. § 1423a (§ 11 of the Organic Act of Guam);

(2) all obligation of the government to pay debt service on, and the redemption price of, the prior bonds being refunded shall be discharged concurrently with the issuance of the refunding bonds. Thereafter, the prior bonds shall be payable solely from and secured solely by an escrow established for such purpose;

(3) the debt service savings resulting from the issuance of the refunding bonds shall be not less than three percent (3%);

(4) the aggregate amount of scheduled debt service on the refunding bonds allocable to the refunding of the 1989 water bonds shall be, in each year to and including the final maturity of such refunding bonds, less than the maximum annual scheduled debt service on the 1989 water bonds, and the final scheduled maturity date of such refunding bonds shall be not more than five (5) years after the final scheduled maturity date of the 1989 water bonds; and

(5) the aggregate amount of scheduled debt service on the refunding bonds allocable to the refunding of the 1992 highway bonds shall be, in each year to and including the
final maturity of such refunding bonds, less than the maximum annual scheduled debt service on the 1992 highway bonds, and the final scheduled maturity date of such refunding bonds shall be not more than five (5) years after the final scheduled maturity date of the 1992 highway bonds.

(c) Source of and Security for Payment. The refunding bonds shall be payable from and secured by the same source or sources of revenues as the prior bonds refunded by the issue. Any pledge or lien on revenues or other moneys authorized to be granted with respect to the prior bonds refunded by the issue is hereby authorized to be granted with respect to the refunding bonds. I Liheslaturan Guåhan hereby finds and declares that it is the policy of the government of Guam that § 30 Revenues shall be and remain the primary source of payment of any bonds issued to refund the 1989 water bonds.

(d) Terms and Conditions Determined by Certificate. The terms and conditions of the refunding bonds shall be as determined by I Maga’lahen Guåhan by the execution of a certificate or indenture authorizing the issuance of such bonds. The certificate or indenture shall contain terms and conditions that are consistent with this Section, and shall include substantially the same additional bond tests, rate covenants and other covenants as were applicable with respect to the prior bonds. The proceeds of the refunding bonds may be used to fund a bond reserve only if and to the extent that moneys from any bond reserve for the prior issue are transferred to the escrow from which the prior bonds will be paid. Interest on the refunding bonds may be capitalized for a period not exceeding fifteen (15) months.

(e) Valid and Binding Obligations, Collection of Revenues. The bonds authorized by this Section shall constitute the valid and binding obligations of the government of Guam. All officers charged by law with any duty in the collection of any revenues from which debt service on the issue is payable shall do every lawful thing necessary to collect the amount necessary for such purpose. The validity of any such bonds shall not be affected by the validity or regularity of any proceedings for the implementa- tion of the capital improvement projects funded by the prior bonds.
(f) Appropriation. The revenues described in Subsection (c) of this Section are hereby continuously appropriated for the purposes for which they are pledged.

(g) Waiver of Immunity. Notwithstanding any substantive or procedural provision of Chapter 6 of Title 5 of the Guam Code Annotated, the government of Guam waives immunity from any suit or action in contract on the bonds authorized by this Section, but does not waive sovereign immunity as to the personal liability of elected officials and employees of the government of Guam.

(h) Form of Bonds; Covenants; Appointment of Fiduciaries; Other Related Agreements. The technical form and language of the refunding bonds, including provisions for execution, exchange, transfer, registration, paying agency, lost or mutilated bonds, negotiability, cancellation and other terms, covenants or conditions not inconsistent with this Section, shall be as specified in the certificate or indenture executed by I Maga’lahen Guåhan authorizing the issuance of the bonds. The certificate or indenture may appoint one (1) or more trustees or other fiduciaries authorized to receive and hold in trust the proceeds of the bonds and moneys relating thereto, to protect the rights of bondholders and to perform such other duties as may be specified in the certificate. I Maga’lahen Guåhan is also authorized to execute, on behalf of the government of Guam, any appropriate agreements, certificates or other instruments relating to the bonds and the sale of the bonds, including, but limited to, an agreement, certificate or instrument subordinating the pledge of revenues securing any other debt to the pledge of revenues securing the refunding bonds.

(i) Authorization for Credit Enhancement. I Maga’lahen Guåhan is authorized to enter into such contracts or agreements with such banks, insurance companies or other financial institutions as I Maga’lahen Guåhan determines are necessary or desirable to improve the security and marketability of any bonds authorized by this Section. Such contracts or agreements may contain an obligation to reimburse, with interest, any such banks, insurance companies or other financial institutions for advances used to pay principal of or interest on the issue. Any obligations under such contract or agreement shall be payable solely from the same sources as debt service on the refunding bonds is payable,
and any advance under such agreement, if necessary, shall be treated as creating a reimbursement obligation issued to refund the refunding bonds.

(j) No Personal Liability. No employee or elected official of the government of Guam shall be individually or personally liable for the payment of any amounts due on any bonds issued under this Section, or for any other liability arising in connection with the bonds; provided, however, that nothing in this Section shall relieve any employee or elected official from the performance of any ministerial duty required by law.

(k) Approval by Guam Economic Development Authority. Section 50103(k) of Title 12 of the Guam Code Annotated, provides that agencies and instrumentalities of the government of Guam shall issue bonds and other obligations only by means of and through the agency of the Guam Economic Development Authority (‘GEDA’). No issue of bonds authorized by this Section shall be sold until the board of directors of GEDA has adopted a resolution approving the sale of such issue.

(l) Approval of Terms and Conditions. Said § 50103(k) also provides that GEDA shall not sell any bond without the approval of I Liheslaturan Guåhan of the terms and conditions of the issuance of the bonds. I Liheslaturan Guåhan hereby approves the terms and conditions of the issuance of the bonds authorized by this Section, so long as such bonds are structured as provided by this Act and achieve the savings required by this Act. Upon issuance of bonds to refund the 1989 water bonds, § 30 Revenues and other funds held in the bond account for the 1989 water bonds shall be released pursuant to this Act.

(m) Approval by Guam Public Utilities Commission Not Required. Section 12004 of Title 12 of the Guam Code Annotated provides that the Guam Waterworks Authority (‘GWA’) shall not enter into any contractual agreements or obligations which could increase rates and charges prior to the written approval of the Public Utilities Commission. Because debt service on the refunding bonds issued to refund the 1989 water bonds is expected to be paid from § 30 Revenues and not from GWA revenues, and because the refunding bond indenture provisions relating to GWA revenues are to be substantially the same as such provisions in the1989 water bond indenture, the entry by GWA into the refunding bond indenture is hereby deemed not to increase rates and charges in and of itself, is hereby authorized and approved, and shall not be required to be approved by the Guam Public Utilities Commission.

(n) Variable Rate Bonds and Interest Rate Hedges. Refund- ing bonds issued to refund the 1989 water bonds may be issued as bonds bearing interest at a variable rate, and I Maga’lahen Guåhan is authorized to enter into one (1) or more interest rate hedging contracts, including, but not limited to, arrangements commonly known as swap agreements, floors, caps and collars, which I Maga’lahen Guåhan determines to be necessary or appropriate to place the obligations of the government of Guam, as represented by the refunding bonds and such interest rate hedging contracts, on a basis other than a fully variable rate basis, but only under the following terms and conditions, which are applicable in such circumstances in lieu of the requirements of Paragraphs (3) and (4) of Subsection (b) of this Section:

(1) the initial interest rate hedging contracts, if any must have an aggregate term of not less than two (2) years;

(2) each year over the longer of the first five (5) years after the date of issuance of the bonds or the term of any initial interest rate hedging contracts, the maximum net annual obligation of the government, as represented by the refunding bonds and such interest rate hedging contracts, must be expected, on the basis of the prior ten (10) years experience with comparable bonds and interest rate hedging contracts, not to exceed the annual obligation that the government would have had if the refunding bonds had been issued as fixed-rate, current-interest bonds meeting the criteria of Paragraphs (3) and (4) of Subsection (b) of this Section;

(3) the aggregate principal amount of refunding bonds outstanding at the later of the end of the first five (5) years after the date of issuance of the bonds or the end of the term of any initial interest rate hedging contracts may not exceed the aggregate principal amount of refunding bonds that would have been outstanding had the refunding bonds beenissued as fixed-rate, current-interest bonds meeting the requirements of Paragraphs (3) and (4) of Subsection (b) of this Section;

(4) the final scheduled maturity date of such refunding bonds shall be not more than five (5) years after the final scheduled maturity date of the 1989 water bonds; and

(5) upon any conversion of the variable rate refunding bonds to fixed rate, any period during which the fixed rate bonds are not subject to optional redemption shall be less than one and one-half (1.5) years.

(o) Permitted Investments. The proceeds of bonds issued by the government, and any revenues relating to such bonds, may be invested in, but only in, the types of investments permitted by the certificate or indenture pursuant to which such bonds are issued.

SOURCE: Added by P.L. 25-003:IV:29.. Amended by P.L. 25-115:1.