Massachusetts General Laws
Chapter 29 - State Finance
Section 49 - Sinking Fund for Commonwealth Bonds; Investments

Section 49. The aggregate principal amount of bonds, if any, of any issue of commonwealth bonds stated to mature in any year may vary from the aggregate principal amount of bonds of such issue stated to mature in any other year. The state treasurer may agree at or prior to the time such issue of bonds is issued with the holders of bonds of such issue or with a trustee, which shall be a trust company or bank with trust powers doing business in the commonwealth, for the benefit of such holders to establish a sinking fund for such issue of bonds, to make deposits into such sinking fund according to a schedule theretofore established by the state treasurer and to use the monies in such sinking fund only for (a) the payment of principal of or interest on, or purchase, at a price not to exceed par of, the bonds of such an issue or (b) the payment of principal of or interest on, or purchase, at a price not to exceed par of, the bonds of any 1 or more specified maturities of such an issue. The full faith and credit of the commonwealth is pledged to the making of payments to any such sinking fund. Withdrawals from any such sinking fund for the payment of principal of or interest on such bonds, or for the purchase of such bonds as permitted by this paragraph, may be made without further appropriation or authorization by any officer of the commonwealth. Pending their application for such purpose, monies in any such sinking fund shall be held by the state treasurer or such trustee and invested in (i) direct obligations of, or obligations the payment of the principal and interest of which are unconditionally guaranteed by, the United States of America; (ii) obligations of the Federal National Mortgage Association, Government National Mortgage Association, Federal Financing Bank, Federal Intermediate Credit Banks, Federal Bank for Cooperatives, Federal Land Banks, Federal Home Loan Banks, Farmers Home Administration, Export–Import Bank of the United States, Student Loan Marketing Association, United States Postal Service, Tennessee Valley Authority or Federal Home Loan Mortgage Corporation or by any other agency or corporation which has been or is hereafter created under an act of Congress of the United States as an agency or instrumentality of the United States of America; (iii) housing authority bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States of America or project notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; (iv) interest-bearing time deposits or certificates of deposit of banking institutions or trust companies organized under the laws of any state of the United States or any national banking association, provided that such deposits or certificates shall be continuously and fully secured by obligations described in clauses (i) to (iii), inclusive, having a market value, exclusive of accrued interest, at least equal to the aggregate amount of such deposits and certificates; (v) any of the securities described in clauses (i) to (iii), inclusive, which are subject to repurchase agreements with any bank or trust company organized under the laws of any state of the United States or any national banking association; or (vi) obligations that have been advance refunded or defeased prior to their maturity, that are fully and irrevocably secured as to principal and interest by moneys or securities described in clauses (i) to (iii), inclusive, held in trust for the payment thereof, and that are not callable prior to maturity except at the option of the holder thereof. Securities purchased as an investment of monies credited to any sinking fund shall be deemed at all times to be a part of such sinking fund. Notwithstanding any act authorizing all or part of an issue of commonwealth bonds to the effect that such bonds shall be issued upon the serial payment plan or to the effect that the maturities thereof shall be so arranged that the amounts payable in the several years of the period of amortization, other than the final year, shall be as nearly equal as in the opinion of the state treasurer it is practicable to make them or to any similar effect, this paragraph shall apply to any issue of commonwealth bonds made after January 1, 1980 unless the act authorizing such issue expressly states that this paragraph shall not apply to such issue.
Bonds of the commonwealth may be issued as registered bonds or as bearer bonds, with or without coupons, as the state treasurer may deem best. Such bonds shall bear interest at such rate or rates, including rates variable from time to time according to an index, banker's loan rate or otherwise, as the state treasurer, with the approval of the governor, shall fix. This paragraph shall apply to any bonds issued after January 1, 1982 unless the act authorizing such issue expressly states that this paragraph shall not apply.
Registered bonds may be uncertificated. Books shall be maintained by or on behalf of the state treasurer specifying the persons entitled to uncertificated bonds, and the rights represented thereby shall be registered upon such books. A true copy of the official actions of the commonwealth relating to such bonds shall be kept by or on behalf of the state treasurer, a copy of which, verified to be such by an authorized officer, shall be admissible before any court of record, administrative body or arbitration panel without further authentication.
Bonds or notes of the commonwealth which are subject to the requirement imposed by Section 3 of Article LXII of the Amendments to the Constitution of the Commonwealth that the governor recommend the term thereof to the general court shall not be issued, and monies to finance projects authorized to be financed by such bonds or notes shall not be advanced in anticipation of the issuance thereof, until legislation has been enacted upon such term recommendation.
Unless otherwise specifically provided, any statute authorizing the state treasurer to issue and sell bonds of the commonwealth shall authorize the state treasurer to issue and sell such bonds in such denominations as the state treasurer shall determine to be in the best interests of the commonwealth, and any requirement that the maturities thereof be so arranged that the amounts payable in the several years of the period of amortization 1 other than the final year shall be as nearly equal as in the opinion of the state treasurer it is practicable to make them shall mean that the amounts so payable shall be as nearly equal considering the denominations of the bonds issued and sold as in the opinion of the state treasurer it is practicable to make them.
Bonds issued under 2 or more bond authorization acts may be consolidated for the purpose of sale and issued, sold, printed and delivered as a single bond issue despite the requirement of any bond authorization act requiring or designating a particular total for bonds issued under that act. Notwithstanding any requirement of any such act that bonds issued thereunder shall bear any particular designation, bonds consolidated under this section shall be designated on their face ''Consolidated Loan of'' followed by the year of issue and the series thereof in such year. Notwithstanding this section, the state treasurer shall separately account for the bonds issued under and the proceeds received from bond sales under the particular authorizing act. In connection with any such consolidated issue, the state treasurer shall specify at the time of issuance (i) the amount of proceeds to be allocated to each bond authorization act or section thereof, in which case allocation of proceeds shall occur at the time of issuance, or (ii) the various sections of bond authorization acts to which proceeds of the issue may be allocated as expenditures are made under the authorizations referenced in such sections, in which case allocation of proceeds shall occur at such later time or times as such expenditures shall occur, or (iii) any combination of the foregoing. In lieu of allocating proceeds under clause (ii), the state treasurer may allocate proceeds of the issue to expenditures incurred under 1 or more bond authorization acts not specified at the time of issuance, including without limitation bond authorization acts enacted after the time of issuance, so long as the term limitations contained in the substituted bond authorization acts and the related term recommendations of the governor are not inconsistent with the term of the consolidated issue.
Notwithstanding any general or special law to the contrary, a provision in any statute authorizing the state treasurer to issue and sell bonds of the commonwealth providing that such bonds shall bear interest at such rate as the state treasurer, with the approval of the governor, shall fix; or a provision of similar import, shall be construed to provide that such bonds shall bear interest at such rate or rates as the state treasurer, with the approval of the governor, shall fix.
Unless otherwise specifically provided, any act authorizing the state treasurer to issue and sell bonds of the commonwealth shall authorize the state treasurer, with the approval of the governor, to issue and sell bonds 1 subject to call for redemption at any time or from time to time, with or without premium, as the state treasurer determines to be in the best interest of the commonwealth.
Bonds or notes of the commonwealth may be sold at par, premium or discount and may be sold as instruments the principal amount of which either remains constant or increases during the life of the instrument. Whenever bonds or notes are issued under a statute to which this paragraph applies, the amount issued shall be deemed to be the net proceeds of the issue; provided that the state treasurer may determine to apply all or a portion of any premium received on the sale of any such bonds or note, without appropriation, to the costs of issuance thereof or other financing costs related thereto or to the payment of the principal thereof or sinking fund installments with respect thereto, in which case the amount of any premium so applied shall not be included in the amount of the issue. This paragraph shall apply to any bonds or notes issued after January 1, 1988 unless the act authorizing such issue expressly states that this paragraph shall not apply.
In connection with the issuance of bonds and notes of the commonwealth which are intended to qualify for tax exemption under the Internal Revenue Code of 1986, and to induce the purchase of such bonds and notes, the state treasurer may covenant on behalf of the commonwealth with the purchasers or with the holders from time to time of such bonds or notes or with a trustee or trustees for the benefit of such holders with respect to compliance with the requirements of said Internal Revenue Code relative to such tax exemption, including without limitation compliance with provisions relating to the use of proceeds by private parties, the investment of proceeds and the payment of rebate, so-called, to the federal government. Any such covenant may appear on the bonds or notes or may be included in a separate contract or trust indenture, a copy of which shall be available for public inspection at the office of the state treasurer. Any right of a holder of a bond or note in respect of any such covenant may be enforced as a claim against the commonwealth.
Any act authorizing the state treasurer to issue and sell bonds of the commonwealth shall also authorize the state treasurer, without any further authorization, to borrow from time to time on the credit of the commonwealth such sums of money as may be necessary for the purpose of making payments for the purposes for which such bonds are authorized and to issue and renew, from time to time, notes of the commonwealth therefor in anticipation, of such bonds, bearing interest payable at such time and at such rates as shall be fixed by the state treasurer. The notes shall be issued and may be renewed 1 or more times for such terms not exceeding 3 years, as the governor may recommend to the general court under Section 3 of Article LXII of the Amendments to the Constitution of the Commonwealth. This paragraph; (i) shall apply to all bond authorization acts in effect as of July 1, 1999 and all bond authorization acts validly enacted after such date, unless any particular act expressly states that this paragraph shall not apply; and (ii) shall constitute authority to issue notes in anticipation of such bonds in addition to and not in limitation of any authority to issue notes in anticipation of bonds contained in any bond authorization act.
If bonds are issued subject to a requirement under federal tax law that the proceeds from any investment of the proceeds from the sale of the bonds shall be used for capital expenditures including, without limitation, section 54AA(g)(2) of the Internal Revenue Code of 1986, as amended, the state treasurer may, without further appropriation or allotment, apply investment earnings allocable to the proceeds of such bonds to the payment or reimbursement of capital expenditures for which bonds have been authorized but not yet issued, and the amount of bonds authorized to be issued for any such expenditures shall be reduced by the amount of investment earnings so applied. Bonds and notes issued by the commonwealth, their transfer and income therefrom, including any profit made on the sale thereof, shall at all times be free from taxation within the commonwealth.

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