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§ 1.125, that the Eighteenth Series expressway system in metropolitan of these bonds were eligible for pur
Jacksonville to be leased to and operated chase, dealing in, underwriting and un- by the Florida State Road Department. limited holding by National Banks, it is
It is authorized to secure its bonds by a our conclusion that the Bonds of the pledge of toll and other revenues and General State Authority of the Com- certain gasoline tax funds. The costs monwealth of Pennsylvania, Nineteenth of operation and maintenance of the Series, are eligible for purchase, dealing expressway system are paid by the in, underwriting, and unlimited holding Florida State Road Department from by National Banks.
monies other than the tolls and other [29 F.R. 2419, Feb. 13, 1964)
revenues of the system. The system is
presently composed of three toll bridges § 1.133 State of Israel Bonds.
and a system of expressways. (a) Request. The Comptroller of the
(2) The proceeds from the sale of Currency has been requested to rule that
these bonds will be used to refinance the the 4 percent Dollar Bonds of the State
Authority's outstanding bonds (Series of of Israel, Second Development Issue, are
1957) and to construct an additional eligible for investment by National bridge and other expressway improveBanks under the provisions of Para
ments. The financial history of the graph Seventh of 12 U.S.C. 24.
Authority over the past six years shows (b) Opinion. Israel's economic de- a steady increase in gross tolls and in velopment and its record of payments
available gasoline tax funds. If funds are sufficent to support a determination
from these sources continue at the curby a bank that the State of Israel is and
rent level, they will be sufficient to cover will be able to perform its obligations.
the debt service requirements of the proSuch a determination must, however, be
posed bond issue through 1972. Engibased to a substantial extent upon esti
neering estimates indicate that with the mates believed to be reliable. For this
construction of the new bridge and other reason and because of the limitations on
improvements, funds available for bond the transfer and marketability the
service will be sufficient to enable the bonds, holdings will be subject to the
Authority to perform all that it underlimitations of $ 1.6(b).
takes to perform in connection with (c) Ruling. It is our conclusion that
these bonds, including all debt service the 4 percent Dollar Bonds of the State
requirements. of Israel, Second Development Issue, are
(c) Ruling. It is our conclusion that eligible for purchase by National Banks
a bank may in these circumstances pruwithin the limitations of Paragraph
dently determine that there is adequate Seventh of 12 U.S.C. 24 and of $ 1.6(b).
evidence that the Authority will be able Accordingly, a bank's holdings of these
to perform all that it undertakes to perbonds and of other securities subject to
form and that the Jacksonville Expressthe limitations of $ 1.6(b) may not ex
way Revenue Bonds, Series of 1963, of ceed in the aggregate five percent of the
the Jacksonville Expressway Authority bank's capital and surplus.
meet the requirements of $ 1.5(a) and
are eligible for investment by National [29 FR. 2419, Feb. 13, 1964)
Banks under the provisions and subject $ 1.134 Jacksonville Expressway Reve- to the 10 percent limitation of paragraph nue Bonds.
Seventh of 12 U.S.C. 24. (a) Request. The Comptroller of the
(29 F.R. 3420, Mar. 17, 1964) Currency has been requested to rule that the $135 million Jacksonville Express
$ 1.135 Bond anticipation notes issued way Revenue Bonds, Series of 1963, of
by the New York State Housing the Jacksonville Expressway Authority
Finance Agency. (F la) are eligible for investment by (a) Request. The Comptroller of the National Banks under the provisions of Currency has been requested to rule on: paragraph Seventh of 12 U.S.C. 24.
the application of the 10 percent limita(b) Opinion. (1) The Jacksonville tion of paragraph Seventh of 12 U.S.C. 24 Expressway Authority, corporate to bond anticipation notes issued by the agency of the State of Florida, was cre- New York State Housing Finance Agency. ated pursuant to a special act of the (b) Opinion. The Agency issues bond Florida Legislature. Its principal pur- anticipation notes and upon the issuance pose is to issue its bonds to finance an of the bonds provides for the funding of
these notes by the deposit of bond pro- sylvania law authorizes School Districts ceeds sufficient to pay the principal of to enter into leases with the Authority the notes in trụst for the sole purpose of and to levy ad valorem real estate taxes paying such principal. The funds de- without limitation as to rate or amount posited are required to be invested in di- to pay the rentals provided for in such rect obligations of the United States, ma- leases. State school subsidies include turing not later than the maturity date reimbursement to School Districts in acof the notes.
cordance with a statutory formula and (c) Ruling. When the proceeds from
approval procedure for a portion of the the Agency bonds are deposited, the notes rental paid to the Authority on approved are not thereafter considered obligations
projects. The bonds will be direct and of the issuer for the purpose of computing
general obligations of the Authority and the 10 percent limitation prescribed by
will be secured equally with all other 12 U.S.C. 24 on the holdings of the in
bonds of the Authority, issued or to be vestment securities of any one obligor.
issued, by the full faith and credit of the (29 F.R. 5314, Apr. 18, 1964)
Authority and by the pledge of rentals $ 1.136 State Public School Building
payable by School Districts on projects Authority of the Commonwealth of
leased from the Authority. Pennsylvania Series N Bonds.
(3) The Supreme Court of Pennsyl
vania has passed favorably on the con(a) Request. The Comptroller of the
stitutionality of the Act creating the Currency has been requested to rule that Authority, has ruled that the current the $25 million School Lease Revenue
revenues of a School District include Bonds, Series N, of the State Public
taxes for the ensuing year, State school School Building Authority of the Com- subsidies and other revenues, and that monwealth of Pennsylvania are eligible the long term commitment of a School for purchase, dealing in, underwriting District to use current revenues to pay and unlimited holding by National annual rentals to the Authority does not Banks under paragraph Seventh of 12
violate the municipal debt limitation of U.S.C. 24.
the Pennsylvania Constitution. (b) Opinion. (1) The State Public (4) The bonds of the Authority are School Building Authority was created the general obligations of a public auin 1947 by an act of the General As
thority of the Commonwealth of Pennsembly of the Commonwealth of Penn- sylvania. The resources of the Authorsylvania, as a body corporate and politic,
ity include the lease rental obligations a public corporation and a governmental
of Pennsylvania School Districts which instrumentality. The purpose of the
possess powers of general property taxaAuthority is the construction, improve- tion and in addition receive from the ment, maintenance, operation, furnish
Commonwealth school subsidy payments ing and equipping of public school build- under an established statutory program. ings for use as a part of the Public
The Commonwealth has thus made apSchool System of the Commonwealth of
propriate provisions and provided adePennsylvania. In order to provide funds
quate resources for the payment of the for this purpose, the Authority has been
bond obligations of its duly constituted authorized to issue its bonds and to
School Building Authority and the lease pledge its revenues and its full faith and
rental obligations of its School Districts. credit for the payment thereof. It is not authorized, however, to pledge the
(c) Ruling. Following the principles credit or the taxing power of the Com
and definitions set forth in § 1.3 (d) and monwealth or any of its school districts.
(e) and applied in rulings on the Virginia (2) The proceeds from the sale of the
Public School Authority and on Authorbonds of the Authority will be used to
ities of the Commonwealth of Pennsylrefund certain outstanding bonds of the
vania ($ $ 1.124, 1.125, 1.129), it is our Authority and for school building proj
conclusion that the School Lease Reyects which are to be leased to School enue Bonds, Series N, of the State Public Districts of the Commonwealth. The
School Building Authority of the Comleases will provide for payment, out of
monwealth of Pennsylvania are eligible the current revenues of the School Dis
for purchase, dealing in, underwriting trict, of annual rentals substantially in
and unlimited holding under paragraph excess of the annual principal and inter
Seventh of 12 U.S.C. 24. est requirements on the bonds. Penn- (29 F.R. 5314, Apr. 18, 1964)
$ 1.137 Delaware River and Bay Author. (4) The Compact between the States ity revenue bonds.
of Delaware and New Jersey by which (a) Request. The Comptroller of the
the Authority was created contains a Currency has been requested to rule that
covenant by which said States agree that the $103,000,000 Revenue Bonds of the
so long as any obligations of the AuthorDelaware River and Bay Authority are
ity remain outstanding and unpaid, eligible for investment by National Banks
neither of said States will authorize any and banks in the District of Columbia
structure or facility adapted for public under the provisions of paragraph Sev
use in crossing the Delaware River or enth of 12 U.S.C. 24.
Bay between the States within pre(b) Opinion (1) The bonds are be
scribed geographic boundaries by any ing issued for the purposes of paying the
person or body other than the Authority balance of the cost of constructing an
unless adequate provision shall be made additional bridge across the Delaware
for the protection of those advancing River immediately adjacent to The Dela
money upon such obligations. ware Memorial Bridge, the cost of con
(5) The First Bridge, which has been structing certain improvements and
in operation since August 16, 1951, is modifications to The Delaware Memorial
a vital link in the heavily traveled route Bridge and the balance of the cost of
between New England and Washington, constructing and acquiring a public ferry
D.C. Net operating revenues enabled the system across Delaware Bay between
Authority to retire by September 1963, Cape May, New Jersey and Lewes,
$39,290,000 of the $48,600,000 of bonds Delaware.
issued to construct and improve the First (2) The subject issue consists of reve
Bridge. The remaining principal innue bonds to be issued by The Delaware
debtedness of $9,310,000 was refunded River and Bay Authority which is a body
by the proceeds of short term notes ispolitic and an agency of the government
sued on September 16, 1963, which are of the States of Delaware and New Jer
due on June 15, 1964. The construction sey created in 1962 by a compact between
of the second structure for The Delaware these two states for the purpose of de
Memorial Bridge is expected to result in veloping the area in both States, border
significant increase in revenues ing the Delaware River and Bay for
through the inducement of a larger traftransportation, port and terminal pur
fic volume on The Delaware Memorial poses. Only the tolls and other revenues
Bridge. It is estimated that revenues to be derived from the sources hereto
from the crossing facilities of the Aufore described are pledged as security for
thority will cover principal and interest the bonds. The bonds do not pledge the
requirements from 1.51 to 1.71 times credit of the States of Delaware or New
during the next ten years and from 1.71 Jersey or of any agency or political sub
to 2.73 times from 1974 to 2003. The division thereof and do not create a debt
earnings records and financial stateor liability of the States of Delaware or
ments of the Authority warrant the conNew Jersey or of any agency or political
clusion that the subject bonds fall within subdivision thereof.
§ 1.5(a) and are therefore, subject to the (3) The subject bonds are to be issued
limitation of $ 1.6(a). However, bankers under and secured by a trust agreement
are reminded that they must determine which provides for fixing and revising
on the basis of their own review whether charges for traffic using the Authority
securities are suitable for their own inFacilities and for the deposit of a suffi
vestment. cient amount of charges, over and above (c) Ruling. It is the conclusion of the amount necessary for the payment
this Office that the above described reveof current expenses, to a special sinking
nue bonds of The Delaware River and fund for debt service of all bonds issued Bay Authority are eligible for investunder the trust agreement. All revenues ment by National Banks and banks in derived from any other crossing facility
the District of Columbia within the limowned and operated by the Authority
itations of paragraph Seventh of 12 will be deposited in the Revenue Fund
U.S.C. 24. and applied in the same manner.
(29 F.R. 5315, Apr. 18, 1964)
§ 1.138 Sabine River Authority, State of maintenance and operation expenses.
Louisiana, General Obligation Bonds, Engineering estimates indicate that with Series 1964.
the construction of the new bridge and (a) Request. The Comptroller of the
other improvements, funds available for
bond service will be sufficient to enable Currency has been requested to rule that the $15,000,000 Sabine River Authority,
the Authority to perform all that it unState of Louisiana, General Obligation
dertakes to perform in connection with Bonds, Series 1964, are eligible for in
these bonds, including all debt service vestment by national banks under para
requirements. graph Seventh of 12 U.S.C. 24.
(3) The Authority is authorized to (b) Opinion. (1) The Authority,
issue and have outstanding bonds and created by an Act of the Louisiana
notes not in excess of $15,000,000 which Legislature and subsequently ratified in
are payable from revenues derived from а. constitutional amendment, is
properties and facilities maintained and
an agency and instrumentality of the State
operated by the Authority or received by of Louisiana. In accordance with the
it from other sources. Consequently,
unless the law is amended to permit purposes of the Authority, the subject
issuance of such bonds and notes in exbonds are to pay part of the $60,000,000 acquisition and construction cost of dam,
cess of said $15,000,000, such issuance of water reservoir, and hydroelectric power
additional bonds would be limited to the generating plant to be constructed by
amount of bonds then retired by the the Authority and the Sabine River Au
Authority. thority of Texas. This joint project is
(c) Ruling. It is our conclusion that a to be undertaken pursuant to a compact
bank may in these circumstances prubetween Louisiana and Texas for the
dently determine that there is adequate purpose of conserving and developing the
evidence that the Authority will be able waters of the Sabine River for benefi
to perform all that it undertakes to percial purposes. In addition to hydroelec
form and that the General Obligation tric generation, the joint project will
Bonds, Series 1964, of the Sabine River create a reservoir of 65-mile length (to
Authority, State of Louisiana meet the be the largest inland body of water in
requirements of $ 1.5(a) and are eligible both Louisiana and Texas) and control,
for investment by national banks under both upstream and downstream of the
the provisions and subject to the 10 perdam, waters on the boundary line be
cent limitation of paragraph Seventh of tween Louisiana and Texas. Water will
12 U.S.C. 24. be provided for industrial and agricul- [29 F.R. 5449, Apr. 23, 1964] tural uses as well as community development and recreational activities.
§ 1.139 State of Israel Bonds, third de(2) The estimated cost of the project
velopment issue. is to be paid with the proceeds of these
(a) Request. The Comptroller of the bonds, the proceeds of $15,000,000 bonds Currency has been requested to rule that to be issued simultaneously by Sabine the 4 percent Dollar Bonds of the State River Authority of Texas, $15,000,000 to of Israel, Third Development Issue, are be contributed by the State of Louisiana, eligible for investment by National and $15,000,000 to be supplied by Sabine Banks under the provisions of paragraph River Authority of Texas from sources Seventh of 12 U.S.C. 24. other than the issuance of bonds. The (b) Opinion. The Third issue is simipower to be supplied by the project is lar to the Second issue, except that the under contract of sale to Gulf States investment characteristics of the bonds Utilities Company, Central Louisiana of the Third issue have been improved by Electric Company, Inc., and Louisiana the undertaking of the State of Israel to Power & Light Company. Under this purchase, under certain circumstances, contract of sale, these companies agree bonds of the Third issue held by banks to be unconditionally obligated without and certain other holders. For this reaqualification to make payments sufficient son, our ruling of February 6, 1964, on to pay joint project bond principal and the eligibility of the Second issue, interest of both Authorities. The balance
§ 1.133,will also be applicable to the Third of Power Payments remaining after pay- issue. ment of such bond principal and interest (c) Ruling. It is our conclusion that is estimated sufficient to pay joint project the 4 percent Dollar Bonds of the State of Israel, Third Development Issue, are Turnpike Authority meet the requireeligible for purchase by National Banks ments of $ 1.5(a) (Investment Securities within the limitations of paragraph Regulation), and are eligible for investSeventh of 12 U.S.C. 24 and of § 1.6(b). ment by National Banks under the proAccordingly, a bank's holdings of these visions and subject to the 10 percent bonds and of other securities subject to limitation of paragraph Seventh of 12 the limitations of $ 1.6 may not exceed U.S.C. 24. in the aggregate five percent of the
[ 29 F.R. 7546, June 12, 1964) bank's capital and surplus. [29 F.R. 7283, June 4, 1964)
§ 1.141 School Refunding Bonds,
Broward County, Florida. $ 1.140 Richmond-Petersburg Turnpike (a) Request. The Comptroller of the Bonds.
Currency has been requested to rule that (a) Request. The Comptroller of the
the $12,350,000 School Refunding Bonds, Currency has been requested to rule that
Series of 1963, of Special Tax School Disthe $69,000,000 3.45 percent and $6,150,
trict Number One, Broward County, 000 412 percent Turnpike Revenue Bonds
Florida, are eligible for purchase, dealing of the Richmond-Petersburg Turnpike in, underwriting and unlimited holding Authority (Virginia) are eligible for in
by National Banks under paragraph vestment by National Banks under par
Seventh of 12 U.S.C. 24. agraph Seventh of 12 U.S.C. 24.
(b) Opinion. (1) Special Tax School (b) Opinion. The Turnpike Author
District Number One, Broward County, ity, a political subdivision of the Com- Florida, is a body politic exercising govmonwealth of Virginia, was created in
ernmental powers relating to the admin1954 by an act of the General Assembly
istration and operation of all public for the purposes of constructing, operat
schools in Broward County and having ing, and maintaining a turnpike between the power to tax through levy and collecand through the cities of Richmond,
tion of a direct annual tax, without limiVirginia, and Petersburg, Virginia. The
tation as to rate and amount, upon all Turnpike, which opened in 1958, is a
taxable property within the school dislimited access, divided highway, 34.7
trict for the purpose of paying principal miles in length, which provides a link
of and interest on bonds which it may in the heavily traveled interstate route
issue. The area of the school district is between the northern cities of the East
coterminous with that of Broward Coast and Florida. There has been a County. steady increase in traffic and revenue
(2) The proceeds from the sale of since its opening. For the 12 months
these bonds will be used on June 1, 1966, ending December 31, 1963, the substantial to refund an outstanding 1956 series. gains in traffic and revenues over calen- Until this refunding takes place, the dar 1962 were evident. Operating ex- proceeds will be invested in direct obpenses for the 12-month period increased ligations of the United States which are moderately, and net revenues were up expected to provide income sufficient for 12.6 percent. Net earnings provided 1.58 debt service requirements. During this times coverage on interest requirements initial period, the proceeds of the 1963 as compared to 1.40 for 1962, and are bonds and the direct obligations of the now sufficient to cover average annual United States in which they are invested debt service. The Authority's bond re- will be the sole security for the 1963 serve fund at the end of 1963 totaled over bonds. Upon retirement of the out$4.5 million, which is well above the $3.2 standing 1956 bonds, the 1963 bonds will million balance at the end of 1962 and is become general obligations of the school to be accumulated to an amount equal district for the payment of which the to two years' interest, or a dollar amount full faith, credit and taxing power of of over $5.3 million.
the school district has been pledged. (c) Ruling. It is our conclusion that The 1963 bonds will thus be supported a bank may in these circumstances at all times by resources sufficient to prudently determine that there is ade- justify full faith and credit. quate evidence that the Authority will (c) Ruling. Following the principles be able to perform all that it undertakes and definitions set forth in § 1.3 (c), (d), to perform and that the Turnpike Rev- and (e), it is our conclusion that the enue Bonds of the Richmond-Petersburg School Refunding Bonds, Series of 1963,