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“cost of service", which term includes

(b) Opinion. (1) The Wisconsin Unidebt service of its bonds, the Authority

versity Building Corporation, a non-stock must notify the State Treasurer of such

corporation whose income is not distribdeficiency and the Commonwealth of

utable to its members, directors, or offiMassachusetts must pay the amount of

cers, was organized in 1925 pursuant to the deficiency to the Authority for pay- the Wisconsin statutes. The Corporament to its creditors and bondholders.

tion's Board of Directors consists of five Deficiency payments by the Common

members from the staff of the Univerwealth which are not covered by appro

sity of Wisconsin and its purpose is to priations of its legislature are to be

acquire, finance and improve real estate, assessed against the towns of Falmouth

and to lease such improved real estate and Nantucket, and the County of

to the University of Wisconsin. Dukes in proportions of 10, 40 and 50

(2) The State of Wisconsin, acting percent, respectively. The amount assessed against the County of Dukes is in

through the Regents of the University turn assessed against the towns in the

of Wisconsin, a body corporate and inCounty. The amounts assessed against

strumentality of the State created for all the towns for reimbursement to the

the purpose of providing higher educaCommonwealth are raised through the

tion, intends to employ the Corporation exercise of the general power of prop

as a means of constructing and financing erty taxation which they have under

a new dormitory at the University of applicable laws.

Wisconsin. The Corporation will issue (3) The towns of Falmouth and Nan

$5,300,000 of bonds to finance the contucket, and the various towns of the

struction of this dormitory to be leased County of Dukes, which are political

to the Regents. The payment of princisubdivisions of the Commonwealth of

pal and interest on these obligations is Massachusetts, possessing resources sufi

secured by a pledge of the net lease cient to justify faith and credit, have, as

rental payments paid by the Regents, as authorized by the laws of Massachusetts,

lessee, which will be sufficient to satisfy pledged their full faith and credit to

all debt service requirements on the make payments to the Authority of

bonds. Rental payments due the Coramounts which will be sufficient to pro

poration from the Regents are to be paid vide for all required payments in connec

from monies appropriated by the State tion with these bonds.

which will be liable for accrued rentals, (c) Ruling. It is the conclusion of

and any default under any lease or subthis Office that the $150,000 Steamship

lease. Bonds dated March 1, 1961, and similar

(3) The State of Wisconsin, possessing bonds of the Woods Hole, Martha's Vine

resources sufficient to justify faith and yard, and Nantucket Steamship Au

credit, has as authorized by the laws thority are "public securities” as set

of Wisconsin thus pledged its full faith forth in $ 1.3(c), issued pursuant to 12

and credit to make payments to the U.S.C. 24 Paragraph Seventh, and are

Corporation, through the Regents, of therefore eligible for purchase, dealing

amounts sufficient to provide for all rein, underwriting and unlimited holding

quired payments in connection with by National Banks.

these bonds. The Dormitory Bonds of

1962 are, therefore, general obligations [29 F.R. 13568, Oct. 2, 1964)

of a state or political subdivision thereof

within the meaning of $ 1.3 (d) and (e). § 1.150 Dormitory Bonds of 1962 of

the Wisconsin University Building (c) Ruling. It is the conclusion of Corporation.

this Office that the $5,300,000 Dormitory (a) Request. The Comptroller of the

Bonds of 1962 of the Wisconsin University Currency has been requested to rule on

Building Corporation are “public securithe eligibility of the $5,300,000 Dormitory

ties” as set forth in § 1.3(c), issued purBonds of 1962 of the Wisconsin Uni

suant to 12 U.S.C. 24, Paragraph Seventh, versity Building Corporation for dealing

and are therefore eligible for dealing in in, underwriting, and unlimited holding

underwriting, and unlimited holding by by National Banks under the provisions

National Banks. of Paragraph Seventh of 12 U.S.C. 24. [29 F.R. 13569, Oct. 2, 1964)

sums sufficient to pay the rentals on duly authorized projects and it has also specifically provided that it shall be liable and may be sued on contract for accrued rentals and for any other default under any such lease.

(3) The State of Wisco) possessing resources sufficient to justify faith and credit, has as authorized by the laws of Wisconsin thus pledged its full faith and credit to make payments to the corporation of amounts sufficient to provide for all required payments in connection with these bonds. These various issues of bonds are, therefore, general obligations of a State or political subdivision thereof within the meaning of $ 1.3 (d) and (e).

(c) Ruling. It is the conclusion of this Office that the various issues of bonds of the Wisconsin State Agencies Building Corporation, as set forth above, are “public securities” as defined in g 1.3 (c), issued pursuant to Paragraph Seventh of 12 U.S.C. 24, and are therefore eligible for dealing in, underwriting, and unlimited holding by National Banks. [29 F.R. 13569, Oct. 2, 1964)

§ 1.151 Wisconsin State Agencies Build

ing Corporation. (a) Request. The Comptroller of the Currency has been requested to rule that the $8,325,000 Educational Facilities Building Bonds, Series A of 1958; the $10,685,000 Educational Facilities Building Bonds, Series A of 1959; the $9,775,000 Educational Facilities Building Bonds, Series A of 1961; the $9,500,000 Welfare Department Facilities Building Bonds, Series A of 1961; the $12,185,000 Educational Facilities Building Bonds, Series A of 1962; and subsequent series of Bonds to be hereafter issued and secured under the statutes, or under statutes containing substantially the same relevant and material provisions as the statutes, pursuant to which the foregoing Bonds were issued by the Wisconsin State Agencies Building Corporation, as being eligible for dealing in, underwriting and unlimited holding by National Banks pursuant to the provisions of Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion (1) The State of Wisconsin has provided for the financing of the State building program by authorizing The Regents of the University of Wisconsin, The Board of Regents of State Colleges and the Department of Public Welfare to enter into long-term lease rental agreements with a nonprofit corporation for

the

construction and financing of buildings and other improvements related to activities under their control.

(2) The Wisconsin State Agency Building Corporation is a nonprofit corporation organized under the provisions of the Wisconsin Nonstock Corporation Law for the purpose of constructing buildings and other improvements for State university and State college purposes as well as for general State purposes. The proceeds of the bonds issued and to be issued by the Corporation are for the construction of facilities for leasing to the State university, the State colleges or the Department of Public Welfare, respectively, on long-term net leases. Rental payments under the leases are in an amount determined to be sufficient to pay the principal of and interest on the bonds issued in connection with the project. While funds from various sources may be pledged for the payment of the lease rentals, the State has provided standing appropriations of

§ 1.152 Chicago Transit Authority

Equipment Trust Certificates. (a) Request. The Comptroller of the Currency has been requested to rule that the outstanding Chicago Transit Authority Equipment Trust Certificates, through Series 11, are eligible for investment by National Banks within the limitations of Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The Chicago Transit Authority is an independent public agency established by a special Act of the Illinois Legislature in 1945 to acquire, unify, and modernize all major mass transit facilities serving Chicago and its major suburbs. The Equipment Trust Certificates of the Authority are secured by title to standard rolling stock held by the Harris Trust and Savings Bank, as trustee, and leased to the Authority. The lease rental payments of the Authority are used by the trustee to pay interest and principal of the Certificates, all of which are payable on parity.

(2) These Trust Certificates constitute a binding obligation of the Chicago Transit Authority payable solely out of and secured by a pledge of revenues derived by its transportation system, subject, however, to the debt service require

ments of Revenue Bonds issued by the tificates of the Hospital Authority of Authority. The Authority is required by Cobb County, Georgia issued on June 1, statute and under the terms of certain 1964 are eligible for dealing in, underTrust Agreements securing its Revenue writing and unlimited holding by NaBonds and Equipment Trust Certificates, tional Banks pursuant to Paragraph to adjust the rates so as to always Seventh of 12 U.S.C. 24. meet, from earnings, all of its financial (b) Opinion. (1) The Hospital Aurequirements.

thority of Cobb County, created pursuant (3) In 1947 the Authority began op- to the Hospital Authorities Law of the erating its mass transit system, and dur- State of Georgia, as a public corporate ing each of the next sixteen years it was body for the purpose of constructing and able to cover the debt service require- financing a hospital for the County, has ment of its Revenue Bonds. Since July issued Certificates the proceeds from 1950, when the Authority issued its first which are being used to finance the conEquipment Trust Certificates, all inter- struction of the hospital and related est has been paid promptly when due, facilities. These Certificates are payand all principal retired on or before able from the revenues from the Auschedule. Retirement of these Certifi- thority's contract with Cobb County cates as of December 31, 1963, was equiv- made pursuant to the “Hospital Aualent to 77.29 percent of the $49,485,000 thorities Law” and funds derived from debt incurred. A comparison of the any other source. Under this contract, Authority's demonstrated cash produc- the County has agreed to pay for the ing ability during the last five years period of the outstanding Certificates, with all future debt service require- ending in 1985, the Authority annually ments for outstanding Certificates and a definite amount which is sufficient to Bonds, during the year 1964 through pay debt service on the Certificates. The 1976, when all Trust Certificates are County has also agreed to pay monthly scheduled to mature, indicates that its the hospital's operation and mainteearning at the current level will cover the nance costs which it has not earned maximum debt service requirements of

itself. In order to make the payments any year through 1976, by 1.92 times. under this contract the County is auThe depreciated value of the equipment thorized to levy an ad valorem tax of up securing the outstanding Certificates to five mills, and in certain circumstances during their life greatly exceeds the an additional two mills may be levied, amount of the Certificates.

although it is anticipated that one mill (c) Ruling. It is the conclusion of this will be sufficient to cover the demands Office that a National Bank may in these

of the contract. circumstances at this time prudently (2) Cobb County, a political subdividetermine that there is adequate evidence

sion of the State of Georgia possessing that the Authority will be able to perform resources sufficient to justify faith and all that it undertakes to perform and

credit, has, as authorized by the laws of that the outstanding Equipment Trust

Georgia, pledged its full faith and credit Certificates, through Series 11, of the to make payments to the Authority of Chicago Transit Authority meet the re- amounts which will be sufficient to proquirement of $ 1.5(a) and are therefore

vide for all required payments in coneligible for investment by National Banks

nection with these bonds. under the provisions and subject to the

(c) Ruling. It is the conclusion of this 10 percent limitation of Paragraph

Office that the $1,850,000, 334 percent Seventh of 12 U.S.C. 24.

Revenue Certificates of the Hospital Au[29 F.R. 13570, Oct. 2, 1964)

thority of Cobb County are “public

securities” as set forth in § 1.3(c), issued § 1.153 Hospital authority of Cobb

pursuant to Paragraph Seventh of 12 County, Georgia.

U.S.C. 24, and are therefore eligible for (a) Request. The Comptroller of the purchase, dealing in, underwriting, and Currency has been requested to rule that

unlimited holding by National Banks. the $1,850,000, 334 percent Revenue Cer- (29 F.R. 13869, Oct. 8, 1964)

Housing Finance Agency of the State of New York, State University Construction Bonds, 1964 Series A, meet the requirements of § 1.5(a) and, therefore, are eligible for investment by National Banks under the provisions and subject to the 10 percent limitation of paragraph Seventh of 12 U.S.C. 24. [29 F.R. 13927, Oct. 9, 1964)

a

§ 1.154 New York State Housing Fi

nance Agency. (a) Request. The Comptroller of the Currency has been requested to rule on the eligibility of the $62,765,000 Housing Finance Agency of the State of New York, State University Construction Bonds, 1963 Series A, and the $93,100,000 Housing Finance Agency of the State of New York, State University Construction Bonds, 1964 Series A, for investment by National Banks under the provisions of paragraph seventh, 12 U.S.C. 24.

(b) Opinion. (1) The New York State Housing Finance Agency, a body corporate and a public instrumentality of the State of New York, was created in 1960 by an act of New York State Legislature to encourage the investment of private capital in academic buildings and other facilities at the State-operated institutions and statutory and contract colleges under the jurisdiction of the University of the State of New York and to assure their timely construction, acquisition, reconstruction, rehabilitation, and improvement. The subject bonds were issued to finance the construction, acquisition reconstruction, rehabilitation and improvement of additional facilities of the University of the State of New York to meet the needs of a growing enrollment.

(2) The 1963 Series A bonds mature serially from May 1964 to May 1995 and the 1964 Series A mature serially from November 1964 until November 1995. They are payable from revenues derived from a lease of the facilities by the Agency to the University of the State of New York, and they are secured by a pledge of these net lease rental payments and all funds and accounts established for their payment. The lease agreement provides for annual rentals sufficient to cover debt service requirements and administrative expenses. The need for these facilities appears to be great, and enrollment and income projections of the University appear sufficient to provide necessary funds.

(c) Ruling. It is the conclusion of this Office that a national bank may in these circumstances determine that there is adequate evidence that the Agency will be able to perform all that it undertakes to perform and that the $62,965,000 Housing Finance Agency of the State of New York, State University Construction Bonds, 1963 Series A, and the $93,100,000

$ 1.155 Federal National Mortgage As

sociation Participation Certificates. (a) Request. The Comptroller of the Currency has been requested to rule that the $300 million participation certificates to be issued by the Federal National Mortgage Association (FNMA) in fiduciary capacity on or about November 2, 1964, are eligible for dealing in, underwriting and unlimited holding by National Banks pursuant to the provisions of Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion (1) P.L. 88–560, approved September 2, 1964, amended section 302(c) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(c)) to authorize the FNMA to act in a fiduciary and representative capacity and, in accord with a related trust indenture, to issue participations or other instruments as might be appropriate for financing purposes. The FNMA is also authorized, in its corporate capacity, to obligate itself for the timely payment of interest and principal by means of a guaranty of such participations or other instruments as it may issue in a fiduciary capacity.

(2) On or about November 2, 1964, the FNMA, as trustee, expects to issue $300 million of certificates representing beneficial interests (participations) in the payments from a pool of mortgages made subject to the trust. The trustors creating the trust are the FNMA and the Administrator of Veterans Affairs. The beneficiaries are the holders of outstanding certificates as well as the trustors, but certificate holders, having equal and proportionate benefit one with another, will enjoy complete preference, priority, and distinction over the trustors as beneficiaries or otherwise. The corpus of the trust will be comprised solely of payments from mortgages owned and held by the trustors but made subject to trust, unless there be a default either actual or imminent in the payment of outstanding certificates, in which event the mortgages as entireties will pass into

the corpus of the trust and be under the control of the trustee for protection of certificate holders. Proceeds from sale of certificates are to be applied to reduce the use of funds borrowed or otherwise obtained from the United States Treasury.

(3) Under the trust indenture, the FNMA, as trustee, is empowered to issue certificates to the public, provided that the aggregate amount of certificates outstanding at any one time may not exceed 80 percent of the aggregate of the outstanding principal balances of the mortgages and other assets subject to the trust. Payment of all certificates, as to both interest and principal, is guaranteed by the FNMA in its corporate capacity.

(4) An amendment to Paragraph Seventh of 12 U.S.C. 24 (P.L. 88–560, approved September 2, 1964) provided that the limitations and restrictions contained therein as to dealing in, underwriting and purchasing for its own account investment securities by a national bank shall not apply to “obligations participations, or other instruments of or issued by the Federal National Mortgage Association.

(c) Ruling. It is the conclusion of this Office that the $300 million certificates of participation to be issued by the FNMA in a fiduciary capacity are “public securities” as defined in $ 1.3(c) and therefore eligible for dealing in, underwriting, and unlimited holding by a National Bank under Paragraph Seventh of 12 U.S.C. 24. [29 F.R. 14221, Oct. 16, 1964]

pursuant to the Consolidated Farmers Home Administration Act of 1961 (7 U.S.C. 1928). Under this Act, "any contract of insurance executed by the Secretary [of Agriculture] under this subchapter shall be an obligation supported by the full faith and credit of the United States and incontestable except for fraud or misrepresentation of which the holder has actual knowledge."

(2) Payment of principal and interest is made by the City of Wheeling to the Agricultural Department, which deducts an amount equal to one percent of the outstanding principal for administrative expenses, and pays the remaining amount to the bondholders. If the City defaults on any of its payments to the Department, the Department must nevertheless pay the bondholders. Therefore, since the payment of principal and interest on these bonds is made by the United States Government and supported by its full faith and credit, they are obligations of the United States Government.

(c) Ruling. It is the conclusion of this Office that the $70,000 Waterworks Revenue Bonds of the City of Wheeling, Missouri and similar bonds insured under the same legislation are “public securities” as set forth in § 1.3(c), issued pursuant to Paragraph Seventh of 12 U.S.C. 24, and are therefore eligible for dealing in, underwriting and unlimited holding by National Banks. [29 F.R. 14435, Oct. 21, 1964) § 1.157 Elkhart High School Building

Corporation. (a) Request. The Comptroller of the Currency has been requested to rule that the $4,675,000 First Mortgage Bonds issued by the Elkhart High School Building Corporation are eligible for dealing in, unaerwriting and unlimited holding by National Banks pursuant to the provisions of Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The Elkhart High School Building Corporation, a body corporate and a public instrumentality of the State of Indiana, was created pursuant to the School Building Corporation Act which authorizes school districts, including school cities, to enter into long-term lease rental agreements with nonprofit building corporations for the purpose of financing the construction of school buildings. The subject bonds were issued for the purpose of ac

$ 1.156 Water Revenue Bonds of the

City of Wheeling, Missouri. (a) Request. The Comptroller of the Currency has been requested to rule that the Water Revenue Bonds of the City of Wheeling, Missouri, and similar bonds insured under the same legislation and supported by the same payment and security provisions are eligible for dealing in, underwriting and unlimited holding by National Banks pursuant to Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The proceeds of this bond issue will be used to construct a municipal water works system for the City of Wheeling, serving approximately 100 families. The payment of principal and interest on these bonds is insured by the United States Government, acting

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