chase, dealing in, underwriting and unlimited holding by National Banks pursuant to paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The Capital Construction and Improvement Commission is a body politic and corporate created by an act of the Louisiana State Legislature. The Commission is authorized and empowered, inter alia, to borrow money for the purpose of obtaining funds for the construction and improvement of the State highway system and to issue bonds not in excess of $140 million to evidence such borrowing.

(2) The bonds will be payable solely from revenue derived from the Louisiana sales tax which has been irrevocably and irrepealably pledged and dedicated (subject to 7 percent of such revenues pledged to certain obligations of the Louisiana Fiscal Authority) to the payment of the bonds and which will be levied and collected so long as any of the Commission's obligations are outstanding. On the basis of current revenue levels, as well as the Commission's projections, sales tax revenues will be sufficient to exceed by 10 times the maximum annual bond interest and principal payments of the Commission, assuming the maximum permissible amount of bonds are issued, and of the Louisiana Fiscal Authority.

(3) The State of Louisiana has made adequate provision and is obligated for payments of amounts which will be sufficient to provide for all required payments in connection with the bonds. These bonds are thus general obligations of a state or political subdivision thereof within the meaning of § 1.3 (d) and (e) of the Investment Securities Regulation (12 CFR 1.3 (d) and (e)).

(c) Ruling. It is, therefore, our conclusion that the $15 million Public Improvement Bonds issued by the Capital Construction and Improvement Commission of the State of Louisiana are public securities as defined in § 1.3 (c), (d), and (e) of the Investment Securities Regulation (12 CFR 1.3 (c), (d), and (e)) issued pursuant to paragraph Seventh of 12 U.S.C. 24 and are, therefore, eligible for purchase, dealing in, underwriting and unlimited holding by National Banks. [31 F.R. 11641, Sept. 3, 1966]

§ 1.175 Florida State Board of Education Higher Education Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule that the $25,000,000 Florida State Board of Education Higher Education Bonds, Series B, are eligible for purchase, dealing in, underwriting, and unlimited holding by national banks pursuant to paragraph Seventh of 12 U.S.C. 84.

(b) Opinion. (1) The Florida State Board of Education is a body corporate, created and existing under the Constitution of the State of Florida, and is composed of the Governor, Secretary of State, Attorney General, State Treasurer, and State Superintendent of Public Instruction. The Board is empowered by the Constitution, inter alia, to issue bonds to finance the cost of capital outlay projects for various educational facilities of the State and to pledge, for the payment of such bonds' principal and interest, all or any part of the revenues from the State's Gross Receipts Taxes. Under this authority the Board has previously issued $75,000,000 of Series A bonds and $25,000,000 of Series B bonds.

(2) The Board has covenanted, as authorized by the Florida Constitution, that the bonds are solely payable from, and secured by a first lien on, and the irrevocable pledge of, the revenues derived from the Gross Receipts Taxes. These taxes are levied, at a rate of 11⁄2 percent, on the gross receipts of the sales of electricity, natural or manufactured gas, for use of telephones, and for the sending of telegrams and telegraph messages, and have been in effect at the same rate since 1931. As provided in the Constitution, the Legislature may not reduce the rate of tax presently in effect, or eliminate, exempt or remove any of the entities now subject to tax. In addition, the Constitution prohibits the issuance of bonds requiring a debt service in an amount exceeding 75 percent of the average annual amount of revenues derived from the Gross Receipts Taxes determined in accordance with a prescribed formula.

(3) The State of Florida has made adequate provision and is obligated for payments of amounts which will be suffi

cient to provide for all required payments in connection with the bonds. These bonds are thus general obligations of a State or political subdivision thereof within the meaning of section 1.3 (d) and (e) of the Investment Securities Regulation (12 CFR 1.3 (d) and (e)).

(c) Ruling. It is, therefore, our conclusion that the $25,000,000 Florida State Board of Education Higher Education Bonds, Series B, are public securities as defined in section 1.3 (c), (d), and (e) of the Investment Securities Regulation (12 CFR 1.3 (c), (d), and (e)) issued pursuant to paragraph Seventh of 12 U.S.C. 24 and are, therefore, eligible for purchase, dealing in, underwriting and unlimited holding by national banks. [31 F.R. 12431, Sept. 20, 1966]

§ 1.176

Export-Import Bank Portfolio Fund Participation Certificates.

(a) Request. The Comptroller of the Currency has been requested to rule that participation certificates in Export-Import Bank of Washington Portfolio Funds are public securities eligible for purchase, dealing in, and unlimited holding by national banks pursuant to paragraph seven of 12 U.S.C. 24.

(b) Opinion. (1) The Export-Import Bank is authorized by law to issue participation certificates representing interests in Portfolio Funds, each fund consisting of a pool of maturities falling due over a number of years. The certificates carry the unconditional guaranty of the Export-Import Bank as to payments of principal and interest.

(2) In an opinion of September 30, 1966, addressed to the Secretary of the Treasury, the Attorney General of the United States ruled that guaranties contained in Export-Import Bank's participation certificates are valid general obligations of the United States.

(c) Ruling. It is accordingly our conclusion that participation certificates in Export-Import Bank of Washington Portfolio Funds are public securities as defined in § 1.3(c) of the Investment Securities Regulation (12 CFR 1.3(c)) issued pursuant to Paragraph Seventh of 12 U.S.C. 24 and are, therefore, eligible for purchase, dealing in, and unlimited holding by national banks.

[31 F.R. 14629, Nov. 17, 1966]

§ 1.177

State of Ohio Highway Improvement Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule that the $75,000,000 State of Ohio Highway Improvement Bonds, Series D, are general obligations of the State of Ohio and are eligible for purchase, dealing in, underwriting and unlimited holding under paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. The State of Ohio, which possesses general powers of taxation, has by constitutional amendment authorized the issuance of these bonds and has pledged its faith and credit for their payment. The constitutional amendment also appropriates in each year a sufficient amount of monies, derived from fees, excises or license taxes relating to motor vehicles and motor vehicle fuels, for the payment of the interest and principal coming due in that year. The constitutional appropriation of specified taxes, however, in no way limits the unconditional pledge of the faith and credit of the State.

(c) Ruling. It is our conclusion that the State of Ohio Highway Improvement Bonds, Series D, are general obligations of the State of Ohio and are eligible for purchase, dealing in, underwriting, and unlimited holding under paragraph Seventh of 12 U.S.C. 24. [32 F.R. 408, Jan. 14, 1967]

§ 1.178 Memphis TVA Lease Rental Revenue Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule that the $103 million City of Memphis, Tenn., TVA Lease Rental Revenue Bonds are eligible for purchase, dealing in, and holding by national banks under paragraph seven of 12 U.S.C. 24.

(b) Opinion. (1) Paragraph Seven of 12 U.S.C. 24 provides in part that a national bank may purchase, deal in, and underwrite bonds, notes or other obligations issued by the Tennessee Valley Authority (TVA), but may not hold at any one time such obligations in a total amount in excess of 10 percent of the bank's capital and surplus.

(2) Under the lease rental agreement with the city of Memphis for certain electric generating and transmission facilities, TVA is obligated to make semi

annual payments to the city in amounts exceeding the maximum semiannual principal and interest payments on the bonds. The obligation to make such payments is absolute and unconditional. Pursuant to the bond resolution, the city is required to deposit all lease rental payments into a bond debt service fund. The city of Memphis obligations are thus supported indirectly by an unconditional promise of TVA, an instrumentality of the United States, whose obligations are specifically made eligible by statute for dealing in, underwriting and purchase, within the 10 percent limitation, by national banks.

(c) Ruling. It is our conclusion, therefore, that the City of Memphis, Tenn., TVA Lease Rental Revenue Bonds are eligible for purchase, dealing in and holding by national banks, subject to the 10 percent limitation of paragraph seven of 12 U.S.C. 24.

[32 F.R. 720, Jan. 21, 1967]

§ 1.179

General State Authority of the Commonwealth of Pennsylvania; State Highway and Bridge Authority of the Commonwealth of Pennsylvania.

(a) Request. The Comptroller of the Currency has been requested to rule that 12 CFR 1.125 and 1.129 relating, respectively, to the bonds of the General State Authority of the Commonwealth of Pennsylvania and the bonds of the State Highway and Bridge Authority of the Commonwealth of Pennsylvania are applicable with respect to outstanding and future bond issues of the two authorities.

(b) Opinion. (1) Both the General State Authority and the State Highway and Bridge Authority are public corporations created by Acts of the Pennsylvania Legislature for the purpose of constructing public improvements for lease to the Commonwealth of Pennsylvania. Both Authorities are empowered to issue bonds to finance the costs of their respective projects and to pledge their revenues, as well as their faith and credit, for the payment of bond principal and interest.

(2) The revenues of the General State Authority are derived from lease rental payments received from the Commonwealth urder unconditional net leases. Such revenues are set at an amount sufficient to meet the Authority's interest and principal payments as well as other necessary expenses. The revenues of the Highway and Bridge Authority are de

rived not only from lease rental payments received from the Commonwealth under similar terms, but also from an appropriation from the Motor License Fund, as provided in the Act which created the Authority. Such revenues are also set at an amount sufficient to meet the Authority's interest and principal payments as well as other necessary expenses. The revenues derived by each Authority from the lease rental payments are pledged to the payment of each Authority's bond interest and principal.

(3) The Commonwealth, which possesses general powers of taxation, has covenanted to pay its lease rental obligations out of revenues of current and successive years that are not restricted to any particular source. By so covenanting, the Commonwealth has committed its faith and credit to the payment of its lease rental obligations. The Commonwealth has thus unconditionally promised to pay, indirectly, an aggregate amount which will suffice to discharge, when due, all interest on and principal of each Authority's obligations.

(c) Ruling. It is our conclusion, therefore, that the bonds of the General State Authority of the Commonwealth of Pennsylvania and the bonds of the State Highway and Bridge Authority of the Commonwealth of Pennsylvania are general obligations of the Commonwealth of Pennsylvania and are eligible for purchase, dealing in, underwriting and unlimited holding by national banks under paragraph Seventh of 12 U.S.C. 24.

[32 F.R. 721, Jan. 21, 1967]

§ 1.180 Orange County Juvenile Hall Lease Corporation Leasehold Mortgage Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule that the $2,850,000 Leasehold Mortgage Bonds of the Orange County Juvenile Hall Lease Corporation are eligible for purchase, dealing in, underwriting, and unlimited holding by national banks under paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The Orange County Juvenile Hall Lease Corporation is a publicly owned entity organized as a nonprofit corporation under laws of the State of California. The Corporation was formed for the purpose of, and is empowered to, finance construction of additions and improvements to the Orange County Juvenile Hall. The Cor

§ 1.181

New York State Housing Finance Agency.

(a) Request. The Comptroller of the Currency has been requested to consider whether the ruling of October 28, 1965 (12 CFR 1.166), that the General Housing Loan Bonds of the New York State Housing Finance Agency are eligible for underwriting, is now applicable to outstanding and future issues of the Agency's General Housing Loan Bonds, Mental Hygiene Improvement Bonds, and State University Construction Bonds.

(b) Opinion. The State of New York. with respect to each issue, has required the maintenance of a reserve fund sufficient to meet the next succeeding year's annual requirements for bond interest and principal payments, and has provided that any deficiency in such reserve fund shall be apportioned and paid from the general funds of the State of New York. The State, which possesses general powers of taxation, has thus committed its faith and credit in support of these bonds.

(c) Ruling. It is our conclusion, therefore, that the General Housing Loan Bonds, Mental Hygiene Improvement Bonds, and State University Construction Bonds of the New York State Housing Finance Agency are general obligations of a State or a political subdivision thereof under paragraph Seventh of 12 U.S.C. 24 and, accordingly, are

eligible for purchase, dealing in, underwriting and unlimited holding by national banks.

[32 F.R. 3687, Mar. 3, 1967]

§ 1.182 Orange County-Westminster Civic Center Authority City Building Facilities Revenue Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule that the $2,350,000 Orange County-Westminster Civic Center Authority City Building Facilities Revenue Bonds are eligible for purchase, dealing in, underwriting, and unlimited holding by national banks under paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The Orange CountyWestminster Civic Center Authority is a public entity created pursuant to the laws of the State of California by an agreement between the City of Westminster and the County of Orange. Under this agreement, and as authorized by California law, the Authority is empowered to acquire a site for, construct and lease public buildings, and to issue bonds to finance such projects. The Authority is issuing these bonds for the purpose of constructing public buildings which will be leased to the City.

(2) Under a lease rental agreement between the City and the Authority, the City has unconditionally promised to pay annual rentals to the Authority in an amount sufficient to meet annual interest and principal payments on these bonds, as well as other necessary expenses. The City, which possesses general powers of taxation, has thus committed its faith and credit in support of the bonds.

(c) Ruling. It is Our conclusion, therefore, that the bonds of the Orange County-Westminster Civic Center Authority are general obligations of a State or a political subdivision thereof under paragraph Seventh of 12 U.S.C. 24 and, accordingly, are eligible for purchase, dealing in, underwriting, and unlimited holding by national banks.

[32 F.R. 3687, Mar. 3, 1967]

§ 1.183 Indiana School Building Corporations.

(a) Request. The Comptroller of the Currency has been requested to consider whether the ruling of October 14, 1964 (§ 1.157), relating to the eligibility

for purchase, dealing in, underwriting, and unlimited holding of the First Mortgage Bonds of the Elkhart High School Building Corp. is now applicable to such bonds and similar Indiana school building corporation bonds.

(b) Opinion. (1) The State of Indiana has by statute authorized school corporations, which are governmental entities possessing general powers of taxation including property taxation, to enter into long-term lease rental agreements with nonprofit school building corporations for the purpose of financing the construction of school buildings. The school building corporations are formed, in accordance with the requirements of the statute, solely for the purpose of providing school facilities and are thus instrumentalities chosen by the State for this purpose.

(2) Bonds issued by the building corporations are paid from lease rental payments made by the school corporations. Indiana law requires the school corporations to levy a tax sufficient to produce in each year the funds necessary to pay the agreed lease rental. These payments, which are required by law to be used only to pay the principal and interest on the bonds as they become due and for related expenses, are in an amount sufficient for such purposes. The bonds are thus appropriately supported by the promise of a governmental entity possessing general powers of taxation.

(c) Ruling. It is our conclusion, therefore, that bonds issued by Indiana school building corporations in accordance with the provisions of the Indiana school law are general obligations of a State or a political subdivision thereof under paragraph Seventh of 12 U.S.C 24, and accordingly, eligible for purchase, dealing in, underwriting, and unlimited holding by national banks.

[32 F.R. 4342, Mar. 22, 1967]

(b) Opinion. (1) The Tennessee State School Bond Authority, a corporate governmental agency and instrumentality of the State of Tennessee, was created in 1965 by an Act of the General Assembly of the State of Tennessee to finance higher educational facilities for the University of Tennessee and the State Universities of Tennessee. The Authority is issuing the present bonds to accomplish that purpose. The facilities for each institution will be constructed by its governing body, either the Board of Trustees of the University of Tennessee or the State Board of Education for the State Universities of Tennessee. Each Board has unconditionally promised to pay to the Authority annual financing charges sufficient to meet the Authority's debt service obligations on the bonds.

(2) It is expected that fees, rentals, and other charges will provide sufficient funds for the payment of the annual financing charges. The Act creating the Authority, however, specifically authorizes each Board, in connection with its agreement with the Authority, to deduct from amounts appropriated by the General Assembly for the operation and maintenance of the institution for which the facility is constructed such amount or amounts as may be required to make up any deficiency. Each Board has agreed with the Authority that it will make such deduction.

(3) The Act also contains a pledge and agreement by the State with the holders of bonds issued by the Authority that the State will not limit or alter rights vested in the Authority by the Act to fulfill the terms of any agreements made with the holders, or in any way impair the rights and remedies of the holders until the bonds and certain related obligations are fully met and discharged. The State of Tennessee, which possesses general powers of taxation, has thus committed its faith and credit in support of the bonds.

(c) Ruling. It is our conclusion, therefore, that the $43,365,000 Tennessee State School Bond Authority, Higher Educational Facilities Bonds, 1967, are general obligations of a State under paragraph Seventh of 12 U.S.C. 24 and accordingly, are eligible for purchase, dealing in, underwriting, and unlimited holding by national banks. (Comptroller's letter dated Apr. 25, 1967.) [32 F.R. 9062, June 27, 1967]