62.62 Appropriation bonds for payment of employee retirement system liability in 1st class cities.

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(1)Definitions. In this section:

(a)“Appropriation bond” means a bond issued by a city to evidence its obligation to repay a certain amount of borrowed money that is payable from all of the following:

1. Moneys annually appropriated by law for debt service due with respect to such appropriation bond in that year.

2. Proceeds of the sale of such appropriation bonds.

3. Payments received for that purpose under agreements and ancillary arrangements described in s. 62.621 .

4. Investment earnings on amounts in subds. 1. to 3.

(b)“Bond” means any bond, note, or other obligation of a city issued under this section.

(c)“City” means a 1st class city.

(d)“Common Council” means the common council of a city.

(e)“Refunding bond” means an appropriation bond issued to fund or refund all or any part of one or more outstanding pension-related bonds.

(1m)Legislative finding and determination. Recognizing that a city, by prepaying part or all of the city’s unfunded prior service liability with respect to an employee retirement system of the city, may reduce its costs and better ensure the timely and full payment of retirement benefits to participants and their beneficiaries under the employee retirement system, the legislature finds and determines that it is in the public interest for the city to issue appropriation bonds to obtain proceeds to pay its unfunded prior service liability.

(2)Authorization of appropriation bonds.

(a)A common council shall have all powers necessary and convenient to carry out its duties, and to exercise its authority, under this section.

(b)Subject to pars.

(c)and

(d), a common council may issue appropriation bonds under this section to pay all or any part of the city’s unfunded prior service liability with respect to an employee retirement system of the city, or to fund or refund outstanding appropriation bonds issued under this section. A city may use proceeds of appropriation bonds to pay issuance or administrative expenses, to make deposits to reserve funds, to pay accrued or funded interest, to pay the costs of credit enhancement, to make payments under other agreements entered into under s. 62.621 , or to make deposits to stabilization funds established under s. 62.621 .

(c)Other than refunding bonds issued under sub.

(6), all bonds must be issued simultaneously.

1. Before a city may issue appropriation bonds under par.

(b), its common council shall enact an ordinance that establishes a 5-year strategic and financial plan related to the payment of all or any part of the city’s unfunded prior service liability with respect to an employee retirement system of the city. The strategic and financial plan shall provide that future annual pension liabilities are funded on a current basis. The strategic and financial plan shall contain quantifiable benchmarks to measure compliance with the plan. The common council shall make a determination that the ordinance meets the requirements of this subdivision and, absent manifest error, the common council’s determination shall be conclusive. The common council shall submit to the governor and to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172

(2), a copy of the strategic and financial plan.

2. Annually, the city shall submit to the governor, the department of revenue, and the department of administration, and to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172

(2), a report that includes all of the following:

a. The city’s progress in meeting the benchmarks in the strategic and financial plan.

b. Any proposed modifications to the plan.

c. The status of any stabilization fund that is established under s. 62.622

(3).

d. The most current actuarial report related to the city’s employee retirement system.

e. The amount, if any, by which the city’s contributions to the employee retirement system for the prior year is less than the normal cost contribution for that year as specified in the initial actuarial report for the city’s employee retirement system for that year.

f. The amount that the actuary determines is the city’s required contribution to the employee retirement system for that year.

(2m)Penalty for inadequate contribution. If the city’s contributions to the employee retirement system for the prior year is less than the lower of the required contribution for that year, as described in sub.

(d)2. f. , or the normal cost for that year, the department of revenue shall reduce and withhold the amount of the shared revenue payments to the city under subch. I of ch. 79 , in the following year, by an amount equal to the difference between the required cost contribution for that prior year and the city’s actual contribution in that prior year. The department of revenue shall deposit the amount of the reduced and withheld shared revenue payment into the city’s employee retirement system.

(3)Terms.

(a)A city may borrow moneys and issue appropriation bonds in evidence of the borrowing pursuant to one or more written authorizing resolutions under sub.

(4). Unless otherwise provided in an authorizing resolution, the city may issue appropriation bonds at any time, in any specific amounts, at any rates of interest, for any term, payable at any intervals, at any place, in any manner, and having any other terms or conditions that the common council considers necessary or desirable. Appropriation bonds may bear interest at variable or fixed rates, bear no interest, or bear interest payable only at maturity or upon redemption prior to maturity.

(b)The common council may authorize appropriation bonds having any provisions for prepayment the common council considers necessary or desirable, including the payment of any premium.

(c)Interest shall cease to accrue on an appropriation bond on the date that the appropriation bond becomes due for payment if payment is made or duly provided for.

(d)All moneys borrowed by a city that is evidenced by appropriation bonds issued under this section shall be lawful money of the United States, and all appropriation bonds shall be payable in such money.

(e)All appropriation bonds owned or held by a fund of the city are outstanding in all respects, and the common council or other governing body controlling the fund shall have the same rights with respect to an appropriation bond as a private party, but if any sinking fund acquires appropriation bonds that gave rise to such fund, the appropriation bonds are considered paid for all purposes and no longer outstanding and shall be canceled as provided in sub.

(d).

(f)A city shall not be generally liable on appropriation bonds, and appropriation bonds shall not be a debt of the city for any purpose whatsoever. Appropriation bonds, including the principal thereof and interest thereon, shall be payable only from amounts that the common council may, from year to year, appropriate for the payment thereof.

(4)Procedures.

(a)No appropriation bonds may be issued by a city unless the issuance is pursuant to a written authorizing resolution adopted by a majority of a quorum of the common council. The resolution may be in the form of a resolution or trust indenture, and shall set forth the aggregate principal amount of appropriation bonds authorized thereby, the manner of their sale, and the form and terms thereof. The resolution or trust indenture may establish such funds and accounts, including a reserve fund, as the common council determines.

(b)Appropriation bonds may be sold at either public or private sale and may be sold at any price or percentage of par value. All appropriation bonds sold at public sale shall be noticed as provided in the authorizing resolution. Any bid received at public sale may be rejected.

(5)Form.

(a)As determined by the common council, appropriation bonds may be issued in book-entry form or in certificated form. Notwithstanding s. 403.104

(1), every evidence of appropriation bond is a negotiable instrument.

(b)Every appropriation bond shall be executed in the name of and for the city by the president of the common council and city clerk, and shall be sealed with the seal of the city, if any. Facsimile signatures of either officer may be imprinted in lieu of manual signatures, but the signature of at least one such officer shall be manual. An appropriation bond bearing the manual or facsimile signature of a person in office at the same time the signature was signed or imprinted shall be fully valid notwithstanding that before or after the delivery of such appropriation bond the person ceased to hold such office.

(c)Every appropriation bond shall be dated not later than the date it is issued, shall contain a reference by date to the appropriate authorizing resolution, shall state the limitation established in sub.

(f), and shall be in accordance with the appropriate authorizing resolution in all respects.