CHAPTER 336

FORMERLY

SENATE SUBSTITUTE NO. 1

TO

SENATE BILL NO. 110

AN ACT TO AMEND CHAPTER 54, TITLE 30, DELAWARE CODE RELATING TO THE REALTY TRANSFER TAX AND THE ESTABLISHMENT OF A CONSERVATION TRUST FUND THEREUNDER.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Sections 5401-5415 of Title 30, Delaware Code, shall be referred to as "Subchapter I, Realty Transfer Tax".

Section 2. Amend Chapter 54, Title 30, Delaware Code by adding thereto a new Subchapter to read as follows:

"SUBCHAPTER II. Conservation Trust Fund, Assignment of Tax Revenue §5421. Definitions

The following words, terms and phrases, when used in this Subchapter, shall have the meanings ascribed to them in this Section, except where the context clearly indicates a different meaning:

(1) 'Authorization Act' means an act of the General Assembly approved by a majority of all the members of each House, approving the issuance of revenue bonds pursuant to this Subchapter.

(2) 'Base Amount' means the total amount of realty transfer taxes collected by the State under Section 5402 of Title 30 during the fiscal year ending June 30, 1991, net of any refunds and any commission paid to collection agents.

(3) 'Bonds' or 'revenue bonds' means revenue bonds which may be issued by the State pursuant to this Subchapter and, where appropriate, shall also refer to notes and other forms of obligations of the State incurred pursuant to this Chapter.

(4) 'Conservation Trust Fund' means the Delaware Land and Water Conservation Trust Fund established and maintained pursuant to this Subchapter.

(5) 'Department' means the Department of Natural Resources and Environmental Control.

(6) 'Earnings Account' means the account by that name created within the Conservation Trust Fund pursuant to Section 5423 of this Chapter.

(7) 'Endowment Account' means the account by that name created within the Conservation Trust Fund pursuant to Section 5423 of this Chapter.

(8) 'Issuing Officers' means the State's issuing officers as defined for the purposes of Chapter 74 of Title 29.

(9) 'Project' means the planning for, and the acquisition and development of property, undertaken to achieve the purposes of this Chapter.

(10) 'Revenue Account' means the account by that name created within the Conservation Trust Fund pursuant to Section 5423 of this Chapter.

(11) 'State Agency' means the following units of State government which manage natural and cultural resources: Department of Natural Resources and Environmental Control (Division of Parks and Recreation and Fish and Wildlife), Department of State (Division of Historical and Cultural Affairs) and the Department of Agriculture (Division of Resource Management).

(12) 'Secretary' means the Secretary of the Department.

§5422. General

The purpose of this Subchapter is to provide funding to implement the conservation program described in Volume 65, Chapter 212 of the Laws of Delaware. Funding to achieve the purposes of this Subchapter shall be provided from appropriations by the State, grants from the federal government, funds in the Conservation Trust Fund and the earnings thereon, proceeds from the sale of revenue bonds, private donations and any other sources which may be available from time to time. The Department is authorized and directed to encourage and seek funding from any available private and public sources.

§5423. Delaware Land and Water Conservation Trust Fund

(a) There is created and established under the jurisdiction and control of the Department a trust fund to be known as the Delaware Land and Water Conservation Trust Fund to implement the conservation program described in Volume 65, Chapter 212 of the Laws of Delaware. Within the Conservation Trust Fund there is established an 'Endowment Account', a 'Project Account', an 'Earnings Account' and a 'Revenue Account'. Funds in the Conservation Trust Fund shall be applied for the purposes of this Subchapter as hereinafter provided.

(b) The corpus of funds remaining on deposit in the Delaware Land and Water Conservation Trust Fund maintained under Section 4733 of Title 7 on the date of enactment of this Subchapter shall be deposited in the Endowment Account. Any earnings on said corpus still on deposit in said Fund on the date of enactment of this Subchapter, and all earnings on the funds in the Endowment Account, shall be deposited in the Earnings Account, provided that all earnings on the funds in the Endowment Account in excess of $1 million in any fiscal year shall be deposited in the Project Account. Additional deposits shall be made to the Endowment Account from realty transfer taxes as hereinafter provided, from other State funds as the General Assembly may from time to time determine, and from any other public and private sources which may from time to time be made available. The Endowment Account is intended to provide a permanent endowment to accomplish the purposes of this Subchapter. The corpus of the Endowment Account shall not be invaded except that after $50 million of proceeds of bonds issued under this Subchapter have been expended for the purposes hereof, the Secretary may withdraw up to $20 million from the Endowment Account to deposit into the Project Account to be applied for the purposes of this Subchapter.

(c) Funds in the Project Account, and the earnings thereon to be retained therein, shall be applied by the Department to pay the costs of planning, and acquisition and development of property, to achieve the purposes of this Subchapter. The Project Account shall be funded from certain realty transfer taxes as hereinafter provided, from other State funds as the General Assembly may from time to time determine, and from any other public and private sources which may from time to time be made available. The Project Account is intended to provide funds for current expenditure to achieve the purposes of this Subchapter although the Department may, in its discretion, accumulate funds in the Project Account for particular Project purposes.

(d)(1) Funds in the Earnings Account, and the earnings thereon, which are to be retained therein, shall be disbursed, upon application, to State Agencies, counties, municipal governments and local park districts, to pay the costs of planning, and acquisition and development of property, to achieve the purposes of this Subchapter. Not more than 50% of a total Project cost may be paid from the Conservation Trust Fund; except that up to 75% of a Project cost may be paid where the applicant is a local park district and up to 100% of a total Project cost may be paid where the applicant is a State Agency, if the park district or State Agency, as applicable, provides evidence satisfactory to the Department that no other matching funds or in-kind contributions are available. In any given year, State Agencies shall only be eligible to receive funds as defined in this section where the Secretary determines that available funds exceed the eligible project requests from non-State applicants. Private entities, including non-profit entities, and school districts shall not be eligible for a grant from the Earnings Account. At the end of each fiscal year the Secretary may transfer from the Earnings Account to the Project Account all funds in the Earnings Account which have not been reserved for grants under this subsection.

(11) The applicant requesting funds from the Earnings Account must provide evidence satisfactory to the Department that the required matching funds have been committed or will be expended for the proposed Project. Any property already held or expenditures already made by the applicant may not be counted as part of an applicant's matching contribution. In-kind contributions of land, services and/or materials provided by the applicant or received by the applicant from other sources may be used by the applicant to satisfy its matching requirement.

(iii) All expenses of operation and maintenance for property acquired with funds from the Earnings Account shall be borne perpetually by the applicant.

(iv) It is intended that property acquired or improved with funds from the Earnings Account shall remain in public outdoor recreation and conservation use in perpetuity. Said property may not be converted to other uses without a subsequent act of the General Assembly. If the General Assembly approved the sale or lease of any project or a portion thereof, the State shall receive its pro rata share of net sale and/or lease income. Said funds shall be deposited in the Earnings Account to be immediately available for other Projects.

(e)(i) The Revenue Account shall be funded with realty transfer tax revenues as provided in Section 5415 of Title 30, and other State funds as the General Assembly may determine from time to time. The State hereby irrevocably pledges and assigns and continuously appropriates the realty transfer taxes imposed by the State pursuant to Section 5402 of this Title, as amended from time to time, to the Revenue Account to be applied as hereinafter provided, exclusively for the benefit of the holders of revenue bonds issued pursuant to this Subchapter, and as otherwise provided herein.

(ii) All realty transfer tax revenues deposited in the Revenue Account in each fiscal year shall be applied in the following amounts and in the following order of priority:

(A) From the Base Amount:

(I) Set aside an amount sufficient to pay debt service on revenue bonds issued pursuant to this Subchapter for a period of up to one year as may be required by the terms of such bonds;

(II) Set aside the amount that may be required to satisfy any debt service reserve fund requirement with respect to any such bonds (up to one year's maximum annual debt service);

(III) The excess, if any, shall be paid to the General Fund of the State.

(B) The amount over the Base Amount, if any, in any fiscal year shall then be applied as follows:

(I) Deposit into the Earnings Account such amount as is necessary, when added to the interest earnings from the Endowment Account deposited in the Earnings Account during such fiscal year, to bring the total such deposits into the Earnings Account for such fiscal year to $1 million, and

(II) Deposit the remainder, if any, into the Endowment Account provided that, in any fiscal year when the earnings on the Endowment Account equal at least $1 million, said remainder shall be deposited 50% into the Endowment Account, 25% into the Project Account and the balance shall be transferred to the General Fund.

(iii) It is the intent of the General Assembly that the amount of realty transfer tax revenues applied in any fiscal year for the purposes of conservation under this Subchapter pursuant to clause (ii)(A)(I) of this subsection (e) shall not decline as the total debt service on revenue bonds decreases. Accordingly, in any fiscal year when the debt service required to be set aside under said clause (ii)(A)(I) is less than the debt service required to be set aside under said clause in any prior fiscal year, an amount equal to the decline in such debt service shall be deposited in the Endowment Account before any funds are applied pursuant to clauses (ii)(A)(II) or (III).

(iv) After the amount in the Endowment Account equals $50 million or on July 1, 2005, which ever occurs sooner, no further deposits shall be made into the Endowment Account or the Project Account under this subsection (e).

§5424. Revenue Bonds

(a) The issuing officers may issue revenue bonds of the State to provide funds to achieve the purposes of this Subchapter, including funds necessary to provide for reserves, credit enhancement and transaction costs. Such revenue bonds may be issued only in amount as shall be approved by an Authorization Act of the General Assembly.

Such revenue bonds may be paid from, and secured by, as shall be determined by the issuing officers, only the realty transfer tax revenues set aside pursuant to this Subchapter to pay debt service and to provide reserves, by the proceeds of such revenue bonds, by any reserve fund established for such revenue bonds, by the earnings on such funds and by any credit enhancement obtained by the issuing officers. Such revenue bonds shall not be general obligations of the State and they shall not pledge the full faith and credit of the State. Other than as provided in this Subchapter, such revenue bonds shall not be considered as debt of the State and shall not count against any limitation on the issuance of debt by the State.

(b) Revenue bonds issued pursuant to this Subchapter shall be issued pursuant to a resolution adopted unanimously by the issuing officers. Each issuing officer may designate a deputy to represent him as an issuing officer at meetings of the issuing officers with full powers to act and vote on his behalf.

(c) The resolution of the issuing officers authorizing the issuance of bonds may include provisions for the payment and security therefor including from the proceeds of any credit enhancement which the issuing officers may obtain, provisions for entering into a trust agreement or other contractual arrangements with agents in connection with the Issuance, sale, security and repayment of the bonds, provisions for the date or dates of such bonds the maturity of such bonds (which shall not extend beyond July 1, 2011), provisions for either serial or term bonds, zero fund requirements, if any, due dates of the interest thereon, provisions for the place or places for payment (which may be within or outside the State), the form of bonds (including whether bonds shall be certificated or uncertificated), the denominations and designation of bonds, registration, conversion and transfer privileges, the terms of redemption with or without premium, the date and manner of sale of bonds, which may be at a public or private negotiated sale, provisions for the consolidation of bonds authorized to finance all or a portion of the costs of projects authorized in 1 or more authorization acts, limitations with respect to the interest rate or rates on bonds, provisions for receipt and deposit or investment of the good faith deposit pending delivery of bonds and such other terms and conditions of bonds and or the issuance and sale thereof as the issuing officers may determine to be in the best interests of the State.

(d) All bonds issued pursuant to this Subchapter shall recite that they are issued for a purpose or purposes set forth in an Authorization Act and that they are issued pursuant to the Constitution and laws of the State. Upon the sale and delivery of any such bonds against payments, such recitals shall be conclusive as to the right, power and authority of the State to issue such bonds and of the legality, validity and enforceability of the obligation of the State to any principal of and interest on such bonds from the revenues and other sources pledged therefor. The legality, validity and enforceability of such bonds from the revenues and other sources pledged therefor. The legality, validity and enforceability of such bonds containing such recitals shall never be questioned in any court of law or equity by the State or any person after issuance, execution and delivery against payment of such bonds. All such bonds are hereby declared to have all the qualities and incidents of negotiable instruments under the commercial code of the State.

(e) All bonds issued pursuant to this Subchapter, other than uncertificated obligations, shall be executed on behalf of the State by the issuing officers and shall bear the impression, or a facsimile, of the Great Seal of the State. All the signatures of the issuing officers may be engraved, printed or stamped on such bonds notwithstanding any other law to the contrary but no such signatures nor the impression or a facsimile of the Great Seal need appear on an uncertificated obligation. In case any officer whose signature or a facsimile of whose signature shall appear on any bonds shall cease to be such officer before the delivery of such obligations, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes as if he had remained in office until such delivery.

(f) All bonds issued pursuant to this Subchapter and the interest thereon shall be exempt from income taxation by the State or any political subdivision thereof.

(g) The Issuing officers may, by resolution, direct the State Treasure to contract, in such manner as the issuing officers shall prescribe, with a banking or other institution to act as: (1) Registration agent for bonds issued pursuant to this Subchapter; (2) recording agent to provide a permanent record of all such bonds which shall have been paid or redeemed; and (3) cancellation agent to cancel all such bonds which shall have been paid or redeemed. The State Treasurer may, at the direction of the Issuing officers, contract with such institution for related services. Any such contract shall provide that the agent shall be responsible to the State for the faithful and safe conduct of the services to be performed by it as registration agent, recording agent or cancellation agent, or services related thereto, for the fidelity and integrity of the officers and agents of such contracting institution performing the duties of a registration agent, recording agent or cancellation agent, or services related thereto, and for all loss or damage which may result from any failure of such officers or agents to discharge their duties and for any improper or incorrect discharge of their duties, and shall save the State free and harmless from any and all loss or damage occasioned by or incurred in the performance of such services. Such contract may be terminated by the State Treasurer at any time, if so directed by the issuing officers. Any such contract shall be filed in the office of the State Treasurer as a public record.

(h) The State Treasurer may issue a replacement bond to replace unmatured bonds issued pursuant to this section, which have been lost, stolen, mutilated or destroyed upon receipt of: (a) Satisfactory proof (1) of ownership and (2) of loss or destruction, or, in the case of a mutilated or destroyed bond, the mutilated or destroyed bond; (b) adequate security to indemnify the State and the bank or banks at which the bond is payable against any loss that may be suffered by them on account of the issuance of such replaced obligation; and (c) payment of the cost of preparation of the replacement obligation. Any replacement bond shall be of the same form and tenor as that originally issued, shall be executed by the manual or facsimile signature of the officers in office at the time of the replacement and shall bear an impression or reproduction of the Great Seal of the State or a facsimile thereof. A replacement bond shall be signed by the manual signature of the State Treasurer. There shall be endorsed on the replacement bond a statement in substantially the following form:

'This bond has been reissued to replace a (lost, stolen, mutilated or destroyed) bond.'

(i) Bonds issued pursuant to this Subchapter are securities in which any officer of the State any officers of the political subdivisions, administrative departments, boards and commissions of the State, all banks, bankers, savings banks, trust companies, savings and loan associations, investment companies and other persons carrying on a banking business, all insurance companies, insurance associations and other persons carrying on an insurance business and all administrators, executors, guardians, trustees and other fiduciaries, and all other persons whatsoever who may be authorized to invest in bonds of the State, may properly and legally invest any funds, including capital belonging to them or within their control. Such bonds are securities which may properly and legally be deposited with and received by any officer of the State, or an officer of any political subdivision or agency of the State, for any purpose for which the deposit of bonds of the State may be authorized by law.

(j) It is the intent of the General Assembly that $50 million of revenue bonds shall be issued for the purposes of this Subchapter provided that the total aggregate principal amount of bonds which may be issued pursuant to this Subchapter may not exceed $50 million and the total aggregate principal amount of such bonds which may be issued in any two consecutive fiscal years of the State may not exceed $14 million. In addition the total amount of debt service payments in any fiscal year with respect to all bonds issued pursuant to this Subchapter and outstanding at any one time may not exceed 20% of the Base Amount.

(k) The issuing officers may authorize and issue bonds under this Subchapter to refund bonds issued under this Subchapter and to provide for the transaction costs related thereto. Such refunding bonds shall be issued pursuant to the procedures set forth in this Subchapter and shall be subject to the terms hereof except that

(i) the approval of the General Assembly shall not be required if the present value of the aggregate principal and interest payments on the refunding bonds are less than the present value of the aggregate principal and interest payments on the bonds to be refunded determined by discounting at the effective interest rate on the refunding bonds using the internal rate of return,

(ii) refunding bonds may be issued in the principal amount which exceeds the principal amount of the bonds to be refunded, so long as the present value of the aggregate principal and interest payments of the refunding bonds is less than the present value of the aggregate principal and interest payments on the bonds to be refunded,

(iii) refunding bonds shall not be subject to or counted against the $50 million or the $14 million limits in subsection (j) of this section; and

(iv) no refunding bonds may be issued unless all or a portion of the proceeds of the refunding bonds are deposited irrevocably in an escrow account pledged to pay, and are sufficient together with any other available assets in such account to meet, the payment when due of the principal, premium (if any) and interest on the bonds to be refunded and the funds in said escrow account must be invested in obligations described in Section 7423 (b) of Title 29.

(1) This Chapter provides authorization and procedures for the issuance of bonds for the purposes of this Subchapter, in addition to and not in limitation of, issuing authority contained in any other provision of law. Bonds may be authorized and issued pursuant to this Subchapter without regard to limitations or procedures provided in any other provision of law.

§5425. Payment of Tax Receipts to Conservation Trust Fund

All taxes received under this Chapter, net of any commission and expenses paid pursuant to Section 5406, and net of any refunds and interest paid under Section 5413, shall be any refunds and interest paid under Section 5413, shall be deposited in the Revenue Account of the Conservation Trust Fund established under this Subchapter and applied for the purposes specified herein. The State shall not reduce the rate of tax imposed under Section 5402 nor shall it expand any exemptions from such tax so long as there are outstanding any revenue bonds issued pursuant to this Subchapter, except as may otherwise be provided by agreement with the holders of such bonds."

Section 3. Effective Date. This Act shall become effective on July 1, 1990 or upon the enactment of Delaware Land Protection Act into law, whichever shall occur later.

Approved July 13, 1990.