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under acts which provide that the bonds $ 1.129 State Highway and Bridge Au-
are not to be general obligations of the thority of the Commonwealth of
state but are payable from the sales tax Pennsylvania Bonds.
revenues of the state. The acts also

(a) Request.
provide, however, that the state under-

The Comptroller of the takes to maintain such taxes so as to

Currency has been requested to rule

that the $35,000,000 Series of 1963, Bonds provide sufficient funds to pay the bonds

of the State Highway and Bridge Auand interest thereon.

thority of the Commonwealth of Penn(2) The Supreme Court of the State of Washington has held with respect to

sylvania are eligible for purchase, deal

ing in underwriting, and unlimited these bonds that if the state undertakes

holding by National Banks under paraor agrees to provide any part of a fund

graph Seventh of 12 U.S.C. 24. from any general tax, be it excise or ad valorem, the securities issued upon the (b) Opinion. The State Highway credit of the fund are likewise issued and Bridge Authority was created in upon the credit of the state and are, in

1949, by an act of the General Assembly truth, debts of the state. It has also

of the Commonwealth of Pennsylvania, ruled, however, that these bonds are law- as a body corporate and politic, a public ful and valid and shall be issued in ac- corporation and a governmental instrucordance with the terms of the statutes mentality. The purpose of the Authorauthorizing them.

ity is the construction, reconstruction (c) Ruling. It is our conclusion that and improvement of state highway projthe Public School Plant Facilities Bonds,

ects. In order to provide funds for this 1961, and the Public Building Bonds, purpose, the Authority is authorized to 1961, of the State of Washington, are

issue its bonds and to pledge, for the eligible for purchase, dealing in, under- payment thereof, its revenues, receipts, writing, and unlimited holding by Na

and its full faith and credit. It is not tional Banks.

authorized to pledge the credit or the (28 F.R. 10741, Oct. 5, 1963)

taxing power of the Commonwealth, but

the Act creating the Authority appro$ 1.128 Commonwealth of Pennsylvania priates so much of the money in the Tax Anticipation Notes.

Motor License Fund of the Common(a) Request. The Comptroller of the wealth as may be necessary to carry out Currency has been requested to rule that the provisions of the act. the $115,000,000 Commonwealth of (2) The proceeds from the sale of Pennsylvania Tax Anticipation Notes, the bonds of the Authority will be used Series of 1963, are eligible for purchase, for highway projects which are to be dealing in, underwriting, and unlimited leased to the Commonwealth. The holding by National Banks under Para- leases will provide for payment, out of graph Seventh of 12 U.S.C. 24.

the current revenues of the Common(b) Opinion. Stable current revenues wealth including the Motor License of the Commonwealth of Pennsylvania, Fund, of annual rentals sufficient to which, in accordance with official esti- meet the annual principal and interest mates, are expected to amount to more requirements of the bonds, and to pay than five times the amount to be bor- the current expenses of the Authority. rowed, are pledged for the repay- The leases will also provide that in the ment of these notes. The Common- event the current revenues of the Comwealth of Pennsylvania has thus made monwealth for any year are not suffifully adequate provision from its tax cient to pay the entire rental, the balance revenues for the payment of these notes. of such rental will be paid out of the

(c) Ruling. Following the principles current revenue of succeeding years. applied in the ruling on the Georgia The bonds will be direct and general obState Authorities, $ 1.111, it is our con- ligations of the Authority and will be clusion that the Tax Anticipation Notes, secured equally with all other bonds of Series 1963, of the Commonwealth of the Authority by the full faith and credit Pennsylvania are eligible for purchase, of the Authority and by the pledge of dealing in, underwriting and unlimited all rentals payable by the Commonholding by National Banks.

wealth on projects leased from the Au[28 F.R. 10741, Oct. 5, 1963)

thority.

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(3) The bonds of the Authority are (c) Ruling. It is our conclusion that the general obligations of a public the California Bond Anticipation Notes authority of the Commonwealth of Penn- are eligibile for purchase, dealing in, unsylvania. The resources of the Authority derwriting and unlimited holding by Nainclude the obligation of the Common- tional Banks. wealth to make lease rental payments [29 FR. 498, Jan, 21, 1964) which will be sufficient to provide for all required payments in connection with

$ 1.131 District of Columbia Redevelopthe bonds, and an appropriation of

ment Land Agency Urban Renewal

Bonds. money from the Motor License Fund. The lease rental obligation of the Com

(a) Request. The Comptroller of the monwealth, though payable from the

Currency has been requested to rule that current revenues of the successive years,

the $1,225,000 Urban Renewal Bonds, Se

ries 1963 of the District of Columbia Reis not limited to any particular source of revenue and is, therefore, supported

development Land Agency, are eligble by the general taxing power and the full

for purchase, dealing in, underwriting, faith and credit of the Commonwealth.

and unlimited holding by National Banks The Commonwealth has, thus, under

under the provisions of Paragraph Sev

enth of 12 U.S.C. 24. taken to provide for the payment of the

its obligations of

(b) Opinion. The District of Columbia duly constituted Authority.

Redevelopment Land Agency, a "local (c) Ruling. Following the principles

public agency” within the meaning of

section 110(h) of the Housing Act of 1949 and definitions set forth in 12 CFR 1.3

has entered into an agreement with the (d) and (e) and applied in the ruling

Housing and Home Finance Administraon the General State Authority of the

tor whereby the Administrator agrees to Commonwealth of Pennsylvania, 12 CFR 1.125, it is our conclusion that the Bonds pay or cause to be paid when due the

principal of and interest on these bonds. of the State Highway and Bridge

The provisions contained in the agreeAuthority of the Commonwealth of

ment meet the requirements contained Pennsylvania, Series of 1963, are eligible

in Paragraph Seventh, 12 U.S.C. 24 for for purchase, dealing in, underwriting

a security not subject to the limitations and unlimited holding under Paragraph

and restrictions contained therein as to Seventh of 12 U.S.C. 24.

“dealing in, underwriting and purchas[28 FR. 11501, Oct. 29, 1963)

ing for its own account, investment se

curities”. These bonds are, therefore, $ 1.130 California Bond Anticipation

public securities within the meaning of Notes.

$ 1.3(c) (3). (a) Request. The Comptroller of the (c) Ruling. It is our conclusion that Currency has been requested to rule on the Urban Renewal Bonds, Series 1963 the eligibility of the $50 million State of of the District of Columbia RedevelopCalifornia Bond Anticipation Notes for ment Land Agency are eligible for purpurchase, dealing in, underwriting, and chase, dealing in, underwriting and ununlimited holding by National Banks limited holding by National Banks. under Paragraph Seventh of 12 U.S.C. (29 F.R. 498, Jan. 21, 1964) 24 and this part. (b) Opinion. The notes, having ma

$ 1.132 General State Authority of the

Commonwealth of Pennsylvania Seturities of not to exceed two years, will

rial Bonds, 19th Series. be payable solely from the proceeds of the sale of general obligation water (a) Request. The Comptroller of the bonds to be sold by the State of Cali

Currency has been requested to rule that fornia. The bonds, aggregating $1,750 the $50,000,000 General State Authority million, have been duly authorized by the

of the Commonwealth of Pennsylvania electorate. Interest on he notes will be Serial Bonds, 19th Series, are eligible for payable from state funds appropriated purchase, dealing in, underwriting, and by the legislature. The notes are thus

unlimited holding by National Banks unsupported by the full faith and credit of

der the provisions of Paragraph Seventh the State of California and, accordingly, of 12 U.S.C. 24. qualify as public securities within the

(b) Ruling. Following the principles meaning of $ 1.3 (c) and (e).

applied in our decision of July 3, 1963,

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expressway system in metropolitan $ 1.125, that the Eighteenth Series

Jacksonville to be leased to and operated of these bonds were eligible for pur

by the Florida State Road Department. chase, dealing in, underwriting and un

It is authorized to secure its bonds by a limited holding by National Banks, it is

pledge of toll and other revenues and our conclusion that the Bonds of the

certain gasoline tax funds. The costs General State Authority of the Commonwealth of Pennsylvania, Nineteenth of operation and maintenance of the Series, are eligible for purchase, dealing expressway system are paid by the

Florida State Road Department from in, underwriting, and unlimited holding by National Banks.

monies other than the tolls and other

revenues of the system. The system is (29 F.R. 2419, Feb. 13, 1964)

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 of 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 g 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 (29 FR. 2419, Feb. 13, 1964)

are eligible for investment by National

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. (Florida) 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, a 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

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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 are not thereafter considered obligations

rental paid to the Authority on approved of the issuer for the purpose of computing

projects. The bonds will be direct and the 10 percent limitation prescribed by

general obligations of the Authority and 12 U.S.C. 24 on the holdings of the in

will be secured equally with all other vestment securities of any one obligor.

bonds of the Authority, issued or to be

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

and definitions set forth in g 1.3 (d) and credit or the taxing power of the Commonwealth 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 Pennsyl

vania ($ $ 1.124, 1.125, 1.129), it is our refund certain outstanding bonds of the

conclusion that the School Lease RevAuthority and for school building proj

enue Bonds, Series N, of the State Public ects which are to be leased to School

School Building Authority of the ComDistricts of the Commonwealth. The

monwealth of Pennsylvania are eligible leases will provide for payment, out of

for purchase, dealing in, underwriting the current revenues of the School Dis

and unlimited holding under paragraph trict, of annual rentals substantially in

Seventh of 12 U.S.C. 24. excess of the annual principal and inter

[29 F.R. 5314, Apr. 18, 1964) est requirements on the bonds. Penn

Felo

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stricts § 1.137 Delaware River and Bay Author.
mority
ity revenue bonds.

(4) The Compact between the States tais

of Delaware and New Jersey by which (a) Request. The Comptroller of the count

the Authority was created contains a Currency has been requested to rule that such

covenant by which said States agree that the $103,000,000 Revenue Bonds of the clude

so long as any obligations of the AuthorDelaware River and Bay Authority are

ity remain outstanding and unpaid, nac eligible for investment by National Banks

neither of said States will authorize any and 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 oved enth of 12 U.S.C. 24.

Bay between the States within preand (b) Opinion. (1) The bonds are be

scribed geographic boundaries by any and) ing issued for the purposes of paying the

person or body other than the Authority the balance of the cost of constructing an

unless adequate provision shall be made co be additional bridge across the Delaware

for the protection of those advancing the 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 7.spi . 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 significant

in

increase veloping the area in both States, border

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 che 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

limitation of $ 1.6(a). However, bankers (3) The subject bonds are to be issued under and secured by a trust agreement

are reminded that they must determine

on the basis of their own review whether which provides for fixing and revising

securities are suitable for their own incharges for traffic using the Authority

vestment. Facilities and for the deposit of a suffi

It is the conclusion of

(c) Ruling. cient amount of charges, over and above

this Office that the above described revethe amount necessary for the payment of 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 invest

ment by National Banks and banks in under the trust agreement. All revenues

the District of Columbia within the limderived from any other crossing facility

itations of paragraph Seventh of 12 owned and operated by the Authority

U.S.C. 24. will be deposited in the Revenue Fund

[29 F.R. 5315, Apr. 18, 1964) and applied in the same manner.

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