a definite amount which is sufficient to pay debt service on the Certificates. The County has also agreed to pay monthly the hospital's operation and maintenance costs which it has not earned itself. In order to make the payments under this contract the County is authorized to levy an ad valorem tax of up to five mills, and in certain circumstances an additional two mills may be levied, although it is anticipated that one mill will be sufficient to cover the demands of the contract.

(2) Cobb County, a political subdivision of the State of Georgia possessing resources sufficient to justify faith and credit, has, as authorized by the laws of Georgia, pledged its full faith and credit to make payments to the Authority of amounts which will be sufficient to provide for all required payments in connection with these bonds.

(c) Ruling. It is the conclusion of this Office that the $1,850,000, 33 percent Revenue Certificates of the Hospital Authority of Cobb County 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 purchase, dealing in, underwriting, and unlimited holding by National Banks. [29 F.R. 13869, Oct. 8, 1964]

§ 1.154 New York State Housing Finance 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 institution 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, ac

quisition, 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 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 ellgible 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]

§ 1.155 Federal National Mortgage Association 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 a fiduciary capacity on or about November 2, 1964, are eligible for dealing in, under writing and unlimitied 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.

in

(2) On or about November 2, 1964, the FNMA, as trustee, expects to issue $300 million of certificates representing beneficial interests (participations) 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]

§ 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 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 securi

ties" 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, underwriting 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 Corporration 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 acquiring a site appropriate for a school building, erecting thereon a suitable school building and leasing the same to the School City of Elkhart, a school district and political subdivision of the State of Indiana.

(2) The bonds mature serially from January 1967 to January 1989. They are payable from revenues derived from a net lease of the facilities by the Corporation to the School City of Elkhart. Said net lease rentals are payable from a sinking fund derived by the levy of unlimited ad valorem property taxes by the School City of Elkhart. The School Building Corporation Act requires a school city to levy sufficient taxes each year to pay the annual lease rental. Rental payments under the lease are in an amount determined to be sufficient to pay the debt service and administrative expenses in connection with the bond issue. The Corporation has entered into a trust agreement mortgaging the school premises with the St. Joseph Valley Bank in Elkhart, as trustee, under the terms of which lease rentals will be paid to the trustee for deposit in a sinking fund to pay interest and principal on the bonds.

(3) The School City of Elkhart, a po

litical subdivision of the State of Indiana possessing resources sufficient to justify faith and credit, has, as authorized by the laws of Indiana, pledged its full faith and credit to make payments to the Corporation of amounts which will be sufficient to provide for all required payments in connection with these bonds.

(c) Ruling. It is the conclusion of this Office that the $4,675,000 First Mortgage Bonds issued by the Elkhart High School Building Corporation, as set forth above, are "public securities" as defined 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]

§ 1.158 Mobile County, Ala., Board of School Commissioners Capital Outlay School Warrants.

(a) Request. The Comptroller of the Currency has reconsidered his ruling with respect to whether the $1,500,000 Mobile County, Ala., Board of School Commissioners Capital Outlay School Warrants dated February 1, 1961, and similar warrants issued by Board of School Commissioners pursuant to the same statutory authority 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. The warrants were issued by the Board of School Commissioners of Mobile County, a public instrumentality, pursuant to the Alabama School Warrant Act. They mature at various maturity dates from February 1962 until 1979, being callable after February 1966, in inverse numerical order on any interest payment date, and they are payable from the proceeds of a county-wide ad valorem tax on the assessed valuation of all taxable property in Mobile County. This tax has been duly authorized at elections in said county to be levied annually until 1991, and it has been irrevocably pledged for payment of the principal and interest on the warrants.

(c) Rulings. Upon reconsideration, it is the conclusion of this Office that the $1,500,000 Mobile County Board of School Commissioners Capital Outlay School Warrants and similar warrants issued by Board of School Commissioners pursuant to the same statutory authority

and which are supported by the same payment and security provisions are "public securities" as defined 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. [30 F.R. 3856, Mar. 25, 1965]

§ 1.159 Bonds of the Dormitory Authority of the State of New York.

(a) Request. The Comptroller of the Currency has been requested to rule as to the application of the ten percent investment limitation of paragraph Seventh of 12 U.S.C. 24 to bonds issued by the Dormitory Authority of the State of New York and whether this limitation may be separately applied to the aggregate bonds of each college for which the Authority has issued bonds, or whether, all bonds issued by the Authority for various colleges in New York must be combined in applying this limitation.

(b) Opinion. (1) As was noted in our ruling of September 14, 1962, relating to the eligibility for investment by National Banks in the $8,630,000 Dormitory Authority of the State of New York, 3.60 percent Dormitory Revenue Bonds of 1957 (State University of New York), (§ 1.115) the Authority is a public benefit corporation, created in 1944 to provide dormitories and related facilities at colleges in the State of New York. The bonds issued by the Authority to help finance the construction of dormitories and related facilities of a particular college are, in each instance, payable solely from the revenue derived from the lease of such facilities by the Authority to the particular college.

(2) The Authority, although the issuer and nominal obligor of these bonds, is a conduit through which the individual colleges make payment of the bonds issued for their respective benefit and for which they are the sole source of repayment. Whether the bonds issued for a particular college are eligible for investment by National Banks must be determined by an analysis of the ability of the particular college to perform all that it undertakes to perform in connection with the bonds, including all debt service requirements, and of the marketability of such bonds as required by § 1.5.

(c) Ruling. Accordingly, in applying the ten percent investment limitation of paragraph Seventh of 12 U.S.C. 24 and of § 1.6, to bonds issued by the Dormi

tory Authority of the State of New York, such limitation may be applied separately to bonds issued for a particular college when such bonds are repayable solely by that particular college. In these circumstances, the college is the obligor within the meaning of § 1.6(a). [29 F.R. 15077, Nov. 7, 1964]

§ 1.160

Export-Import Bank Portfolio Fund Participation Certificates.

(a) Request. The Comptroller of the Currency has been requested to rule that various series of Export-Import Bank Portfolio Fund Participation Certificates, are eligible for purchase without limit by national banks.

(b) Opinion. This Office has previously ruled (§ 7.4 of this title) that Participation Certificates, Series "A" of 1962, which were issued and guaranteed by the Export-Import Bank of Washington, were eligible for purchase without limitation by national banks.

(c) Ruling. Where Participation Certificates are issued and guaranteed by the Export-Import Bank of Washington, which is an independent agency of the United States Government, such certificates are, under applicable statutes and regulations, eligible for purchase without limitation by national banks. [29 F.R. 15693, Nov. 24, 1964]

§ 1.161 City of Anaheim (California) Stadium, Inc. Lease-Rental Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule on the eligibility of the $21,500,000 City of Anaheim Stadium, Inc. Lease-Rental Bonds for investment by national banks under the provisions of paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The City of Anaheim Stadium, Inc., a nonprofit corporation acting for the City of Anaheim, Calif., was created to issue its leaserental bonds to finance the construction on leased land of a stadium, together with associated facilities, which is to be suitable for baseball, football and other outdoor sports events and exhibitions.

(2) The lease-rental bonds mature serially from April 1967, to April 2001, and their maturities run concurrently with the term of the lease agreement commencing January 1967, and ending April 2001. The bonds are payable from revenues derived from a net lease of the stadium facilities by the corporation to the City of Anaheim and the City ob

ligates itself generally to pay the lease rentals free and clear of all expenses or charges whatsoever and in an amount sufficient to pay in full the semiannual maturities of principal of and interest on the lease-rental bonds and all other reasonable expenses of the Corporation.

(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 Corporation will be able to perform all that it undertakes to perform and that the $21,500,000 City of Anaheim Stadium, Inc. LeaseRental Bonds meet the requirements of § 1.5(a) of the Investment Securities Regulation, and are, therefore, eligible for investment by national banks under the provisions and subject to the ten percent limitation of paragraph Seventh of 12 U.S.C. 24.

[29 F.R. 17087, Dec. 15, 1964]

§ 1.162

Massachusetts Port Authority Revenue Refunding and Improvement Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule on the eligibility of the $107,500,000 Massachusetts Port Authority Revenue Refunding and Improvement Bonds, dated July 1, 1964, for investment by national banks under the provisions of paragraph seventh of 12 U.S.C. 24.

(b) Opinion. (1) The Massachusetts Port Authority, a body corporate and a public instrumentality of the Commonwealth of Massachuetts, was created to assume and coordinate the control, operation and management of the Mystic River Bridge, Logan International Airport (Boston), Hanscom Field (Bedford) and certain Port properties in Boston, and to construct or acquire additional facilities when authorized by the legislature of the Commonwealth. The bonds were issued to redeem, on October 1, 1969, all of the then outstanding Authority Revenue Bonds, Series A, dated February 1, 1959, and to pay certain costs of extensions and improvements to the Airport and Port Properties of the Authority.

(2) The bonds mature serially from 1969 to 1989 and are payable from the tolls and revenues (over and above the costs of operation and maintenance) from the properties owned by the Authority. The Authority is obligated to fix and collect revenues for the use of its properties sufficient to pay the cost of maintaining, repairing and operating the

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properties and to pay the principal of and the interest on all bonds issued by the Authority as the same become due. The projections of revenues from the properties appear to be sufficient to pay the debt service and administrative expenses of the bond issue as well as the operating expenses of the properties.

(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 Authority will be able to perform all that it undertakes to perform and that the $107,500,000 Massachusetts Port Authority Revenue Refunding and Improvement Bonds, dated July 1, 1964, meet the requirements of § 1.5(a) and, therefore, are eligible for investment by national banks under the provision and subject to the 10 percent limitation of paragraph Seventh of 12 U.S.C. 24.

[29 F.R. 18053, Dec. 19, 1964]

§ 1.163

State of Kansas Board of Regents Revenue Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule regarding the application of the 10 percent investment limitation of paragraph Seventh of 12 U.S.C. 24 to revenue bonds issued by the Board of Regents of the State of Kansas. The inquiry is whether this limitation may be applied separately to the aggregate bonds of each college or university for which the Board of Regents has issued bonds, or whether, in applying this limitation, all bonds issued by the Board of Regents for the various colleges and universities subject to its control must be combined.

(b) Opinion. (1) The governing and control of State-owned colleges and universities in Kansas has been vested by law in the Board of Regents which appoints for each school a Chief Administrative Officer. The Board of Regents is authorized to issue revenue bonds to finance the construction of buildings at State-owned colleges and universities, and is obligated to fix, maintain, and collect such fees and charges for the use of such buildings as will produce revenues sufficient to pay the costs of operation, maintenance, and debt service, and to provide a reasonable reserve fund. The Board of Regents limits its liability in connection with a particular bond issue to the revenue generated by the building financed by that bond issue.