Views on S. 744

Legislation has been proposed which would authorize the District of Columbia to issue and sell general obligation bonds for the purpose of paying certain liabilities of the District and for other purposes. To provide assurance that the cost of any bond issue authorized would be limited to reasonable and necessary amounts, the Senate Committee on Governmental Affairs may wish to obtain an estimate from the District for the reasonable and necessary costs of issuance and for maintaining the debt service reserve fund, so that either a specific amount or a limit could be included in the bill. The section of the bill allowing the District of Columbia City Council to authorize the issuance of the bonds and requiring a plan for financing the annual payment of the principal needs clairfication. Further, the Committee may want to consider whether citizens should have an opportunity to vote approval or disapproval of the terms and conditions of any bonds issued under this legislation. Provisions relating to the limitation period need further clarification. Changes are needed in the sections dealing with the proceeds from the sale of the bonds to eliminate redundancy and to provide clarity. Such changes should be made to ensure that there are funds available to pay the expenses of maintaining the special account in the event that the monies realized on investments are not sufficient to pay such expenses. The type of investments made of the proceeds from the bonds should be limited to interest-bearing, guaranteed investments. Requirements that the Council pledge the District revenues as additional security for the payment of the bonds may also be included in the contract with bondholders. The Committee should consider whether protection provided to bondholders in situations when the District revenues are pledged should be applicable even when the District revenues are not pledged as security. It is unclear whether the bill allows the Mayor of the District to incorporate in the agreement acts authorized by other laws, but not specifically authorized in this legislation. The Committee may wish to retain and exercise its oversight and control responsibilities over amounts obligated or expended for payment of any bonds and the pledge, transfer, or assignment of any District revenues to secure or otherwise to provide for the payment of any bonds.