Section 36-82-253. Requirements for plans; renewal or termination; provisions and limitations regarding obligation for payment; credit enhancement and liquidity agreements

   (a) Each qualified interest rate management agreement shall meet the following requirements:

   (1) Subject to subsection (b) of this Code section, the maximum term, including any renewal periods, of any qualified interest rate management agreement may not exceed ten years unless such longer term has been approved by the governing body of the local governmental entity; provided, however, that in no case may the term of the qualified interest rate management agreement exceed the latest maturity date of the bonds, notes, or debt or lease or installment purchase contract referenced in the qualified interest rate management agreement;

   (2) The local governmental entity shall enter into a qualified interest rate management agreement only with a counterparty meeting the requirements set forth in paragraph (1) of Code Section 36-82-250;

   (3) Prior to the execution and delivery by the local governmental entity of any qualified interest rate management agreement, an interest rate management plan meeting the requirements of Code Section 36-82-252 must have been approved by the governing body of the local governmental entity and the governing body of the local governmental entity shall have been provided evidence that such qualified interest rate management agreement is in compliance with the existing interest rate management plan;

   (4) Any qualified interest rate management agreement shall be payable only in the currency of the United States of America; and

   (5) Unless otherwise approved by the governing body of the local governmental entity, the notional amount of any qualified interest rate management agreement shall not exceed the outstanding principal amount of the debt or the aggregate payments due under any lease or installment purchase contract to which such agreement relates.

(b) A qualified interest rate management agreement may renew from calendar year to calendar year and may provide for the payment of any fee related to a termination or a nonrenewal, so long as the following requirements are satisfied:

   (1) Such qualified interest rate management agreement shall terminate absolutely at the close of the calendar year in which it was executed and at the close of each succeeding calendar year for which it may be renewed;

   (2) Any such qualified interest rate management agreement may provide for automatic renewal unless positive action is taken by the local governmental entity to terminate such contract, or may provide for termination or renewal in some other manner not prohibited by law, which method of renewal or termination, in either case, shall be specified in the qualified interest rate management agreement; and

   (3) Such qualified interest rate management agreement shall include a statement of the total obligation of the local governmental entity for the calendar year of execution and, if renewed, for the calendar year of renewal.

A qualified interest rate management agreement meeting the requirements of this subsection may also provide that the local governmental entity's obligations will terminate immediately and absolutely at such time as appropriated and other funds encumbered for payment by the local governmental entity pursuant to the terms of such qualified interest rate management agreement are no longer available to satisfy such obligations. The total obligation of the local governmental entity for the calendar year payable pursuant to a qualified interest rate management agreement may be stated in contingent but objective terms with respect to variable rate payments or termination payments, but in that event a qualified interest rate management agreement must provide that it will terminate immediately and absolutely at such time as appropriated and other funds encumbered for its payment are no longer available to satisfy the obligations of the local governmental entity under such agreement. A qualified interest rate management agreement executed under this subsection shall not be deemed to create a debt of the local governmental entity or otherwise obligate the payment of any sum beyond the calendar year of execution or, in the event of a renewal, beyond the calendar year of such renewal.
   (c)(1) Any qualified interest rate management agreement of a local governmental entity may provide that it is an unconditional, limited recourse obligation of such local governmental entity payable from a specified revenue source.

   (2) A local governmental entity may, in any qualified interest rate management agreement that constitutes a limited recourse obligation of the local governmental entity, pledge to the punctual payment of amounts due under the qualified interest rate management agreement revenues from a specified revenue source, which shall not include any taxes, including, without limitation, collateral derived from such revenue source or proceeds of the debt, including debt for future delivery, to which such qualified interest rate management agreement relates.

(d) A qualified interest rate management agreement that constitutes a limited recourse obligation shall not be payable from or charged upon any funds other than the revenue identified as the source of payment thereof, nor shall the local governmental entity entering into the same be subject to any pecuniary liability thereon. No counterparty under any such qualified interest rate management agreement shall ever have the right to compel any exercise of the taxing power of the state or the local governmental entity to pay any amount due under any such qualified interest rate management agreement, nor to enforce payment thereof against any property of the state or local governmental entity, other than the specified revenue source; nor shall any such qualified interest rate management agreement constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the state or local governmental entity, other than the specified revenue source. Every such qualified interest rate management agreement shall contain a recital setting forth the substance of this subsection.

(e) Any local governmental entity may enter into credit enhancement or liquidity agreements in connection with any qualified interest rate management agreement containing such terms and conditions as the governing body determines are necessary or desirable, provided that any such agreement has the same source of payment as the related qualified interest rate management agreement.

Code 1981, § 36-82-253, enacted by Ga. L. 2005, p. 642, § 1/SB 227.