Idaho State Statutes - Idaho Attorney Directory

PUBLIC SECURITIES OF HEALTH INSTITUTIONS -- INTEREST EXCHANGE
AGREEMENTS. (1) As used in this section:
(a) "Authorized entity" means any of the following entities: the
authority, a county that has created a hospital board under chapter 36,
title 31, Idaho Code, and that owns and operates a county hospital or
health facility, or a hospital district created and existing under section
39-1331, et seq., Idaho Code, that owns and operates a hospital or health
facility.
(b) "Public securities" means bonds, notes, debentures, interim
certificates, bond anticipation notes, commercial paper, or other
evidences of indebtedness, or lease, installment purchase, or other
agreements, or certificates of participation therein, issued or entered
into by or on behalf of an authorized entity in accordance with applicable
law for the purpose of financing health institutions, and including
specifically leases between the authority and counties authorized by
section 31-836, Idaho Code; and between the authority and hospital
districts authorized by section 39-1339, Idaho Code.
(2) An authorized entity that has issued or entered into, or proposes to
issue or enter into, public securities may enter into an agreement for an
exchange of payments based on interest rates or for a hedge of interest rates
as provided in this section if the authorized entity finds that such an
agreement would be in the best interest of the authorized entity.
(3) An authorized entity may enter into an agreement to exchange payments
based on interest rates or to hedge interest rates only if:
(a) The long-term debt obligations of the person or entity with whom the
authorized entity enters into the agreement are rated in either of the two
(2) highest rating categories of a nationally recognized rating agency,
without regard to any modification of the rating; or
(b) The obligations pursuant to the agreement of the person or entity
with whom the authorized entity enters into the agreement are either:
(i) Guaranteed by a person or entity whose long-term debt
obligations are rated in either of the two (2) highest rating
categories of a nationally recognized rating agency, without regard
to any modification of the rating; or
(ii) Collateralized by obligations deposited with the authorized
entity or an agent of the authorized entity which would: (A) be
legal investment for such authorized entity and is in either of the
two (2) highest rating categories of a nationally recognized rating
agency, without regard to any modification of the rating; and
(B) have a market value at least equal to the amount the person or
entity would be required to pay to the authorized entity if the
agreement was terminated before its final payment date, excluding any
costs, legal fees or consequential damages.
(4) An authorized entity may agree, with respect to public securities
that the authorized entity has issued or entered into, or proposes to issue or
enter into, bearing interest at a variable rate, to pay sums equal to interest
at a fixed rate or rates or at a different variable rate determined pursuant
to a formula set forth in the agreement on an amount not to exceed the
principal amount of the public securities with respect to which the agreement
is made, in exchange for an agreement to pay sums equal to interest on the
same principal amount at a variable rate determined pursuant to a formula set
forth in the agreement.
(5) An authorized entity may agree, with respect to public securities
that the authorized entity has issued or entered into, or proposes to issue or
enter into, bearing interest at a fixed rate or rates, to pay sums equal to
interest at a variable rate determined pursuant to a formula set forth in the
agreement on an amount not to exceed the outstanding principal amount of the
public securities with respect to which the agreement is made, in exchange for
an agreement to pay sums equal to interest on the same principal amount at a
fixed rate or rates set forth in the agreement.
(6) An authorized entity may, with respect to public securities that the
authorized entity has issued or entered into, or proposes to issue or enter
into, bearing interest at a fixed rate or rates or at a variable rate or
rates, or with respect to securities with respect to which it has entered into
an interest rate exchange agreement as described in subsection (4) or (5) of
this section, enter into an interest rate hedge agreement to hedge future
interest rates including, without limitation, an interest rate cap agreement,
an interest rate floor agreement or any combination thereof, on a specified
principal sum in exchange for a sum of money or an agreement to pay sums equal
to interest on the same principal amount at a fixed rate or rates or variable
rate or rates set forth in the agreement.
(7) The term of an agreement entered into pursuant to this section must
not exceed the term of the public securities with respect to which the
agreement was made.
(8) An agreement entered into pursuant to this section is not a debt or
indebtedness or liability of the authorized entity for the purposes of any
limitation upon the debt or indebtedness or liability of the authorized entity
or any requirement for an election with regard to the issuance of debt or
indebtedness or liability that is applicable to the authorized entity.
(9) Limitations upon the rate of interest on a public security do not
apply to interest paid pursuant to an agreement entered into pursuant to this
section.
(10) An authorized entity which has entered into an agreement pursuant to
this section with respect to those public securities may treat the amount or
rate of interest on the public securities as the amount or rate of interest
payable after giving effect to the agreement for the purpose of calculating:
(a) Rates and charges of a revenue-producing enterprise whose revenues
are pledged to or used to pay public securities of the authorized entity;
(b) Statutory requirements concerning revenue coverage that are
applicable to public securities of the authorized entity;
(c) Tax levies to pay debt service on public securities of the authorized
entity; and
(d) Any other amounts which are based upon the rate of interest of public
securities of the authorized entity.
(11) Subject to covenants applicable to the public securities, any
payments required to be made by the authorized entity under the agreement may
be made from money pledged to pay debt service on the public securities with
respect to which the agreement was made or from any other legally available
source.

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