(1) A public entity may enter into an agreement for an exchange of interest rates, cash flows, or payments as provided in this section if it finds that such an agreement would be in the best interests of the public entity. In entering into any agreement under this section, the public entity shall give consideration to the savings and debt management benefits to the citizens of the public entity. Such agreement shall contain such payment, security, default, remedy, and other terms and conditions as the public entity may deem appropriate, including provisions permitting the public entity to pay the party with whom the public entity enters the agreement for any loss of benefits under such agreement upon early termination thereof or default thereunder.

(2) A public entity may enter into an agreement to exchange interest rates, cash flows, or payments only if:

(a) The long-term debt obligations of the party with whom the public entity enters the agreement are rated in one of its two highest rating categories by one or more nationally recognized securities rating agencies which regularly rate such obligations; or

(b) The obligations under the agreement of the party with whom the public entity enters the agreement are either:

(I) Guaranteed by a party whose long-term debt obligations are rated in one of its two highest rating categories by one or more nationally recognized securities rating agencies which regularly rate such obligations; or

(II) Collateralized by obligations deposited with the public entity or an agent of the public entity which would be legal investments for the public entity pursuant to section 24-75-601.1, C.R.S., and which maintain a market value of not less than one hundred percent of the principal amount upon which the exchange of interest rates is based.

(3) A public entity may agree, with respect to public securities that the public entity has issued or proposed public securities bearing interest at a variable rate, to pay sums calculated at a fixed rate or rates or at a different variable rate or rates determined pursuant to a formula or formulas set forth in the agreement on an amount not to exceed the principal amount of the public securities or proposed public securities with respect to which the agreement is made, in exchange for the payment to the public entity of sums calculated at a variable rate or rates determined pursuant to a formula or formulas set forth in the agreement on the same principal amount.

(4) A public entity may agree, with respect to public securities that the public entity has issued or proposed public securities bearing interest at a fixed rate or rates, to pay sums calculated at a variable rate or rates or in fixed amounts determined pursuant to a formula or formulas or a schedule or schedules set forth in the agreement on an amount not to exceed the principal amount of the public securities or proposed public securities with respect to which the agreement is made, in exchange for an agreement for the payment to the public entity of sums calculated at a fixed rate or rates set forth in the agreement on the same principal amount.

(5) The term of an agreement entered into pursuant to this section shall not exceed the term of the public securities or proposed public securities with respect to which the agreement is made.

(6) An agreement entered into pursuant to this section is not a debt or indebtedness of the public entity for the purposes of any limitation upon the debt or indebtedness of the public entity or any requirement for an election with regard to the issuance of public securities that is applicable to the public entity.

(7) A public entity which has entered into an agreement pursuant to this section with respect to public securities or proposed public securities may treat the amount or rate of interest on the public securities or proposed 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;

(b) Statutory requirements concerning revenue coverage that are applicable to public securities;

(c) Tax levies to pay debt service on public securities; and

(d) Any other amounts which are based upon the rate of interest of public securities.

(8) Subject to covenants applicable to the public securities, any payments required to be made by the public entity under the agreement may be made from and secured by amounts pledged to pay debt service on the public securities or proposed public securities with respect to which the agreement is made or from any other legally available source.

(9) Prior to entering into an interest rate exchange agreement, the governing board of the public entity shall receive information as to the costs, risks, and benefits of the agreement from the staff of the public entity.

(10) Any state agency, as defined in section 24-36-121 (3)(c), C.R.S., shall notify the state treasurer when it enters into an agreement for an exchange of interest rates, cash flows, or payments as provided in this section.