Whenever any municipality, as defined in section 7-369, has authorized the issuance of general obligation bonds under the provisions of any public or special act, it may authorize the issuance of temporary notes in anticipation of the receipt of the proceeds from the sale of such bonds. The amount of such notes may equal but not exceed the amount of such bonds. Pending the use of the proceeds of such notes for the purpose for which the bonds were authorized, the proceeds may be invested in the same manner as other general funds of the municipality are invested. Such notes shall be issued for a period of not more than two years, but notes issued for a shorter period of time may be renewed by the issue of other notes, provided the period from the date of the original notes to the maturity of the last notes issued in renewal thereof shall not exceed two years. The term of such notes shall not be included in computing the time within which such bonds must mature. The provisions of section 7-373 shall be deemed to apply to such notes, and such notes shall constitute general obligations of the municipality. No such note shall be included in computing the aggregate indebtedness and borrowing capacity of the municipality but, except as hereinafter provided, as long as any such note is outstanding, the entire authorized principal amount of such bonds shall be deemed to be outstanding for the purpose of computing the aggregate indebtedness and borrowing capacity of the municipality, unless funds for the payment of such note have been deposited in trust as hereinafter provided; provided, if the municipality has received a written commitment from any federal or state authority for a grant-in-aid for the project to be financed by such bonds, the amount of bonds included in the computation as aforesaid shall be reduced so that the amount included plus the grant-in-aid shall be equal to the total estimated cost of the project being so financed. The officer or agency authorized by law or by vote of the municipality to issue such notes shall, within any limitation imposed by the vote, determine the date, maturity, interest rate, form, manner of sale and other details of such notes. Such notes may bear interest or be sold at a discount. The interest or discount on such notes, including renewals thereof, and the expense of preparing, issuing and marketing them may be included as a part of the cost of the project or improvements being financed and may either be borrowed temporarily under the provisions of this section or permanently funded by the issue of bonds, notes or other obligations under the provisions of this chapter. Upon the sale of such bonds, the proceeds thereof, to the extent required, shall be applied forthwith to the payment of the principal and interest of all notes issued in anticipation thereof or shall be deposited in trust for such purpose with a bank or trust company, which may be the bank or trust company, if any, at which such notes are payable. Any power granted by this section shall be in addition to and not in derogation of any power existing in or hereafter granted to any municipality under the provisions of any special act.

(1953, 1955, S. 365d; 1971, P.A. 746; P.A. 83-519, S. 21, 23; P.A. 86-350, S. 9, 28.)

History: 1971 act added provision concerning consideration of grants-in-aid in computation of aggregate indebtedness; P.A. 83-519 provided clarification that the amount of such notes may equal but not exceed the amount of the bonds and that any proceeds of such notes not used for the purposes of the bonds may be invested in the same manner as general funds of the town; P.A. 86-350 changed the word “town” to “municipality”, and authorized temporary borrowing or permanent funding through bond issue to cover costs of interest or discounting of notes and expenses of preparing, issuing or marketing them.

See Sec. 42b-1 for definitions re registered public obligations.

See Sec. 42b-11 re effect of chapter 748 with respect to registered public obligations issued on or after July 7, 1983.

See Sec. 42b-12 for requirement that this section and chapter 748 be construed in conjunction with the Uniform Commercial Code.

See Sec. 42b-14 re severability of provisions relating to registered public obligations.