40A:5-42. Purchase and retirement of outstanding bonds; procedure; duties of Local Finance Board

Any local unit, by resolution adopted by vote of at least two-thirds of the full membership of the governing body, may at any time appropriate and apply any unappropriated funds to the purchase and retirement of any of its then outstanding bonds, notes or other obligations. The purchase price may be the face value, or may be below or above the face value of such bonds, notes or other obligations. Any such proposed purchase shall be subject to the following provisions:

a. Before adoption of the resolution, the governing body shall cause satisfactory proof to be filed with the bureau that such funds then are, or within a reasonable time will be, available.

b. Before contracting to purchase any bonds, notes or other obligations at a price above their face value, the governing body shall submit such resolution to the said bureau for approval by the Local Finance Board. Before taking definite action, the said Local Finance Board may require the submission of additional information and may require that the governing body of the local unit shall call for public tenders of bonds, notes or other obligations on such notice and subject to such rules as the board may prescribe. On receipt of such tenders, the governing body shall report them to the said Local Finance Board together with a further proposed resolution for approval by that board.

In approving or disapproving any proposed purchase of bonds, notes or other obligations, the said Local Finance Board shall find and determine whether such appropriation of available funds is in the interest of the local unit, having regard for (1) the prospective need of funds for other purposes, (2) reasonableness of the price proposed to be paid, (3) any saving of interest to result from retirement of the bonds, notes or other obligations at the price proposed to be paid, (4) the equality and reasonableness of the debt service on obligations which will remain outstanding, and (5) fairness to the holders of other obligations.

After purchase of any bonds, notes or other obligations, satisfactory proof of cancellation of the bonds, notes or other obligations and of any coupons thereto annexed shall forthwith be filed with the bureau by the chief financial officer of the local unit.

Any local unit, by resolution adopted by vote of at least two-thirds of the full membership of the governing body may at any time appropriate to and pay into any sinking fund maintained by such local unit any unappropriated funds; provided, a certified copy of such resolution shall be submitted to the Local Finance Board and the Local Finance Board, by resolution, shall determine that it is satisfied by proof submitted to it that such funds then are, or within a reasonable time will be, available, and shall consent to such appropriation.

L.1960, c. 169, s. 1, eff. Jan. 1, 1962. Amended by L.1977, c. 396, s. 7, eff. Feb. 23, 1978.