The formal authorization to issue the Bonds, adopted by the governing body of the Issuer.

A Bond Resolution may be adopted by the Issuer for the purpose of authorizing the issuance of the Bonds and giving authority to officers of the Issuer to execute any documents necessary to close the financing. In general, a Bond Resolution is adopted prior to the Closing and even prior to the sale of the Bonds (which occurs when the parties sign the Bond Purchase Agreement or receive Competitive Bids in a Competitive Sale) and typically includes or makes provision for the final terms of the Bonds. If the final terms are not yet available because the Bonds have not been sold, the Issuer may use the Bond Resolution to set certain parameters (e.g., the maximum Principal amount of Bonds to be issued, maximum Interest Rate, maximum Maturity Date, maximum Premium/Discount, and Optional Redemption date) on the terms of the Bonds, in which case the Bond Resolution will delegate to an officer of the Issuer or a committee composed of Issuer members or an officer (e.g., a director of finance) the responsibility of negotiating the final terms of the Bonds and related financing terms.  If the Bond Resolution includes parameters of the sale with delegated authority, then the Bonds must be sold in adherence with such parameters.

The Bond Resolution constitutes a contract between the Issuer and the bondholders. Special attention should be devoted to ensuring that the Bond Resolution is final and free of any errors before submitting it to the governing body of the Issuer (i.e., county commission, city commission, city council, town council) for adoption.  Once adopted by the Issuer, the Bond Resolution is final and cannot be changed.  Any changes would likely need to be made by supplemental Bond Resolution adopted by the governing body of the Issuer and could delay the transaction. Typically, the Bond Resolution will include the substantially final form of several of the documents listed below as exhibits, meaning these documents may be changed to some degree even after the Bond Resolution is adopted.

A Bond Resolution may be only one piece of the Issuer’s approval of the terms of the Bonds. Local law procedures vary considerably from Issuer to Issuer and from state to state. The steps needed by a particular Issuer to approve a Bond Issue are largely determined by applicable state and local governmental laws.  For example, some Issuers must adopt Ordinances, which may be subject to popular referendum, and then follow the Ordinances with a Bond Resolution.  Other Issuers are required to have the state legislature adopt bond-issuing authority on their behalf.  Still other Issuers (primarily authorities formed under state law for the purpose of being Conduit Issuers) have streamlined procedures that permit the issuance of the Bonds with a single Bond Resolution.  Sometimes, too, different procedures must be followed by the same Issuer for new money Bonds as opposed to Refunding Bonds.  You should consult closely with your supervising attorney to gain a detailed understanding of the appropriate documentation for each particular transaction, particularly if the Issuer is one with which you and/or your firm has not previously worked.  There are numerous pitfalls relating to Bond Resolutions and approval procedures which make replicating a prior transaction without double-checking extremely dangerous.

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See Also

Issuer

A state, political subdivision, agency or authority that borrows money through the sale of bonds or other securities.