4.2.3.1 Constituted Authorities

4.2.3.1 Constituted Authorities

A constituted authority is an entity that is formed under state law and is specifically authorized by state law to issue bonds on behalf of a state or a political subdivision of a state to further public purposes. In general, for an entity to be treated as a constituted authority the following must be true:

1. The entity must have been formed with the approval of the state or political subdivision on behalf of which it is intending to issue bonds.
   
   
2. The governing board of the entity must be controlled by the governing body of the applicable state or political subdivision.
   
   
3. The entity must have the power to acquire, finance, lease, and sell property and to issue bonds in furtherance of its purposes.
   
   
4. Debt service on bonds must be payable from revenues of the entity and the applicable state or political subdivision must not be liable to bondholders for payments of debt service (although the entity’s revenues may be entirely derived from payments made by the applicable state or political subdivision).
   
   
5. The entity is a non profit or state agency and earnings cannot benefit private persons.
   
   
6. Upon dissolution, title to all bond financed property must revert to the applicable state or political subdivision.