000,000 General State Authority of the Commonwealth of Pennsylvania Serial Bonds, 19th Series, are eligible for purchase, dealing in, underwriting, and unlimited holding by National Banks under the provisions of paragraph Seventh of 12 U.S.C. 24.

(b) Ruling. Following the principles, applied in our decision of July 3, 1963, 12 C.F.R. 1.25, that the Eighteenth Series of these bonds were eligible for purchase, dealing in, underwriting and unlimited holding by National Banks, it is our conclusion that the bonds of the General State Authority of the Commonwealth of Pennsylvania, Nineteenth Series, are eligible for purchase, dealing in, underwriting, and unlimited holding by National Banks.

Dated: February 6, 1964.

§ 1.133 State of Israel Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule that the 4% Dollar Bonds of the State of Israel, Second Development Issue, are eligible for investment by National Banks under the provisions of Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. Israel's economic development and its record of payments are sufficient to support a determination by a bank that the State of Israel is and will be able to perform its obligations. Such a determination must, however, be based to a substantial extent upon estimates believed to be reliable. For this reason and because of the limitations on the transfer and marketability of the bonds, holdings will be subject to the limitations of § 1.6(b) of this part.

(c) Ruling. It is our conclusion that the 4% Dollar Bonds of the State of Israel, Second Development Issue, are eligible for purchase by National Banks within the limitations of Paragraph Seventh of 12 U.S.C. 24 and of 1.6(b) of this part. Accordingly, a bank's holdings of these bonds and of other securities subject to the limitations of § 1.6(b) of this part may not exceed in the aggregate five percent of the bank's capital and surplus. Dated: February 6, 1964

§ 1.134 Jacksonville Expressway Revenue Bonds

(a) Request. The Comptroller of the Currency has been requested to rule that the $135

million Jacksonville Expressway Revenue Bonds, Series of 1963, of the Jacksonville Expressway Authority (Florida) are eligible for investment by National Banks under the provisions of Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The Jacksonville Expressway Authority, a corporate agency of the State of Florida, was created pursuant to a special act of the Florida Legislature. Its principal purpose is to issue its bonds to finance an expressway system in metropolitan Jacksonville to be leased to and operated by the Florida State Road Department. It is authorized to secure its bonds by a pledge of toll and other revenues and certain gasoline tax funds. The costs of operation and maintenance of the expressway system are paid by the Florida State Road Department from monies other than the tolls and other revenues of the system. The system is presently composed of three toll bridges and a system of expressways.

(2) The proceeds from the sale of these bonds will be used to refinance the Authority's outstanding bonds (Series of 1957) and to construct an additional bridge and other expressway improvements. The financial history of the Authority over the past six years shows a steady increase in gross tolls and in available gasoline tax funds. If funds from these sources continue at the current level, they will be sufficient to cover the debt service requirements of the proposed bond issue through 1972. Engineering estimates indicate that with the construction of the new bridge and other improvements, funds available for bond service will be sufficient to enable the Authority to perform all that it undertakes to perform in connection with these bonds, including all debt service requirements.

(c) Ruling. It is our conclusion that a bank may in these circumstances prudently determine that there is adequate evidence that the Authority will be able to perform all that it undertakes to perform and that the Jacksonville Expressway Revenue Bonds, Series of 1963, of the Jacksonville Expressway Authority meet the requirements of § 1.5(a) of this part and are eligible for investment by National Banks under the provisions and subject to the 10 percent limitation of Paragraph Seventh of 12 U.S.C. 24.

Dated: March 11, 1964

§ 1.135 Bond Anticipation Notes Issued by the New York State Housing Finance Agency

(a) Request. The Comptroller of the Currency has been requested to rule on the application of the 10 percent limitation of Paragraph Seventh of 12 U.S.C. 24 to bond anticipation notes issued by the New York State Housing Finance Agency.

(b) Opinion. The Agency issues bond anticipation notes and upon the issuance of the bonds provides for the funding of these notes by the deposit of bond proceeds sufficient to pay the principal of the notes in trust for the sole purpose of paying such principal. The funds deposited are required to be invested in direct obligations of the United States, maturing not later than the maturity date of the notes.

(c) Ruling. When the proceeds from the Agency bonds are deposited, the notes are not thereafter considered obligations of the issuer for the purpose of computing the 10 percent limitation prescribed by 12 U.S.C. 24 on the holdings of the investment securities of any one obligor.

Dated: April 10, 1964

§ 1.136 State Public School Building Authority of the Commonwealth of Pennsylvania Series N Bonds.

(a) Request. The Comptroller of the Currency has been requested to rule that the $25 million School Lease Revenue Bonds, Series N, of the State Public School Building Authority of the Commonwealth of Pennsylvania are eligible for purchase, dealing in, underwriting and unlimited holding by National Banks under paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The State Public School Building Authority was created in 1947 by an act of the General Assembly of the Commonwealth of Pennsylvania, as a body corporate and politic, a public corporation and a governmental instrumentality. The purpose of the Authority is the construction, improvement, maintenance, operation, furnishing and equipping of public school buildings for use as a part of the Public School System of the Commonwealth of Pennsylvania. In order to provide funds for this purpose, the Author

ity has been authorized to issue its bonds and to pledge its revenues and its full faith and credit for the payment thereof. It is not authorized, however, to pledge the credit or the taxing power of the Commonwealth or any of its school districts.

(2) The proceeds from the sale of the bonds of the Authority will be used to refund certain outstanding bonds of the Authority and for school building projects which are to be leased to School Districts of the Commonwealth. The leases will provide for payment, out of the current revenues of the School District, of annual rentals substantially in excess of the annual principal and interest requirements on the bonds. Pennsylvania law authorizes School Districts to enter into leases with the Authority and to levy ad valorem real estate taxes without limitation as to rate or amount to pay the rentals provided for in such leases. State school subsidies include reimbursement to School Districts in accordance with a statutory formula and approval procedure for a portion of the rental paid to the Authority on approved projects. The bonds will be direct and general obligations of the Authority and will be secured equally with all other bonds of the Authority, issued or to be issued, by the full faith and credit of the Authority and by the pledge of rentals payable by School Districts on projects leased from the Authority.

(3) The Supreme Court of Pennsylvania has passed favorably on the constitutionality of the Act creating the Authority, has ruled that the current revenues of a School District include taxes for the ensuing year, State school subsidies and other revenues, and that the long term commitment of a School District to use current revenues to pay annual rentals to the Authority does not violate the municipal debt limitation of the Pennsylvania Constitution.

(4) The bonds of the Authority are the general obligations of a public authority of the Commonwealth of Pennsylvania. The resources of the Authority include the lease rental obligations of Pennsylvania School Districts which possess powers of general property taxation and in addition receive from the Commonwealth school subsidy payments under an established statutory program. The Commonwealth has thus made appropriate provisions and provided adequate resources

for the payment of the bond obligations of its duly constituted School Building Authority and the lease rental obligations of its School Districts.

(c) Ruling. Following the principles and definitions set forth in pararaphs (d) and (e) of § 1.3 and applied in rulings on the Virginia Public School Authority and on Authorities of the Commonwealth of Pennsylvania (§§ 1.124, 1.125, 1.129), it is our conclusion that the School Lease Revenue Bonds, Series N, of the State Public School Building Authority of the Commonwealth of Pennsylvania are eligible for purchase, dealing in, underwriting and unlimited holding under Paragraph Seventh of 12 U.S.C. 24. Dated: April 8, 1964.

§ 1.137 Delaware River and Bay

Authority Revenue Bonds

(a) Request. The Comptroller of the Currency has been requested to rule that the $103,000,000 Revenue Bonds of the Delaware River and Bay Authority are eligible for investment by National Banks and banks in the District of Columbia under the provisions of Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) The bonds are being issued for the purposes of paying the balance of the cost of constructing an additional bridge across the Delaware River immediately adjacent to The Delaware Memorial Bridge, the cost of constructing certain improvements and modifications to The Delaware Memorial Bridge and the balance of the cost of constructing and acquiring a public ferry system across Delaware Bay between Cape May, New Jersey, and Lewes, Delaware.

(2) The subject issue consists of revenue bonds to be issued by The Delaware River and Bay Authority which is a body politic and an agency of the government of the States of Delaware and New Jersey created in 1962 by a compact between these two states for the purpose of developing the area in both States, bordering the Delaware River and Bay for transportation, port and terminal purposes. Only the tolls and other revenues to be derived from the sources heretofore described are pledged as security for the bonds. The bonds do not pledge the credit of the States of Delaware or New Jersey or any agency or political subdivision thereof and do not create

a debt or liability of the States of Delaware or New Jersey or of any agency or political subdivision thereof.

(3) The subject bonds are to be issued under and secured by a trust agreement which provides for fixing and revising charges for traffic using the Authority Facilities and for the deposit of a sufficient amount of charges, over and above the amount necessary for the payment of current expenses, to a special sinking fund for debt service of all bonds issued under the trust agreement. All revenues derived from any other crossing facility owned and operated by the Authority will be deposited in the Revenue Fund and applied in the same manner.

(4) The Compact between the States of of Delaware and New Jersey by which the Authority was created contains a covenant by which said States agree that so long as any obligations of the Authority remain outstanding and unpaid, neither of said States will authorize any structure or facility adapted for public use in crossing the Delaware River or Bay between the States within prescribed geographic boundaries by any person or body other than the Authority unless adequate provision shall be made for the protection of those advancing money upon such obligations.

(5) The First Bridge, which has been in operation since August 16, 1951, is a vital link in the heavily traveled route between New England and Washington, D. C. Net operating revenues enabled the Authority to retire by September 1963, $39,290,000 of the $48,600,000 of bonds issued to construct and improve the First Bridge. The remaining principal indebtedness of $9,310,000 was refunded by the proceeds of short term notes issued on September 16, 1963, which are due on June 15, 1964. The construction of the second structure for The Delaware Memorial Bridge is expected to result in a significant increase in revenues through the inducement of a larger traffic volume on The Delaware Memorial Bridge. It is estimated that revenues from the crossing facilities of the Authority will cover principal and interest requirements from 1.51 and 1.71 times during the next ten years and from 1.71 to 2.73 times from 1974 to 2003. The earnings records and financial statements of the Authority warrant the conclusion that the subject bonds fall within § 1.5(a) and are therefore, subject to the

limitation of § 1.6(a). However, bankers are reminded that they must determine on the basis of their own review whether securities are suitable for their own investment.

(c) Ruling. It is the conclusion of this Office that the above described revenue bonds of The Delaware River and Bay Authority are eligible for investment by National Banks and banks in the District of Columbia within the limitations of Paragraph Seventh of 12 U.S.C. 24.

Dated: April 14, 1964.

§ 1.138 Sabine River Authority, State of Louisiana, General Obligation Bonds, Series 1964.

(a) Request. The Comptroller of the Currency has been requested to rule that the $15,000,000 Sabine River Authority, State of Louisiana, General Obligation Bonds, Series 1964, are eligible for investment by national banks under Paragraph Seventh of 12 U.S.C. 24.

a

(b) Opinion. (1) The Authority, created by an Act of the Louisiana Legislature and subsequently ratified in constitutional amendment, is an agency and instrumentality of the State of Louisiana. In accordance with the purposes of the Authority, the subject bonds are to pay part of the $60,000,000 acquisition and construction cost of dam, water reservoir, and hydroelectric power generating plant to be constructed by the Authority and the Sabine River Authority of Texas. This joint project is to be undertaken pursuant to a compact between Louisiana and Texas for the purpose of conserving and developing the waters of the Sabine River for beneficial purposes. In addition to hydroelectric generation, the joint project will create a reservoir of 65-mile length (to be the largest inland body of water in both Louisiana and Texas) and control, both upstream and downstream of the dam, waters on the boundary line between Louisiana and Texas. Water will be provided for industrial and agricultural uses as well as community development and recreational activities.

(2) The estimated cost of the project is to be paid with the proceeds of these bonds, the proceeds of $15,000,000 bonds to be issued simultaneously by Sabine River Authority of Texas, $15,000,000 to be con

tributed by the State of Louisiana, and $15,000,000 to be supplied by Sabine River Authority of Texas from sources other than the issuance of bonds. The power to be supplied by the project is under contract of sale to Gulf States Utilities Company, Central Louisiana Electric Company, Inc., and Louisiana Power & Light Company. Under this contract of sale, these companies agree to be unconditionally obligated without qualification to make payments sufficient to pay joint project bond principal and interest of both Authorities. The balance of Power Payments remaining after payment of such bond principal and interest is estimated sufficient to pay joint project maintenance and operation expenses. Engineering estimates indicate that with the construction of the new bridge and other improvements, funds available for bond service will be sufficient to enable the Authority to perform all that it undertakes to perform in connection with these bonds, including all debt service requirements.

(3) The Authority is authorized to issue and have outstanding bonds and notes not in excess of $15,000,000 which are payable from revenues derived from properties and facilities maintained and operated by the Authority or received by it from other sources. Consequently, unless the law is amended to permit issuance of such bonds and notes in excess of said $15,000,000, such issuance of additional bonds would be limited to the amount of bonds then retired by the Authority.

(c) Ruling. It is our conclusion that a bank may in these circumstances prudently determine that there is adequate evidence that the Authority will be able to perform all that it undertakes to perform and that the General Obligation Bonds, Series 1964, of the Sabine River Authority, State of Louisiana meet the requirements of § 1.5(a) and are eligible for investment by national banks under the provisions and subject to the 10 percent limitation of Paragraph Seventh of 12 U.S.C. 24.

Dated: April 17, 1964.

§ 1.139 State of Israel Bonds, Third Development Issue

(a) Request. The Comptroller of the Currency has been requested to rule that the 4% Dollar Bonds of the State of Israel, Third Development Issue, are eligible for investment

by National Banks under the provisions of Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. The Third issue is similar to the Second issue, except that the investment characteristics of the bonds of the Third issue have been improved by the undertaking of the State of Israel to purchase, under certain circumstances, bonds of the Third issue held by banks and certain other holders. For this reason, our ruling of February 6, 1964, on the eligibility of the Second issue, 12 CFR 1.133, will also be applicable to the Third issue.

(c) Ruling. It is our conclusion that the 4% Dollar Bonds of the State of Israel, Third Development Issue, are eligible for purchase by National Banks within the limitations of Paragraph Seventh of 12 U.S.C. 24 and of § 1.6(b) of this part. Accordingly, a bank's holdings of these bonds and of other securities subject to the limitations of § 1.6 of this part may not exceed in the aggregate five percent of the bank's capital and surplus. Dated: May 27, 1964

§ 1.140 Richmond-Petersburg Turnpike

Bonds

(a) Request. The Comptroller of the Currency has been requested to rule that the $69,000,000 3.45% and $6,150,000 42% Turnpike Revenue Bonds of the RichmondPetersburg Turnpike Authority (Virginia) are eligible for investment by National Banks under Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. The Turnpike Authority, a political subdivision of the Commonwealth of Virginia, was created in 1954 by an act of the General Assembly for the purposes of constructing, operating, and maintaining a turnpike between and through the cities of Richmond, Virginia, and Petersburg, Virginia. The Turnpike, which opened in 1958, is a limited access, divided highway, 34.7 miles in length, which provides a link in the heavily traveled interstate route between the northern cities of the East Coast and Florida. There has been a steady increase in traffic and revenue since its opening. For the 12 months ending December 31, 1963, the substantial gains in traffic and revenues over calendar 1962 were evident. Operating expenses for the 12-month period increased moderately, and net revenues were up 12.6%. Net earnings provided 1.58 times coverage on interest

requirements as compared to 1.40 for 1962, and are now sufficient to cover average annual debt service. The Authority's bond reserve fund at the end of 1963 totaled over $4.5 million, which is well above the $3.2 million balance at the end of 1962 and is to be accumulated to an amount equal to two year's interest, or a dollar amount of over $5.3 million.

(c) Ruling. It is our conclusion that a bank may in these circumstances prudently determine that there is adequate evidence that the Authority will be able to perform all that it undertakes to perform and that the Turnpike Revenue Bonds of the RichmondPetersburg Turnpike Authority meet the requirements of § 1.5(a) of this part and are eligible for investment by National Banks under the provisions and subject to the 10 percent limitation of Paragraph Seventh of 12 U.S.C. 24.

Dated: June 8, 1964

§ 1.141 School Refunding Bonds, Broward County, Florida

(a) Request. The Comptroller of the Currency has been requested to rule that the $12,350,000 School Refunding Bonds, Series of 1963, of Special Tax School District Number One, Broward County, Florida, are eligible for purchase, dealing in, underwriting and unlimited holding by National Banks under Paragraph Seventh of 12 U.S.C. 24.

(b) Opinion. (1) Special Tax School District Number One, Broward County, Florida, is a body politic exercising governmental powers relating to the administration and operation of all public schools in Broward County and having the power to tax through levy and collection of a direct annual tax, without limitation as to rate and amount, upon all taxable property within the school district for the purpose of paying principal of and interest on bonds it may issue. The area of the school district is coterminous with that of Broward County.

(2) The proceeds from the sale of these bonds will be used on June 1, 1966, to refund an outstanding 1956 series. Until this refunding takes place, the proceeds will be invested in direct obligations of the United States which are expected to provided income sufficient for debt service requirements. During