2002 Legislation
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HOUSE BILL NO. 669 – Bond Bank Authority, revision

HOUSE BILL NO. 669

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H0669......................................................by STATE AFFAIRS
BOND BANK AUTHORITY - Amends and adds to existing law to revise provisions
of the Idaho Bond Bank Authority Act relating to municipal loans, moneys in
the reserve fund, transfers of moneys from the reserve fund and state sales
tax account, nonpayment of scheduled debt service payments and alternative
intercept procedures.
                                                                        
02/22    House intro - 1st rdg - to printing
02/25    Rpt prt - to Bus
02/26    Rpt out - ref'd to St Aff
02/27    Rpt out - rec d/p - to 2nd rdg
02/28    2nd rdg - to 3rd rdg
03/04    3rd rdg - PASSED - 64-0-6
      AYES -- Aikele, Barraclough, Barrett, Bell, Bieter, Black, Block,
      Boe, Bolz, Bradford, Bruneel, Callister, Campbell, Clark, Collins,
      Crow, Cuddy, Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13),
      Field(20), Gould, Hadley, Hammond, Harwood, Henbest, Higgins,
      Hornbeck, Jaquet, Jones, Kellogg(Duncan), Kendell, Kunz, Lake,
      Langford, Mader, Martinez, McKague, Meyer, Montgomery, Mortensen,
      Pearce, Pischner, Pomeroy, Raybould, Ridinger, Robison, Sali,
      Sellman, Shepherd, Smith(33), Smith(23), Smylie, Stevenson, Stone,
      Tilman, Trail, Wheeler, Wood, Young, Mr. Speaker
      NAYS -- None
      Absent and excused -- Bedke, Gagner, Loertscher, Moyle, Roberts,
      Schaefer
    Floor Sponsor - Deal
    Title apvd - to Senate
03/05    Senate intro - 1st rdg - to St Aff
03/11    Rpt out - rec d/p - to 2nd rdg
03/12    2nd rdg - to 3rd rdg
03/15    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Boatright, Branch Brandt, Bunderson, Burtenshaw,
      Cameron, Darrington, Davis, Deide, Dunklin, Frasure, Geddes, Goedde,
      Hawkins, Hill, Ingram, Ipsen, Keough, King-Barrutia, Little, Lodge,
      Marley, Noh, Richardson, Risch, Sandy, Schroeder, Sims, Sorensen,
      Stegner, Stennett, Thorne, Wheeler, Williams
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Sandy
    Title apvd - to House
03/15    To enrol
    Rpt enrol - Sp signed - Pres signed
03/18    To Governor
03/20    Governor signed
         Session Law Chapter 148
         Effective: 07/01/02

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 669
                                                                        
                                 BY STATE AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE IDAHO BOND BANK AUTHORITY;  AMENDING  SECTION  67-8702,  IDAHO
  3        CODE,  TO  FURTHER DEFINE "MUNICIPAL BOND" TO INCLUDE LOANS; AMENDING SEC-
  4        TION 67-8710, IDAHO CODE, TO PROVIDE THAT THE AUTHORITY MAY AUTHORIZE CER-
  5        TAIN AGREEMENTS WITH CORPORATE TRUSTEES IN ORDER TO ESTABLISH RESERVES AND
  6        OTHER FUNDS OR ACCOUNTS IN ADDITION TO OR IN  LIEU  OF  SPECIFIED  RESERVE
  7        FUNDS  IN ORDER TO SECURE BONDS ISSUED BY THE AUTHORITY UNLESS THE AUTHOR-
  8        ITY PROVIDES OTHERWISE; AMENDING SECTION 67-8713, IDAHO CODE,  TO  PROVIDE
  9        THAT  MUNICIPAL  BONDS  OR  ANY  RESERVE  SURETY  POLICY OR SIMILAR CREDIT
 10        ENHANCEMENT OBTAINED TO SECURE BONDS OF THE AUTHORITY SHALL  BE  DEPOSITED
 11        OR  TRANSFERRED  INTO  THE  RESERVE  FUND,  TO  PROVIDE THAT MONEYS IN THE
 12        RESERVE FUND ARE PLEDGED, TO PROVIDE REFERENCE TO MONEYS OF THE  AUTHORITY
 13        THAT  ARE  PLEDGED  TO PAY INTEREST AND PRINCIPAL, TO PROVIDE REFERENCE TO
 14        LEGISLATIVE APPROPRIATION AND TO PROVIDE THAT THE AUTHORITY MAY  ESTABLISH
 15        SUBACCOUNTS  IN THE RESERVE FUND; AMENDING SECTION 67-8716, IDAHO CODE, TO
 16        MAKE A GRAMMATICAL CHANGE, TO PROVIDE REFERENCES TO CODE SECTIONS  AND  TO
 17        REVISE  PROVISIONS RELATING TO THE TRANSFER OF MONEYS FROM THE STATE SALES
 18        TAX ACCOUNT; AMENDING SECTION 67-8725, IDAHO CODE, TO PROVIDE REFERENCE TO
 19        OUTSTANDING UNPAID MUNICIPAL BONDS, TO PROVIDE THAT THE PAYING  AGENT  MAY
 20        BE  THE TRUSTEE FOR THE BONDS OF THE AUTHORITY THAT ARE SECURED BY MUNICI-
 21        PAL BONDS, TO REVISE PROVISIONS RELATING TO THE  NONPAYMENT  OF  SCHEDULED
 22        DEBT  SERVICE  PAYMENTS  AND TRANSFERS OF MONEYS FROM THE RESERVE FUND, TO
 23        PROVIDE THAT PAYMENT BY THE STATE TREASURER OF MONEYS APPROPRIATED BY  THE
 24        LEGISLATURE  SHALL  DISCHARGE  CERTAIN  OBLIGATIONS  AND  TRANSFER CERTAIN
 25        RIGHTS FROM BONDHOLDERS TO THE STATE, TO PROVIDE THAT IF PAYMENTS ON BONDS
 26        ARE MADE BY THE STATE TREASURER FROM MONEYS IN THE RESERVE FUND AS  APPRO-
 27        PRIATED  BY  THE LEGISLATURE, THE STATE TREASURER SHALL IMMEDIATELY INTER-
 28        CEPT PAYMENTS FROM RECEIPTS OF PROPERTY TAX PAYMENTS OR SALES  TAX  MONEYS
 29        THAT  WOULD  BE  DISTRIBUTED, TO PROVIDE REFERENCES TO MUNICIPAL BONDS, TO
 30        PROVIDE THAT THE STATE TREASURER SHALL APPLY THE INTERCEPTED  PAYMENTS  TO
 31        REIMBURSE  THE  STATE  FOR  PAYMENTS  MADE  BY  THE STATE FOR THE BONDS BY
 32        DEPOSIT TO THE RESERVE FUND, TO CLARIFY MONEYS FOR  WHICH  A  MUNICIPALITY
 33        MAY  BE  RESPONSIBLE,  TO  PROVIDE THAT A MUNICIPALITY MAY BE COMPELLED TO
 34        LEVY AND PROVIDE TAX OR OTHER REVENUES TO PAY DEBT  SERVICE  ON  MUNICIPAL
 35        BONDS  WHEN DUE AND TO MAKE A GRAMMATICAL CHANGE; AND AMENDING CHAPTER 87,
 36        TITLE 67, IDAHO CODE, BY THE ADDITION OF  A  NEW  SECTION  67-8727,  IDAHO
 37        CODE, TO SET FORTH AN ALTERNATIVE INTERCEPT PROCEDURE.
                                                                        
 38    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 39        SECTION  1.  That  Section 67-8702, Idaho Code, be, and the same is hereby
 40    amended to read as follows:
                                                                        
 41        67-8702.  DEFINITIONS. As used in this chapter:
 42        (1)  "Authority" or "bond  bank  authority"  means  the  Idaho  bond  bank
 43    authority.
                                                                        
                                           2
                                                                        
  1        (2)  "Bonds"  means  bonds,  notes  or  other obligations of the authority
  2    issued under this chapter.
  3        (3)  "Municipal bond" means a bond, note or other obligation, including  a
  4    loan,  lease  or installment sale agreement, issued or undertaken by a munici-
  5    pality for any purpose authorized by law.
  6        (4)  "Municipality" means any county, city, municipal corporation,  school
  7    district,  irrigation  district,  sewer district, water district, highway dis-
  8    trict or other special purpose district or political subdivision of the  state
  9    established by law.
                                                                        
 10        SECTION  2.  That  Section 67-8710, Idaho Code, be, and the same is hereby
 11    amended to read as follows:
                                                                        
 12        67-8710.  ISSUANCE OF BONDS -- FORM OF ISSUANCE -- SALE PRICE  --  PAYMENT
 13    OR REFUNDING OF BONDS -- TERMS OF AGREEMENT WITH BONDHOLDER. (1) The authority
 14    may  issue  its bonds from time to time in principal amounts that it considers
 15    necessary to provide funds for any  purpose  under  this  chapter,  including,
 16    without  limitations,  to purchase municipal bonds, to fund reserves or to pay
 17    costs of issuance, refunding, including redemption  premium,  credit  enhance-
 18    ment,  or  other matters related to the purpose, structure or marketing of the
 19    bonds.
 20        (2)  Bonds shall be authorized by resolution of the  authority  and  shall
 21    bear the date, mature at the time or times, bear interest at the rate or rates
 22    of  fixed or variable interest, payable at the times, be in the denominations,
 23    be in the forms, carry the conversion or  registration  privileges,  have  the
 24    rank  or  priority,  be executed in the manner, be payable from the sources in
 25    the medium of payment at the place or places inside or outside the state,  and
 26    be  subject  to  the  terms  of redemption, with or without premium, rights of
 27    holders to tender for purchase and other terms and conditions as  the  resolu-
 28    tion of the authority provides.
 29        (3)  Bonds of the authority may be issued in one (1) or more series.
 30        (4)  Bonds  of  the authority may be sold at public or private sale at the
 31    price or prices the authority determines.
 32        (5)  The authority may, from time to time,  issue  its  bonds  under  this
 33    chapter  and  pay  and  retire, or fund or refund previously issued bonds from
 34    proceeds of refunding bonds, or from other funds or  money  of  the  authority
 35    available for that purpose.
 36        (6)  By resolution, the authority may authorize entering into an indenture
 37    or  trust  agreement  with  a  corporate trustee located within or outside the
 38    state in order:
 39        (a)  To provide for the issuance of the bonds with such  terms,  including
 40        without  limitation those terms referred to in subsection (2) of this sec-
 41        tion, as the authority may determine;
 42        (b)  To pledge or assign to the trustee for the benefit of holders of  the
 43        bonds  all  or  any part of the proceeds of the bonds, any municipal bonds
 44        purchased from municipalities, any other assets or revenues of or received
 45        by or pledged to the authority, and the income or other proceeds from  any
 46        or all of the foregoing;
 47        (c)  To  provide  for the establishment of reserves and any other funds or
 48        accounts that the authority determines to be necessary or appropriate,  in
 49        addition  to  or in lieu of the reserve fund established pursuant to  sec-
 50        tion 67-8713, Idaho Code, which  will  secure  all  bonds  issued  by  the
 51        authority unless the resolution of the authority providing for issuance of
 52        the bonds provides otherwise;
 53        (d)  To provide for the custody, safekeeping and enforcement of the munic-
                                                                        
                                           3
                                                                        
  1        ipal bonds acquired;
  2        (e)  To  provide for the right to sell or otherwise dispose of property of
  3        any kind, including municipal bonds;
  4        (f)  To provide for the investment of bond proceeds or other  moneys  held
  5        by  the  trustee  in such securities or obligations as may be described in
  6        the indenture or trust agreement;
  7        (g)  To provide for amending the indenture or  trust  agreement,  with  or
  8        without the consent of the holders of the bonds;
  9        (h)  To  provide  for  the replacement of lost, stolen, destroyed or muti-
 10        lated bonds;
 11        (i)  To provide for the issuance or limitations on issuance of  additional
 12        bonds;
 13        (j)  To  provide  for  the  rights, liabilities, powers and duties arising
 14        upon the breach of any covenant, condition or  obligation,  to  limit  the
 15        rights of bondholders to enforce covenants, conditions or obligations, and
 16        to prescribe the events of default and the terms and conditions upon which
 17        any  or  all of the bonds become or may be declared due and payable before
 18        maturity, and the terms and conditions upon which the declaration and  its
 19        consequences may be waived;
 20        (k)  To  appoint and to provide for the duties and obligations of a paying
 21        agent or agents or other fiduciaries inside or outside the state;
 22        (l)  To make covenants to do or refrain  from  doing  acts,  including  to
 23        enter  into  any  contract,  and to provide any other terms and conditions
 24        which the authority may determine to be necessary or appropriate in  order
 25        to better secure the bonds or improve their marketability; and
 26        (m)  To  intercept certain payments, and to impose interest and penalties,
 27        as provided in section 67-8725, Idaho Code.
                                                                        
 28        SECTION 3.  That Section 67-8713, Idaho Code, be, and the same  is  hereby
 29    amended to read as follows:
                                                                        
 30        67-8713.  RESERVE  FUND  --  ADDITIONAL  FUNDS  AND ACCOUNTS. (1) There is
 31    hereby created in the state treasury a fund to be known as the "Idaho  Munici-
 32    pal  Bond  Bank  Authority  Reserve Fund" (hereinafter referred to as "reserve
 33    fund") in which there shall be deposited or transferred:
 34        (a)  All proceeds of bonds or municipal bonds or any reserve surety policy
 35        or similar credit enhancement obtained to secure bonds  of  the  authority
 36        that  the  authority  may  require,  municipalities,  by contract with the
 37        municipality or by a resolution of the authority, to be deposited  in  the
 38        reserve fund; and
 39        (b)  All  moneys  appropriated  by  the legislature for the purpose of the
 40        fund.
 41        (2)  Moneys in the reserve fund shall be maintained by the  authority  and
 42    are  pledged and shall be held and applied solely to the payment of the inter-
 43    est on and principal of bonds, pursuant to the provisions of section  67-8725,
 44    Idaho  Code,  as the interest and principal become due and payable. Moneys may
 45    not be withdrawn from the reserve fund if a withdrawal would reduce the amount
 46    in the reserve fund to an amount less than the required debt service  reserve,
 47    as  herein  defined,  except  for  payment of interest then due and payable on
 48    bonds and the principal of bonds then maturing and payable, whether by  reason
 49    of  maturity  or mandatory redemption, for which payments other than moneys of
 50    the authority pledged to pay such interest and principal are not  then  avail-
 51    able.  As  used  in this chapter, "required debt service reserve" means, as of
 52    the date of computation, the amount required to be on deposit in  the  reserve
 53    fund as provided by resolution of the authority.
                                                                        
                                           4
                                                                        
  1        (3)  For  purposes  of valuation, investments in the reserve fund shall be
  2    valued  at par, or if purchased at less than par,  at  cost  unless  otherwise
  3    provided  by resolution of the authority. Valuation on a particular date shall
  4    include the amount of interest then earned or accrued  to  that  date  on  the
  5    moneys or investments in the reserve fund.
  6        (4)  Moneys  in  the  reserve  fund in excess of the required debt service
  7    reserve, whether by reason of investment or otherwise, may be withdrawn at any
  8    time by the authority and transferred  to  another  fund  or  account  of  the
  9    authority,  subject to the provisions of any agreement with the holders of any
 10    bonds.
 11        (5)  In order to assure the  maintenance  of  the  required  debt  service
 12    reserve  in  the reserve fund, the legislature may annually appropriate to the
 13    authority for deposit in the reserve fund the sum, certified by  the  chairman
 14    of  the authority to the legislature, that is necessary to restore the fund to
 15    an amount equal to the required debt service  reserve.  The  chairman  of  the
 16    authority,  annually before December 1, shall make and deliver to the legisla-
 17    ture his certificate stating the sum required to restore  the  funds  to  that
 18    amount. Nothing in this subsection creates a debt or liability of the state to
 19    make any appropriation.
 20        (6)  All  amounts  received on account of moneys appropriated by the state
 21    to the reserve fund shall be held and applied in accordance with this section;
 22    provided however, at the end of each fiscal year, if the amount in the reserve
 23    fund derived from amounts appropriated by the legislature exceeds the required
 24    debt service reserve, any amount representing earnings or income  received  on
 25    account  of  moneys  appropriated  to the reserve fund by the legislature that
 26    exceed the expenses of the authority for that fiscal year shall be transferred
 27    to the general fund of the state.
 28        (7)  The authority may establish subaccounts in the  reserve  fund,  addi-
 29    tional  reserves or other funds or accounts as may be, in its discretion, nec-
 30    essary or appropriate to further the accomplishment of its purposes or to com-
 31    ply with the provisions of any of its agreements or resolutions.
                                                                        
 32        SECTION 4.  That Section 67-8716, Idaho Code, be, and the same  is  hereby
 33    amended to read as follows:
                                                                        
 34        67-8716.  UNLIMITED SALES TAX ACCOUNT PLEDGE. (1) If moneys expected to be
 35    intercepted pursuant to section 67-8725, Idaho Code, are expected to be insuf-
 36    ficient to reimburse the state for its payments on in respect of the municipal
 37    bonds,  the  state treasurer shall certify to and give notice to the state tax
 38    commission of the amount of the deficiency.
 39        (2)  After receipt of the certified notice from the state treasurer pursu-
 40    ant to section 67-8727, Idaho Code, or subsection (1)  of  this  section,  the
 41    state tax commission shall:
 42        (a)  Immediately  fix  the amount necessary and in the amount of the defi-
 43        ciency stated in the notice; and
 44        (b)  Cause moneys to be transferred from the state sales tax account  pur-
 45        suant  to  section  63-3638,  Idaho  Code,  and deposited in the bond bank
 46        authority fund, which is hereby statutorily created in the state treasury;
 47        provided however, that in no event shall a transfer  of  moneys  from  the
 48        state  sales  tax  account  under the provisions of this chapter impede or
 49        otherwise affect the payment of sales tax moneys pledged for  the  payment
 50        on other outstanding state bonds outstanding on the effective date of this
 51        act  or  subsequently issued as tax anticipation notes pursuant to section
 52        63-3202, Idaho Code.
 53        (3)  Moneys transferred from the state sales tax account to the bond  bank
                                                                        
                                           5
                                                                        
  1    authority  fund  pursuant to subsection (2) of this section shall be deposited
  2    in the reserve fund as replacement  moneys  for  amounts  withdrawn  from  the
  3    reserve  fund  to  pay  debt service on the bonds pursuant to section 67-8725,
  4    Idaho Code, to the extent such moneys are derived from amounts appropriated to
  5    the reserve fund by the legislature, or shall be used to pay debt service when
  6    due on bonds for which other moneys available  pursuant  to  section  67-8727,
  7    Idaho Code, are insufficient.
  8        (4)  The  state  of  Idaho  pledges  to and agrees with the holders of any
  9    bonds that the state will not alter, impair or limit the rights vested by  the
 10    sales  tax  account  pledge  provided  in this section and in section 63-3638,
 11    Idaho Code, with respect to the bonds until the bonds, together with  applica-
 12    ble interest, are fully paid and discharged.
 13        (45)  To the extent that other legally available revenues and funds of the
 14    state  are sufficient to meet the certified deficiency, the transfer of moneys
 15    from the sales tax account in section 63-3638, Idaho Code, is abated.
                                                                        
 16        SECTION 5.  That Section 67-8725, Idaho Code, be, and the same  is  hereby
 17    amended to read as follows:
                                                                        
 18        67-8725.  PAYMENT  TRANSFER  --  NOTICE  OF  NONPAYMENT -- STATE FINANCIAL
 19    ASSISTANCE INTERCEPT MECHANISM -- STATE TREASURER DUTIES -- INTEREST AND  PEN-
 20    ALTY PROVISIONS.
 21        (1) (a)  Each  municipality with outstanding unpaid municipal bonds as set
 22        forth in this chapter shall transfer moneys sufficient for  the  scheduled
 23        debt service payment to its paying agent at least fifteen (15) days before
 24        any  principal  or  interest  payment date for the bonds. The paying agent
 25        may, if instructed to do so by the municipality, invest the moneys at  the
 26        risk  and  be  the trustee for the benefit bonds of the municipality until
 27        the payment date authority that are secured by those municipal bonds.
 28        (b)  A municipality which is unable to transfer the scheduled debt service
 29        payment to the paying agent at least fifteen (15) days before  the  sched-
 30        uled  payment date shall immediately notify the paying agent and the state
 31        treasurer by:
 32             (i)   Telephone;
 33             (ii)  A writing sent by facsimile transmission; and
 34             (iii) A writing sent by first-class United States mail.
 35        (c)  If sufficient funds are  not  transferred  to  the  paying  agent  as
 36        required  by  this subsection, the paying agent shall notify the authority
 37        and the state treasurer of that failure in writing at least ten (10)  days
 38        before the scheduled debt service payment date by:
 39             (i)   Telephone;
 40             (ii)  A writing sent by facsimile transmission; and
 41             (iii) A writing sent by first-class United States mail.
 42        (d)  If  sufficient  moneys  to pay the schedule debt service payment have
 43        not been transferred to the paying agent, the state treasurer shall, on or
 44        at least ten (10) days before the scheduled  payment  date,  transfer  the
 45        authority  or  the  state  treasurer  shall  cause sufficient moneys to be
 46        transferred from the reserve fund as provided in  section  67-8713,  Idaho
 47        Code, to the paying agent to make the scheduled debt service payment.
 48        (e)  To  the  extent  moneys transferred from the reserve fund are derived
 49        from moneys appropriated to the reserve fund by the legislature, tThe pay-
 50        ment by the state treasurer:
 51             (i)   Discharges the obligation of the issuing  municipality  to  its
 52             bondholders for the payment; and
 53             (ii)  Transfers  the  rights represented by the general obligation of
                                                                        
                                           6
                                                                        
  1             the municipality from the bondholders to the state.
  2        (2) (a)  If one (1) or more payments on bonds are made by the state  trea-
  3        surer  from moneys in the reserve fund that are derived from moneys appro-
  4        priated to the reserve fund by the legislature, due to the failure of  the
  5        municipality  to  make  payment on its bonds in a timely manner, the state
  6        treasurer shall:
  7             (i)  Immediately intercept any payments from:
  8                  (A)  The receipts of any payment of property taxes; or
  9                  (B)  Sales tax moneys that would be distributed pursuant to sec-
 10                  tion 63-3638, Idaho Code; or
 11                  (C)  Any other source of operating moneys provided by the  state
 12                  to  the  municipality that issued the municipal bonds that would
 13                  otherwise be paid to the municipality by the state; and
 14             (ii) Apply the intercepted payments to reimburse the state  for  pay-
 15             ments  made by the state for the bonds by deposit to the reserve fund
 16             up to the amount withdrawn from the reserve  fund  for  such  purpose
 17             until  all  obligations of the municipality to the state arising from
 18             those payments, including interest and penalties, are paid in full.
 19        (b)  The state has no obligation to the municipality or to any  person  or
 20        entity  to replace any moneys intercepted under the authority of this sub-
 21        section.
 22        (3)  The municipality that issued municipal bonds for which the state  has
 23    made all or part of a debt service payment, either from amounts in the reserve
 24    fund  that  are  derived  from  moneys appropriated by the legislature or from
 25    moneys transferred from the  state  sales  tax  account  pursuant  to  section
 26    67-8716, Idaho Code, shall:
 27        (a)  Reimburse all moneys drawn by the state treasurer on its behalf;
 28        (b)  Pay  interest  to  the state on all moneys paid by the state from the
 29        date the moneys are drawn to the date they are repaid at a rate  not  less
 30        than the average prime rate for national money center banks plus five per-
 31        cent (5%); and
 32        (c)  Pay all penalties required by this chapter.
 33        (4) (a)  The  state  treasurer  shall establish the reimbursement interest
 34        rate after considering the circumstances of any prior draws by the munici-
 35        pality on the state, market interest and penalty rates, and  the  cost  of
 36        funds, if any, that were required to be borrowed by the state to make pay-
 37        ments on the bonds.
 38        (b)  The  state  treasurer may, after considering the circumstances giving
 39        rise to the failure of the municipality to make payment on its bonds in  a
 40        timely  manner, impose on the municipality a penalty of not more than five
 41        percent (5%) of the amount paid by the state for each instance in which  a
 42        payment by the state is made.
 43        (5)(a)(i)  If  the  state treasurer determines that amounts obtained under
 44             this section will not reimburse the state in full within one (1) year
 45             from the state's payment of a municipality's scheduled  debt  service
 46             payment, the state treasurer shall pursue any legal action, including
 47             mandamus, against the municipality to compel it to:
 48                  (A)  Levy  and provide tax or other revenues to pay debt service
 49                  on its municipal bonds when due; and
 50                  (B)  Meet its repayment obligations to the state.
 51             (ii)  In pursuing its rights under paragraph (a) of this  subsection,
 52             the  state  shall  have the same substantive and procedural rights as
 53             would a holder of the bonds of a municipality.
 54        (b)  The attorney general  shall  assist  the  state  treasurer  in  these
 55        duties.
                                                                        
                                           7
                                                                        
  1        (c)  The municipality shall pay the attorney's fees, expenses and costs of
  2        the state treasurer and the attorney general.
  3        (6) (a)  Except  as  provided  in  paragraph  (c)  of this subsection, any
  4        municipality whose operating funds were intercepted under this section may
  5        replace those funds from other municipal moneys or  from  property  taxes,
  6        subject to the limitations provided in this subsection.
  7        (b)  A  municipality  may  use  property  taxes or other moneys to replace
  8        intercepted funds only if the property taxes or other moneys were  derived
  9        from:
 10             (i)   Taxes  originally levied to make the payment but which were not
 11             timely received by the municipality;
 12             (ii)  Taxes from a supplemental levy made to make the missed  payment
 13             or to replace the intercepted moneys;
 14             (iii) Moneys  transferred  from the undistributed reserve, if any, of
 15             the municipality; or
 16             (iv)  Any other source of money on hand and legally available.
 17        (c)  Notwithstanding the provisions of paragraphs (a) and (b) of this sub-
 18        section, a municipality may not replace operating funds intercepted by the
 19        state with moneys collected and held to make payments  on  bonds  if  that
 20        replacement would divert moneys from the payment of future debt service on
 21        the  bonds  and  increase  the risk that the state would be called upon an
 22        additional time to make payments on the bonds.
                                                                        
 23        SECTION 6.  That Chapter 87, Title 67, Idaho Code, be,  and  the  same  is
 24    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 25    ignated as Section 67-8727, Idaho Code, and to read as follows:
                                                                        
 26        67-8727.  ALTERNATIVE INTERCEPT PROCEDURE. Notwithstanding any other  pro-
 27    vision of law to the contrary, to the extent that any bonds are not secured by
 28    moneys  appropriated by the legislature to the reserve fund established pursu-
 29    ant to section 67-8713, Idaho Code, or such moneys  are  insufficient  to  pay
 30    debt  service  when  due  on the bonds, in lieu of the provisions set forth in
 31    section 67-8725, Idaho Code, the following provisions  shall  apply,  provided
 32    that  the  provisions  of section 67-8725, Idaho Code, shall continue to apply
 33    with respect to transfers of amounts in the reserve fund derived  from  moneys
 34    appropriated by the legislature:
 35        (1)  (a) Each  municipality with outstanding unpaid municipal bonds as set
 36        forth in this chapter shall transfer moneys sufficient for  the  scheduled
 37        debt service payment to its paying agent at least fifteen (15) days before
 38        any principal or interest payment date for the bonds. The paying agent may
 39        be  the  trustee  for the bonds of the authority that are secured by those
 40        municipal bonds.
 41        (b)  A municipality which is unable to transfer the scheduled debt service
 42        payment to the paying agent at least fifteen (15) days before  the  sched-
 43        uled payment date shall immediately notify the paying agent, the authority
 44        and the state treasurer by:
 45             (i)   Telephone;
 46             (ii)  A writing sent by facsimile transmission; and
 47             (iii) A writing sent by first-class United States mail.
 48        (c)  If  sufficient  funds  are  not  transferred  to  the paying agent as
 49        trustee for the bonds of the authority that are secured by those municipal
 50        bonds at least ten (10) days before the  scheduled  debt  service  payment
 51        date  of  those  bonds,  the  trustee  shall  transfer any available funds
 52        pledged to secure payment of the bonds held in any reserve fund  or  other
 53        pledged  fund,  or  draw  on any reserve surety policy securing the bonds,
                                                                        
                                           8
                                                                        
  1        sufficient amounts to make up any shortfall in the amount necessary to pay
  2        debt service on the bonds on the scheduled payment date and  deposit  such
  3        amount in the debt service payment fund for those bonds.
  4        (d)  If, as a result of the failure of the municipality to make payment on
  5        its  municipal bonds in a timely manner, the trustee is required to trans-
  6        fer funds pursuant to paragraph (c) of this subsection to pay debt service
  7        on the bonds or there are not sufficient funds available pursuant to para-
  8        graph (c) of this subsection to make up for  any shortfall in  the  amount
  9        necessary  to pay debt service on the bonds, at least ten (10) days before
 10        the scheduled debt service payment date of the bonds,  the  trustee  shall
 11        notify the authority and the state treasurer by:
 12             (i)   Telephone;
 13             (ii)  A writing sent by facsimile transmission; and
 14             (iii) A writing sent by first-class United States mail.
 15        (e)  Upon  the  notice  provided in subsection (1)(d) of this section, the
 16        state treasurer shall:
 17             (i)   Immediately intercept any payments from:
 18                  (A)  The receipts of any payment of property taxes; or
 19                  (B)  Sales tax moneys that would be distributed pursuant to sec-
 20                  tion 63-3638, Idaho Code; or
 21                  (C)  Any other source of operating moneys provided by the  state
 22                  to  the  municipality that issued the municipal bonds that would
 23                  otherwise be paid to the municipality by the state; and
 24             (ii)  Transfer the intercepted payments in  the  following  order  of
 25             priority:
 26                  (A)  To  the  trustee for the bonds for deposit in the debt ser-
 27                  vice payment fund for  the  bonds  until  there  are  sufficient
 28                  amounts  on  deposit  to  pay  debt  service on the bonds on the
 29                  scheduled payment date; provided that  if  the  state  treasurer
 30                  will  be  unable to transfer sufficient intercepted payments for
 31                  such purpose, the state treasurer shall give notice to the state
 32                  tax commission, certifying the  amount  of  the  deficiency,  at
 33                  least  five  (5) days prior to the scheduled payment date of the
 34                  bonds;
 35                  (B)  To the trustee for  the  bonds  to  reimburse  any  amounts
 36                  transferred  from a reserve or other pledged fund or surety pol-
 37                  icy pursuant to paragraph (c)  of  this  subsection  up  to  the
 38                  required  balance in such fund or required reimbursement of such
 39                  surety; and
 40                  (C)  To the state for the reimbursement  of  any  moneys  trans-
 41                  ferred  from  the  state  sales  tax account pursuant to section
 42                  67-8716, Idaho Code, to pay debt service on  the  bonds  on  the
 43                  scheduled  payment date, together with any interest or penalties
 44                  established pursuant to section 67-8725, Idaho Code.
 45        (f)  The state has no obligation to the municipality or to any  person  or
 46        entity  to replace any moneys intercepted under the authority of this sub-
 47        section.
 48        (2)  (a) The municipal bonds or the agreement for purchase of the  munici-
 49        pal  bonds by the authority may provide for payment of interest and penal-
 50        ties and other terms for reimbursement of any amounts drawn  from  reserve
 51        funds,  pledged funds, reserve surety policies or other credit enhancement
 52        to pay debt service on the bonds due to the failure of the municipality to
 53        make payment on its municipal bonds in a timely manner. To the extent that
 54        debt service on the bonds is paid from the state sales tax account  pursu-
 55        ant to section 67-8716, Idaho Code, the provisions of sections 67-8725(3),
                                                                        
                                           9
                                                                        
  1        (4) and (5), Idaho Code, shall apply.
  2        (b)  If  the authority determines that amounts obtained under this section
  3        will not fully make up any amounts which a municipality has failed to  pay
  4        on  its municipal bonds when due, together with any interest and penalties
  5        established pursuant to this section, within one (1) year from the payment
  6        of the municipality's scheduled debt service payment, the authority or the
  7        trustee for the bonds may pursue any  legal  action,  including  mandamus,
  8        against the municipality to compel the municipality to:
  9             (i)   Levy  and  provide tax or other revenues to pay debt service on
 10             its municipal bonds when due; and
 11             (ii)  Meet its repayment obligations, under its  municipal  bonds  or
 12             otherwise, to the authority.
 13        (c)  In pursuing their rights under this subsection, the authority and the
 14        trustee  shall have the same substantive and procedural rights as a holder
 15        of the bonds of a municipality.
 16        (d)  The attorney general shall assist the authority in carrying  out  its
 17        duties under this subsection.
 18        (e)  The municipality shall pay the attorney's fees, expenses and costs of
 19        the authority, the trustee and the attorney general.
 20        (4)  (a) Except  as  provided  in  paragraph  (c)  of this subsection, any
 21        municipality whose operating funds were intercepted under this section may
 22        replace those funds from other municipal moneys or  from  property  taxes,
 23        subject to the limitations provided in this subsection.
 24        (b)  A  municipality  may  use  property  taxes or other moneys to replace
 25        intercepted funds only if the property taxes or other moneys were  derived
 26        from:
 27             (i)   Taxes  originally levied to make the payment but which were not
 28             timely received by the municipality;
 29             (ii)  Taxes from a supplemental levy made to make the missed  payment
 30             or to replace the intercepted moneys;
 31             (iii) Moneys  transferred  from the undistributed reserve, if any, of
 32             the municipality; or
 33             (iv)  Any other source of money on hand and legally available.
 34        (c)  Notwithstanding the provisions of subsections (4)(a) and (b) of  this
 35        section, a municipality may not replace operating funds intercepted by the
 36        state  with  moneys  collected  and held to make payments on bonds if that
 37        replacement would divert moneys from the payment of future debt service on
 38        the bonds and increase the risk that the state would  be  called  upon  an
 39        additional time to make payments on the bonds.

Statement of Purpose / Fiscal Impact


                    STATEMENT OF PURPOSE
                              
                         RS ll977Cl
                              
The purpose of this legislation is to create an alternate intercept
procedure for the Bond Bank when bonds are not secured by moneys
appropriated by the legislature and to clarify existing language in
the statute.


                       FISCAL IMPACT
                              
                              
                              
These changes will have no fiscal impact


Contact
Name: Lisa Carberry
Phone: 208 332-2997



STATEMENT OF PURPOSE/FISCAL NOTE          H669