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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
|||| 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 onin 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 outstandingstate 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 the26 risk andbe the trustee for the benefitbonds of the municipality until27 the payment dateauthority 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 or44 at least ten (10) days before the scheduled payment date, transferthe 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, t The 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 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