View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
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 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
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