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H0240......................................................by STATE AFFAIRS
IDAHO BOND BANK AUTHORITY - Amends and adds to existing law relating to the
Idaho Bond Bank Authority to clarify that the authority can purchase
municipal bonds from entities other than municipalities; to revise the
sales tax intercept mechanism; and to provide that the authority need not
guarantee sales tax moneys on all bonds it purchases.
02/17 House intro - 1st rdg - to printing
02/18 Rpt prt - to St Aff
03/03 Rpt out - rec d/p - to 2nd rdg
03/04 2nd rdg - to 3rd rdg
03/08 3rd rdg - PASSED - 69-0-1
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Cannon, Chadderdon,
Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Garrett, Hart, Harwood, Henbest, Henderson,
Jaquet, Jones, Kemp, Lake, LeFavour, Loertscher, Martinez, Mathews,
McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen, Nonini,
Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche,
Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley,
Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail,
Wills, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Bradford
Floor Sponsor - Deal
Title apvd - to Senate
03/09 Senate intro - 1st rdg - to St Aff
03/24 Rpt out - rec d/p - to 2nd rdg
03/25 2nd rdg - to 3rd rdg
03/29 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough,
Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce,
Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor - Davis
Title apvd - to House
03/30 To enrol
03/31 Rpt enrol - Sp signed - Pres signed
04/04 To Governor
04/14 Governor signed
Session Law Chapter 389
Effective: 04/14/05
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 240
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 TERMS; AMENDING SECTION 67-8705, IDAHO CODE, TO
4 REVISE POWERS AND DUTIES OF THE AUTHORITY; AMENDING SECTION 67-8710,
5 IDAHO CODE, TO CLARIFY THAT THE AUTHORITY MAY PLEDGE THE PROCEEDS OF
6 MUNICIPAL BONDS PURCHASED FROM OTHER SELLERS; AMENDING SECTION 67-8712,
7 IDAHO CODE, TO CLARIFY THAT MUNICIPAL BONDS MAY BE PURCHASED FROM SOURCES
8 OTHER THAN MUNICIPALITIES; AMENDING SECTION 67-8713, IDAHO CODE, TO PRO-
9 VIDE THAT THE RESERVE FUND WILL SECURE BONDS DESIGNATED BY THE AUTHORITY;
10 AMENDING SECTION 67-8716, IDAHO CODE, TO AUTHORIZE THE AUTHORITY TO ELECT
11 TO NOT PROVIDE FOR SALES TAX PAYMENT ON DESIGNATED BONDS AND TO CLARIFY
12 THE PROCESS FOR PAYMENT OF SALES TAX MONEYS IF OTHER SOURCES ARE NOT SUF-
13 FICIENT; AMENDING SECTION 67-8725, IDAHO CODE, TO PROVIDE FOR BONDS WHERE
14 NO INTERCEPT OCCURS, TO CLARIFY THAT PROVISIONS FOR INTERCEPTING A
15 MUNICIPALITY'S FUNDS TO PAY MUNICIPAL BONDS APPLY ONLY TO MUNICIPALITIES
16 THAT HAVE AGREED TO BE SUBJECT TO SUCH INTERCEPT AND THAT ONLY FUNDS LAW-
17 FULLY AVAILABLE FOR REPAYMENT OF A MUNICIPALITY'S BONDS MAY BE INTERCEPTED
18 AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 67-8727, IDAHO CODE,
19 TO REVISE THE ALTERNATIVE INTERCEPT PROCEDURE AND TO MAKE TECHNICAL COR-
20 RECTIONS; AND AMENDING CHAPTER 87, TITLE 67, IDAHO CODE, BY THE ADDITION
21 OF A NEW SECTION 67-8728, IDAHO CODE, TO PROVIDE A LIMITED EXEMPTION FROM
22 INTERCEPT PROVISIONS; AND DECLARING AN EMERGENCY.
23 Be It Enacted by the Legislature of the State of Idaho:
24 SECTION 1. That Section 67-8702, Idaho Code, be, and the same is hereby
25 amended to read as follows:
26 67-8702. DEFINITIONS. As used in this chapter:
27 (1) "Authority" or "bond bank authority" means the Idaho bond bank
28 authority.
29 (2) "Bonds" means bonds, notes or other obligations of the authority
30 issued under this chapter.
31 (3) "Municipal bond" means a bond, note or other obligation, including a
32 loan, lease or installment sale agreement, issued or undertaken by a munici-
33 pality for any purpose authorized by law.
34 (4) "Municipality" means any county, city, municipal corporation, school
35 district, irrigation district, sewer district, water district, highway dis-
36 trict or other special purpose district or political subdivision of the state
37 established by law.
38 (5) "State sales tax account" means any fund or account in the state
39 treasury in which state sales tax moneys are deposited, but only to the extent
40 moneys in such fund or account are attributable to the state sales tax moneys.
41 SECTION 2. That Section 67-8705, Idaho Code, be, and the same is hereby
42 amended to read as follows:
2
1 67-8705. POWERS AND DUTIES OF THE AUTHORITY. The authority shall have the
2 following powers and duties:
3 (1) To sue and be sued in its own name;
4 (2) To adopt and from time to time alter an official seal;
5 (3) To adopt and from time to time amend or repeal rules and bylaws;
6 (4) To accept and receive public grants or private gifts, bequests or
7 other moneys;
8 (5) To purchase municipal bonds on original issue or previously issued,
9 from the municipality issuer or from any other source, and to obtain funds for
10 such other purposes of the authority authorized by this chapter by:
11 (a) Issuing bonds payable from or secured by municipal bonds of one (1)
12 or more municipalities;
13 (b) Pledging or otherwise obligating, for and in the name and on behalf
14 of the state as its agent and instrumentality, sales tax revenues of the
15 state as a source of payment or security for bonds issued by the author-
16 ity;
17 (c) Establishing debt service reserve funds or other reserve funds;
18 (d) Obtaining private credit enhancement for bonds issued by the author-
19 ity;
20 (e) Investing moneys held by the authority, as proceeds or to pay or
21 secure bonds issued by the authority, in such securities or obligations as
22 are described in the indenture, trust agreement or other instrument pro-
23 viding for the authority's issuance of the bonds;
24 (f) Investing any moneys held by the authority, in excess of funds
25 described in paragraph (e) of this subsection, in any securities or other
26 obligations in which a trustee may invest as provided by law;
27 (g) Taking any other actions and entering into such other contracts and
28 agreements as the authority may determine to be necessary or appropriate
29 to accomplish the purposes of the authority and this chapter; or
30 (h) Facilitating the purchase of notes from municipalities to be uti-
31 lized by a municipality in purchasing, leasing or lease-purchasing tangi-
32 ble personal property when the note was otherwise legally issued and
33 authorized by a municipality and the purchase of the note from a munici-
34 pality does not violate the state constitution.
35 (6) To charge such fees to municipalities or other potential sellers of
36 municipal bonds in connection with application for and receipt of financing
37 under this chapter and interest and other charges on or in connection with
38 municipal bonds purchased as it may deem necessary or appropriate to cover all
39 costs and expenses of the authority and its operations, and to set such other
40 terms and conditions on its services or purchase of municipal bonds as may be
41 necessary or appropriate to secure the bonds or improve their marketability or
42 to otherwise achieve the purposes of the authority; and
43 (7) To take any and all actions, execute any and all contracts, including
44 payment of any arbitrage rebate as may be necessary to obtain or maintain
45 exemption of interest on bonds issued by the authority from federal income
46 taxes; provided however, that nothing shall prevent the authority from issuing
47 bonds bearing interest subject to federal income tax; and
48 (8) To develop underwriting policies or guidelines in connection with
49 municipal bonds purchased by the authority.
50 SECTION 3. That Section 67-8710, Idaho Code, be, and the same is hereby
51 amended to read as follows:
52 67-8710. ISSUANCE OF BONDS -- FORM OF ISSUANCE -- SALE PRICE -- PAYMENT
53 OR REFUNDING OF BONDS -- TERMS OF AGREEMENT WITH BONDHOLDER. (1) The authority
3
1 may issue its bonds from time to time in principal amounts that it considers
2 necessary to provide funds for any purpose under this chapter, including,
3 without limitations, to purchase municipal bonds, to fund reserves or to pay
4 costs of issuance, refunding, including redemption premium, credit enhance-
5 ment, or other matters related to the purpose, structure or marketing of the
6 bonds.
7 (2) Bonds shall be authorized by resolution of the authority and shall
8 bear the date, mature at the time or times, bear interest at the rate or rates
9 of fixed or variable interest, payable at the times, be in the denominations,
10 be in the forms, carry the conversion or registration privileges, have the
11 rank or priority, be executed in the manner, be payable from the sources in
12 the medium of payment at the place or places inside or outside the state, and
13 be subject to the terms of redemption, with or without premium, rights of
14 holders to tender for purchase and other terms and conditions as the resolu-
15 tion of the authority provides.
16 (3) Bonds of the authority may be issued in one (1) or more series.
17 (4) Bonds of the authority may be sold at public or private sale at the
18 price or prices the authority determines.
19 (5) The authority may, from time to time, issue its bonds under this
20 chapter and pay and retire, or fund or refund previously issued bonds from
21 proceeds of refunding bonds, or from other funds or money of the authority
22 available for that purpose.
23 (6) By resolution, the authority may authorize entering into an indenture
24 or trust agreement with a corporate trustee located within or outside the
25 state in order:
26 (a) To provide for the issuance of the bonds with such terms, including
27 without limitation those terms referred to in subsection (2) of this sec-
28 tion, as the authority may determine;
29 (b) To pledge or assign to the trustee for the benefit of holders of the
30 bonds all or any part of the proceeds of the bonds, any municipal bonds
31 purchased from municipalities or other sellers, any other assets or reve-
32 nues of or received by or pledged to the authority, and the income or
33 other proceeds from any or all of the foregoing;
34 (c) To provide for the establishment of reserves and any other funds or
35 accounts that the authority determines to be necessary or appropriate, in
36 addition to or in lieu of the reserve fund established pursuant to sec-
37 tion 67-8713, Idaho Code, which will secure all bonds issued by the
38 authority unless the resolution of the authority providing for issuance of
39 the bonds provides otherwise;
40 (d) To provide for the custody, safekeeping and enforcement of the munic-
41 ipal bonds acquired;
42 (e) To provide for the right to sell or otherwise dispose of property of
43 any kind, including municipal bonds;
44 (f) To provide for the investment of bond proceeds or other moneys held
45 by the trustee in such securities or obligations as may be described in
46 the indenture or trust agreement;
47 (g) To provide for amending the indenture or trust agreement, with or
48 without the consent of the holders of the bonds;
49 (h) To provide for the replacement of lost, stolen, destroyed or muti-
50 lated bonds;
51 (i) To provide for the issuance or limitations on issuance of additional
52 bonds;
53 (j) To provide for the rights, liabilities, powers and duties arising
54 upon the breach of any covenant, condition or obligation, to limit the
55 rights of bondholders to enforce covenants, conditions or obligations, and
4
1 to prescribe the events of default and the terms and conditions upon which
2 any or all of the bonds become or may be declared due and payable before
3 maturity, and the terms and conditions upon which the declaration and its
4 consequences may be waived;
5 (k) To appoint and to provide for the duties and obligations of a paying
6 agent or agents or other fiduciaries inside or outside the state;
7 (l) To make covenants to do or refrain from doing acts, including to
8 enter into any contract, and to provide any other terms and conditions
9 which the authority may determine to be necessary or appropriate in order
10 to better secure the bonds or improve their marketability; and
11 (m) To intercept certain payments, and to impose interest and penalties,
12 as provided in section 67-8725, Idaho Code.
13 SECTION 4. That Section 67-8712, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 67-8712. PRESUMPTION OF VALIDITY. After issuance, all bonds of the
16 authority, and the purchase of all municipal bonds from municipalities with
17 the proceeds of the bonds, and any contracts entered into in connection with
18 issuance of the bonds, shall be conclusively presumed to be fully authorized
19 and issued under the laws of the state, and all persons, entities and munici-
20 palities are estopped from questioning the authorization, sale, issuance, exe-
21 cution or delivery of the bonds and other agreements by the authority.
22 SECTION 5. That Section 67-8713, Idaho Code, be, and the same is hereby
23 amended to read as follows:
24 67-8713. RESERVE FUND -- ADDITIONAL FUNDS AND ACCOUNTS. (1) There is
25 hereby created in the state treasury a fund to be known as the "Idaho Munici-
26 pal Bond Bank Authority Reserve Fund" (hereinafter referred to as "reserve
27 fund") in which there shall be deposited or transferred:
28 (a) All proceeds of bonds or municipal bonds or any reserve surety policy
29 or similar credit enhancement obtained to secure bonds of the authority
30 that the authority may require, by contract with the municipality or by a
31 resolution of the authority, to be deposited in the reserve fund; and
32 (b) All moneys appropriated by the legislature for the purpose of the
33 fund.
34 (2) Moneys in the reserve fund shall be maintained by the authority and
35 are pledged and shall be held and applied solely to the payment of the inter-
36 est on and principal of those bonds designated by the authority, pursuant to
37 the provisions of section 67-8725, Idaho Code, as the interest and principal
38 become due and payable. Moneys may not be withdrawn from the reserve fund if a
39 withdrawal would reduce the amount in the reserve fund to an amount less than
40 the required debt service reserve, as herein defined, except for payment of
41 interest then due and payable on bonds and the principal of bonds then matur-
42 ing and payable, whether by reason of maturity or mandatory redemption, for
43 which payments other than moneys of the authority pledged to pay such interest
44 and principal are not then available. As used in this chapter, "required debt
45 service reserve" means, as of the date of computation, the amount required to
46 be on deposit in the reserve fund as provided by resolution of the authority.
47 (3) For purposes of valuation, investments in the reserve fund shall be
48 valued at par, or if purchased at less than par, at cost unless otherwise pro-
49 vided by resolution of the authority. Valuation on a particular date shall
50 include the amount of interest then earned or accrued to that date on the
51 moneys or investments in the reserve fund.
5
1 (4) Moneys in the reserve fund in excess of the required debt service
2 reserve, whether by reason of investment or otherwise, may be withdrawn at any
3 time by the authority and transferred to another fund or account of the
4 authority, subject to the provisions of any agreement with the holders of any
5 bonds.
6 (5) In order to assure the maintenance of the required debt service
7 reserve in the reserve fund, the legislature may annually appropriate to the
8 authority for deposit in the reserve fund the sum, certified by the chairman
9 of the authority to the legislature, that is necessary to restore the fund to
10 an amount equal to the required debt service reserve. The chairman of the
11 authority, annually before December 1, shall make and deliver to the legisla-
12 ture his certificate stating the sum required to restore the funds to that
13 amount. Nothing in this subsection creates a debt or liability of the state to
14 make any appropriation.
15 (6) All amounts received on account of moneys appropriated by the state
16 to the reserve fund shall be held and applied in accordance with this section;
17 provided however, at the end of each fiscal year, if the amount in the reserve
18 fund derived from amounts appropriated by the legislature exceeds the required
19 debt service reserve, any amount representing earnings or income received on
20 account of moneys appropriated to the reserve fund by the legislature that
21 exceed the expenses of the authority for that fiscal year shall be transferred
22 to the general fund of the state.
23 (7) The authority may establish subaccounts in the reserve fund, addi-
24 tional reserves or other funds or accounts as may be, in its discretion, nec-
25 essary or appropriate to further the accomplishment of its purposes or to com-
26 ply with the provisions of any of its agreements or resolutions.
27 SECTION 6. That Section 67-8716, Idaho Code, be, and the same is hereby
28 amended to read as follows:
29 67-8716. UNLIMITED SALES TAX ACCOUNT PLEDGE. (1) If moneys expected to be
30 intercepted pursuant to section 67-8725, Idaho Code, are expected to be insuf-
31 ficient to reimburse the state for its payments in respect of the municipal
32 bonds, except for bonds the authority has specifically designated, at the time
33 of issuance, not to receive payment from the sales tax, the state treasurer
34 shall certify to and give notice to the state tax commission of the amount of
35 the deficiency.
36 (2) If sufficient moneys are not available to pay debt service on the
37 bonds, except for bonds the authority has specifically designated not to
38 receive payment from the sales tax, as of five (5) days prior to the scheduled
39 payment date of the bonds, the state treasurer shall give notice to the state
40 tax commission, certifying the amount of the deficiency, at least five (5)
41 days prior to the scheduled payment date. After receipt of the certified
42 notice from the state treasurer pursuant to section 67-8727, Idaho Code, or
43 subsection (1) of this section or this subsection (2), the state tax commis-
44 sion shall:
45 (a) Immediately fix the amount necessary and in the amount of the defi-
46 ciency stated in the notice; and
47 (b) Cause moneys to be transferred from the state sales tax moneys sub-
48 ject to distribution under section 63-3638, Idaho Code, to be transferred
49 from the state sales tax account pursuant to section 63-3638, Idaho Code,
50 and deposited in the bond bank authority fund, which is hereby statutorily
51 created in the state treasury; provided however, that in no event shall a
52 transfer of moneys from the state sales tax account under the provisions
53 of this chapter impede or otherwise affect the payment of sales tax
6
1 moneys pledged for the payment on other state bonds outstanding on the
2 effective date of this act or subsequently issued as tax anticipation
3 notes pursuant to section 63-3202, Idaho Code.
4 (3) Moneys transferred from the state sales tax account to the bond bank
5 authority fund pursuant to subsection (2) of this section shall be deposited
6 in the reserve fund as replacement moneys for amounts withdrawn from the
7 reserve fund to pay debt service on the bonds pursuant to section 67-8725,
8 Idaho Code, to the extent such moneys are derived from amounts appropriated to
9 the reserve fund by the legislature, or shall be used to pay debt service when
10 due on bonds for which other moneys available pursuant to section 67-8727,
11 Idaho Code, are insufficient.
12 (4) The state of Idaho pledges to and agrees with the holders of any
13 bonds that the state will not alter, impair or limit the rights vested by the
14 sales tax account pledge provided in this section and in section 63-3638,
15 Idaho Code, with respect to the bonds until the bonds, together with applica-
16 ble interest, are fully paid and discharged.
17 (5) To the extent that other legally available revenues and funds of the
18 state are sufficient to meet the certified deficiency, the transfer of moneys
19 from the sales tax account in section 63-3638, Idaho Code, is abated.
20 SECTION 7. That Section 67-8725, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 67-8725. PAYMENT TRANSFER -- NOTICE OF NONPAYMENT -- STATE FINANCIAL
23 ASSISTANCE INTERCEPT MECHANISM -- STATE TREASURER DUTIES -- INTEREST AND PEN-
24 ALTY PROVISIONS.
25 (1) (a) Each municipality with outstanding unpaid municipal bonds as set
26 forth in this chapter held by or for the authority, except for those
27 municipal bonds described in section 67-8728, Idaho Code, and so desig-
28 nated by the authority at the time it issues bonds to acquire such munici-
29 pal bonds, shall transfer moneys sufficient for the scheduled debt service
30 payment to its paying agent at least fifteen (15) days before any princi-
31 pal or interest payment date for the bonds. The paying agent may be the
32 trustee for the bonds of the authority that are secured by those municipal
33 bonds.
34 (b) A municipality subject to this section and chapter with regard to any
35 municipal bonds and which is unable to transfer the scheduled debt service
36 payment to the paying agent at least fifteen (15) days before the sched-
37 uled payment date shall immediately notify the paying agent and the state
38 treasurer 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 (c) If sufficient funds are not transferred to the paying agent as
43 required by this subsection, the paying agent shall notify the authority
44 and the state treasurer of that failure in writing at least ten (10) days
45 before the scheduled debt service payment date by:
46 (i) Telephone;
47 (ii) A writing sent by facsimile transmission; and
48 (iii) A writing sent by first-class United States mail.
49 (d) If sufficient moneys to pay the scheduled debt service payment have
50 not been transferred to the paying agent at least ten (10) days before the
51 scheduled payment date, the authority or the state treasurer shall cause
52 sufficient moneys to be transferred from the reserve fund as provided in
53 section 67-8713, Idaho Code, to the paying agent to make the scheduled
7
1 debt service payment.
2 (e) To the extent moneys transferred from the reserve fund are derived
3 from moneys appropriated to the reserve fund by the legislature, the pay-
4 ment by the state treasurer:
5 (i) Discharges the obligation of the issuing municipality to its
6 bondholders for the payment; and
7 (ii) Transfers the rights represented by the general obligation of
8 the municipality from the bondholders to the state.
9 (2) (a) If one (1) or more payments on bonds are made by the state trea-
10 surer from moneys in the reserve fund that are derived from moneys appro-
11 priated to the reserve fund by the legislature, due to the failure of the
12 municipality to make payment on its bonds in a timely manner, the state
13 treasurer, subject to the limitations provided in paragraph (b) of this
14 subsection shall:
15 (i) Immediately intercept any payments from:
16 (A) The receipts of any payment of property taxes; or
17 (B) Sales tax moneys that would be distributed pursuant to sec-
18 tion 63-3638, Idaho Code; or
19 (C) Any other source of operating moneys provided by the state
20 to the municipality that issued the municipal bonds that would
21 otherwise be paid to the municipality by the state; and
22 (ii) Apply the intercepted payments to reimburse the state for pay-
23 ments made by the state for the bonds by deposit to the reserve fund
24 up to the amount withdrawn from the reserve fund for such purpose
25 until all obligations of the municipality to the state arising from
26 those payments, including interest and penalties, are paid in full.
27 (b) When intercepting payments under paragraph (a) of this subsection,
28 the state treasurer shall intercept only such payments, if any, which
29 would otherwise be lawfully available to the municipality for the repay-
30 ment of its municipal bonds and further subject to the limitations of sec-
31 tion 67-8728, Idaho Code.
32 (c) The state has no obligation to the municipality or to any person or
33 entity to replace any moneys intercepted under the authority of this sub-
34 section.
35 (3) The municipality that issued municipal bonds for which the state has
36 made all or part of a debt service payment, either from amounts in the reserve
37 fund that are derived from moneys appropriated by the legislature or from
38 moneys transferred from the state sales tax account pursuant to section
39 67-8716, Idaho Code, shall:
40 (a) Reimburse all moneys drawn by the state treasurer on its behalf;
41 (b) Pay interest to the state on all moneys paid by the state from the
42 date the moneys are drawn to the date they are repaid at a rate not less
43 than the average prime rate for national money center banks plus five per-
44 cent (5%); and
45 (c) Pay all penalties required by this chapter.
46 (4) (a) The state treasurer shall establish the reimbursement interest
47 rate after considering the circumstances of any prior draws by the munici-
48 pality on the state, market interest and penalty rates, and the cost of
49 funds, if any, that were required to be borrowed by the state to make pay-
50 ments on the bonds.
51 (b) The state treasurer may, after considering the circumstances giving
52 rise to the failure of the municipality to make payment on its bonds in a
53 timely manner, impose on the municipality a penalty of not more than five
54 percent (5%) of the amount paid by the state for each instance in which a
55 payment by the state is made.
8
1 (5)(a)(i) If the state treasurer determines that amounts obtained under
2 this section will not reimburse the state in full within one (1) year
3 from the state's payment of a municipality's scheduled debt service
4 payment, the state treasurer shall pursue any legal action, including
5 mandamus, against the municipality to compel it to:
6 (A) Levy and provide tax or other revenues to pay debt service
7 on its municipal bonds when due; and
8 (B) Meet its repayment obligations to the state.
9 (ii) In pursuing its rights under paragraph (a) of this subsection,
10 the state shall have the same substantive and procedural rights as
11 would a holder of the bonds of a municipality.
12 (b) The attorney general shall assist the state treasurer in these
13 duties.
14 (c) The municipality shall pay the attorney's fees, expenses and costs of
15 the state treasurer and the attorney general.
16 (6) (a) Except as provided in paragraph (c) of this subsection, any
17 municipality whose operating funds were intercepted under this section may
18 replace those funds from other municipal moneys or from property taxes,
19 subject to the limitations provided in this subsection.
20 (b) A municipality may use property taxes or other moneys to replace
21 intercepted funds only if the property taxes or other moneys were derived
22 from:
23 (i) Taxes originally levied to make the payment but which were not
24 timely received by the municipality;
25 (ii) Taxes from a supplemental levy made to make the missed payment
26 or to replace the intercepted moneys;
27 (iii) Moneys transferred from the undistributed reserve, if any, of
28 the municipality; or
29 (iv) Any other source of money on hand and legally available.
30 (c) Notwithstanding the provisions of paragraphs (a) and (b) of this sub-
31 section, a municipality may not replace operating funds intercepted by the
32 state with moneys collected and held to make payments on bonds if that
33 replacement would divert moneys from the payment of future debt service on
34 the bonds and increase the risk that the state would be called upon an
35 additional time to make payments on the bonds.
36 SECTION 8. That Section 67-8727, Idaho Code, be, and the same is hereby
37 amended to read as follows:
38 67-8727. ALTERNATIVE INTERCEPT PROCEDURE. Notwithstanding any other pro-
39 vision of law to the contrary, to the extent that any bonds are not secured by
40 moneys appropriated by the legislature to the reserve fund established pursu-
41 ant to section 67-8713, Idaho Code, or such moneys are insufficient to pay
42 debt service when due on the bonds, in lieu of the provisions set forth in
43 section 67-8725, Idaho Code, the following provisions shall apply, provided
44 that the provisions of section 67-8725, Idaho Code, shall continue to apply
45 with respect to transfers of amounts in the reserve fund derived from moneys
46 appropriated by the legislature:
47 (1) (a) Each municipality with outstanding unpaid municipal bonds as set
48 forth in this chapter held by or for the authority, except for those
49 municipal bonds described in section 67-8728, Idaho Code, and so desig-
50 nated by the authority at the time it issues bonds to acquire such munici-
51 pal bonds, shall transfer moneys sufficient for the scheduled debt service
52 payment to its paying agent at least fifteen (15) days before any princi-
53 pal or interest payment date for the bonds. The paying agent may be the
9
1 trustee for the bonds of the authority that are secured by those municipal
2 bonds.
3 (b) A municipality which is unable to transfer the scheduled debt service
4 payment to the paying agent at least fifteen (15) days before the sched-
5 uled payment date shall immediately notify the paying agent, the authority
6 and the state treasurer by:
7 (i) Telephone;
8 (ii) A writing sent by facsimile transmission; and
9 (iii) A writing sent by first-class United States mail.
10 (c) If sufficient funds are not transferred to the paying agent as
11 trustee for the bonds of the authority that are secured by those municipal
12 bonds at least ten (10) days before the scheduled debt service payment
13 date of those bonds, the trustee shall transfer any available funds
14 pledged to secure payment of the bonds held in any reserve fund or other
15 pledged fund, or draw on any reserve surety policy securing the bonds,
16 sufficient amounts to make up any shortfall in the amount necessary to pay
17 debt service on the bonds on the scheduled payment date and deposit such
18 amount in the debt service payment fund for those bonds.
19 (d) If, as a result of the failure of the municipality to make payment on
20 its municipal bonds in a timely manner, the trustee is required to trans-
21 fer funds pursuant to paragraph (c) of this subsection to pay debt service
22 on the bonds or there are not sufficient funds available pursuant to para-
23 graph (c) of this subsection to make up for any shortfall in the amount
24 necessary to pay debt service on the bonds, at least ten (10) days before
25 the scheduled debt service payment date of the bonds, the trustee shall
26 notify the authority and the state treasurer by:
27 (i) Telephone;
28 (ii) A writing sent by facsimile transmission; and
29 (iii) A writing sent by first-class United States mail.
30 (e) Upon the notice provided in subsection (1)(d) of this section, the
31 state treasurer, subject to the limitations provided in subsection
32 (1)(e)(iii) of this section shall:
33 (i) Immediately intercept any payments from:
34 (A) The receipts of any payment of property taxes; or
35 (B) Sales tax moneys that would be distributed pursuant to sec-
36 tion 63-3638, Idaho Code; or
37 (C) Any other source of operating moneys provided by the state
38 to the municipality that issued the municipal bonds that would
39 otherwise be paid to the municipality by the state; and
40 (ii) Transfer the intercepted payments in the following order of
41 priority:
42 (A) To the trustee for the bonds for deposit in the debt ser-
43 vice payment fund for the bonds until there are sufficient
44 amounts on deposit to pay debt service on the bonds on the
45 scheduled payment date; provided that if the state treasurer
46 will be unable to transfer sufficient intercepted payments for
47 such purpose, the state treasurer shall give notice to the state
48 tax commission, certifying the amount of the deficiency, at
49 least five (5) days prior to the scheduled payment date of the
50 bonds;
51 (B) To the trustee for the bonds to reimburse any amounts
52 transferred from a reserve or other pledged fund or surety pol-
53 icy pursuant to paragraph (c) of this subsection up to the
54 required balance in such fund or required reimbursement of such
55 surety; and
10
1 (C) To the state for the reimbursement of any moneys trans-
2 ferred from the state sales tax account pursuant to section
3 67-8716, Idaho Code, to pay debt service on the bonds on the
4 scheduled payment date, together with any interest or penalties
5 established pursuant to section 67-8725, Idaho Code;
6 (iii) When intercepting payments under this subsection, the state
7 treasurer shall intercept only such payments, if any, which would
8 otherwise be lawfully available to the municipality for the repayment
9 of its municipal bonds and further subject to the limitations of sec-
10 tion 67-8728, Idaho Code.
11 (f) The state has no obligation to the municipality or to any person or
12 entity to replace any moneys intercepted under the authority of this sub-
13 section.
14 (2) (a) The municipal bonds or the agreement for purchase of the munici-
15 pal bonds by the authority may provide for payment of interest and penal-
16 ties and other terms for reimbursement of any amounts drawn from reserve
17 funds, pledged funds, reserve surety policies or other credit enhancement
18 to pay debt service on the bonds due to the failure of the municipality to
19 make payment on its municipal bonds in a timely manner. To the extent that
20 debt service on the bonds is paid from the state sales tax account pursu-
21 ant to section 67-8716, Idaho Code, the provisions of sections 67-8725(3),
22 (4) and (5), Idaho Code, shall apply.
23 (b) If the authority determines that amounts obtained under this section
24 will not fully make up any amounts which a municipality has failed to pay
25 on its municipal bonds when due, together with any interest and penalties
26 established pursuant to this section, within one (1) year from the payment
27 of the municipality's scheduled debt service payment, the authority or the
28 trustee for the bonds may pursue any legal action, including mandamus,
29 against the municipality to compel the municipality to:
30 (i) Levy and provide tax or other revenues to pay debt service on
31 its municipal bonds when due; and
32 (ii) Meet its repayment obligations, under its municipal bonds or
33 otherwise, to the authority.
34 (c) In pursuing their rights under this subsection, the authority and the
35 trustee shall have the same substantive and procedural rights as a holder
36 of the bonds of a municipality.
37 (d) The attorney general shall assist the authority in carrying out its
38 duties under this subsection.
39 (e) The municipality shall pay the attorney's fees, expenses and costs of
40 the authority, the trustee and the attorney general.
41 (43) (a) Except as provided in paragraph (c) of this subsection, any
42 municipality whose operating funds were intercepted under this section may
43 replace those funds from other municipal moneys or from property taxes,
44 subject to the limitations provided in this subsection.
45 (b) A municipality may use property taxes or other moneys to replace
46 intercepted funds only if the property taxes or other moneys were derived
47 from:
48 (i) Taxes originally levied to make the payment but which were not
49 timely received by the municipality;
50 (ii) Taxes from a supplemental levy made to make the missed payment
51 or to replace the intercepted moneys;
52 (iii) Moneys transferred from the undistributed reserve, if any, of
53 the municipality; or
54 (iv) Any other source of money on hand and legally available.
55 (c) Notwithstanding the provisions of subsections (43) (a) and (b) of
11
1 this section, a municipality may not replace operating funds intercepted
2 by the state with moneys collected and held to make payments on bonds if
3 that replacement would divert moneys from the payment of future debt ser-
4 vice on the bonds and increase the risk that the state would be called
5 upon an additional time to make payments on the bonds.
6 SECTION 9. That Chapter 87, Title 67, Idaho Code, be, and the same is
7 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
8 ignated as Section 67-8728, Idaho Code, and to read as follows:
9 67-8728. LIMITED EXEMPTION FROM INTERCEPT PROVISIONS. (1) The intercept
10 provisions provided for by sections 67-8725 and 67-8727, Idaho Code, shall not
11 apply to:
12 (a) Municipal bonds where a municipality has the authority through an
13 election held and results certified pursuant to section 3, article VIII of
14 the constitution of the state of Idaho to collect revenues sufficient to
15 pay the interest and principal of such municipal bonds;
16 (b) Municipal bonds which are local improvement bonds issued under chap-
17 ter 17, title 50, Idaho Code; or
18 (c) Municipal bonds purchased by the authority from proceeds of bonds,
19 which the authority has designated at the time its bonds are issued, not
20 to receive payment from the sales tax.
21 (2) Any municipality seeking either of the limited exemptions set forth
22 in subsection (1)(a) or (1)(b) of this section shall do so through a resolu-
23 tion of the municipality duly adopted indicating that the municipality meets
24 the requirements for this limited exemption.
25 SECTION 10. An emergency existing therefor, which emergency is hereby
26 declared to exist, this act shall be in full force and effect on and after its
27 passage and approval.
STATEMENT OF PURPOSE
RS 14995
In 2000, the voters of Idaho approved a constitutional amendment
authorizing the Idaho Bond Bank Authority to issue bonds to
assist municipalities (cities, counties, school districts,
irrigation districts, sewer districts, water districts, highway
districts or other special purpose districts or political
subdivisions) in financing needed facilities at a lower cost to
the taxpayers and to secure the repayment of the bonds of the
Authority by funds of the state, including the sales tax. In
2001, the legislature adopted enabling legislation to implement
the constitutional amendment, and this legislation was amended
again in 2002. In December, 2004, the Authority completed its
first bond issue, assisting seven Idaho municipalities to save
financing costs.
Based on information gained during the preparation of this recent
bond issue from municipalities, rating agencies, and others, the
Authority is proposing certain amendments which would:
(1) provide that the bonds of Idaho municipalities may be
purchased from such municipalities or from other sources;
(2) clarify that the reserve fund shall secure those bonds
designated by the Authority;
(3) provide that the procedures for intercept of funds coming to
such municipalities from the state, in the event of a failure of
a municipality to pay such bonds, would apply to funds that the
municipality can legally commit to such bonds and would be
limited in certain other cases; and
(4) clarify the references to the sales tax account and the
process for payment of the Authority's bonds from the state sales
tax, if funds are not available from the municipalities or from
other sources.
FISCAL NOTE
There will be no fiscal impact to the state as a result of this
legislation. The intended result is for lower interest costs for
local governmental units throughout the state.
Contact
Name: Liza Carberry, Idaho State Treasurer's Office
Phone: 208-332-2997
STATEMENT OF PURPOSE/FISCAL NOTE H 240