View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact
S1485......................................................by STATE AFFAIRS
BOND BANK AUTHORITY - Amends and repeals existing law relating to the Bond
Bank Authority to revise the pledge of the sales tax; to revise procedures
relating to repayment of reserve funds and the related intercept of funds
payable to a municipality; to revise procedures; and to delete a limited
exemption from intercept provisions.
03/10 Senate intro - 1st rdg - to printing
03/11 Rpt prt - to St Aff
03/24 Rpt out - rec d/p - to 2nd rdg
03/25 2nd rdg - to 3rd rdg
03/26 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon(Gannon),
Geddes, Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough,
Langhorst, Little, Lodge, Malepeai(Sagness), McGee, McKague,
McKenzie, Pearce, Richardson, Schroeder, Siddoway, Stegner, Stennett,
Werk
NAYS -- None
Absent and excused -- None
Floor Sponsor - Davis
Title apvd - to House
03/26 House intro - 1st rdg - to Rev/Tax
03/27 Rpt out - rec d/p - to 2nd rdg
03/28 2nd rdg - to 3rd rdg
Rls susp - PASSED - 66-0-4
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon,
Chavez, Chew, Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart,
Harwood, Henbest, Henderson, Jaquet, Killen, Kren, Lake, LeFavour,
Loertscher, Luker, Marriott, Mathews, Mortimer, Moyle, Nielsen,
Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ringo, Roberts,
Ruchti, Rusche, Sayler, Schaefer, Shepherd(02), Shepherd(08),
Shirley, Shively, Smith(30), Smith(24), Snodgrass, Stevenson, Thayn,
Thomas, Trail, Vander Woude, Wood(27), Wood(35), Mr. Speaker
NAYS -- None
Absent and excused -- King, Labrador, McGeachin, Wills
Floor Sponsor - Clark
Title apvd - to Senate
03/31 To enrol
04/01 Rpt enrol - Pres signed - Sp signed - To Governor
04/11 Governor signed
Session Law Chapter 407
Effective: 07/01/08
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE SENATE SENATE BILL NO. 1485 BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO THE BOND BANK AUTHORITY; AMENDING SECTION 67-8716, IDAHO CODE, TO 3 REVISE THE PLEDGE OF THE SALES TAX; AMENDING SECTION 67-8725, IDAHO CODE, 4 TO REVISE PROCEDURES RELATING TO REPAYMENT OF RESERVE FUNDS AND THE 5 RELATED INTERCEPT OF FUNDS PAYABLE TO A MUNICIPALITY; AMENDING SECTION 6 67-8727, IDAHO CODE, TO REVISE PROCEDURES RELATING TO THE INTERCEPT OF 7 FUNDS PAYABLE TO A MUNICIPALITY; AND REPEALING SECTION 67-8728, IDAHO 8 CODE, RELATING TO A LIMITED EXEMPTION FROM INTERCEPT PROVISIONS. 9 Be It Enacted by the Legislature of the State of Idaho: 10 SECTION 1. That Section 67-8716, Idaho Code, be, and the same is hereby 11 amended to read as follows: 12 67-8716. UNLIMITED SALES TAX ACCOUNT PLEDGE. (1)If moneys expected to be13intercepted pursuant to section 67-8725, Idaho Code, are expected to be insuf-14ficient to reimburse the state for its payments in respect of the municipal15bonds, except for bonds the authority has specifically designated, at the time16of issuance, not to receive payment from the sales tax, the state treasurer17shall certify to and give notice to the state tax commission of the amount of18the deficiency.19(2)If sufficient moneys are not available to pay debt service on the 20 bonds of the authority, except for bonds the authority has specifically desig- 21 nated not to receive payment from the sales tax, as of five (5) days prior to 22 the scheduled payment date ofthesuch bonds, the state treasurer shall give 23 notice to the state tax commission, certifying the amount of the deficiency, 24 at least five (5) days prior to the scheduled payment date. After receipt of 25 the certified notice from the state treasurer pursuant tosection 67-8727,26Idaho Code, or subsection (1) of this section orthis subsection (21), the 27 state tax commission shall: 28 (a) Immediately fix the amount necessary and in the amount of the defi- 29 ciency stated in the notice; and 30 (b) Cause state sales tax moneys subject to distribution under section 31 63-3638, Idaho Code, to be transferred from the state sales tax account 32 and deposited in the bond bank authority fund, which is hereby statutorily 33 created in the state treasury; provided however, that in no event shall a 34 transfer of moneys from the state sales tax account under the provisions 35 of this chapter impede or otherwise affect the payment of sales tax moneys 36 pledged for the payment on other state bonds outstanding on the effective 37 date of this act or subsequently issued as tax anticipation notes pursuant 38 to section 63-3202, Idaho Code. 39 (32) Moneys transferred from the state sales tax account to the bond bank 40 authority fund pursuant to subsection (21) of this section shall be deposited 41 in the reserve fund as replacement moneys for amounts withdrawn from the 42 reserve fund to pay debt service on the bonds pursuant to section 67-8725, 43 Idaho Code, to the extent such moneys are derived from amounts appropriated to 2 1 the reserve fund by the legislature, or shall be used to pay debt service when 2 due on bonds for which other moneys available pursuant to section 67-8727, 3 Idaho Code, are insufficient. 4 (43) The state of Idaho pledges to and agrees with the holders of any 5 bonds that the state will not alter, impair or limit the rights vested by the 6 sales tax account pledge provided in this section and in section 63-3638, 7 Idaho Code, with respect to the bonds until the bonds, together with applica- 8 ble interest, are fully paid and discharged. 9 (54) To the extent that other legally available revenues and funds of the 10 state are sufficient to meet the certified deficiency, the transfer of moneys 11 from the sales tax account in section 63-3638, Idaho Code, is abated. 12 SECTION 2. That Section 67-8725, Idaho Code, be, and the same is hereby 13 amended to read as follows: 14 67-8725. PAYMENT TRANSFER -- NOTICE OF NONPAYMENT -- STATE FINANCIAL 15 ASSISTANCE INTERCEPT MECHANISM -- STATE TREASURER DUTIES -- INTEREST AND PEN- 16 ALTY PROVISIONS. 17 (1) (a) Each municipality, with outstanding unpaid municipal bonds as set 18 forth in this chapter held by or for the authority,except for those19municipal bonds described in section 67-8728, Idaho Code, and so desig-20nated by the authority at the time it issues bonds to acquire such munici-21pal bonds,shall transfer moneys sufficient for the scheduled debt service 22 payment to its paying agent at least fifteen (15) days before any princi- 23 pal or interest payment date for the bonds in order that the bonds of the 24 authority may be paid. The paying agent may be the trustee for the bonds 25 of the authority that are secured by those municipal bonds. 26 (b) A municipality subject to this section and chapter with regard to any 27 municipal bonds and which is unable to transfer the scheduled debt service 28 payment to the paying agent at least fifteen (15) days before the sched- 29 uled payment date shall immediately notify the paying agent and the state 30 treasurer by: 31 (i) Telephone; 32 (ii) A writing sent by facsimile transmission; and 33 (iii) A writing sent by first-class United States mail. 34 (c) If sufficient funds are not transferred to the paying agent as 35 required by this subsection, the paying agent shall notify the authority 36 and the state treasurer of that failure in writing at least ten (10) days 37 before the scheduled debt service payment date by: 38 (i) Telephone; 39 (ii) A writing sent by facsimile transmission; and 40 (iii) A writing sent by first-class United States mail. 41 (d) If sufficient moneys to pay the scheduled debt service payment have 42 not been transferred to the paying agent at least ten (10) days before the 43 scheduled payment date, the authority or the state treasurer shall cause 44 sufficient moneys to be transferred from the reserve fund as provided in 45 section 67-8713, Idaho Code, to the paying agent to make the scheduled 46 debt service payment on the bonds of the authority. 47 (e) To the extent moneys transferred from the reserve fund are derived 48 from moneys appropriated to the reserve fund by the legislature, the pay- 49 ment by the state treasurer:50(i) Discharges the obligation of the issuing municipality to its51bondholders for the payment; and52(ii) Ttransfers the rights represented by thegeneralobligation of 53 the municipality and/or authority from the bondholders to the state. 3 1 (2) (a) If one (1) or more payments on bonds are made by the state trea- 2 surer from moneys in the reserve fund that are derived from moneys appro- 3 priated to the reserve fund by the legislature, due to the failure of the 4 municipality to make payment on its bonds in a timely manner, the state 5 treasurer, subject to the limitations provided in paragraph (b) of this 6 subsection 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) Liquor revenues that would be distributed pursuant to sec- 12 tion 23-404, Idaho Code; or 13 (D) Any other source of operating moneys provided by the state 14 to the municipality that issued the municipal bonds that would 15 otherwise be paid to the municipality by the state; and 16 (ii) Apply the intercepted payments to reimburse the state for pay- 17 ments made by the state for the bonds of the authority by deposit to 18 the reserve fund up to the amount withdrawn from the reserve fund for 19 such purpose until all obligations of the municipality to the state 20 arising from those payments, including interest and penalties, are 21 paid in full. 22 (b)When intercepting payments under paragraph (a) of this subsection,23the state treasurer shall intercept only such payments, if any, which24would otherwise be lawfully available to the municipality for the repay-25ment of its municipal bonds and further subject to the limitations of sec-26tion 67-8728, Idaho CodeThe foregoing intercept and transfer provisions 27 shall operate by force of law and no consent thereto is required of the 28 municipality in order to be enforceable, provided that such provisions 29 shall not apply to any municipal bonds that were previously deemed exempt 30 from intercept under section 67-8728, Idaho Code, when such section was in 31 full force and effect. 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. Any funds intercepted under subsection (2)(a)(i) of this section 35 shall be used only for payment of bonds of the authority and not the bonds 36 of the municipality, and the municipality shall receive no credit against 37 amounts due under its municipal bonds for any amounts intercepted under 38 subsection (2)(a)(i) of this section. 39 (3) The municipality that issued municipal bonds for which the state has 40 made all or part of a debt service payment, either from amounts in the reserve 41 fund that are derived from moneys appropriated by the legislature or from 42 moneys transferred from the state sales tax account pursuant to section 43 67-8716, Idaho Code, shall: 44 (a) Reimburse all moneys drawn by the state treasurer on its behalf; 45 (b) Pay interest to the state on all moneys paid by the state from the 46 date the moneys are drawn to the date they are repaid at a rate not less 47 than the average prime rate for national money center banks plus five per- 48 cent (5%); and 49 (c) Pay all penalties required by this chapter. 50 (4) (a) The state treasurer shall establish the reimbursement interest 51 rate after considering the circumstances of any prior draws by the munici- 52 pality on the state, market interest and penalty rates, and the cost of 53 funds, if any, that were required to be borrowed by the state to make pay- 54 ments on the bonds. 55 (b) The state treasurer may, after considering the circumstances giving 4 1 rise to the failure of the municipality to make payment on its bonds in a 2 timely manner, impose on the municipality a penalty of not more than five 3 percent (5%) of the amount paid by the state for each instance in which a 4 payment by the state is made. 5 (5)(a)(i) If the state treasurer determines that amounts obtained under 6 this section will not reimburse the state in full within one (1) 7 year from the state's payment of a municipality's scheduled debt ser- 8 vice payment, the state treasurer shall pursue any legal action, 9 including mandamus, against the municipality to compel it to: 10 (A) Levy and provide tax or other revenues to pay debt service 11 on its municipal bonds when due; and 12 (B) Meet its repayment obligations to the state. 13 (ii) In pursuing its rights under paragraph (a) of this subsection, 14 the state shall have the same substantive and procedural rights as 15 would a holder of the bonds of a municipality. 16 (b) The attorney general shall assist the state treasurer in these 17 duties. 18 (c) The municipality shall pay the attorney's fees, expenses and costs of 19 the state treasurer and the attorney general. 20 (6) (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. Said operating 24 funds may also be replaced by the authority from excess amounts available 25 to it if the municipality subsequently pays the delinquent payments on its 26 municipal bonds and any penalties or costs of expenses due the authority 27 in connection therewith. 28 (b) A municipality may use property taxes or other moneys to replace 29 intercepted funds only if the property taxes or other moneys were derived 30 from: 31 (i) Taxes originally levied to make the payment but which were not 32 timely received by the municipality; 33 (ii) Taxes from a supplemental levy made to make the missed payment 34 or to replace the intercepted moneys; 35 (iii) Moneys transferred from the undistributed reserve, if any, of 36 the municipality; or 37 (iv) Any other source of money on hand and legally available. 38 (c) Notwithstanding the provisions of paragraphs (a) and (b) of this sub- 39 section, a municipality may not replace operating funds intercepted by the 40 state with moneys collected by the municipality and held to make payments 41 on its municipal bonds if that replacement would divert moneys from the 42 payment of future debt service ontheits municipal bonds and increase the 43 risk that the state would be called upon an additional time to make pay- 44 ments on the bonds of the authority. 45 SECTION 3. That Section 67-8727, Idaho Code, be, and the same is hereby 46 amended to read as follows: 47 67-8727. ALTERNATIVE INTERCEPT PROCEDURE. Notwithstanding any other pro- 48 vision of law to the contrary, to the extent that any bonds are not secured by 49 moneys appropriated by the legislature to the reserve fund established pursu- 50 ant to section 67-8713, Idaho Code, or such moneys are insufficient to pay 51 debt service when due on the bonds, in lieu of the provisions set forth in 52 section 67-8725, Idaho Code, the following provisions shall apply, provided 53 that the provisions of section 67-8725, Idaho Code, shall continue to apply 5 1 with respect to transfers of amounts in the reserve fund derived from moneys 2 appropriated by the legislature: 3 (1) (a) Each municipality with outstanding unpaid municipal bonds as set 4 forth in this chapter held by or for the authority,except for those5municipal bonds described in section 67-8728, Idaho Code, and so desig-6nated by the authority at the time it issues bonds to acquire such munici-7pal bonds,shall transfer moneys sufficient for the scheduled debt service 8 payment to its paying agent at least fifteen (15) days before any princi- 9 pal or interest payment date for the bonds. The paying agent may be the 10 trustee for the bonds of the authority that are secured by those municipal 11 bonds. 12 (b) A municipality which is unable to transfer the scheduled debt service 13 payment to the paying agent at least fifteen (15) days before the sched- 14 uled payment date shall immediately notify the paying agent, the authority 15 and the state treasurer by: 16 (i) Telephone; 17 (ii) A writing sent by facsimile transmission; and 18 (iii) A writing sent by first-class United States mail. 19 (c) If sufficient funds are not transferred to the paying agent as 20 trustee for the bonds of the authority that are secured by those municipal 21 bonds at least ten (10) days before the scheduled debt service payment 22 date of those bonds, the trustee shall transfer any available funds 23 pledged to secure payment of the bonds of the authority or the municipal- 24 ity held in any reserve fund or other pledged fund, or draw on any reserve 25 surety policy securingthesuch bonds, sufficient amounts to make up any 26 shortfall in the amount necessary to pay debt service on the bonds on the 27 scheduled payment date and deposit such amount in the debt service payment 28 fund for those bonds. 29 (d) If the trustee is required to transfer funds pursuant to paragraph 30 (c) of this subsection to pay debt service on the bonds of the authority 31 or there are not sufficient funds available pursuant to paragraph (c) of 32 this subsection to make up for any shortfall in the amount necessary to 33 pay debt service onthesuch bonds in order that the bonds of the author- 34 ity may be timely paid, at least ten (10) days before the scheduled debt 35 service payment date of the bonds, the trustee shall notify the authority 36 and the state treasurer by: 37 (i) Telephone; 38 (ii) A writing sent by facsimile transmission; and 39 (iii) A writing sent by first-class United States mail. 40 (e) Upon the notice provided in subsection (1)(d) of this section, the 41 state treasurer, subject to the limitations provided in subsection42(1)(e)(iii) of this sectionshall: 43 (i) Immediately intercept any payments from: 44 (A) The receipts of any payment of property taxes; or 45 (B) Sales tax moneys that would be distributed pursuant to sec- 46 tion 63-3638, Idaho Code; or 47 (C) Liquor tax moneys that would be distributed pursuant to 48 section 23-404, Idaho Code; or 49 (D) Any other source of operating moneys provided by the state 50 to the municipality that issued the municipal bonds that would 51 otherwise be paid to the municipality by the state; and 52 (ii) Transfer the intercepted payments in the following order of 53 priority: 54 (A) To the trustee for the bonds of the authority for deposit 55 in the debt service payment fund forthesuch bonds until there 6 1 are sufficient amounts on deposit to pay debt service on the 2 bonds of the authority on the scheduled payment date; provided 3 that if the state treasurer will be unable to transfer suffi- 4 cient intercepted payments for such purpose, the state treasurer 5 shall give notice to the state tax commission, certifying the 6 amount of the deficiency, at least five (5) days prior to the 7 scheduled payment date of the bonds; 8 (B) To the trustee for the bonds to reimburse any amounts 9 transferred from a reserve or other pledged fund or surety pol- 10 icy pursuant to paragraph (c) of this subsection up to the 11 required balance in such fund or required reimbursement of such 12 surety; and 13 (C) To the state for the reimbursement of any moneys trans- 14 ferred from the state sales tax account pursuant to section 15 67-8716, Idaho Code, to pay debt service on the bonds on the 16 scheduled payment date, together with any interest or penalties 17 established pursuant to section 67-8725, Idaho Code; 18 (iii)When intercepting payments under this subsection, the state19treasurer shall intercept only such payments, if any, which would20otherwise be lawfully available to the municipality for the repayment21of its municipal bonds and further subject to the limitations of sec-22tion 67-8728, Idaho CodeThe foregoing intercept and transfer provi- 23 sions shall operate by force of law and no consent thereto is 24 required of the municipality in order to be enforceable, provided 25 that such provisions shall not apply to any municipal bonds which 26 were previously deemed exempt from intercept under section 67-8728, 27 Idaho Code, when such section was in full force and effect. 28 (f) The state has no obligation to the municipality or to any person or 29 entity to replace any moneys intercepted under the authority of this sub- 30 section. Any funds intercepted under subsection (1)(e) of this section 31 shall be used only for payment of bonds of the authority and not for the 32 bonds of the municipality, and the municipality shall receive no credit 33 against amounts due under its municipal bonds for any amounts intercepted 34 under subsection (1)(e) of this section. 35 (2) (a) The municipal bonds or the agreement for purchase of the munici- 36 pal bonds by the authority may provide for payment of interest and penal- 37 ties and other terms for reimbursement of any amounts drawn from reserve 38 funds, pledged funds, reserve surety policies or other credit enhancement 39 to pay debt service on the bonds of the authority due to the failure of 40 the municipality to make payment on its municipal bonds in a timely man- 41 ner. To the extent that debt service on the bonds of the authority is paid 42 from the state sales tax account pursuant to section 67-8716, Idaho Code, 43 the provisions of sections 67-8725(3), (4) and (5), Idaho Code, shall 44 apply. 45 (b) If the authority determines that amounts obtained under this section 46 will not fully make upany amounts which a municipality has failed to pay47onfor failure of the municipality to pay its municipal bonds when due, 48 together with any interest and penalties established pursuant to this sec- 49 tion, within one (1) year from the payment of the municipality's scheduled 50 debt service payment, the authority or the trustee for the bonds of the 51 authority may pursue any legal action, including mandamus, against the 52 municipality to compel the municipality to: 53 (i) Levy and provide tax or other revenues to pay debt service on 54 its municipal bonds when due; and 55 (ii) Meet its repayment obligations, under its municipal bonds or 7 1 otherwise, to the authority. 2 (c) In pursuing their rights under this subsection, the authority and the 3 trustee shall also have the same substantive and procedural rights as a 4 holder of the bonds of a municipality. 5 (d) The attorney general shall assist the authority in carrying out its 6 duties under this subsection. 7 (e) The municipality shall pay the attorney's fees, expenses and costs of 8 the authority, the trustee and the attorney general. 9 (3) (a) Except as provided in paragraph (c) of this subsection, any 10 municipality whose operating funds were intercepted under this section may 11 replace those funds from other municipal moneys or from property taxes, 12 subject to the limitations provided in this subsection. Said operating 13 funds may also be replaced by the authority from excess amounts available 14 to it if the municipality subsequently pays the delinquent payments on its 15 municipal bonds and any penalties or costs of expenses due the authority 16 in connection therewith. 17 (b) A municipality may use property taxes or other moneys to replace 18 intercepted funds only if the property taxes or other moneys were derived 19 from: 20 (i) Taxes originally levied to make the payment but which were not 21 timely received by the municipality; 22 (ii) Taxes from a supplemental levy made to make the missed payment 23 or to replace the intercepted moneys; 24 (iii) Moneys transferred from the undistributed reserve, if any, of 25 the municipality; or 26 (iv) Any other source of money on hand and legally available. 27 (c) Notwithstanding the provisions of subsections (3)(a) and (b) of this 28 section, a municipality may not replace operating funds intercepted by the 29 state with moneys collected by the municipality and held to make payments 30 on its municipal bonds if that replacement would divert moneys from the 31 payment of future debt service ontheits municipal bonds and increase the 32 risk that the state would be called upon an additional time to make pay- 33 ments on the bonds of the authority. 34 SECTION 4. That Section 67-8728, Idaho Code, be, and the same is hereby 35 repealed.
STATEMENT OF PURPOSE
RS18048
This legislation is intended to clarify that sales tax, liquor tax
or other revenues which are distributed to municipalities
throughout the state are subject to intercept by the state
treasurer if those municipalities fail to make payment on loans to
such municipalities from the Idaho Bond Bank Authority in order
that the Authority's bonds may be paid, and such state intercept
operates by force of law and not by consent of the municipality.
FISCAL NOTE
No general fund monies will be expended due to this legislation.
Contact
Name: Liza Carberry, Idaho Bond Bank Authority
Phone: 208-332-2997
Ron Crane, Idaho State Treasurer
Phone: 208-332-3200
STATEMENT OF PURPOSE/FISCAL NOTE S 1485