Second Substitute S.B. 32

Senator Scott K. Jenkins proposes the following substitute bill:

1 LOCAL GOVERNMENT BONDING ACT
2 2008 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Scott K. Jenkins
5 House Sponsor: Ben C. Ferry
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Local Government Bonding Act.
10 Highlighted Provisions:
11 This bill:
12 . addresses documents providing for the issuance of bonds;
13 . addresses a requirement that a local political subdivision conduct a public hearing to
14 issue bonds;
15 . addresses the scope of the public hearing to include potential economic impacts on
16 the private sector; and
17 . makes technical changes.
18 Monies Appropriated in this Bill:
19 None
20 Other Special Clauses:
21 None
22 Utah Code Sections Affected:
23 AMENDS:
24 11-14-307, as last amended by Laws of Utah 2007, Chapter 10
25 ENACTS:

26 11-14-318, Utah Code Annotated 1953
27
28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 11-14-307 is amended to read:
30 11-14-307. Revenue bonds payable out of excise tax revenues.
31 (1) To the extent constitutionally permissible, [cities, towns, or counties] a city, town,
32 or county may:
33 (a) issue bonds payable solely from a special fund into which are to be deposited:
34 (i) excise taxes levied and collected by the city, town, or county[, or];
35 (ii) excise taxes levied by the state and rebated pursuant to law to the city, town, or
36 county[,]; or [any]
37 (iii) a combination of [those] the excise taxes[,] described in Subsections (1)(a)(i) and
38 (ii); or [may]
39 (b) pledge all or any part [thereof] of the excise taxes described in Subsection (1)(a) as
40 an additional source of payment for [their] general obligation bonds it issues.
41 (2) (a) [Any] If the covenant is not inconsistent with this chapter, a resolution
42 [authorizing] or trust indenture providing for the issuance of bonds payable in whole or in part
43 from the proceeds of excise tax revenues may contain covenants with the holder or holders of
44 the bonds as to:
45 (i) the excise tax revenues[,];
46 (ii) the disposition of the excise tax revenues[,];
47 (iii) the issuance of future bonds[,]; and
48 (iv) other pertinent matters that are considered necessary by the governing body to
49 assure the marketability of those bonds[, provided the covenants are not inconsistent with the
50 provisions of this chapter].
51 (b) [The] A resolution may also include provisions to insure the enforcement,
52 collection, and proper application of excise tax revenues as the governing body may think
53 proper.
54 (c) The proceeds of bonds payable in whole or in part from pledged class B or C road
55 funds shall be used to construct, repair, and maintain streets and roads in accordance with
56 Sections 72-6-108 and 72-6-110 and to fund any reserves and costs incidental to the issuance of

57 the bonds.
58 (d) When any bonds payable from excise tax revenues have been issued, the resolution
59 or other enactment of the legislative body imposing the excise tax and pursuant to which the
60 tax is being collected, the obligation of the governing body to continue to levy, collect, and
61 allocate the excise tax, and to apply the revenues derived [therefrom] from the excise tax in
62 accordance with the provisions of the authorizing resolution or other enactment, shall be
63 irrevocable until the bonds have been paid in full as to both principal and interest, and is not
64 subject to amendment in any manner [which] that would impair the rights of the holders of
65 those bonds or which would in any way jeopardize the timely payment of principal or interest
66 when due.
67 (3) (a) The state pledges to and agrees with the holders of any bonds issued by a city,
68 town, or county to which the proceeds of excise taxes collected by the state and rebated to the
69 city, town, or county are devoted or pledged as authorized in this section, that the state will not
70 alter, impair, or limit the excise taxes in a manner that reduces the amounts to be rebated to the
71 city, town, or county which are devoted or pledged as authorized in this section until the bonds
72 or other securities, together with applicable interest, are fully met and discharged.
73 (b) Nothing in this Subsection (3) precludes alteration, impairment, or limitation of
74 excise taxes if adequate provision is made by law for the protection of the holders of the bonds.
75 (c) [Each] A city, town, or county may include this pledge and undertaking for the state
76 in those bonds.
77 (4) (a) [The outstanding] Outstanding bonds to which excise tax revenues [have been]
78 are pledged as the sole source of payment may not at any one time exceed an amount for which
79 the average annual installments of principal and interest will exceed 80% of the total excise
80 tax revenues received by the issuing entity from the collection or rebate of the excise tax
81 revenues during the fiscal year of the issuing entity immediately preceding the fiscal year in
82 which the resolution authorizing the issuance of bonds is adopted.
83 (b) If an excise tax has not been levied by a city, town, or county for a sufficient period
84 of time to determine the 80% bond payment requirement under Subsection (4)(a), a city, town,
85 or county may use an excise tax revenue that is currently levied within the same geographic
86 coverage area and with the same percentage of collection to determine the amount of excise tax
87 revenues that are expected to be received to determine the 80% bond payment requirement

88 under Subsection (4)(a).
89 (5) Bonds issued solely from a special fund into which are to be deposited excise tax
90 revenues constitutes a borrowing solely upon the credit of the excise tax revenues received or
91 to be received by the city, town, or county and does not constitute an indebtedness or pledge of
92 the general credit of the city, town, or county.
93 (6) [(a)] Before issuing any bonds under this section, a city, town, or county shall[:]
94 comply with Section 11-14-318 .
95 [(i) give public notice of its intent to issue the bonds; and]
96 [(ii) hold a public hearing to receive input from the public with respect to the issuance
97 of the bonds.]
98 [(b) The city, county, or town shall:]
99 [(i) publish the notice once each week for two consecutive weeks in the official
100 newspaper as designated under Section 11-14-316 , with the first publication being not less than
101 14 days before the public hearing; and]
102 [(ii) ensure that the notice identifies:]
103 [(A) the purpose for the issuance of the bonds;]
104 [(B) the maximum principal amount of the bonds to be issued;]
105 [(C) the excise taxes proposed to be pledged for repayment of the bonds; and]
106 [(D) the time, place, and location of the public hearing.]
107 (7) A city, town, or county shall submit the question of whether or not to issue any
108 bonds under this section to voters for their approval or rejection if, within 30 calendar days
109 after the notice required by [Subsection (6)] Section 11-14-318 , a written petition requesting an
110 election and signed by at least 20% of the registered voters in the city, town, or county is filed
111 with the city, town, or county.
112 Section 2. Section 11-14-318 is enacted to read:
113 11-14-318. Public hearing required.
114 (1) Before issuing bonds authorized under this chapter, a local political subdivision
115 shall:
116 (a) in accordance with Subsection (2), provide public notice of the local political
117 subdivision's intent to issue bonds; and
118 (b) hold a public hearing:

119 (i) if an election is required under this chapter:
120 (A) no sooner than 30 days before the day on which the notice of election is published
121 under Section 11-14-202 ; and
122 (B) no later than five business days before the day on which the notice of election is
123 published under Section 11-14-202 ; and
124 (ii) to receive input from the public with respect to:
125 (A) the issuance of the bonds; and
126 (B) the potential economic impact that the improvement, facility, or property for which
127 the bonds pay all or part of the cost will have on the private sector.
128 (2) A local political subdivision shall:
129 (a) publish the notice required by Subsection (1)(a):
130 (i) once each week for two consecutive weeks in the official newspaper described in
131 Section 11-14-316 ;
132 (ii) with the first publication being not less than 14 days before the public hearing
133 required by Subsection (1)(b); and
134 (iii) on the Utah Public Notice Website created under Section 63F-1-701 no less than
135 14 days before the public hearing required by Subsection (1)(b); and
136 (b) ensure that the notice:
137 (i) identifies:
138 (A) the purpose for the issuance of the bonds;
139 (B) the maximum principal amount of the bonds to be issued;
140 (C) the taxes, if any, proposed to be pledged for repayment of the bonds; and
141 (D) the time, place, and location of the public hearing; and
142 (ii) informs the public that the public hearing will be held for the purposes described in
143 Subsection (1)(b)(ii).