53A-28-302. State financial assistance intercept mechanism -- State treasurer duties
-- Interest and penalty provisions.
(1) (a) If one or more payments on bonds are made by the state treasurer as provided in
Section 53A-28-301, the state treasurer shall:
(i) immediately intercept any payments from the Uniform School Fund or from any other
source of operating monies provided by the state to the board that issued the bonds that would
otherwise be paid to the board by the state; and
(ii) apply the intercepted payments to reimburse the state for payments made pursuant to
the state's guaranty until all obligations of the board to the state arising from those payments,
including interest and penalties, are paid in full.
(b) The state has no obligation to the board or to any person or entity to replace any
monies intercepted under authority of Subsection (1)(a).
(2) The board that issued bonds for which the state has made all or part of a debt service
payment shall:
(a) reimburse all monies drawn by the state treasurer on its behalf;
(b) pay interest to the state on all monies paid by the state from the date the monies were
drawn to the date they are repaid at a rate not less than the average prime rate for national money
center banks plus 1%; and
(c) pay all penalties required by this chapter.
(3) (a) The state treasurer shall establish the reimbursement interest rate after considering
the circumstances of any prior draws by the board on the state, market interest and penalty rates,
and the cost of funds, if any, that were required to be borrowed by the state to make payment on
the bonds.
(b) The state treasurer may, after considering the circumstances giving rise to the failure
of the board to make payment on its bonds in a timely manner, impose on the board a penalty of
not more than 5% of the amount paid by the state pursuant to its guaranty for each instance in
which a payment by the state is made.
(4) (a) (i) If the state treasurer determines that amounts obtained under this section will
not reimburse the state in full within one year from the state's payment of a board's scheduled
debt service payment, the state treasurer shall pursue any legal action, including mandamus,
against the board to compel it to:
(A) levy and provide property tax revenues to pay debt service on its bonds when due as
required by Title 11, Chapter 14, Local Government Bonding Act; and
(B) meet its repayment obligations to the state.
(ii) In pursuing its rights under this Subsection (4)(a), the state shall have the same
substantive and procedural rights under Title 11, Chapter 14, Local Government Bonding Act, as
would a holder of the bonds of a board.
(b) The attorney general shall assist the state treasurer in these duties.
(c) The board shall pay the attorney's fees, expenses, and costs of the state treasurer and
the attorney general.
(5) (a) Except as provided in Subsection (5)(c), any board whose operating funds were
intercepted under this section may replace those funds from other board monies or from ad
valorem property taxes, subject to the limitations provided in this Subsection (5).
(b) A board may use ad valorem property taxes or other monies to replace intercepted
funds only if the ad valorem property taxes or other monies were derived from:
(i) taxes originally levied to make the payment but which were not timely received by the
board;
(ii) taxes from a special levy made to make the missed payment or to replace the
intercepted monies;
(iii) monies transferred from the capital outlay fund of the board or the undistributed
reserve, if any, of the board; or
(iv) any other source of money on hand and legally available.
(c) Notwithstanding the provisions of Subsections (5)(a) and (b), a board may not replace
operating funds intercepted by the state with monies collected and held to make payments on
bonds if that replacement would divert monies from the payment of future debt service on the
bonds and increase the risk that the state's guaranty would be called upon a second time.
Amended by Chapter 105, 2005 General Session
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Last revised: Thursday, May 28, 2009