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S.B. 152






Sponsor: Howard A. Stephenson

9    This act affects sections of Utah Code Annotated 1953 as follows:
10    AMENDS:
11         17A-2-1439, as last amended by Chapter 261, Laws of Utah 1996
12    Be it enacted by the Legislature of the state of Utah:
13        Section 1. Section 17A-2-1439 is amended to read:
14         17A-2-1439. Contracts providing for payment in installments -- Issuance and sale
15     of bonds -- Sinking fund -- Covenants -- Default -- Revenue obligations -- Refunding bonds.
16        (1) (a) (i) To pay for construction, operation, and maintenance of works, and expenses
17    preliminary and incidental to them, the board may enter into contracts with the United States of
18    America or its agencies, providing for payment in installments.
19        (ii) To pay for all or part of the cost of the construction or acquisition of any works, to pay
20    for the improvement and extension of them, to pay expenses preliminary and incidental to them,
21    to pay interest on the bonds during acquisition and construction, to provide for necessary reserves,
22    and to pay costs of issuance and sale of the bonds (including, without limitation, printing,
23    registration and transfer costs, legal fees, financial advisor's fees, and underwriter's discount), the
24    board may issue the bonds of the district as provided in this section.
25        (b) The indebtedness or obligation represented by any bonds issued by or any contract
26    entered into by the board may be payable in whole or in part from all or part of the revenues
27    derived by the district from the operation of all or any designated portion of its works, from the

1    proceeds of assessments and taxes levied under this part, or from any combination of those
2    revenues, assessments, and taxes.
3        (c) The indebtedness or obligation represented by any bonds issued by or any contract
4    entered into by the board may be incurred for the acquisition, construction, or both, of all or part
5    of any works, for the improvement or extension of any works, or for a system of works for the
6    distribution of water or for the treatment of water or both, whether or not the works of the district
7    so acquired, constructed, improved, or extended include a source of water supply.
8        (d) (i) These bonds shall be issued and sold in compliance with Title 11, Chapter 14, Utah
9    Municipal Bond Act, and may be in the form and denominations and have provisions and details
10    permitted by the Utah Municipal Bond Act, except that the bonds shall mature serially or
11    otherwise and contract payment installments shall fall due at any time or times not later than 50
12    years from their date.
13        (ii) The bonds and any evidences of participation interests in the bonds may be issued,
14    executed, authenticated, registered, transferred, exchanged, and otherwise made to comply with
15    Title 15, Chapter 7, Registered Public Obligations Act, or any other statute relating to the
16    registration of bonds enacted to meet the requirements of Section 103 of the Internal Revenue
17    Code of 1954, as amended, or any similar or successor federal law, and applicable regulations.
18        (e) A bond issued under this section on or after May 4, 1998 may not obligate the board
19    or district to levy a tax at the maximum allowable rate on taxable property within the district, but
20    may obligate the board or district to levy a tax on taxable property within the district at a rate
21    sufficient to pay the principal and interest on the bond.
22        (2) (a) Bonds may be issued hereunder at one time or from time to time.
23        (b) If more than one issue or series of bonds is delivered hereunder, the bonds of the
24    respective issues or series shall have priorities of payment as provided in the proceedings
25    authorizing the bonds.
26        (3) (a) Any resolution authorizing the issuance of bonds or the entering into of a contract
27    indebtedness or obligation payable in installments hereunder shall provide for the creation of a
28    sinking fund into which shall be paid from the revenues, assessments, and taxes, any or all,
29    pledged to the payment in the authorizing resolution sums fully sufficient to pay the principal of
30    and interest on the bonds or on the contract indebtedness or obligation and to create a reserve for
31    contingencies as required by the resolution.

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1        (b) Any resolution so authorizing bonds or the entering into of a contract indebtedness or
2    obligation may contain those covenants with the future holders of the bonds or the other
3    contracting party as to the management and operation of the properties and works of the district,
4    the imposition and collection of fees and charges, including taxes and assessments, for the water
5    and services furnished thereby, the disposition of the fees and revenues, the issuance of future
6    bonds and the incurring of future contract indebtedness or obligations and the creation of future
7    liens and encumbrances against the works and the revenues thereof, the carrying of insurance on
8    the works and the disposition of the proceeds of insurance, the sale, disposal, or alienation of the
9    works, and other pertinent matters deemed necessary or proper by the board to assure the
10    merchantability of the bonds or the execution of the contract.
11        (c) These covenants and agreements may not be inconsistent with this section.
12        (4) (a) It may be provided in the resolution that any holder of the bonds or any contracting
13    party may by appropriate legal action compel performance of all duties required of the board and
14    the officials of the district by this part and the resolution authorizing the bonds or contract.
15        (b) If any bond issued or any contract entered into hereunder is permitted to go into default
16    as to any installment of principal or interest, any court of competent jurisdiction may, pursuant to
17    the application of the holder of any bond or of the other contracting party, appoint a receiver to
18    operate the works of the district and to collect and distribute the revenues thereof under the
19    resolution, this part, and as the court may direct.
20        (5) (a) When the district has issued bonds or entered into a contract and pledged any
21    revenues of the works for the payment of them as provided in this part, the district shall impose
22    and collect fees and charges for water and services furnished by the works in that amount and at
23    those rates fully sufficient at all times (in conjunction with the proceeds of available taxes and
24    assessments if the bonds or contract indebtedness or obligation are also payable in part from the
25    proceeds of assessments and taxes levied under this part) to pay the expenses of operating and
26    maintaining the works, to provide a sinking fund sufficient to assure the prompt payment of
27    principal of and interest on the bonds or contract indebtedness or obligation as principal and
28    interest fall due, and to provide those funds for reserves and contingencies and for a depreciation
29    fund for repairs, extensions, and improvements to the works as deemed necessary to assure
30    adequate and efficient service, all as may be required by the resolution.
31        (b) No board or commission other than the board of directors of the district has authority

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1    over or is required to approve the making or fixing of fees and charges, the acquisition of property
2    by the district, the issuance of its bonds, or the entering into of a contract.
3        (6) (a) The board of any district that issues or has issued any bonds under this part, or that
4    enters or has entered into any contracts under this part, may issue bonds hereunder for the purpose
5    of refunding all or any part of the outstanding bonds, or the outstanding indebtedness or obligation
6    represented by the contracts, or in part for the purpose of the refunding and in part for the purpose
7    of acquiring, constructing, improving, or extending works for the district.
8        (b) If bonds are issued solely for refunding purposes, the election required by Section
9    17A-2-1440 is not a condition precedent to the issuance of the bonds.
10        (c) Refunding bonds so authorized:
11        (i) may be sold and the proceeds thereof applied to or deposited in an escrow and invested
12    pending the retirement of the outstanding bonds; or
13        (ii) may be delivered in exchange for the outstanding bonds.
14        (d) The refunding bonds shall be authorized and secured in the manner herein provided
15    for the issuance and securing of other bonds and may, but are not required to, have the same source
16    of security and payment as the bonds refunded.
17        (7) (a) If bonds have been issued or a contract indebtedness or obligation has been incurred
18    hereunder payable in whole or in part from revenues to be derived from supplying water to the
19    inhabitants of territory which was not at the time of the issuance of the bonds or the entering into
20    of the contract contained within the corporate limits of any municipality or any other district
21    created for the purpose of supplying water to the territory, the district shall thereafter be the sole
22    public corporation or political subdivision authorized to supply water to this area.
23        (b) No municipal corporation or other district into which any part of the territory is
24    incorporated or included has authority either to supply water to the inhabitants of the corporation
25    or district or to grant a franchise for the supplying of the water.
26        (c) Nothing contained in this subsection prevents the modification of this restriction
27    contained by the district if modification does not in any way jeopardize the prompt payment of
28    principal of and interest on the bonds of the district then outstanding or of the payment of
29    installments of indebtedness or obligation under a contract.

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Legislative Review Note
    as of 1-6-98 2:47 PM

A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

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