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S.B. 273

             1     

HIGHWAY BONDING

             2     
2000 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: David H. Steele

             5      AN ACT RELATING TO FINANCING HIGHWAY CONSTRUCTION AND REPAIR;
             6      AUTHORIZING THE ISSUANCE AND SALE OF GENERAL OBLIGATION BONDS FOR
             7      HIGHWAYS AND RELATED FACILITIES; SPECIFYING THE USE OF BOND AND NOTE
             8      PROCEEDS AND THE MANNER OF ISSUANCE; IMPOSING AND ABATING A
             9      PROPERTY TAX; CREATING SINKING FUNDS; MODIFYING DEBT LIMIT
             10      REQUIREMENTS; AUTHORIZING CERTAIN OTHER HIGHWAY EXPENDITURES;
             11      PROVIDING FOR RELATED MATTERS; AND MAKING TECHNICAL CORRECTIONS.
             12      This act affects sections of Utah Code Annotated 1953 as follows:
             13      AMENDS:
             14          63-38c-402, as last amended by Chapter 331, Laws of Utah 1999
             15      ENACTS:
             16          63B-9-201, Utah Code Annotated 1953
             17          63B-9-202, Utah Code Annotated 1953
             18          63B-9-203, Utah Code Annotated 1953
             19          63B-9-204, Utah Code Annotated 1953
             20          63B-9-205, Utah Code Annotated 1953
             21          63B-9-206, Utah Code Annotated 1953
             22          63B-9-207, Utah Code Annotated 1953
             23          63B-9-208, Utah Code Annotated 1953
             24          63B-9-209, Utah Code Annotated 1953
             25          63B-9-210, Utah Code Annotated 1953
             26          63B-9-211, Utah Code Annotated 1953
             27          63B-9-212, Utah Code Annotated 1953


             28          63B-9-213, Utah Code Annotated 1953
             29          63B-9-214, Utah Code Annotated 1953
             30          63B-9-215, Utah Code Annotated 1953
             31          63B-9-216, Utah Code Annotated 1953
             32          63B-9-217, Utah Code Annotated 1953
             33      Be it enacted by the Legislature of the state of Utah:
             34          Section 1. Section 63-38c-402 is amended to read:
             35           63-38c-402. Debt limitation -- Vote requirement needed to exceed limitation --
             36      Exceptions.
             37          (1) (a) Except as provided in Subsection (1)(b), the outstanding general obligation debt
             38      of the state may not exceed 20% of the maximum allowable appropriations limit unless approved
             39      by more than a two-thirds vote of both houses of the Legislature.
             40          (b) Notwithstanding the limitation contained in Subsection (1)(a), debt issued under the
             41      authority of Title 63B, Chapter 6, Part 2, 1997 Highway General Obligation Bond Authorization,
             42      Title 63B, Chapter 6, Part 3, 1997 Highway Bond Anticipation Note Authorization, Title 63B,
             43      Chapter 7, Part 2, 1998 Highway General Obligation Bond Authorization, Title 63B, Chapter 7,
             44      Part 3, 1998 Highway Bond Anticipation Note Authorization, Title 63B, Chapter 8, Part 2, 1999
             45      Highway General Obligation Bond Authorization, [and] Title 63B, Chapter 8, Part 3, 1999
             46      Highway Bond Anticipation Note Authorization, Title 63B, Chapter 9, Part 2, 2000 Highway
             47      General Obligation Bond, is not subject to the debt limitation established by this section.
             48          (2) This section does not apply if contractual rights will be impaired.
             49          Section 2. Section 63B-9-201 is enacted to read:
             50     
Part 2. 2000 Highway General Obligation Bond

             51          63B-9-201. State Bonding Commission authorized to issue general obligation bonds.
             52          The commission created under Section 63B-1-201 may issue and sell general obligation
             53      bonds of the state pledging the full faith, credit, and resources of the state for the payment of the
             54      principal of and interest on the bonds, to provide funds to the Department of Transportation.
             55          Section 3. Section 63B-9-202 is enacted to read:
             56          63B-9-202. Maximum amount -- Projects authorized.
             57          (1) The total amount of bonds issued under this part may not exceed $5,000,000.
             58          (2) (a) Up to $4,600,000 of the proceeds from the issuance of bonds shall be provided to


             59      the Department of Transportation to provide funds to pay all or part of the costs of state highway
             60      construction or reconstruction projects.
             61          (b) These costs may include the cost of acquiring land, interests in land, easements and
             62      rights-of-way, improving sites, and making all improvements necessary, incidental, or convenient
             63      to the facilities, interest estimated to accrue on these bonds during the period to be covered by
             64      construction of the projects plus a period of six months after the end of the construction period,
             65      and all related engineering, architectural, and legal fees.
             66          (3) If, after completion of the projects authorized under Subsection (2)(a) and payment of
             67      the costs of issuing and selling the bonds under Section 63B-9-203 , any bond proceeds remain
             68      unexpended, the Department of Transportation may use those unexpended proceeds to pay all or
             69      part of the costs of construction projects approved and prioritized by the Transportation
             70      Commission.
             71          (4) The commission may, by resolution, make any statement of intent relating to a
             72      reimbursement that is necessary or desirable to comply with federal tax law.
             73          (5) The Department of Transportation may enter into agreements related to that project
             74      before the receipt of proceeds of bonds issued under this chapter.
             75          Section 4. Section 63B-9-203 is enacted to read:
             76          63B-9-203. Bond proceeds may be used to pay costs of issuance and sale.
             77          The proceeds of bonds issued under this chapter shall be used for the purposes described
             78      in Section 63B-9-202 and to pay all or part of any cost incident to the issuance and sale of the
             79      bonds including, without limitation, printing, registration and transfer costs, legal fees, trustees'
             80      fees, financial advisors' fees, liquidity providers' fees, credit enhancement providers' fees, and
             81      underwriters' discount.
             82          Section 5. Section 63B-9-204 is enacted to read:
             83          63B-9-204. Manner of issuance -- Amounts, interest, and maturity.
             84          (1) Bonds issued under this chapter may be authorized, sold, and issued at times and in a
             85      manner determined by the commission by resolution.
             86          (2) Bonds may be issued in one or more series, in amounts, and shall bear dates, interest
             87      rates, including a variable rate, and maturity dates as the commission determines by resolution.
             88          (3) A bond issued may not mature later than 15 years after the dated date of the bonds.
             89          Section 6. Section 63B-9-205 is enacted to read:


             90          63B-9-205. Terms and conditions of sale -- Plan of financing -- Signatures --
             91      Replacement -- Registration -- Federal rebate.
             92          (1) In the issuance of bonds, the commission may determine by resolution:
             93          (a) the manner of sale, including public or private sale;
             94          (b) the terms and conditions of sale, including price, whether at, below, or above face
             95      value;
             96          (c) denominations;
             97          (d) form;
             98          (e) manner of execution;
             99          (f) manner of authentication;
             100          (g) place and medium of purchase;
             101          (h) redemption terms; and
             102          (i) other provisions and details it considers appropriate.
             103          (2) The commission may, by resolution, adopt a plan of financing, which may include
             104      terms and conditions of arrangements entered into by the commission on behalf of the state with
             105      financial and other institutions for letters of credit, standby letters of credit, reimbursement
             106      agreements, and remarketing, indexing, and tender agent agreements to secure the bonds, including
             107      payment from any legally available source of fees, charges, or other amounts coming due under
             108      the agreements entered into by the commission.
             109          (3) (a) Any signature of a public official authorized by resolution of the commission to
             110      sign the bonds may be a facsimile signature of that official imprinted, engraved, stamped, or
             111      otherwise placed on the bonds.
             112          (b) If all signatures of public officials on the bonds are facsimile signatures, provision shall
             113      be made for a manual authenticating signature on the bonds by or on behalf of a designated
             114      authentication agent.
             115          (c) If an official ceases to hold office before delivery of the bonds signed by that official,
             116      the signature or facsimile signature of the official is nevertheless valid for all purposes.
             117          (d) A facsimile of the state seal may be imprinted, engraved, stamped, or otherwise placed
             118      on the bonds.
             119          (4) (a) The commission may enact resolutions providing for the replacement of lost,
             120      destroyed, or mutilated bonds, or for the exchange of bonds after issuance for bonds of smaller or


             121      larger denominations.
             122          (b) Bonds in changed denominations shall:
             123          (i) be exchanged for the original bonds in like aggregate principal amounts and in a
             124      manner that prevents the duplication of interest; and
             125          (ii) bear interest at the same rate, mature on the same date, and be as nearly as practicable
             126      in the form of the original bonds.
             127          (5) (a) Bonds may be registered as to both principal and interest or may be in a book entry
             128      form under which the right to principal and interest may be transferred only through a book entry.
             129          (b) The commission may provide for the services and payment for the services of one or
             130      more financial institutions or other entities or persons, or nominees, within or outside the state, for
             131      the authentication, registration, transfer, including record, bookkeeping, or book entry functions,
             132      exchange, and payment of the bonds.
             133          (c) The records of ownership, registration, transfer, and exchange of the bonds, and of
             134      persons to whom payment with respect to the obligations is made, are private records as provided
             135      in Section 63-2-302 , or protected records as provided in Section 63-2-304 .
             136          (d) The bonds and any evidences of participation interest in the bonds may be issued,
             137      executed, authenticated, registered, transferred, exchanged, and otherwise made to comply with
             138      Title 15, Chapter 8, Registered Public Obligations Act, or any other act of the Legislature relating
             139      to the registration of obligations enacted to meet the requirements of Section 149 of the Internal
             140      Revenue Code of 1986, as amended, or any successor to it, and applicable regulations.
             141          (6) The commission may:
             142          (a) by resolution, provide for payment to the United States of whatever amounts are
             143      necessary to comply with Section 148 (f) of the Internal Revenue Code of 1986, as amended; and
             144          (b) enter into agreements with financial and other institutions and attorneys to provide for:
             145          (i) the calculation, holding, and payment of those amounts; and
             146          (ii) payment from any legally available source of fees, charges, or other amounts coming
             147      due under any agreements entered into by the commission.
             148          Section 7. Section 63B-9-206 is enacted to read:
             149          63B-9-206. Constitutional debt limitation.
             150          (1) The commission may not issue bonds under this chapter in an amount that violates the
             151      limitation described in Utah Constitution Article XIV, Section 1.


             152          (2) For purposes of applying the debt limitation contained in Utah Constitution Article
             153      XIV, Section 1, the value of the taxable property in Utah is considered to be 100% of the fair
             154      market value of the taxable property of the state, as computed from the last assessment for state
             155      purposes previous to the issuance of the bonds.
             156          Section 8. Section 63B-9-207 is enacted to read:
             157          63B-9-207. Tax levy -- Abatement of tax.
             158          (1) Each year after issuance of the bonds and until all outstanding bonds are retired, there
             159      is levied a direct annual tax on all real and personal property within the state subject to state
             160      taxation, sufficient to pay:
             161          (a) applicable bond redemption premiums, if any;
             162          (b) interest on the bonds as it becomes due; and
             163          (c) principal of the bonds as it becomes due.
             164          (2) (a) The State Tax Commission shall fix the rate of the direct annual tax levy each year.
             165          (b) The tax shall be collected and the proceeds applied as provided in this chapter.
             166          (3) The direct annual tax imposed under this section is abated to the extent money is
             167      available from sources, other than ad valorem taxes in the sinking fund, for the payment of bond
             168      interest, principal, and redemption premiums.
             169          Section 9. Section 63B-9-208 is enacted to read:
             170          63B-9-208. Creation of sinking fund.
             171          (1) There is created a sinking fund, to be administered by the state treasurer, entitled the
             172      "2000 Highway General Obligation Bonds Sinking Fund."
             173          (2) All monies deposited in the sinking fund, from whatever source, shall be used to pay
             174      debt service on the bonds.
             175          (3) The proceeds of all taxes levied under this chapter are appropriated to this fund.
             176          (4) The state treasurer may create separate accounts within the sinking fund for each series
             177      of bonds issued.
             178          Section 10. Section 63B-9-209 is enacted to read:
             179          63B-9-209. Payment of interest, principal, and redemption premiums.
             180          The state treasurer shall:
             181          (1) promptly pay any principal and interest due on the bonds from funds within the sinking
             182      fund; and


             183          (2) immediately transmit the amount paid to the paying agent for the bonds.
             184          Section 11. Section 63B-9-210 is enacted to read:
             185          63B-9-210. Investment of sinking fund money.
             186          (1) The state treasurer may, by following the procedures and requirements of Title 51,
             187      Chapter 7, State Money Management Act, invest any money contained in the sinking fund until
             188      it is needed for the purposes for which the fund is created.
             189          (2) Unless otherwise provided in the resolution of the commission authorizing the issuance
             190      of bonds under this chapter, the treasurer shall retain all income from the investment of any money
             191      contained in the sinking fund in the sinking fund and use it for the payment of debt service on the
             192      bonds.
             193          Section 12. Section 63B-9-211 is enacted to read:
             194          63B-9-211. Bond proceeds -- Deposits -- Investment -- Disposition of investment
             195      income and unexpended proceeds.
             196          (1) (a) Proceeds from the sale of bonds issued under this chapter shall be deposited within
             197      one or more accounts as determined by resolution of the commission.
             198          (b) The state treasurer shall administer and maintain these accounts unless otherwise
             199      provided by the commission by resolution.
             200          (c) The commission, by resolution, may provide for the deposit of these monies with a
             201      trustee and the administration, disposition, or investment of these monies by this trustee.
             202          (2) (a) The commission, by resolution, shall provide for the kinds of investments in which
             203      the proceeds of bonds issued under this chapter may be invested.
             204          (b) Income from the investment of proceeds of bonds issued under this chapter shall be
             205      applied as provided by resolution of the commission.
             206          (3) Any unexpended bond proceeds issued under this chapter shall be deposited, upon
             207      completion of the purposes for which the bonds were issued, in the sinking fund, unless otherwise
             208      provided in the resolution of the commission authorizing the issuance of bonds under this chapter.
             209          Section 13. Section 63B-9-212 is enacted to read:
             210          63B-9-212. Refunding of bonds.
             211          (1) The commission may provide for the refunding of any of the bonds in accordance with
             212      Title 11, Chapter 27, Utah Refunding Bond Act.
             213          (2) For purposes of Title 11, Chapter 27, Utah Refunding Bond Act, the state is considered


             214      the public body and the commission its governing body.
             215          Section 14. Section 63B-9-213 is enacted to read:
             216          63B-9-213. Certification of satisfaction of conditions precedent -- Conclusiveness.
             217          (1) The commission may not issue any bond under this chapter until it finds and certifies
             218      that all conditions precedent to issuance of the bonds have been satisfied.
             219          (2) A recital on any bond of this finding and certification conclusively establishes the
             220      completion and satisfaction of all such conditions.
             221          Section 15. Section 63B-9-214 is enacted to read:
             222          63B-9-214. Tax exemption.
             223          The bonds issued under this chapter, any interest paid on the bonds, and any income from
             224      the bonds are not taxable in this state for any purpose, except for the corporate franchise tax.
             225          Section 16. Section 63B-9-215 is enacted to read:
             226          63B-9-215. Legal investment status.
             227          Bonds issued under this chapter are legal investments for all state trust funds, insurance
             228      companies, banks, trust companies, and the State School Fund and may be used as collateral to
             229      secure legal obligations.
             230          Section 17. Section 63B-9-216 is enacted to read:
             231          63B-9-216. Publication of resolution or notice -- Limitation on actions to contest
             232      legality.
             233          (1) The commission may:
             234          (a) publish any resolution it adopts under this chapter once in a newspaper having general
             235      circulation in Utah; or
             236          (b) in lieu of publishing the entire resolution, publish a notice of bonds to be issued, titled
             237      as such, containing the information required by Subsection 11-14-21 (3).
             238          (2) (a) Any interested person, for 30 days after the date of publication, may contest:
             239          (i) the legality of the resolution;
             240          (ii) any of the bonds authorized under it; or
             241          (iii) any of the provisions made for the security and repayment of the bonds.
             242          (b) After 30 days, a person may not contest the legality of the resolution, any of the bonds
             243      authorized under it, or any of the provisions made for the security and repayment of the bonds for
             244      any cause.


             245          Section 18. Section 63B-9-217 is enacted to read:
             246          63B-9-217. Report to Legislature.
             247          The governor shall report the commission's proceedings to each annual general session of
             248      the Legislature in his budget for as long as bonds issued under this chapter remain outstanding.




Legislative Review Note
    as of 3-1-00 7:50 AM


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

Office of Legislative Research and General Counsel


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