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H.B. 120





Sponsor: David N. Cox

             5      This act modifies provisions relating to the State System of Public Education by providing
             6      for a capital facilities program that would require new public schools financed by the
             7      issuance of certain capital facilities general obligation bonds to be built to accommodate no
             8      more than 600 students at the elementary school level, no more than 900 students at the
             9      middle or junior high level, and no more than 1,200 students at the high school level. The
             10      act provides for the issuance of $100,000,000 in general obligation bonds to help fund the
             11      program. The act requires school districts to match monies they would receive from the
             12      issuance of the bonds on a seven to three basis. The act takes effect July 1, 2001.
             13      This act enacts uncodified material.
             14      This act affects sections of Utah Code Annotated 1953 as follows:
             15      ENACTS:
             16          53A-20-103.5, Utah Code Annotated 1953
             17          63B-10-101, Utah Code Annotated 1953
             18          63B-10-102, Utah Code Annotated 1953
             19          63B-10-103, Utah Code Annotated 1953
             20          63B-10-104, Utah Code Annotated 1953
             21          63B-10-105, Utah Code Annotated 1953
             22          63B-10-106, Utah Code Annotated 1953
             23          63B-10-107, Utah Code Annotated 1953
             24          63B-10-108, Utah Code Annotated 1953
             25          63B-10-109, Utah Code Annotated 1953
             26          63B-10-110, Utah Code Annotated 1953
             27          63B-10-111, Utah Code Annotated 1953

             28          63B-10-112, Utah Code Annotated 1953
             29          63B-10-113, Utah Code Annotated 1953
             30          63B-10-114, Utah Code Annotated 1953
             31          63B-10-115, Utah Code Annotated 1953
             32          63B-10-116, Utah Code Annotated 1953
             33          63B-10-117, Utah Code Annotated 1953
             34      Be it enacted by the Legislature of the state of Utah:
             35          Section 1. Section 53A-20-103.5 is enacted to read:
             36          53A-20-103.5. Capital facilities general obligation bonds -- School district match --
             37      School building capacity.
             38          (1) The State Bonding Commission shall issue general obligation bonds under Title 63B,
             39      Chapter 10, 2001 Public Education Capital Facilities General Obligation Bonds, to assist local
             40      school boards in meeting their school building needs.
             41          (2) A school district shall use the monies it receives under Subsection (1) for capital outlay
             42      purposes as defined by rule of the State Board of Education in accordance with Title 63, Chapter
             43      46a, Utah Administrative Rulemaking Act.
             44          (3) The State Board of Education shall distribute the bond proceeds to school districts on
             45      the basis of a grant process that takes into account:
             46          (a) the school district's capital outlay needs;
             47          (b) the district's ability to raise money for capital outlay purposes as related to the assessed
             48      valuation per student for real property within the school district; and
             49          (c) effort made by the district to meet its capital outlay needs.
             50          (4) (a) To receive monies under this section, a school district must match the monies it
             51      would receive from the issuance of the bonds on a seven to three basis, that is three dollars in local
             52      resources for every seven dollars in bond monies.
             53          (b) A school district shall use local resources for its match under Subsection (4)(a), which
             54      may include donations, gifts, endowments, and monies raised through school district taxing or
             55      bonding authority.
             56          (5) The monies received from the issuance of bonds under Subsection (1) shall only be
             57      used to construct capital facilities which have the following maximum student capacities:
             58          (a) 600 students in an elementary school;

             59          (b) 900 students in a middle or junior high school; and
             60          (c) 1,200 students in a high school.
             61          (6) (a) The monies received under Subsection (1) are in addition to the appropriation made
             62      under Section 53A-21-105 as the state's contribution to the capital outlay foundation program and
             63      are made available to promote the construction of more effective and efficient facilities.
             64          (b) A school district receiving monies under this section is not precluded from constructing
             65      school buildings that exceed the capacities listed in Subsection (5) as long as the buildings are
             66      wholly financed from sources other than the general obligation bonds issued under Title 63B,
             67      Chapter 10.
             68          Section 2. Section 63B-10-101 is enacted to read:

Part 1. 2001 Public Education Capital Facilities General Obligation Bonds

             71          63B-10-101. State Bonding Commission authorized to issue general obligation bonds.
             72          The commission created under Section 63B-1-201 may issue and sell general obligation
             73      bonds of the state pledging the full faith, credit, and resources of the state for the payment of the
             74      principal of and interest on the bonds to provide funds to the State Board of Education for
             75      allocation to school districts for capital construction only.
             76          Section 3. Section 63B-10-102 is enacted to read:
             77          63B-10-102. Maximum amounts -- Projects authorized.
             78          (1) The total amount of bonds issued under this chapter may not exceed $100,000,000.
             79          (2) (a) Proceeds from the issuance of bonds shall be provided to the State Board of
             80      Education to provide funds to school districts to help pay the costs of capital facilities construction
             81      projects referred to in Section 53A-20-103.5 .
             82          (b) These costs may include the cost of acquiring land on which to build new schools,
             83      interest estimated to accrue on the bonds during the period to be covered by the construction of the
             84      projects plus a period of six months thereafter, and all related engineering, architectural, and legal
             85      fees.
             86          (3) The commission may, by resolution, make any statement of intent relating to a
             87      reimbursement that is necessary or desirable to comply with federal tax law.
             88          (4) The State Board of Education and local school boards may enter into agreements
             89      relative to the projects referred to in Subsection (2)(a) prior to the receipt of proceeds of bonds

             90      issued under this chapter.
             91          Section 4. Section 63B-10-103 is enacted to read:
             92          63B-10-103. Bond proceeds may be used to pay costs of issuance and sale.
             93          The proceeds of the bonds issued under this chapter shall be used for the purposes
             94      described in Section 63B-10-102 and to pay all or part of any cost incident to the issuance and sale
             95      of the bonds, including, without limitation, printing, registration, and transfer costs, legal fees,
             96      financial advisors' fees, and underwriters' discount.
             97          Section 5. Section 63B-10-104 is enacted to read:
             98          63B-10-104. Manner of issuance -- Amounts, interest, and maturity.
             99          (1) Bonds issued under this chapter may be authorized, sold, and issued at times and in a
             100      manner determined by the commission by resolution.
             101          (2) Bonds may be issued in one or more series, in amounts, and shall bear dates, interest
             102      rates, including a variable rate, and maturity dates as the commission determines by resolution.
             103          (3) A bond issued may not mature later than 20 years after the date of final passage of this
             104      chapter.
             105          Section 6. Section 63B-10-105 is enacted to read:
             106          63B-10-105. Terms and conditions of sale -- Plan of financing -- Signatures --
             107      Replacement -- Registration -- Federal rebate.
             108          (1) In the issuance of bonds, the commission may determine by resolution:
             109          (a) the manner of sale, including public or private sale;
             110          (b) the terms and conditions of sale, including price, whether at, below, or above face
             111      value;
             112          (c) denominations;
             113          (d) form;
             114          (e) manner of execution;
             115          (f) manner of authentication;
             116          (g) place and medium of purchase;
             117          (h) redemption terms; and
             118          (i) other provisions and details it considers appropriate.
             119          (2) The commission may by resolution adopt a plan of financing which may include terms
             120      and conditions of arrangements entered into by the commission on behalf of the state with financial

             121      and other institutions for letters of credit, standby letters of credit, reimbursement agreements, and
             122      remarketing, indexing, and tender agent agreements to secure the bonds, including payment from
             123      any legally available source of fees, charges, or other amounts coming due under the agreements
             124      entered into by the commission.
             125          (3) (a) Any signature of a public official authorized by resolution of the commission to
             126      sign the bonds may be a facsimile signature of that official imprinted, engraved, stamped, or
             127      otherwise placed on the bonds.
             128          (b) If all signatures of public officials on the bonds are facsimile signatures, provision shall
             129      be made for a manual authenticating signature on the bonds by or on behalf of a designated
             130      authentication agent.
             131          (c) If an official ceases to hold office before delivery of the bonds signed by that official,
             132      the signature or facsimile signature of the official is nevertheless valid for all purposes.
             133          (d) A facsimile of the state seal may be imprinted, engraved, stamped, or otherwise placed
             134      on the bonds.
             135          (4) (a) The commission may enact resolutions providing for the replacement of lost,
             136      destroyed, or mutilated bonds, or for the exchange of bonds after issuance for bonds of smaller or
             137      larger denominations.
             138          (b) Bonds in changed denominations shall:
             139          (i) be exchanged for the original bonds in like aggregate principal amounts and in a
             140      manner that prevents the duplication of interest; and
             141          (ii) bear interest at the same rate, mature on the same date, and be as nearly as practicable
             142      in the form of the original bonds.
             143          (5) (a) Bonds may be registered as to both principal and interest or may be in a book entry
             144      form under which the right to principal and interest may be transferred only through a book entry.
             145          (b) The commission may provide for the services and payment for the services of one or
             146      more financial institutions or other entities or persons, or nominees, within or outside the state, for
             147      the authentication, registration, transfer, including record, bookkeeping, or book entry functions,
             148      exchange, and payment of the bonds.
             149          (c) The records of ownership, registration, transfer, and exchange of the bonds, and of
             150      persons to whom payment with respect to the obligations is made, are private records as provided
             151      in Section 63-2-302 or protected records as provided in Section 63-2-304 .

             152          (d) The bonds and any evidences of participation interest in the bonds may be issued,
             153      executed, authenticated, registered, transferred, exchanged, and otherwise made to comply with
             154      Title 15, Chapter 7, Registered Public Obligations Act, or any other act of the Legislature relating
             155      to the registration of obligations enacted to meet the requirements of Section 149 of the Internal
             156      Revenue Code of 1986, as amended, or any successor to it, and applicable regulations.
             157          (6) The commission may:
             158          (a) by resolution, provide for payment to the United States of such amounts as may be
             159      necessary to comply with Section 148 (f) of the Internal Revenue Code of 1986, as amended; and
             160          (b) enter into agreements with financial and other institutions and attorneys to provide for:
             161          (i) the calculation, holding, and payment of those amounts; and
             162          (ii) payment from any legally available source of fees, charges, or other amounts coming
             163      due under any agreements entered into by the commission.
             164          Section 7. Section 63B-10-106 is enacted to read:
             165          63B-10-106. Constitutional debt limitation.
             166          (1) The commission may not issue bonds under this chapter in an amount that violates the
             167      limitation described in Utah Constitution Article XIV, Sec. 1.
             168          (2) For purposes of applying the debt limitation contained in Utah Constitution Article
             169      XIV, Sec. 1, the value of taxable property in Utah is considered to be 100% of the fair market
             170      value of the taxable property of the state, as computed from the last assessment for state purposes
             171      previous to the issuance of the bonds.
             172          Section 8. Section 63B-10-107 is enacted to read:
             173          63B-10-107. Tax levy -- Abatement of tax.
             174          (1) Each year after issuance of the bonds and until all outstanding bonds are retired, there
             175      is levied a direct annual tax on all real and personal property within the state subject to state
             176      taxation, sufficient to pay:
             177          (a) applicable bond redemption premiums, if any;
             178          (b) interest on the bonds as it becomes due; and
             179          (c) principal of the bonds as it becomes due.
             180          (2) (a) The State Tax Commission shall fix the rate of the direct annual tax levy each year.
             181          (b) The tax shall be collected and the proceeds applied as provided in this chapter.
             182          (3) The direct annual tax imposed under this section is abated to the extent money is

             183      available from sources, other than ad valorem taxes in the sinking fund, for the payment of bond
             184      interest, principal, and redemption premiums.
             185          Section 9. Section 63B-10-108 is enacted to read:
             186          63B-10-108. Creation of sinking fund.
             187          (1) There is created a sinking fund to be administered by the state treasurer entitled the
             188      "2001 Public Education Capital Facilities General Obligation Bonds Sinking Fund."
             189          (2) All monies deposited in the sinking fund, from whatever source, shall be used to pay
             190      debt service on the bonds.
             191          (3) The proceeds of all taxes levied under this chapter are appropriated to this fund.
             192          (4) The state treasurer may create separate accounts within the sinking fund for each series
             193      of bonds issued.
             194          Section 10. Section 63B-10-109 is enacted to read:
             195          63B-10-109. Payment of interest, principal, and redemption premiums.
             196          (1) The Division of Finance shall draw warrants on the state treasury before any interest,
             197      principal, or redemption premiums become due on the bonds.
             198          (2) After receipt of the warrants, the state treasurer shall:
             199          (a) promptly pay from funds within the sinking fund; and
             200          (b) immediately transmit the amount paid to the paying agent for the bonds.
             201          Section 11. Section 63B-10-110 is enacted to read:
             202          63B-10-110. Investment of sinking fund money.
             203          (1) The state treasurer may invest any money in the sinking fund in accordance with Title
             204      51, Chapter 7, State Money Management Act, until it is needed for the purposes for which the fund
             205      is created.
             206          (2) Unless otherwise provided in the resolution of the commission authorizing the issuance
             207      of bonds under this chapter, the treasurer shall retain all income from the investment of any money
             208      contained in the sinking fund and use it for the payment of debt service on the bonds.
             209          Section 12. Section 63B-10-111 is enacted to read:
             210          63B-10-111. Bond proceeds -- Deposits -- Investment -- Disposition of investment
             211      income and unexpended proceeds.
             212          (1) (a) Proceeds from the sale of bonds issued under this chapter shall be deposited within
             213      one or more accounts as determined by resolution of the commission.

             214          (b) The state treasurer shall administer and maintain these accounts unless otherwise
             215      provided by the commission by resolution.
             216          (c) The commission by resolution may provide for the deposit of these monies with a
             217      trustee and the administration, disposition, or investment of these monies by this trustee.
             218          (2) (a) The commission by resolution shall provide for the kinds of investments in which
             219      the proceeds of bonds issued under this chapter may be invested.
             220          (b) Income from the investment of proceeds of bonds issued under this chapter shall be
             221      applied as provided by resolution of the commission.
             222          (3) Any unexpended bond proceeds issued under this chapter shall be deposited, upon
             223      completion of the purposes for which the bonds were issued, in the sinking fund, unless otherwise
             224      provided in the resolution of the commission authorizing the issuance of bonds under this chapter.
             225          Section 13. Section 63B-10-112 is enacted to read:
             226          63B-10-112. Refunding of bonds.
             227          (1) The commission may provide for the refunding of any of the bonds in accordance with
             228      Title 11, Chapter 27, Utah Refunding Bond Act.
             229          (2) For purposes of Title 11, Chapter 27, Utah Refunding Bond Act, the state is considered
             230      the public body and the commission its governing body.
             231          Section 14. Section 63B-10-113 is enacted to read:
             232          63B-10-113. Certification of satisfaction of conditions precedent -- Conclusiveness.
             233          (1) The commission may not issue any bond under this chapter until it finds and certifies
             234      that all conditions precedent to issuance of the bonds have been satisfied.
             235          (2) A recital on any bond of such a finding and certification conclusively establishes the
             236      completion and satisfaction of all such conditions.
             237          Section 15. Section 63B-10-114 is enacted to read:
             238          63B-10-114. Tax exemption.
             239          The bonds issued under this chapter, any interest paid on the bonds, and any income from
             240      the bonds are not taxable in this state for any purpose, except for the corporate franchise tax.
             241          Section 16. Section 63B-10-115 is enacted to read:
             242          63B-10-115. Legal investment status.
             243          Bonds issued under this chapter are legal investments for all state trust funds, insurance
             244      companies, banks, trust companies, and the State School Fund and may be used as collateral to

             245      secure legal obligations.
             246          Section 17. Section 63B-10-116 is enacted to read:
             247          63B-10-116. Publication of resolution or notice -- Limitation on actions to contest
             248      legality.
             249          (1) The commission may:
             250          (a) publish any resolution it adopts under this chapter once in a newspaper having general
             251      circulation in Utah; or
             252          (b) instead of publishing the entire resolution, publish a notice of bonds to be issued, titled
             253      as such, containing the information called for in Subsection 11-14-21 (3).
             254          (2) (a) Any interested person, for a 30-day period after the date of publication, may contest:
             255          (i) the legality of the resolution;
             256          (ii) any of the bonds authorized under it; or
             257          (iii) any of the provisions made for the security and repayment of the bonds.
             258          (b) After 30 days a person may not contest the legality of the resolution, any of the bonds
             259      authorized under it, or any of the provisions made for the security and repayment of the bonds for
             260      any cause.
             261          Section 18. Section 63B-10-117 is enacted to read:
             262          63B-10-117. Report to Legislature.
             263          The governor shall report the commission's proceedings to each annual general session of
             264      the Legislature in his budget for as long as bonds issued under this chapter remain outstanding.
             265          Section 19. Legislative intent.
             266          It is the intent of the Legislature that each year after issuance of the bonds and until all
             267      outstanding bonds are retired, the state shall use a portion of the income tax revenue allocated
             268      under Article XII, Section 12 of the Utah Constitution, sufficient to pay:
             269          (1) applicable bond redemption premiums, if any;
             270          (2) interest on the bonds as it becomes due; and
             271          (3) principal of the bonds as it becomes due.
             272          Section 20. Effective date.
             273          This act takes effect on July 1, 2001.

Legislative Review Note
    as of 1-2-01 3:25 PM

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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