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First Substitute S.B. 106

Representative John E. Swallow proposes to substitute the following bill:


             1     
MUNICIPAL BOND SECURED TRANSACTIONS

             2     
2001 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Lyle W. Hillyard

             5      This act modifies the Utah Municipal Bond Act by establishing a method for creating and
             6      perfecting security interests for governmental obligations.
             7      This act affects sections of Utah Code Annotated 1953 as follows:
             8      AMENDS:
             9          11-14-23, as last amended by Chapter 280, Laws of Utah 1981
             10      ENACTS:
             11          11-14-28, Utah Code Annotated 1953
             12      Be it enacted by the Legislature of the state of Utah:
             13          Section 1. Section 11-14-23 is amended to read:
             14           11-14-23. Exemptions from application of chapter -- Exception.
             15          [This] (1) Except as provided in Subsection (2), this chapter [shall] does not apply to
             16      bonds issued by the state of Utah nor to bonds or obligations payable solely from special
             17      assessments levied on benefited property[, except with respect to Section].
             18          (2) Sections 11-14-14.5 [which shall] and 11-14-28 have general application in accordance
             19      with [its] their terms.
             20          Section 2. Section 11-14-28 is enacted to read:
             21          11-14-28. Creation and perfection of government security interests.
             22          (1) As used in this section:
             23          (a) "Bonds" means any bond, note, lease, or other obligation of a governmental unit.
             24          (b) "Governmental unit" has the meaning assigned in Subsection 70A-9a-102 (45).
             25          (c) "Pledge" means the creation of a security interest of any kind.


             26          (d) "Property" means any property or interests in property, other than real property.
             27          (e) "Security agreement" means any resolution, ordinance, indenture, document, or other
             28      agreement or instrument under which the revenues, fees, rents, charges, taxes, or other property
             29      are pledged to secure the bonds.
             30          (2) This section expressly governs the creation, perfection, priority, and enforcement of
             31      a security interest created by the state or a governmental unit of the state, notwithstanding anything
             32      in Title 70A, Chapter 9a, Uniform Commercial Code - Secured Transactions, to the contrary.
             33          (3) (a) The revenues, fees, rents, charges, taxes, or other property pledged by a
             34      governmental unit for the purpose of securing its bonds are immediately subject to the lien of the
             35      pledge.
             36          (b) (i) The lien is a perfected lien upon the effective date of the security agreement.
             37          (ii) The physical delivery, filing, or recording of a security agreement or financing
             38      statement under the Uniform Commercial Code or otherwise, or any other similar act, is not
             39      necessary to perfect the lien.
             40          (c) The lien of any pledge is valid, binding, perfected, and enforceable from the time the
             41      pledge is made.
             42          (d) The lien of the pledge has priority:
             43          (i) based on the time of the creation of the pledge unless otherwise provided in the security
             44      agreement; and
             45          (ii) as against all parties having claims of any kind in tort, contract, or otherwise against
             46      the governmental unit, regardless of whether or not the parties have notice of the lien.
             47          (e) Each pledge and security agreement made for the benefit or security of any of the bonds
             48      shall continue to be effective until:
             49          (i) the principal, interest, and premium, if any, on the bonds have been fully paid;
             50          (ii) provision for payment has been made; or
             51          (iii) the lien created by the security agreement has been released by agreement of the
             52      parties in interest or as provided by the security agreement that created the lien.


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