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S.B. 116

             1     

LOCAL GOVERNMENT VARIABLE RATE

             2     
BONDING AUTHORITY

             3     
2002 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: D. Chris Buttars

             6      This act modifies provisions relating to County Improvement Districts and Municipal
             7      Improvement Districts. The act provides authority to use variable rate bonds to encourage
             8      community improvements, affordable housing, and commercial/industrial developments.
             9      The act makes technical changes.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             12          17A-3-210, as last amended by Chapter 1, Laws of Utah 2000
             13          17A-3-220, as renumbered and amended by Chapter 186, Laws of Utah 1990
             14          17A-3-227, as renumbered and amended by Chapter 186 and last amended by Chapter 214,
             15      Laws of Utah 1990
             16          17A-3-228, as renumbered and amended by Chapter 186, Laws of Utah 1990
             17          17A-3-310, as renumbered and amended by Chapter 186 and last amended by Chapter 214,
             18      Laws of Utah 1990
             19          17A-3-320, as renumbered and amended by Chapter 186, Laws of Utah 1990
             20          17A-3-328, as renumbered and amended by Chapter 186, Laws of Utah 1990
             21          17A-3-329, as renumbered and amended by Chapter 186 and last amended by Chapter 214,
             22      Laws of Utah 1990
             23      Be it enacted by the Legislature of the state of Utah:
             24          Section 1. Section 17A-3-210 is amended to read:
             25           17A-3-210. Interim warrants.
             26          (1) (a) As work proceeds in a special improvement district, the governing body may issue
             27      interim warrants against the district:


             28          (i) for an amount not to exceed 90% of the value of the work previously done, upon
             29      estimates of the project engineer;
             30          (ii) after completion of the work and acceptance of the work by the project engineer and
             31      by the governing body, for 100% of the value of the work completed; and
             32          (iii) where improvements in the district require the acquisition of property, for not more
             33      than the property price.
             34          (b) Subject to the provisions of Section 17A-3-209 , the governing body may issue warrants
             35      to:
             36          (i) a contractor, to apply at par value on the contract price for the improvements; or
             37          (ii) to the owner of the acquired property, to apply at par value on the property price.
             38          (c) The governing body may also issue and sell warrants at not less than par value in a
             39      manner determined by the governing body and apply the proceeds of the sale towards payment of
             40      the contract price and property price.
             41          (2) (a) Interim warrants shall bear interest from date of issue until paid.
             42          (b) The governing body shall [fix] specify the interest rate or rates, which may be a fixed
             43      rate or rates, a variable rate or rates, or a combination of fixed and variable rates. In the case of
             44      a variable interest rate or rates, the governing body shall specify the basis upon which the rate or
             45      rates shall be determined from time to time, the manner in which and schedule upon which the rate
             46      or rates shall be adjusted, and a maximum rate that the interim warrants may bear.
             47          (c) The governing body may fix a maturity date for each interim warrant. If a warrant
             48      matures before the governing body has available to it the sources of payment itemized in
             49      Subsection (3)(a), (b), (c), or (d), it may authorize the issuance of a new interim warrant to pay the
             50      principal and interest on the warrant falling due.
             51          (d) Interest accruing on interim warrants shall be included as a cost of the improvements.
             52          (3) The governing body shall pay interim warrants and interest on the warrants from one
             53      or more of the following sources:
             54          (a) issuance of or proceeds from the sale of special improvement bonds issued against the
             55      district;
             56          (b) cash received from the payment for improvements;
             57          (c) payment of assessments not pledged to the payment of the bonds;
             58          (d) the guaranty fund if appropriate; or


             59          (e) proceeds of an interim warrant.
             60          (4) With the authorization of the governing body, the governing entity may purchase any
             61      or all of the interim warrants issued against the district and may use the governing entity's general
             62      funds for this purchase.
             63          Section 2. Section 17A-3-220 is amended to read:
             64           17A-3-220. Period for paying assessments -- Frequency of installments -- Interest.
             65          (1) Except as provided in Section 17A-3-219 , an assessment shall be levied at one time
             66      upon the property. The governing body may provide in the ordinance levying the assessment that
             67      all or such portion of the assessment as is designated in the ordinance may be paid in installments
             68      over a period of time not exceeding 20 years from the effective date of the ordinance levying the
             69      assessment, except that in any case where the installments are to be payable over a period of time
             70      exceeding [10] ten years from the effective date, the governing body shall find and determine that
             71      the improvements for which the assessment are made have a reasonable, useful life for the full
             72      period during which the installments are payable or that it would otherwise be in the best interests
             73      of the governing entity and of the owners of property to be assessed to provide for payment of the
             74      assessments over a period in excess of [10] ten years.
             75          (2) Installments shall be payable at least annually but may be payable at more frequent
             76      intervals as provided by the ordinance levying the assessment, except that if the ordinance provides
             77      for payment of the assessment over a period in excess of [10] ten years from the effective date of
             78      the same, the ordinance may also provide that no installments of these assessments shall be
             79      payable during all or any portion of the period ending three years after this effective date.
             80          (3) Where the assessment is payable in installments, the ordinance shall provide that the
             81      unpaid balance of the assessment shall bear interest at a rate or rates which may be a fixed rate or
             82      rates, a variable rate or rates, or a combination of fixed and variable rates, from the effective date
             83      of the ordinance or from such other date as may be specified in the ordinance until due; except that
             84      where the assessment is for light service or park maintenance, interest shall be charged only from
             85      and after the due date of each installment and the first installment for the assessment shall be due
             86      15 days after the effective date of the ordinance. If interest is to accrue on any assessment at a
             87      variable rate or rates, the governing body shall specify the basis upon which the rate or rates shall
             88      be determined from time to time, the manner in which and schedule upon which the rate or rates
             89      shall be adjusted, and a maximum rate that the assessments may bear. Interest shall be paid in


             90      addition to the amount of each installment annually or at more frequent intervals as provided in
             91      the ordinance levying the assessment.
             92          Section 3. Section 17A-3-227 is amended to read:
             93           17A-3-227. Special improvement refunding bonds.
             94          (1) (a) The governing body may issue special improvement refunding bonds to refund
             95      special improvement bonds issued under authority of this part.
             96          (b) The governing body may adopt a resolution refunding the special improvement bonds
             97      in whole or in part or at or in advance of their maturity, whether at stated maturity or upon
             98      redemption or declaration of maturity.
             99          (2) In issuing the special improvement refunding bonds, the governing body shall comply
             100      with:
             101          (a) the requirements of this part;
             102          (b) the provisions of Title 11, Chapter 27, Utah Refunding Bond Act, as provided in
             103      Subsection (13); and
             104          (c) the requirements of this section.
             105          (3) Special improvement refunding bonds shall:
             106          (a) be payable solely from the same funds from which the prior bonds are payable;
             107          (b) mature not later than the date of final maturity of the prior bonds;
             108          (c) not mature or bear interest at any time in amounts which cannot be paid when due from
             109      the payments of the assessments, interest on assessments, or the reduced payment obligations, as
             110      applicable, assuming that payments of these assessments, reduced payment obligations, and
             111      interest are paid when due, together with the amounts of any prior payments or prepayments of
             112      these assessments, reduced payment obligations, and interest previously made and that remain
             113      available for payment of the special improvement refunding bonds; and
             114          (d) bear interest [payable semiannually or annually,] as determined by the governing body
             115      in accordance with Subsection 17A-3-228 (5).
             116          (4) Special improvement refunding bonds may:
             117          (a) be issued in bearer form, with or without interest coupons attached, or in registered
             118      form in accordance with Title 15, Chapter 7, Registered Public Obligations Act, as determined by
             119      the governing body;
             120          (b) as determined by the governing body:


             121          (i) be in a form and contain details consistent with this part;
             122          (ii) be payable at a place or places;
             123          (iii) be delivered in exchange for the prior bonds; or
             124          (iv) be sold in a manner, at terms, and with details consistent with this part, and at a price
             125      or prices above, at, or below par;
             126          (c) be callable for redemption prior to maturity upon terms, conditions, and notice, and
             127      premium, if any, to be paid, as the governing body determines, but no special improvement
             128      refunding bonds are callable for redemption unless the terms and conditions of redemption are
             129      stated on their face; and
             130          (d) be issued for the purpose of refunding one or more issues of prior bonds of a governing
             131      entity and, if issued to refund two or more issues of prior bonds, be issued in a single series to
             132      refund all of the issues of prior bonds to be refunded, or in two or more series to refund one or
             133      more of these issues of prior bonds.
             134          (5) The governing body may provide for the payment of incidental refunding costs of the
             135      special improvement refunding bonds as follows:
             136          (a) by advancing funds from the general funds or other funds of the governing entity, if the
             137      governing body:
             138          (i) finds and determines that this advance of the governing entity's funds is in the best
             139      interest of the governing entity and its citizens, including, without limitation, the owners of
             140      property within the district; and
             141          (ii) provides that the assessments and the interest on assessments from which the prior
             142      bonds are payable may not be reduced during whatever period is necessary to provide funds from
             143      the payment of these assessments and the interest on assessments with which to reimburse the
             144      governing entity for all funds advanced by it for the payment of incidental refunding costs, together
             145      with interest on these funds at a rate or rates equal to the interest rate or rates payable on these
             146      assessments;
             147          (b) from any premium received from the sale of the special improvement refunding bonds;
             148          (c) from any earnings on the investment of the proceeds of the special improvement
             149      refunding bonds pending their use to redeem the prior bonds;
             150          (d) from any other sources legally available to the governing entity for this purpose; or
             151          (e) from any combination of Subsections (5)(a) through (d).


             152          (6) (a) The governing entity shall designate an official of the governing entity to execute
             153      a manual or facsimile signature on special improvement refunding bonds and any interest coupons
             154      attached to them.
             155          (b) The governing entity shall designate another official to attest, by manual or facsimile
             156      signature, to the signature of the official executing the special improvement refunding bonds and
             157      any interest coupons.
             158          (c) In addition to these signatures, any special improvement refunding bond may include
             159      a certificate signed by the manual or facsimile signature of an authenticating agent, registrar,
             160      transfer agent, or the like.
             161          (d) At least one signature of an authorized official or other person required or permitted
             162      to be placed on the special improvement refunding bonds shall be a manual signature.
             163          (e) Special improvement refunding bonds and interest coupons bearing the signatures,
             164      manual or facsimile, of officers in office on the date of execution of the bonds or coupons are valid
             165      and binding obligations, even if before the delivery of the special improvement refunding bonds
             166      or interest coupons any or all of the persons whose signatures appear on them have ceased to be
             167      officers of the governing entity.
             168          (7) (a) The governing entity shall make the special improvement refunding bonds and the
             169      interest on them payable from and secured by:
             170          (i) the same assessments and interest on assessments from which the prior bonds were
             171      payable and were secured, as they may be reduced by the amending ordinance described in
             172      Subsection (10); and
             173          (ii) the special improvement guaranty fund if the prior bonds were payable from and
             174      secured by this fund.
             175          (b) The governing entity may make the special improvement refunding bonds and the
             176      interest on them payable from and secured by the special improvement guaranty fund.
             177          (c) The governing body shall:
             178          (i) adopt an ordinance amending the prior ordinance, as provided in Subsection (10); and
             179          (ii) give notice of any reduced payment obligations to the owners of properties assessed
             180      in the prior ordinance, as provided in Subsection (11).
             181          (d) (i) Neither the amendment of the prior ordinance nor the issuance of special
             182      improvement refunding bonds affects the validity of the continued enforceability of the original


             183      or any other prior assessments or the interest on assessments, except for the amounts of any
             184      reductions to the original or prior assessments or interest on assessments.
             185          (ii) Neither this amendment nor the issuance of the special improvement refunding bonds
             186      affects the validity of the enforceability or priority of the lien on the properties upon which the
             187      assessments were levied, except for the amounts of any reductions to the original or prior
             188      assessments or interest on assessments.
             189          (iii) All these reductions to the original or prior assessments and the interest on
             190      assessments shall continue to exist in favor of the special improvement refunding bonds.
             191          (iv) All these liens and priorities shall continue to exist against these properties to secure
             192      the payment of the reduced payment obligations and the special improvement refunding bonds in
             193      the same manner and, except for the amounts of any reductions to the original or prior assessments
             194      or interest on assessments, to the same extent as the original and any other prior assessments,
             195      interest on assessments, and the prior bonds were secured by the original assessments, interest on
             196      assessments, and the original liens and priorities.
             197          (e) It is the intent of the Legislature that there be no impairment of the validity of, or,
             198      except with respect to the amounts of these reductions to the original or prior assessments or
             199      interest on them, of the enforceability or priority of any of these assessments, interest on them, or
             200      liens as a result of the amendment of the prior ordinance or the issuance of the special
             201      improvement refunding bonds.
             202          (8) (a) The lien securing any reduced payment obligations from which the special
             203      improvement refunding bonds are payable and secured is subordinate to the lien securing the
             204      original or prior assessments, interest on assessments, and the prior bonds until the principal of,
             205      interest on, and redemption premium, if any, on the prior bonds are fully paid.
             206          (b) Following this payment, this lien shall continue as provided in Section 17A-3-223 , as
             207      security for the payment of the reduced payment obligations, the penalties and costs of collection
             208      of those obligations, and the payment of the principal of, interest on, and redemption premium, if
             209      any, on the special improvement refunding bonds.
             210          (9) (a) Unless the principal of, interest on, and redemption premiums, if any, on the prior
             211      bonds are paid simultaneously with the issuance of the special improvement refunding bonds, the
             212      governing entity shall irrevocably set aside the proceeds of the special improvement refunding
             213      bonds in an escrow or other separate account.


             214          (b) The governing entity shall pledge that account as security for the payment of the
             215      principal of, interest on, and redemption premiums, if any, on the special improvement refunding
             216      bonds or the prior bonds, or both.
             217          (10) The governing entity shall ensure that the amending ordinance required by Subsection
             218      (7) meets the following requirements:
             219          (a) (i) Subject to the provisions of Subsection (5)(a), the amount by which the principal
             220      or interest, or both, payable on the special improvement refunding bonds is less than the amount
             221      of principal or interest, or both, payable on the prior bonds shall be applied to reduce the
             222      assessments levied by the prior ordinance or the interest payable on those assessments, or both, as
             223      determined by the governing body.
             224          (ii) Any reductions of the assessments levied by the prior ordinance or of interest payable
             225      on those assessments, or both, shall be made in such manner that the then unpaid assessments
             226      levied against each of the assessed properties and the unpaid interest on these assessments shall
             227      receive a proportionate share of the reductions.
             228          (iii) These reductions do not apply to assessments and interest on assessments that have
             229      been paid.
             230          (b) The amending ordinance shall either:
             231          (i) state the amounts of the reduced payment obligations for each of the properties assessed
             232      in the prior ordinance; or
             233          (ii) incorporate by reference a revised assessment list approved by the governing body that
             234      contains these reduced payment obligations.
             235          (c) The amending ordinance need not describe each block, lot, part of block or lot, tract,
             236      or parcel of property assessed.
             237          (d) The governing entity shall comply with the requirements of Subsection 17A-3-218 (1)
             238      regarding publication and effective date with respect to the amending ordinance.
             239          (e) (i) The amending ordinance shall state the effective date or dates of any reductions in
             240      the assessments and the interest on assessments levied in the prior ordinance.
             241          (ii) The governing entity may not set an effective date that is before the date when all of
             242      the principal of, interest on, and any redemption premiums on the prior bonds and any advances
             243      of funds made under Subsection (5)(a) are fully paid.
             244          (11) (a) The notice to owners of assessed properties of reductions in their assessments and


             245      interest payments, referred to in Subsection (7)(c)(ii), shall:
             246          (i) identify the property subject to the assessment; and
             247          (ii) state the amount of the reduced payment obligations that will be payable from and after
             248      the applicable date stated in the amending ordinance.
             249          (b) The notice may contain any other information that the governing body considers
             250      appropriate.
             251          (12) (a) The governing entity shall mail the notice referred to in Subsection (7)(c)(ii),
             252      postage prepaid, not less than 21 days before the date the first payment of the reduced assessments
             253      becomes due addressed to "owner" at the street number of each piece of improved assessed
             254      property.
             255          (b) If a street number has not been assigned, then the post office box, rural route number,
             256      or any other mailing address of the improved property shall be used for the mailing of the notice.
             257          (c) The governing body may include the notice with or in any other notices regarding the
             258      payment of assessments and interest on assessments sent to the property owners in the district
             259      within the time and addressed as stated in this Subsection (12).
             260          (d) Neither the failure to give notice nor any defect in its content or the manner or time in
             261      which it is given affects the validity or enforceability of the amending ordinance or the special
             262      improvement refunding bonds or the validity, enforceability, or priority of the reduced payment
             263      obligations.
             264          (e) Whether or not this notice is given, no other notice is required to be given to the owners
             265      of the assessed properties in connection with the issuance of the special improvement refunding
             266      bonds.
             267          (13) To the extent it is not inconsistent with this part, Title 11, Chapter 27, Utah
             268      Refunding Bond Act, applies to the issuance of special improvement refunding bonds.
             269          (14) The provisions of this part relating to special improvement refunding bonds apply to
             270      all special improvement bonds issued and outstanding or which may be issued and outstanding in
             271      the future.
             272          (15) This part applies to all special improvement refunding bonds issued under this part,
             273      even though the prior bonds that are refunded by those special improvement refunding bonds were
             274      issued under any other law, including, without limitation, any law that has been repealed.
             275          Section 4. Section 17A-3-228 is amended to read:


             276           17A-3-228. Bonds.
             277          (1) Fifteen days or more after the effective date of any ordinance levying an assessment
             278      in a special improvement district, the governing body levying the assessment, by ordinance or
             279      resolution, may authorize the issuance of special improvement bonds to pay the costs of the
             280      improvements in the district against the funds created by the assessment. [Special] The aggregate
             281      principal amount of the special improvement bonds so authorized shall not exceed the unpaid
             282      balance of the assessments at the end of this 15-day period[,]. The special improvement bonds
             283      shall be fully negotiable for all purposes, shall mature at such time or times not exceeding the
             284      period of time over which installments of the assessments are due and payable plus one year, shall
             285      bear interest at the lowest rate or rates reasonably obtainable, shall be sold at the prices, either at,
             286      in excess of, or below their face value, shall be payable at the place or places, shall be in the form,
             287      and generally shall be issued and shall be sold in the manner and with those details as may be
             288      provided by ordinance or resolution. The bonds shall be dated no earlier than the effective date
             289      of the ordinance levying the assessment.
             290          (2) Except for special improvement bonds issued for light service or park maintenance
             291      purposes (which bonds shall bear interest only from their due date), interest shall be paid
             292      semiannually or annually as determined by the governing body and may be evidenced by interest
             293      coupons attached to the bonds.
             294          (3) The governing body may provide that the bonds shall be callable for redemption prior
             295      to maturity and fix the terms and conditions of redemption, including the notice to be given and
             296      the premium, if any, to be paid. No bonds are callable for redemption unless the terms and
             297      conditions of redemption are stated on the face of the bonds.
             298          (4) The bonds shall be signed and may be countersigned by the official or officials of the
             299      governing entity (including a member or members of the governing body) as designated by the
             300      governing body. If so provided by the governing body, the signatures on the bonds and interest
             301      coupons, if any, may be by facsimile signature if at least one signature required or permitted to be
             302      placed on the face of the bond is manually signed. Bonds or interest coupons bearing the
             303      signatures (manual or facsimile) of officers in office on the date of the execution of them shall be
             304      valid and binding obligations notwithstanding that before the delivery of the bonds any or all of
             305      the persons whose signatures appear on them shall have ceased to be officers of the governing
             306      entity.


             307          (5) The governing body may provide that the bonds shall bear interest at a fixed rate or
             308      rates, a variable rate or rates, or a combination of fixed and variable rates. In the case of a variable
             309      interest rate or rates, the governing body shall specify the basis upon which the rate or rates shall
             310      be determined from time to time, the manner in which and schedule upon which the rate or rates
             311      shall be adjusted, and a maximum rate that the bonds may bear.
             312          (6) The governing body may specify terms and conditions under which the bonds bearing
             313      interest at a variable interest rate may be converted to bear interest at a fixed interest rate.
             314          (7) The governing body may specify terms and conditions under which the county agrees
             315      to repurchase the bonds. The governing body may secure a letter of credit or other instrument to
             316      secure payment or repurchase of any bonds. The governing body may engage a remarketing agent
             317      and an indexing agent, subject to terms and conditions agreed to by the governing body. The
             318      governing body may cause the special improvement district to pay the costs of the foregoing and
             319      any similar costs with respect to the bonds.
             320          Section 5. Section 17A-3-310 is amended to read:
             321           17A-3-310. Interim warrants.
             322          (1) (a) As work proceeds in a special improvement district, the governing body may issue
             323      interim warrants against the district:
             324          (i) as portions of the work are completed, for not more than 90% of the value of the
             325      completed work as estimated by the engineer of the municipality;
             326          (ii) after completion of the work and acceptance of the work by the engineer of the
             327      municipality and by the governing body, for 100% of the value of the work completed; and
             328          (iii) where improvements in the district require the acquisition of property, for not more
             329      than the property price.
             330          (b) Subject to the provisions of Section 17A-3-309 , the governing body may issue warrants
             331      to:
             332          (i) a contractor, to apply at par value on the contract price for the improvements; or
             333          (ii) to the owner of the property, to apply at par value on the property price.
             334          (c) The governing body may also issue and sell the warrants at not less than par value in
             335      a manner determined by the governing body and apply the proceeds of the sale towards payment
             336      of the contract price and property price.
             337          (2) (a) Interim warrants shall bear interest from date of issue until paid.


             338          (b) The governing body shall [fix] specify the interest rate or rates, which may be a fixed
             339      rate or rates, a variable rate or rates, or a combination of fixed and variable rates. In the case of
             340      a variable interest rate or rates, the governing body shall specify the basis upon which the rate or
             341      rates shall be determined from time to time, the manner in which and schedule upon which the rate
             342      or rates shall be adjusted, and a maximum rate that the interim warrants may bear.
             343          (c) The governing body may fix a maturity date for each interim warrant. If a warrant
             344      matures before the governing body has available to it the sources of payment itemized in
             345      Subsections (3)(a), (b), or (c), it may authorize the issuance of a new warrant to pay the principal
             346      and interest on the warrant falling due.
             347          (d) Interest accruing on interim warrants shall be included as a cost of the improvements
             348      in the special improvement district.
             349          (3) The governing body shall pay interim warrants and interest on the warrants from one
             350      or more of the following sources:
             351          (a) proceeds from the sale of special improvement bonds issued against the district;
             352          (b) cash received from the payment of assessments not pledged to the payment of the
             353      bonds;
             354          (c) improvement revenues not pledged to the payment of the bonds; or
             355          (d) proceeds of an interim warrant.
             356          Section 6. Section 17A-3-320 is amended to read:
             357           17A-3-320. Payment of assessments in installments -- Frequency -- Interest.
             358          (1) An assessment shall be levied at one time upon the property. The governing body may
             359      provide in the ordinance levying the assessment that all or such portion of the assessment as is
             360      designated in the ordinance may be paid in installments over a period of time not exceeding 20
             361      years from the effective date of the ordinance levying the assessment, except that in any case where
             362      the installments are to be payable over a period of time exceeding [10] ten years from the effective
             363      date, the governing body shall find and determine that the improvements for which the assessment
             364      are made have a reasonable useful life for the full period during which the installments are payable
             365      or that it would otherwise be in the best interests of the municipality and of the owners of property
             366      to be assessed to provide for payment of the assessments over a period in excess of [10] ten years.
             367          (2) Installments shall be payable at least annually but may be payable at more frequent
             368      intervals as provided by the ordinance levying the assessment, except that if the ordinance provides


             369      for payment of the assessment over a period in excess of [10] ten years from the effective date of
             370      the same, the ordinance may also provide that no installments of these assessments shall be
             371      payable during all or any portion of the period ending three years after this effective date.
             372          (3) Where the assessment is payable in installments, the ordinance shall provide that the
             373      unpaid balance of the assessment shall bear interest at a rate or rates, which may be a fixed rate or
             374      rates, a variable rate or rates, or a combination of fixed and variable rates, determined by the
             375      governing body from the effective date of the ordinance or from such other date as may be
             376      specified in the ordinance until due; except that where the assessment is for light service or park
             377      maintenance, interest shall be charged only from the due date of each installment, and the first
             378      installment for any assessment shall be due 15 days after the effective date of the ordinance. If
             379      interest is to accrue on any assessment at a variable rate or rates, the governing body shall specify
             380      in the ordinance the basis upon which the rate or rates shall be determined from time to time, the
             381      manner in which and schedule upon which the rate or rates shall be adjusted, and a maximum rate
             382      that the assessments may bear. Interest shall be paid in addition to the amount of each installment
             383      annually or at more frequent intervals as provided in the ordinance levying the assessment.
             384          Section 7. Section 17A-3-328 is amended to read:
             385           17A-3-328. Special improvement bonds.
             386          (1) Fifteen days or more after the effective date of any ordinance levying an assessment
             387      in a special improvement district, the governing body of the municipality levying the assessment,
             388      by ordinance or resolution, may authorize the issuance of special improvement bonds to pay the
             389      costs of the improvements in the district against the funds created by the assessment. [Special]
             390      The aggregate principal amount of the special improvement bonds so authorized shall not exceed
             391      the unpaid balance of the assessments at the end of this 15-day period[,]. The special improvement
             392      bonds shall be fully negotiable for all purposes, shall mature at such time or times not exceeding
             393      the period of time over which installments of the assessments are due and payable plus one year,
             394      shall bear interest at the lowest rate or rates reasonably obtainable, shall be payable at such place
             395      or places, shall be in such form, and generally shall be issued and shall be sold in such manner and
             396      with such details as may be provided by ordinance or resolution. All these bonds shall be dated
             397      no earlier than the effective date of the ordinance levying the assessment.
             398          (2) Except for special improvement bonds issued for lighting service or park maintenance
             399      purposes (which bonds shall bear interest only from the due date), interest shall be paid


             400      semiannually or annually as determined by the governing body and may be evidenced by interest
             401      coupons attached to the bonds.
             402          (3) The governing body may provide that the bonds shall be callable for redemption prior
             403      to maturity and fix the terms and conditions of redemption, including the notice to be given and
             404      the premium, if any, to be paid. No bonds are callable for redemption unless the terms and
             405      conditions of redemption are stated on the face of the bonds.
             406          (4) The bonds shall be signed and may be countersigned by any officials of the
             407      municipality (including a member or members of the governing body) as designated by the
             408      governing body of the municipality. If so provided by the governing body, the signatures on the
             409      bonds and interest coupons, if any, may be by facsimile signature if at least one signature required
             410      or permitted to be placed on the face of the bond is manually signed. Bonds or interest coupons
             411      bearing the signatures (manual or facsimile) of officers in office on the date of execution of them
             412      shall be valid and binding obligations notwithstanding that before the delivery of the bonds any
             413      or all of the persons whose signatures appear on them shall have ceased to be officers of the
             414      municipality.
             415          (5) The governing body may provide that the bonds shall bear interest at a fixed rate or
             416      rates, a variable rate or rates, or a combination of fixed and variable rates. In the case of a variable
             417      interest rate or rates, the governing body shall specify the basis upon which the rate or rates shall
             418      be determined from time to time, the manner in which and schedule upon which the rate or rates
             419      shall be adjusted, and a maximum rate that the bonds may bear.
             420          (6) The governing body may specify terms and conditions under which the bonds bearing
             421      interest at a variable interest rate may be converted to bear interest at a fixed interest rate.
             422          (7) The governing body may specify terms and conditions under which the municipality
             423      agrees to repurchase the bonds. The governing body may secure a letter of credit or other
             424      instrument to secure payment or repurchase of any bonds. The governing body may engage a
             425      remarketing agent and indexing agent, subject to terms and conditions agreed to by the governing
             426      body. The governing body may cause the special improvement district to pay the costs of the
             427      foregoing and any similar costs with respect to the bonds.
             428          Section 8. Section 17A-3-329 is amended to read:
             429           17A-3-329. Special improvement refunding bonds.
             430          (1) (a) The governing body may issue special improvement refunding bonds to refund


             431      special improvement bonds issued under authority of this part.
             432          (b) The governing body may adopt a resolution refunding the special improvement bonds
             433      in whole or in part, at or in advance of their maturity, whether at stated maturity or upon
             434      redemption or declaration of maturity.
             435          (2) In issuing the special improvement refunding bonds, the governing body shall comply
             436      with:
             437          (a) the requirements of this part;
             438          (b) the provisions of Title 11, Chapter 27, Utah Refunding Bond Act, as provided in
             439      Subsection (13); and
             440          (c) the requirements of this section.
             441          (3) Special improvement refunding bonds shall:
             442          (a) be payable solely from the sources described in Subsection (7)(a);
             443          (b) mature not later than the date of final maturity of the prior bonds;
             444          (c) not mature or bear interest at any time in amounts that cannot be paid when due from
             445      the payments of the assessments, interest on assessments, and improvement revenues, or the
             446      reduced payment obligations, as applicable, assuming that payments of these assessments,
             447      improvement revenues, reduced payment obligations, and interest are paid when due, together with
             448      the amounts of any prior payments or prepayments of these assessments, improvement revenues,
             449      reduced payment obligations, and interest previously made and that remain available for payment
             450      of the special improvement refunding bonds; and
             451          (d) bear interest [payable semiannually or annually,] as determined by the governing body
             452      in accordance with Subsection 17A-3-328 (5).
             453          (4) Special improvement refunding bonds may:
             454          (a) be issued in bearer form, with or without interest coupons attached, or in registered
             455      form in accordance with Title 15, Chapter 7, Registered Public Obligations Act, as determined
             456      by the governing body;
             457          (b) as determined by the governing body:
             458          (i) be in a form and contain details consistent with this part;
             459          (ii) be payable at a place or places;
             460          (iii) be delivered in exchange for the prior bonds; or
             461          (iv) be sold in a manner, at terms, and with details consistent with this part, and at a price


             462      or prices above, at, or below par;
             463          (c) be callable for redemption prior to maturity upon terms, conditions, and notice, and
             464      premium, if any, to be paid, as the governing body determines, but no special improvement
             465      refunding bonds are callable for redemption unless the terms and conditions of redemption are
             466      stated on their face; and
             467          (d) be issued for the purpose of refunding one or more issues of prior bonds of a
             468      municipality and, if issued to refund two or more issues of prior bonds, be issued in a single series
             469      to refund all of the issues of prior bonds to be refunded, or in two or more series to refund one or
             470      more of these issues of prior bonds.
             471          (5) The governing body may provide for the payment of incidental refunding costs of the
             472      special improvement refunding bonds as follows:
             473          (a) by advancing funds from the general fund or other funds of the municipality, if the
             474      governing body:
             475          (i) finds and determines that this advance of municipal funds is in the best interest of the
             476      municipality and its citizens, including, without limitation, the owners of property within the
             477      district; and
             478          (ii) provides that the assessments, the interest on assessments, and the improvement
             479      revenues from which the prior bonds are payable may not be reduced during whatever period is
             480      necessary to provide funds from the payment of these assessments, interest on assessments, and
             481      improvement revenues with which to reimburse the municipality for all funds advanced by it for
             482      the payment of incidental refunding costs, together with interest on these funds at a rate or rates
             483      equal to the interest rate or rates payable on these assessments;
             484          (b) from any premium received from the sale of the special improvement refunding bonds;
             485          (c) from any earnings on the investment of the proceeds of the special improvement
             486      refunding bonds pending their use to redeem the prior bonds;
             487          (d) from any other sources legally available to the municipality for this purpose; or
             488          (e) from any combination of Subsections (5)(a) through (d).
             489          (6) (a) The governing body of the municipality shall designate an official of the
             490      municipality to execute a manual or facsimile signature on special improvement refunding bonds
             491      and any interest coupons attached to them.
             492          (b) The governing body of the municipality shall designate another municipal official to


             493      attest, by manual or facsimile signature, to the signature of the official executing the special
             494      improvement refunding bonds and any interest coupons.
             495          (c) In addition to these signatures, any special improvement refunding bond may include
             496      a certificate signed by the manual or facsimile signature of an authenticating agent, registrar,
             497      transfer agent, or the like.
             498          (d) At least one signature of an authorized official or other person required or permitted
             499      to be placed on the special improvement refunding bonds shall be a manual signature.
             500          (e) Special improvement refunding bonds and interest coupons bearing the signatures,
             501      manual or facsimile, of officers in office on the date of execution of the special improvement
             502      refunding bonds or coupons are valid and binding obligations, even if before the delivery of the
             503      special improvement refunding bonds or interest coupons any or all of the persons whose
             504      signatures appear on them have ceased to be officers of the municipality.
             505          (7) (a) Notwithstanding Subsection (7)(b), in issuing special improvement refunding
             506      bonds, the governing body shall make the special improvement refunding bonds and the interest
             507      on them payable from and secured by:
             508          (i) either the same assessments and interest on assessments from which the prior bonds
             509      were payable and were secured or by the reduced assessments and interest on assessments adopted
             510      by the governing body pursuant to Subsection (10);
             511          (ii) the special improvement guaranty fund if the prior bonds were payable from and
             512      secured by this fund; and
             513          (iii) improvement revenues if the prior bonds were payable from and secured by
             514      improvement revenues.
             515          (b) In issuing special improvement refunding bonds, the governing body may make the
             516      special improvement refunding bonds and the interest on them payable from and secured by:
             517          (i) the special improvement guaranty fund; and
             518          (ii) improvement revenues.
             519          (c) The governing body shall:
             520          (i) adopt an ordinance amending the prior ordinance, as provided in Subsection (10); and
             521          (ii) give notice of any reduced payment obligations to the owners of properties assessed
             522      in the prior ordinance, as provided in Subsection (11).
             523          (d) (i) Neither the amendment of the prior ordinance nor the issuance of special


             524      improvement refunding bonds affects the validity of or the continued enforceability of the original
             525      or any other prior assessments or the interest on assessments, except for the amounts of any
             526      reductions to the original or prior assessments or interest on assessments specified in the amended
             527      ordinance.
             528          (ii) Neither this amendment nor the issuance of the special improvement refunding bonds
             529      affects the validity of or the enforceability or priority of the lien on the properties upon which the
             530      assessments were levied, except for the amounts of any reductions to the original or prior
             531      assessments or interest on assessments specified in the amended ordinance.
             532          (iii) All these reductions to the original or prior assessments and the interest on
             533      assessments shall continue to exist in favor of the special improvement refunding bonds.
             534          (iv) All these liens and priorities shall continue to exist against these properties to secure
             535      the payment of the reduced payment obligations and the special improvement refunding bonds in
             536      the same manner and, except for the amounts of any reductions to the original or prior assessments
             537      or interest on assessments, to the same extent as the original and any other prior assessments,
             538      interest on assessments, and the prior bonds were secured by the original assessments, interest on
             539      assessments, and the original liens and priorities.
             540          (e) It is the intent of the Legislature that there be no impairment of the validity of, or,
             541      except with respect to the amounts of these reductions to the original or prior assessments or
             542      interest on them, of the enforceability or priority of any of these assessments, interest on them, or
             543      liens as a result of the amendment of the prior ordinance or the issuance of the special
             544      improvement refunding bonds.
             545          (8) (a) The lien securing any reduced payment obligations from which the special
             546      improvement refunding bonds are payable and secured is subordinate to the lien securing the
             547      original or prior assessments, interest on assessments, and the prior bonds until the principal of,
             548      interest on, and redemption premium, if any, on the prior bonds are fully paid.
             549          (b) Following this payment, this lien shall continue as provided in Section 17A-3-323 , as
             550      security for the payment of the reduced payment obligations, the penalties and costs of collection
             551      of those obligations, and the payment of the principal of, interest on, and redemption premium, if
             552      any, on the special improvement refunding bonds.
             553          (9) (a) Unless the principal of, interest on, and redemption premiums, if any, on the prior
             554      bonds are paid simultaneously with the issuance of the special improvement refunding bonds, the


             555      municipality shall irrevocably set aside the proceeds of the special improvement refunding bonds
             556      in an escrow or other separate account.
             557          (b) The governing body shall pledge that account as security for the payment of the
             558      principal of, interest on, and redemption premiums, if any, on the special improvement refunding
             559      bonds or the prior bonds, or both.
             560          (10) The governing body shall ensure that the amending ordinance required by Subsection
             561      (7) meets the following requirements:
             562          (a) (i) Subject to the provisions of Subsection (5)(a), the amount by which the principal
             563      or interest, or both, payable on the special improvement refunding bonds is less than the amount
             564      of principal or interest, or both, payable on the prior bonds shall be applied to reduce the
             565      assessments levied by the prior ordinance or the interest payable on those assessments, or both, as
             566      determined by the governing body.
             567          (ii) Any reductions of the assessments levied by the prior ordinance or of interest payable
             568      on those assessments, or both, shall be made in such manner that the then unpaid assessments
             569      levied against each of the assessed properties and the unpaid interest on these assessments shall
             570      receive a proportionate share of the reductions.
             571          (iii) These reductions do not apply to assessments and interest on assessments that have
             572      been paid.
             573          (b) The amending ordinance shall either:
             574          (i) state the amounts of the reduced payment obligations for each of the properties assessed
             575      in the prior ordinance; or
             576          (ii) incorporate by reference a revised assessment list approved by the governing body that
             577      contains these reduced payment obligations.
             578          (c) The amending ordinance need not describe each block, lot, part of block or lot, tract,
             579      or parcel of property assessed.
             580          (d) The governing body shall comply with the requirements of Subsection 17A-3-318 (1)
             581      regarding publication and effective date with respect to the amending ordinance.
             582          (e) (i) The amending ordinance shall state the effective date or dates of any reductions in
             583      the assessments and the interest on assessments levied in the prior ordinance.
             584          (ii) The governing body may not set an effective date or dates that is before the date when
             585      all of the principal of, interest on, and any redemption premiums on the prior bonds and any


             586      advances of funds made under Subsection (5)(a) are fully paid.
             587          (11) (a) The notice to owners of assessed properties of reductions in their assessments and
             588      interest payments required by Subsection (7)(c)(ii) shall:
             589          (i) identify the property subject to the assessment; and
             590          (ii) state the amount of the reduced payment obligations that will be payable from and after
             591      the applicable date stated in the amending ordinance.
             592          (b) The notice may contain any other information that the governing body considers
             593      appropriate.
             594          (12) (a) The governing body shall mail the notice referred to in Subsection (7)(c)(ii),
             595      postage prepaid, not less than 21 days before the date the first payment of the reduced assessments
             596      becomes due addressed to "owner" at the street number of each piece of improved, assessed
             597      property.
             598          (b) If a street number has not been assigned to a piece of improved, assessed property, the
             599      notice shall be addressed to "owner" and mailed to the post office box, rural route number, or any
             600      other mailing address of the improved property.
             601          (c) The governing body may include the notice with or in any other notices regarding the
             602      payment of assessments and interest on assessments sent to the property owners in the district
             603      within the time and addressed as stated in this Subsection (12).
             604          (d) Neither the failure to give notice nor any defect in its content or the manner or time in
             605      which it is given affects the validity or enforceability of the amending ordinance or the special
             606      improvement refunding bonds or the validity, enforceability, or priority of the reduced payment
             607      obligations.
             608          (e) Whether or not this notice is given, no other notice is required to be given to the owners
             609      of the assessed properties in connection with the issuance of the special improvement refunding
             610      bonds.
             611          (13) To the extent it is not inconsistent with this part, Title 11, Chapter 27, Utah
             612      Refunding Bond Act, applies to the issuance of special improvement refunding bonds.
             613          (14) The provisions of this part relating to special improvement refunding bonds apply to
             614      all special improvement bonds issued and outstanding or which may be issued and outstanding in
             615      the future.
             616          (15) This part applies to all special improvement refunding bonds issued under this part


             617      even though the prior bonds that are refunded by those special improvement refunding bonds were
             618      issued under any other law, including, without limitation, any law that has been repealed.




Legislative Review Note
    as of 1-11-02 3:03 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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