First Substitute S.B. 258

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Senate 3rd Reading Amendments 2-24-2006 sm/enw This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Fri, Feb 24, 2006 at 4:52 PM by smaeser. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Fri, Feb 24, 2006 at 5:12 PM by smaeser. --> Senator Curtis S. Bramble proposes the following substitute bill:

1 REVENUE BONDS - AUDITING OF
2 PUBLIC-PRIVATE CONTRACTS
3 2006 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Curtis S. Bramble
6 House Sponsor: John Dougall
7
8 LONG TITLE
9 General Description:
10 This bill modifies the Local Government Bonding Act to require an assessment of the
11 financial condition of certain public-private contracts.
12 Highlighted Provisions:
13 This bill:
14 . requires an independent assessment to be conducted before the execution of any
15 new contract or agreement between a local political subdivision and a private entity
16 that involves payments where the revenue is pledged for payment of a revenue
17 bond;
17a S. . exempts international airports from the requirement for an independent assessment; .S
18 . requires the local political subdivision to ensure that the independent assessment is
19 conducted prior to entering into a new contract or agreement;
20 . requires the independent assessment to be performed using audited financial
21 statements provided by the private entity;
22 . requires the audited financial statements to include an opinion by an independent
23 certified public accountant indicating that the financial statements are fairly stated
24 in accordance with accounting principles generally accepted in the United States of
25 America; and

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Senate 3rd Reading Amendments 2-24-2006 sm/enw 26

. requires that the independent assessment determine whether there are adequate
27 available net assets or a reasonable expectation of sufficient future cash flows and
28 revenues in excess of expenses to provide for the lease payments.
29 Monies Appropriated in this Bill:
30 None
31 Other Special Clauses:
32 None
33 Utah Code Sections Affected:
34 ENACTS:
35 11-14-317, Utah Code Annotated 1953
36
37 Be it enacted by the Legislature of the state of Utah:
38 Section 1. Section 11-14-317 is enacted to read:
39 11-14-317. Contract with private entities involving revenue bonds -- Prior
40 independent assessment of financial ability -- Opinion by independent certified public
41 accountant -- Periodic independent assessments.
42 (1) S. (a) .S Beginning July 1, 2006, S. and except as provided in Subsection (1)(b), .S 42a an independent assessment shall be conducted prior to the
43 execution of any contract or agreement between a local political subdivision and a private
44 entity to determine the private entity's ability to meet its financial obligations to the local
45 political subdivision if the contract or agreement involves payments, the revenue from which is
46 pledged for the payment of principal or interest on a revenue bond.
46a S. (b) A contract or agreement that generates revenue that is payable in relation to an
46b international airport is exempt from the requirements of this section. .S
47 (2) The local political subdivision shall ensure that the independent assessment under
48 Subsection (1) is conducted:
49 (a) prior to entering into a new contract or agreement; and
50 (b) using audited financial statements provided by the private entity.
51 (3) The audited financial statements shall include an opinion by an independent
52 certified public accountant indicating that the financial statements are fairly stated in
53 accordance with accounting principles generally accepted in the United States of America.
54 (4) The independent assessment shall determine whether there are adequate available
55 net assets or a reasonable expectation of sufficient future cash flows and revenues in excess of
56 expenses to provide for the lease payments.

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- 3 - 57 (5) A local political subdivision may conduct periodic independent assessments under
58 this section on existing contracts or agreements meeting the requirements described under
59 Subsection (1).