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S.B. 32 Enrolled

             1     

LOCAL GOVERNMENT BONDING ACT

             2     
2008 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Scott K. Jenkins

             5     
House Sponsor: Ben C. Ferry

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Local Government Bonding Act.
             10      Highlighted Provisions:
             11          This bill:
             12          .    addresses documents providing for the issuance of bonds;
             13          .    addresses a requirement that a local political subdivision conduct a public hearing to
             14      issue bonds;
             15          .    addresses the scope of the public hearing to include potential economic impacts on
             16      the private sector; and
             17          .    makes technical changes.
             18      Monies Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          None
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          11-14-307, as last amended by Laws of Utah 2007, Chapter 10
             25      ENACTS:
             26          11-14-318, Utah Code Annotated 1953
             27     
             28      Be it enacted by the Legislature of the state of Utah:
             29          Section 1. Section 11-14-307 is amended to read:


             30           11-14-307. Revenue bonds payable out of excise tax revenues.
             31          (1) To the extent constitutionally permissible, [cities, towns, or counties] a city, town,
             32      or county may:
             33          (a) issue bonds payable solely from a special fund into which are to be deposited:
             34          (i) excise taxes levied and collected by the city, town, or county[, or];
             35          (ii) excise taxes levied by the state and rebated pursuant to law to the city, town, or
             36      county[,]; or [any]
             37          (iii) a combination of [those] the excise taxes[,] described in Subsections (1)(a)(i) and
             38      (ii); or [may]
             39          (b) pledge all or any part [thereof] of the excise taxes described in Subsection (1)(a) as
             40      an additional source of payment for [their] general obligation bonds it issues.
             41          (2) (a) [Any] If the covenant is not inconsistent with this chapter, a resolution
             42      [authorizing] or trust indenture providing for the issuance of bonds payable in whole or in part
             43      from the proceeds of excise tax revenues may contain covenants with the holder or holders of
             44      the bonds as to:
             45          (i) the excise tax revenues[,];
             46          (ii) the disposition of the excise tax revenues[,];
             47          (iii) the issuance of future bonds[,]; and
             48          (iv) other pertinent matters that are considered necessary by the governing body to
             49      assure the marketability of those bonds[, provided the covenants are not inconsistent with the
             50      provisions of this chapter].
             51          (b) [The] A resolution may also include provisions to insure the enforcement,
             52      collection, and proper application of excise tax revenues as the governing body may think
             53      proper.
             54          (c) The proceeds of bonds payable in whole or in part from pledged class B or C road
             55      funds shall be used to construct, repair, and maintain streets and roads in accordance with
             56      Sections 72-6-108 and 72-6-110 and to fund any reserves and costs incidental to the issuance of
             57      the bonds.


             58          (d) When any bonds payable from excise tax revenues have been issued, the resolution
             59      or other enactment of the legislative body imposing the excise tax and pursuant to which the tax
             60      is being collected, the obligation of the governing body to continue to levy, collect, and allocate
             61      the excise tax, and to apply the revenues derived [therefrom] from the excise tax in accordance
             62      with the provisions of the authorizing resolution or other enactment, shall be irrevocable until
             63      the bonds have been paid in full as to both principal and interest, and is not subject to
             64      amendment in any manner [which] that would impair the rights of the holders of those bonds or
             65      which would in any way jeopardize the timely payment of principal or interest when due.
             66          (3) (a) The state pledges to and agrees with the holders of any bonds issued by a city,
             67      town, or county to which the proceeds of excise taxes collected by the state and rebated to the
             68      city, town, or county are devoted or pledged as authorized in this section, that the state will not
             69      alter, impair, or limit the excise taxes in a manner that reduces the amounts to be rebated to the
             70      city, town, or county which are devoted or pledged as authorized in this section until the bonds
             71      or other securities, together with applicable interest, are fully met and discharged.
             72          (b) Nothing in this Subsection (3) precludes alteration, impairment, or limitation of
             73      excise taxes if adequate provision is made by law for the protection of the holders of the bonds.
             74          (c) [Each] A city, town, or county may include this pledge and undertaking for the state
             75      in those bonds.
             76          (4) (a) [The outstanding] Outstanding bonds to which excise tax revenues [have been]
             77      are pledged as the sole source of payment may not at any one time exceed an amount for which
             78      the average annual installments of principal and interest will exceed 80% of the total excise tax
             79      revenues received by the issuing entity from the collection or rebate of the excise tax revenues
             80      during the fiscal year of the issuing entity immediately preceding the fiscal year in which the
             81      resolution authorizing the issuance of bonds is adopted.
             82          (b) If an excise tax has not been levied by a city, town, or county for a sufficient period
             83      of time to determine the 80% bond payment requirement under Subsection (4)(a), a city, town,
             84      or county may use an excise tax revenue that is currently levied within the same geographic
             85      coverage area and with the same percentage of collection to determine the amount of excise tax


             86      revenues that are expected to be received to determine the 80% bond payment requirement
             87      under Subsection (4)(a).
             88          (5) Bonds issued solely from a special fund into which are to be deposited excise tax
             89      revenues constitutes a borrowing solely upon the credit of the excise tax revenues received or to
             90      be received by the city, town, or county and does not constitute an indebtedness or pledge of
             91      the general credit of the city, town, or county.
             92          (6) [(a)] Before issuing any bonds under this section, a city, town, or county shall[:]
             93      comply with Section 11-14-318 .
             94          [(i) give public notice of its intent to issue the bonds; and]
             95          [(ii) hold a public hearing to receive input from the public with respect to the issuance
             96      of the bonds.]
             97          [(b) The city, county, or town shall:]
             98          [(i) publish the notice once each week for two consecutive weeks in the official
             99      newspaper as designated under Section 11-14-316 , with the first publication being not less than
             100      14 days before the public hearing; and]
             101          [(ii) ensure that the notice identifies:]
             102          [(A) the purpose for the issuance of the bonds;]
             103          [(B) the maximum principal amount of the bonds to be issued;]
             104          [(C) the excise taxes proposed to be pledged for repayment of the bonds; and]
             105          [(D) the time, place, and location of the public hearing.]
             106          (7) A city, town, or county shall submit the question of whether or not to issue any
             107      bonds under this section to voters for their approval or rejection if, within 30 calendar days after
             108      the notice required by [Subsection (6)] Section 11-14-318 , a written petition requesting an
             109      election and signed by at least 20% of the registered voters in the city, town, or county is filed
             110      with the city, town, or county.
             111          Section 2. Section 11-14-318 is enacted to read:
             112          11-14-318. Public hearing required.
             113          (1) Before issuing bonds authorized under this chapter, a local political subdivision


             114      shall:
             115          (a) in accordance with Subsection (2), provide public notice of the local political
             116      subdivision's intent to issue bonds; and
             117          (b) hold a public hearing:
             118          (i) if an election is required under this chapter:
             119          (A) no sooner than 30 days before the day on which the notice of election is published
             120      under Section 11-14-202 ; and
             121          (B) no later than five business days before the day on which the notice of election is
             122      published under Section 11-14-202 ; and
             123          (ii) to receive input from the public with respect to:
             124          (A) the issuance of the bonds; and
             125          (B) the potential economic impact that the improvement, facility, or property for which
             126      the bonds pay all or part of the cost will have on the private sector.
             127          (2) A local political subdivision shall:
             128          (a) publish the notice required by Subsection (1)(a):
             129          (i) once each week for two consecutive weeks in the official newspaper described in
             130      Section 11-14-316 ;
             131          (ii) with the first publication being not less than 14 days before the public hearing
             132      required by Subsection (1)(b); and
             133          (iii) on the Utah Public Notice Website created under Section 63F-1-701 no less than
             134      14 days before the public hearing required by Subsection (1)(b); and
             135          (b) ensure that the notice:
             136          (i) identifies:
             137          (A) the purpose for the issuance of the bonds;
             138          (B) the maximum principal amount of the bonds to be issued;
             139          (C) the taxes, if any, proposed to be pledged for repayment of the bonds; and
             140          (D) the time, place, and location of the public hearing; and
             141          (ii) informs the public that the public hearing will be held for the purposes described in


             142      Subsection (1)(b)(ii).


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