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Second Substitute S.B. 32

Senator Scott K. Jenkins proposes the following substitute bill:


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


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


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


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