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H.B. 67 Enrolled





Chief Sponsor: Bradley G. Last

Senate Sponsor: Dennis E. Stowell

             7      LONG TITLE
             8      General Description:
             9          This bill modifies provisions in the State Financing Consolidation Act to require
             10      legislative approval before bonds are authorized or issued under the Act.
             11      Highlighted Provisions:
             12          This bill:
             13          .    clarifies and simplifies existing language;
             14          .    requires the State Bonding Commission to obtain legislative approval before it
             15      authorizes or issues bonds under the authority of the State Financing Consolidation
             16      Act; and
             17          .    makes technical changes.
             18      Money Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          None
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          63B-1b-401, as renumbered and amended by Laws of Utah 2008, Chapter 382
             25          63B-1b-402, as renumbered and amended by Laws of Utah 2008, Chapter 382
             26      ENACTS:
             27          63B-1b-103, Utah Code Annotated 1953
             29      Be it enacted by the Legislature of the state of Utah:

             30          Section 1. Section 63B-1b-103 is enacted to read:
             31          63B-1b-103. Limitation on issuance of bonds -- Legislative approval required.
             32          No bonds may be authorized or issued under this chapter without the prior approval of
             33      the Legislature.
             34          Section 2. Section 63B-1b-401 is amended to read:
             35           63B-1b-401. Pledge of agency bonds to pay revenue bonds -- Contents of
             36      financing agreements -- Use of money received by authorizing agencies.
             37          (1) [With] Subject to the requirements of this chapter, and with the approval of the
             38      relevant authorizing agency, the State Bonding Commission may pledge, assign, or otherwise
             39      transfer any agency bonds, any money payable on or with respect to them, any legally available
             40      money or other security administered by an authorizing agency, or any combination of bonds,
             41      money, or other security to provide for the payment of revenue bonds issued under Section
             42      63B-1b-402 and the payment of any amounts due under agreements and contracts described in
             43      Subsection 63B-1b-402 (9).
             44          (2) (a) Before issuing revenue bonds under Section 63B-1b-402 , the commission shall
             45      enter into a financing agreement with the appropriate authorizing agency or agencies.
             46          (b) This agreement shall specify:
             47          (i) any agency bonds, money, or other security to be pledged by the commission to
             48      provide for the payment of the revenue bonds;
             49          (ii) the amount to be paid to the order of the authorizing agency or agencies for the
             50      agency bonds, money, or other security; and
             51          (iii) other matters that the commission considers necessary or appropriate.
             52          (3) The amounts received by each authorizing agency from the proceeds of the revenue
             53      bonds, together with all amounts paid to the authorizing agencies pursuant to Subsection
             54      63B-1b-402 (10), shall be applied by the authorizing agency as authorized by the law creating
             55      or authorizing the loan or grant program of the authorizing agency.
             56          Section 3. Section 63B-1b-402 is amended to read:
             57           63B-1b-402. Commission may authorize revenue bonds -- Contents of bond

             58      document -- Special and reserve funds -- Limitation on liability -- Restoration of money
             59      in reserve funds -- Payment of bonds and other technical requirements -- Refunding --
             60      Report to Division of Finance.
             61          (1) (a) In order to provide authorizing agencies with an alternative method of
             62      liquidating agency bonds and[, by doing so, providing authorizing agencies] with additional
             63      funds to further the purposes of the authorizing agencies, the commission may authorize the
             64      [issuance of] state to issue revenue bonds [from time to time by the state] subject to the
             65      requirements of this chapter.
             66          (b) [These] The revenue bonds shall be payable solely from a special fund established
             67      by the state treasurer as provided in Subsection (4).
             68          (c) Revenue bonds may be sold at public or private sale and may be issued in one or
             69      more series.
             70          (2) Revenue bonds may be authorized, issued, and sold by the commission on behalf of
             71      the state at a time or times and in a manner set forth in a bond document that provides for:
             72          (a) the terms and conditions of sale, including price, whether at, below or above face
             73      value;
             74          (b) interest rates, including a variable rate;
             75          (c) authorized denomination;
             76          (d) maturity dates;
             77          (e) form;
             78          (f) manner of execution;
             79          (g) manner of authentication;
             80          (h) place and medium of payment;
             81          (i) redemption terms;
             82          (j) authorized signatures of public officials; and
             83          (k) other provisions and details considered necessary or appropriate.
             84          (3) To the extent set forth in the resolution, the proceeds of revenue bonds may be used
             85      for the purposes set forth in Subsection (1) and to:

             86          (a) provide for any necessary or desirable reserve fund as provided for in Subsection
             87      (5); and
             88          (b) pay fees, charges, and other amounts related to the issuance and sale of the revenue
             89      bonds.
             90          (4) (a) As provided in the bond document, the principal of, premium, if any, and
             91      interest on, any issue of revenue bonds is payable solely from and secured by one or more
             92      special funds consisting of:
             93          (i) the pledge and assignment of any agency bonds, including all amounts payable on or
             94      with respect to them, and other [monies] money and security, as provided for in an agreement
             95      entered into under Subsection 63B-1b-401 (2);
             96          (ii) amounts on deposit in the reserve fund, if any, established under Subsection (5);
             97          (iii) amounts available pursuant to any security device or credit enhancement device
             98      that the commission authorizes for the purpose of improving the marketability of the revenue
             99      bonds; and
             100          (iv) other amounts available and pledged by the commission to secure payment of that
             101      issue of revenue bonds.
             102          (b) Owners of revenue bonds do not have recourse against the general funds or general
             103      credit of the state or its political subdivisions or agencies, but this limitation does not limit or
             104      alter the obligations of political subdivisions on agency bonds in any manner.
             105          (c) Revenue bonds do not constitute nor give rise to a general obligation or liability of,
             106      or constitute a charge or lien against, the general credit or taxing power of the state or its
             107      political subdivisions or agencies, including any authorizing agency.
             108          (d) Revenue bonds shall contain on their face a statement that:
             109          (i) the revenue bonds are payable solely from the sources set forth in this Subsection
             110      (4) and specified in the bond document with respect to the revenue bonds;
             111          (ii) neither the state nor any political subdivision of the state is obligated to pay the
             112      revenue bonds; and
             113          (iii) neither the faith and credit nor the taxing power of the state or any of its political

             114      subdivisions is pledged to the payment of principal or redemption price of, or premium, if any,
             115      or interest on the revenue bonds.
             116          (e) Revenue bonds do not constitute debt of the state within the meaning of Utah
             117      Constitution Article XIII, Sec. 5 (3) or Article XIV, Sec. 1.
             118          (5) (a) The commission may establish a reserve fund with respect to any issue of
             119      revenue bonds.
             120          (b) If a reserve fund is established, the bond document relating to that issue of revenue
             121      bonds shall specify:
             122          (i) the minimum amount that is required to be on deposit in the reserve fund;
             123          (ii) the amount of sale proceeds from the sale of that issue of revenue bonds that shall
             124      be deposited in the reserve fund; and
             125          (iii) the manner in which any deficiency in the reserve fund shall be replenished.
             126          (c) (i) On or before the first day of December of each year, the state treasurer shall
             127      certify to the governor and the director of the Division of Finance the amount, if any, that may
             128      be required to restore all reserve funds established to the minimum amount specified by the
             129      state treasurer with respect to each reserve fund.
             130          (ii) The governor may request an appropriation from the Legislature equal to the
             131      certified amount in order to restore each reserve fund to the specified minimum amount.
             132          (6) (a) (i) The commission may provide in the bond document that any signature of a
             133      public official authorized to sign revenue bonds may be by the facsimile signature of that
             134      official imprinted, engraved, stamped, or otherwise placed on the revenue bonds.
             135          (ii) If all signatures of public officials on the revenue bonds are facsimile signatures,
             136      the bond document shall provide for a manual authenticating signature on the revenue bonds by
             137      or on behalf of a designated authenticating agent.
             138          (iii) If an official ceases to hold office before delivery of the revenue bonds signed by
             139      that official, the signature or facsimile signature of the official is valid and sufficient for all
             140      purposes.
             141          (b) A facsimile of the seal of the state may be imprinted, engraved, stamped, or

             142      otherwise placed on the revenue bonds.
             143          (7) (a) The commission may provide in the bond document for the replacement of lost,
             144      destroyed, stolen, or mutilated revenue bonds or for the exchange of revenue bonds after
             145      issuance for revenue bonds of smaller or larger denominations.
             146          (b) Revenue bonds in changed denominations shall:
             147          (i) be exchanged for the original revenue bonds in the aggregate principal amounts and
             148      in a manner that prevents the duplication of interest; and
             149          (ii) bear interest at the same rate, be of the same series, mature on the same date, and
             150      be as nearly as practicable in the same form as the original revenue bonds.
             151          (8) (a) (i) Revenue bonds may be registered as to both principal and interest or may be
             152      in a book entry form under which the right to principal and interest may be transferred only
             153      through a book entry.
             154          (ii) The commission may provide for the services and payment for the services of one
             155      or more financial institutions, other entities or persons, or nominees, within or outside the state,
             156      for:
             157          (A) authentication;
             158          (B) registration;
             159          (C) transfer, including record, bookkeeping, or book entry functions;
             160          (D) exchange; and
             161          (E) payment.
             162          (b) The records of ownership, registration, transfer, and exchange of the revenue
             163      bonds, and of persons to whom payment with respect to them is made, are classified as private
             164      or protected as defined in Title 63G, Chapter 2, Government Records Access and Management
             165      Act.
             166          (c) The revenue bonds and any evidences of participation interests in the revenue bonds
             167      may be issued, executed, authenticated, registered, transferred, exchanged, and otherwise made
             168      to comply with Title 15, Chapter 7, Registered Public Obligations Act, or any other act of the
             169      Legislature relating to the registration of obligations enacted to meet the requirements of

             170      Section 149 (a), Internal Revenue Code of 1986, or any comparable predecessor or successor
             171      provision, and applicable regulations.
             172          (9) (a) The commission may authorize the execution and delivery of whatever
             173      agreements and contracts that the commission considers necessary and appropriate in
             174      connection with the issuance of revenue bonds.
             175          (b) These agreements and contracts may include agreements and contracts with
             176      financial and other institutions for financial advisory services, trustee services, insurance,
             177      letters of credit, reimbursement agreements, tender agreements, put agreements, repurchase
             178      agreements, and indexing and tender agent agreements to:
             179          (i) facilitate the sale of the revenue bonds; or
             180          (ii) secure or provide liquidity to support any agreement, obligation, or contract entered
             181      into by an authorized officer on behalf of the state in connection with:
             182          (A) the issuance and sale of the revenue bonds;
             183          (B) any repurchase, remarketing, or other pledge of the revenue bonds; and
             184          (C) any insurance, repurchase, remarketing, tender, put, letter of credit, or agreement,
             185      obligation, or contract entered into in connection with them, including payment of fees,
             186      charges, or other amounts coming due under agreements entered into with financial or other
             187      institutions on behalf of the state.
             188          (10) When all revenue bonds of an issue have been paid, or provision for their payment
             189      has been made, [there] the following shall be transferred to the appropriate authorizing agency
             190      or agencies, in the amounts and in the manner that the commission considers fair and equitable,
             191      and to the extent not required to secure payment of the revenue bonds and related fees, charges,
             192      and other amounts:
             193          (a) all amounts remaining on deposit in any reserve fund established with respect to the
             194      issue of revenue bonds; and
             195          (b) all other amounts and all agency bonds held by the commission and any trustee and
             196      pledged to the payment of the revenue bonds.
             197          (11) (a) The state treasurer or the commission may create any funds and accounts

             198      necessary to carry out the purposes of this section.
             199          (b) (i) The state treasurer shall administer and maintain those funds and accounts.
             200          (ii) The state treasurer may invest all [monies] money held in those funds and accounts
             201      in accordance with Title 51, Chapter 7, State Money Management Act, and in accordance with
             202      the bond document or any other agreement entered into on behalf of the state as authorized by
             203      the bond document.
             204          (iii) The commission may not approve the bond document or other agreement with
             205      respect to the investment and application of [these monies] the money unless the state treasurer
             206      has affirmatively approved any investment provisions contained in the bond document or other
             207      agreement.
             208          (c) All income from the [monies] money invested in a fund or account created under
             209      this Subsection (11) shall accrue to the benefit of the fund or account and shall be used for the
             210      purpose for which the fund or account was established.
             211          (12) [(a)] The commission may authorize the issuance of refunding revenue bonds of
             212      the state in accordance with Title 11, Chapter 27, Utah Refunding Bond Act, for the purpose of
             213      refunding any revenue bonds[. (b) The state is] and for the purposes of that act, the state shall
             214      be considered a "public body" and the commission its "governing body." [for purposes of that
             215      act.]
             216          (13) (a) Revenue bonds may not be issued under this [section] chapter until an
             217      authorized official finds and certifies that all conditions precedent to the issuance of the
             218      revenue bond, including the requirements of Section 63B-1b-103 , have been satisfied.
             219          (b) A recital on any revenue bond of a finding and certification conclusively establishes
             220      the completion and satisfaction of all conditions [of] required in this section.
             221          (14) Revenue bonds, interest paid on revenue bonds, and any income from revenue
             222      bonds [is] are not taxable within this state for any purpose, except for the corporate franchise
             223      tax.
             224          (15) (a) Revenue bonds are legal investments for all state trust funds, insurance
             225      companies, banks, trust companies, and the State School Fund.

             226          (b) Revenue bonds may also be used as collateral to secure legal obligations.
             227          (16) Immediately upon the issuance of each issue of revenue bonds, an authorized
             228      official shall make a verified return to the Division of Finance of:
             229          (a) the aggregate principal amount of revenue bonds issued;
             230          (b) the amount of proceeds of sale of revenue bonds received by the state;
             231          (c) the amount paid to the authorizing agency or agencies for the agency bonds;
             232          (d) the total amount of all fees and expenses relating to the issuance of the revenue
             233      bonds;
             234          (e) the amount of sale proceeds of the revenue bonds used to pay fees and expenses;
             235      and
             236          (f) the amount of sale proceeds of the revenue bonds deposited in the reserve fund
             237      established with respect to the issue of revenue bonds, if any.

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