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S.B. 193

             1     

LOCAL GOVERNMENT BONDING ACT AMENDMENTS

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Curtis S. Bramble

             5     
House Sponsor: Patrick Painter

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends the Local Government Bonding Act by providing that the 10-year
             10      period during which voter authorized bonds may be issued tolls during a period of time
             11      when the bonds are prevented from being issued due to pending litigation.
             12      Highlighted Provisions:
             13          This bill:
             14          .    provides that the 10-year period during which voter authorized bonds may be issued
             15      is tolled when the bonds are challenged in a court of law;
             16          .    provides that if, when the tolling period described in the preceding paragraph ends,
             17      the period of time remaining to issue the bonds is less than one year, the period of
             18      time remaining to issue the bonds shall be extended to one year;
             19          .    provides that the tolling provisions described in this bill apply to bonds that were
             20      approved by voters on or after May 8, 2002; and
             21          .    makes technical changes.
             22      Money Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None
             26      Utah Code Sections Affected:
             27      AMENDS:


             28          11-14-301, as last amended by Laws of Utah 2007, Chapter 329
             29          11-14-311, as last amended by Laws of Utah 2006, Chapter 83
             30     
             31      Be it enacted by the Legislature of the state of Utah:
             32          Section 1. Section 11-14-301 is amended to read:
             33           11-14-301. Issuance of bonds by governing body -- Computation of indebtedness
             34      under constitutional and statutory limitations.
             35          (1) If the governing body has declared the bond proposition to have carried and no
             36      contest has been filed, or if a contest has been filed and favorably terminated, the governing
             37      body may proceed to issue the bonds voted at the election.
             38          (2) (a) It is not necessary that all of the bonds be issued at one time, but, except as
             39      provided in Subsection (2)(b) or (c), bonds approved by the voters may not be issued more than
             40      10 years after the [date of] day on which the election is held.
             41          (b) The 10-year period described in Subsection (2)(a) is tolled if, at any time during the
             42      10-year period, the bonds are challenged in a court of law, in relation to:
             43          (i) the legality or validity of the bonds or the election or proceedings authorizing the
             44      bonds;
             45          (ii) the authority of the local political subdivision to issue the bonds;
             46          (iii) the provisions made for the security or payment of the bonds; or
             47          (iv) any other issue that materially and adversely affects the marketability of the bonds,
             48      as determined by the governing body of the local political subdivision.
             49          (c) Except as provided in Subsection (2)(d), the tolling period described in Subsection
             50      (2)(b) ends on the day on which all challenges, described in Subsection (2)(b), to the bonds are
             51      subject to a final settlement, final adjudication, or other final resolution of the challenge.
             52          (d) If the 10-year period described in Subsection (2)(a) is tolled under Subsection
             53      (2)(b) and, when the tolling ends, the period of time remaining to issue the bonds is less than
             54      one year, the period of time remaining to issue the bonds shall be extended to one year.
             55          (e) The tolling provisions described in this Subsection (2) apply to all bonds described
             56      in this section that were approved by voters on or after May 8, 2002.
             57          (3) (a) Bonds approved by the voters may not be issued to an amount that will cause
             58      the indebtedness of the local political subdivision to exceed that permitted by the Utah


             59      Constitution or statutes.
             60          (b) In computing the amount of indebtedness that may be incurred pursuant to
             61      constitutional and statutory limitations, the constitutionally or statutorily permitted percentage,
             62      as the case may be, shall be applied to the fair market value, as defined under Section 59-2-102 ,
             63      of the taxable property in the local political subdivision, as computed from the last applicable
             64      equalized assessment roll before the incurring of the additional indebtedness.
             65          (c) In determining the fair market value of the taxable property in the local political
             66      subdivision as provided in this section, the value of all tax equivalent property, as defined in
             67      Section 59-3-102 , shall be included as a part of the total fair market value of taxable property
             68      in the local political subdivision, as provided in Title 59, Chapter 3, Tax Equivalent Property
             69      Act.
             70          (4) Bonds of improvement districts issued in a manner that they are payable solely
             71      from the revenues to be derived from the operation of the facilities of the district may not be
             72      included as bonded indebtedness for the purposes of the computation.
             73          (5) Where bonds are issued by a city, town, or county payable solely from revenues
             74      derived from the operation of revenue-producing facilities of the city, town, or county, or
             75      payable solely from a special fund into which are deposited excise taxes levied and collected by
             76      the city, town, or county, or excise taxes levied by the state and rebated pursuant to law to the
             77      city, town, or county, or any combination of those excise taxes, the bonds shall be included as
             78      bonded indebtedness of the city, town, or county only to the extent required by the Utah
             79      Constitution, and any bonds not so required to be included as bonded indebtedness of the city,
             80      town, or county need not be authorized at an election, except as otherwise provided by the Utah
             81      Constitution, the bonds being hereby expressly excluded from the election requirement of
             82      Section 11-14-201 .
             83          (6) A bond election is not void when the amount of bonds authorized at the election
             84      exceeded the limitation applicable to the local political subdivision at the time of holding the
             85      election, but the bonds may be issued from time to time in an amount within the applicable
             86      limitation at the time the bonds are issued.
             87          Section 2. Section 11-14-311 is amended to read:
             88           11-14-311. Bond anticipation notes.
             89          (1) (a) If the governing body considers it advisable and in the interests of the local


             90      political subdivision to anticipate the issuance of bonds to be issued under this chapter, the
             91      governing body may, pursuant to appropriate resolution, issue bond anticipation notes.
             92          (b) Each resolution authorizing the issuance of bond anticipation notes shall:
             93          (i) describe the bonds in anticipation of which the notes are to be issued;
             94          (ii) specify the principal amount of the notes and the maturity dates of the notes; and
             95          (iii) specify either the rates of interest, if any, on the notes or the method by which
             96      interest on the notes may be determined while the notes are outstanding.
             97          (c) If the resolution specifies a method by which the interest rates on the notes may be
             98      determined, the resolution may specify the maximum rate of interest which the notes may bear.
             99          (2) Bond anticipation notes shall be issued and sold in a manner and at a price, either
             100      at, below, or above face value, as the governing body determines by resolution. Interest on
             101      bond anticipation notes may be made payable semiannually, annually, or at maturity. Bond
             102      anticipation notes may be made redeemable prior to maturity at the option of the governing
             103      body in the manner and upon the terms fixed by the resolution authorizing their issuance.
             104      Bond anticipation notes shall be executed and shall be in a form and have details and terms as
             105      provided in the authorizing resolution.
             106          (3) Contemporaneously with the issuance of the bonds in anticipation of which bond
             107      anticipation notes are issued, provision shall be made for the retirement of any outstanding
             108      bond anticipation notes.
             109          (4) Whenever the bonds in anticipation of which notes are issued are to be payable
             110      from ad valorem taxes and constitute full general obligations of the local political subdivision,
             111      the bond anticipation notes and the interest on them shall be secured by a pledge of the full
             112      faith and credit of the local political subdivision in the manner provided in Section 11-14-310
             113      and shall also be made payable from funds derived from the sale of the bonds in anticipation of
             114      which the notes are issued. Whenever the bonds in anticipation of which the notes are to be
             115      issued are to be payable solely from revenues derived from the operation of revenue-producing
             116      facilities, these bond anticipation notes and the interest on them shall be secured by a pledge of
             117      the income and revenues derived by the local political subdivision from the revenue-producing
             118      facilities and shall also be made payable from funds derived from the sale of the bonds in
             119      anticipation of which the notes are issued.
             120          (5) Bond anticipation notes issued under this section may be refunded by the issuance


             121      of other bond anticipation notes issued under this section.
             122          (6) Sections 11-14-304 , 11-14-305 , 11-14-315 , 11-14-316 , and 11-14-401 apply to all
             123      bond anticipation notes issued under this section.
             124          (7) Bonds are not considered to have been issued [more than 10 years after the date of
             125      the election authorizing the issuance of them, under] outside of the 10-year period described in
             126      Section 11-14-301 , if the issuance of [these] the bonds [has been] is anticipated under this
             127      section by bond anticipation notes issued [prior to] before the expiration of [this ten-year] the
             128      10-year period.




Legislative Review Note
    as of 2-7-12 2:12 PM


Office of Legislative Research and General Counsel


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