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First Substitute H.B. 381

Representative John Knotwell proposes the following substitute bill:


             1     
LOCAL GOVERNMENT INTERFUND LOANS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: John Knotwell

             5     
Senate Sponsor: Curtis S. Bramble

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends provisions allowing local governments to authorize interfund loans.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    requires the terms and conditions of an interfund loan to be in writing;
             14          .    requires an interfund loan to be approved by ordinance or resolution in a public
             15      meeting;
             16          .    places restrictions on the interest rate;
             17          .    places restrictions on the length of the loan;
             18          .    requires notice and a public hearing with an exception to the requirements;
             19          .    provides an exemption from the requirements under certain circumstances; and
             20          .    makes technical corrections.
             21      Money Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          This bill coordinates with S.B. 18, Local Government General Fund Amendments, by
             25      providing technical amendments.


             26      Utah Code Sections Affected:
             27      AMENDS:
             28           10-5-120 , as enacted by Laws of Utah 1983, Chapter 34
             29           10-6-106 , as last amended by Laws of Utah 2003, Chapter 292
             30           10-6-132 , as enacted by Laws of Utah 1979, Chapter 26
             31           17-36-3 , as last amended by Laws of Utah 2012, Chapter 17
             32           17-36-30 , as enacted by Laws of Utah 1975, Chapter 22
             33           17B-1-601 , as renumbered and amended by Laws of Utah 2007, Chapter 329
             34           17B-1-626 , as renumbered and amended by Laws of Utah 2007, Chapter 329
             35      ENACTS:
             36           10-5-102.5 , Utah Code Annotated 1953
             37      Utah Code Sections Affected by Coordination Clause:
             38           10-5-102.5 , Utah Code Annotated 1953
             39           10-6-106 , as last amended by Laws of Utah 2003, Chapter 292
             40           17-36-3 , as last amended by Laws of Utah 2012, Chapter 17
             41     
             42      Be it enacted by the Legislature of the state of Utah:
             43          Section 1. Section 10-5-102.5 is enacted to read:
             44          10-5-102.5. Definitions.
             45          As used in this chapter:
             46          (1) "Fund" is as defined by the Governmental Accounting Standards Board as reflected
             47      in the Uniform Accounting Manual for All Local Governments prepared by the Office of the
             48      Utah State Auditor.
             49          (2) "General fund" is as defined by the Governmental Accounting Standards Board as
             50      reflected in the Uniform Accounting Manual for All Local Governments prepared by the Office
             51      of the Utah State Auditor.
             52          (3) "Interfund loan" means a loan of cash from one fund to another, subject to future
             53      repayment.
             54          (4) "Town general fund" means the general fund used by a town.
             55          Section 2. Section 10-5-120 is amended to read:
             56           10-5-120. Loans between funds -- Bonds purchased by funds.


             57          (1) Subject to this section, restrictions imposed by bond ordinance, [statute,] or other
             58      controlling regulations, the town council may [(1)]:
             59          (a) subject to the restrictions in Section 53-2a-605 , authorize an interfund [loans] loan
             60      from one fund to another [at such interest rates and upon such repayment terms and conditions
             61      as it may prescribe,]; and [(2)]
             62          (b) with available cash in any fund, purchase or otherwise acquire for investment an
             63      unmatured [bonds] bond of the town or of any fund of the town.
             64          (2) An interfund loan under Subsection (1)(a) shall be in writing and specify the terms
             65      and conditions of the loan, including the:
             66          (a) effective date of the loan;
             67          (b) name of the fund loaning the money;
             68          (c) name of the fund receiving the money;
             69          (d) amount of the loan;
             70          (e) subject to Subsection (3), term of and repayment schedule for the loan;
             71          (f) subject to Subsection (4), interest rate of the loan;
             72          (g) method of calculating interest applicable to the loan;
             73          (h) procedures for:
             74          (i) applying interest to the loan; and
             75          (ii) paying interest on the loan; and
             76          (i) other terms and conditions the town council determines applicable.
             77          (3) The term and repayment schedule specified under Subsection (2)(e) may not exceed
             78      10 years.
             79          (4) (a) In determining the interest rate of the loan specified under Subsection (2)(f), the
             80      town council shall apply an interest rate that reflects the rate of potential gain had the funds
             81      been deposited or invested in a comparable investment.
             82          (b) Notwithstanding Subsection (4)(a), the interest rate of the loan specified under
             83      Subsection (2)(f):
             84          (i) if the term of the loan under Subsection (2)(e) is one year or less, may not be less
             85      than the rate offered by the Public Treasurers' Investment Fund that was created for public
             86      funds transferred to the state treasurer in accordance with Section 51-7-5 ; or
             87          (ii) if the term of the loan under Subsection (2)(e) is more than one year, may not be


             88      less than the greater of the rate offered by:
             89          (A) the Public Treasurers' Investment Fund that was created for public funds
             90      transferred to the state treasurer in accordance with Section 51-7-5 ; or
             91          (B) a United States Treasury note of a comparable term.
             92          (5) (a) For an interfund loan under Subsection (1)(a), the town council shall:
             93          (i) hold a public hearing;
             94          (ii) prepare a written notice of the date, time, place, and purpose of the hearing, and the
             95      proposed terms and conditions of the interfund loan under Subsection (2);
             96          (iii) provide notice of the public hearing in the same manner as required under
             97      Subsection 10-5-108 (2) as if the hearing were a budget hearing; and
             98          (iv) authorize the interfund loan by ordinance or resolution in a public meeting.
             99          (b) The notice and hearing requirements in Subsection (5)(a) are satisfied if the
             100      interfund loan is included in an original budget or in a subsequent budget amendment
             101      previously approved by the town council for the current fiscal year.
             102          (6) Subsections (2) through (5) do not apply to an interfund loan if the interfund loan
             103      is:
             104          (a) a loan from the town general fund to any other fund of the town; or
             105          (b) a short term advance from the town's cash and investment pool to individual funds
             106      that are repaid by the end of the fiscal year.
             107          Section 3. Section 10-6-106 is amended to read:
             108           10-6-106. Definitions.
             109          As used in this chapter:
             110          (1) "Account group" is defined by generally accepted accounting principles as reflected
             111      in the Uniform Accounting Manual for Utah Cities.
             112          (2) "Appropriation" means an allocation of money by the governing body for a specific
             113      purpose.
             114          (3) (a) "Budget" means a plan of financial operations for a fiscal period which
             115      embodies estimates of proposed expenditures for given purposes and the proposed means of
             116      financing them.
             117          (b) "Budget" may refer to the budget of a particular fund for which a budget is required
             118      by law or it may refer collectively to the budgets for all such funds.


             119          (4) "Budgetary fund" means a fund for which a budget is required.
             120          (5) "Budget officer" means the city auditor in a city of the first and second class, the
             121      mayor or some person appointed by the mayor with the approval of the city council in a city of
             122      the third, fourth, or fifth class, the mayor in the council-mayor optional form of government, or
             123      the person designated by the charter in a charter city.
             124          (6) "Budget period" means the fiscal period for which a budget is prepared.
             125          (7) "Check" means an order in a specific amount drawn upon a depository by an
             126      authorized officer of a city.
             127          (8) "City general fund" means the general fund used by a city.
             128          [(8)] (9) "Current period" means the fiscal period in which a budget is prepared and
             129      adopted, i.e., the fiscal period next preceding the budget period.
             130          [(9)] (10) "Department" means any functional unit within a fund that carries on a
             131      specific activity, such as a fire or police department within a General Fund.
             132          [(10)] (11) "Encumbrance system" means a method of budgetary control in which part
             133      of an appropriation is reserved to cover a specific expenditure by charging obligations, such as
             134      purchase orders, contracts, or salary commitments to an appropriation account at their time of
             135      origin. Such obligations cease to be encumbrances when paid or when the actual liability is
             136      entered on the city's books of account.
             137          [(11)] (12) "Estimated revenue" means the amount of revenue estimated to be received
             138      from all sources during the budget period in each fund for which a budget is being prepared.
             139          [(12)] (13) "Financial officer" means the mayor in the council-mayor optional form of
             140      government or the city official as authorized by Section 10-6-158 .
             141          [(13)] (14) "Fiscal period" means the annual or biennial period for accounting for fiscal
             142      operations in each city.
             143          [(14)] (15) "Fund" is as defined by generally accepted accounting principles as
             144      reflected in the Uniform Accounting Manual for Utah Cities.
             145          [(15)] (16) "Fund balance," "retained earnings," and "deficit" have the meanings
             146      commonly accorded such terms under generally accepted accounting principles as reflected in
             147      the Uniform Accounting Manual for Utah Cities.
             148          (17) "General fund" is as defined by the Governmental Accounting Standards Board as
             149      reflected in the Uniform Accounting Manual for All Local Governments prepared by the Office


             150      of the Utah State Auditor.
             151          [(16)] (18) "Governing body" means a city council, or city commission, as the case
             152      may be, but the authority to make any appointment to any position created by this chapter is
             153      vested in the mayor in the council-mayor optional form of government.
             154          [(17)] (19) "Interfund loan" means a loan of cash from one fund to another, subject to
             155      future repayment [and does not constitute an expenditure or a use of retained earnings or fund
             156      balance of the lending fund or revenue to the borrowing fund].
             157          [(18)] (20) "Last completed fiscal period" means the fiscal period next preceding the
             158      current period.
             159          [(19)] (21) "Public funds" means any money or payment collected or received by an
             160      officer or employee of the city acting in an official capacity and includes money or payment to
             161      the officer or employee for services or goods provided by the city, or the officer or employee
             162      while acting within the scope of employment or duty. Public funds do not include money or
             163      payments collected or received by an officer or employee of a city for charitable purposes if the
             164      mayor or city council has consented to the officer's or employee's participation in soliciting
             165      contributions for a charity.
             166          [(20)] (22) "Special fund" means any fund other than the General Fund.
             167          [(21)] (23) "Warrant" means an order drawn upon the city treasurer, in the absence of
             168      sufficient money in the city's depository, by an authorized officer of a city for the purpose of
             169      paying a specified amount out of the city treasury to the person named or to the bearer as
             170      money becomes available.
             171          Section 4. Section 10-6-132 is amended to read:
             172           10-6-132. Loans by one fund to another -- Acquiring bonds for investment.
             173          (1) Subject to this section, restrictions imposed by bond ordinance, [statute] or other
             174      controlling regulations, the governing body of a city may [(1)]:
             175          (a) subject to the restrictions in Section 53-2a-605 , authorize an interfund [loans] loan
             176      from one fund to another [at such interest rates and upon such repayment terms and conditions
             177      as it may prescribe,]; and [(2)]
             178          (b) with available cash in any fund, purchase or otherwise acquire for investment an
             179      unmatured [bonds] bond of the city or of any fund of the city.
             180          (2) An interfund loan under Subsection (1)(a) shall be in writing and specify the terms


             181      and conditions of the loan, including the:
             182          (a) effective date of the loan;
             183          (b) name of the fund loaning the money;
             184          (c) name of the fund receiving the money;
             185          (d) amount of the loan;
             186          (e) subject to Subsection (3), term of and repayment schedule for the loan;
             187          (f) subject to Subsection (4), interest rate of the loan;
             188          (g) method of calculating interest applicable to the loan;
             189          (h) procedures for:
             190          (i) applying interest to the loan; and
             191          (ii) paying interest on the loan; and
             192          (i) other terms and conditions the governing body determines applicable.
             193          (3) The term and repayment schedule specified under Subsection (2)(e) may not exceed
             194      10 years.
             195          (4) (a) In determining the interest rate of the loan specified under Subsection (2)(f), the
             196      governing body shall apply an interest rate that reflects the rate of potential gain had the funds
             197      been deposited or invested in a comparable investment.
             198          (b) Notwithstanding Subsection (4)(a), the interest rate of the loan specified under
             199      Subsection (2)(f):
             200          (i) if the term of the loan under Subsection (2)(e) is one year or less, may not be less
             201      than the rate offered by the Public Treasurers' Investment Fund that was created for public
             202      funds transferred to the state treasurer in accordance with Section 51-7-5 ; or
             203          (ii) if the term of the loan under Subsection (2)(e) is more than one year, may not be
             204      less than the greater of the rate offered by:
             205          (A) the Public Treasurers' Investment Fund that was created for public funds
             206      transferred to the state treasurer in accordance with Section 51-7-5 ; or
             207          (B) a United States Treasury note of a comparable term.
             208          (5) (a) For an interfund loan under Subsection (1)(a), the governing body shall:
             209          (i) hold a public hearing;
             210          (ii) prepare a written notice of the date, time, place, and purpose of the hearing, and the
             211      proposed terms and conditions of the interfund loan under Subsection (2);


             212          (iii) provide notice of the public hearing in the same manner as required under Section
             213      10-6-113 as if the hearing were a budget hearing; and
             214          (iv) authorize the interfund loan by ordinance or resolution in a public meeting.
             215          (b) The notice and hearing requirements in Subsection (5)(a) are satisfied if the
             216      interfund loan is included in an original budget or in a subsequent budget amendment
             217      previously approved by the governing body for the current fiscal year.
             218          (6) Subsections (2) through (5) do not apply to an interfund loan if the interfund loan
             219      is:
             220          (a) a loan from the city general fund to any other fund of the city; or
             221          (b) a short term advance from the city's cash and investment pool to individual funds
             222      that are repaid by the end of the fiscal year.
             223          Section 5. Section 17-36-3 is amended to read:
             224           17-36-3. Definitions.
             225          As used in this chapter:
             226          (1) "Accrual basis of accounting" means a method where revenues are recorded when
             227      earned and expenditures recorded when they become liabilities notwithstanding that the receipt
             228      of the revenue or payment of the expenditure may take place in another accounting period.
             229          (2) "Appropriation" means an allocation of money for a specific purpose.
             230          (3) (a) "Budget" means a plan for financial operations for a fiscal period, embodying
             231      estimates for proposed expenditures for given purposes and the means of financing the
             232      expenditures.
             233          (b) "Budget" may refer to the budget of a fund for which a budget is required by law, or
             234      collectively to the budgets for all those funds.
             235          (4) "Budgetary fund" means a fund for which a budget is required, such as those
             236      described in Section 17-36-8 .
             237          (5) "Budget officer" means:
             238          (a) for a county of the second, third, fourth, fifth, or sixth class, the county auditor,
             239      county clerk, or county executive as provided in Subsection 17-19-19 (1); or
             240          (b) for a county of the first class, a person described in Section 17-19a-203 .
             241          (6) "Budget period" means the fiscal period for which a budget is prepared.
             242          (7) "Check" means an order in a specific amount drawn upon the depositary by any


             243      authorized officer in accordance with Section 17-19-3 , 17-19a-301 , 17-24-1 , or 17-24-1.1 , as
             244      applicable.
             245          (8) "County general fund" means the general fund used by a county.
             246          [(8)] (9) "Countywide service" means a service provided in both incorporated and
             247      unincorporated areas of a county.
             248          [(9)] (10) "Current period" means the fiscal period in which a budget is prepared and
             249      adopted.
             250          [(10)] (11) "Department" means any functional unit within a fund which carries on a
             251      specific activity.
             252          [(11)] (12) "Encumbrance system" means a method of budgetary control where part of
             253      an appropriation is reserved to cover a specific expenditure by charging obligations, such as
             254      purchase orders, contracts, or salary commitments to an appropriation account. An expenditure
             255      ceases to be an encumbrance when paid or when the actual liability is entered in the books of
             256      account.
             257          [(12)] (13) "Estimated revenue" means any revenue estimated to be received during the
             258      budget period in any fund for which a budget is prepared.
             259          [(13)] (14) "Fiscal period" means the annual or biennial period for recording county
             260      fiscal operations.
             261          [(14)] (15) "Fund" means an independent fiscal and accounting entity comprised of a
             262      sum of money or other resources segregated for a specific purpose or objective.
             263          [(15)] (16) "Fund balance" means the excess of the assets over liabilities, reserves, and
             264      contributions, as reflected by its books of account.
             265          [(16)] (17) "Fund deficit" means the excess of liabilities, reserves, and contributions
             266      over its assets, as reflected by its books of account.
             267          [(17)] (18) "General Fund" [means the fund used to account for all receipts,
             268      disbursements, assets, liabilities, reserves, fund balances, revenues, and expenditures not
             269      required to be accounted for in other funds] is as defined by the Governmental Accounting
             270      Standards Board as reflected in the Uniform Accounting Manual for All Local Governments
             271      prepared by the Office of the Utah State Auditor.
             272          [(18)] (19) "Interfund loan" means a loan of cash from one fund to another, subject to
             273      future repayment[; but it does not constitute an expenditure or a use of retained earnings, fund


             274      balance, or unappropriated surplus of the lending fund].
             275          [(19)] (20) "Last completed fiscal period" means the fiscal period next preceding the
             276      current period.
             277          [(20)] (21) "Modified accrual basis of accounting" means a method under which
             278      expenditures other than accrued interest on general long-term debt are recorded at the time
             279      liabilities are incurred and revenues are recorded when they become measurable and available
             280      to finance expenditures of the current period.
             281          [(21)] (22) "Municipal capital project" means the acquisition, construction, or
             282      improvement of capital assets that facilitate providing municipal service.
             283          [(22)] (23) "Municipal service" means a service not provided on a countywide basis
             284      and not accounted for in an enterprise fund, and includes police patrol, fire protection, culinary
             285      or irrigation water retail service, water conservation, local parks, sewers, sewage treatment and
             286      disposal, cemeteries, garbage and refuse collection, street lighting, airports, planning and
             287      zoning, local streets and roads, curb, gutter, and sidewalk maintenance, and ambulance service.
             288          [(23)] (24) "Retained earnings" means that part of the net earnings retained by an
             289      enterprise or internal service fund which is not segregated or reserved for any specific purpose.
             290          [(24)] (25) "Special fund" means any fund other than the General Fund, such as those
             291      described in Section 17-36-6 .
             292          [(25)] (26) "Unappropriated surplus" means that part of a fund which is not
             293      appropriated for an ensuing budget period.
             294          [(26)] (27) "Warrant" means an order in a specific amount drawn upon the treasurer by
             295      the auditor.
             296          Section 6. Section 17-36-30 is amended to read:
             297           17-36-30. Interfund loans -- Acquisition of issued unmatured bonds.
             298          [The] (1) Subject to this section, restrictions imposed by bond covenants, or other
             299      controlling regulations, the governing body may [(1)]:
             300          (a) subject to the restrictions in Section 53-2a-605 , authorize an interfund [loans] loan
             301      from one fund to another [at such interest rates and subject to such terms for repayment as it
             302      may prescribe]; and [may (2)]
             303          (b) with available cash in any fund, purchase or otherwise acquire for investment[,
             304      issued] an unmatured [bonds] bond of the county or of any county fund.


             305          (2) An interfund loan under Subsection (1)(a) shall be in writing and specify the terms
             306      and conditions of the loan, including the:
             307          (a) effective date of the loan;
             308          (b) name of the fund loaning the money;
             309          (c) name of the fund receiving the money;
             310          (d) amount of the loan;
             311          (e) subject to Subsection (3), term of and repayment schedule for the loan;
             312          (f) subject to Subsection (4), interest rate of the loan;
             313          (g) method of calculating interest applicable to the loan;
             314          (h) procedures for:
             315          (i) applying interest to the loan; and
             316          (ii) paying interest on the loan; and
             317          (i) other terms and conditions the governing body determines applicable.
             318          (3) The term and repayment schedule specified under Subsection (2)(e) may not exceed
             319      10 years.
             320          (4) (a) In determining the interest rate of the loan specified under Subsection (2)(f), the
             321      governing body shall apply an interest rate that reflects the rate of potential gain had the funds
             322      been deposited or invested in a comparable investment.
             323          (b) Notwithstanding Subsection (4)(a), the interest rate of the loan specified under
             324      Subsection (2)(f):
             325          (i) if the term of the loan under Subsection (2)(e) is one year or less, may not be less
             326      than the rate offered by the Public Treasurers' Investment Fund that was created for public
             327      funds transferred to the state treasurer in accordance with Section 51-7-5 ; or
             328          (ii) if the term of the loan under Subsection (2)(e) is more than one year, may not be
             329      less than the greater of the rate offered by:
             330          (A) the Public Treasurers' Investment Fund that was created for public funds
             331      transferred to the state treasurer in accordance with Section 51-7-5 ; or
             332          (B) a United States Treasury note of a comparable term.
             333          (5) (a) For an interfund loan under Subsection (1)(a), the governing body shall:
             334          (i) hold a public hearing;
             335          (ii) prepare a written notice of the date, time, place, and purpose of the hearing, and the


             336      proposed terms and conditions of the interfund loan under Subsection (2);
             337          (iii) provide notice of the public hearing in the same manner as required under Section
             338      17-36-12 as if the hearing were a budget hearing; and
             339          (iv) authorize the interfund loan by ordinance or resolution in a public meeting.
             340          (b) The notice and hearing requirements in Subsection (5)(a) are satisfied if the
             341      interfund loan is included in an original budget or in a subsequent budget amendment
             342      previously approved by the governing body for the current fiscal year.
             343          (6) Subsections (2) through (5) do not apply to an interfund loan if the interfund loan
             344      is:
             345          (a) a loan from the county general fund to any other fund of the county; or
             346          (b) a short term advance from the county's cash and investment pool to individual
             347      funds that are repaid by the end of the fiscal year.
             348          Section 7. Section 17B-1-601 is amended to read:
             349           17B-1-601. Definitions.
             350          As used in this part:
             351          (1) "Appropriation" means an allocation of money by the board of trustees for a
             352      specific purpose.
             353          (2) "Budget" means a plan of financial operations for a fiscal year which embodies
             354      estimates of proposed expenditures for given purposes and the proposed means of financing
             355      them, and may refer to the budget of a particular fund for which a budget is required by law or
             356      it may refer collectively to the budgets for all such funds.
             357          (3) "Budget officer" means the person appointed by the local district board of trustees
             358      to prepare the budget for the district.
             359          (4) "Budget year" means the fiscal year for which a budget is prepared.
             360          (5) "Calendar year entity" means a local district whose fiscal year begins January 1 and
             361      ends December 31 of each calendar year as described in Section 17B-1-602 .
             362          (6) "Current year" means the fiscal year in which a budget is prepared and adopted,
             363      which is the fiscal year next preceding the budget year.
             364          (7) "Deficit" has the meaning given under generally accepted accounting principles as
             365      reflected in the Uniform Accounting Manual for Local Districts.
             366          (8) "Estimated revenue" means the amount of revenue estimated to be received from all


             367      sources during the budget year in each fund for which a budget is being prepared.
             368          (9) "Financial officer" means the official under Section 17B-1-642 .
             369          (10) "Fiscal year" means the annual period for accounting for fiscal operations in each
             370      district.
             371          (11) "Fiscal year entity" means a local district whose fiscal year begins July 1 of each
             372      year and ends on June 30 of the following year as described in Section 17B-1-602 .
             373          (12) "Fund" has the meaning given under generally accepted accounting principles as
             374      reflected in the Uniform Accounting Manual for Local Districts.
             375          (13) "Fund balance" has the meaning given under generally accepted accounting
             376      principles as reflected in the Uniform Accounting Manual for Local Districts.
             377          (14) "General fund" is as defined by the Governmental Accounting Standards Board as
             378      reflected in the Uniform Accounting Manual for All Local Governments prepared by the Office
             379      of the Utah State Auditor.
             380          [(14)] (15) "Governmental funds" means the general fund, special revenue fund, debt
             381      service fund, and capital projects fund of a local district.
             382          [(15)] (16) "Interfund loan" means a loan of cash from one fund to another, subject to
             383      future repayment. [It does not constitute an expenditure or a use of retained earnings or fund
             384      balance of the lending fund or revenue to the borrowing fund.]
             385          [(16)] (17) "Last completed fiscal year" means the fiscal year next preceding the
             386      current fiscal year.
             387          (18) "Local district general fund" means the general fund used by a local district.
             388          [(17)] (19) "Proprietary funds" means enterprise funds and the internal service funds of
             389      a local district.
             390          [(18)] (20) "Public funds" means any money or payment collected or received by an
             391      officer or employee of a local district acting in an official capacity and includes money or
             392      payment to the officer or employee for services or goods provided by the district, or the officer
             393      or employee while acting within the scope of employment or duty.
             394          [(19)] (21) "Retained earnings" has the meaning given under generally accepted
             395      accounting principles as reflected in the Uniform Accounting Manual for Local Districts.
             396          [(20)] (22) "Special fund" means any local district fund other than the local district's
             397      general fund.


             398          Section 8. Section 17B-1-626 is amended to read:
             399           17B-1-626. Loans by one fund to another.
             400          (1) Subject to this section, restrictions imposed by bond covenants, [statute,]
             401      restrictions in Section 53-2a-605 , or other controlling regulations, the board of trustees of a
             402      local district may authorize an interfund [loans] loan from one fund to another [at interest rates,
             403      repayment terms, and conditions prescribed by the board of trustees].
             404          (2) An interfund loan under Subsection (1) shall be in writing and specify the terms
             405      and conditions of the loan, including the:
             406          (a) effective date of the loan;
             407          (b) name of the fund loaning the money;
             408          (c) name of the fund receiving the money;
             409          (d) amount of the loan;
             410          (e) subject to Subsection (3), term of and repayment schedule for the loan;
             411          (f) subject to Subsection (4), interest rate of the loan;
             412          (g) method of calculating interest applicable to the loan;
             413          (h) procedures for:
             414          (i) applying interest to the loan; and
             415          (ii) paying interest on the loan; and
             416          (i) other terms and conditions the board of trustees determines applicable.
             417          (3) The term and repayment schedule specified under Subsection (2)(e) may not exceed
             418      10 years.
             419          (4) (a) In determining the interest rate of the loan specified under Subsection (2)(f), the
             420      board of trustees shall apply an interest rate that reflects the rate of potential gain had the funds
             421      been deposited or invested in a comparable investment.
             422          (b) Notwithstanding Subsection (4)(a), the interest rate of the loan specified under
             423      Subsection (2)(f):
             424          (i) if the term of the loan under Subsection (2)(e) is one year or less, may not be less
             425      than the rate offered by the Public Treasurers' Investment Fund that was created for public
             426      funds transferred to the state treasurer in accordance with Section 51-7-5 ; or
             427          (ii) if the term of the loan under Subsection (2)(e) is more than one year, may not be
             428      less than the greater of the rate offered by:


             429          (A) the Public Treasurers' Investment Fund that was created for public funds
             430      transferred to the state treasurer in accordance with Section 51-7-5 ; or
             431          (B) a United States Treasury note of a comparable term.
             432          (5) (a) For an interfund loan under Subsection (1), the board of trustees shall:
             433          (i) hold a public hearing;
             434          (ii) prepare a written notice of the date, time, place, and purpose of the hearing, and the
             435      proposed terms and conditions of the interfund loan under Subsection (2);
             436          (iii) provide notice of the public hearing in the same manner as required under Section
             437      17B-1-609 as if the hearing were a budget hearing; and
             438          (iv) authorize the interfund loan by resolution in a public meeting.
             439          (b) The notice and hearing requirements in Subsection (5)(a) are satisfied if the
             440      interfund loan is included in an original budget or in a subsequent budget amendment
             441      previously approved by the board of trustees for the current fiscal year.
             442          (6) Subsections (2) through (5) do not apply to an interfund loan if the interfund loan
             443      is:
             444          (a) a loan from the local district general fund to any other fund of the local district; or
             445          (b) a short term advance from the local district's cash and investment pool to individual
             446      funds that are repaid by the end of the fiscal year.
             447          Section 9. Coordinating H.B. 381 with S.B. 18 -- Technical amendments.
             448          If this H.B. 381 and S.B. 18, Local Government General Fund Amendments, both pass
             449      and become law, the Legislature intends that the Office of Legislative Research and General
             450      Counsel, in preparing the Utah Code database for publication, make the following changes:
             451          (1) Section 10-5-102.5 in this H.B. 381 supersedes Section 10-5-102.5 in S.B. 18;
             452          (2) Subsection 10-6-106 (8) in this H.B. 381 supersedes Subsection 10-6-106 (8) in S.B.
             453      18;
             454          (3) Subsection 17-36-3 (8) in this H.B. 381 supersedes Subsection 17-36-3 (8) in S.B.
             455      18; and
             456          (4) the definition of "General Fund" in Subsection 17-36-3 (18) in this H.B. 381
             457      supersedes the changes to the definition of "General Fund" in Subsection 17-36-3 (17) in S.B.
             458      18.


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