1     
RURAL MUNICIPAL ECONOMIC DEVELOPMENT LOAN

2     
PROGRAM

3     
2021 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Jeffrey D. Stenquist

6     
Senate Sponsor: Scott D. Sandall

7     

8     LONG TITLE
9     General Description:
10          This bill creates the Municipal Infrastructure Fund (fund) within the Governor's Office
11     of Economic Development (office).
12     Highlighted Provisions:
13          This bill:
14          ▸     defines terms;
15          ▸     creates the fund within the office;
16          ▸     describes the allowable uses of the fund, including that the fund is to be used for
17     infrastructure loans to rural municipalities;
18          ▸     describes the office's requirements in providing and managing loans from the fund;
19     and
20          ▸     grants certain rulemaking authority to the office related to managing the fund.
21     Money Appropriated in this Bill:
22          This bill appropriates in fiscal year 2022:
23          ▸     to General Fund Restricted -- Municipal Infrastructure Fund Restricted Account, as
24     a one-time appropriation:
25               •     from the General Fund, One-time, $69,000,000; and
26          ▸     to Governor's Office of Economic Development -- Municipal Infrastructure Loan
27     Program, as a one-time appropriation:

28               •     from the General Fund Restricted -- Municipal Infrastructure Fund Restricted
29     Account, One-time, $69,000,000.
30     Other Special Clauses:
31          None
32     Utah Code Sections Affected:
33     AMENDS:
34          63B-1b-202, as last amended by Laws of Utah 2017, Chapter 345
35     ENACTS:
36          63N-3-601, Utah Code Annotated 1953
37          63N-3-602, Utah Code Annotated 1953
38          63N-3-603, Utah Code Annotated 1953
39          63N-3-604, Utah Code Annotated 1953
40     

41     Be it enacted by the Legislature of the state of Utah:
42          Section 1. Section 63B-1b-202 is amended to read:
43          63B-1b-202. Custodial officer -- Powers and duties.
44          (1) (a) There is created within the Division of Finance an officer responsible for the
45     care, custody, safekeeping, collection, and accounting of all bonds, notes, contracts, trust
46     documents, and other evidences of indebtedness:
47          (i) owned or administered by the state or any of its agencies; and
48          (ii) except as provided in Subsection (1)(b), relating to revolving loan funds.
49          (b) Notwithstanding Subsection (1)(a), the officer described in Subsection (1)(a) is not
50     responsible for the care, custody, safekeeping, collection, and accounting of a bond, note,
51     contract, trust document, or other evidence of indebtedness relating to the:
52          (i) Agriculture Resource Development Fund, created in Section 4-18-106;
53          (ii) Utah Rural Rehabilitation Fund, created in Section 4-19-105;
54          (iii) Petroleum Storage Tank Trust Fund, created in Section 19-6-409;
55          (iv) Olene Walker Housing Loan Fund, created in Section 35A-8-502; [and]
56          (v) Brownfields Fund, created in Section 19-8-120[.]; and
57          (vi) Municipal Infrastructure Fund, created in Section 63N-3-602.
58          (2) (a) Each authorizing agency shall deliver to this officer for the officer's care,

59     custody, safekeeping, collection, and accounting all bonds, notes, contracts, trust documents,
60     and other evidences of indebtedness:
61          (i) owned or administered by the state or any of its agencies; and
62          (ii) except as provided in Subsection (1)(b), relating to revolving loan funds.
63          (b) This officer shall:
64          (i) establish systems, programs, and facilities for the care, custody, safekeeping,
65     collection, and accounting for the bonds, notes, contracts, trust documents, and other evidences
66     of indebtedness submitted to the officer under this Subsection (2); and
67          (ii) shall make available updated reports to each authorizing agency as to the status of
68     loans under their authority.
69          (3) The officer described in Section 63B-1b-201 shall deliver to the officer described in
70     Subsection (1)(a) for the care, custody, safekeeping, collection, and accounting by the officer
71     described in Subsection (1)(a) of all bonds, notes, contracts, trust documents, and other
72     evidences of indebtedness closed as provided in Subsection 63B-1b-201(2)(b).
73          Section 2. Section 63N-3-601 is enacted to read:
74     
Part 6. Municipal Infrastructure Fund

75          63N-3-601. Definitions.
76          As used in this part:
77          (1) "Fund" means the Municipal Infrastructure Fund created in Section 63N-3-602.
78          (2) "Infrastructure asset" means a physical asset that provides or supports an essential
79     public service.
80          (3) "Infrastructure loan" means a loan of money from the fund to finance an
81     infrastructure project.
82          (4) "Infrastructure project" means a project to build or improve one or more
83     infrastructure assets for a municipality, including:
84          (a) telecom and high-speed Internet infrastructure;
85          (b) power and energy infrastructure;
86          (c) water and sewerage infrastructure;
87          (d) healthcare infrastructure; or
88          (e) other infrastructure as defined by rule made by the office in accordance with Title
89     63G, Chapter 3, Utah Administrative Rulemaking Act.

90          (5) (a) "Rural municipality" means a city or town in a county of the third, fourth, fifth,
91     or sixth class.
92          (b) "Rural municipality" may include an unincorporated area of a county of the third,
93     fourth, fifth, or sixth class.
94          Section 3. Section 63N-3-602 is enacted to read:
95          63N-3-602. Municipal Infrastructure Fund -- Creation -- Use of money.
96          (1) There is created a restricted account within the General Fund known as the
97     Municipal Infrastructure Fund.
98          (2) The fund consists of money from the following sources:
99          (a) appropriations made to the fund by the Legislature;
100          (b) federal money and grants that are deposited into the fund;
101          (c) contributions and grants from any private or public sources for deposit into the
102     fund; and
103          (d) all money collected from the repayment of fund money used for an infrastructure
104     loan.
105          (3) (a) The fund shall earn interest.
106          (b) All interest earned on money in the fund shall be deposited into the fund.
107          (4) Money in the fund may only be used by the office to:
108          (a) provide infrastructure loans to rural municipalities; and
109          (b) pay for the office's costs in administering the fund, including costs related to
110     providing infrastructure loans, monitoring infrastructure projects, and obtaining repayments of
111     infrastructure loans.
112          (5) The office may establish separate accounts in the fund for infrastructure loans,
113     administrative and operating expenses, or any other purpose to implement this part.
114          (6) Money in the fund shall be invested by the state treasurer as provided in Title 51,
115     Chapter 7, State Money Management Act, and the earnings from the investments shall be
116     credited to the fund.
117          (7) The office shall include in the annual written report described in Section
118     63N-1-301, a report of how money from the fund was used, including information regarding all
119     infrastructure projects funded by loans from the fund.
120          Section 4. Section 63N-3-603 is enacted to read:

121          63N-3-603. Infrastructure loans -- Authority -- Rulemaking.
122          (1) Money in the fund may be used by the office to make infrastructure loans to any
123     rural municipality for any purpose consistent with the provisions of this part.
124          (2) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
125     office shall make rules providing procedures and standards for making infrastructure loans,
126     including application requirements and a process for prioritizing applications.
127          (3) The prioritization process, procedures, and standards for making an infrastructure
128     loan may include consideration of the following:
129          (a) the availability of money in the fund;
130          (b) the credit worthiness of the infrastructure project, including the identification of a
131     dedicated source of revenue to repay the infrastructure loan;
132          (c) the amount of expected economic and other benefits to the rural municipality from
133     the infrastructure project when compared to the cost of the infrastructure project;
134          (d) the amount of money from other sources being contributed to the infrastructure
135     project; and
136          (e) a municipality's difficulty in obtaining or qualifying for complete funding with
137     reasonable repayment options from other sources.
138          Section 5. Section 63N-3-604 is enacted to read:
139          63N-3-604. Loan program procedures -- Repayment.
140          (1) A rural municipality may obtain an infrastructure loan from the office by entering
141     into a loan contract with the office secured by legally issued bonds, notes, or other evidence of
142     indebtedness validly issued under state law, including pledging all or any portion of a revenue
143     source controlled by the rural municipality to the repayment of the loan.
144          (2) A loan from the fund shall bear interest at a rate:
145          (a) not less than bond market interest rates available to the state; and
146          (b) not more than .5% above bond market interest rates available to the state.
147          (3) A rural municipality shall begin repayment of a loan no later than the date of
148     completion of the infrastructure project.
149          (4) An infrastructure loan contract with a rural municipality may provide that a portion
150     of the proceeds of the loan may be applied to fund a reserve fund to secure the repayment of the
151     loan.

152          (5) Before obtaining an infrastructure loan, a rural municipality shall:
153          (a) publish the rural municipality's intention to obtain an infrastructure loan at least
154     once in accordance with the publication and notice requirements described in Section
155     11-14-316; and
156          (b) adopt an ordinance or resolution authorizing the infrastructure loan.
157          (6) (a) If a rural municipality fails to comply with the terms of the rural municipality's
158     infrastructure loan contract, the office may seek any legal or equitable remedy to obtain
159     compliance or payment of damages.
160          (b) If a rural municipality fails to make infrastructure loan payments when due, the
161     state shall, at the request of the office, withhold an amount of money due to the rural
162     municipality and deposit the withheld money into the fund to pay the amount due under the
163     contract.
164          (c) The office may elect when to take any action or request the withholding of money
165     under this Subsection (6).
166          (7) All loan contracts, bonds, notes, or other evidence of indebtedness securing any
167     infrastructure loans shall be collected and accounted for in accordance with Section
168     63B-1b-202.
169          Section 6. Appropriation.
170          The following sums of money are appropriated for the fiscal year beginning July 1,
171     2021, and ending June 30, 2022. These are additions to amounts previously appropriated for
172     fiscal year 2022.
173          Subsection 6(a). Restricted Fund and Account Transfers.
174          The Legislature authorizes the State Division of Finance to transfer the following
175     amounts between the following funds or accounts as indicated. Expenditures and outlays from
176     the funds to which the money is transferred must be authorized by an appropriation.
177     ITEM 1
178          To General Fund Restricted -- Municipal Infrastructure Fund Restricted Account
179               From General Fund, One-time
$69,000,000

180               Schedule of Programs:
181                    General Fund Restricted -- Municipal Infrastructure Fund
182                    Restricted Account                    $69,000,000

183          Subsection 6(b). Operating and Capital Budgets.
184          Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, the
185     Legislature appropriates the following sums of money from the funds or accounts indicated for
186     the use and support of the government of the state of Utah.
187     ITEM 2
188          To Governor's Office of Economic Development
189               From General Fund Restricted -- Municipal Infrastructure Fund
190                Restricted Account, One-time
$69,000,000

191               Schedule of Programs:
192                    Municipal Infrastructure Loan Program     $69,000,000
193          The Legislature intends that, under Section 63J-1-603 of the Utah Code, appropriations
194     under this section not lapse at the close of Fiscal Year 2022.