1
2
3
4
5
6
7 LONG TITLE
8 General Description:
9 This bill modifies provisions relating to local government bonds.
10 Highlighted Provisions:
11 This bill:
12 ▸ prohibits a local political subdivision from issuing a lease revenue bond if a
13 specified threshold is exceeded, with an exception; and
14 ▸ requires a local government entity intending to issue certain lease revenue bonds to
15 comply with specified notice and public hearing requirements before issuing the
16 lease revenue bond.
17 Money Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 None
21 Utah Code Sections Affected:
22 AMENDS:
23 11-14-103, as last amended by Laws of Utah 2016, Chapter 386
24 17D-2-501, as enacted by Laws of Utah 2008, Chapter 360
25
26 Be it enacted by the Legislature of the state of Utah:
27 Section 1. Section 11-14-103 is amended to read:
28 11-14-103. Bond issues authorized -- Purposes -- Use of bond proceeds.
29 (1) Any local political subdivision may, in the manner and subject to the limitations
30 and restrictions contained in this chapter, issue its negotiable bonds for the purpose of paying
31 all or part of the cost of:
32 (a) acquiring, improving, or extending any one or more improvements, facilities, or
33 property that the local political subdivision is authorized by law to acquire, improve, or extend;
34 (b) acquiring, or acquiring an interest in, any one or more or any combination of the
35 following types of improvements, facilities, or property to be owned by the local political
36 subdivision, either alone or jointly with one or more other local political subdivisions, or for
37 the improvement or extension of any of those wholly or jointly owned improvements, facilities,
38 or properties:
39 (i) public buildings of every nature, including without limitation, offices, courthouses,
40 jails, fire, police and sheriff's stations, detention homes, and any other buildings to
41 accommodate or house lawful activities of a local political subdivision;
42 (ii) waterworks, irrigation systems, water systems, dams, reservoirs, water treatment
43 plants, and any other improvements, facilities, or property used in connection with the
44 acquisition, storage, transportation, and supplying of water for domestic, industrial, irrigation,
45 recreational, and other purposes and preventing pollution of water;
46 (iii) sewer systems, sewage treatment plants, incinerators, and other improvements,
47 facilities, or property used in connection with the collection, treatment, and disposal of sewage,
48 garbage, or other refuse;
49 (iv) drainage and flood control systems, storm sewers, and any other improvements,
50 facilities, or property used in connection with the collection, transportation, or disposal of
51 water;
52 (v) recreational facilities of every kind, including without limitation, athletic and play
53 facilities, playgrounds, athletic fields, gymnasiums, public baths, swimming pools, camps,
54 parks, picnic grounds, fairgrounds, golf courses, zoos, boating facilities, tennis courts,
55 auditoriums, stadiums, arenas, and theaters;
56 (vi) convention centers, sports arenas, auditoriums, theaters, and other facilities for the
57 holding of public assemblies, conventions, and other meetings;
58 (vii) roads, bridges, viaducts, tunnels, sidewalks, curbs, gutters, and parking buildings,
59 lots, and facilities;
60 (viii) airports, landing fields, landing strips, and air navigation facilities;
61 (ix) educational facilities, including without limitation, schools, gymnasiums,
62 auditoriums, theaters, museums, art galleries, libraries, stadiums, arenas, and fairgrounds;
63 (x) hospitals, convalescent homes, and homes for the aged or indigent; and
64 (xi) electric light works, electric generating systems, and any other improvements,
65 facilities, or property used in connection with the generation and acquisition of electricity for
66 these local political subdivisions and transmission facilities and substations if they do not
67 duplicate transmission facilities and substations of other entities operating in the state prepared
68 to provide the proposed service unless these transmission facilities and substations proposed to
69 be constructed will be more economical to these local political subdivisions;
70 (c) new construction, renovation, or improvement to a state highway within the
71 boundaries of the local political subdivision or an environmental study for a state highway
72 within the boundaries of the local political subdivision; or
73 (d) except as provided in Subsection (5), the portion of any claim, settlement, or
74 judgment that exceeds $3,000,000.
75 (2) Except as provided in Subsection (1)(c), any improvement, facility, or property
76 under Subsection (1) need not lie within the limits of the local political subdivision.
77 (3) A cost under Subsection (1) may include:
78 (a) the cost of equipment and furnishings for such improvements, facilities, or
79 property;
80 (b) all costs incident to the authorization and issuance of bonds, including engineering,
81 legal, and fiscal advisers' fees;
82 (c) costs incident to the issuance of bond anticipation notes, including interest to accrue
83 on bond anticipation notes;
84 (d) interest estimated to accrue on the bonds during the period to be covered by the
85 construction of the improvement, facility, or property and for 12 months after that period; and
86 (e) other amounts which the governing body finds necessary to establish bond reserve
87 funds and to provide working capital related to the improvement, facility, or property.
88 (4) (a) Except as provided in Subsection (4)(b), the proceeds from bonds issued on or
89 after May 14, 2013, may not be used:
90 (i) for operation and maintenance expenses for more than one year after the date any of
91 the proceeds are first used for those expenses; or
92 (ii) for capitalization of interest more than five years after the bonds are issued.
93 (b) The restrictions on the use of bond proceeds under Subsection (4)(a) do not apply
94 to bonds issued to pay all or part of the costs of a claim, settlement, or judgment under
95 Subsection (1)(d).
96 (5) Beginning on or after July 1, 2021, a local political subdivision may not issue its
97 negotiable bonds for a purpose described in Subsection (1)(d).
98 (6) (a) As used in this Subsection (6):
99 (i) "Applicable lease revenue bond" means a lease revenue bond in an amount that
100 exceeds $10,000,000.
101 (ii) "Combined total" means the total of all lease revenue bonds issued by a local
102 political subdivision within any consecutive three-year period.
103 (b) (i) A local political subdivision may not issue a lease revenue bond if the issuance
104 of the bond will cause the combined total to exceed $200,000,000.
105 (ii) The amount of a lease revenue bond to pay for the construction, reconstruction, or
106 remodeling of a correctional facility, as defined in Section 77-17b-102, does not count toward
107 the combined total.
108 (c) Before issuing an applicable lease revenue bond on or after May 1, 2024, a local
109 political subdivision shall:
110 (i) make a statement at a meeting of the local political subdivision, as provided in
111 Subsection (6)(d);
112 (ii) as provided in Subsection (6)(e, publish notice of the proposed issuance of a lease
113 revenue bond and of the public hearing under Subsection (6)(f); and
114 (iii) hold a public hearing, as provided in Subsection (6)(f).
115 (d) (i) At a regular meeting of the local political subdivision that is held at least 14 days
116 before a public hearing under Subsection (6)(f), the governing body of a local political
117 subdivision intending to issue an applicable lease revenue bond shall make a statement
118 indicating:
119 (A) the intent to issue a lease revenue bond; and
120 (B) the purpose and estimated amount of the lease revenue bond.
121 (ii) The local political subdivision's agenda under Section 52-4-202 for a meeting
122 described in Subsection (6)(d)(i) shall include a separate item for the statement required under
123 Subsection (6)(d)(i).
124 (e) (i) A local political subdivision intending to issue an applicable lease revenue bond
125 shall provide notice of the intent to issue a lease revenue bond and of the public hearing
126 required under Subsection (6)(f).
127 (ii) The notice required under Subsection (6)(e)(i) shall be published:
128 (A) subject to Section 45-1-101, in a newspaper or combination of newspapers of
129 general circulation in the local political subdivision;
130 (B) electronically in accordance with Section 45-1-101; and
131 (C) for the local political subdivision, as a class A notice under Section 63G-30-102,
132 for at least 14 days immediately before the public hearing under Subsection (6)(d).
133 (iii) If the local political subdivision intending to issue an applicable lease revenue
134 bond is a school district, the notice required by Subsection (6)(e)(i) shall include a statement
135 that contains substantially the following language: "This proposed lease revenue bond commits
136 money from future property tax and income tax revenue allocated to the school district.
137 Additionally, a lease revenue bond generally has a higher interest cost than a voter-approved
138 general obligation bond."
139 (iv) The notice described in Subsection (6)(e)(ii)(A):
140 (A) shall be no less than 1/4 page in size, use type no smaller than 18 point, and be
141 surrounded by a 1/4-inch border;
142 (B) shall be run once each week for the two weeks before a local political subdivision
143 conducts a public hearing under Subsection (6)(f); and
144 (C) may not be placed in the portion of a newspaper where legal notices and classified
145 advertisements appear.
146 (v) A notice required under Subsection (6)(e)(i) shall:
147 (A) contain a clear statement indicating that the local political subdivision intends to
148 issue a lease revenue bond;
149 (B) explain the purpose, proposed amount, and length of term of the lease revenue
150 bond and the annual amount that the local political subdivision will be required to pay in
151 principal and interest on the lease revenue bond;
152 (C) identify the intended lessee of the facility to be constructed using proceeds from
153 the lease revenue bond and the expected annual amount of lease payments that the lessee will
154 pay;
155 (D) provide the date, time, place, and purpose of the public hearing under Subsection
156 (6)(f); and
157 (E) provide the date, time, and place of the local political subdivision governing body
158 meeting at which the governing body anticipates taking action on the proposal to issue a lease
159 revenue bond.
160 (f) (i) A local political subdivision intending to issue an applicable lease revenue bond
161 shall hold a public hearing on the proposed lease revenue bond.
162 (ii) A public hearing under this Subsection (6)(f):
163 (A) shall be held beginning at or after 6:00 p.m.;
164 (B) shall be held separate from any other public hearing; and
165 (C) may be held the same day as another public hearing, including immediately before
166 or after the other public hearing.
167 (iii) At a public hearing under this Subsection (6)(f), the governing body of the local
168 political subdivision shall provide a member of the public desiring to be heard an opportunity
169 to present testimony on the proposed issuance of a lease revenue bond:
170 (A) within reasonable time limits; and
171 (B) without unreasonable restriction on the number of individuals allowed to make
172 public comment.
173 Section 2. Section 17D-2-501 is amended to read:
174 17D-2-501. Provisions applicable to issuance of local building authority bonds.
175 (1) Except as otherwise provided in this chapter:
176 [
177 [
178 Act, except Section 11-14-306; and
179 [
180 [
181 11, Chapter 14, Local Government Bonding Act, except Sections 11-14-306 and 11-14-403;
182 and
183 [
184 provided in Title 11, Chapter 27, Utah Refunding Bond Act.
185 (2) A local building authority that issues a lease revenue bond on or after May 1, 2024
186 shall comply with the same requirements and is subject to the same limitations under
187 Subsection 11-14-103(6) that apply to the issuance of a lease revenue bond by a local political
188 subdivision, as defined in Section 11-14-102.
189 Section 3. Effective date.
190 This bill takes effect on May 1, 2024.