11-42-701 - Guaranty fund.
11-42-701. Guaranty fund.
(1) Except as provided in Section 11-42-702, each local entity that issues assessmentbonds shall:
(a) create a guaranty fund, as provided in this section, to secure bonds, to the extent ofthe money in the fund; and
(b) fund the guaranty fund by:
(i) appropriations from the local entity's general fund;
(ii) a property tax levy of not to exceed .0002 per dollar of taxable value of taxableproperty within the local entity's jurisdictional boundaries;
(iii) issuing general obligation bonds; or
(iv) appropriations from other sources as determined by the local entity's governing body.
(2) A tax levied by a local entity under Subsection (1)(b)(ii) to fund a guaranty fund isnot included for purposes of calculating the maximum levy limitation applicable to the localentity.
(3) A local entity may covenant for the benefit of bond holders that, as long as the bondsare outstanding and unpaid, the local entity will:
(a) create a guaranty fund as provided in this section;
(b) (i) to the extent legally permissible and by any of the methods described inSubsection (1)(b), transfer each year to the guaranty fund an amount of money up to the amountthe local entity would collect by levying a tax of .0002 per dollar of taxable value of taxableproperty within the local entity until the balance in the guaranty fund equals 10% of the amountof all outstanding bonds; and
(ii) in subsequent years transfer to the guaranty fund the amount necessary to replenish ormaintain the guaranty fund at 10% of the amount of all outstanding bonds; and
(c) invest the funds on deposit in the guaranty fund as provided in Title 51, Chapter 7,State Money Management Act.
(4) A local entity may create subaccounts within a guaranty fund for each issue ofoutstanding assessment bonds and refunding assessment bonds in a manner that the local entity'sgoverning body considers appropriate to allocate among the bond issues the securities held in andinterest earnings on the guaranty fund for purposes of complying with federal law.
(5) A local entity may transfer to its general fund any money in its guaranty fund thatexceeds 10% of the amount of all of the local entity's outstanding assessment bonds andrefunding assessment bonds that are secured by the guaranty fund.
(6) For purposes of Subsections (3)(b) and (5), refunding assessment bonds may not beconsidered outstanding until the principal of and interest and any redemption premiums on theprior bonds that are refunded by the refunding assessment bonds are fully paid or legallyconsidered to be paid.
Enacted by Chapter 329, 2007 General Session