53A-28-302 - State financial assistance intercept mechanism -- State treasurer duties -- Interest and penalty provisions.
53A-28-302. State financial assistance intercept mechanism -- State treasurer duties-- Interest and penalty provisions.
(1) (a) If one or more payments on bonds are made by the state treasurer as provided inSection 53A-28-301, the state treasurer shall:
(i) immediately intercept any payments from the Uniform School Fund or from any othersource of operating monies provided by the state to the board that issued the bonds that wouldotherwise be paid to the board by the state; and
(ii) apply the intercepted payments to reimburse the state for payments made pursuant tothe state's guaranty until all obligations of the board to the state arising from those payments,including interest and penalties, are paid in full.
(b) The state has no obligation to the board or to any person or entity to replace anymonies intercepted under authority of Subsection (1)(a).
(2) The board that issued bonds for which the state has made all or part of a debt servicepayment shall:
(a) reimburse all monies drawn by the state treasurer on its behalf;
(b) pay interest to the state on all monies paid by the state from the date the monies weredrawn to the date they are repaid at a rate not less than the average prime rate for national moneycenter banks plus 1%; and
(c) pay all penalties required by this chapter.
(3) (a) The state treasurer shall establish the reimbursement interest rate after consideringthe circumstances of any prior draws by the board on the state, market interest and penalty rates,and the cost of funds, if any, that were required to be borrowed by the state to make payment onthe bonds.
(b) The state treasurer may, after considering the circumstances giving rise to the failureof the board to make payment on its bonds in a timely manner, impose on the board a penalty ofnot more than 5% of the amount paid by the state pursuant to its guaranty for each instance inwhich a payment by the state is made.
(4) (a) (i) If the state treasurer determines that amounts obtained under this section willnot reimburse the state in full within one year from the state's payment of a board's scheduleddebt service payment, the state treasurer shall pursue any legal action, including mandamus,against the board to compel it to:
(A) levy and provide property tax revenues to pay debt service on its bonds when due asrequired by Title 11, Chapter 14, Local Government Bonding Act; and
(B) meet its repayment obligations to the state.
(ii) In pursuing its rights under this Subsection (4)(a), the state shall have the samesubstantive and procedural rights under Title 11, Chapter 14, Local Government Bonding Act, aswould a holder of the bonds of a board.
(b) The attorney general shall assist the state treasurer in these duties.
(c) The board shall pay the attorney's fees, expenses, and costs of the state treasurer andthe attorney general.
(5) (a) Except as provided in Subsection (5)(c), any board whose operating funds wereintercepted under this section may replace those funds from other board monies or from advalorem property taxes, subject to the limitations provided in this Subsection (5).
(b) A board may use ad valorem property taxes or other monies to replace interceptedfunds only if the ad valorem property taxes or other monies were derived from:
(i) taxes originally levied to make the payment but which were not timely received by theboard;
(ii) taxes from a special levy made to make the missed payment or to replace theintercepted monies;
(iii) monies transferred from the capital outlay fund of the board or the undistributedreserve, if any, of the board; or
(iv) any other source of money on hand and legally available.
(c) Notwithstanding the provisions of Subsections (5)(a) and (b), a board may not replaceoperating funds intercepted by the state with monies collected and held to make payments onbonds if that replacement would divert monies from the payment of future debt service on thebonds and increase the risk that the state's guaranty would be called upon a second time.
Amended by Chapter 105, 2005 General Session