67-8727. ALTERNATIVE INTERCEPT PROCEDURE. Notwithstanding any other provision of law to the contrary, to the extent that any bonds are not secured by moneys appropriated by the legislature to the reserve fund established pursuant to section 67-8713, Idaho Code, or such moneys are insufficient to pay debt service when due on the bonds, in lieu of the provisions set forth in section 67-8725, Idaho Code, the following provisions shall apply, provided that the provisions of section 67-8725, Idaho Code, shall continue to apply with respect to transfers of amounts in the reserve fund derived from moneys appropriated by the legislature:
(1) (a) Each municipality with outstanding unpaid municipal bonds as set forth in this chapter held by or for the authority, shall transfer moneys sufficient for the scheduled debt service payment to its paying agent at least fifteen (15) days before any principal or interest payment date for the bonds. The paying agent may be the trustee for the bonds of the authority that are secured by those municipal bonds.
(b) A municipality which is unable to transfer the scheduled debt service payment to the paying agent at least fifteen (15) days before the scheduled payment date shall immediately notify the paying agent, the authority and the state treasurer by:
(i) Telephone;
(ii) A writing sent by facsimile transmission; and
(iii) A writing sent by first-class United States mail.
(c) If sufficient funds are not transferred to the paying agent as trustee for the bonds of the authority that are secured by those municipal bonds at least ten (10) days before the scheduled debt service payment date of those bonds, the trustee shall transfer any available funds pledged to secure payment of the bonds of the authority or the municipality held in any reserve fund or other pledged fund, or draw on any reserve surety policy securing such bonds, sufficient amounts to make up any shortfall in the amount necessary to pay debt service on the bonds on the scheduled payment date and deposit such amount in the debt service payment fund for those bonds.
(d) If the trustee is required to transfer funds pursuant to paragraph (c) of this subsection to pay debt service on the bonds of the authority or there are not sufficient funds available pursuant to paragraph (c) of this subsection to make up for any shortfall in the amount necessary to pay debt service on such bonds in order that the bonds of the authority may be timely paid, at least ten (10) days before the scheduled debt service payment date of the bonds, the trustee shall notify the authority and the state treasurer by:
(i) Telephone;
(ii) A writing sent by facsimile transmission; and
(iii) A writing sent by first-class United States mail.
(e) Upon the notice provided in subsection (1)(d) of this section, the state treasurer shall:
(i) Immediately intercept any payments from:
(A) The receipts of any payment of property taxes; or
(B) Sales tax moneys that would be distributed pursuant to section 63-3638, Idaho Code; or
(C) Liquor tax moneys that would be distributed pursuant to section 23-404, Idaho Code; or
(D) Any other source of operating moneys provided by the state to the municipality that issued the municipal bonds that would otherwise be paid to the municipality by the state; and
(ii) Transfer the intercepted payments in the following order of priority:
(A) To the trustee for the bonds of the authority for deposit in the debt service payment fund for such bonds until there are sufficient amounts on deposit to pay debt service on the bonds of the authority on the scheduled payment date; provided that if the state treasurer will be unable to transfer sufficient intercepted payments for such purpose, the state treasurer shall give notice to the state tax commission, certifying the amount of the deficiency, at least five (5) days prior to the scheduled payment date of the bonds;
(B) To the trustee for the bonds to reimburse any amounts transferred from a reserve or other pledged fund or surety policy pursuant to paragraph (c) of this subsection up to the required balance in such fund or required reimbursement of such surety; and
(C) To the state for the reimbursement of any moneys transferred from the state sales tax account pursuant to section 67-8716, Idaho Code, to pay debt service on the bonds on the scheduled payment date, together with any interest or penalties established pursuant to section 67-8725, Idaho Code;
(iii) The foregoing intercept and transfer provisions shall operate by force of law and no consent thereto is required of the municipality in order to be enforceable, provided that such provisions shall not apply to any municipal bonds which were previously deemed exempt from intercept under section 67-8728, Idaho Code, when such section was in full force and effect.
(f) The state has no obligation to the municipality or to any person or entity to replace any moneys intercepted under the authority of this subsection. Any funds intercepted under subsection (1)(e) of this section shall be used only for payment of bonds of the authority and not for the bonds of the municipality, and the municipality shall receive no credit against amounts due under its municipal bonds for any amounts intercepted under subsection (1)(e) of this section.
(2) (a) The municipal bonds or the agreement for purchase of the municipal bonds by the authority may provide for payment of interest and penalties and other terms for reimbursement of any amounts drawn from reserve funds, pledged funds, reserve surety policies or other credit enhancement to pay debt service on the bonds of the authority due to the failure of the municipality to make payment on its municipal bonds in a timely manner. To the extent that debt service on the bonds of the authority is paid from the state sales tax account pursuant to section 67-8716, Idaho Code, the provisions of sections 67-8725(3), (4) and (5), Idaho Code, shall apply.
(b) If the authority determines that amounts obtained under this section will not fully make up for failure of the municipality to pay its municipal bonds when due, together with any interest and penalties established pursuant to this section, within one (1) year from the payment of the municipality’s scheduled debt service payment, the authority or the trustee for the bonds of the authority may pursue any legal action, including mandamus, against the municipality to compel the municipality to:
(i) Levy and provide tax or other revenues to pay debt service on its municipal bonds when due; and
(ii) Meet its repayment obligations, under its municipal bonds or otherwise, to the authority.
(c) In pursuing their rights under this subsection, the authority and the trustee shall also have the same substantive and procedural rights as a holder of the bonds of a municipality.
(d) The attorney general shall assist the authority in carrying out its duties under this subsection.
(e) The municipality shall pay the attorney’s fees, expenses and costs of the authority, the trustee and the attorney general.
(3) (a) Except as provided in paragraph (c) of this subsection, any municipality whose operating funds were intercepted under this section may replace those funds from other municipal moneys or from property taxes, subject to the limitations provided in this subsection. Said operating funds may also be replaced by the authority from excess amounts available to it if the municipality subsequently pays the delinquent payments on its municipal bonds and any penalties or costs of expenses due the authority in connection therewith.
(b) A municipality may use property taxes or other moneys to replace intercepted funds only if the property taxes or other moneys were derived from:
(i) Taxes originally levied to make the payment but which were not timely received by the municipality;
(ii) Taxes from a supplemental levy made to make the missed payment or to replace the intercepted moneys;
(iii) Moneys transferred from the undistributed reserve, if any, of the municipality; or
(iv) Any other source of money on hand and legally available.
(c) Notwithstanding the provisions of subsections (3)(a) and (b) of this section, a municipality may not replace operating funds intercepted by the state with moneys collected by the municipality and held to make payments on its municipal bonds if that replacement would divert moneys from the payment of future debt service on its municipal bonds and increase the risk that the state would be called upon an additional time to make payments on the bonds of the authority.
History:
[67-8727, added 2002, ch. 148, sec. 6, p. 432; am. 2005, ch. 389, sec. 8, p. 1257; am. 2008, ch. 407, sec. 3, p. 1120.]