State financial assistance intercept mechanism -- State treasurer duties -- Interest and penalty provisions.
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(1)
(a) If one or more payments on bonds are made by the state treasurer as provided in Section 53G-4-805, the state treasurer shall:
(i) immediately intercept any payments from the Uniform School Fund or from any other source of operating money provided by the state to the local school board that issued the bonds that would otherwise be paid to the local school board by the state; and
(ii) apply the intercepted payments to reimburse the state for payments made pursuant to the state's guaranty until all obligations of the local school board to the state arising from those payments, including interest and penalties, are paid in full.
(b) The state has no obligation to the local school board or to any person or entity to replace any money intercepted under authority of Subsection (1)(a).
(2) The local school board that issued bonds for which the state has made all or part of a debt service payment shall:
(a) reimburse all money drawn by the state treasurer on its behalf;
(b) pay interest to the state on all money paid by the state from the date the money was drawn to the date they are repaid at a rate not less than the average prime rate for national money center banks plus 1%; and
(c) pay all penalties required by this part.
(3)
(a) The state treasurer shall establish the reimbursement interest rate after considering the circumstances of any prior draws by the local school 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 on the bonds.
(b) The state treasurer may, after considering the circumstances giving rise to the failure of the local school board to make payment on its bonds in a timely manner, impose on the local school board a penalty of not more than 5% of the amount paid by the state pursuant to its guaranty for each instance in which a payment by the state is made.
(4)
(a)
(i) If the state treasurer determines that amounts obtained under this section will not reimburse the state in full within one year from the state's payment of a local school board's scheduled debt service payment, the state treasurer shall pursue any legal action, including mandamus, against the local school board to compel it to:
(A) levy and provide property tax revenues to pay debt service on its bonds when due as required 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 same substantive and procedural rights under Title 11, Chapter 14, Local Government Bonding Act, as would a holder of the bonds of a local school board.
(b) The attorney general shall assist the state treasurer in these duties.
(c) The local school board shall pay the attorney's fees, expenses, and costs of the state treasurer and the attorney general.
(5)
(a) Except as provided in Subsection (5)(c), any local school board whose operating funds were intercepted under this section may replace those funds from other local school board money or from ad valorem property taxes, subject to the limitations provided in this Subsection (5).
(b) A local school board may use ad valorem property taxes or other money to replace intercepted funds only if the ad valorem property taxes or other money was derived from:
(i) taxes originally levied to make the payment but which were not timely received by the local school board;
(ii) taxes from a special levy made to make the missed payment or to replace the intercepted money;
(iii) money transferred from the capital outlay fund of the local school board or the undistributed reserve, if any, of the local school board; or
(iv) any other source of money on hand and legally available.
(c) Notwithstanding the provisions of Subsections (5)(a) and (b), a local school board may not replace operating funds intercepted by the state with money collected and held to make payments on bonds if that replacement would divert money from the payment of future debt service on the bonds and increase the risk that the state's guaranty would be called upon a second time.