KRS § 66.191 — KY Code / Title IX / Chapter 66 / Section 66.191
66.191 Complaint for validation of bonds -- Proceedings
Status: in_force

66.191 Complaint for validation of bonds -- Proceedings.

(1) As used in this section, supplementing the definitions of the terms contained in

KRS 66.011, "issuer" also includes any person issuing fractionalized interests in

bonds and any instrumentality of an issuer and "bonds" also includes obligations.

(2) (a) An issuer, at any time prior to its issuance or entering into of bonds, may file a

complaint for validation and thereby commence an action for the purpose of

obtaining an adjudication of its authority to issue or enter into and the validity

of, and security for, and source of payment of, the bonds, and of the validity of

all proceedings taken and proposed to be taken in connection therewith,

including, but not limited to, any of the following:

1. The levy of taxes or special assessments levied or to be levied;

2. The lien of those taxes or special assessments;

3. The levy or charge of rates, charges, rentals, lease payments, or tolls;

4. Any underlying obligation; and

5. The proceedings and remedies for the collection of the taxes, special

assessments, rates, charges, rentals, lease payments, or tolls, or payments

by an issuer.

(b) No such action shall be commenced except upon determination of its

necessity by the governing body or other authority empowered to adopt the

legislation for the issuance of the bonds.

(c) The action shall be commenced in the Circuit Court of the county in which the

issuer is located in whole or in part or has its principal office.

(3) The complaint for validation shall contain that which is required by the Rules of

Civil Procedure including, without limitation, in ordinary and precise language and

by references or exhibits, statements or descriptions of all of the following:

(a) The issuer's existence and authority for issuing the bonds;

(b) The holding and result of any required election relating to the bonds;

(c) If already passed or issued, the legislation, order, or proceeding authorizing

the issuance of the bonds and evidence of its passage or issuance;

(d) All other essential proceedings taken and proposed to be taken in connection

with the bonds;

(e) If not set forth in legislation, order, or proceeding already passed or issued, the

approximate amount and general proposed terms of the bonds;

(f) The county or counties in which the proceeds of the bonds, or any part thereof,

are to be expended; and

(g) Any other pertinent matters.

(4) Upon the filing of the complaint, the court shall issue an order in general terms in

the form of a notice directed to the state and to "all property owners, taxpayers,

citizens, and others having or claiming any right, title, or interest in any property or

funds to be affected" by the issuance or entering into of the bonds or "affected in

any way thereby," requiring the state through the Attorney General and all such

persons to appear and be heard before the court at a time to be designated in the

order, and show cause why the complaint should not be granted and the proceedings

and the bonds validated and confirmed as therein.

(5) At least twenty (20) days before the time fixed in the order for hearing, a copy of the

complaint and order, unless waived in writing, shall be served upon the Attorney

General. The Attorney General shall carefully examine the complaint and if it

appears, or there is reason to believe, that the complaint is defective, insufficient, or

untrue, or if in the opinion of the Attorney General the issuance of the bonds or any

related action, is not lawful or has not been duly authorized, the Attorney General

may enter an appearance for the state and assert any defense to the complaint that

the Attorney General considers proper. The Attorney General may enter an

appearance and assert any support for the complaint that the Attorney General

considers proper. No other appearance by or service of the complaint on any other

attorney or person other than the Attorney General or persons set forth in this

section shall be required.

(6) The clerk of the court in which the action is commenced shall publish a copy of the

order in a newspaper of general circulation in that county and in each other county

in which at least ten percent (10%) of the proceeds of the bonds is proposed to be

expended. The publication in each county shall be made not less than seven (7) nor

more than twenty-one (21) days before the date set for hearing. Upon publication of

the order, service upon all property owners, taxpayers, citizens, or others having or

claiming any right, title, or interest in or against the plaintiff or property subject to

taxation or special assessment for payment of debt charges on the bonds, or

otherwise affected by or interested in the issuance or entering into of the bonds

described in the complaint is complete, and the court has jurisdiction of them to the

same extent as if these defendants were individually named in the complaint and

personally served.

(7) The Attorney General, and any other person made a defendant, or his counsel shall,

subject to laws restricting public access to certain records, have reasonable access to

all records and proceedings of the issuer which pertain to the matters described in

the complaint. Any officer, agent, or employee of the issuer who has charge,

possession, custody, or control of any of those records and proceedings shall furnish

such authenticated copies of them as the person requests, at that person's expense.

(8) Upon motion of the issuer, whether before or after the date set for hearing as

provided in subsection (4) of this section, the court may enjoin any person from

commencing any other action or proceeding contesting the same or related matters

as described in the complaint, as the complaint may from time to time be amended.

The court may order a joint hearing or trial before it of all related issues then

pending in any action or proceeding in any court in the state, and may order any

such action or proceeding consolidated with the validation complaint pending

before it, and may make any order as may be necessary or proper to effect that

consolidation and as may tend to avoid unnecessary costs or delays or multiplicity

of suits. That order is not appealable.

(9) Any property owner, taxpayer, citizen, or person affected by or interested in the

issuance or entering into of the bonds may become a named party to the action by

pleading to the complaint at or before the time set for the hearing provided in

subsection (4) of this section, or thereafter by intervention upon leave of court.

(10) At the time designated in the order for hearing, the court shall proceed to hear and

determine all questions of law and fact in the action and may make such

interlocutory orders and adjournments as will enable it properly to try and determine

the action and to render a final judgment with the least possible delay.

(11) Any party to the action may appeal from a final judgment of a Circuit Court under

subsection (10) of this section to the Court of Appeals. The notice of appeal shall

take priority over all other civil cases therein pending, except habeas corpus. No

oral argument shall be permitted on appeal except at the request of the court on its

own motion.

(12) All of the following apply to a final judgment of the Circuit Court, as finally

affirmed or modified in any appeal, that determines that the issuer or obligor has

authority to issue the bonds upon the general terms set forth in the complaint for

validation and that adjudicates the legality of all proceedings taken and proposed to

be taken in connection with the bonds:

(a) The final judgment is forever binding and conclusive, as to all matters

adjudicated, against the issuer, any obligor, and all other parties to the action,

and those in privity with them, whether named in the action or included in the

description in the notice provided for in subsection (4) of this section.

(b) If all procedural steps required to be taken for the completion of the

authorization, issuance, sale, and delivery of the bonds after the date of the

final judgment, are properly taken in accordance with the applicable

provisions of law and the terms of the final judgment, the final judgment

constitutes a permanent injunction against any person's contesting, by any

action or proceeding, any of the following:

1. The validity of the bonds described in the complaint;

2. The validity of the taxes, special assessments, tolls, charges, rates, or

other levies, or lease payments, or payments by an obligor, authorized,

contracted, or covenanted to be imposed, made, or collected for the

payment of the debt charges on the bonds; or

3. The validity of any pledge of or lien on revenue or property to secure the

payment of the debt charges or payment obligations on the bonds.

(c) A final judgment does not permanently enjoin any person not a named party to

the action from raising a claim or defense seeking relief in whole or in part

from any levy of taxes or special assessments, made or to be made, or

collected or to be collected, against property owned by that person, authorized

for the payment of any debt charges or payment obligations on the bonds

described in the complaint if the claim or defense is based upon a right that

such person may have only in his individual capacity as an owner of the

property subject to the tax or special assessment.

(13) The costs of each action under this section shall be paid by the plaintiff and may be

paid from the proceeds of the bonds, except that if a taxpayer, citizen, or other

person has contested, intervened in, or appealed the action the court may tax the

whole or such part of the costs against that person as is equitable and just.