An Act To Clarify the Rights of Bondholders and Noteholders in the Event a School Administrative Unit with Outstanding Bonds or Notes Is Dissolved or Is No Longer Authorized by Law (AFTER DEADLINE) ,Approved for introdu~tion by a majority ofthe Legislative CounciL pursuant to Joint Rule 205. ,
Maine Legislature, Session 124, LD 1493
Committee: Education and Cultural Affairs
Sponsors: ALFOND
Amends: 20-A MRSA §15695-A

MAINE STATE LEGISLATURE 
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124thMAI E EGISLATURE 
Legislative Document 
No. 1493 
S.P.572 
In Senate, June 11,2009 
An Act To Clarify the Rights of Bondholders and Noteholders in the 
Event a School Administrative Unit with Outstanding Bonds or 
Notes Is Dissolved or Is No Longer Authorized by Law 
(AFTER DEADLINE) 
,Approved for introdu~tion by a majority ofthe Legislative CounciL pursuant to Joint Rule 
205.' 
, 
Reference to the Committee on Education and Cultural Affairs suggested and ordered 
printed. 
Presented by Senator ALFOND of Cumberland. 
Printed on recycled paper 
9tf)(J~. 
JOY 1. O'BRIEN 
Secretary of the Senate 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 20-A MRSA §15695-A is enacted to read: 
§15695-A. Bondholders of school administrative units 
1. Rights of bondholders of school administrative units. If legislation, including a 
ballot measure approved at referendum, becomes effective that dissolves a school 
administrative unit that has issued outstanding general obligation bonds or notes or 
repeals the laws pursuant to which such a school administrative unit is organized and 
exists, the rights of the holders of the outstanding bonds and notes issued by that school 
administrative unit are not· inlpaired and the underlying indebtedness of any such 
outstanding general obligation bonds or notes is deemed to survive, whether or not 
1·1 
replacement or successor school administrative units are organized or established, and 
any state subsidy with respect to those outstanding obligations or the relative portion of 
those outstanding obligations to be paid or reimbursed by the State is not affected. 
23· 
2. Power to tax. Until one or more school administrative units are organized or 
established to replace or succeed a former school administrative unit as desci-ibed in 
subsection 1 and assume the outstr lding bonds or notes issued by such former school 
administrative unit, all taxable prol ~rty located in the municipalities that were members 
of that former school administrative unit is subject to ad valorem taxation to pay the 
underlying indebtedness of the bonds or notes issued by the former school administrative· 
unit to the same extent as that taxable propeliy was subject to ad valorem taxation in the 
former school administrative unit and as if such bonds or notes remained outstanding. 
Taxes to pay the underlying indebtedness of the outstanding bonds ar notes orthe former 
school administrative uniLas described in subsection 1 must be levied and collected by 
the municipalities located in the former school administrative unit in the same manner as 
the taxes of the municipalities. If one or more school administrative units are organized 
or established to replace or succeed a former school administrative unit as described in 
subsection 1, all taxable property located in the municipalities that were members of the 
former schoal administrative unit and t1iat are located within the replacement or successor 
school administrative unit or school administrative units is subject to ad valorem taxation 
to pay the underlying indebtedness of the bonds or notes of the former school 
administrative unit to the same exteht as that taxable property was subject to ad valorem 
taxation in the former school administrative unit. 
Taxes to pay the underlying 
indebtedness of the outstanding bonds or notes of the former school administrative unit as 
described in subsection 1 must be levied and collected by the replacement or successor 
school administrative unit iIi the same manner as the taxes of the replacement or 
. successor school admin istrative unit. 
3. Power to levy. The holders of bonds and notes as described in subsection 1 retain 
the right to leyy on taxable propeliy located in the fonner school administrative unit and 
that taxable property is subject to Title 30-A, section 5701. 
4. 
Payment responsibility. 
Until one or more school administrative units are 
organized or established to replace or succeed a former school administrative unit as 
described in subsection 1, the municipalities that were members of the former school 
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administrative unit shall pay the underlying indebtedness of the bonds or notes of the 
former school administrative unit in accordance with their terms. 
As between the 
municipalities that were members of the former school administrative' unit, payment 
responsibility for the underlying indebtedness of the bonds or notes of the former school 
administrative unit must be allocated in proportion to the most recent state valuations of 
those municipalities. 
A school administrative unit or school administrative units organized or established to 
replace or succeed a former school administrative unit as described in subsection 1 shall 
pay the underlying indebtedness of the bonds and notes of the former school 
administrative unit in accordance with their terms. As between replacement or successor 
school administrative units of a former school administrative unit, payment responsibility 
for the underlying indebtedness of the bonds or notes must be allocated based upon the 
most recent state valuations of the municipalities that are 'located in each of the 
replacement or successor school administrative units and that were members of the 
former school administrativ.e unit. 
. 
Nothing contained in this subsection may be construed to prohibit the organization or 
establishment ofa school administrative unit or school administrative units that replace or 
succeed a former school administrative unit from employing a different method of 
allocating payment responsibility for the underlying indebtedness of the bonds or notes 
described in subsection 1. 
SUMMARY· 
This bill provides that the rights of bondholders or noteholders may not be impaired' 
in the event that legislation is enacted that dissolves a school administrative unit with 
outstanding indebtedness or in the event that the laws pursuant to which a school 
administrative unit with outstanding indebtedness is organized and exists are repealed.