IN Code § 5-1.5-5-4 (2021)
2021 Indiana Code|Title 5. State and Local Administration|Article 1.5. Indiana Bond Bank|Chapter 5. Reserve Fund|5-1.5-5-4. Required Debt Service Reserve; Resolution Concerning Appropriations; Excess Funds; Budget Committee Review; Default

Sec. 4. (a) Except as provided in subsection (c), and in order to assure the maintenance of the required debt service reserve in any reserve fund, a resolution authorizing the bank to issue bonds or notes may include a provision stating that:(1) the general assembly may annually appropriate to the bank for deposit in one (1) or more of the funds the sum, certified by the chairman of the board to the general assembly, that is necessary to restore one (1) or more of the funds to an amount equal to the required debt service reserve; and(2) the chairman annually, before December 1, shall make and deliver to the general assembly a certificate stating the sum required to restore the funds to that amount.Nothing in this subsection creates a debt or liability of the state to make any appropriation.(b) All amounts received on account of money appropriated by the state to any reserve fund shall be held and applied in accordance with section 1(b) of this chapter. However, at the end of each fiscal year, if the amount in any reserve fund exceeds the required debt service reserve, any amount representing earnings or income received on account of any money appropriated to the reserve fund that exceeds the expenses of the bank for that fiscal year may be transferred to the general fund of the state.(c) Notwithstanding any other law, and except as provided by subsection (d), after June 30, 2005, the:(1) issuance by the bank of any indebtedness that incorporates the provisions set forth in subsection (a) or otherwise establishes a procedure for the bank or a person acting on behalf of the bank to certify to the general assembly the amount needed to restore a reserve fund or another fund to required levels; or(2) execution by the bank of any other agreement that creates a reserve fund subject to subsection (a) to pay all or part of any indebtedness issued by the bank;is subject to the conditions set forth in subsection (e) and review by the budget committee and approval by the budget director as required by subsection (f).(d) If the budget committee does not conduct a review of a proposed transaction under subsection (c) within twenty-one (21) days after a request by the bank, the review is considered to have been conducted. If the budget director does not approve or disapprove a proposed transaction under subsection (c) within twenty-one (21) days after a request by the bank, the transaction is considered to have been approved.(e) Issuance by the bank of any indebtedness that establishes a reserve fund under subsection (a), the establishment of a procedure for certification, or the execution by the bank of any other agreement that creates a reserve fund subject to subsection (a) may be extended only for a project or a purpose that:(1) can be financed by a qualified entity under the law applying to financing by the qualified entity; or(2) is specifically authorized by the general assembly.A reserve fund established under subsection (a) may be used only to finance the purchase of securities (as defined in IC 5-1.5-1-10) issued by entities described in IC 5-1.5-1-8.(f) The budget director may approve establishing a reserve fund under subsection (a) only if the following conditions are satisfied:(1) The project or purpose qualifies under subsection (e).(2) The documentation required by subsection (g) has been provided by the bank.(3) The bank has provided the budget agency with a written finding that revenues available to the qualified entity to pay annual debt service exceed the annual debt service requirements by at least twenty percent (20%).(4) If the financing is for a project or purpose that will produce ongoing revenue from fees or user charges, the qualified entity agrees to include a provision in the instrument governing the qualified entity's duties with respect to the security (as defined in IC 5-1.5-1-10) that the qualified entity will first increase the rate of the fees or user charges, or both, by an amount sufficient to satisfy any shortfall in the reserve fund established under subsection (a) before subsection (a) is to be applied.(5) A qualified entity seeking the benefit of a reserve fund established under subsection (a) agrees to include a provision in the instrument governing the qualified entity's duties with respect to the security (as defined in IC 5-1.5-1-10) that the qualified entity will pledge sufficient property taxes, user fees, hook up fees, connection fees, or any other available local revenues or any combination of those revenues that will be sufficient to satisfy any shortfall in the reserve fund established under subsection (a) before subsection (a) is to be applied.(6) A qualified entity seeking the benefit of a reserve fund established under subsection (a) agrees to include a provision in the instrument governing the qualified entity's duties with respect to the security (as defined in IC 5-1.5-1-10) requiring that the qualified entity establish and maintain its own separate reserve fund or account under the governing instrument, in an amount to be determined by the budget director, upon the recommendation of the bank, in order to provide an additional margin of security for the security before subsection (a) is to be applied.(g) Notwithstanding any other law, if any amounts are appropriated by the general assembly and transferred to the bank for deposit in a reserve fund under subsection (a) as a result of a default by a qualified entity on its security, to the extent that any department or agency of the state, including the treasurer of state, is the custodian of money payable to such qualified entity (other than for goods or services provided by the qualified entity), at any time after written notice to the department or agency head from the bank that the qualified entity is in default on the payment of principal of or interest on the securities of the qualified entity then held or owned by or arising from an agreement with the bank, the applicable department or agency shall recover any amounts appropriated by the general assembly for deposit in a reserve fund under subsection (a) by:(1) making deductions and withholding from any future amounts that would otherwise be available for distribution to the qualified entity under any other law, until an amount equal to the appropriation has been deducted and withheld; and(2) transferring any amounts so deducted and withheld from time to time to the treasurer of state for the purpose of allowing the treasurer of state to reimburse the fund or account of the state from which the appropriation was made.A deduction under this subsection must be made, first, from local income tax distributions under IC 6-3.6-9, and, second, from any other undistributed funds of the qualified entity in the possession of the state. However, the deduction and withholding of payment from a qualified entity and reimbursement to the fund or account of the state from which the appropriation was made under this section must not adversely affect the validity of the security in default.(h) If the bank proposes that a reserve fund be established under subsection (a) for a project or purpose, the bank shall provide to the budget committee and the budget agency at or before the time of the bank's request, the following information in writing:(1) A description of the project or purpose.(2) How the project or purpose satisfies the requirements of subsection (e).(3) The qualified entity's application for financing that was filed with the bank.(4) The estimated relative savings that can be achieved by establishing a reserve fund under subsection (a).(5) The finding required by subsection (f)(3) and proposed language for those instrument provisions required by subsection (f)(4) through (f)(6), if applicable.(6) Any other information required by the budget committee or budget agency.As added by P.L.25-1984, SEC.1. Amended by P.L.43-1985, SEC.21; P.L.235-2005, SEC.77; P.L.229-2011, SEC.67; P.L.259-2019, SEC.6.