2023 Idaho Code › Title 67 - STATE GOVERNMENT AND STATE AFFAIRS › Chapter 87 - IDAHO BOND BANK AUTHORITY › Section 67-8725 - PAYMENT TRANSFER — NOTICE OF NONPAYMENT — STATE FINANCIAL ASSISTANCE INTERCEPT MECHANISM — STATE TREASURER DUTIES — INTEREST AND PENALTY PROVISIONS.

67-8725. PAYMENT TRANSFER — NOTICE OF NONPAYMENT — STATE FINANCIAL ASSISTANCE INTERCEPT MECHANISM — STATE TREASURER DUTIES — INTEREST AND PENALTY PROVISIONS.
(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 in order that the bonds of the authority may be paid. The paying agent may be the trustee for the bonds of the authority that are secured by those municipal bonds.
(b) A municipality subject to this section and chapter with regard to any municipal bonds and 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 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 required by this subsection, the paying agent shall notify the authority and the state treasurer of that failure in writing at least ten (10) days before the scheduled debt service payment date by:
(i) Telephone;
(ii) A writing sent by facsimile transmission; and
(iii) A writing sent by first-class United States mail.
(d) If sufficient moneys to pay the scheduled debt service payment have not been transferred to the paying agent at least ten (10) days before the scheduled payment date, the authority or the state treasurer shall cause sufficient moneys to be transferred from the reserve fund as provided in section 67-8713, Idaho Code, to the paying agent to make the scheduled debt service payment on the bonds of the authority.
(e) To the extent moneys transferred from the reserve fund are derived from moneys appropriated to the reserve fund by the legislature, the payment by the state treasurer transfers the rights represented by the obligation of the municipality and/or authority from the bondholders to the state.
(2) (a) If one (1) or more payments on bonds are made by the state treasurer from moneys in the reserve fund that are derived from moneys appropriated to the reserve fund by the legislature, due to the failure of the municipality to make payment on its bonds in a timely manner, the state treasurer, subject to the limitations provided in paragraph (b) of this subsection 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 revenues 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) Apply the intercepted payments to reimburse the state for payments made by the state for the bonds of the authority by deposit to the reserve fund up to the amount withdrawn from the reserve fund for such purpose until all obligations of the municipality to the state arising from those payments, including interest and penalties, are paid in full.
(b) 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 that were previously deemed exempt from intercept under section 67-8728, Idaho Code, when such section was in full force and effect.
(c) 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 (2)(a)(i) of this section shall be used only for payment of bonds of the authority and not 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 (2)(a)(i) of this section.
(3) The municipality that issued municipal bonds for which the state has made all or part of a debt service payment, either from amounts in the reserve fund that are derived from moneys appropriated by the legislature or from moneys transferred from the state sales tax account pursuant to section 67-8716, Idaho Code, shall:
(a) Reimburse all moneys drawn by the state treasurer on its behalf;
(b) Pay interest to the state on all moneys paid by the state from the date the moneys are drawn to the date they are repaid at a rate not less than the average prime rate for national money center banks plus five percent (5%); and
(c) Pay all penalties required by this chapter.
(4) (a) The state treasurer shall establish the reimbursement interest rate after considering the circumstances of any prior draws by the municipality 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 payments on the bonds.
(b) The state treasurer may, after considering the circumstances giving rise to the failure of the municipality to make payment on its bonds in a timely manner, impose on the municipality a penalty of not more than five percent (5%) of the amount paid by the state for each instance in which a payment by the state is made.
(5)(a)(i) If the state treasurer determines that amounts obtained under this section will not reimburse the state in full within one (1) year from the state’s payment of a municipality’s scheduled debt service payment, the state treasurer shall pursue any legal action, including mandamus, against the municipality to compel it to:
(A) Levy and provide tax or other revenues to pay debt service on its municipal bonds when due; and
(B) Meet its repayment obligations to the state.
(ii) In pursuing its rights under paragraph (a) of this subsection, the state shall have the same substantive and procedural rights as would a holder of the bonds of a municipality.
(b) The attorney general shall assist the state treasurer in these duties.
(c) The municipality shall pay the attorney’s fees, expenses and costs of the state treasurer and the attorney general.
(6) (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 paragraphs (a) and (b) of this subsection, 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:
[67-8725, added 2001, ch. 130, sec. 1, p. 460; am. 2002, ch. 148, sec. 5, p. 430; am. 2005, ch. 389, sec. 7, p. 1255; am. 2008, ch. 407, sec. 2, p. 1117.]