2023 New Mexico Statutes › Chapter 6 - Public Finances › Article 15 - Finances of Counties, Municipalities and School Districts › Section 6-15-22 - Creation of sinking funds to secure payment of bonds.

A. Any bonds authorized pursuant to Sections 6-6-7 to 6-6-18 and 6-15-1 to 6-15-22 NMSA 1978 may be secured by a sinking fund which may be created by resolution or ordinance of the governing body either at or prior to the issuance of such bonds. The resolution or ordinance creating the sinking fund may also be combined with any resolution or ordinance pertaining to the issuance of such bonds. The resolution or ordinance may provide for annual mandatory payments to be made into the sinking fund and from the taxes to be issued for the payment of such bonds. When a sinking fund is created, payments into the sinking fund shall be made from the special fund created pursuant to Sections 6-15-4 or 6-15-14 NMSA 1978 at the times and in the manner specified by the governing body in the resolution or ordinance creating the sinking fund. Either principal or interest or both may be paid from the sinking fund but no interest shall be paid therefrom unless specifically provided for in the sinking fund's authorizing resolution or ordinance.
B. All sinking funds created pursuant to this article may be invested and reinvested in any of the following:
(1) bonds or other evidences of indebtedness of the United States of America or any of its agencies or instrumentalities when such obligations are guaranteed as to principal and interest by the United States of America or by any agency or instrumentality thereof; or
(2) bonds or other evidences of indebtedness of this state, or of any of the counties or incorporated cities, towns or duly organized school districts of the state.
C. The treasurer or other chief financial officer of the county, municipality or school district if designated, other than the treasurer, with the consent of the governing body, may enter into an irrevocable depository trust or escrow agreement with any bank doing business in this state. The depository trust agreement may contain any or all of the following provisions:
(1) for the safekeeping and handling of cash and securities of the sinking fund;
(2) such terms and conditions as shall secure the proper safeguarding, inventory, withdrawal and handling of the cash and securities;
(3) the investment and reinvestment or limitation on investment and reinvestment by trustee or escrow agent of all or any part of the sinking fund on a continuing basis, which may extend throughout the life of the agreement;
(4) the terms under which the sinking fund may be expanded to provide for the payment of additional or subsequent bond issues; or
(5) payment of the trustee fees and expenses either from bond proceeds or on a continuing basis.
D. No access to and no deposit or withdrawal of the securities from any place of deposit selected by such officers shall be permitted or made except as the terms of the agreement may provide. The agreement need not require that securities be physically located in New Mexico, if such securities are represented by safekeeping receipts issued for the account of or benefit of the treasurer by a federal reserve bank or any bank located in a reserve city whose combined capital and surplus on the date of the safekeeping receipt equal or exceed the total amount to be deposited in the sinking fund under the terms of the contract.
E. The depository trust agreement may be combined with an escrow agreement pertaining to the issuance of refunding bonds.
F. The trustee or escrow agent of the sinking fund may also be the paying agent on the bonds secured by the sinking fund or any other bonds of the county, municipality or school district.
History:
1953 Comp., § 11-6-34.3, enacted by Laws 1975, ch. 326, § 8.
ANNOTATIONS
Compiler's notes.
— The words "this article" refer to Chapter 11, Article 6, 1953 Comp., the operative provisions of which are presently compiled as 6-6-7 to 6-6-18 and 6-15-1 to 6-15-28 NMSA 1978.
Cross references.
— For authorizing resolution or ordinance providing for sinking fund,
see
6-15-3 NMSA 1978.
Am. Jur. 2d, A.L.R. and C.J.S. references. —
64 Am. Jur. 2d Public Securities and Obligations § 364.
20 C.J.S. Counties § 226; 64 C.J.S. Municipal Corporations § 1704; 79 C.J.S. Schools and School Districts § 374; 87 C.J.S. Towns § 218.