§ 5-1.5-5-4 — Required debt service reserve; resolution concerning appropriations; excess funds; budget committee review; default

Indiana § 5-1.5-5-4

• Jurisdiction: Indiana
• Title 5: STATE AND LOCAL ADMINISTRATION
• Art. 1.5: INDIANA BOND BANK
• Ch. 5: Reserve Fund

Text

(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.

Legislative History

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.