§ 5-1.5-8-5.1 — Authorization to convey revenue or taxes to issuing entity

Indiana § 5-1.5-8-5.1

• Jurisdiction: Indiana
• Title 5: STATE AND LOCAL ADMINISTRATION
• Art. 1.5: INDIANA BOND BANK
• Ch. 8: Loans to Qualified Entities

Text

1. (a) The following definitions apply
throughout this section:
(1) "Assignment agreement" means an agreement between a
qualified entity and the issuing entity for the conveyance of all or
part of any revenues or taxes received by the qualified entity from
a disbursement agent.
(2) "Conveyance" means an assignment, sale, transfer, or other
conveyance.
(3) "Deposit account" means a designated escrow account
established by the issuing entity at a trust company or bank
having trust powers for the deposit of transferred receipts under
an assignment agreement.
(4) "Disbursement agent" means a state disbursement agent or
local disbursement agent.
(5) "Issuing entity" means:
(A) the bank;
(B) a corporation, trust, or other entity that has been established
by the bank for the limited purpose of issuing obligations for
the benefit of the bank and any qualified entity; or
(C) a bank or trust company in its capacity as trustee for
obligations issued by an entity identified in clause (A) or (B).
(6) "Local disbursement agent" means:
(A) the fiscal officer (as defined in IC 36-1-2-7) of the county
for any county in which a qualified entity is wholly or partially
located;
(B) the fiscal officer for a qualified entity; or
(C) the treasurer of a school corporation.
(7) "State disbursement agent" means the state treasurer, the state
comptroller, or the state department of revenue.
(8) "Transferred receipts" means all or part of any revenues or
taxes received from a disbursement agent that have been
conveyed by a qualified entity under an assignment agreement.
(9) "Statutory lien" has the meaning given to that term under 11
U.S.C. 101(53) of the federal bankruptcy code.
(b) Subject to approval from the board under subsection (j), any
qualified entity that receives revenues or taxes from a disbursement
agent may (to the extent not prohibited by any applicable statute,
regulation, rule, resolution, ordinance, or agreement governing the use
of the revenues or taxes) authorize, by ordinance or resolution, the
conveyance of all or any portion of the revenues or taxes to an issuing
entity. Any conveyance of transferred receipts shall:
(1) be made pursuant to an assignment agreement in exchange for
the net proceeds of obligations issued by the issuing entity for the
benefit of the qualified entity and shall, for all purposes,
constitute an absolute conveyance of all right, title, and interest
therein;
(2) not be deemed a pledge or other security interest for any
borrowing by the qualified entity;
(3) be valid, binding, and enforceable in accordance with the
terms thereof and of any related instrument, agreement, or other
arrangement, including any pledge, grant of security interest, or
other encumbrance made by the issuing entity to secure any
obligations issued by the issuing entity for the benefit of the
qualified entity; and
(4) not be subject to disavowal, disaffirmance, cancellation, or
avoidance by reason of insolvency of any party, lack of
consideration, or any other fact, occurrence, or state law or rule.
On and after the effective date of the conveyance of the
transferred receipts:
(A) the qualified entity shall have no right, title, or interest in or
to the transferred receipts conveyed; and
(B) the transferred receipts conveyed shall be the property of
the issuing entity to the extent necessary to pay the obligations
issued by the issuing entity for the benefit of the qualified
entity, and shall be received, held, and disbursed by the issuing
entity in a trust fund outside the treasury of the qualified entity.
An assignment agreement may provide for the periodic
reconveyance to the qualified entity of amounts of transferred
receipts remaining after the payment of the obligations issued by
the issuing entity for the benefit of the qualified entity.
(c) In connection with any conveyance of transferred receipts, the
qualified entity is authorized to direct the applicable disbursement
agent to deposit or cause to be deposited any amount of the transferred
receipts into a deposit account in order to secure the obligations issued
by the issuing entity for the benefit of the qualified entity. If the
qualified entity states that the direction is irrevocable, the direction
shall be treated by the applicable disbursement agent as irrevocable
with respect to the transferred receipts described in the direction.
Notwithstanding any other law, each disbursement agent shall comply
with the terms of any such direction received from a qualified entity
and shall execute and deliver the acknowledgments and agreements,
including escrow and similar agreements, as the qualified entity may
require to effectuate the deposit of transferred receipts in accordance
with the direction of the qualified entity. Notwithstanding any other
law, the disbursement agent shall distribute the transferred receipts to
the deposit account in accordance with the written authorization and
direction from the qualified entity set forth in the assignment
agreement and any related escrow and similar agreements, and upon
each distribution of transferred receipts in accordance with the
direction from the qualified entity, the disbursement agent shall have
no further duty or responsibility with respect to the distribution of
transferred receipts.
(d) Not later than the date of issuance by an issuing entity of any
obligations secured by collections of transferred receipts, a certified
copy of the ordinance or resolution authorizing the conveyance of the
right to receive the transferred receipts, executed copies of the
applicable assignment agreement, the agreement providing for the
establishment of the deposit account, and a notice designating the dates
that the disbursement agent's duty to distribute transferred receipts to
the deposit account shall begin and end shall be filed with:
(1) the disbursement agent having custody of the transferred
receipts;
(2) if the conveyance of transferred receipts consists of all or a
portion of local income tax revenues under IC 6-3.6, the adopting
body (as defined in IC 6-3.6-3-1) having jurisdiction over the
applicable tax rate and allocations affecting such local income tax
revenues; and
(3) the Indiana transparency website established under IC 5-14-3.8 in a manner prescribed by the state examiner. The state
examiner shall make the information available to the department
of local government finance.
(e) Any obligations of an issuing entity issued or incurred to provide
funds to purchase any transferred receipts from a qualified entity under
this chapter shall be entitled to the following benefits and protections:
(1) The obligations issued by an issuing entity shall be secured by
a statutory lien on the transferred receipts received, or entitled to
be received, by the issuing entity that are designated as pledged
for such obligations of the issuing entity. The statutory lien shall
automatically attach from the time the obligations of the issuing
entity are issued without further action or authorization by the
issuing entity or any other entity, person, governmental authority,
or officer. The statutory lien shall be valid and binding from the
time the obligations of the issuing entity are executed and
delivered without any physical delivery thereof or further act
required, and shall be a first priority lien, unless the obligations,
or the documents authorizing the obligations or providing a
source of payment or security for those obligations, shall
otherwise provide.
(2) The transferred receipts received or entitled to be received
shall be immediately subject to the statutory lien from the time the
obligations of the issuing entity are issued, and the statutory lien
shall automatically attach to the transferred receipts (whether
received or entitled to be received by the issuing entity) and be
effective, binding, and enforceable against the issuing entity, the
qualified entity, the disbursement agent, the state, and their
agents, successors, transferees and creditors, and all others
asserting rights therein or having claims of any kind in tort,
contract, or otherwise, irrespective of whether those parties have
notice of the lien and without the need for any physical delivery,
recordation, filing, or further act.
(3) The statutory lien imposed by this section is automatically
released and discharged with respect to amounts of transferred
receipts reconveyed to the qualified entity pursuant to subsection
(b)(4), effective upon the reconveyance.
(4) The statutory lien provided in this section is separate from and
shall not affect any special revenues lien or other protection
afforded to special revenue obligations under the federal
Bankruptcy Code.
(f) The state covenants with each qualified entity, the issuing entity,
each disbursement agent, and the purchasers or owners of the issuing
entity's obligations that the state will not limit or alter the rights and
powers vested in the qualified entity, the issuing entity, and the state
entities by this section with respect to the disposition of transferred
receipts so as to impair the terms of any contract, including any
assignment agreement, made by the qualified entity with the issuing
entity or any contract executed by the issuing entity in connection with
the issuance of obligations by the issuing entity for the benefit of the
qualified entity, until all requirements with respect to the deposit by the
disbursement agent of transferred receipts for the benefit of the issuing
entity have been fully met and the obligations of the issuing entity
related thereto have been discharged and satisfied. In addition, the state
covenants with each qualified entity, the issuing entity, each
disbursement agent, and the purchasers or owners of the issuing entity's
obligations that the state will not limit or alter the basis on which the
qualified entity's share or percentage of transferred receipts is derived,
or the use of the funds, so as to impair the terms of any such contract.
Nothing contained in this chapter shall be construed or interpreted as
creating a debt of the state within the meaning of the limitation on or
prohibition against state indebtedness under the Constitution of the
State of Indiana or interpreted to construe the state as a guarantor of
any debt or obligation subject to an assignment agreement under this
section.
(g) In the case of a qualified entity that has authorized the
conveyance of all or a portion of its local income tax revenues imposed
under IC 6-3.6 and executed an assignment agreement with respect
thereto, obligations of the issuing entity issued for the benefit of the
qualified entity, together with the debt service owed each year thereon,
shall be:
(1) included as part of the outstanding debt service of the
qualified entity solely for purposes of calculating the minimum
coverage ratio under IC 6-3.6-4-3; and
(2) treated as outstanding obligations of the qualified entity
payable from the revenues solely for purposes of limiting the
reduction of the proportional allocation of revenues under IC 6-3.6-6-3 and IC 6-3.6-6-5.
This subsection shall not be construed as a pledge of the transferred
receipts or the granting of a security interest therein by the qualified
entity, and is included solely for the purpose of computing the
limitations on the reductions to the tax rate and allocations set forth
under IC 6-3.6-4-3, IC 6-3.6-6-3, and IC 6-3.6-6-5.
(h) The bank is authorized to create one (1) or more nonprofit
corporations in order to effectuate the purposes of this chapter and the
bank may grant or delegate to any such nonprofit corporation powers
of the bank as may be necessary, convenient, or appropriate to carry out
and effectuate the public and corporate purposes of this article.
(i) A qualified entity may not enter into assignment agreements in
a manner inconsistent with the provisions of this chapter. This chapter
constitutes the specific manner for exercising the power to enter into
assignment agreements for purposes of IC 20-26-3, IC 36-1-3, or any
other statute granting home rule power to a qualified entity.
(j) Before a qualified entity may adopt an ordinance or resolution
described in subsection (b), the board must have adopted a resolution
approving the qualified entity's proposed conveyance of transferred
receipts to the issuing body. The resolution of the board may be
preliminary in nature and may contain such terms and conditions that
the board deems advisable. If, after receiving approval from the board,
the qualified entity adopts an ordinance or resolution described in
subsection (b), the qualified entity shall provide a certified copy of the
ordinance or resolution to the bank. The bank shall notify the distressed
unit appeal board of each qualified entity that adopts an ordinance or
resolution under this section.

Legislative History

As added by P.L.259-2019, SEC.7. Amended by P.L.156-2020, SEC.11; P.L.9-2024, SEC.118.