§ 61-02-68.16 — Reserve fund

North Dakota § 61-02-68.16

• Jurisdiction: North Dakota
• Title 61: Waters
• Ch. 61-02: Water Commission

Text

1. The commission shall establish and maintain a reserve fund in which there must be
deposited all moneys appropriated by the legislative assembly for the purpose of the
fund, all proceeds of notes issued or guaranteed by the commission required to be
deposited in the fund by terms of a contract or a resolution of the commission with
respect to the proceeds of notes, any moneys or funds of the commission that it
determines to deposit in the fund, any moneys made available to the commission for
the purposes of the fund from any other source, and any contractual right to the receipt
of moneys by the commission for the purpose of the fund, including a letter of credit or
similar instrument. Moneys in the reserve fund must be held and applied solely to the
payment of the interest on and the principal of notes and sinking fund payments as
they become due and payable and for the retirement of notes, including payment of
any redemption premium required to be paid when any notes are redeemed or retired
before maturity, and for the payment of principal and interest on evidences of
indebtedness or obligations guaranteed by the commission. Moneys in the reserve
fund may not be withdrawn if the withdrawal would reduce the amount in the reserve
fund to an amount less than the required debt service reserve, except for payment of
the interest due and payable on notes and the principal of notes maturing and payable
and sinking fund payments and for the retirement of notes in accordance with the
terms of a contract between the commission and its noteholders, for the payment of
principal and interest on evidences of indebtedness or obligations of an owner of water
projects for which a guarantee has been issued by the commission, and for payment
of interest or principal or sinking fund payments or retirement of notes or draws upon a
guarantee, for which other moneys of the commission are not then available in
accordance with the terms of the contract. The reserve fund may not be used for the
payment of a guarantee by the commission unless the commission has determined
that notes of the commission cannot be issued under acceptable terms for the
payment of the guarantee or that the payment of the guarantee will not reduce the
reserve fund to an amount less than the required debt service reserve. The required
debt service reserve must be an aggregate amount equal to at least the largest
amount of money required by the terms of all contracts between the commission and
its noteholders to be raised in the current or any succeeding calendar year for the
payment of interest on and maturing principal of outstanding notes and the payment

required by the terms of any contract to a sinking fund established for the payment or
redemption of the notes.
2. If the establishment of the reserve fund for an issue or the maintenance of an existing
reserve fund at a required level under this section would necessitate the investment of
all or any portion of a new reserve fund or all or any portion of an existing reserve fund
at a restricted yield, because to not restrict the yield may cause the notes to be taxable
under the Internal Revenue Code, then at the discretion of the commission a reserve
fund does not need be established before the issuance of notes or the reserve fund
need not be funded to the levels required by other subsections of this section or an
existing reserve fund may be reduced.
3. Notes may not be issued by the commission unless there is in the reserve fund the
required debt service reserve for all notes then issued and outstanding and the notes
to be issued. This chapter does not prevent or preclude the commission from satisfying
this requirement by depositing so much of the proceeds of the notes to be issued,
upon their issuance, as is needed to achieve the required debt service reserve. The
commission may issue its notes for the purpose of providing an amount necessary to
increase the amount in the reserve fund to the required debt service reserve, or to
meet any higher or additional reserve as may be fixed by the commission with respect
to the fund.
4. In order to assure the maintenance of the required debt service reserve, there must be
appropriated by the legislative assembly and paid to the commission for deposit in the
reserve fund any sum certified by the commission as necessary to restore the reserve
fund to an amount equal to the required debt service reserve or to maintain a reserve
fund established by the commission under this chapter and required according to the
terms of a guarantee issued by the commission. The commission may approve a
resolution for the issuance of notes, as provided by this chapter, which states in
substance that this subsection is not applicable to the required debt service reserve for
notes issued under that resolution.
5. If the maturity of a series of notes of the commission is not more than three years from
the date of issuance of the notes, the commission may determine that no reserve fund
need be established for that respective series of notes or that the reserve fund may be
in an amount less than the required debt service reserve. If the determination is made,
holders of that respective series of notes do not have an interest in or claim on existing
reserve funds established for the security of the holders of previously issued
commission notes, and do not have an interest in or claim on reserve funds
established for the holders of subsequent issues of notes of the commission.