First Regular Session S.B. 1474
PROPOSED AMENDMENT
SENATE AMENDMENTS TO S.B. 1474
(Reference to printed bill)
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Page 35, between lines 25 and 26, insert:
"Sec. 6. Section 48-251, Arizona Revised Statutes, is amended to read:
48-251. Annual report; exemptions
A. Each district that is organized under this title and that is not exempted exempt under subsection C of this section shall submit an annual report as prescribed by this section that contains the following information:
1. A schedule of the beginning and ending fund balances and all revenues and expenditures for the preceding fiscal year on a form prescribed by the auditor general or the same information contained in a financial statement for the preceding fiscal year that has been attested to by an independent certified public accountant. The schedule or statement shall include all monies, gifts or donations that are received from all sources and that have a value exceeding one hundred dollars.
2. Legal descriptions of any boundary changes occurring during the preceding fiscal year.
3. The names, occupations and business telephone numbers of all members of the governing board and officers of the district on the last day of the preceding fiscal year.
4. The schedule and location of regular meetings of the district governing board.
5. The location or locations where public notices of meetings are posted pursuant to section 38‑431.02.
6. The name and title of the person or persons completing the reporting requirements pursuant to this subsection.
7. Except for a district organized pursuant to chapter 5, article 3 of this title, a copy of any audit or financial review required to be prepared pursuant to section 48‑253, subsection G.
B. The secretary or other officer of the district governing board shall submit the report within two hundred forty days of after the close of the district's fiscal year to the clerk of the board of supervisors of each county in which the district is located.
C. Districts organized under chapters 4, 6, 17, 22, 23, 27 and 28 of this title are exempt from the requirements of this section. Districts that do not provide services or otherwise operate during the entire period covered by the report and that notify the clerk of the board of supervisors in writing of these circumstances within the time for filing the report are exempt from the requirements of subsection A of this section.
D. If a district fails to submit a report as required by this section, any taxpayer residing in the district may petition the superior court in a county in which the district is organized to order the district to show cause why the report has not been submitted. On a failure to show cause, the court shall order the district to file all reports as required by this section. A failure to obey the order of the court is punishable as contempt of court.
E. If the court finds that a district has violated this section, it shall award the taxpayer attorney fees and costs associated with bringing the action.
F. The board of supervisors of each county shall submit annually by March 31 a report on compliance with the requirements of this section to the president of the senate, the speaker of the house of representatives and the governor. The annual report shall include a listing of all those districts required to comply with the requirements of this section, the districts in compliance and not in compliance with the requirements and an analysis of the sufficiency of each district report.
G. The board of supervisors shall notify each district not in compliance with the reporting requirements of this section to comply within thirty days after receipt by certified mail of the noncompliance and that the district is subject to a civil penalty if it fails to comply. The board of supervisors shall assess, and the county treasurer shall collect from the monies of a district remaining in noncompliance thirty days after receipt of certified mail, a penalty assessment of one hundred dollars per day for each day that the district is not in compliance with the reporting requirements of this section from thirty days after receipt by certified mail of the noncompliance notice until such time as the board of supervisors receives a copy of the district's annual report, to the extent that district monies are available and unencumbered. Penalty monies collected shall be deposited in the county general fund.
Sec. 7. Section 48-252, Arizona Revised Statutes, is amended to read:
48-252. District budgets; exemptions
A. Each district that is organized under this title and that is not exempted exempt by subsection D of this section shall submit the annual budget most recently adopted by the district to the county board of supervisors and the county treasurer. The district budget shall be prepared consistent with the annual financial statements required by this article. The board of supervisors may supply forms for use by districts in preparing their annual budget.
B. Budgets required to be submitted pursuant to this section shall be submitted to the county treasurer and the board of supervisors no later than July 10 of each year. If the district fails to submit a budget as required by this section, any taxpayer residing in the district, the board of supervisors or the county treasurer may petition the superior court in a county where the district is organized to show cause why the budget has not been submitted. On a failure to show cause, the court shall order the district to submit the budget within ten days after judgment is entered.
C. If the court enters judgment against the district under this section, the court may award the taxpayer, board of supervisors or county treasurer reasonable attorney fees and costs associated with bringing the action.
D. Districts organized under chapters 4, 5, 6, 17, 22, 23, 27 and 28 of this title are exempt from the requirements of this section.
Sec. 8. Section 48-253, Arizona Revised Statutes, is amended to read:
48-253. District audits and financial reviews; exemptions
A. Each district that is organized under this title, that is not exempt under subsection G or H of this section and that is required to make an annual report under this article shall have its reports audited in accordance with generally accepted government auditing standards and the following:
1. Audits required by this section shall be performed annually for districts whose budgets are one million dollars or more. Districts whose budgets are one hundred thousand dollars or more but less than one million dollars shall have a financial review performed annually. Districts whose budgets are more than fifty thousand dollars and less than one hundred thousand dollars shall have a financial review performed at least biennially. Districts whose budgets are fifty thousand dollars or less shall have a financial review performed at the request of the county board of supervisors or on receipt of a request for a financial review that is signed by at least ten residents of that district. A district shall not be required to perform a financial review more than once per fiscal year.
2. A district may select an outside auditor who is a certified public accountant or an agent of a certified public accountant who is selected by the board of supervisors and who is trained as an auditor.
3. A district may advertise and use competitive bidding practices to select an agent to perform the audits or financial reviews required by this section.
B. Each district that submits a financial statement for the preceding fiscal year that has been attested to by an independent certified public accountant pursuant to section 48‑251 is deemed to have complied with this section by submitting a copy of the financial statement to the county treasurer.
C. Each district shall submit a copy of the completed audit or financial review to the county treasurer and the board of supervisors within two hundred forty days after the close of the district's fiscal year or within one hundred eighty days after a request for a financial review is received by the district pursuant to subsection A, paragraph 1 of this section.
D. If a district fails to submit an audit or financial review as required by this section, any taxpayer residing in the district, the board of supervisors or the county treasurer may petition the superior court in a county where the district is organized to show cause why the audit or financial review has not been submitted. On a failure to show cause, the court shall order the district to submit the audit or financial review within ten days after the judgment is entered. Except for a district organized pursuant to chapter 5, article 3 of this title, on complaint made to the county attorney, the county attorney may investigate any claimed failure to comply with this section, report publicly on the investigation's findings and take any enforcement action deemed appropriate by the county attorney.
E. If the court enters a judgment against the district under this section, the court may award the taxpayer, board of supervisors or county treasurer reasonable attorney fees and costs associated with bringing the action.
F. For districts organized under chapter 19 of this title, a district with an annual budget of at least five million dollars shall have an audit performed annually and a district with an annual budget of at least one million dollars but less than five million dollars shall have an audit performed every five years and a financial review performed each year an audit is not performed. A district with an annual budget of at least one hundred thousand dollars but less than one million dollars shall have an audit performed every ten years and a financial review performed each year an audit is not performed.
G. For districts organized under chapter 5 of this title and except for districts organized under chapter 5, article 3 of this title, a district that receives five hundred thousand dollars or more in total revenues shall perform an annual audit. For the purposes of this subsection, revenues include monies generated by tax levies, monies received through appropriations, grants and other federal and state sources and monies received from services or other private sources, including ambulance and similar services. If a district's total budgeted revenues in a fiscal year are less than five hundred thousand dollars and the district receives total actual revenues in a fiscal year of five hundred thousand dollars or more, the district shall have an audit performed for that preceding fiscal year as if the audit had originally been required by this section. Districts whose total annual revenues are one hundred thousand dollars or more but less than five hundred thousand dollars shall have a financial review performed annually. Districts whose total annual revenues are more than fifty thousand dollars and less than one hundred thousand dollars shall have a financial review performed at least biennially. Districts whose total annual revenues are fifty thousand dollars or less shall have a financial review performed at the request of the county board of supervisors or on receipt of a request for a financial review that is signed by at least ten residents of that district. A district shall not be required to perform a financial review more than once per fiscal year. All financial reviews and audits prescribed by this section must be conducted according to generally accepted government auditing standards.
H. Districts organized under chapters 4, 6, 17, 22, 23, 27 and 28 of this title are exempt from the requirements of this section.
Sec. 9. Section 48-264, Arizona Revised Statutes, is amended to read:
48-264. Dissolution of inactive special taxing districts; board of supervisors action; exceptions
A. If a special taxing district is found to have been inactive for at least five consecutive years, and upon on investigation the board of supervisors finds that the district has no future purpose as determined by the district board of directors and no current indebtedness, the board of supervisors shall dissolve the district by board resolution.
B. Dissolution action pursuant to subsection A of this section does not apply to districts formed under chapters 4, 21, 22, 23, 27 and 28 of this title.
Sec. 10. Section 48-271, Arizona Revised Statutes, is amended to read:
48-271. Board of supervisors authority to approve or deny formation of special district
A. Notwithstanding any provision of law for the formation of a special taxing district, the county board of supervisors has the absolute authority to deny the formation, other than under chapter 4, 11, 12, 17, 18, 19, or 22 or 23 of this title, of a special district in that county, if sufficient grounds exist for such formation denial. Nothing in this subsection shall be deemed to limit in any way judicial review of a decision by the board of supervisors in denying the formation of a special taxing district.
B. For purposes of this section, a special district is any entity proposed to be established on or after January 1, 1989 with substantially the following characteristics:
1. The status of a political subdivision of this state vested with the rights, privileges and immunities of a municipality to the extent consistent with its stated purposes.
2. A limited purpose as stated in its authorizing statutes.
3. An independently elected governing body.
4. Exterior boundaries within or coterminous with a single county.
5. The power to impose and collect taxes.
6. Perpetual succession of its governmental existence, purpose, powers and governing body, subject to a prescribed dissolution procedure.
7. Corporate existence separate and apart from any other unit of government."
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"1. One member appointed by the governor, one member appointed by the president of the senate and one member appointed by the speaker of the house of representatives, each serving for a term of four years from the date of appointment."
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"ARTICLE 4. REVENUE BONDS
48-3861. Definitions
In this article, unless the context otherwise requires:
1. "Bond" means any obligation that is authorized and issued pursuant to this article, including:
(a) Bonds and lease-purchase and installment purchase agreements.
(b) Certificates of participation in a lease-purchase or installment purchase agreement.
(c) Obligations that are authorized and issued to refund or refinance obligations that are authorized and issued pursuant to this article.
2. "Bond‑related expenses" means any expenses incurred by the district for issuing and administering its bonds, including underwriting fees and costs, trustee fees, financial consultant fees, printing and advertising costs, paying agent fees, transfer agent fees, legal, accounting, feasibility consultant and other professional fees and expenses, credit enhancement fees, attorney and accounting fees and expenses related to credit enhancement, bond insurance or liquidity enhancement, remarketing fees, rating agency fees and costs, travel and telephone expenses and all other fees considered necessary by the district in order to market and administer the bonds.
3. "Public facility purpose" includes:
(a) The capital costs of acquiring, designing, developing, constructing, reconstructing, equipping, furnishing, repairing, maintaining and improving a public facility, directly related improvements and public infrastructure, except as otherwise limited by this article.
(b) Any authorized purpose provided under section 48-3821, subsection A, paragraph 3.
(c) The payment of bonds.
(d) Bond-related expenses.
4. "public infrastructure" means capital improvements that will directly and principally benefit the district and includes:
(a) Sanitary sewage systems.
(b) Drainage and flood control systems.
(c) Water systems.
(d) Highways, streets, roadways and parking facilities, including access, ingress, egress and parking.
(e) Pedestrian and other facilities for nonmotorized access, ingress, egress and parking.
(f) Landscaping.
(g) Public buildings and public safety and fire protection facilities.
(h) Lighting systems.
(i) Traffic control systems, signals, controls, markings and signage.
48-3862. Obligation for the bonds
Bonds issued under this article:
1. Are payable only according to their terms.
2. Are obligations of a district established under this chapter.
3. Are not general, special or other obligations of this state or of the county or municipality in which the district is located. The members of the board and persons who execute the bonds are not personally liable for payment of the bonds.
4. Do not constitute a debt of this state or of the county or municipality in which the district is located.
5. Are not enforceable against this state. Payment of the bonds is enforceable only out of any monies or assets of the district specifically pledged and assigned, pursuant to this article, to or in trust for the benefit of the holder or holders of the bonds.
48-3863. Authorization of bonds
A. A district may issue bonds pursuant to this article in a principal amount that is necessary to:
1. Provide sufficient monies for any public facility purposes, except that not more than one-fourth of the capital facilities that are financed with bond proceeds, measured by square footage, may be used for retail sales of tangible personal property. For the purposes of this paragraph, "retail sales" means the sale of tangible personal property to an ultimate consumer as provided by section 42-5061. Retail sales do not include:
(a) Sales of food and beverages for consumption on the premises of the venue.
(b) The distribution without charge of promotional products that display logos or trademarks used at the venue.
(c) Sales solely to employees of the public facility.
2. Establish and fully or partially fund any required reserves or sinking accounts.
3. Issue refunding bonds if the board considers refunding to be expedient. The board may provide for investing and holding the proceeds of the refunding bonds in trust for the benefit of the holders of the bonds being refunded.
4. Refund any bonds issued by the district if the bonds are secured from the same source of revenues as the bonds authorized by this article by issuing new bonds, whether the bonds to be refunded have or have not matured.
5. Issue bonds partly to refund outstanding bonds and partly for any public facility purpose consistent with this article.
B. Bonds issued pursuant to this article may not exceed a cumulative outstanding principal amount of seven hundred fifty million dollars, exclusive of refunding bonds and other bonds issued to refund outstanding bonds of the district.
C. The board shall authorize the bonds by resolution. The resolution shall prescribe all of the following:
1. The district's revenue sources that are pledged and dedicated to secure the bonds.
2. The rate or rates of interest, which may be fixed or variable, the date or dates on which interest is payable and the denominations of the bonds.
3. The date or dates of the bonds and maturity, which shall be within thirty years after the date of issuance.
4. The manner of executing the bonds.
5. The medium and place of payment.
6. The terms of redemption, which may provide for a premium for early redemption.
D. All bonds issued by the district, including any refunding bonds or other refinancing obligations of the district, must mature and be payable within four hundred eighty months after the date of the initial issue of bonds under this article.
48-3864. Issuance and sale of bonds
A. the board shall issue the bonds in the number and amount provided in a resolution authorized pursuant to section 48-3863, subsection C. The board shall provide notice of its intention to issue bonds in a manner consistent with market practice.
B. The bonds may be sold by competitive public sale, through an online bidding process or at negotiated sale for public or private offering at the price and on the terms prescribed in the resolution. For the purposes of this subsection, "online bidding process" means a procurement process in which the board receives bids electronically over the internet in a real-time, competitive bidding event.
C. The proceeds from the sale of the bonds shall be deposited in the bond proceeds account established pursuant to section 48-3865.
D. Title 35, chapter 3, article 7 applies to the board and to bonds issued under this article.
48-3865. Bond proceeds account
A. If a district issues bonds under this article, the board shall establish a bond proceeds account within its general fund consisting of monies received from the sale of the bonds.
B. The district may use monies in the bond proceeds account only for public facility purposes in the manner prescribed by this chapter.
C. The district fiscal agent shall administer and account for the bond proceeds account.
48-3866. Debt service account
A. If a district issues bonds under this article, the board shall establish a debt service account within its general fund consisting of monies designated and dedicated by the board for repayment of the bonds and payment of costs and related expenses associated with redeeming the bonds.
B. Monies in the debt service account may be used only for the purposes authorized by this article.
C. The district fiscal agent shall administer and account for the debt service account.
48-3867. Securing principal and interest
In connection with issuing bonds authorized by this article and to secure the principal of and interest on the bonds, the board by resolution may:
1. Pledge for the payment of principal of and interest on the bonds all or part of the revenues and other monies received by the district and deposited in the general fund or any account or subaccount of the general fund.
2. Pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the debt service account or any other account or subaccount as necessary to secure and pay the principal of and the interest and any premium on the bonds as they come due.
3. Segregate the debt service account into one or more subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the debt service account or into any subaccount in the debt service account.
4. Establish priorities among bondholders based on criteria adopted by the board.
5. Set aside, regulate and dispose of reserves and sinking accounts.
6. Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given.
7. Provide for payment of bond‑related expenses from the proceeds of the sale of the bonds or other revenues available to the board.
8. Provide for the services of trustees, cotrustees, agents and consultants and other specialized services with respect to the bonds.
9. Take any other action that in any way may enhance the security and protection of the bonds or interest on the bonds.
48-3868. Lien of pledge
A. Any pledge made under this article is valid and binding from the time the pledge is made.
B. The monies pledged to the holders of the bonds and received by the district for placement in the debt service account are immediately subject to the lien of the pledge without any further act. Any lien of any pledge is valid and binding against all parties that have claims of any kind against the district, regardless of whether the parties have notice of the lien. The official resolution or any instrument by which this pledge is created, when adopted by the board of directors, is notice to all concerned of the creation of the pledge, and those instruments need not be recorded in any other place to perfect the pledge.
48-3869. Bond purchase for cancellation
The board may purchase bonds for cancellation, using any available monies, at a price not exceeding the following:
1. If the bonds are redeemable at the time of purchase, the applicable redemption price plus accrued interest to the next interest payment date.
2. If the bonds are not redeemable at the time of purchase, the applicable redemption price on the first date after purchase on which the bonds become subject to redemption plus accrued interest to that date.
48-3870. Payment and cancellation of bonds
A. Bonds issued under this article shall be paid solely from monies in the debt service account.
B. The members of the board and any persons who execute the bonds are not personally liable for the payment of the bonds.
C. The district fiscal agent shall cancel all bonds when paid.
48-3871. Use of surplus monies
A. If a balance remains in the bond proceeds account after all public facility purpose costs have been paid:
1. The board shall credit the balance to repay any other outstanding indebtedness of the district.
2. If the district has no outstanding indebtedness, the board shall credit the remaining balance to the district's general fund.
B. If a balance remains in the debt service account after payment of all bonds, interest and other charges related to bonds issued under this article, the board shall credit the balance to the general fund.
48-3872. Investment of monies in the bond proceeds account
A. The board may authorize the district fiscal agent to invest monies in the bond proceeds account in the manner prescribed by section 48‑3874.
B. The order directing an investment shall state a date on which the proceeds from the sale of the bonds will be needed for use, and the fiscal agent shall make the investment in such a way as to mature on or before the specified date.
C. All monies earned as interest or otherwise derived from the investment of the monies in the bond proceeds account shall be credited to the bond proceeds account.
48-3873. Investment of monies in the debt service account
A. The board may authorize the district fiscal agent to invest and reinvest any monies in the debt service account as provided by section 48‑3874.
B. The order directing an investment shall state a date on which the monies and other resources in the debt service account will be needed for use, and the fiscal agent shall make the investment in such a way as to mature on or before the specified date.
C. All monies earned as interest or otherwise derived from the investment of the monies in the debt service account shall be credited to the district's general fund.
48-3874. Authorized investments of monies
A. The monies in either the bond proceeds account or the debt service account may be invested and reinvested at the direction of the board in any of the following:
1. United States treasury obligations.
2. Consolidated farm loan bonds.
3. Obligations issued by the federal intermediate credit banks or bonds for cooperatives on authority of the farm credit act of 1933.
4. Any other obligations guaranteed by the united states government.
5. Any investments that are authorized by any other agencies of the United States government and that are authorized to secure public deposits.
6. State and local government series United States treasury securities.
7. State, county or municipal bonds issued in this state and on which the payments of interest have not been deferred.
8. Investment agreements and repurchase agreements collateralized by investments described in paragraphs 1 through 5 of this subsection.
B. The purchase of the securities shall be made by the district fiscal agent on authority of a resolution of the board. the fiscal agent shall act as custodian of all securities purchased.
C. The board may place any restrictions on reinvestment yield on bond proceeds or on any monies pledged to pay the bonds if necessary to comply with federal income tax laws and regulations to gain any federal tax benefits available with respect to the bonds.
48-3875. Deposit and disbursement of monies
A. Monies derived from selling bonds under this article or pledged or assigned to or in trust for the benefit of the holder or holders of the bonds shall be deposited by the district fiscal agent in financial institutions that the board designates and that are insured by an agency or instrumentality of the United States. the monies shall be disbursed as the board directs and according to the terms of any agreements with the holder or holders of the bonds.
B. This section does not limit the power of the board to agree in connection with the issuance of any of its bonds as to the custody and disposition of the monies received from selling bonds or from the income and revenues pledged or assigned to or in trust for the benefit of the holder or holders of the bonds.
48-3876. Characteristics of bonds; negotiability; legal investments; exemption from taxation
A. Bonds issued under this article are fully negotiable within the meaning and for all purposes of the uniform commercial code, subject only to any provisions for registration, regardless of whether the bonds actually constitute negotiable instruments under the uniform commercial code.
B. The bonds, their transfer and the income from the bonds are at all times free from taxation in this state.
C. Bonds issued under this article:
1. Are securities in which public officers and bodies of this state and of municipalities and political subdivisions of this state, all companies, associations and other persons carrying on an insurance business, all financial institutions, investment companies and other persons carrying on a banking business, all fiduciaries and all other persons who are authorized to invest in government obligations may properly and legally invest.
2. Are securities that may be deposited with public officers or bodies of this state and municipalities and political subdivisions of this state for purposes that require the deposit of government bonds or obligations.
48-3877. Effect of changing circumstances on bonds; agreement of state
A. Bonds issued under this article remain valid and binding obligations of the district notwithstanding that before the delivery of the bonds any person whose signature appears on the bonds ceases to be an officer of the district.
B. An amendment of any provision in this chapter does not diminish or impair the validity of bonds issued under this article or the remedies and rights of bondholders.
C. This state pledges to and agrees with the holders of the bonds authorized by this article that this state will not limit, alter or impair the rights vested in the district to receive the monies necessary to fulfill the terms of any agreements made with the holders of the bonds, or in any way impair the rights and remedies of the bondholders, until all bonds issued under this article, together with interest on the bonds, interest on any unpaid installments of principal or interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders, are fully met and discharged. The board, as agent for this state, may include this pledge and undertaking in its resolutions and indentures authorizing and securing its bonds.
48-3878. Validity of bonds; legal opinion
A. This article constitutes full authority for authorizing and issuing bonds without reference to any other law of this state. No other law with regard to authorizing or issuing obligations or that in any way impedes or restricts performing the acts authorized by this article may be construed to apply to any proceedings taken or acts done pursuant to this article.
B. The validity of bonds issued under this article does not depend on and is not affected by the legality of any proceeding relating to the acquisition, construction, improvement, operation or maintenance of a public facility for which the bonds are issued.
C. The board may submit any bonds to be issued under this article to legal counsel after all proceedings for authorizing the bonds have been completed. On submission, the counsel shall examine and pass on the validity of the bonds and the regularity of the proceedings. If the proceedings comply with this article, and if the bonds when delivered and paid for will constitute binding and legal obligations of the district, the counsel shall certify on the back of each bond, in substance, that it is issued according to the constitution and laws of this state and that the interest on the bonds will be exempt from state taxes as provided by law.
D. The bonds shall recite that they are regularly issued pursuant to this article. That recital, together with the legal opinion under subsection C of this section, constitutes prima facie evidence of the legality and validity of the bonds. From and after the sale and delivery of the bonds, they are incontestable by this state or the district."
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