2022 Arizona Revised Statutes
Title 49 - The Environment
§ 49-1275 - Water supply development revolving fund; loans; terms

49-1275. Water supply development revolving fund; loans; terms

A. A loan from the water supply development revolving fund shall be evidenced by bonds, if the eligible entity has bonding authority, or by a loan repayment agreement, delivered to and held by the authority.

B. A loan under this section shall:

1. Be conditioned on establishing a dedicated revenue source for repaying the loan.

2. Be repaid in a period and on terms determined by the authority.

C. The authority shall prescribe the rate of interest on loans made under this section, but the rate shall not exceed the prevailing market rate for similar types of loans. The authority may adopt rules that provide for flexible interest rates and interest-free loans. All loan agreements or bonds of an eligible entity shall clearly specify the amount of principal and interest and any redemption premium that is due on any payment date. The authority may not unilaterally amend a loan repayment agreement, loan or bond after its execution or implement any policy that modifies terms and conditions or affects a previously executed loan repayment agreement, loan or bond. The authority may not impose a redemption premium or an interest payment beyond the date the principal is paid as a condition of refinancing or receiving prepayment on a loan repayment agreement, loan or bond if the loan repayment agreement, loan or bond did not originally contain a redemption premium or interest payment beyond the date the principal is paid.

D. The approval of a loan is conditioned on a written commitment by the eligible entity to complete all applicable reviews and approvals and to secure all required permits in a timely manner.

E. A loan made to an eligible entity that is a political subdivision of this state may be secured additionally by an irrevocable pledge of any shared state revenues due to the eligible entity for the duration of the loan as prescribed by the authority. As applicable to loans additionally secured with shared state revenues, the authority may enter into agreements to specify the allocation of shared state revenues in relation to individual borrowers from such authorities. If a pledge of shared state revenues as additional security for a loan is required and the eligible entity fails to make any payment due to the authority under its loan repayment agreement or the eligible entity's bonds, the authority shall certify to the state treasurer and notify the governing body of the defaulting eligible entity that the eligible entity has failed to make the required payment and shall direct a withholding of shared state revenues as prescribed in subsection F of this section. The certificate of default shall be in the form determined by the authority, except that the certificate shall specify the amount required to satisfy the unpaid payment obligation of the eligible entity.

F. On receipt of a certificate of default from the authority, the state treasurer, to the extent not expressly prohibited by law, shall withhold any monies due to the defaulting eligible entity from the next succeeding distribution of monies pursuant to section 42-5029. In the case of an eligible entity that is a city or town, the state treasurer shall also withhold from the monies due to the defaulting city or town from the next succeeding distribution of monies pursuant to section 43-206 the amount specified in the certificate of default and shall immediately deposit the monies in the water supply development revolving fund. The state treasurer shall continue to withhold and deposit monies until the authority certifies to the state treasurer that the default has been cured. The state treasurer shall not withhold any amount that is necessary to make any required deposits then due for the payment of principal and interest on bonds or indebtedness of the eligible entity if so certified by the defaulting eligible entity to the state treasurer and the authority. The defaulting eligible entity shall not certify deposits as necessary for payment for bonds or indebtedness unless the bonds were issued or the indebtedness incurred before the date of the loan repayment agreement and the bonds or indebtedness was secured by a pledge of distributions made pursuant to sections 42-5029 and 43-206.

G. By resolution of the board, the authority may impose any additional requirements it considers necessary to ensure that the loan principal and interest are timely paid.

H. All monies received from eligible entities as loan repayments, interest and penalties shall be deposited, pursuant to sections 35-146 and 35-147, in the water supply development revolving fund.

I. For an eligible entity that is a political subdivision of this state, the revenues of the eligible entity's utility system or systems may be pledged to the payment of a loan without an election, if the pledge of revenues does not violate any covenant pertaining to the utility system or systems or the revenues pledged to secure outstanding bonds or other obligations or indebtedness of the eligible entity.

J. For an eligible entity that is a political subdivision of this state, if the revenues from a secondary property tax levy constitute revenues pledged by the eligible entity to repay a loan, the eligible entity shall submit the question of entering and performing a loan repayment agreement to the qualified electors of the eligible entity at an election held on the first Tuesday following the first Monday in November.

K. An election is not required if voter approval has previously been obtained for substantially the same project with another funding source.

L. Payments made pursuant to a loan repayment agreement are not subject to section 42-17106.

M. For an eligible entity that is a political subdivision of this state, a loan repayment agreement under this section does not create a debt of the eligible entity, and the authority may not require that payment of a loan repayment agreement be made from other than the revenues pledged by the eligible entity.

N. An eligible entity may employ attorneys, accountants, financial consultants and other experts in their fields as deemed necessary to perform services with respect to a loan repayment agreement.

O. At the direction of the authority, an eligible entity shall pay, and is authorized to pay, the authority's costs in issuing water supply development bonds or otherwise borrowing to fund a loan.