Arizona § 48-962 - Bond anticipation notes; form; procedures applicable

§ 48-962. Bond anticipation notes; form; procedures applicable

A. If the board of directors has determined that improvement bonds shall be issued, bond anticipation notes may be sold at any time after the ordering of the work.

B. Principal and interest on the bond anticipation notes shall be paid solely from the proceeds of the sale of improvement bonds and monies collected from property owners paying all or part of their assessments in cash prior to the filing of the certified list of unpaid assessments as provided in section 48-937. The notes may be in such form and denomination as the board of directors shall provide. The notes shall be executed by the superintendent of streets or the treasurer and attested by the clerk. The notes may bear interest from their date at a rate not in excess of the rate to be borne on the bonds as shown in the resolution of intention. The term of the notes shall not extend more than six months beyond the date set for completion of the construction, but the board of directors shall always retain the option of repaying such notes in advance of maturity and without penalty and the further option to extend the life of the notes if the term of the construction contract is extended or if any default is made by the contractor. The notes shall be authorized by resolution of the board of directors.

C. The total amount of notes to be issued for any work or improvement shall not be greater than the aggregate of ninety per cent of the contract price and the total estimated amount of incidental expenses. The notes shall be sold at not less than par at either public or private sale. The superintendent of streets may enter into loan agreements with the purchaser of the notes relative to:

1. The time and place of delivery.

2. The sale of improvement bonds to the purchaser of the notes if the municipality is unable to procure a purchaser willing to purchase the bonds when issued.

3. Naming the purchaser of the notes or his or her nominee as the district's assignee for purposes of making the demand upon the owners of property for payment in cash.

4. Collection of cash payments from persons wishing to pay their assessments in cash and application of such cash payments to the repayment of the notes.

5. Payment of an additional fee to the purchaser of the notes to cover the administrative expenses of the cash collections if the purchaser is to be the person to whom cash collections are to be made.

6. Requiring the purchaser or his or her nominee to procure or show proof of a fidelity bond.

7. Such other provisions as the parties may determine to be necessary to secure the repayment of the notes.

D. To secure the payment of the notes the loan agreements may also provide for a collateral assignment to the purchaser of the notes of all cash collections, the warrant and the district's interest in the performance bond.

E. The proceeds from the sale of the notes shall be placed in a special fund to be held by the treasurer and to be used for payment of incidental expenses and payments to the construction contractor.

F. Payments from the special fund to the contractor shall be made semimonthly or monthly to be due and paid the contractor upon a basis of ninety per cent of the value of the work actually performed as estimated by the superintendent of streets or engineer employed for such purpose to and including the fifteenth or last day of each calendar month. The balance shall be paid to the contractor after the sale of the bonds solely from the proceeds. If bonds equal to the balance remaining cannot be sold then the balance shall be paid by delivery of a like principal amount of bonds to the contractor.

G. The issuance of bond anticipation notes shall constitute an assignment to the district of the monies due the contractor under the construction contract. The district may agree with the construction contractor that the district will make the demands for cash payments as provided in section 48-928 or may authorize the purchaser of the bond anticipation notes or his or her nominee to make the cash collections.

H. When bonds are issued to represent any assessments remaining unpaid at the date of the certified list, the district shall sell the bonds at public or private sale at the best price available but in no event below par and accrued interest to the date of delivery to the bond purchaser and use the proceeds to redeem the notes and pay the balance due the contractor.

I. In addition to the incidental expenses which may be included in the assessment, if bond anticipation notes are issued, the superintendent of streets may also include in the incidental expenses all interest to accrue on the bond anticipation notes, the added costs of cash collections, the cost of any fidelity bond and all legal or financial fees incurred in the issuance and sale of the bond anticipation notes.

J. Whenever bond anticipation notes have been issued and the contractor has been paid in accordance with subsection E of this section, the district shall apply the proceeds collected from demands upon the property owners to reduction of the outstanding portion of the bond anticipation notes and when the notes have been paid to the contractor to reduce any balance due.