Administrative Rules of Montana
Department 36 - NATURAL RESOURCES AND CONSERVATION
Chapter 36.23 - DRINKING WATER STATE REVOLVING FUND ACT
Subchapter 36.23.1 - Financial Assistance
Rule 36.23.111 - REVENUE BONDS
Universal Citation: MT Admin Rules 36.23.111
Current through Register Vol. 6, March 22, 2024
(1) The department may accept revenue bonds issued by a municipality in accordance with the provisions of Title 7, chapter 7, part 44, or Title 7, chapter 13, part 2, MCA, or other applicable statutory provisions, subject to the following terms and conditions:
(a) the bonds must be payable from
the revenues of the system on a parity with any outstanding revenue bonds
payable from the system. The bond must be secured by a pledge of the net
revenues of the system. If bonds are currently outstanding payable from the
gross revenues of the system, a gross revenue pledge will be acceptable
provided the requirements of (1) (b) through (d) are met;
(b) the payment of principal and interest on
the revenue bonds must be secured by a reserve account equal to reserve
requirement, such requirement to be met upon the issuance of the
bonds;
(c) the municipality shall
covenant to collect and maintain rates, charges, and rentals such that the
revenue for each fiscal year the bonds are outstanding will be at least
sufficient to pay the current expenses of operation and maintenance of the
system, to maintain the operating reserve, and to produce net revenues during
each fiscal year not less than 125% of the maximum amount of principal and
interest due on all outstanding bonds payable from the revenues of the system
in any future fiscal year, or, if the municipality calculates debt service on
such outstanding bonds on a calendar year basis, then in any future calendar
year;
(d) the municipality shall
agree not to incur any additional debt payable from the revenues of the system,
unless the net revenues of the system for the last complete fiscal year
preceding the issuance of such additional bonds have equaled at least 125% of
the maximum amount of principal and interest payable from the revenue bond
account in any subsequent fiscal year during the term of the then outstanding
bonds and the additional bonds proposed to be issued, or, if the municipality
calculates debt service on such outstanding bonds on a calendar year basis,
then in any future calendar year.
(i) For the
purpose of the foregoing computation, the net revenues must be those shown by
the financial reports caused to be prepared by the municipality, except that if
the rates and charges for service provided by the system have been changed
since the beginning of the preceding fiscal year, then the rates and charges in
effect at the time of issuance of the additional bonds must be applied to the
quantities of service actually rendered and made available during such
preceding fiscal year to ascertain the gross revenues, from which there shall
be deducted, to determine the net revenues, the actual operation and
maintenance cost plus any additional annual costs of operation and maintenance
which the engineer for the municipality estimates will be incurred because of
the improvement or extension of the system to be constructed from the proceeds
of the additional bonds proposed to be issued.
(ii) In no event may any such additional
bonds be issued and made payable from the revenue bond account if there then
exists any deficiency in the balances required to be maintained in any of the
accounts of the fund or if the municipality is in default in any of the other
provisions;
(e)
applications indicating the loan will be evidenced by the issuance of a revenue
bond must be accompanied by:
(i) if requested
by the department, audited financial statements of the system for the last two
completed fiscal years;
(ii) if
requested by the department, a certificate as to the municipality's current
population and number of system users, a schedule of the 10 largest users of
the system showing the percentage of total revenues provided by such users and
the amount of outstanding system debt;
(iii) a description of the existing and
proposed facilities constituting the system, including a discussion of the
additional capital needs for the system over the next three-year
period;
(iv) a copy of the
ordinance or resolution establishing and describing the system of rates and
charges for the use or availability of the system;
(v) a pro forma showing revenues of the
system in an amount sufficient to meet the requirements of these rules and any
outstanding obligations payable from the system;
(vi) if the pro forma indicates an increase
in rates and charges to meet the requirements of these rules, a copy of the
proposed rates and charge resolution and a proposed schedule for the adoption
of the charges and if subject to review or approval by another entity, the
schedule for the rate approval; and
(vii) any other information deemed necessary
by the department to assess the feasibility of the project and the financial
security of the bonds;
(f) notwithstanding the fact that the
municipal revenue bond act does not require that the issuance of revenue bonds
be approved by the voters, the department may require the municipality to
conduct an election to evidence community support and acceptance of the project
or require the bonds be authorized by the electors and issued as general
obligation bonds in accordance with
7-7-4202, MCA. A municipality shall
conduct an election to evidence community support and acceptance of the project
when in the opinion of the department there are projected large rate increases
due to the improved facility or the facility is a projected high-cost
facility.
(2) Tax-backed revenue bonds issued by county water and sewer districts created pursuant to Title 7, chapter 13, parts 22 and 23, MCA, will be accepted as evidence of the loan, subject to the following terms and conditions:
(a) the issuance of the bonds must be
authorized by the electors of the district as provided in
7-13-2321 through
7-13-2328, MCA;
(b) the election authorizing the incurrence
of the debt shall be conducted by the date of the binding commitment, unless
such requirement is waived by the department;
(c) the district shall covenant that it will
cause taxes to be levied to meet the district's obligation on any bond issued
to the department in the event that the revenues of the system are inadequate
therefor in accordance with the provisions of
7-13-2302 through
7-13-2310, MCA;
(d) the bonds must be payable from the
revenues of the system on a parity with any outstanding revenue bonds payable
from the system;
(e) the district
shall covenant to collect and maintain rates, charges, and rentals such that
the revenue for each fiscal year the bonds are outstanding will be at least
sufficient to pay the current expenses of operation and maintenance of the
system, to maintain the operating reserve and to produce net revenues during
each fiscal year not less than 120% of the maximum amount of principal and
interest due on all outstanding bonds payable from the revenues of the system
in any future fiscal year, or, if the district calculates debt service on such
outstanding bonds on a calendar year basis, then in any future calendar
year;
(f) the payment of principal
and interest on the bonds must be secured by a reserve account equal to the
reserve requirement, such requirement to be proportionately funded from each
periodic draw so that the requirement is fully satisfied upon the final
draw;
(g) the district shall agree
not to incur any additional debt payable from the revenues of the system
without the written consent of the department, unless the net revenues of the
system for the last complete fiscal year preceding the issuance of such
additional bonds have equaled at least 120% of the maximum amount of principal
and interest payable from the revenue bond account in any subsequent fiscal
year during the term of the then outstanding bonds and the additional bonds
proposed to be issued, or, if the district calculates debt service on such
outstanding bonds on a calendar year basis, then in any future calendar year.
(i) For the purpose of the foregoing
computation, the net revenues must be those shown by the financial reports
caused to be prepared by the district, except that if the rates and charges for
services provided by the system have been changed since the beginning of the
preceding fiscal year, then the rates and charges in effect at the time of
issuance of the additional bonds must be applied to the quantities of service
actually rendered and made available during such preceding fiscal year to
ascertain the gross revenues, from which there shall be deducted, to determine
the net revenues, the actual operation and maintenance cost plus any additional
annual costs of operation and maintenance which the engineer for the district
estimates will be incurred because of the improvement or extension of the
system to be constructed from the proceeds of the additional bonds proposed to
be issued.
(ii) In no event shall
any such additional bonds be issued and made payable from the revenue bond
account if there then exists any deficiency in the balances required to be
maintained in any of the accounts of the fund or if the district is in default
in any of the other provisions;
(h) an application by a district must be
accompanied by:
(i) if requested by the
department, financial statements of the system for the last two completed
fiscal years if there is an existing system (the department in its discretion
may require that at least one year's financial statement be audited)
;
(ii) a map depicting the
boundaries of the district;
(iii) a
certificate as to numbers of persons in the district subject to levy described
in (v) and the number of wastewater system customers and the amount of
outstanding wastewater debt;
(iv) a
pro forma showing revenues of the system in an amount sufficient to meet the
requirements of these rules and any outstanding obligations payable from the
system;
(v) if the pro forma
indicates an increase in rates and charges to meet the requirements of these
rules, a copy of the proposed rates and charge resolution and a proposed
schedule for the adoption of the charges.
75-6-205, MCA; IMP, 75-6-222, MCA;
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