Arizona Laws 41-5856. Payment of program guarantees; notification requirements; repayment
A. On any draw from the debt service reserve fund to pay principal or interest on a guaranteed financing, the bank trustee, paying agent or other fiduciary for the guaranteed financing shall deliver written notice of the draw to the board and to the state treasurer within ten business days after the draw.
Terms Used In Arizona Laws 41-5856
- Achievement district school: means a public school or a charter school that has qualified as an achievement district school pursuant to article 10 of this chapter and that has submitted an application with the board pursuant to this article to obtain guaranteed financing. See Arizona Laws 41-5851
- Board: means the credit enhancement eligibility board established by section 41-5852. See Arizona Laws 41-5851
- Fiduciary: A trustee, executor, or administrator.
- Fund: means the Arizona public school credit enhancement fund established by section 41-5854. See Arizona Laws 41-5851
- Guaranteed financing: means debt obligations that are issued by or on behalf of a public school or a charter school to acquire, construct, renovate, equip, refinance or improve capital facilities and for which the board has approved a guarantee of all or a portion of the principal and interest payments pursuant to the program. See Arizona Laws 41-5851
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Program: means the Arizona public school credit enhancement program established by section 41-5855. See Arizona Laws 41-5851
- Property: includes both real and personal property. See Arizona Laws 1-215
- Trustee: A person or institution holding and administering property in trust.
- Writing: includes printing. See Arizona Laws 1-215
B. If a school does not expect to make timely payment of principal or interest on its guaranteed financing, and after any monies in any debt service reserve fund securing the guaranteed financing are fully expended, the bank trustee, paying agent or other fiduciary responsible for paying the principal and interest to investors on the guaranteed financing, at least five business days before a debt service payment date on the guaranteed financing, shall notify the board and the state treasurer in writing of the expected deficiency. Within two business days after receipt of the notice, the state treasurer shall pay from the fund to the bank trustee, paying agent or other fiduciary the amount to be used solely for making payment of principal or interest on the guaranteed financing.
C. If the state treasurer makes a payment in connection with a guaranteed financing from the fund pursuant to subsection B of this section, the school on whose behalf the payment was made shall repay the amount of the payment plus interest at a rate that is one hundred basis points higher than the true interest rate on the guaranteed financing as determined by the board. Repayment shall be made in equal monthly installments over a twelve-month period or another period as determined by the board. The repayments shall be made to the state treasurer for deposit in the fund. After the stated repayment period, any outstanding repayment balance shall become immediately due and payable. Any repayment amount owed to the fund that is not otherwise paid remains a lawful obligation of the school and shall be paid from any other monies lawfully available to the school.
D. In exchange for the guarantee of the payment of amounts due on guaranteed financing issued by or on behalf of an achievement district school, the board and the fund are entitled to protections and remedies relating to the repayment of the amount, if any, paid from the fund with respect to the guaranteed financing, and the payment of program participation fees. The protections and remedies may include one or more of the following:
1. The right to all or a portion of the proceeds from the sale or lease of any property serving as collateral for a guaranteed financing.
2. The right to intercept any payments or monies otherwise payable to the school.
3. The right to any insurance proceeds otherwise payable to the school.
E. On request of the board, the attorney general shall take any actions necessary to enforce repayment of fund monies by a school.