Indiana Code 5-1.5-8-5.1. Authorization to convey revenue or taxes to issuing entity
(1) “Assignment agreement” means an agreement between a qualified entity and the issuing entity for the conveyance of all or part of any revenues or taxes received by the qualified entity from a disbursement agent.
Terms Used In Indiana Code 5-1.5-8-5.1
- Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Lien: A claim against real or personal property in satisfaction of a debt.
- 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.
- Property: includes personal and real property. See Indiana Code 1-1-4-5
- Statute: A law passed by a legislature.
- Tort: A civil wrong or breach of a duty to another person, as outlined by law. A very common tort is negligent operation of a motor vehicle that results in property damage and personal injury in an automobile accident.
- Trustee: A person or institution holding and administering property in trust.
- Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
(3) “Deposit account” means a designated escrow account established by the issuing entity at a trust company or bank having trust powers for the deposit of transferred receipts under an assignment agreement.
(4) “Disbursement agent” means a state disbursement agent or local disbursement agent.
(5) “Issuing entity” means:
(A) the bank;
(B) a corporation, trust, or other entity that has been established by the bank for the limited purpose of issuing obligations for the benefit of the bank and any qualified entity; or
(C) a bank or trust company in its capacity as trustee for obligations issued by an entity identified in clause (A) or (B).
(6) “Local disbursement agent” means:
(A) the fiscal officer (as defined in IC 36-1-2-7) of the county for any county in which a qualified entity is wholly or partially located;
(B) the fiscal officer for a qualified entity; or
(C) the treasurer of a school corporation.
(7) “State disbursement agent” means the state treasurer, the state comptroller, or the state department of revenue.
(8) “Transferred receipts” means all or part of any revenues or taxes received from a disbursement agent that have been conveyed by a qualified entity under an assignment agreement.
(9) “Statutory lien” has the meaning given to that term under 11 U.S.C. § 101(53) of the federal bankruptcy code.
(b) Subject to approval from the board under subsection (j), any qualified entity that receives revenues or taxes from a disbursement agent may (to the extent not prohibited by any applicable statute, regulation, rule, resolution, ordinance, or agreement governing the use of the revenues or taxes) authorize, by ordinance or resolution, the conveyance of all or any portion of the revenues or taxes to an issuing entity. Any conveyance of transferred receipts shall:
(1) be made pursuant to an assignment agreement in exchange for the net proceeds of obligations issued by the issuing entity for the benefit of the qualified entity and shall, for all purposes, constitute an absolute conveyance of all right, title, and interest therein;
(2) not be deemed a pledge or other security interest for any borrowing by the qualified entity;
(3) be valid, binding, and enforceable in accordance with the terms thereof and of any related instrument, agreement, or other arrangement, including any pledge, grant of security interest, or other encumbrance made by the issuing entity to secure any obligations issued by the issuing entity for the benefit of the qualified entity; and
(4) not be subject to disavowal, disaffirmance, cancellation, or avoidance by reason of insolvency of any party, lack of consideration, or any other fact, occurrence, or state law or rule. On and after the effective date of the conveyance of the transferred receipts:
(A) the qualified entity shall have no right, title, or interest in or to the transferred receipts conveyed; and
(B) the transferred receipts conveyed shall be the property of the issuing entity to the extent necessary to pay the obligations issued by the issuing entity for the benefit of the qualified entity, and shall be received, held, and disbursed by the issuing entity in a trust fund outside the treasury of the qualified entity.
An assignment agreement may provide for the periodic reconveyance to the qualified entity of amounts of transferred receipts remaining after the payment of the obligations issued by the issuing entity for the benefit of the qualified entity.
(c) In connection with any conveyance of transferred receipts, the qualified entity is authorized to direct the applicable disbursement agent to deposit or cause to be deposited any amount of the transferred receipts into a deposit account in order to secure the obligations issued by the issuing entity for the benefit of the qualified entity. If the qualified entity states that the direction is irrevocable, the direction shall be treated by the applicable disbursement agent as irrevocable with respect to the transferred receipts described in the direction. Notwithstanding any other law, each disbursement agent shall comply with the terms of any such direction received from a qualified entity and shall execute and deliver the acknowledgments and agreements, including escrow and similar agreements, as the qualified entity may require to effectuate the deposit of transferred receipts in accordance with the direction of the qualified entity. Notwithstanding any other law, the disbursement agent shall distribute the transferred receipts to the deposit account in accordance with the written authorization and direction from the qualified entity set forth in the assignment agreement and any related escrow and similar agreements, and upon each distribution of transferred receipts in accordance with the direction from the qualified entity, the disbursement agent shall have no further duty or responsibility with respect to the distribution of transferred receipts.
(d) Not later than the date of issuance by an issuing entity of any obligations secured by collections of transferred receipts, a certified copy of the ordinance or resolution authorizing the conveyance of the right to receive the transferred receipts, executed copies of the applicable assignment agreement, the agreement providing for the establishment of the deposit account, and a notice designating the dates that the disbursement agent’s duty to distribute transferred receipts to the deposit account shall begin and end shall be filed with:
(1) the disbursement agent having custody of the transferred receipts;
(2) if the conveyance of transferred receipts consists of all or a portion of local income tax revenues under IC 6-3.6, the adopting body (as defined in IC 6-3.6-3-1) having jurisdiction over the applicable tax rate and allocations affecting such local income tax revenues; and
(3) the Indiana transparency website established under IC 5-14-3.8 in a manner prescribed by the state examiner. The state examiner shall make the information available to the department of local government finance.
(e) Any obligations of an issuing entity issued or incurred to provide funds to purchase any transferred receipts from a qualified entity under this chapter shall be entitled to the following benefits and protections:
(1) The obligations issued by an issuing entity shall be secured by a statutory lien on the transferred receipts received, or entitled to be received, by the issuing entity that are designated as pledged for such obligations of the issuing entity. The statutory lien shall automatically attach from the time the obligations of the issuing entity are issued without further action or authorization by the issuing entity or any other entity, person, governmental authority, or officer. The statutory lien shall be valid and binding from the time the obligations of the issuing entity are executed and delivered without any physical delivery thereof or further act required, and shall be a first priority lien, unless the obligations, or the documents authorizing the obligations or providing a source of payment or security for those obligations, shall otherwise provide.
(2) The transferred receipts received or entitled to be received shall be immediately subject to the statutory lien from the time the obligations of the issuing entity are issued, and the statutory lien shall automatically attach to the transferred receipts (whether received or entitled to be received by the issuing entity) and be effective, binding, and enforceable against the issuing entity, the qualified entity, the disbursement agent, the state, and their agents, successors, transferees and creditors, and all others asserting rights therein or having claims of any kind in tort, contract, or otherwise, irrespective of whether those parties have notice of the lien and without the need for any physical delivery, recordation, filing, or further act.
(3) The statutory lien imposed by this section is automatically released and discharged with respect to amounts of transferred receipts reconveyed to the qualified entity pursuant to subsection (b)(4), effective upon the reconveyance.
(4) The statutory lien provided in this section is separate from and shall not affect any special revenues lien or other protection afforded to special revenue obligations under the federal Bankruptcy Code.
(f) The state covenants with each qualified entity, the issuing entity, each disbursement agent, and the purchasers or owners of the issuing entity’s obligations that the state will not limit or alter the rights and powers vested in the qualified entity, the issuing entity, and the state entities by this section with respect to the disposition of transferred receipts so as to impair the terms of any contract, including any assignment agreement, made by the qualified entity with the issuing entity or any contract executed by the issuing entity in connection with the issuance of obligations by the issuing entity for the benefit of the qualified entity, until all requirements with respect to the deposit by the disbursement agent of transferred receipts for the benefit of the issuing entity have been fully met and the obligations of the issuing entity related thereto have been discharged and satisfied. In addition, the state covenants with each qualified entity, the issuing entity, each disbursement agent, and the purchasers or owners of the issuing entity’s obligations that the state will not limit or alter the basis on which the qualified entity’s share or percentage of transferred receipts is derived, or the use of the funds, so as to impair the terms of any such contract. Nothing contained in this chapter shall be construed or interpreted as creating a debt of the state within the meaning of the limitation on or prohibition against state indebtedness under the Constitution of the State of Indiana or interpreted to construe the state as a guarantor of any debt or obligation subject to an assignment agreement under this section.
(g) In the case of a qualified entity that has authorized the conveyance of all or a portion of its local income tax revenues imposed under IC 6-3.6 and executed an assignment agreement with respect thereto, obligations of the issuing entity issued for the benefit of the qualified entity, together with the debt service owed each year thereon, shall be:
(1) included as part of the outstanding debt service of the qualified entity solely for purposes of calculating the minimum coverage ratio under IC 6-3.6-4-3; and
(2) treated as outstanding obligations of the qualified entity payable from the revenues solely for purposes of limiting the reduction of the proportional allocation of revenues under IC 6-3.6-6-3 and IC 6-3.6-6-5.
This subsection shall not be construed as a pledge of the transferred receipts or the granting of a security interest therein by the qualified entity, and is included solely for the purpose of computing the limitations on the reductions to the tax rate and allocations set forth under IC 6-3.6-4-3, IC 6-3.6-6-3, and IC 6-3.6-6-5.
(h) The bank is authorized to create one (1) or more nonprofit corporations in order to effectuate the purposes of this chapter and the bank may grant or delegate to any such nonprofit corporation powers of the bank as may be necessary, convenient, or appropriate to carry out and effectuate the public and corporate purposes of this article.
(i) A qualified entity may not enter into assignment agreements in a manner inconsistent with the provisions of this chapter. This chapter constitutes the specific manner for exercising the power to enter into assignment agreements for purposes of IC 20-26-3, IC 36-1-3, or any other statute granting home rule power to a qualified entity.
(j) Before a qualified entity may adopt an ordinance or resolution described in subsection (b), the board must have adopted a resolution approving the qualified entity’s proposed conveyance of transferred receipts to the issuing body. The resolution of the board may be preliminary in nature and may contain such terms and conditions that the board deems advisable. If, after receiving approval from the board, the qualified entity adopts an ordinance or resolution described in subsection (b), the qualified entity shall provide a certified copy of the ordinance or resolution to the bank. The bank shall notify the distressed unit appeal board of each qualified entity that adopts an ordinance or resolution under this section.
As added by P.L.259-2019, SEC.7. Amended by P.L.156-2020, SEC.11; P.L.9-2024, SEC.118.