§ 3269. Reserve fund

(a) A reserve fund is created for use in paying the past due balances of an assessment under this subchapter in the event that there is a foreclosure upon the property subject to the assessment and the proceeds resulting from the foreclosure are, after all superior liens have been satisfied, insufficient to pay those past due balances. The reserve fund shall comply with the provisions of subsections (b) through (e) of this section and shall be administered by and in the custody of the entity described in subsection (f) of this section. Each municipality that establishes a district under this subchapter shall participate in the reserve fund created by this subsection.

(b) The reserve fund shall be funded by participating property owners at a level sufficient to provide for the payment of past due balances described in subdivision 3262(c)(2) of this title in the event of a foreclosure upon a participating property and the costs of administering the reserve fund and shall only be used to provide for such payment and administration.

(c) The contribution of each participating property owner to the reserve fund shall be included in the special assessment applicable to the property and shall be subject to section 3255 of this title. From time to time, the Commissioner of Financial Regulation shall determine the appropriate contribution to the fund in accordance with subsection (d) of this section. A determination by the Commissioner under this subsection shall apply to the reserve fund contribution for an assessment concerning which a written agreement under section 3262 is signed after the date of the Commissioner’s determination and shall not affect the reserve fund contribution for an assessment concerning which such an agreement was signed on or before the date of the Commissioner’s determination.

(d) The reserve fund shall be capitalized in accordance with standards and procedures approved by the Commissioner of Financial Regulation to cover expected foreclosures and fund administration costs based on good lending practice experience. Interest earned shall remain in the fund. The administrator of the reserve fund shall invest and reinvest the monies in the fund and hold, purchase, sell, assign, transfer, and dispose of the investments in accordance with the standard of care established by the Prudent Investor Rule under 9 Vt. Stat. Ann. chapter 147. The administrator shall apply the same investment objectives and policies adopted by the Vermont State Employees’ Retirement System, where appropriate, to the investment of monies in the fund.

(e) The municipality shall disclose in advance to each interested property owner the amount of that property owner’s required payment into the reserve fund. Once disclosed, the amount of the reserve fund payment shall not change over the life of the assessment.

(f) An entity appointed under 30 V.S.A. § 209(d)(2) to deliver energy efficiency programs to multiple service territories shall administer the reserve fund created under subdivision (a)(1) of this section.

(1) The entity’s costs of administering the reserve fund shall be considered costs of operating the districts under section 3263 of this title.

(2) In the event of foreclosure on a property that is subject to a special assessment and is in a district that participates in the reserve fund administered by the entity, the entity’s obligation shall be to disburse, at the direction of the municipality, monies from the reserve fund to apply to the past due balances of the assessment. In no event shall other monies received or held by the entity be available to meet this obligation or the payment of balances on an assessment.

(3) The entity shall keep an accurate account of all activities and receipts and expenditures under this subsection. An independent audit of the reserve fund shall be conducted annually. The cost of such an audit shall be considered a cost of administering the reserve fund. Where feasible, the entity shall cause this audit to be conducted in conjunction with other independent audits of its accounts, receipts, and expenditures. An audit conducted under this subdivision shall be available, on request, to the Auditor of Accounts and the Commissioners of Financial Regulation and of Public Service. (Added 2009, No. 45, § 15j, eff. May 27, 2009; amended 2011, No. 47, § 18g, eff. Jan. 1, 2012; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.)