HOUSE BILL NO. 8

INTRODUCED BY MCCANN M

BY REQUEST OF THE DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION AND THE OFFICE OF BUDGET AND PROGRAM PLANNING

A BILL FOR AN ACT ENTITLED: "AN ACT APPROVING RENEWABLE RESOURCE PROJECTS AND AUTHORIZING LOANS; REAUTHORIZING RENEWABLE RESOURCE PROJECTS AUTHORIZED BY THE 55TH LEGISLATURE; APPROPRIATING MONEY TO THE DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION FOR LOANS UNDER THE RENEWABLE RESOURCE GRANT AND LOAN PROGRAM; AUTHORIZING THE ISSUANCE OF COAL SEVERANCE TAX BONDS; AUTHORIZING THE CREATION OF A STATE DEBT AND APPROPRIATING COAL SEVERANCE TAXES; PLACING CERTAIN CONDITIONS UPON LOANS; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE."

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

NEW SECTION. Section 1. Approval of renewable resource projects and authorizations to provide loans. The legislature finds that the renewable resource projects listed in this section meet the provisions of 17-5-702. The department of natural resources and conservation is authorized to make loans to the political subdivisions of state government and local governments listed below in amounts not to exceed the loan amounts listed for each project from the proceeds of the bonds authorized in [section 3].

(1) GROUP A: Notwithstanding the provisions of [section 6], the interest rate for the projects in this group must be at the rate at which the state bonds are sold for the anticipated 20-year term of the loan. The projects in this group are eligible for grants authorized under House Bill No. 6. If a grant is authorized but available grant funds are insufficient, the applicant must be offered the opportunity to receive a loan for up to the total amount of the authorized loan under [sections 1 through 8] plus the amount of the authorized grant approved in House Bill No. 6.

Loan	Amount

MALTA IRRIGATION DISTRICT

Repair and Modification of Dodson Diversion Dam	$2,274,950

DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION

Deadman's Basin Water Quality Improvement	409,700

BOULDER, TOWN OF

Water System Improvements	907,000

DALY DITCHES IRRIGATION DISTRICT

Republican Canal Diversion Dam Replacement	730,691

HEBGEN BASIN/WEST YELLOWSTONE REFUSE DISTRICT

Composting Facility for Municipal Solid Waste	2,080,000

(2) GROUP B: Notwithstanding the provisions of [section 6], the interest rate for the projects in this group is 4.5% or the rate at which the state bonds are sold, whichever is lower, for up to 20 years.

Loan	Amount

CANYON CREEK IRRIGATION DISTRICT

Canyon Lake and Wyant Lake Restoration Project	$227,000

DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION

Missouri Pipe Span Rehabilitation Project	409,426

NEW SECTION. Section 2. Projects not completing requirements -- projects reauthorized. The legislature finds that the following renewable resource projects that were approved by the 55th legislature in Chapter 80, Laws of 1997, may not complete the requirements necessary to obtain the loan funds prior to June 30, 1999. The projects described in this section are reauthorized. The department of natural resources and conservation is authorized to make loans to the political subdivisions of state government and local governments listed below in amounts not to exceed the loan amounts listed for each project from the proceeds of the bonds authorized in [section 3].

(1) GROUP A: Notwithstanding the provisions of [section 6], the interest rate for the project in this group may be 1% below the long-term bond rate at which the state bonds are sold for the first 5 years of an anticipated 20-year term and must be at the rate at which the state bonds are sold for the remaining 15 years.

Loan	Amount

ENNIS, TOWN OF

Water Storage and Distribution System Improvements	$350,000

(2) GROUP B: Notwithstanding the provisions of [section 6], the interest rate for the projects in this group may be 2% below the long-term bond rate at which the state bonds are sold for the first 5 years of an anticipated 20-year term and must be at the rate at which the state bonds are sold for the remaining 15 years.

Loan	Amount

GLENDIVE, CITY OF

Water Treatment Plant Improvements	$2,240,762

HILL COUNTY WATER DISTRICT

Water Treatment Plant	400,000

FORSYTH, CITY OF

Water Treatment Plant Improvements	1,218,916

SEELEY LAKE-MISSOULA COUNTY WATER DISTRICT

Water Treatment Plant	1,600,000

(3) GROUP C: Notwithstanding the provisions of [section 6], the interest rate for the project in this group may be 3% below the long-term bond rate at which the state bonds are sold for the first 5 years of an anticipated 20-year term and must be at the rate at which the state bonds are sold for the remaining 15 years.

FORT PECK RURAL COUNTY WATER DISTRICT	$1,325,000

(4) GROUP D: Notwithstanding the provisions of [section 6], the interest rate for the project in this group is 3.5% or the rate at which the state bonds are sold, whichever is lower, for up to 20 years.

Loan	Amount

HUNTLEY PROJECT IRRIGATION DISTRICT

Irrigation System Improvements	$3,500,440

(5) GROUP E: Notwithstanding the provisions of [section 6], the interest rate for the project in this group is 4.5% or the rate at which the state bonds are sold, whichever is lower, for up to 20 years.

Loan	Amount

MONTANA DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION

North Fork of the Smith River Dam Rehabilitation	$1,035,467

NEW SECTION. Section 3. Coal severance tax bonds authorized. (1) The legislature finds that Title 17, chapter 5, part 7, provides for the issuance of coal severance tax bonds for financing specific approved renewable resource projects as part of the state renewable resource grant and loan program. Available funds from previous sales of coal severance tax bonds, plus any additional principal amount on bonds as may be necessary, pursuant to the conditions in 85-1-605, to fund emergency loans, as authorized and approved in accordance with 85-1-605(4), also may be used for the projects approved in [sections 1 through 8]. The board of examiners is authorized to issue coal severance tax bonds in an amount not to exceed $23,603,032, of which $18,909,352 is to be used to finance the projects approved in [sections 1 and 2], $2,547,950 is to be used to finance additional loans in lieu of grants for projects listed in [section 1] (if grant funds are not sufficient), and up to $2,145,730 is to be used to establish a reserve for the bonds. Proceeds of the bonds are appropriated to the department of natural resources and conservation for financing the projects identified in [sections 1 and 2] and may be used as authorized in 85-1-605(4). Loans made under 85-1-605(4) must bear interest at the rate borne by the state bonds unless the legislature in a subsequent session provides for a lower interest rate, in which case the rate must be reduced to the rate specified by the legislature.

(2) In connection with the issuance of coal severance tax bonds, the board of examiners may pay the principal and interest on the bonds when due from the debt service account and in all other respects manage and use the funds within each special bond account for the benefit of the bonds. The board of examiners shall exercise its discretion to enhance the marketability of the bonds and to secure the most advantageous financial arrangements for the state.

(3) Earnings on bond proceeds prior to the completion of any loan must be allocated to the debt service account to pay the debt service on the bonds during this period. Earnings in excess of debt service, if any, must be allocated to the renewable resource grant and loan state special revenue account.

(4) Loan repayments from loans financed with coal severance tax bonds are pledged, dedicated, and appropriated to the debt service account in the state treasury for the benefit of bonds approved for loans under this section.

NEW SECTION. Section 4. Creation of state debt -- appropriation of coal severance tax -- bonding provisions. (1) Because [section 3] authorizes the creation of a state debt, a vote of two-thirds of the members of each house is required for enactment of [section 3].

(2) The legislature, through the enactment of this section by a vote of three-fourths of the members of each house of the legislature, as required by Article IX, section 5, of the Montana constitution, pledges, dedicates, and appropriates from the coal severance tax bond fund all money necessary for the payment of principal and interest not otherwise provided for on the coal severance tax bonds authorized by [section 3] to be issued pursuant to Title 17, chapter 5, part 7, and pursuant to the provisions of [sections 1 through 7] and the general resolution for this bond program that has been adopted by the board of examiners under the authority provided in Title 17, chapter 5, part 7.

NEW SECTION. Section 5. Condition of loans. (1) Disbursement of funds under [sections 1 through 8] for loans is subject to the following conditions that must be met by project sponsors:

(a) approval of a scope of work and budget for the project by the department of natural resources and conservation. Reductions in a scope of work or budget may not affect priority activities or improvements.

(b) documented commitment of other funds required for project completion;

(c) satisfactory completion of conditions described in the recommendations section of the project narrative in the renewable resource grant and loan program project evaluations and recommendations report for the 1999 biennium;

(d) execution of a loan agreement with the department; and

(e) accomplishment of other specific requirements considered necessary by the department to accomplish the purpose of the loan as evidenced from the application to the department or from the proposal to the legislature.

(2) Each sponsor authorized for a loan from coal severance tax bond proceeds may be required to pay to the department a pro rata share of the bond issuance costs and the administrative costs incurred by the department to complete the loan transaction.

NEW SECTION. Section 6. Interest rates on loans. Loans made from proceeds of coal severance tax bonds must be at interest rates specified in [sections 1 through 3], except that when loan requests are reduced, interest rates must be recalculated based on the methodology described in the renewable resource grant and loan program project evaluations and recommendations report submitted to the 56th legislature for the 2001 biennium. If the bonds or notes bear interest at an adjustable rate, the department of natural resources and conservation shall establish, at the time of the sale of each bond, an assured rate of interest as if the bond bore interest at a fixed rate. The assured rate of interest must be the rate of interest on the bonds for the purpose of calculating the interest rates on the loans pursuant to [sections 1 through 3].

NEW SECTION. Section 7. Private and discount purchase of loans. Loans to political subdivisions and local government entities and bonds, warrants, and notes issued in evidence of the loans may be made, purchased by, and sold to the department of natural resources and conservation at a discount and at a private negotiated sale, notwithstanding the provisions of any other law applicable to political subdivisions or local government entities.

NEW SECTION. Section 8. Appropriations established. For any entity of state government that receives a loan under [sections 1 through 7], an appropriation is established for the amount of the loan upon award of the loan by the department of natural resources and conservation.

NEW SECTION. Section 9. Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.

NEW SECTION. Section 10. Effective date. [This act] is effective on passage and approval.

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