(A) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes pursuant to Section 4-29-60, Section 4-29-67, Section 4-12-20, or Section 4-12-30 may issue special source revenue bonds secured by and payable from all or a part of such revenues, subject to the following terms and conditions:

(1) The issuance of bonds is authorized by a duly adopted ordinance of the governing body of the issuer or, if the issuer is a special purpose district, an ordinance of the county council or councils in the county or counties in which the special purpose district is located, and a resolution of the governing body of the issuer, after a public hearing is held at least fifteen days after notice of the hearing is published in a newspaper of general circulation in the county or municipality or special purpose district.

(2)(i) The bonds are issued for the purpose of paying the cost of designing, acquiring, constructing, improving, or expanding (a) the infrastructure serving the issuer or the project, (b) for improved or unimproved real estate and personal property including machinery and equipment used in the operation of a manufacturing or commercial enterprise, or (c) aircraft which qualifies as a project pursuant to Section 12-44-30(16), which property is determined by the issuer to enhance the economic development of the issuer. Costs of issuance of the bonds also may be paid from bond proceeds. Bonds issued pursuant to this section to finance the acquisition of real or personal property may be additionally secured by a mortgage of that real or personal property.

(ii) To the extent that the bonds or any credit or offset against a fee in lieu of taxes that is allowed in lieu of the issuance of the bonds, is used as payment for personal property, including machinery and equipment, and the personal property is removed from the project at any time during the life of the fee, the amount of the fee in lieu of taxes due on the personal property for the year in which the personal property was removed from the project also shall be due for the two years immediately following the removal. The amounts will be remitted by the department to the county in which the project is located.

(a) To the extent that any payment amounts were used for both real property and personal property or infrastructure and personal property, all amounts will be presumed to have been first used for personal property.

(b) If personal property is removed from the project but is replaced with qualifying replacement property, then the personal property will not be considered to have been removed from the property.

(3) The bonds may include amounts for capitalized interest for a period not to extend beyond the later of (a) the date that is three years from the date of issuance of the bonds and (b) the first date on which any ad valorem taxes (including, but not limited to, county or school district taxes) would have been payable on the property (other than unimproved real property) which is the subject of the payment in lieu of taxes.

(4) The issuer may use proceeds of the bonds (including by establishment of a reserve fund to be used) (a) directly for infrastructure owned or controlled by the issuer or (b) to make loans or grants to, or to participate in joint undertakings with, other agencies or political subdivisions of the State that own or control the infrastructure referred to in item (2) of this subsection.

(5) The bonds are, and must state on their face that they are, (a) payable solely from all or a specifically described part of the payments in lieu of taxes received and retained by the issuer under Section 4-29-60, Section 4-29-67, Section 4-12-20, Section 4-12-30, or Section 13 of Article VIII of the Constitution of this State, (b) not secured by, or in any way entitled to, a pledge of the full faith, credit, or taxing power of the issuer, (c) not an indebtedness of the issuer within the meaning of any state constitutional provision or statutory limitation but are payable solely from a special source that does not include revenues from any tax or license, and (d) not a pecuniary liability of the issuer or a charge against the issuer's general credit or taxing power.

(6) The ordinance authorizing the issuance of the bonds shall specifically describe the portion of the payments in lieu of taxes received and retained by the issuer from which the bonds are payable and by which the bonds are secured.

(7) The bonds may be executed and delivered at any time as a single issue or from time to time as several issues, be in the form and denominations, be of the tenor, be payable in the installments and at the time or times not to exceed the time over which payments in lieu of taxes are scheduled to be received, be subject to the terms of redemption, be payable at the place or places, bear interest at the rate or rates which is payable at the place or places, and contain provisions not inconsistent with this section, all of which must be provided in the ordinance authorizing the bonds.

(8) The bonds may be sold at public or private sale at the prices and in the manner and from time to time as may be determined by the governing board to be most advantageous, and the governing board may pay, as a part of the costs described in item (2) of this subsection, and out of the bond proceeds, all expenses, premiums, commissions, and expenses which the governing board considers necessary or advantageous in connection with the authorization, sale, and issuance of the bonds.

(9) The ordinance may provide for the issuance, in the future, of further bonds on a parity with those initially issued, but the proceedings may preclude the issuance of bonds or any obligations of any sort secured by a lien prior to the lien of the bond or bonds afterward issued on a parity with the bonds.

(10) Pending the issuance of bonds, bond anticipation notes may be issued, and to the end that a vehicle be provided therefor, the provisions of Section 11-17-10 to Section 11-17-110, as now or hereafter amended, are applicable to the bond anticipatory borrowing.

(11) The ordinance authorizing the issuance of the bonds may contain agreements and provisions customarily contained in the instruments securing revenue or special source bonds as the governing board considers advisable, but the issuer does not have the power to obligate itself to impose or maintain any particular level of tax rates.

(B) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes pursuant to Section 4-29-60, Section 4-29-67, Section 4-12-20, or Section 4-12-30 may pledge the revenues as additional security for general obligation debt or revenue debt of the issuer if the general obligation debt or revenue debt is issued in accordance with items (1) and (2) of this subsection.

(C) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes pursuant to Section 4-29-60, Section 4-29-67, Section 4-12-20, or Section 4-12-30 may pledge the revenues as additional security for general obligation debt or revenue debt of other agencies or political subdivisions of the State referred to in item (4)(b) of this subsection if the pledge is authorized by a duly-adopted ordinance of the governing body of the county or municipality or special purpose district after a public hearing is held at least fifteen days after notice of the hearing is published in a newspaper of general circulation in the county or municipality or special purpose district, and if the general obligation debt or revenue debt to which the revenues received from a payment in lieu of taxes are pledged is issued solely for the purpose of paying the cost of designing, acquiring, constructing, improving, or expanding the infrastructure serving the county or municipality or special purpose district in order to enhance the economic development of the county or municipality or special purpose district and costs of issuance of the bonds.

(D) Revenues received by a county or municipality or special purpose district which may be pledged or from which bonds may be payable and secured pursuant to this Section 4-29-68 or Section 4-1-175 may be used jointly to pay or secure a single series of bonds.

(E) A political subdivision of this State subject to the limitation of Section 14(7)(a) of Article X of the Constitution of this State pledging pursuant to this section all or a portion of the revenues received and retained by that subdivision from a payment in lieu of taxes to the repayment of any bonds shall not include in the assessed value of taxable property located in the political subdivision for the purposes of calculating the limit imposed by that section of the Constitution any amount representing the value of the property that is the basis of the pledged portion of revenues. If the political subdivision, before pledging revenues pursuant to this section, has included an amount representing the value of a parcel or item of property that is the subject of a payment in lieu of taxes in the assessed value of taxable property located in the political subdivision and has issued general obligation debt within the debt limit calculated on the basis of such assessed value, then it may not pledge pursuant to this section revenues based on the item or parcel of property, to the extent that the amount representing its value is necessary to permit the outstanding general obligation debt within the debt limit of the political subdivision.

(F) A county, municipality, or special purpose district that receives and retains revenues from a payment in lieu of taxes pursuant to Section 4-1-170, 4-12-30, 4-29-60, 4-29-67, or Chapter 44, Title 12 in which these revenues are derived in whole or in part from a redevelopment project area established pursuant to Title 31, Chapter 6 shall allocate these revenues in accordance with the ordinance of the municipality adopted pursuant to Section 31-6-70 as if these revenues remained ad valorem taxes. All fees collected in the redevelopment project area which are not subject to the ordinance of the municipality adopted pursuant to Section 31-6-70 become payments in lieu of taxes and the portion collected by the municipality may be pledged to secure special source revenue bonds issued by the municipality pursuant to Section 4-1-175 or this section.

(G) If the stream of payments from a fee in lieu of tax agreement becomes insufficient to completely service the payments of interest and principal due pursuant to a debt obligation issued pursuant to Section 4-29-68, a penalty must be imposed, in addition to any amount of fee in lieu of tax payment otherwise due or payable, in the amount necessary to pay all amounts of interest and principal which are not otherwise paid by the pledged fee revenue. This penalty does not apply if the entity obligated to make the fee payments or a member of the control group associated with the entity owns the entire bond issue one year before any such default of payment.

HISTORY: 1992 Act No. 361, Section 35, eff May 4, 1992; 1993 Act No. 123, Section 4, eff June 14, 1993; 1995 Act No. 4, Section 1, eff January 10, 1995; 1995 Act No. 125, Section 4B, approved June 7, 1995 and effective for taxable years beginning after 1995; 1996 Act No. 462, Section 23, eff July 2, 1996; 1997 Act No. 149, Section 7, eff June 24, 1997; 1999 Act No. 114, Section 4, eff June 30, 1999; 2007 Act No. 116, Section 67, eff June 28, 2007; 2010 Act No. 290, Section 7, eff January 1, 2011.

Code Commissioner's Note

Subsection (G) was originally codified at the direction of the Code Commissioner as Section 12-44-180. On March 12, 1999, it was redesignated as Section 4-29-68(G), at the direction of the Code Commissioner.

Editor's Note

1993 Act No. 123, Section 7, eff June 14, 1993, provides as follows:

"SECTION 7. This act takes effect upon approval by the Governor and applies prospectively to any project for which an inducement agreement was not entered into before the effective date of this act; provided, however, that projects with respect to which an inducement agreement, millage rate agreement, or both, have been entered into before the effective date of this act are entitled but not required to use the provisions of Section 4-29-67 of the 1976 Code, as amended by this act, and also one or more of the provisions of the following subsections of Section 4-29-67 of the 1976 Code as in existence before the amendments contained in this act: (B); (F)(1)(c); (F)(2); (G); and (I); and provided further that investors having a lease agreement which was entered into before the effective date of this act meeting the eighty-five million dollar minimum level of investment required under Section 4-29-67(C) within five years from the date the lease agreement was signed shall have seven years from the date the lease agreement was signed to complete the investment, unless a longer period is otherwise stipulated in the lease agreement. The last sentence of Section 4-29-67(I) of the 1976 Code, as amended by this act, is not applicable to any project with respect to which an inducement agreement was entered into or an inducement or similar resolution was adopted by the governing body of the county before the effective date of this act; provided, however, that if an inducement agreement has not been entered into before the effective date of this act, such an agreement must be entered into with respect to any such project within one year of the effective date of this act in order for pre-inducement agreement project expenditures to qualify for the fee provided in subsection (D)(2). Any lease which was entered into with a county prior to the effective date of this act, in order to preserve the eligibility of certain property for subsequent inclusion in a fee in lieu of taxes arrangement, and which lease provides for lease payments within two dollars of what the property taxes on the leased property would otherwise have been, shall not be considered a lease agreement of any kind for purposes of beginning the running of any time period provided under Section 4-29-67 of the 1976 Code, including, but not limited to, the five, seven, and twenty-year periods provided therein. For purposes of this SECTION 7, references to inducement or millage rate agreements shall be considered to exclude any amendments or replacements of such agreements."

Effect of Amendment

The 1993 amendment added references throughout to "special purpose district"; in subsection (A) rewrote paragraphs (1), (2), (4) and (9); and in subsection (E), first sentence, deleted "or Section 15(6)" preceding "of Article X."

The first 1995 amendment, Act No. 4, Section 1, added subsection (F).

The second 1995 amendment, Act No. 125, Section 4B, added references to Sections 4-12-20 and 4-12-30 in subsections (A) through (C).

The 1996 amendment revised subsection (A) paragraph (2).

The 1997 amendment added subsection (G).

The 1999 amendment inserted "4-12-30" and "Chapter 44, Title 12", changed "taxes" to "fees" and made grammatical changes in subsection (F).

The 2007 amendment rewrote paragraph (A)(2).

The 2010 amendment rewrote paragraph (A)(2).