CHAPTER 11. RURAL COMMUNITY WATER SUPPLY SYSTEMS
IC 14-25-11
Chapter 11. Rural Community Water Supply Systems
IC 14-25-11-1
"Commission" defined
Sec. 1. As used in this chapter, "commission" refers to the Indianautility regulatory commission.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-2
"Eligible entity" defined
Sec. 2. As used in this chapter, "eligible entity" means a city,town, conservancy district, special taxing district, or specialassessment district that meets the following conditions:
(1) Has authority to own, construct, enlarge, maintain, oroperate any type of water system.
(2) Has a population at the time of the submission of anapplication of not more than one thousand two hundred fifty(1,250) according to:
(A) the most recent federal census; or
(B) if that census figure is not available, a census approvedby the state board of finance.
A hospital, a school, a church, a factory, a commercialestablishment, or an institution of any kind served or to beserved by a water supply system is not considered to have apopulation equivalent for the purpose of determining the entity'seligibility.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-3
"Legislative body" defined
Sec. 3. As used in this chapter, "legislative body" means thefollowing:
(1) The common council of a city.
(2) The town council of a town.
(3) The board created by statute to administer the affairs of anyof the following:
(A) A conservancy district.
(B) A special taxing district.
(C) A special assessment district.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-4
Money borrowed from flood control revolving fund
Sec. 4. The legislative body of an eligible entity may borrow fromthe flood control revolving fund created by IC 14-28-5 up to onehundred fifty thousand dollars ($150,000) for the construction,modernization, enlargement, or alteration of a water supply systemor a part of the system. Money borrowed may be used, among otherpurposes, to purchase, construct, enlarge, or modernize reservoirs,
wells, mains, meters, storage tanks, pumps, filtering beds, chemicaltreatment facilities, and anything necessary to collect, store, anddeliver adequately treated water to the property line of the user. Aloan for an entity for these purposes is in addition to any other loanfrom the flood control revolving fund for purposes other than watersupply.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-5
Uses of loans
Sec. 5. A loan may be used to pay the following:
(1) Engineering, legal, and administrative costs incidental to theapplication for the loan and the program for construction forwhich the money is borrowed.
(2) Necessary construction and purchases.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-6
Loan applications
Sec. 6. (a) The legislative body of an eligible entity that desires aloan must do the following:
(1) First pass an ordinance or a resolution to that effect.
(2) Prepare and submit an application to the department.
(b) An application must state the following:
(1) The amount of the loan desired.
(2) A statement of the need for the water supply system.
(3) A statement of the program for which the money will beused, supported by a preliminary engineering report thatincludes cost studies.
(4) Written statements that the eligible entity is unable toborrow the amount of the loan from the commercial moneymarket by the sale of revenue or other bonds that the eligibleentity may sell. The statements must be signed by at least two(2) individuals separately engaged in the business of buying andselling municipal bonds.
(5) A program for the repayment of the loan.
(6) Any other information that the department requests.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-7
Duties of state department of health regarding loan applications
Sec. 7. (a) Upon receipt of an application, the department shallrefer the application to the state department of health.
(b) The state department of health shall do the following:
(1) Investigate the application.
(2) Make a report to the department concerning the following:
(A) The need for a loan.
(B) The acceptability of the works of improvement for whichthe loan is proposed to be used.
(c) Upon receipt of the report from the state department of health,
the department shall do the following:
(1) Examine the application to determine if the proposed worksof improvement fit into a comprehensive program for thedevelopment of the water resources of Indiana.
(2) Prepare a report upon the application.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-8
Duties of commission regarding loan applications
Sec. 8. (a) The legislative body of an eligible entity desiring aloan shall also submit the application to the commission forauthorization to borrow the money.
(b) The commission:
(1) shall act upon the application; and
(2) may request from the state department of health and thedepartment a copy of each department's report on theapplication.
(c) The commission may:
(1) approve the application; and
(2) order approval to borrow money;
before the completion of the reports upon the application by the statedepartment of health and the department.
(d) The fee of the commission is payable out of the loan.However, if the eligible entity does not receive the loan, a fee maynot be charged.
(e) The commission shall, after giving notice as provided by IC 8,consider the following in making a determination:
(1) Whether the application contains an adequate program,within the limits of the maximum loan amounts available, tomeet the needs of the eligible entity.
(2) Whether the cost estimates for the proposed works ofimprovement are reasonable.
(3) Whether the program for the repayment of the loan isreasonable with due consideration for operation andmaintenance expenses.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-9
Duties of state board of finance regarding loan applications
Sec. 9. (a) The department shall forward the application and thedepartment's report on the application, together with the report of thestate department of health, to the state board of finance.
(b) Before acting on the application, the state board of financeshall also request of and receive from the commission thecommission's order on the application for authority to borrow money.
(c) The state board of finance shall do the following:
(1) Consider the economic need of the eligible entity applyingfor the loan in addition to the following:
(A) The reports of the following:
(i) The state department of health. (ii) The department.
(B) The order of the commission.
(2) Approve or disapprove the application accordingly.
(d) If the state board of finance approves the application, theauditor of state shall promptly make the money available to theeligible entity applying for the loan.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-10
Terms, repayment, and refunding of loans
Sec. 10. (a) A loan made under this chapter or under IC 13-3-7(before its repeal):
(1) may be made for a period not to exceed twenty (20) years;and
(2) must bear interest as follows:
(A) At the rate of one and one-half percent (1 1/2%) per yearfor the first eight (8) years.
(B) After that, at the rate of five percent (5%) per year untilrepaid in full.
(b) An eligible entity receiving a loan under this chapter mustagree to the following:
(1) Repay the loan in equal annual installments of principal.
(2) Pay interest annually on the unpaid balance of the loan.
(c) The first installment must be paid not later than December 31of the year following the year in which the loan is made available.However, if:
(1) the loan is made available to the eligible entity after theregular budget making time; and
(2) there is not a provision in the budget of the entity for thecollection of a tax to repay the principal and interest of the loanin the next following year;
the first installment of repayment shall be paid not later thanDecember 31 of the second year following the year in which the loanmoney is made available.
(d) The borrower may make a repayment of the loan in full or inpart at any time without interest penalty.
(e) A loan, whether payable from revenues, taxes, or both, may berefunded by the eligible entity by the issuance of bonds, notes, orother evidences of indebtedness, secured by a pledge of revenues orin another manner under other statutes.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-11
Levy of special annual tax to repay loan
Sec. 11. (a) The legislative body of an eligible entity receiving aloan under this chapter or IC 13-3-7 (before its repeal) may levy aspecial annual tax on all taxable property located within thegeographic boundaries of the entity. The tax:
(1) is in addition to any other tax authorized by statute; and
(2) must be levied at rates that will produce sufficient revenue
to pay the annual installment of principal and interest.
The tax at the rate authorized may be in addition to the maximumannual rates prescribed by law.
(b) The proceeds of the special tax shall be kept and maintainedin a separate and special fund for the payment of principal andinterest only.
(c) Other statutes providing for petitions, notices, andremonstrances before incurring debt do not apply to the following:
(1) The loan.
(2) The tax rate necessary to make payments.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-12
Approval of operation and maintenance plans
Sec. 12. When final plans have been prepared after the receipt ofthe loan, the state department of health must approve the plans andthe provisions for operation and maintenance before loan money maybe expended for construction or purchase. This section, however,does not delay the payment of the following:
(1) The fee to the commission.
(2) Engineering, legal, or administrative costs due and payable.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-13
Repayment of loan from charges to users
Sec. 13. If the legislative body of an eligible entity proposes torepay the loan in whole or in part from revenues received from acharge to users for services provided, the legislative body shall levyfor at least the first year the special tax provided in section 11 of thischapter in an amount that, together with revenues to be received, willbe sufficient to assure the repayment of the first installment ofprincipal and interest on the remaining balance.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-14
Revenues from water supply system sufficient to repay loan
Sec. 14. (a) If the receipt of revenue from the water supply systemis sufficient to pay the interest due and the annual installment ofrepayment of the loan, the legislative body of the entity shall do thefollowing:
(1) Pay those amounts from revenue received.
(2) Hold the proceeds from the special tax levy in a special fundthat may not be used for any other purpose.
(b) The legislative body of the entity may invest the money in thespecial fund in obligations having maturities not exceeding one (1)year in accordance with IC 5-13-9.
(c) When the loan has been repaid in full to the state, thelegislative body of the entity shall transfer the amount in the specialfund to the general fund.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-15
Revenues from water supply system insufficient to repay loan
Sec. 15. If the receipt of revenue from the water supply system isinsufficient in any year to pay the interest due and the annualinstallment of repayment of the loan, the legislative body of theentity shall do the following:
(1) Pay the amounts from the special fund.
(2) At the next budget making time levy the special tax in asufficient amount to provide in the special fund sufficientmoney to pay the next installment of principal due and theinterest on the remaining balance.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-16
Effect of loans from other sources
Sec. 16. The legislative body of an eligible entity may borrowmoney as provided in this chapter before, simultaneously with, orafter borrowing money from other sources for the purposesauthorized in this chapter. The legislative body of the entity maycontinue to levy the special tax provided in section 11 of this chapterfor the payment of principal and interest on the loan authorized bythis chapter or IC 13-3-7 (before its repeal) irrespective of whetherthe principal and interest on the loans from other sources are to bepaid by revenues, tax proceeds, or other methods.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-17
Order of repayment of loans; impairment of duty to levy tax
Sec. 17. (a) If:
(1) the principal and interest on the loans from other sources areto be paid from revenues; and
(2) the legislative body of the eligible entity also proposes topay the principal and interest on the loan authorized by thischapter or IC 13-3-7 (before its repeal) from revenues;
the obligation of the legislative body of the entity to repay theprincipal and interest of the loan from revenues is subordinate to theother loans from other sources.
(b) The legislative body of the entity proposing to pay the loanfrom revenues may not make any covenants in connection with loansfrom other sources that would impair the duty of the legislative bodyto:
(1) levy for at least the first year the special tax provided insection 11 of this chapter; or
(2) levy the special tax in any year thereafter when the receiptof revenues from the water supply system is insufficient to paythe next installment of principal due and the interest on theremaining balance of the loan after deducting from the revenuethe following:
(A) The full amount to pay the next installment of principaldue. (B) The interest on the remaining balance of the loans fromother sources that are to be paid by revenues.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-18
Loan in excess of constitutional limits not to be repaid with taxrevenues
Sec. 18. This chapter does not authorize a loan to be repaid fromtax collections in an amount that exceeds any constitutionallimitations. If the amount borrowed exceeds those limitations, theexcess amount is payable only from revenues to be derived fromcharges to users for services provided.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-19
Recovery of amounts owed to flood control revolving fund
Sec. 19. (a) This section applies if an eligible entity:
(1) fails to make any payments to the flood control revolvingfund or any other payments required by this chapter; or
(2) is in any way indebted to the fund for any amounts incurredor accrued.
(b) As used in this section, "fund" refers to the flood controlrevolving fund.
(c) The state may recover the amounts the eligible entity owes tothe fund by either of the following methods:
(1) The state may institute an appropriate action in the circuit orsuperior court with jurisdiction in the county in which theeligible entity is located on the instigation of the state board offinance and the department. The attorney general shallprosecute the action.
(2) The auditor of state may withhold the payment anddistribution of any state money that the defaulting eligible entityis entitled to receive under any statute.
As added by P.L.1-1995, SEC.18.
IC 14-25-11-20
Effect on loan of sale of water supply system
Sec. 20. (a) This section applies if the water supply systemconstructed, modernized, enlarged, or altered from a loan providedunder this chapter is sold to another eligible entity regardless ofwhether the entity may borrow money under this chapter.
(b) The purchasing entity shall either:
(1) repay the loan provided under this chapter in full; or
(2) agree with the state board of finance to assume all theobligations for repayment of the loan of the selling entity.
(c) Upon acceptance of this agreement by the purchasing entity,the state board of finance shall release the selling entity from furtherliability in connection with the loan.
(d) If the water supply system constructed, modernized, enlarged,or altered from a loan provided under this chapter is sold to a water
supply utility without taxing power, the loan shall be repaid in fullbefore the consummation of the sale.
As added by P.L.1-1995, SEC.18.