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 Indiana
utility 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 special
assessment district that meets the following conditions:
(1) Has authority to own, construct, enlarge, maintain, or
operate any type of water system.
(2) Has a population at the time of the submission of an
application 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 approved
by the state board of finance.
A hospital, a school, a church, a factory, a commercial
establishment, or an institution of any kind served or to be
served by a water supply system is not considered to have a
population equivalent for the purpose of determining the entity's
eligibility. 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 the
following:
(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 any
of 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 from
the flood control revolving fund created by IC 14-28-5 up to one
hundred fifty thousand dollars ($150,000) for the construction,
modernization, enlargement, or alteration of a water supply system
or a part of the system. Money borrowed may be used, among other
purposes, to purchase, construct, enlarge, or modernize reservoirs,
wells, mains, meters, storage tanks, pumps, filtering beds, chemical
treatment facilities, and anything necessary to collect, store, and
deliver adequately treated water to the property line of the user. A
loan for an entity for these purposes is in addition to any other loan
from the flood control revolving fund for purposes other than water
supply. 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 the
application for the loan and the program for construction for
which 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 a
loan 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 be
used, supported by a preliminary engineering report that
includes cost studies.
(4) Written statements that the eligible entity is unable to
borrow the amount of the loan from the commercial money
market by the sale of revenue or other bonds that the eligible
entity may sell. The statements must be signed by at least two
(2) individuals separately engaged in the business of buying and
selling 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 shall
refer 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 which
the 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 works
of improvement fit into a comprehensive program for the
development 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 a
loan shall also submit the application to the commission for
authorization to borrow the money.
(b) The commission:
(1) shall act upon the application; and
(2) may request from the state department of health and the
department a copy of each department's report on the
application.
(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 state
department 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 may
not 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, to
meet the needs of the eligible entity.
(2) Whether the cost estimates for the proposed works of
improvement are reasonable.
(3) Whether the program for the repayment of the loan is
reasonable with due consideration for operation and
maintenance 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 the
department's report on the application, together with the report of the
state department of health, to the state board of finance.
(b) Before acting on the application, the state board of finance
shall also request of and receive from the commission the
commission'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 applying
for 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, the
auditor of state shall promptly make the money available to the
eligible 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 year
for the first eight (8) years.
(B) After that, at the rate of five percent (5%) per year until
repaid in full.
(b) An eligible entity receiving a loan under this chapter must
agree 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 31
of 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 the
regular budget making time; and
(2) there is not a provision in the budget of the entity for the
collection of a tax to repay the principal and interest of the loan
in the next following year;
the first installment of repayment shall be paid not later than
December 31 of the second year following the year in which the loan
money is made available.
(d) The borrower may make a repayment of the loan in full or in
part at any time without interest penalty.
(e) A loan, whether payable from revenues, taxes, or both, may be
refunded by the eligible entity by the issuance of bonds, notes, or
other evidences of indebtedness, secured by a pledge of revenues or
in 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 a
loan under this chapter or IC 13-3-7 (before its repeal) may levy a
special annual tax on all taxable property located within the
geographic 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 maximum
annual rates prescribed by law.
(b) The proceeds of the special tax shall be kept and maintained
in a separate and special fund for the payment of principal and
interest only.
(c) Other statutes providing for petitions, notices, and
remonstrances 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 of
the loan, the state department of health must approve the plans and
the provisions for operation and maintenance before loan money may
be 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 to
repay the loan in whole or in part from revenues received from a
charge to users for services provided, the legislative body shall levy
for at least the first year the special tax provided in section 11 of this
chapter in an amount that, together with revenues to be received, will
be sufficient to assure the repayment of the first installment of
principal 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 system
is sufficient to pay the interest due and the annual installment of
repayment of the loan, the legislative body of the entity shall do the
following:
(1) Pay those amounts from revenue received.
(2) Hold the proceeds from the special tax levy in a special fund
that may not be used for any other purpose.
(b) The legislative body of the entity may invest the money in the
special 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, the
legislative body of the entity shall transfer the amount in the special
fund 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 is
insufficient in any year to pay the interest due and the annual
installment of repayment of the loan, the legislative body of the
entity shall do the following:
(1) Pay the amounts from the special fund.
(2) At the next budget making time levy the special tax in a
sufficient amount to provide in the special fund sufficient
money to pay the next installment of principal due and the
interest 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 borrow
money as provided in this chapter before, simultaneously with, or
after borrowing money from other sources for the purposes
authorized in this chapter. The legislative body of the entity may
continue to levy the special tax provided in section 11 of this chapter
for the payment of principal and interest on the loan authorized by
this chapter or IC 13-3-7 (before its repeal) irrespective of whether
the principal and interest on the loans from other sources are to be
paid 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 are
to be paid from revenues; and
(2) the legislative body of the eligible entity also proposes to
pay the principal and interest on the loan authorized by this
chapter or IC 13-3-7 (before its repeal) from revenues;
the obligation of the legislative body of the entity to repay the
principal and interest of the loan from revenues is subordinate to the
other loans from other sources.
(b) The legislative body of the entity proposing to pay the loan
from revenues may not make any covenants in connection with loans
from other sources that would impair the duty of the legislative body
to:
(1) levy for at least the first year the special tax provided in
section 11 of this chapter; or
(2) levy the special tax in any year thereafter when the receipt
of revenues from the water supply system is insufficient to pay
the next installment of principal due and the interest on the
remaining balance of the loan after deducting from the revenue
the following:
(A) The full amount to pay the next installment of principal
due.
(B) The interest on the remaining balance of the loans from
other 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 tax
revenues
Sec. 18. This chapter does not authorize a loan to be repaid from
tax collections in an amount that exceeds any constitutional
limitations. If the amount borrowed exceeds those limitations, the
excess amount is payable only from revenues to be derived from
charges 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 revolving
fund or any other payments required by this chapter; or
(2) is in any way indebted to the fund for any amounts incurred
or accrued.
(b) As used in this section, "fund" refers to the flood control
revolving fund.
(c) The state may recover the amounts the eligible entity owes to
the fund by either of the following methods:
(1) The state may institute an appropriate action in the circuit or
superior court with jurisdiction in the county in which the
eligible entity is located on the instigation of the state board of
finance and the department. The attorney general shall
prosecute the action.
(2) The auditor of state may withhold the payment and
distribution of any state money that the defaulting eligible entity
is 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 system
constructed, modernized, enlarged, or altered from a loan provided
under this chapter is sold to another eligible entity regardless of
whether 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 the
obligations 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 further
liability 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 full
before the consummation of the sale. As added by P.L.1-1995, SEC.18.
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 Indiana
utility 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 special
assessment district that meets the following conditions:
(1) Has authority to own, construct, enlarge, maintain, or
operate any type of water system.
(2) Has a population at the time of the submission of an
application 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 approved
by the state board of finance.
A hospital, a school, a church, a factory, a commercial
establishment, or an institution of any kind served or to be
served by a water supply system is not considered to have a
population equivalent for the purpose of determining the entity's
eligibility. 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 the
following:
(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 any
of 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 from
the flood control revolving fund created by IC 14-28-5 up to one
hundred fifty thousand dollars ($150,000) for the construction,
modernization, enlargement, or alteration of a water supply system
or a part of the system. Money borrowed may be used, among other
purposes, to purchase, construct, enlarge, or modernize reservoirs,
wells, mains, meters, storage tanks, pumps, filtering beds, chemical
treatment facilities, and anything necessary to collect, store, and
deliver adequately treated water to the property line of the user. A
loan for an entity for these purposes is in addition to any other loan
from the flood control revolving fund for purposes other than water
supply. 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 the
application for the loan and the program for construction for
which 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 a
loan 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 be
used, supported by a preliminary engineering report that
includes cost studies.
(4) Written statements that the eligible entity is unable to
borrow the amount of the loan from the commercial money
market by the sale of revenue or other bonds that the eligible
entity may sell. The statements must be signed by at least two
(2) individuals separately engaged in the business of buying and
selling 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 shall
refer 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 which
the 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 works
of improvement fit into a comprehensive program for the
development 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 a
loan shall also submit the application to the commission for
authorization to borrow the money.
(b) The commission:
(1) shall act upon the application; and
(2) may request from the state department of health and the
department a copy of each department's report on the
application.
(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 state
department 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 may
not 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, to
meet the needs of the eligible entity.
(2) Whether the cost estimates for the proposed works of
improvement are reasonable.
(3) Whether the program for the repayment of the loan is
reasonable with due consideration for operation and
maintenance 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 the
department's report on the application, together with the report of the
state department of health, to the state board of finance.
(b) Before acting on the application, the state board of finance
shall also request of and receive from the commission the
commission'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 applying
for 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, the
auditor of state shall promptly make the money available to the
eligible 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 year
for the first eight (8) years.
(B) After that, at the rate of five percent (5%) per year until
repaid in full.
(b) An eligible entity receiving a loan under this chapter must
agree 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 31
of 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 the
regular budget making time; and
(2) there is not a provision in the budget of the entity for the
collection of a tax to repay the principal and interest of the loan
in the next following year;
the first installment of repayment shall be paid not later than
December 31 of the second year following the year in which the loan
money is made available.
(d) The borrower may make a repayment of the loan in full or in
part at any time without interest penalty.
(e) A loan, whether payable from revenues, taxes, or both, may be
refunded by the eligible entity by the issuance of bonds, notes, or
other evidences of indebtedness, secured by a pledge of revenues or
in 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 a
loan under this chapter or IC 13-3-7 (before its repeal) may levy a
special annual tax on all taxable property located within the
geographic 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 maximum
annual rates prescribed by law.
(b) The proceeds of the special tax shall be kept and maintained
in a separate and special fund for the payment of principal and
interest only.
(c) Other statutes providing for petitions, notices, and
remonstrances 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 of
the loan, the state department of health must approve the plans and
the provisions for operation and maintenance before loan money may
be 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 to
repay the loan in whole or in part from revenues received from a
charge to users for services provided, the legislative body shall levy
for at least the first year the special tax provided in section 11 of this
chapter in an amount that, together with revenues to be received, will
be sufficient to assure the repayment of the first installment of
principal 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 system
is sufficient to pay the interest due and the annual installment of
repayment of the loan, the legislative body of the entity shall do the
following:
(1) Pay those amounts from revenue received.
(2) Hold the proceeds from the special tax levy in a special fund
that may not be used for any other purpose.
(b) The legislative body of the entity may invest the money in the
special 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, the
legislative body of the entity shall transfer the amount in the special
fund 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 is
insufficient in any year to pay the interest due and the annual
installment of repayment of the loan, the legislative body of the
entity shall do the following:
(1) Pay the amounts from the special fund.
(2) At the next budget making time levy the special tax in a
sufficient amount to provide in the special fund sufficient
money to pay the next installment of principal due and the
interest 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 borrow
money as provided in this chapter before, simultaneously with, or
after borrowing money from other sources for the purposes
authorized in this chapter. The legislative body of the entity may
continue to levy the special tax provided in section 11 of this chapter
for the payment of principal and interest on the loan authorized by
this chapter or IC 13-3-7 (before its repeal) irrespective of whether
the principal and interest on the loans from other sources are to be
paid 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 are
to be paid from revenues; and
(2) the legislative body of the eligible entity also proposes to
pay the principal and interest on the loan authorized by this
chapter or IC 13-3-7 (before its repeal) from revenues;
the obligation of the legislative body of the entity to repay the
principal and interest of the loan from revenues is subordinate to the
other loans from other sources.
(b) The legislative body of the entity proposing to pay the loan
from revenues may not make any covenants in connection with loans
from other sources that would impair the duty of the legislative body
to:
(1) levy for at least the first year the special tax provided in
section 11 of this chapter; or
(2) levy the special tax in any year thereafter when the receipt
of revenues from the water supply system is insufficient to pay
the next installment of principal due and the interest on the
remaining balance of the loan after deducting from the revenue
the following:
(A) The full amount to pay the next installment of principal
due.
(B) The interest on the remaining balance of the loans from
other 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 tax
revenues
Sec. 18. This chapter does not authorize a loan to be repaid from
tax collections in an amount that exceeds any constitutional
limitations. If the amount borrowed exceeds those limitations, the
excess amount is payable only from revenues to be derived from
charges 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 revolving
fund or any other payments required by this chapter; or
(2) is in any way indebted to the fund for any amounts incurred
or accrued.
(b) As used in this section, "fund" refers to the flood control
revolving fund.
(c) The state may recover the amounts the eligible entity owes to
the fund by either of the following methods:
(1) The state may institute an appropriate action in the circuit or
superior court with jurisdiction in the county in which the
eligible entity is located on the instigation of the state board of
finance and the department. The attorney general shall
prosecute the action.
(2) The auditor of state may withhold the payment and
distribution of any state money that the defaulting eligible entity
is 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 system
constructed, modernized, enlarged, or altered from a loan provided
under this chapter is sold to another eligible entity regardless of
whether 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 the
obligations 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 further
liability 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 full
before the consummation of the sale. As added by P.L.1-1995, SEC.18.
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 Indiana
utility 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 special
assessment district that meets the following conditions:
(1) Has authority to own, construct, enlarge, maintain, or
operate any type of water system.
(2) Has a population at the time of the submission of an
application 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 approved
by the state board of finance.
A hospital, a school, a church, a factory, a commercial
establishment, or an institution of any kind served or to be
served by a water supply system is not considered to have a
population equivalent for the purpose of determining the entity's
eligibility. 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 the
following:
(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 any
of 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 from
the flood control revolving fund created by IC 14-28-5 up to one
hundred fifty thousand dollars ($150,000) for the construction,
modernization, enlargement, or alteration of a water supply system
or a part of the system. Money borrowed may be used, among other
purposes, to purchase, construct, enlarge, or modernize reservoirs,
wells, mains, meters, storage tanks, pumps, filtering beds, chemical
treatment facilities, and anything necessary to collect, store, and
deliver adequately treated water to the property line of the user. A
loan for an entity for these purposes is in addition to any other loan
from the flood control revolving fund for purposes other than water
supply. 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 the
application for the loan and the program for construction for
which 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 a
loan 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 be
used, supported by a preliminary engineering report that
includes cost studies.
(4) Written statements that the eligible entity is unable to
borrow the amount of the loan from the commercial money
market by the sale of revenue or other bonds that the eligible
entity may sell. The statements must be signed by at least two
(2) individuals separately engaged in the business of buying and
selling 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 shall
refer 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 which
the 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 works
of improvement fit into a comprehensive program for the
development 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 a
loan shall also submit the application to the commission for
authorization to borrow the money.
(b) The commission:
(1) shall act upon the application; and
(2) may request from the state department of health and the
department a copy of each department's report on the
application.
(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 state
department 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 may
not 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, to
meet the needs of the eligible entity.
(2) Whether the cost estimates for the proposed works of
improvement are reasonable.
(3) Whether the program for the repayment of the loan is
reasonable with due consideration for operation and
maintenance 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 the
department's report on the application, together with the report of the
state department of health, to the state board of finance.
(b) Before acting on the application, the state board of finance
shall also request of and receive from the commission the
commission'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 applying
for 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, the
auditor of state shall promptly make the money available to the
eligible 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 year
for the first eight (8) years.
(B) After that, at the rate of five percent (5%) per year until
repaid in full.
(b) An eligible entity receiving a loan under this chapter must
agree 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 31
of 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 the
regular budget making time; and
(2) there is not a provision in the budget of the entity for the
collection of a tax to repay the principal and interest of the loan
in the next following year;
the first installment of repayment shall be paid not later than
December 31 of the second year following the year in which the loan
money is made available.
(d) The borrower may make a repayment of the loan in full or in
part at any time without interest penalty.
(e) A loan, whether payable from revenues, taxes, or both, may be
refunded by the eligible entity by the issuance of bonds, notes, or
other evidences of indebtedness, secured by a pledge of revenues or
in 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 a
loan under this chapter or IC 13-3-7 (before its repeal) may levy a
special annual tax on all taxable property located within the
geographic 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 maximum
annual rates prescribed by law.
(b) The proceeds of the special tax shall be kept and maintained
in a separate and special fund for the payment of principal and
interest only.
(c) Other statutes providing for petitions, notices, and
remonstrances 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 of
the loan, the state department of health must approve the plans and
the provisions for operation and maintenance before loan money may
be 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 to
repay the loan in whole or in part from revenues received from a
charge to users for services provided, the legislative body shall levy
for at least the first year the special tax provided in section 11 of this
chapter in an amount that, together with revenues to be received, will
be sufficient to assure the repayment of the first installment of
principal 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 system
is sufficient to pay the interest due and the annual installment of
repayment of the loan, the legislative body of the entity shall do the
following:
(1) Pay those amounts from revenue received.
(2) Hold the proceeds from the special tax levy in a special fund
that may not be used for any other purpose.
(b) The legislative body of the entity may invest the money in the
special 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, the
legislative body of the entity shall transfer the amount in the special
fund 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 is
insufficient in any year to pay the interest due and the annual
installment of repayment of the loan, the legislative body of the
entity shall do the following:
(1) Pay the amounts from the special fund.
(2) At the next budget making time levy the special tax in a
sufficient amount to provide in the special fund sufficient
money to pay the next installment of principal due and the
interest 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 borrow
money as provided in this chapter before, simultaneously with, or
after borrowing money from other sources for the purposes
authorized in this chapter. The legislative body of the entity may
continue to levy the special tax provided in section 11 of this chapter
for the payment of principal and interest on the loan authorized by
this chapter or IC 13-3-7 (before its repeal) irrespective of whether
the principal and interest on the loans from other sources are to be
paid 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 are
to be paid from revenues; and
(2) the legislative body of the eligible entity also proposes to
pay the principal and interest on the loan authorized by this
chapter or IC 13-3-7 (before its repeal) from revenues;
the obligation of the legislative body of the entity to repay the
principal and interest of the loan from revenues is subordinate to the
other loans from other sources.
(b) The legislative body of the entity proposing to pay the loan
from revenues may not make any covenants in connection with loans
from other sources that would impair the duty of the legislative body
to:
(1) levy for at least the first year the special tax provided in
section 11 of this chapter; or
(2) levy the special tax in any year thereafter when the receipt
of revenues from the water supply system is insufficient to pay
the next installment of principal due and the interest on the
remaining balance of the loan after deducting from the revenue
the following:
(A) The full amount to pay the next installment of principal
due.
(B) The interest on the remaining balance of the loans from
other 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 tax
revenues
Sec. 18. This chapter does not authorize a loan to be repaid from
tax collections in an amount that exceeds any constitutional
limitations. If the amount borrowed exceeds those limitations, the
excess amount is payable only from revenues to be derived from
charges 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 revolving
fund or any other payments required by this chapter; or
(2) is in any way indebted to the fund for any amounts incurred
or accrued.
(b) As used in this section, "fund" refers to the flood control
revolving fund.
(c) The state may recover the amounts the eligible entity owes to
the fund by either of the following methods:
(1) The state may institute an appropriate action in the circuit or
superior court with jurisdiction in the county in which the
eligible entity is located on the instigation of the state board of
finance and the department. The attorney general shall
prosecute the action.
(2) The auditor of state may withhold the payment and
distribution of any state money that the defaulting eligible entity
is 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 system
constructed, modernized, enlarged, or altered from a loan provided
under this chapter is sold to another eligible entity regardless of
whether 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 the
obligations 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 further
liability 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 full
before the consummation of the sale. As added by P.L.1-1995, SEC.18.
