A.R.S. tit. 28 ch. 21 — Arizona Revised Statutes Title 28 Chapter 21 — State Highway Financing And Bonding

28-7501. Definitions In this article, unless the context otherwise requires: 1. "Any highway purpose" includes any one or more of the following purposes: (a) Payment of highway obligations. (b) The cost of and cost allocated to construction, reconstruction, maintenance and repair of public highways and bridges, county, city and town roads and streets. (c) The acquisition of real property for future highway needs. (d) The cost of constructing landscape buffers, noise barriers, pedestrian bypasses, multi-use paths and other environmental impact mitigation measures to mitigate the adverse impact of freeways on local neighborhoods. 2. "Bond related expenses" means: (a) Printing, publication or advertising expenses with respect to the sale and issuance of bonds. (b) Fees, expenses and costs of registrars. (c) Fees, expenses and costs of attorneys, accountants, feasibility consultants, computer programmers or other experts employed to aid in the sale and issuance of the bonds. (d) Other costs, fees and expenses incurred or reasonably related to the issuance and sale of the bonds. 3. "Bond related obligation" means an agreement or contractual relationship between the board and a bank, trust company, insurance company, surety bonding company, pension fund or other financial institution providing increased credit on or security for the bonds or liquidity for secondary market transactions. 4. "Bonds" means bonds of the board issued pursuant to this article. 28-7502. Bond authority A. Subject to this article, the board may: 1. Issue its negotiable bonds in a principal amount that in the opinion of the board is necessary to provide sufficient monies for any highway purpose, to establish reserves to secure the bonds and to provide for the payment of all other expenditures of the board incidental to and necessary and convenient to carry out these purposes. 2. Issue refunding bonds if the board deems refunding expedient. 3. Refund any bonds issued by the board or by its predecessor in interest, the Arizona state highway commission, if these bonds are secured from the same source of revenues as the bonds authorized in this article, by the issuance of new bonds, whether or not the bonds to be refunded have matured. 4. Issue bonds partly to refund bonds then outstanding and partly for any highway purpose consistent with this article or as the legislature may authorize. 5. Provide for the registration as to the principal or both principal and interest of the bonds. B. Regardless of whether or not the bonds are of such form or character as to be negotiable instruments under the terms of the negotiable instruments law, the bonds are fully negotiable within the meaning of and for all purposes of the negotiable instruments law. 28-7503. Bond requirements The bonds shall: 1. Be authorized by resolution of the board. 2. Bear such date or dates and mature at such time or times, not exceeding thirty years from their respective dates, as the resolution or resolutions may provide. 3. Bear interest at such rate or rates, including rates that may vary from time to time pursuant to parameters set by the board in the authorizing resolution. 4. Be in the denominations, be in the form, either coupon or registered, be executed in the manner, be payable in the medium of payment at such place and be subject to the terms of redemption, at the option of either the board or the owner of the bond, as the resolution or resolutions provide. 5. Be sold at public or private sale above, at or below par and on the terms the board determines, except that bonds to fund or refund other bonds may be exchanged with the holders of bonds being funded or refunded on terms the board determines. 28-7504. Bond payment; security A. In connection with the issuance of the bonds authorized by this article or to secure the payment of the bonds and interest on the bonds, the board by resolution may: 1. Provide that bonds issued under this article may be secured by a first lien, subject to section 28-7509, on all or any part of the monies paid into the state highway fund from the sources specifically collected as prescribed in article IX, section 14, Constitution of Arizona, and the monies distributed pursuant to section 28-5808. 2. Pledge and assign to or in trust with a trustee appointed by the board for the benefit of the holder or the holders of the bonds any part of the state highway fund revenues collected as prescribed in article IX, section 14, Constitution of Arizona, and the monies distributed pursuant to section 28-5808, as will be necessary to pay the principal of and interest on the bonds as the principal and interest become due. 3. Set aside, regulate and dispose of reserves and sinking funds. 4. Provide that sufficient amounts of the proceeds from the sale of the bonds may be used to fully or partly fund all reserves or sinking funds set up by the bond resolution. 5. Prescribe the procedure, if any, by which the terms of a contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given. 6. Provide for payment from the proceeds of the sale of the bonds of all fees, charges and bond related expenses or obligations incurred by the board in the issuance, sale, delivery and payment of the bonds. 7. Do any other matters, of like or different character, that may in any way affect the security and protection of the bonds. B. A pledge made pursuant to this article is valid and binding from the time when the pledge is made. C. The monies pledged pursuant to this article and deposited in the state highway fund are immediately subject to the lien of the pledge without any future physical delivery or further act, and any lien of any pledge is valid or binding against all parties having claims of any kind in tort, contract or otherwise against the board regardless of whether the parties have notice of the lien or pledge. When placed in the records of the board, the official resolution or trust indenture or any instrument by which this pledge is created is notice to all concerned of the creation of the pledge, and these instruments are not required to be recorded in any other place. 28-7505. Liability; bond validity A. The members of the board or a person executing the bonds is not personally liable for the payment of the bonds. B. The bonds are valid and binding obligations of the department notwithstanding the fact that before the delivery of the bonds any of the officers whose signatures appear on the bonds cease to be officers of the department. C. From and after the sale and delivery of the bonds, the bonds are incontestable by the board or department. 28-7506. Bond purchase; cancellation The board may purchase bonds out of any monies available for the purchase, and these bonds shall then be canceled, at a price of not more than either of the following: 1. If the bonds are then redeemable, the redemption price then applicable plus accrued interest to the next interest payment date on the bonds. 2. If the bonds are not then redeemable, the redemption price applicable on the first date after the purchase on which the bonds become subject to redemption plus accrued interest to that date. 28-7507. Notice; bond issuance A. The board shall publish a notice of its intention to issue bonds under this article for at least five consecutive days in a newspaper published in this state. The last day of publication shall be at least ten days before the issuance of the bonds. B. The notice shall state the amount of the bonds to be sold and the intended date of issuance. C. A copy of the notice shall be hand delivered or sent by certified mail with return receipt to the director of the department of administration on or before the last day of publication. 28-7508. Financial interest prohibited; violation; classification A. A member of the board or employee of the department shall not have a direct or indirect financial interest in any real property for future highway needs that is purchased from monies made available by the issuance of bonds. B. A person who violates this section is guilty of a class 2 misdemeanor. 28-7509. Highway bond proceeds fund; investment A. The highway bond proceeds fund is established. After deducting the necessary fees, charges and expenses incurred in the issuance and sale of the bonds and any amounts necessary to provide for the payment of refunded bonds, the department shall promptly deposit, pursuant to sections 35-146 and 35-147, the proceeds received from the sale and delivery of the bonds for all purposes in the highway bond proceeds fund. The state treasurer shall maintain the fund separate and apart from all other funds, except that the treasurer shall first apply those amounts of the bond proceeds provided in the resolution issuing the bonds to all reserve and sinking funds created in the bond resolution. The department may spend monies in the highway bond proceeds fund for any lawful purpose not inconsistent with the resolution or resolutions authorizing the bonds. B. The board may order the investment of monies in the highway bond proceeds fund by the state treasurer in any of the following: 1. Obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities and any investments authorized by any other agencies of the United States government that are now authorized for use to secure public deposits. 2. State, county or municipal bonds issued in this state on which the payments of interest have not been deferred. C. The order directing the state treasurer to invest the monies shall set forth the specified time when the proceeds from the sale of the bonds shall be used for the purposes directed in the bond resolution, and the state treasurer shall invest the proceeds from the sale of the bonds in the securities prescribed in subsection B of this section in such a way as to mature at the specified date. D. The board shall use the monies or securities in the highway bond proceeds fund solely for the purposes provided in the bond resolution, except that, if the revenues pledged to secure the bonds ever are insufficient to pay the annual principal and interest on the bonds, the board shall order: 1. The liquidation of the securities remaining in the fund. 2. The state treasurer to apply all such monies in the fund as necessary to make current all payments then due on the bonds. 28-7510. Parity bonds A. The board may issue parity bonds only when all of the payments due on the principal and interest on the outstanding bonds are current. B. The board may not issue parity bonds unless the monies subject to pledge for payment of the bonds for the preceding twelve months exceed by three times the highest annual principal and interest payments on all of the outstanding bonds and the bonds to be issued for the highest one year period during the life of both the outstanding bonds and the bonds to be issued. C. Notwithstanding subsection B of this section, the board may issue parity bonds to refund or refinance any outstanding bonds if the board meets the requirements of subsection B of this section or if the board certifies that the principal and interest payments for each fiscal year on all outstanding bonds and the bonds to be issued immediately after the date of issuance of the refunding parity bonds do not exceed one hundred five per cent of the principal and interest payments for each fiscal year on all outstanding bonds immediately before the issuance of the refunding parity bonds. D. The bonds sought to be issued shall mature and the principal and interest are payable at the same time as bonds then outstanding that have the same priority of lien. E. All bonds issued under this article are deemed to contain the restrictions against issuance of parity bonds contained in this section, whether or not the resolution issuing the bonds or the bonds themselves contain covenants to this effect. F. For the purposes of this section, amounts subject to pledge shall be presumptively determined by a certificate of the chairman of the board. G. The pledge of revenues prescribed in section 28-7504, subsection A, paragraphs 1 and 2 is not subject to sections 28-6952 through 28-6955, 28-6992, 28-6993 and 28-6995 through 28-7006. The payment of the necessary fees, charges and expenses incurred in the issuance of the bonds and the principal of and interest on the bonds are not subject to section 28-7007 but shall be made in the manner prescribed in the resolution issuing the bonds. 28-7511. Bonds; freeway mitigation; matching amount A. A city or town may issue general obligation bonds for the purpose of planning, undertaking and carrying out projects for the elimination of present slum and blighted areas and the prevention of the development of those conditions in the future by mitigating the effects of existing and proposed freeway conditions on cities, towns and neighborhoods. The projects may include acquiring land for recreation, water, sewage and drainage facilities, streets, sidewalks, ways and other public places and other projects to develop or redevelop affected areas. B. The board may use bond monies obtained pursuant to section 28-7510 to match on a one to one basis the city or town general obligation bond monies obtained pursuant to this section to provide funding for expenses related to mitigation measures on property located within the department's right-of-way. If a city or town obtains bond monies pursuant to this section for the purpose of mitigating the effects of proposed freeway conditions on cities, towns and neighborhoods, this state shall not construct the freeway unless the board agrees to the mitigation measures proposed by the city or town. 28-7512. Agreement of state A. This state pledges to and agrees with the holders of the bonds that this state will not limit or alter the rights vested in the board to collect the fees, excises and taxes as may be necessary to produce sufficient revenue to meet the expense of the state highway system and to fulfill the terms of any agreements made with the holders of the bonds or in any way impair the rights and remedies of the bondholders, until all bonds issued under this article, interest on the bonds, interest on any unpaid installments of interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders are fully met and discharged. B. The board as agent for this state may include this pledge and undertaking by this state in its resolutions and indentures securing its bonds. 28-7513. Taxation exemption The board is regarded as performing a governmental function in carrying out the purposes of this article and is not required to pay taxes or assessments on any of the property acquired or constructed for these purposes or on the activities of the board in maintaining and caring for the real property or in the revenues derived from the real property. The bonds, their transfer and the income from the bonds are at all times free from taxation in this state. 28-7514. Attorney general bond certification A. The board may submit to the attorney general any bonds to be issued under this article after all proceedings for the authorization of the bonds have been taken. On the submission of the proceedings to the attorney general, the attorney general shall investigate and determine the validity of the bonds and the regularity of all proceedings in connection with the issuance. B. If the proceedings conform to this article and if it is determined that the bonds when delivered and paid for will constitute binding and legal obligations of the board enforceable according to the terms of the bonds, the attorney general shall certify in substance on the back of each of the bonds that it is issued in accordance with the constitution and laws of this state. 28-7515. Bond obligations of the board A. Bonds issued pursuant to this article: 1. Are obligations of the board issuing the bonds. 2. Are payable only pursuant to the terms of the bonds. 3. Are not obligations that are general, special or otherwise of this state. 4. Are not a legal debt of this state. 5. Are not enforceable against this state. B. Payment of the bonds issued pursuant to this article is not enforceable out of any monies of the department other than the income and revenue pledged and assigned to or in trust for the benefit of the holder or holders of the bonds. 28-7516. Bonds; legal investments Bonds issued under this article are made securities: 1. In which all of the following may properly and legally invest monies including capital in their control or belonging to them: (a) Public officers and bodies of this state. (b) Political subdivisions of this state. (c) Insurance companies and associations and other persons carrying on an insurance business. (d) Banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, building and loan associations, investment companies and other persons carrying on a banking business. (e) Administrators, guardians, executors, trustees and other fiduciaries. (f) Other persons authorized to invest in bonds or other obligations of this state. 2. That may be deposited with and may be received by all public officers and bodies of this state and all political subdivisions of this state for any purpose for which the deposit of bonds or other obligations of this state is authorized. 28-7517. Exclusive law A. The powers provided by this article are in addition to the powers conferred by any other general or special law. Without reference to any other provision of this title or to any other general or special law, this article is authority for the completion of the purposes prescribed in this article, for entering into acquisition and construction contracts in connection with those purposes and for the authorization, issuance and sale of the bonds pursuant to this article without regard to the procedure required by any other law. B. Except as otherwise provided in this article, the provisions of this title that relate to the matters contained in this article are superseded because this article is the exclusive law on these matters. 28-7561. Bonds payable from transportation excise taxes A. The board is designated as the body having sole and exclusive power to authorize and issue bonds or incur long-term obligations payable in whole or in part from monies in a regional area road fund established by chapter 17, article 1 of this title. The board may act for and on behalf of a county that has a regional area road fund established by chapter 17, article 1 of this title to: 1. Issue negotiable bonds payable solely from monies paid into the bond account of the respective regional area road fund in a principal amount that in the opinion of the board is necessary to provide sufficient monies for any lawful purpose for which the respective regional area road fund monies may be spent, to establish reserves to secure the bonds and to provide for the payment of all other expenditures of the board that are incidental, necessary and convenient to carry out these purposes. 2. Issue refunding bonds if the board deems refunding expedient, including refunding any bonds and other obligations issued pursuant to chapter 21 of this title if the proceeds of the bonds and other obligations to be refunded are used for the purposes provided in section 28-6304, subsection C, paragraph 4 or 5, as applicable, whether the bonds and other obligations to be refunded have or have not matured. Proceeds of the refunding bonds may be used to pay principal, interest or redemption premiums on the refunded bonds and other obligations. 3. Refund any bonds issued by the board and payable from regional area road fund income as authorized in this article by the issuance of refunding bonds, whether the bonds to be refunded have or have not matured. Proceeds of refunding bonds may be used to pay principal, interest or redemption premiums on refunded bonds. 4. Issue bonds partly to refund bonds and other obligations described in paragraphs 2 and 3 of this subsection outstanding and partly for any other purpose consistent with this article. B. Regardless of whether or not the bonds are of such form or character as to be negotiable instruments under the terms of the uniform commercial code, the bonds are fully negotiable within the meaning and for all purposes of the uniform commercial code. 28-7562. Bond requirements A. The bonds authorized by this article shall: 1. Be authorized by resolution of the board. 2. Bear such date or dates and mature at such time or times, not exceeding the earlier of twenty years from their respective dates or the date the transportation excise taxes securing the bonds cease, as the resolution or resolutions may provide. 3. Bear interest at such rate or rates, including rates that may vary from time to time pursuant to parameters set by the board in the authorizing resolution. 4. Be in the denomination, be in the form, either coupon or registered, be executed in the manner and be payable as to principal, interest or premium in the medium of payment at the office of the state treasurer of this state or at such other place or places as the board provides either by automatic deposit, wire transfer or mail, as the resolution or resolutions may provide. 5. Be subject to the terms of redemption, at the option of either the board or the owner of the bond, as the resolution or resolutions may provide. B. The bonds may be sold at either public or private sale, above, at or below par and on terms the board determines. Bonds to fund or refund other bonds may be exchanged with the holders of bonds being funded or refunded on terms the board determines. 28-7563. Bond payment; security In connection with the issuance of the bonds authorized by this article or to secure the payment of the bonds and interest on the bonds, the board by resolution may: 1. Provide that bonds issued under this article may be paid with and secured by a pledge on all or any part of the monies paid into the bond account of the respective regional area road fund, and if monies in the bond account are ever insufficient, from any other unobligated monies in the construction account or the bond proceeds account. The board may: (a) Set the priority of lien or claim of any series or issue of bonds against any other series or issues. (b) Not abrogate or change the priority unless the affected series or issue is to be fully paid or fully provided for by the issuance of refunding bonds or the holders of the bonds affected agree in writing to the change. 2. Pledge and assign to or in trust, with a trustee appointed by the board, for the benefit of the holder or the holders of the bonds all or any part of the monies paid into the bond account of the respective regional area road fund as will be necessary to pay the principal of, interest on and premium, if any, on the bonds as the bonds become due. 3. Set aside, regulate and dispose of reserves and sinking funds. 4. Provide that sufficient amounts of the proceeds from the sale of the bonds may be used to fully or partly fund all reserves or sinking funds set up by the bond resolution. 5. Prescribe the procedure, if any, by which the terms of a contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given. 6. Provide for payment from the proceeds of the sale of the bonds of all legal and financial expenses incurred by the board in the issuance, sale, delivery and payment of the bonds. 7. Do any other matters, of like or different character, that in any way may affect the security and protection of the bonds. 28-7564. Pledges; liens A. A pledge made pursuant to this article is valid and binding from the time when the pledge is made. The monies pledged pursuant to this article when placed in the bond account, bond proceeds account or construction account of the respective regional area road fund are immediately subject to the lien of the pledge without any future physical delivery or further act. B. A lien of any pledge is valid or binding against all parties having claims of any kind in tort, contract or otherwise against the board, regardless of whether the parties have notice. When placed in the records of the board, the official resolution or trust indenture or any instrument by which this pledge is created is notice to all concerned of the creation of the pledge, and these instruments are not required to be recorded in any other place. A filing or recording of the resolution of the board creating or extending the lien or pledge in order for the pledge or lien to become fully effective is not required in any office other than in the office of the board. 28-7565. Liability; bond validity A. The members of the board or a person executing the bonds authorized by this article are not personally liable for the payment of the bonds. B. The bonds are valid and binding obligations of the board notwithstanding the fact that before the delivery of the bonds any of the officers whose signatures appear on the bonds cease to be officers of the board. C. From and after the sale and delivery of the bonds, the bonds are incontestable by the board or the county. 28-7566. Bond purchase The board may purchase bonds authorized by this article out of any monies available, and these bonds may then be canceled, at a price of not more than either of the following: 1. If the bonds are then redeemable, the price then applicable plus accrued interest to the next interest payment date on the bonds. 2. If the bonds are not then redeemable, the redemption price applicable on the first date after the purchase on which the bonds become subject to redemption plus accrued interest to that date. 28-7567. Notice; bond issuance A. The board shall publish a notice of its intention to issue bonds under this article for at least five consecutive days in a newspaper published in this state. The last day of publication shall be at least ten days before the issuance of the bonds. B. The notice shall state the amount of the bonds to be sold and the intended date of issuance. 28-7568. Bond proceeds; distribution; expenditures A. After deducting the necessary costs and expenses of the issuance and sale of the bonds and any amounts necessary to provide for the payment of refunded bonds, the department shall promptly deposit, pursuant to sections 35-146 and 35-147, the proceeds received from the sale and delivery of bonds issued pursuant to this article in the bond proceeds account within the regional area road fund pursuant to chapter 17, article 1 of this title. The department shall first apply those amounts of the bond proceeds provided in the resolution issuing the bonds to all reserve and sinking funds created in the bond resolution. B. The board shall use the bond proceeds solely for the purposes provided in the bond resolution, except that, if the revenues pledged to secure the bonds ever become insufficient to pay the annual principal and interest on the bonds, the board shall order: 1. The liquidation of any permitted investments remaining in the bond proceeds account. 2. The state treasurer to apply all of the receipts as necessary to make current all payments then due on the bonds. 28-7569. Agreement of state and county A. This state pledges to and agrees with the holders of the bonds issued under this article that this state will not limit or alter the transportation excise taxes in a way that adversely affects the rights of the holders of the bonds, limit or alter the authority of the respective county levying a transportation excise tax in a way that prevents the imposition of sufficient transportation excise taxes to fulfill the terms of any agreements made with the holders of the bonds or in any way impair the rights and remedies of the bondholders, until all bonds issued under this article, interest on the bonds, interest on any unpaid installments of interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders are fully met and discharged. B. The board as agent for this state may include this pledge and undertaking by this state in its resolutions and indentures securing its bonds. C. A county shall not take any action to lower or terminate any transportation excise tax. 28-7570. Taxation exemption The board is regarded as performing a governmental function in carrying out the purposes of this article and is not required to pay taxes or assessments on any of the property acquired or constructed or on the activities of the board in maintaining and caring for the real property or in the monies derived from the real property. The bonds issued under this article, their transfer and the income from the bonds are at all times free from taxation in this state. 28-7571. Attorney general bond certification A. The board may submit to the attorney general any bonds to be issued under this article after all proceedings for the authorization of the bonds have been taken. On the submission of the proceedings to the attorney general, the attorney general shall investigate and determine the validity of the bonds and the regularity of all proceedings in connection with the issuance. B. If the proceedings conform to this article and if it is determined that the bonds when delivered and paid for will constitute binding and legal obligations of the board enforceable according to the terms of the bonds, the attorney general shall certify in substance on the back of each of the bonds that it is issued in accordance with the constitution and laws of this state. 28-7572. Bond obligations of the board Bonds issued pursuant to this article: 1. Are obligations of the board issuing the bonds. 2. Are payable only pursuant to the terms of the bonds. 3. Are not obligations general, special or otherwise of this state. 4. Are not a legal debt of this state or of the respective county imposing the transportation excise tax. 5. Are not enforceable against this state or that county out of any monies other than the income and revenue pledged and assigned to or in trust for the benefit of the holder or holders of the bonds. 28-7573. Bonds; legal investments Bonds issued under this article are made securities: 1. In which all of the following may properly and legally invest monies including capital in their control or belonging to them: (a) Public officers and bodies of this state. (b) Political subdivisions of this state. (c) Insurance companies and associations and other persons carrying on an insurance business. (d) Banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, building and loan associations, investment companies and other persons carrying on a banking business. (e) Administrators, guardians, executors, trustees and other fiduciaries. (f) Other persons authorized to invest in bonds or other obligations of this state. 2. That may be deposited with and may be received by all public officers and bodies of this state and all political subdivisions of this state for any purpose for which the deposit of bonds or other obligations of this state is authorized. 28-7611. Definitions In this article, unless the context otherwise requires: 1. "Grant agreement" means a written agreement between the director and the United States of America or any of its departments or agencies by which the director will receive a grant to construct a project or to reimburse the director for monies spent with respect to the project. 2. "Grant anticipation notes" means notes authorized by this article. 3. "Grant revenues" means any revenues the director will receive under a grant agreement, proceeds of grant anticipation notes and income and gain from the investment of these revenues and proceeds. 28-7612. Grant anticipation notes After the director has entered into one or more grant agreements, the board may issue and sell grant anticipation notes. The principal, premium, if any, and interest on the notes shall be paid solely from any of the following: 1. The grant revenues. 2. If provided by the board at the time of authorizing the issuance of the grant anticipation notes, other monies lawfully available for application to that purpose, including the proceeds from the sale of other obligations of the director. 28-7613. Refund The board may issue grant anticipation notes to refund grant anticipation notes previously issued and other obligations, the proceeds of which were or are to be applied to the financing of the project to which the grant agreement relates. 28-7614. Limitations The amount of grant anticipation notes secured by grant revenues issued by the director shall not exceed the aggregate of all uncollected grant revenues to be received by the board. 28-7615. Application of grant revenues; grant anticipation notes fund; payment of notes A. On the issuance of any grant anticipation notes, the grant revenues to be received by the director pursuant to the applicable grant agreement shall be collected and, as provided by the board at the time of authorizing the issuance of the grant anticipation notes, used for any of the following: 1. Paid into a special fund to be known as the grant anticipation notes fund. 2. Held for application to the payment of the costs of the project to which the grant agreement relates. 3. Applied to reimburse the director for monies previously spent with respect to the project. B. As long as any grant anticipation notes are outstanding, monies paid into the grant anticipation notes fund pursuant to subsection A shall only be used to pay principal and interest on the grant anticipation notes. C. Notwithstanding any other law, this article authorizes the payment when due or redemption in advance of maturity, if the notes so provide, of all principal and interest and redemption premiums on the notes from the monies in the grant anticipation notes fund. 28-7616. Use of proceeds The proceeds from the sale of the notes shall be used by the director for payment of any of the following: 1. Costs and expenses incurred in the construction or acquisition of the project for which the grant or grants are being made. 2. Legal and financial costs and expenses incurred in issuing and administering the notes. 3. Costs for which the director will be entitled to receive reimbursement pursuant to the grant agreement. 4. If authorized by the board, payment of interest to accrue on the notes during their life. 5. Payment of the principal, premium or interest on other obligations, all or a portion of the proceeds of which were or are to be applied to the financing of the project to which the grant agreement relates. 28-7617. Nature of grant anticipation notes; limited obligation A. Grant anticipation notes issued under this article are not general obligations of the department, any public officer or employee of the department or this state. B. The notes are limited obligations payable solely from grant revenues received by the director and, if provided by the board at the time of authorizing the issuance of the grant anticipation notes, other monies lawfully available for application to that purpose and pledged to the payment of the principal, premium, if any, and interest on the notes. C. A holder of a grant anticipation note may not compel the payment of grant revenues to the director. 28-7618. Attorney general note certification A. The board may submit to the attorney general any notes to be issued under this article after all proceedings for the authorization of the notes have been taken. On the submission of the proceedings to the attorney general, the attorney general shall investigate and determine the validity of the notes and the regularity of all proceedings in connection with the issuance. B. If the proceedings comply with this article and the attorney general determines that the notes when delivered and paid for will constitute binding and legal obligations of the board that are enforceable according to the terms of the notes, the attorney general shall certify in substance on the back of each of the notes that each note is issued in accordance with the constitution and laws of this state. 28-7651. Definitions In this article, unless the context otherwise requires: 1. "Bond" means a bond secured solely by bridge construction revenues or a bond secured solely by highway improvement revenues as authorized and issued pursuant to this article. 2. "Bridge construction revenues" means monies received pursuant to section 42-5032, subsection A and deposited in the bridge construction interest fund or redemption fund under section 28-7656, subsection A. 3. "Highway improvement revenues" means monies received pursuant to section 42-5032, subsection B and deposited in the highway improvement interest fund or redemption fund under section 28-7656, subsection B. 28-7652. Agreement for construction of bridge or highway improvements A. The department and a county with a population of more than two million persons may enter into an intergovernmental agreement pursuant to title 11, chapter 7, article 3 for the construction of a bridge to provide direct access to commercial, residential and recreational facilities. The agreement shall: 1. Contain the commitment of this state and the county to transfer bridge construction revenues to the county treasurer for deposit in the bridge construction interest fund or redemption fund under section 28-7656, subsection A for the purpose of financing the construction, design, acquisition and attendant acquisition costs of the bridge. 2. Contain the commitment of the county to pay other monies for the purpose of financing the bridge. 3. Include this state's pledge of sufficient bridge construction revenues to fulfill this state's obligation for funding the bridge. 4. State the responsibilities of each party with regard to planning, designing, constructing, owning and maintaining the bridge. 5. Provide that payment for the costs of the bridge shall be made from contributions from the parties to the agreement and other contributors before the use of bond proceeds. B. The department and the county may enter into an intergovernmental agreement pursuant to title 11, chapter 7, article 3 for the design, reconstruction and improvement of a county highway approaching and traversing a bridge constructed pursuant to subsection A of this section. The agreement shall: 1. Contain the commitment of this state and the county to transfer highway improvement revenues to the county treasurer for deposit in the highway improvement interest fund or redemption fund pursuant to section 28-7656, subsection B for the purpose of financing the design, reconstruction and improvement costs of the highway. 2. Contain the commitment of the county to pay other monies for the purpose of financing the highway improvements. 3. Include this state's pledge of sufficient highway improvement revenues to fulfill this state's obligation for funding the highway improvements. 4. State the responsibilities of each party with regard to planning, designing, reconstructing, owning and maintaining the highway. 5. Provide that payment for the costs of the highway improvements shall be made from contributions from the parties to the agreement and other contributors before the use of bond proceeds. 6. Contain the representation by the county that it has the legally binding assurance of the owner of a sports entertainment facility as defined in section 42-5032, subsection E and that the owner will reimburse the county for all expenses the county may incur under section 28-401, subsection D, paragraph 4 and section 42-5032, subsection B. 28-7653. Bonds secured by bridge construction revenues; bonds secured by highway improvement revenues A. If a majority of the members of the county board of supervisors authorizes the issuance of bonds secured by bridge construction revenues by resolution dated before July 1, 1998, the county may issue the bonds so authorized in the manner provided in this article. The bonds secured by bridge construction revenues may be authorized in an aggregate principal amount of not more than five million dollars. B. If a majority of the members of the county board of supervisors authorizes the issuance of bonds secured by highway improvement revenues by resolution dated before December 31, 2004, the county may issue the bonds so authorized in the manner provided in this article. Bonds secured by highway improvement revenues may be authorized in an aggregate principal amount of not more than five million dollars. C. All proceeds, revenues, accounting and payments with respect to bonds secured by bridge construction revenues pursuant to this article shall be conducted and maintained separately from those with respect to bonds secured by highway improvement revenues pursuant to this article. D. Bonds issued pursuant to this article shall not be considered to be a debt of the county or the state within any constitutional or statutory debt limit. E. When bonds issued pursuant to this article are sold, a schedule shall be filed with the county treasurer showing the amounts of principal and interest to be paid at each principal and interest payment date. F. The county shall pledge all or any part of the bridge construction revenues to be received and the county's rights in the bridge construction intergovernmental agreement to the payment of an amount of the bonds secured by bridge construction revenues. The county shall pledge all or any part of the highway improvement revenues to be received and the county's rights in the highway improvement intergovernmental agreement to the payment of an amount of the bonds secured by highway improvement revenues. The pledges constitute an irrevocable assignment to the officer charged with paying the applicable bonds that is binding on the county. No notice of the assignment need be filed or recorded and no public notice of any nature is required to make the pledge effective against any person claiming an interest in the bridge construction revenues or highway improvement revenues, as applicable, except a holder of the bonds. On receipt of any payment of bridge construction revenues or highway improvement revenues, the county treasurer shall cause a sufficient portion of the amount received to be deposited in the bridge construction redemption fund and interest fund, or the highway improvement redemption fund or interest fund, established under section 28-7656 pertaining to the applicable bonds. G. No bridge construction bondholder may claim a preference as to source of payment over any other bridge construction bondholder of the same series. No highway improvement bondholder may claim a preference as to source of payment over any other highway improvement bondholder of the same series. 28-7654. Issuance of bonds A. The county board of supervisors is authorized to issue bonds secured by a pledge of bridge construction revenues. B. The county board of supervisors is authorized to issue bonds secured by a pledge of highway improvement revenues. C. Any bonds issued pursuant to this article may be issued in one or more series, bear the dates, be payable in the medium of payment and at the places, bear the rates of interest, including variable rates, carry the registration privileges and prior redemption provisions, be executed in the manner, contain the other terms, covenants and conditions and be in the form the board of supervisors prescribes. The bonds shall be sold at, above or below par in the manner as the board of supervisors determines. 28-7655. Characteristics of bonds The bonds issued under this article: 1. Are fully negotiable within the meaning and for all purposes provided by title 47. 2. Are payable only according to their terms from bridge construction revenues or highway improvement revenues, as applicable, and are not general, special or other obligations of the issuing county or this state. The bonds do not constitute a legal debt of this state and are not enforceable against this state. Payment of the bonds shall not be made from any monies other than those allowed to be pledged. 28-7656. Interest fund; redemption fund A. The treasurer of the county issuing bonds secured by bridge construction revenues shall establish an interest fund and a redemption fund for paying the bonds. The treasurer shall deposit into the funds bridge construction revenues in amounts sufficient to pay the interest and principal of the bonds as they mature. The funds shall be used solely to pay principal and interest on the bonds. B. The treasurer of the county issuing bonds secured by highway improvement revenues shall establish an interest fund and a redemption fund for paying the bonds. The treasurer shall deposit into the funds highway improvement revenues in amounts sufficient to pay the interest and principal of the bonds as they mature. The funds shall be used solely to pay the principal and interest on the bonds. C. The funds under subsections A and B shall be established and maintained separately and used exclusively for the respective purposes for which they are established. 28-7657. Pledge of revenues to secure debt instruments A. Notwithstanding any other provision of this article, a county that receives bridge construction revenues may pledge, by separate covenant included in the resolution authorizing the issuance of bridge construction revenue bonds under this article or obligations it may incur, future receipts of the revenues to the payment of the bridge construction revenue bonds or to the costs of the bridge. The pledge may be included in the resolution authorizing the issuance of the bonds. The resolution authorizing the issuance of the bonds may also authorize assigning bridge construction revenues to a trustee or paying agent to secure the bonds. B. Notwithstanding any other provision of this article, a county that receives highway improvement revenues may pledge, by separate covenant included in the resolution authorizing the issuance of highway improvement revenue bonds under this article or obligations it may incur, future receipts of the revenues to the payment of the highway improvement revenue bonds or to the costs of the highway improvements. The pledge may be included in the resolution authorizing the issuance of the bonds. The resolution authorizing the issuance of the bonds may also authorize assigning highway improvement revenues to a trustee or paying agent to secure the bonds. 28-7658. Agreement of state A. This state pledges to and agrees with the holders of the bonds secured by bridge construction revenues and highway improvement revenues that it will not limit, alter or impair the rights vested in a county under this article to receive bridge construction revenues or highway improvement revenues, as applicable, and as necessary to produce sufficient revenue to fulfill the terms of any intergovernmental agreements made with the county, or in any way impair the rights and remedies of the bondholders to receive the necessary revenues, until all the applicable bonds issued under this article are fully met and discharged. B. The county may include this pledge and undertaking in its resolutions and indentures securing the bonds under this article. 28-7659. Supplemental law This article is supplemental and alternative to any other provision of law that also enables a county to issue any form or type of bonds. 28-7671. Definitions In this article, unless the context otherwise requires: 1. "Eligible highway project" means a highway project that is both: (a) On the federal aid system, national highway system or state route or state highway system. (b) Included in either: (i) The department's state highway construction plan. (ii) The transportation improvement plan of a regional association of governments. 2. "Eligible transit capital project" means land, buildings or motor vehicles or a combination of land, buildings and motor vehicles that is included in the transportation improvement plan of a regional association of governments and that is part of the federal transit administration's rural public transportation program for entities that are eligible pursuant to section 28-7676 and that have populations of less than fifty thousand persons. 3. "Eligible transportation project" means a transportation project that is eligible pursuant to section 28-7676. 4. "Federal SIB act" means section 350 of the national highway system designation act of 1995 (P.L. 104-59; 109 Stat. 618), any regulations adopted pursuant to that section and any other provisions of federal law providing for state infrastructure banks, infrastructure credit programs and other grant programs for highway purposes and any regulations adopted pursuant to those laws. 5. "Fund" means the highway expansion and extension loan program fund established by section 28-7674. 6. "Indian tribe" means any Indian tribe, band, group or community that is recognized by the United States secretary of the interior and that exercises governmental authority within the limits of any Indian reservation under the jurisdiction of the United States government, notwithstanding the issuance of any patent and including rights-of-way running through the reservation. 7. "Loan repayment agreement" means one or more loan agreements, instruments or other agreements providing for repayment of a loan or other financial assistance and entered into by this state or its agencies, including the department, or a political subdivision or Indian tribe. 8. "Political subdivision" means a county, city, town or special taxing district authorized by law to construct or assist in the construction of an eligible highway project or a county, city, town or special taxing district established pursuant to section 48-5102 to construct or assist in the construction of a transportation project. 9. "SIB cooperative agreement" means a cooperative agreement or agreements entered into by the Arizona department of transportation with the United States department of transportation pursuant to this article and the federal SIB act. 10. "Transportation project" means all or a portion of a project that is included in the state's transportation improvement program or a plan, as defined in section 28-6351, including the project planning, environmental work, design, right-of-way acquisition or construction for the transportation project and associated rolling stock and operating systems but not including an eligible highway project. 28-7673. Powers and duties of the board and department A. The transportation board may: 1. Make loans or provide other financial assistance to political subdivisions, Indian tribes or this state or its agencies, including the department, from monies in the fund for eligible projects. 2. Enter into a loan repayment agreement with an entity if in the board's judgment the loan repayment agreement is in furtherance of funding eligible projects pursuant to this article. 3. Apply for, accept and administer grants and other financial assistance from the United States government and from other public and private sources that are made for deposit in the fund. B. The Arizona department of transportation may enter into SIB cooperative agreements or capitalization grant agreements with the United States department of transportation. C. The board or the department shall deposit, pursuant to sections 35-146 and 35-147, any monies received pursuant to subsection A, paragraphs 2 and 3 and subsection B in the fund. D. The board and the department may each enter into contracts, execute any agreements or instruments and do any other act necessary or appropriate to carry out the purposes of this article, including exercising any power granted to them pursuant to this title in conjunction with, to facilitate or to otherwise assist the financing or operation of the fund or an eligible project. E. If a SIB cooperative agreement and the federal SIB act apply, the board and the department shall each comply with the requirements of the SIB cooperative agreement and the federal SIB act in carrying out their powers and duties pursuant to this article. F. In providing financial assistance pursuant to this article, the board shall not make a gift, grant or donation of monies in the fund, and any financial assistance provided shall be repaid to the fund. G. This article does not increase the board's bonding authority. 28-7674. Highway expansion and extension loan program fund A. The highway expansion and extension loan program fund is established. The fund constitutes a state infrastructure bank under the federal SIB act. The state treasurer shall receive in trust, hold and disburse monies in the fund solely for the purposes authorized by this article. The department shall administer the fund as a continuing appropriation in accordance with this article and the federal SIB act. Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations. B. The fund consists of: 1. Monies appropriated by the legislature. 2. Monies derived from board funding obligations delivered pursuant to section 28-7678. These monies shall be separately accounted for and invested. 3. Monies designated for deposit in the fund by the transportation board, a state agency or a political subdivision. 4. Monies received from the United States government under SIB cooperative agreements, including capitalization grants. 5. Monies received from political subdivisions, Indian tribes or this state or its agencies pursuant to agreements entered into pursuant to this article. 6. Interest and other income received from investing monies in the fund. 7. Gifts, grants, donations or other amounts received from any public or private source for deposit in the fund. C. The board may use monies in the fund for the following purposes in connection with providing financial assistance under this article: 1. Making eligible project loans or providing other financial assistance to political subdivisions, Indian tribes and this state or its agencies under section 28-7676. 2. Subsidizing interest rates. 3. Providing other forms and methods of financial assistance that are approved by the board and, to the extent required by the federal SIB act, by the United States secretary of transportation and that relate to the eligible project with respect to which the assistance is being provided. 4. Paying the costs to administer the fund, except that no more than the percentage of the aggregate of federal capitalization grants pursuant to the federal SIB act may be used to pay these costs. Monies from other sources may be used without limit to pay these costs. D. Except for monies received pursuant to subsection B, paragraph 4 of this section, up to ten million dollars of the monies in the fund may be used for eligible transit capital projects in municipalities with a population of less than fifty thousand persons. E. On notice from the board, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund. F. The board shall use the monies and other assets in the fund solely for the purposes authorized by this article. G. The board may establish any accounts or subaccounts in the fund as it determines are necessary or appropriate to carry out the purposes of this article. H. All proceeds of capitalization grants received from the United States pursuant to the federal SIB act and title 23, United States Code, shall be deposited in the fund and shall be used only to make loans or provide other financial assistance to political subdivisions, Indian tribes and this state or its agencies to design, construct, acquire right-of-way for, restore or rebuild eligible projects, for the purposes prescribed in subsection C of this section or for any other purposes permitted by the federal SIB act and title 23, United States Code. 28-7675. Fund; annual financial audit and report A. The transportation board shall annually cause a financial audit to be made of the fund. The financial audit shall be conducted by a certified public accountant within six months after the end of each fiscal year. The board shall immediately file a certified copy of the audit with the auditor general. B. The board shall pay any fees and costs of the financial audit under this section from the fund. C. The transportation board is exempt from subsection A of this section if all of the following apply: 1. Unexpended monies do not remain in the fund except interest and investment earnings deposited pursuant to section 28-7674, subsection B, paragraph 6. 2. There are no outstanding eligible project loans in the fund. 3. All approved or pending eligible project loans or other financial assistance applications are disbursed, and the board does not expect additional financial assistance applications. 4. There are no outstanding board funding obligations due to the state treasurer. 28-7676. Eligible project loans and other financial assistance A. A political subdivision or this state or its agencies, including the department, may apply to the transportation board for any loan or other financial assistance from the fund to support an eligible project. B. An Indian tribe may apply to the board for any loan or other financial assistance from the fund to support an eligible project that the board determines provides substantial public benefits. C. Through December 31, 2004, of the total amount of monies and other assets in the fund, the board shall provide loans and other financial assistance for use as follows: 1. Fifty per cent in counties with a population of one million two hundred thousand or more persons according to the most recent United States decennial census. 2. Twenty-five per cent in counties with a population of five hundred thousand or more but less than one million two hundred thousand persons according to the most recent United States decennial census. 3. Twenty-five per cent in counties with a population of less than five hundred thousand persons according to the most recent United States decennial census. D. The percentages prescribed in subsection C of this section apply over the prescribed time period and are not yearly allocations but do not apply to loans made by the board before August 6, 1999. E. In compliance with any applicable federal requirements, the board shall: 1. Approve, disapprove or modify a simplified application form and guidelines. 2. Prescribe a simplified procedure to apply for and approve financial assistance. 3. Consider at least the following in selecting which eligible projects shall receive financial assistance: (a) Economic benefits. (b) Mobility. (c) Air quality. (d) Safety. (e) How quickly the applicant proposes to repay the loan. (f) The ability of the applicant to repay a loan according to the terms and conditions established by this section. (g) The availability of assistance for projects located in smaller cities and towns and rural areas. 4. Give a preference of up to twenty per cent to eligible projects that include local, federal or private financial participation in accelerating the project. This preference shall be commensurate with the level of local, federal or private financial participa