A.R.S. tit. 35 ch. 10 — Arizona Revised Statutes Title 35 Chapter 10 — Public Deposits

35-1201. Definitions In this chapter, unless the context otherwise requires: 1. "Administrator" means the statewide collateral pool administrator. 2. "Default or insolvency" includes the failure or refusal of any eligible depository to return any public deposit on demand or at maturity and the issuance of an order of supervisory authority restraining that depository from making payments of deposit liabilities or the appointment of a receiver for that depository. 3. "Defaulting depository" means any eligible depository determined to be in default or insolvent. 4. "Eligible collateral" means any collateral that is authorized pursuant to section 35-323. 5. "Eligible depository" has the same meaning prescribed in section 35-321. 6. "Public deposit": (a) Means public monies deposited in an eligible depository pursuant to this chapter. (b) Does not include monies that have been collateralized pursuant to regulations adopted by the United States department of housing and urban development. 7. "Public depositor": (a) Means this state or any county, city, town or other political subdivision of this state, including any commission, institution, committee, board or officer and any state court. (b) Does not include a charter school, a Native American tribe or tribal entity, a federal agency or a housing authority, provided that the housing authority deposits are secured in accordance with regulations or guidelines of the United States department of housing and urban development. 8. "Public monies" means monies belonging to or received or held by officers of public depositors in their official capacity. 9. "Qualified escrow agent" means any bank or trust company that is qualified to hold collateral pledged to secure public deposits pursuant to section 35-1208. 10. "Required collateral" means the amount of eligible collateral required for an eligible depository to secure public deposits set by the policies and procedures of the administrator. 35-1202. Powers of the statewide collateral pool administrator The statewide collateral pool administrator is established in the office of the state treasurer. On or before July 1, 2014, the administrator shall have the necessary policies and procedures in place to implement this chapter. The administrator may: 1. Adopt and enforce the policies and procedures necessary to carry out this chapter. Any policies set forth by the administrator shall be developed, including a comment period, in consultation with financial institutions that serve as eligible depositories and public depositors. 2. Prescribe and enforce policies fixing the terms and conditions under which uninsured public deposits must be secured by collateral under this chapter. 3. Require any eligible depository to provide information concerning its public deposits as requested by the administrator. 4. Determine when a default or insolvency has occurred and take such action as the administrator may deem advisable for the protection, collection, compromise or settlement of any claim arising in case of default or insolvency. 35-1203. Subrogation of administrator to depositor's rights; distribution of assets; payment On payment in full to any public depositor on any claim presented pursuant to this chapter, the administrator shall be subrogated to all of the depositor's rights, title and interest against the depository that is in default or insolvent and shall share in any distribution of the defaulting or insolvent depository's assets ratably with other depositors. The sums received from any distribution shall be paid to the other eligible depositories against which assessments were made, in proportion to those assessments, after any proper payment or expense of the administrator in enforcing the claim is paid. 35-1204. Mandatory deposit of public funds in eligible depositories; notice; exemption A. Uninsured public deposits required to be secured by collateral pursuant to this chapter shall be deposited in an eligible depository. B. On written notice to the administrator, a city that is governed by a charter and that has a population of more than one million persons is exempt from the requirements of this article. 35-1205. Authority to make public deposits A. All public depositors may make public deposits under the depositor's control in eligible depositories. The eligible depository shall secure any uninsured public deposits pursuant to this chapter or in accordance with the procedures prescribed in section 35-323.01. B. Local officials handling public deposits in this state may not require from an eligible depository any pledge of collateral for the deposits in excess of the requirements of this chapter. 35-1206. Public depositors; immunity When deposits are made in accordance with this chapter, an official of a public depositor is not personally liable for any loss resulting from the default or insolvency of any eligible depository in the absence of negligence, malfeasance, misfeasance or nonfeasance on the part of public depositor or the depositor's agents. 35-1207. Collateral for public deposits A. An eligible depository shall not accept or retain any public deposit that is required to be secured unless the eligible depository has deposited the required collateral with a qualified escrow agent or the administrator, if required. Every eligible depository shall deposit with a qualified escrow agent eligible collateral equal to or in excess of the required collateral. Required collateral shall be one hundred two percent of public deposits less any applicable deposit insurance. Eligible collateral shall be valued at current market value. Substitutions and withdrawals of eligible collateral may be made without prior notification or consent by the public depositor. The administrator shall provide written consent before withdrawals of collateral. Substitutions of collateral may be made with notification to the administrator. B. Notwithstanding any other provisions of law, an eligible depository shall not be required to give bond or pledge securities or instruments in the manner provided in this section for the purpose of securing deposits that are received or held in the trust department of the depository and that are secured pursuant to 12 United States Code section 92a. 35-1208. Qualified escrow agent; substitutions A. Eligible collateral shall be held as provided in this article or by policy of the administrator. Eligible collateral shall be held in the custody of any bank, including a federal reserve bank, or any depository trust company. B. Each eligible depository shall provide in a written deposit or pledge agreement between the eligible depository and the custodian of the collateral, or in such other manner as prescribed by the administrator by policy, that: 1. In the event of default or insolvency of the eligible depository for which the collateral is held, the custodian shall surrender the collateral to the administrator. 2. The custodian shall reasonably make available to the administrator any books, records and papers pertaining thereto for any examination or other reason necessary for the administration of this article. C. An eligible depository at any time may make substitutions of eligible collateral maintained or pledged for the purposes of this article and shall at all times be entitled to collect and retain all income derived from the collateral without restriction. The authorization to make substitutions of eligible collateral pursuant to this subsection may be suspended or revoked by the administrator if the eligible depository has become the subject of increased regulatory oversight as a result of the eligible depository's failure to maintain capital standards required by the depository's primary regulator. 35-1209. Reports of eligible depositories At the request of the administrator, each eligible depository shall submit to the administrator a report, as prescribed by the administrator, showing the current market value of the depository's pledged collateral. The report shall be certified as to its accuracy by an authorized official of the eligible depository. 35-1210. Procedure for payment of losses When the administrator determines that an eligible depository securing public deposits in accordance with this section is a defaulting depository, the administrator shall take steps as promptly as practicable to reimburse public depositors of all uninsured public deposits held by the defaulting depository using the following procedures: 1. The administrator shall determine the amount of uninsured public deposits net of any deposit insurance held by the defaulting depository either with the cooperation of the department of insurance and financial institutions or the receiver appointed for the defaulting depository or by any other means available. 2. The administrator shall assess the amount of the uninsured public deposits determined under paragraph 1 of this section against the defaulting depository. The administrator shall promptly take possession of the eligible collateral deposited by the defaulting depository with the depository's qualified escrow agent, to the extent necessary to satisfy the administrator's assessment, and shall liquidate the eligible collateral. 3. On receipt of the liquidated eligible collateral, the administrator shall reimburse the public depositors from the proceeds of the collateral to the extent of the defaulting depository's deposit liability to the depositor, net of any applicable deposit insurance. 35-1211. Civil penalties; hearing; noncompliance A. The administrator may assess against and collect the following from an eligible depository for noncompliance with the requirements of this chapter: 1. A civil penalty of not more than two hundred fifty dollars for each day the eligible depository fails to maintain with its qualified escrow agent eligible collateral as required by this article. 2. A civil penalty of not more than one hundred dollars for each day beyond the time period specified in this article or by the policy of the administrator that the depository negligently or wilfully fails to file in the office of the administrator a written report required by this article. B. The eligible depository deemed in noncompliance may request a hearing before a civil penalty is imposed pursuant to this section. Any civil penalty assessed under this section shall be paid within thirty days after receipt of the assessment, or the administrator may assess and collect an additional penalty of five per cent of the amount of the civil penalty for each month or part of a month that the payment is delinquent. The administrator may make available to the public relevant information regarding civil penalties assessed against an eligible depository. C. Any penalties collected pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund. D. If an eligible depository fails to pay the penalties assessed by the administrator pursuant to this section, the administrator may notify local agency treasurers with deposits in the eligible depository of the noncompliance. 35-1212. Fees; public deposit administration fund A. The administrator shall annually assess every eligible depository that is securing any uninsured public deposits pursuant to this chapter a fee in an amount established by the administrator for the enforcement and administration of this chapter. The fees shall fairly and equitably apply to all eligible depositories that are securing any uninsured public deposits pursuant to this chapter calculated according to the proportion of aggregate public monies that each depository holds in relation to the total of all aggregate public deposits held by those eligible depositories for each annual period. For the purposes of this subsection, monies initially invested pursuant to section 35-323.01, subsection A, paragraph 1 and deposited pursuant to section 35-323.01, subsection A, paragraph 2 shall not be included in determining the aggregate public monies held by an eligible depository that is securing any uninsured public deposits pursuant to this chapter. The administrator shall deposit the fees in the public deposit administration fund. B. The public deposit administration fund is established in the state treasury. The fund shall consist of fees deposited pursuant to subsection A of this section and all interest earned on the investment of the monies in the fund. Any interest shall be credited at least annually to the fund. Except as otherwise provided in subsection A of this section, monies in the fund are continuously appropriated to the administrator for the administration and enforcement of this chapter. Monies in the fund are exempt from the provisions of section 35-190, relating to lapsing of appropriations. Monies shall not be appropriated from the state general fund for payment of any expenses incurred under this chapter, and the expenses shall not be charged against the state. Any monies remaining in the fund at the end of each fiscal year that exceed the cost of administering this chapter for that fiscal year shall be applied as a credit for fees assessed pursuant to this section or refunded the following calendar year to the participating eligible depositories.