A.R.S. tit. 35 ch. 3 — Arizona Revised Statutes Title 35 Chapter 3 — Public Indebtedness

35-401. Definitions In this article, unless the context otherwise requires: 1. "Bonds" means tax anticipation bonds issued pursuant to this article. 2. "Loan commissioners" means the loan commissioners of this state. 3. "Taxes" means state excise taxes levied pursuant to lawful appropriations, which are due or will become due prior to the end of the fiscal year but which remain uncollected, in anticipation of which bonds may be issued. 4. "Treasurer" means state treasurer. 35-402. Issuance of bonds When the legislature has made appropriations for any fiscal year as authorized by law, and when ad valorem and excise taxes sufficient to produce funds to pay such appropriations have been levied, if the loan commissioners of the state ascertain that the proceeds of the taxes levied will not be received in the state treasury in time to pay in cash the expenses provided for by such appropriations, they may anticipate the collection of such taxes by issuing and selling bonds designated as "state of Arizona tax anticipation bonds". 35-403. Form and contents of bonds A. Tax anticipations bonds shall be signed by the governor, attested by the director of the department of administration and countersigned by the state treasurer, and shall be payable within six months from the date. They shall bear interest at such rate or rates, not exceeding nine per cent per annum, bear such date and shall be payable at such place as determined by the loan commissioners. B. Each bond shall recite: 1. That it is issued in anticipation of state taxes theretofore levied but remaining uncollected. 2. The fiscal year or years for which the taxes were levied. 3. Whether it is payable from the proceeds of ad valorem taxes levied upon taxable property or from the state's share of excise taxes, or both. 4. That the bond is issued pursuant to this article. 35-404. Amount of bonds; limitation The total amount of tax anticipation bonds, including both principal and interest, shall not exceed fifty per cent of the ad valorem taxes, plus fifty per cent of the state's portion of excise taxes as estimated by the department of revenue, for the years recited in the bonds, uncollected and not in the state treasury at the time of issuance of the bonds. 35-405. Resolution for issuance The loan commissioners shall by resolution authorize the issuance of the bonds, which shall prescribe the form of the bonds, the form of the interest coupons, the manner in which the coupons shall be signed and the particular taxes upon which the bonds are based, and shall fix the manner, terms and conditions under which the bonds shall be sold. 35-406. Sale of bonds; use of proceeds A. The tax anticipation bonds shall be sold to the highest bidder that meets the conditions imposed by the loan commissioners, but shall not be sold at less than par. B. When the issuance and sale of any bonds have been completed, the treasurer shall immediately call in and pay from the proceeds of the sale all state warrants, checks or substitute checks, and electronic funds transfer vouchers that are registered and accumulated at that date, or otherwise the proceeds of the bonds shall be used solely for the purposes for which the taxes on which the bonds are based were levied. 35-407. Payment of bonds and interest When bonds are issued, the taxes upon which they are based and by which they are secured shall, when and as collected, be kept by the treasurer and used solely for payment of the bonds and interest thereon, until all of the bonds, together with the interest, are paid in full. The treasurer may pay the interest on the bonds from the general fund. No interest shall be paid on any bond for any period after the date it is payable or after the date the treasurer calls the bond for payment, whichever date is later. 35-408. Rights of holder of bond The holder of any tax anticipation bond may, in his own name and on his own behalf, or on behalf of all the holders of the bonds, compel by mandamus the performance of any duty imposed by this article. 35-421. State loan commissioners; issuance of bonds; exemption of bonds from taxes A. The governor, the director of the department of administration and the state treasurer shall constitute the loan commissioners of the state of Arizona. B. The loan commissioners shall provide for payment of state indebtedness. For the purpose of paying, redeeming and refunding all or any part of the principal and interest of such indebtedness, the loan commissioners may, from time to time issue negotiable coupon bonds of the state when they can be sold at a lower rate of interest than previously paid or when they can be issued and sold at a profit and benefit to the state. C. Bonds issued under the provisions of this article shall not be taxed within this state. 35-422. Denominations and terms of bonds A. The bonds provided for in section 35-421 shall be issued as nearly as practicable in denominations of one thousand dollars, but bonds of a lower denomination not less than one hundred dollars may be issued when necessary. The bonds shall bear interest at a rate fixed by the commissioners, not exceeding nine per cent per annum, payable semiannually at the office of the state treasurer or at some bank or trust company in New York City, New York, at the option of the purchaser of the bonds. The principal shall be payable within twenty-five years after the date of issuance of the bonds, and the state shall reserve the right to redeem at par any bonds in their numerical order at any time after fifteen years from the date thereof. The bonds shall bear the date of their issue, state where and to whom payable, the rate of interest, shall be signed by the loan commissioners with the seal of the state affixed, shall be countersigned by the state treasurer and bear his official seal, and shall be registered by the department of administration in a book kept for that purpose which shall disclose the amount the bonds sold for, or if exchanged, for what exchanged. B. The faith and credit of the state shall be pledged for the payment of the bonds and the interest accruing thereon. 35-423. Interest coupons A. Coupons for interest shall be attached to each bond, shall be consecutively numbered and bear the same number as the bond to which it is attached, shall bear the facsimile signature of the state treasurer and shall cover the interest expressed in the bond from the date of issue until paid. B. Bonds shall not bear interest, nor shall interest be paid thereon, for any time before they are delivered to the purchaser. 35-424. Sale of bonds; notice, publication and bids A. When the loan commissioners are authorized to issue bonds, or decide to refund or redeem all or any of the existing indebtedness of the state, they shall direct the state treasurer to advertise the sale of the bonds to be issued for that purpose by causing a notice of such sale to be published once a week for one month in three newspapers published in the state, no two of which shall be published in the same county, and, in their discretion, in a publication in New York City, New York, and in San Francisco, California. Such notice shall state the amount of bonds to be sold, the place, day and hour of sale, and that bids will be received by the treasurer for the purchase of the bonds within one month from expiration of such publication. B. At the place and time named in the notice the loan commissioners shall open the bids received by the treasurer and shall award the purchase of the bonds, or any part thereof, to the best bidder. C. The loan commissioners may reject any and all bids, and may refuse to make an award unless sufficient security is furnished by the bidder insuring compliance with his bid. 35-425. Delivery of bonds A. When the sale is awarded, the loan commissioners shall procure the necessary bonds, and, after signing the bonds, deliver them to the state treasurer, taking his receipt for the bonds, and charging him therewith. The treasurer shall deliver the bonds to the purchaser for cash, or exchange them for any of the indebtedness for the redemption of which they were issued. B. Bonds shall not be sold or exchanged for less than their face value and accrued interest at the time of delivery, nor shall any indebtedness be redeemed at more than its face value and accrued interest. C. The state treasurer shall endorse the time when and the amount for which exchanged upon the face of the paper evidencing the indebtedness received by him in exchange. 35-426. Application of proceeds to redemption of indebtedness; notice to redeem A. The state treasurer shall apply monies received to redeem the indebtedness of the bonds issued and shall give notice in the same manner as for paying and redeeming state warrants, checks and substitute checks, and electronic funds transfer vouchers. After the state treasurer redeems such indebtedness, interest on all such indebtedness due and outstanding shall cease. B. Before such indebtedness is paid, the director of the department of administration shall endorse on each certificate the amount due thereon, and write across the face of each the date of its surrender and the name of the person surrendering, and shall keep a record thereof. 35-427. Tax levy for amortization of bonds; determination of tax rate; additional levy; application of monies; violation; penalty A. There shall be levied annually upon the taxable property in this state, in addition to other levies, an amount sufficient to pay the interest on all bonds issued under the provisions of this article, to be placed in the state treasury in the interest fund. Each year after such bonds have been issued, an additional amount shall be levied annually sufficient to pay four per cent of the total amount issued, until all the bonds are paid and discharged, and the amount shall be placed in the state redemption fund as collected. B. The director of the department of administration shall determine the rate of tax to be levied for the purpose provided in subsection A in the different counties in the state and certify the rate to the boards of supervisors in each county. The boards of supervisors shall enter such rate on the assessment rolls as other taxes. If any county is or becomes delinquent in the payment of such taxes, the board of supervisors shall, before the next levy, prorate such delinquencies and make such additional levy, in addition to the current annual rate certified to it by the director of the department of administration necessary to pay the interest and principal of such bonds on maturity. The director of the department of administration may reconvene the board of supervisors for the purpose of entering such rate or additional rate or levy or additional levy as the director certifies. The county, district or municipal treasurer shall, on or before June 1 each year, pay to the state treasurer the total amount so certified to the board of supervisors, whether or not the whole amount has been collected. C. The money derived from such taxes shall be paid into the state treasury and shall be applied, first, to the payment of the interest on the bonds issued under this article and, second, to the payment of the principal of such bonds. Whenever sufficient funds accrue to the credit of the state, the loan commissioners may direct the state treasurer to call such bonds for payment, if the call is optional. D. Any interest earned by monies in the redemption fund shall be credited to the state, county, district or municipality in proportion to the amount paid into the fund by the state, or such county, district or municipality. E. Any money remaining in the interest fund after payment of interest, and any money remaining in the redemption fund after all of the bonds have been paid and discharged, shall be returned by the treasurer to the county, district or municipality remitting such money. F. If the board of supervisors refuses or omits to enter and levy the rate of tax as certified to it by the joint legislative tax committee or the director of the department of administration, or refuses or omits to do any act required by this article, the members thereof are guilty of nonfeasance in office and are individually liable on their bonds for the total amount so omitted, and the attorney general, upon being informed of such refusal, shall commence an action against such officials and their sureties. 35-428. Redemption of bonds; notice; record of bonds redeemed A. When, after the expiration of fifteen years from the date of issuance of any bonds, there is in the redemption fund a surplus of ten thousand dollars or more, the state treasurer shall advertise, in the same manner as required for bids for the sale of bonds, stating the amount of money in the redemption fund, and that such amount has been set apart to pay and discharge a certain number of bonds, naming them by number in the order of their issuance. A copy of such advertisement shall be mailed to each bank or trust company at which the interest on the bonds is payable. If the bonds numbered in the advertisements are not presented for payment and cancellation at the expiration of such publication, the fund shall remain in the treasury to discharge the bonds when presented, but such bonds shall draw no interest after expiration of the publication. Before such bonds are paid they shall be presented to the director of the department of administration, who shall endorse on each bond the amount due thereon, and shall write across the face of each bond the date of its surrender and the name of the person surrendering the bond. B. The director of the department of administration shall keep a record of all bonds issued and disposed of by the state treasurer, showing for each bond the number, rate of interest, date, amount of sale, when, where and to whom payable, and if exchanged, for what, and when presented for redemption the date, amount due thereon, and person surrendering. 35-429. Issuance of state bonds for county, municipal or school district indebtedness A. The board of supervisors of each county and the proper municipal or school authority shall report to the state loan commissioners the bonded and outstanding indebtedness of the county, municipality or school district, and, upon demand of such authorities, the loan commissioners shall provide for redeeming or refunding such indebtedness in the same manner as other state indebtedness and shall issue bonds of the state for any indebtedness authorized by law to be incurred by such county, municipality or school district. B. The bonds shall be issued upon the faith and credit of the state only to the extent that it will cause to be levied and collected taxes for the payment of the principal and interest of such bonds, and pay the principal and interest when such bonds have been issued. C. The county, municipality or school district shall pay into the state treasury, in addition to all other taxes authorized by law, amounts as directed by the director of the department of administration, to be levied for the payment of the principal and interest of such bonds issued for such county, municipality or school district, in the same manner provided for the payment of the principal and interest of state indebtedness. 35-430. Cancellation of redeemed bonds; record of redemption; transmittal of abstract of record; payment of interest A. When the state treasurer pays or redeems any indebtedness, the treasurer shall endorse, by writing or stamping in ink, on the face of the paper evidencing such indebtedness so paid or redeemed, the words "redeemed and canceled" with the date of cancellation. B. The state treasurer shall keep a complete record of all bonds redeemed and surrendered and shall transmit to the governor an abstract of the record with the annual report, which shall be submitted by the governor to the legislature. C. The treasurer shall pay the interest on the bonds, when due, from the interest fund, if sufficient, and if not sufficient, from the state general fund. If a deficiency exists, the director of the department of administration shall draw a warrant, check or electronic funds transfer voucher on the state treasurer, payable to the order of the state treasurer from the state general fund. 35-431. Registration of bond; effect; entry of registration When the owner of a bond authorized to be issued by this article presents it to the director of the department of administration with a request for its conversion into a registered bond, the director of the department of administration shall detach and cancel the coupons, and stamp or write upon such bond that it is registered in the name of the owner and that thereafter the interest and principal of the bond are payable to the registered owner only. The bond may be transferred by the registered owner by presenting it to the director of the department of administration, and the bond shall again be registered. When so registered, the principal and interest of the bond shall be payable to the registered owner. The director of the department of administration shall enter in the register of bonds the registration of each bond and the name of the owner thereof. 35-451. Local debt limit; increase in limitation; authority to issue bonds; definitions A. The aggregate indebtedness of a county, city, town or similar municipal corporation may be increased above six percent of the net assessed value of the full cash value of the property in such a political subdivision only as provided in this article. B. A multi-county water conservation district may become indebted and issue bonds in the manner provided in this article. C. Bonds may be issued under this article for any lawful or necessary purpose. D. For the purposes of this section, "full cash value" and "net assessed value" have the same meanings prescribed in section 42-11001. 35-451.01. Power to use outstanding bond authorizations of common or high school districts A. All outstanding authorizations permitting the issuance of bonds, as provided in this article, or the incurring of debt by a common school district or a high school district at the time either such district becomes part of a unified school district, shall remain in full force and effect. The unified school district shall be vested with all powers to act for and on behalf of such common school district or high school district to issue the bonds for the purposes for which such authorizations were granted. The school district governing board may submit the bonds for approval by the attorney general. B. The bonds shall be issued pursuant to the provisions of this article, except that the effect of the bonds issued pursuant to this section shall be the same as if the questions pertaining to the issuance of the bonds had been submitted to and approved by the electors of the unified district after its formation. C. The provisions of this section shall not be construed as authorizing indebtedness in excess of the percentage limitation as prescribed for a unified school district in article 9, section 8.1, Constitution of Arizona. 35-452. Election to authorize indebtedness; costs A. The governing body or board of a political subdivision enumerated in section 35-451 may, and upon petition signed by fifteen per cent of the qualified electors shall, order an election by such electors to determine whether such indebtedness shall be authorized. The election shall be held on the first Tuesday following the first Monday in November as prescribed by section 16-204, subsection B, paragraph 1, subdivision (d). B. If a majority of the qualified electors voting at the election votes in favor of creating an indebtedness such political subdivision may become so indebted. C. Bond counsel fees, financial advisory fees, printing costs and paying agent and registrar fees shall be paid from either the amount authorized by the qualified electors of the political subdivision or current operating funds. D. Bond election expenses shall be paid from current operating funds only. 35-453. Order for election A. The governing body or board of the political subdivision shall order the election to be held at the regular voting places within the limits of such subdivision on the first Tuesday following the first Monday in November as prescribed by section 16-204, subsection B, paragraph 1, subdivision (d). B. If the election is to be held for creating an indebtedness by a county, the order shall be made by the board of supervisors of the county in which the election will be held. C. The order shall state the object of the election, and shall be prima facie evidence that all provisions necessary to give the order validity or qualify the governing body or board to make such order have been fully complied with. 35-454. Informational pamphlet for bond election; review; ballot; election; return; canvass of votes; certificate of election A. The governing body or board of the political subdivision shall: 1. At least thirty-five days before the bond election, mail a copy of an informational pamphlet to every household within the political subdivision that contains a registered voter. The pamphlet shall contain information on the: (a) Amount of the bond authorization. (b) Maximum interest rate of the bonds. (c) Estimated debt retirement schedule for the current amount of bonds outstanding, showing both principal and interest payments, the current net assessed valuation as reported by the department of revenue and the current adopted and estimated tax rates. For the purposes of this paragraph, "net assessed valuation" may include the values used to determine voluntary contributions collected pursuant to title 9, chapter 4, article 3 and title 48, chapter 1, article 8. (d) Estimated debt retirement schedule for the proposed bond authorization, showing both the estimated principal and interest payments and the estimated average annual tax rate for the proposed bond authorization. In preparing this information and the information prescribed by subdivision (c) of this paragraph, the projected total annual increase in net assessed valuation for any future year shall not exceed: (i) For the first five years of the estimated debt retirement schedule, the average of the annual percentage growth for the previous ten years in the net assessed valuation of the political subdivision. (ii) For the remaining years of the estimated debt retirement schedule, twenty percent of the average of the annual percentage growth for the previous ten years in the net assessed valuation of the political subdivision. (e) Source of repayment. (f) Estimated issuance costs. (g) Estimated tax impact of debt service for the bonds on an owner-occupied residence classified as class three pursuant to section 42-12003, on commercial property classified as class one pursuant to section 42-12001, paragraph 12 and on agricultural or other vacant property classified as class two pursuant to section 42-12002, assuming the net assessed valuation of the property increases annually at the lesser of five percent or fifty percent of the projected total annual increase in net assessed valuation as determined pursuant to subdivision (d) of this paragraph over the term of the bonds using the same average annual tax rate as under subdivision (d) of this paragraph, as follows: The tax impact over the term of the bonds on an owner-occupied residence valued by the county assessor at $250,000 is estimated to be $___ per year for __ years, or $___ total cost. The tax impact over the term of the bonds on commercial property valued by the county assessor at $1,000,000 is estimated to be $____ per year for __ years, or $______ total cost. The tax impact over the term of the bonds on agricultural or other vacant property valued by the county assessor at $100,000 is estimated to be $____ per year for ___ years, or $______ total cost. (h) In bold-faced type, estimated total cost of the proposed bond authorization, including principal and interest. (i) Current outstanding general obligation debt and constitutional debt limitation. (j) Projects and expenditures for which the bonds are to be issued. The purpose statement shall only present factual information in a neutral manner. Advocacy for the expenditures is strictly limited to the arguments submitted pursuant to subdivision (n) of this paragraph. (k) Purpose for which the bonds are to be issued and, if applicable, in bold-faced type, that the amount of the proposed bond authorization combined with the current outstanding debt exceeds the political subdivision's constitutional debt limit. (l) Polling location for the addressee. (m) Hours during the day when the polls will be open. (n) Arguments for and against the authorization of one or more of the bond propositions. Each argument filed shall contain the sworn statement of the person submitting it. If the argument is submitted by an organization, it shall contain the sworn statement of two executive officers of the organization. If the argument is submitted by a political committee, it shall contain the sworn statement of the committee's chairperson or treasurer. If the argument is submitted by an individual and not on behalf of an organization, a political committee or any other group, the person shall submit the argument with a sworn, notarized statement. The names of persons and entities submitting written arguments shall be included in the informational pamphlet. Persons signing the argument shall identify themselves by giving their residence address and telephone number, which may not appear in the informational pamphlet, except that the person's city or town and state of residence shall appear in the pamphlet. Any argument that is submitted and that does not comply with this subdivision may not be included in the pamphlet. 2. Set a deadline to submit arguments for and against the authorization of one or more of the bond propositions at a public meeting and publish the deadline in a newspaper of general circulation in the jurisdiction of the political subdivision. B. The failure of any one or more electors to receive the informational pamphlet shall not be grounds to invalidate the election. The election shall conform with the general election laws of this state. The return of the election held in a county shall be made to the board of supervisors and, in any other case, to the governing body or board of the municipal corporation or district within twelve days after the election. C. For any proposed general obligation bond authorization for which the principal and interest will be paid by a levy of property taxes, the ballot shall contain the phrase "the issuance of these bonds will result in a property tax increase sufficient to pay the annual debt service on bonds". Any written information provided by the political subdivision pertaining to the bond election shall include financial information showing the estimated average tax rate for the proposed bond authorization. If the bonds are to be repaid with secondary property taxes, the ballot shall contain the words "bond approval, yes" and "bond approval, no", and the voter shall signify the voter's desired choice. The ballot shall also contain the following statement: A "yes" vote shall authorize the ______ governing body to issue and sell $______ of ______ bonds of the district to be repaid with secondary property taxes. A "no" vote shall not authorize the ______ governing body to issue and sell such bonds of the district. D. If the governing body intends to use revenues other than property taxes to pay the debt on proposed general obligation bonds, the ballot shall contain the phrase "the issuance of these bonds will result in a property tax increase sufficient to pay the annual debt service on bonds, unless the governing body provides for payment from other sources". E. The board of supervisors, governing body or governing board shall hold a special meeting within twenty days after the election to canvass the votes cast and certify the result. The certificate of the result shall be prima facie evidence of full performance of all conditions and requirements precedent to holding the election. F. The governing board or body shall file and record in the office of the county recorder a certificate disclosing the purpose of the election, the total number of votes cast and the total number of votes for and against creating the indebtedness, and stating whether or not the indebtedness is ordered. On filing and recording the certificate, the governing board or body shall carry out the purpose of the election. G. Variations between the estimates required by subsection A of this section and the actual debt retirement schedules, issuance costs, annual and total costs and tax rates shall not invalidate either the election or the bonds. 35-455. Issuance and sale of bonds; call for election A. When the political subdivision designated in this article desires to issue bonds or other evidences of indebtedness, the governing body or board thereof, with the assent of a majority of the qualified electors therein voting at the election held as provided by section 35-454, may issue and sell bonds in the amount authorized at the election. B. The call for the election shall set forth the aggregate amount of the bonds, the maximum rate of interest to be paid thereon, the minimum and maximum number of years bonds of any issue or series may run from their date, the purposes for which the money derived from the sale of the bonds will be expended, the current outstanding general obligation debt and the constitutional debt limitation of the political subdivision. C. Bonds of any issue or series of bonds voted under this section may run for any number of years not exceeding the longest period permitted by the voted proposition. D. The governing body or board may expend the monies received from the sale of the bonds only for the purposes stated in the ballot and for the necessary costs and expenses of the issuance and sale of the bonds. If an unexpended balance remains after satisfying the purposes of the bonds, the balance shall be used to retire the bonded indebtedness. 35-456. Amount, denomination and form of bonds A. The governing body or board shall cause the bonds to be prepared in the amount and denominations authorized, or whole multiples of such denominations, bearing the date of issuance and numbered in a convenient manner. Bonds voted at one or more elections, for one or more different purposes and subject to one or more debt limits may be combined into a single issue or series maturing at such times and containing such options for redemption prior to maturity, with or without premium, as the governing body or board may determine prior to the issuance of the bonds. On or before retirement of bonds of such a combined issue, the governing body or board shall determine the voted purpose or purposes for which the bonds being retired were issued. This determination is conclusive in calculating the amount of bonds remaining outstanding for each such voted purpose and for calculating outstanding bonded indebtedness with respect to article IX, sections 8 and 8.1, Constitution of Arizona. B. The bonds shall be signed and attested: 1. When issued by the county, by the chairman and the clerk of the board of supervisors. 2. When issued by a city or town, by the mayor and the city clerk. 3. When issued by any other municipal corporation, by the executive officer and clerk of the governing body of such corporation. Any signature may be affixed either by manual signature or by a facsimile reproduction of a manual signature if the signer adopts the facsimile reproduction as and for such person's actual signature. C. The corporate seal of any such political subdivision or municipal corporation may be affixed to the bonds either manually or by photographic reproduction. D. The bonds may be payable to bearer or may be in fully registered form without coupons and shall mature in not to exceed forty years from the date of their issuance. Coupons for the interest may be attached to each bearer bond bearing a facsimile of the signatures of the officers as they appear upon the bonds. E. The form, including whether registrable as to principal or as to both principal and interest, denomination and manner of execution of tax secured bonds issued pursuant to both this article and title 9, chapter 5, article 3 shall be governed by title 9, chapter 5, article 3. F. The governing body may employ registrars and transfer and paying agents to administer the bonds. All or any part of the costs of registration, transfer and payment may be deducted from bond proceeds or may be treated as interest and such costs may be added to and paid from the proceeds of taxes levied to pay interest on the bonds. 35-456.01. Bonds; manual affixing of signatures Wherever any statute requires that any bond issued by a public body be signed manually by two or more officers or other individuals, all such signatures and counter signatures may be printed, lithographed, engraved, or otherwise mechanically reproduced, except that one of the signatures or counter signatures to the bonds shall be manually affixed. 35-457. Sale of bonds; bids; forfeiture of deposit; definitions A. Any or all of the bonds may be sold at public sale or through an online bidding process in a manner prescribed by the governing body or board that includes the following: 1. If sold by public sale before the sale of any bonds the governing body or board shall meet and enter on its record an order directing the sale of the bonds and the date and hour of the sale, and cause a copy of the order to be published at least once a week for two successive weeks in cities having a population of fifteen thousand or more persons, and once a week for four successive weeks in all other political subdivisions before the sale in one or more designated daily or weekly newspapers, together with a notice that sealed proposals will be received for purchase of the bonds on the date and hour named in the order. 2. If sold through an online bidding process, bids for the bonds that are entered into the system may be concealed until a specified time or disclosed in the online bidding process, may be subject to improvement in favor of the political subdivision before a specified time and may be for an entire issue of bonds or specified maturities according to the manner, terms and notice provisions ordered by the governing body. B. If the bonds are sold by public sale or through an online bidding process, all proposals shall be received on the date and hour or in the manner stated in the order and the governing body or board shall award the bonds to the highest and most responsible bidder. The successful bidder shall provide a bid guarantee for not less than two percent of the total par value of the bonds within twenty-four hours after the date and time the bid is awarded. The bid guarantee may be in the form of a certified check or a bond issued by a surety company licensed by the department of insurance and financial institutions to do business in this state. The governing body or board may reject any and all bids. If the successful bidder does not carry out the terms of the proposal to purchase the bonds, the bid guarantee shall be forfeited as stipulated and liquidated damages. C. Notwithstanding any other provision of this section, bonds may be sold by negotiated sale on terms the governing body deems to be the best then available and may bear interest payable at such times as shall be determined by the governing body. D. The bonds may be sold below, at or above par. If an issue of bonds is sold below par, the aggregate amount of discount plus interest to be paid on the bonds must not exceed the amount of interest that would be payable on the bonds over the maturity schedule prescribed by the governing body at the maximum rate set out in the resolution calling the election at which the bonds were voted. The amount of net premium associated with a bond issue may be used only for one or more of the following: 1. To pay costs incurred in issuing the bonds, subject to section 35-452, subsection C. 2. As a deposit in a debt service fund and used only to pay interest on the bonds. 3. For any other purpose, if the political subdivision has voter authorization and available capacity under its debt limitations and the amount of net premium used for such purpose will reduce in an equal amount both: (a) The available aggregate indebtedness capacity of the political subdivision under the statutes and constitution of this state. (b) The principal amount authorized at the election for the political subdivision from which the issue of bonds is being sold. E. Any net premium used as provided in subsection D, paragraph 3 of this section shall be amortized for all debt limitation purposes on a pro rata basis each year by multiplying the net premium used by a percentage equal to the percentage of the total principal amount of the bond issue that matures in that year. F. For the purposes of this section: 1. "Net premium" means the difference between the par amount of the bond issue and the bond issue price determined pursuant to United States treasury regulations. 2. "Online bidding process" means a procurement process in which the governing body receives bids electronically over the internet in a real-time, competitive bidding event. 35-458. Levy of tax for payment of bonds; security A. After the bonds are issued, the governing body or board shall enter on its minutes a record of the bonds sold and their numbers and dates, and shall annually levy and cause to be collected a tax, at the same time and in the same manner as other taxes are levied and collected on all taxable property in the political subdivision, sufficient to pay the annual interest on the bonds when due, and shall likewise annually levy a tax sufficient to redeem the bonds when they mature. The annual levy shall not exceed the net amount necessary to meet annual payments of principal and interest, projected payments of principal and interest on new debt planned for the ensuing year, a reasonable delinquency factor, including an amount necessary to correct prior year errors or shortages in the levy, if applicable, and any expenses and fees required in conjunction with the authorization pursuant to section 35-512. The levy shall be the net of all cash in excess of ten percent of the annual payments of principal and interest in the current fiscal year from the previous year remaining in the fund or funds prescribed by subsection B of this section. B. Monies derived from the levy of the tax when collected shall constitute a fund for payment of interest and the bonds. The fund shall be kept separately and shall be known as the "interest fund" and "redemption fund", or the two funds may be combined into a single "interest and redemption fund". C. All bonds, heretofore and hereafter issued, are secured by a lien on all revenues received pursuant to the tax levy. The lien arises automatically without the need for any action or authorization by the political subdivision or the political subdivision's governing body or board. The lien is valid and binding from the time of the issuance of the bonds. The revenues received pursuant to the levy of the tax are immediately subject to the lien. The lien attaches immediately to the revenues and is effective, binding and enforceable against the political subdivision, the political subdivision's successors, transferees and creditors and all other parties asserting rights in the revenues, irrespective of whether the parties have notice of the lien, without the need for any physical delivery, recordation, filing or further act. 35-458.01. Commercial paper; variable rate bonds; compound interest bonds; bonds subject to tender A. Bonds issued by a city or town may bear interest at any rate or rates not in excess of the maximum voted rate, payable at the times determined by the governing body, provided that each such bond may be evidenced by one instrument, or if commercial paper by a succession of instruments each bearing interest payable only at maturity. Bonds issued under this section shall be subject to the following: 1. The bonds may bear interest at a fixed or variable rate or any combination thereof, none of which exceeds the maximum voted rate. 2. A variable rate shall be based on any objective measure of the current value of money borrowed such as the announced prime rate of a bank, the rates borne by obligations of the United States or an index or other formula provided for by the governing body. The governing body shall employ a recognized agent in municipal bonds to market and remarket the bonds or commercial paper issued and to establish an interest rate in accordance with the approved index or formula. 3. The governing body may grant to the owner of any bond a right to tender, or may require the tender of, such bond for payment or purchase at one or more times before maturity and, in such event, shall enter into appropriate agreements with any bank, financial institution, insurance company or indemnity company for purchase of bonds so tendered. Such agreement may provide that while the bonds are held by the bank, financial institution, insurance company or indemnity company the bonds may bear interest at a rate higher than when the bonds are held by other owners, but not in excess of the maximum voted rate. 4. If bonds are tendered before maturity under an agreement to pay for or purchase bonds when tendered, the city or town may provide for the purchase and resale of such bonds pursuant to the tenders without extinguishing the indebtedness represented by them or incurring new indebtedness on the resale, whether or not such bonds are represented by the same instruments when purchased as when resold. 5. Compensation for the resale of the bonds shall not be based on or measured by the difference between the price at which the bonds are purchased and the price at which they are resold. B. The governing body may contract with a bank, financial institution, insurance company or indemnity company to provide additional security for the bonds in the form of a line of credit, letter of credit, insurance policy or other security, may pay the costs of such additional security from amounts provided in the bond issue or from other available sources and may enter into reimbursement obligations in connection therewith, subject to the following: 1. Any reimbursement obligation entered into with the bank, financial institution, insurance company or indemnity company shall not provide for the payment of interest in excess of the maximum voted rate. The reimbursement obligation does not constitute separate indebtedness of the city or town but is payable from the same source as the bonds, or from other available revenues, as determined by the governing body. 2. Administrative costs related to the reimbursement obligation may be deducted from bond proceeds or may be treated as interest, and these costs may be added to and paid from the proceeds of taxes levied to pay interest on the bonds, subject to the maximum rate and amount approved by the voters. C. If the bonds are issued as commercial paper or bear interest at a variable rate, taxes shall be levied for the payment of principal and interest on such bonds based on the assumption that the bonds will bear interest at the maximum rate permitted under the terms of their issuance. If monies collected pursuant to such levy are more than sufficient to pay currently maturing principal and interest, the excess may be retained in the fund for the payment of interest and principal of the bonds and the next succeeding tax levy shall be reduced by the amount of the excess or the excess shall be used in whole or in part to pay the fees of any bank, financial institution, insurance company or indemnity company which has agreed to provide monies with which to buy bonds tendered for purchase or is providing additional security for the bonds. D. Variable rate bonds and commercial paper may be sold at competitive public sale or at negotiated sale. Notwithstanding section 35-457, a competitive public sale may be accomplished pursuant to a notice of sale which states such terms and conditions as may be provided by the governing body. The governing body shall distribute the notice of sale in the manner deemed to be in the best interests of the city or town. E. If the bonds are to be issued in the form of commercial paper the governing body shall first provide for the establishment of the schedule for the maturities of the bonds within the maximum period permitted by the voted proposition. The individual instruments representing the bonds shall mature over shorter periods and may be retired with proceeds of subsequent instruments, or with the proceeds of definitive bonds, but they shall be finally paid according to the schedule of bond maturities or earlier. Bonds issued in the form of commercial paper may be sold through an agent in the form of instruments which mature at intervals the agent determines to be most advantageous to the issuer after giving public notice to potential investors as determined by the governing body. F. Bonds may be issued as compound interest bonds bearing interest payable only at maturity but compounded periodically until that date at a rate no higher than the maximum voted rate. Notwithstanding section 35-458, taxes to pay the compound interest shall be levied annually and accumulated as the interest accrues unless the compound interest bonds are part of an issue which is amortized according to a plan that calls for the payment of other bonds as to principal and interest in earlier years and in amounts which would at least equal the annual interest payments on such compound interest bonds at the rate or rates borne by the bonds. 35-459. Redemption of bonds and coupons A. When any bonds mature, the county treasurer, when the bonds have been issued by the county, the city or town treasurer, when the bonds have been issued by a city or town, or the fiscal officer of other political subdivisions shall give notice for four weeks in a newspaper published in the county of intention to redeem and the amount of such bonds. The redemption shall be made and all such bonds shall cease to draw interest at the expiration of four weeks after the date of the notice. If the bonds so called for redemption are not presented within three months from the date of the notice, the treasurer shall apply the money to the redemption of the bonds next in the order of the number of their issue. B. The interest coupons when due and payable shall be delivered to the treasurer or proper fiscal officer, who shall pay them and write the word "canceled" across the face of the coupons. Such canceled coupons shall be the treasurer's receipt for their payment. C. When any bonds are redeemed, the treasurer or proper fiscal officer shall in like manner mark them "canceled" on the face of the bonds over his signature, and deliver them to the clerk or secretary of the governing body, taking a receipt for the cancelled bonds. The clerk or secretary shall file the bonds in his office and report the redemptions to the governing body. 35-460. Erection of buildings If bonds for the purpose of erecting and furnishing a public building are authorized at the election, the board of supervisors for a county and the governing body of a city, town or other municipal corporation shall authorize the design and construction of the building in accordance with title 34. 35-461. Payment of expenses of bond issues The expenses of the proceedings provided for in this article shall be borne by the political subdivision instituting the proceedings. If the bonds authorized by this article are sold, the expenses thereof shall be deducted from the proceeds of the sale. 35-465. Definitions In this article, unless the context otherwise requires: 1. "City" means any city incorporated under the laws of this state. "City" also includes any town incorporated under the laws of this state. 2. "County" means any county now or hereafter in existence in the state. 3. "Fiscal year" means the period commencing on July 1 of any year and terminating on June 30 of the next succeeding year. 4. "Governing body" means the body constituted by law to be the legislative department of the taxing district. 5. "Municipal corporation" means any sanitary district, electrical district, irrigation district, hospital district or any other similar municipal corporation which is required by law to adopt a budget. 6. "School district" means any school district now or hereafter in existence in the state. 7. "State" means the state of Arizona. 8. "Taxes" means ad valorem taxes levied or to be levied by the taxing district in the fiscal year, sales taxes and transaction privilege taxes levied by the taxing district and all amounts returned to the taxing district by the state. The term "taxes" does not include ad valorem taxes levied to pay principal of or interest or redemption charges on any bonded indebtedness of the taxing district or sales or transaction privilege taxes which by law or contract must be used by such district for specified purposes, such as motor vehicle fuel taxes. 9. "Taxing district" means any city, county, school district or municipal corporation having the power to levy ad valorem taxes. 10. "Treasurer" means the treasurer of the taxing district or the ex officio tax collector of the taxing district. 35-465.01. Tax anticipation notes After a taxing district has adopted a budget for the current fiscal year as provided by law and the governing body thereof ascertains that the taxes to be received by such district will not be received in time to pay the district's projected expenses, as set forth in such budget, the governing body may issue and sell tax anticipation notes, the principal and interest on which are to be paid solely from the taxes estimated by such taxing district to be received for the current fiscal year and from the proceeds of the sale of such notes. 35-465.02. Form of notes The notes may be issued in one or more series, bear such dates, be in such denomination or denominations, mature on any date or dates occurring on or prior to the next July 31 following the end of the fiscal year in which the notes are issued, mature in such amount or amounts, bear interest at such rate or rates, be in such form and be executed in such medium of payment, be payable at such place or places, and be subject to such terms of redemption with or without premium as the resolution of the governing body authorizing the issuance of the notes may provide. The notes may be sold above, at or below par at either public or private sale. The term "public sale" shall include sale by either auction or sealed bid upon such terms, conditions and notice as the governing body may prescribe. The notes shall be fully negotiable for all purposes as set forth in title 47, chapter 3. 35-465.03. Limitations on issuance of notes The amount of such notes issued by such taxing district in any fiscal year shall not exceed ninety per cent of the aggregate of all uncollected taxes estimated to be received by the district for the fiscal year as shown by the current budget. 35-465.04. Application of taxes; payment of notes Upon the issuance of any tax anticipation notes all taxes which are pledged to pay the notes and which are thereafter received by the taxing district shall be collected and held in the manner set forth in the resolution authorizing the notes or the notes themselves. The resolution authorizing the issuance of the notes shall set forth a pledge of tax revenues describing the times and amount of taxes which must be set aside to repay the notes. Monies pledged to repay the notes shall be used to pay principal and interest on the tax anticipation notes in the manner provided in such resolution. These notes shall be paid on or before July 31 following the end of the fiscal year in which the notes are issued. Any other law to the contrary notwithstanding, this article shall be full authority for the payment when due, or for redemption in advance of maturity, of all principal and interest and redemption premiums on the notes. 35-465.05. Investment of tax anticipation note proceeds; period of investment covenants A. Tax anticipation note proceeds and taxes pledged to repay the tax anticipation notes may be invested by the treasurer in any securities or deposits eligible for investment of public monies pursuant to chapter 2, article 2.1 of this title or, if taxes, in the same manner such taxes could have been invested if the notes had not been issued. B. A resolution pertaining to the issuance of tax anticipation notes may contain covenants prescribing the period that proceeds may be invested and the maximum yield on such investments during any period mentioned in the covenant. C. Investment income received from tax anticipation note proceeds and taxes set aside to pay the tax anticipation notes shall be applied against the tax anticipation note interest expense incurred on the same tax anticipation notes as a reduction of the expenditure, except that the reduction of expenditure shall not exceed the amount of actual tax anticipation note interest expense. In making such calculation, taxing districts may combine the investment income from all series of tax anticipation notes issued within a fiscal year and also combine all tax anticipation note interest expense to be incurred from such issuance. 35-465.06. Use of proceeds The proceeds from the sale of the notes shall be paid into the treasury of the taxing district. The proceeds shall be used by the taxing district to pay the expenses of such district as set forth in the annual budget and to pay the expenses of the proceedings and the issuer's costs incurred for the administration of note repayment. 35-465.07. Rights of holders The holder of any anticipation note may, in the holder's own name and on the holder's own behalf, or on behalf of all of the holders of the notes, take whatever action may be necessary to compel the performance of any duty required by any section of this article. 35-466. Definitions In this article, unless the context otherwise requires: 1. "Governing body" means the body constituted by law to be the governing board of the issuer. 2. "Grant agreement" means any written agreement entered into with the issuer and the United States of America or any of its departments or agencies by which the issuer will receive a grant or subvention for which the funds to be advanced have been appropriated to the department or agency making the grant and by which the issuer incurs no monetary liability to repay the grant or subvention except for the obligation to construct a project or projects. 3. "Grant anticipation notes" means notes authorized by this article and also notes to refund grant anticipation notes. 4. "Grant revenues" means any revenues the issuer will receive under a grant agreement, proceeds of grant anticipation notes and income and gain from investment of such revenues and proceeds. 5. "Issuer" means any city, charter city, town, county, sanitary district, electrical district, irrigation district, hospital district, improvement district or any other similar municipal corporation. 6. "State" means this state or any of its departments, agencies or authorities. 35-466.01. Grant anticipation notes After any issuer has entered into one or more grant agreements, its governing body may issue and sell grant anticipation notes, the principal and interest on which are to be paid solely from the grant revenues to be received under the terms of such grant agreement or agreements. The governing body may also issue grant anticipation notes to refund grant anticipation notes previously issued. 35-466.02. Form of notes The notes may be issued in one or more series, bear such dates, be in such denomination or denominations, mature on any date or dates not later than thirty days after the last date the grant revenues are to be received under the terms of the grant agreement or agreements, or within the period the governing body of the issuer expects to receive the grant revenues if no date for final receipt is set forth in the grant agreement, mature in such amount or amounts, bear interest at such rate or rates not exceeding twelve per cent per annum, be in such form and be executed in such medium of payment, be payable at such place or places and be subject to such terms of redemption with or without premium as the resolution of the governing body of the issuer authorizing the issuance of the notes may provide. The notes may be sold at not less than par at either public or private sale. The term "public sale" includes sale by either auction or sealed bid upon such terms, conditions and notice as the governing body of the issuer may prescribe. The notes shall be fully negotiable for all purposes as set forth in title 47, chapter 3. 35-466.03. Limitations on issuance of notes The amount of such notes secured by grant revenues issued by the issuer shall not exceed the aggregate of all uncollected grant revenues to be received by the governing body under the terms of the applicable grant agreement or agreements. 35-466.04. Application of grant revenues; principal and interest redemption fund; payment of notes Upon the issuance of any grant anticipation notes, all grant revenues received by the issuer pursuant to the applicable grant agreement shall be collected and paid into a special fund to be known as the grant anticipation note principal and interest redemption fund until such time as monies in the fund are sufficient to pay all principal and interest on the notes when due, or redeemed prior to maturity. All monies in the special fund shall be used to pay principal and interest on the grant anticipation notes and shall be used for no other purpose so long as the notes are outstanding. Any law to the contrary notwithstanding, this article shall be full authority for the payment when due, or for 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 special fund. 35-466.05. Investment of note proceeds; period of investment covenants A. Note proceeds may be invested in any of the following securities: 1. Bonds or other evidences of indebtedness of the United States of America or any of its agencies or instrumentalities when such obligations are guaranteed as to principal and interest by the United States of America or by any agency or instrumentality of the United States. 2. Bonds or other evidences of indebtedness of this state or any of the counties, incorporated cities or towns or duly organized school districts of this state. 3. Interest-bearing savings accounts or certificates of deposit of banks or savings and loan associations doing business in this state if such banks or savings and loan associations are insured by the federal deposit insurance corporation or the federal savings and loan insurance corporation. Amounts in excess of that covered by federal insurance shall be secured by the depository to the same extent and in the same manner as required by the general depository law of this state. 4. Deposits placed in accordance with the procedures prescribed in section 35-323.01. B. A resolution pertaining to the issuance of notes may contain covenants prescribing the period that proceeds may be invested and the maximum yield on such investments du