Chapter 3.36
LOCAL IMPROVEMENT GUARANTY FUND
Sections:
3.36.030 Retention of earnings—Surplus in LID funds—Subrogation.
3.36.040 Limitation on warrants issued against guaranty fund.
3.36.050 Transfer of excess to general fund.
3.36.060 No preference—Use of reserve funds.
3.36.070 Protection of fund against general tax liens.
3.36.010 Created.
There is created in the office of the city clerk-treasurer a special fund of the city known as the “city of Sedro-Woolley local improvement guaranty fund” (the “fund” or “guaranty fund”) and said fund shall be drawn upon solely for the purpose set forth in this chapter. (Ord. 1052 § 1, 1988)
3.36.020 Annual adjustments.
From time to time hereafter, for the purpose of maintaining the local improvement guaranty fund, the city shall at the time of making its biennial budget and tax levy provide for the levy of a sum sufficient, with other sources of the fund, to pay the warrants issued against the fund during the preceding fiscal year and to establish the required balance in such fund; provided, that the levy in any one year shall not exceed the greater of (1) twelve percent of the outstanding obligations guaranteed by the fund, or (2) the total amount of delinquent assessments and interest accumulated on the delinquent assessments as of September 1st of the year preceding the year for which the tax levy shall be made and collected. (Ord. 1950-20 § 2 (part), 2020: Ord. 1052 § 2, 1988)
3.36.030 Retention of earnings—Surplus in LID funds—Subrogation.
A. Interest and earnings from the local improvement guaranty fund shall be paid into the fund. If in any local improvement district fund guaranteed by the local improvement guaranty fund there is a surplus remaining after the payment of all outstanding bonds and warrants payable therefrom, such surplus shall be paid into the local improvement guaranty fund.
B. Whenever any sum is paid out of the local improvement guaranty fund on account of the principal or interest of a local improvement bond or warrant, the city as trustee of the fund shall be subrogated to all the rights of the holder or owner of the bond or interest coupon or warrant so paid and the proceeds thereof, or of the underlying assessment, shall become part of the guaranty fund. (Ord. 1052 § 3, 1988)
3.36.040 Limitation on warrants issued against guaranty fund.
Warrants shall be issued against the local improvement guaranty fund to meet any liability accruing against it and shall draw interest at a rate to be established by the city clerk-treasurer in the manner by which interest rates are set from time to time for registered warrants drawn on other funds of the city and not paid for want of sufficient moneys therein. The warrants so issued shall at no time exceed five percent of the outstanding obligations guaranteed by the fund. (Ord. 1052 § 4, 1988)
3.36.050 Transfer of excess to general fund.
A. At any time that the amount in the fund exceeds ten percent of the outstanding obligations guaranteed by the fund, the excess amount or any portion thereof may, by ordinance of the city council, be transferred to the general fund of the city, subject to the conditions required by law and set forth herein; provided, that the city shall not permit the amount in the fund at any time to exceed the maximum amount permitted under Section 148 of the United States Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder recognizing that any such excess could cause obligations guaranteed by the fund to become arbitrage bonds.
B. Prior to transfer of any amounts pursuant to this section, there shall be on file with the city a certificate of the city clerk-treasurer that the guaranty fund has sufficient funds currently on hand to meet all valid outstanding obligations of the fund and all other obligations of the fund reasonably expected to be incurred in the near future. The net cash of the guaranty fund may be reduced by such transfer to an amount not less than ten percent of the net outstanding obligations guaranteed by such fund.
C. If, at any time within five years of any transfer of assets from the guaranty fund is reduced below the minimum amount specified in subsection B of this section, the city shall, to the extent of the amount transferred, pay valid claims against the guaranty fund as a general obligation of the city. In addition, the city shall pay all reasonable costs of collection necessarily incurred by the holders of valid claims against the guaranty fund. (Ord. 1052 § 5, 1988)
3.36.060 No preference—Use of reserve funds.
Defaulted bonds, interest coupons and warrants issued against local improvement district funds of the city shall be purchased out of the guaranty fund; and as between the several issues of bonds or warrants no preference shall exist, but they shall be purchased in the order of their presentation, provided, that in the event that the city shall establish a separate reserve fund pursuant to RCW 35.51.040 with respect to any issue of bonds or warrants, defaulted bonds, interest coupons and warrants of such issue shall be purchased out of the applicable reserve fund and only to the extent assets in such fund are insufficient, shall the city draw upon the guaranty fund. (Ord. 1052 § 6, 1988)
3.36.070 Protection of fund against general tax liens.
A. For the purpose of protecting the fund, so much of the fund as is necessary may be used to purchase certificates of delinquency for general taxes on property subject to local improvement assessments which underlie the bonds, coupons or warrants guaranteed by the fund or to purchase such property at county tax foreclosure sales or from the county after foreclosure.
B. The city, as trustee of the fund, may foreclose the lien of general taxes, certificates of delinquency and purchase the property at foreclosure sale. When doing so, the court costs, costs of publication, expense for clerical work and other expenses incidental thereto shall be charged to and paid from the local improvement guaranty fund.
C. After acquiring title to property by purchase at general tax foreclosure, the city may lease it or sell it at public or private sale at such price and on such terms as may be determined by resolution of the city council. All proceeds shall belong to and be paid into the local improvement guaranty fund. (Ord. 1052 § 7, 1988)