H.F. 89 Section 1. Section 384.4, subsection 1, Code 2015, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . f. Payments of principal and interest on 3 loans entered into pursuant to section 384.24B and authorized 4 for repayment by the council from the debt service fund. 5 Sec. 2. NEW SECTION . 384.24B General obligation loans 6 funded by the city. 7 1. For the purposes of this section, the following 8 definitions shall apply: 9 a. “Loan” means the sum of the transfers from the surplus 10 of one or more reserve accounts or funds of the city which 11 transfers are authorized for the purpose specified in the loan 12 authorization document. 13 b. “Reserve account or fund” means moneys held by a city 14 that are not operating funds, as defined in section 12B.10A, 15 and which account or fund is authorized by law to receive 16 interest pursuant to section 12C.7. 17 c. “Surplus” means the cash balance available in any account 18 or fund from which a loan will be made under this section which 19 exceeds the amount of expenses or disbursements made from 20 the account or fund in the previous three months, plus the 21 amount of transfers, payments, or disbursements required in the 22 following three months. 23 2. A city may authorize a loan to borrow money for any 24 general corporate purpose or essential corporate purpose in 25 accordance with and subject to the provisions of this section. 26 3. a. A transfer from a reserve account or fund for 27 the purposes of this section shall not cause the balance of 28 reserves in such account or fund at the close of the fiscal 29 year following the fiscal year in which the transfer is made 30 to fall below any minimum balance prescribed by law for such 31 account or fund. 32 b. A loan to finance a project under this section shall not 33 result in a user fee, rate, or property tax increase to support 34 the annual operations of the reserve account or fund from which 35 -1- LSB 1663YH (4) 86 aw/sc 1/ 8

H.F. 89 the loan is made, as a result of the unavailability of the 1 surplus funds. 2 4. a. A loan entered into by a city pursuant to this 3 section may contain provisions similar to those found in loan 4 agreements between private parties, including but not limited 5 to the issuance of notes to evidence its obligations. The 6 terms of each loan shall require repayment of the loan within 7 ninety days to the extent necessary to prevent a user fee, 8 rate, or property tax increase which raises the user fees, 9 rates, or property taxes payable into the account or fund from 10 which the loan is made above the level in effect at the time a 11 loan under this section is authorized. 12 b. A loan authorized pursuant to this section shall 13 constitute an indebtedness within the meaning of any 14 constitutional debt limitation and shall be reported by the 15 city to the state treasurer in the same manner as required 16 for bonding activities pursuant to section 12.1. The full 17 or partial refunding of any loan under this section shall 18 be authorized as an essential corporate purpose pursuant to 19 section 384.24, subsection 3, paragraph “f” . 20 5. A loan made pursuant to this section is payable from the 21 debt service fund of the city. The governing body shall follow 22 the same authorization procedures required for the issuance 23 of general obligation bonds issued for the same purpose to 24 authorize a loan made payable from the debt service fund. 25 Upon approval of a loan, the loan shall be accounted for in 26 accordance with section 384.20. 27 6. A loan made pursuant to this section shall include 28 provisions establishing an interest rate on the loan that shall 29 be set at a rate that is between the interest rate established 30 pursuant to section 12C.6, subsection 2, paragraph “a” , and the 31 interest rate established pursuant to section 74A.6, subsection 32 2. 33 7. Repayments of principal and interest shall be paid to 34 the reserve fund or account from which all or a portion of the 35 -2- LSB 1663YH (4) 86 aw/sc 2/ 8

H.F. 89 funds were advanced for the loan in the proportion that the 1 amount of the advance from the fund or account bears to the 2 entire amount of the loan. 3 8. a. The limitation in section 346.24 does not apply to a 4 transfer made pursuant to this section or to a loan authorized 5 pursuant to this section. 6 b. Except as otherwise provided by law, a city shall not 7 become indebted under this section to an amount exceeding six 8 million dollars. 9 9. A loan made pursuant to this section shall not include 10 any transfers or obligations from the reserve fund or account 11 of a city utility or of a combined city utility. 12 10. The powers granted under this section shall not be 13 construed as a limitation of the existing powers of a city. 14 Sec. 3. Section 384.25, Code 2015, is amended to read as 15 follows: 16 384.25 General obligation bonds or loans for essential 17 purposes. 18 1. A city which proposes to carry out any essential 19 corporate purpose within or without its corporate limits, and 20 to contract indebtedness and issue general obligation bonds or 21 authorize a loan described in section 384.24B, to provide funds 22 to pay all or any part of the cost of a project must do so in 23 accordance with the provisions of this division . 24 2. Before the council may institute proceedings for the 25 issuance of bonds or authorization of a loan for an essential 26 corporate purpose, a notice of the proposed action, including 27 a statement of the amount and purposes of the bonds or loan , 28 and the time and place of the meeting at which the council 29 proposes to take action for the issuance of the bonds or 30 authorization of the loan , must be published as provided in 31 section 362.3 . At the meeting, the council shall receive oral 32 or written objections from any resident or property owner 33 of the city. After all objections have been received and 34 considered, the council may, at that meeting or any adjournment 35 -3- LSB 1663YH (4) 86 aw/sc 3/ 8

H.F. 89 thereof, take additional action for the issuance of the bonds 1 or authorization of the loan or abandon the proposal to issue 2 the bonds or authorize the loan . Any resident or property 3 owner of the city may appeal the decision of the council to 4 take additional action to the district court of the county in 5 which any part of the city is located, within fifteen days 6 after the additional action is taken, but the additional action 7 of the council is final and conclusive unless the court finds 8 that the council exceeded its authority. The provisions of 9 this subsection with respect to notice, hearing, and appeal, 10 are in lieu of the provisions contained in chapter 73A , or any 11 other law. 12 3. a. Notwithstanding subsection 2 , a council may institute 13 proceedings for the issuance of bonds or the authorization of a 14 loan described in section 384.24B for an essential corporate 15 purpose specified in section 384.24, subsection 3 , paragraph 16 “w” or “x” , in an amount equal to or greater than three million 17 dollars by causing a notice of the proposal to issue the bonds 18 or authorize the loan , including a statement of the amount and 19 purpose of the bonds or loan , together with the maximum rate of 20 interest which the bonds are to bear or which will be charged 21 to the principal balance of the loan , and the right to petition 22 for an election, to be published at least once in a newspaper 23 of general circulation within the city at least ten days prior 24 to the meeting at which it is proposed to take action for the 25 issuance of the bonds or the authorization of the loan . 26 b. If at any time before the date fixed for taking action 27 for the issuance of the bonds or the authorization of the 28 loan , a petition is filed with the clerk of the city signed 29 by eligible electors of the city equal in number to twenty 30 percent of the persons in the city who voted for the office of 31 president of the United States at the last preceding general 32 election that had such office on the ballot, asking that the 33 question of issuing the bonds or authorizing the loan be 34 submitted to the registered voters of the city, the council 35 -4- LSB 1663YH (4) 86 aw/sc 4/ 8

H.F. 89 shall either by resolution declare the proposal to issue the 1 bonds or authorize the loan to have been abandoned or shall 2 direct the county commissioner of elections to call a special 3 election upon the question of issuing the bonds or authorizing 4 the loan . Notice of the election and its conduct shall be in 5 the manner provided in section 384.26 . 6 c. If a petition is not filed, or if a petition is filed and 7 the proposition of issuing the bonds or authorizing the loan 8 is approved at an election, the council may proceed with the 9 authorization and issuance of the bonds or authorization of the 10 loan . 11 Sec. 4. Section 384.26, subsections 1, 2, 4, and 5, Code 12 2015, are amended to read as follows: 13 1. A city which proposes to carry out any general corporate 14 purpose within or without its corporate limits, and to contract 15 indebtedness and issue general obligation bonds or authorize a 16 loan described in section 384.24B, to provide funds to pay all 17 or any part of the costs of a project, must do so in accordance 18 with the provisions of this division . 19 2. Before the council may institute proceedings for the 20 issuance of bonds or authorization of a loan for a general 21 corporate purpose, it shall call a special city election to 22 vote upon the question of issuing the bonds or authorizing the 23 loan . At the election , the proposition must be submitted in 24 one of the following form forms, as applicable : 25 Shall the ............ (insert the name of the city) issue 26 its bonds in an amount not exceeding the amount of $ .... for 27 the purpose of .......... ? 28 Shall the ............ (insert the name of the city) 29 authorize a loan from its surplus funds in an amount not 30 exceeding the amount of $ .... for the purpose of .......... ? 31 4. The proposition of issuing general corporate purpose 32 bonds or authorizing a loan for a general corporate purpose 33 is not carried or adopted unless the vote in favor of the 34 proposition is equal to at least sixty percent of the total 35 -5- LSB 1663YH (4) 86 aw/sc 5/ 8

H.F. 89 vote cast for and against the proposition at the election. 1 If the proposition of issuing the general corporate purpose 2 bonds or authorizing a loan for a general corporate purpose is 3 approved by the voters, the city may proceed with the issuance 4 of the bonds or authorization of the loan . 5 5. a. Notwithstanding the provisions of subsection 2 , 6 a council may, in lieu of calling an election, institute 7 proceedings for the issuance of bonds or authorization of a 8 loan for a general corporate purpose by causing a notice of the 9 proposal to issue the bonds or authorize the loan , including 10 a statement of the amount and purpose of the bonds or loan , 11 together with the maximum rate of interest which the bonds are 12 to bear or which the loan is to bear , and the right to petition 13 for an election, to be published at least once in a newspaper 14 of general circulation within the city at least ten days prior 15 to the meeting at which it is proposed to take action for the 16 issuance of the bonds or authorization of the loan subject to 17 the following limitations: 18 (1) In cities having a population of five thousand or less, 19 in an amount of not more than four hundred thousand dollars. 20 (2) In cities having a population of more than five thousand 21 and not more than seventy-five thousand, in an amount of not 22 more than seven hundred thousand dollars. 23 (3) In cities having a population in excess of seventy-five 24 thousand, in an amount of not more than one million dollars. 25 b. If at any time before the date fixed for taking action 26 for the issuance of the bonds or the authorization of the 27 loan , a petition is filed with the clerk of the city in the 28 manner provided by section 362.4 , asking that the question 29 of issuing the bonds or authorizing the loan be submitted to 30 the registered voters of the city, the council shall either by 31 resolution declare the proposal to issue the bonds or authorize 32 the loan to have been abandoned or shall direct the county 33 commissioner of elections to call a special election upon the 34 question of issuing the bonds or authorizing the loan . Notice 35 -6- LSB 1663YH (4) 86 aw/sc 6/ 8

H.F. 89 of the election and its conduct shall be in the manner provided 1 in the preceding subsections of this section . 2 c. If no a petition is not filed, or if a petition is 3 filed and the proposition of issuing the bonds or authorizing 4 the loan is approved at an election, the council may proceed 5 with the authorization and issuance of the bonds or the 6 authorization of the loan . 7 Sec. 5. Section 384.33, Code 2015, is amended to read as 8 follows: 9 384.33 Action. 10 No An action may not be brought which questions the legality 11 of general obligation bonds , notes, or loans under this 12 chapter or the power of the city to issue the bonds , notes, or 13 loans or the effectiveness of any proceedings relating to the 14 authorization and issuance of the bonds , notes, or loans from 15 and after sixty days from the time the bonds , notes, or loans 16 are ordered issued by the city. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill enacts new Code section 384.24B to allow a city to 21 borrow surplus moneys from its reserve accounts or funds for 22 any general corporate purpose or essential corporate purpose, 23 as those terms are defined in current law. The bill requires 24 that a city certify taxes to be levied for deposit in the debt 25 service fund in the amount necessary to pay principal and 26 interest on loans authorized under the bill. The bill defines 27 “loan”, “surplus”, and “reserve account or fund”. 28 The bill requires that such loans not cause the balances 29 of such reserve accounts or funds to fall below any minimum 30 balance prescribed by law and requires that a city shall 31 not become indebted under such loans to an amount in excess 32 of $6 million unless otherwise provided by law. The bill 33 requires that loans from reserve funds be reported to the state 34 treasurer in the same manner as required for bonds issued 35 -7- LSB 1663YH (4) 86 aw/sc 7/ 8

H.F. 89 by a city. The bill requires that such loans not result in 1 a user fee, rate, or property tax increase as a result of 2 unavailability of surplus funds. The terms of each loan shall 3 require repayment of the loan within 90 days to the extent 4 necessary to prevent a user fee rate or property tax increase. 5 Such a loan shall be payable from the city debt service fund 6 and shall constitute an indebtedness within the meaning of any 7 statutory debt limitation. 8 The full or partial repayment of a loan entered into under 9 the bill shall constitute an essential corporate purpose 10 pursuant to Code section 384.24, subsection 3, paragraph “f”. 11 The bill provides that upon approval of such a loan that the 12 loan shall be accounted for as a separate account pursuant 13 to current Code section 384.20. The bill further provides 14 that interest rates on such a loan be set between the interest 15 rate established for the deposit of public funds, established 16 in current Code section 12C.6 and the maximum interest rate 17 established for public obligations and assessments under 18 current Code section 74A.6, subsection 2. The bill provides 19 that such a loan not include any transfers or obligations from 20 a reserve fund or account of a city utility or combined city 21 utility. 22 The bill requires that a city council follow substantially 23 the same procedures for the issuance of general obligation 24 bonds for essential corporate purposes, pursuant to Code 25 section 384.25, or for general corporate purposes, pursuant to 26 Code section 384.26, when making a loan from reserve funds. 27 The bill further provides that an action may not be brought 28 against a city regarding the legality, power to issue, or power 29 to authorize notes or loans under Code chapter 384 at any time 30 after 60 days following authorization. 31 -8- LSB 1663YH (4) 86 aw/sc 8/ 8