1. (1) In lieu of creating and funding a guaranty fund under Section 11-42-701 for an issue of assessment bonds or refunding assessment bonds, a local entity may establish a reserve fund to secure the issue.

2. (2) If a local entity establishes a reserve fund under this section:

   1. (a) the bonds secured by the reserve fund are not secured by a guaranty fund under Section 11-42-701;
   2. (b) the local entity is not required to fund a guaranty fund under Section 11-42-701 for those bonds; and
   3. (c) unless otherwise provided in this part or in the proceedings authorizing the issuance of bonds, the provisions of this part regarding a guaranty fund have no application to the bonds that are secured by the reserve fund.

3. (3) Each local entity that establishes a reserve fund shall:

   1. (a) fund and replenish the reserve fund in the amounts and manner provided in the proceedings authorizing the issuance of the bonds that are secured by the reserve fund; and
   2. (b) invest the funds on deposit in the reserve fund as provided in Title 51, Chapter 7, State Money Management Act.

4. (4)

   1. (a) Subject to Subsection (4)(b), a local entity may replenish a reserve fund under this section by any of the methods described in Subsection 11-42-701(1)(b).
   2. (b) The proceedings authorizing the issuance of assessment bonds or refunding assessment bonds shall provide that if a local entity uses any of the methods described in Subsection 11-42-701(1)(b) to replenish a reserve fund, the local entity shall be reimbursed, with interest at a rate that the local entity determines, with money that the local entity receives from foreclosing on delinquent property.

5. (5) Upon the retirement of bonds secured by a reserve fund, the local entity shall:

   1. (a) terminate the reserve fund; and
   2. (b) disburse all remaining money in the fund as provided in the proceedings authorizing the issuance of the bonds.

Amended by Chapter 246, 2009 General Session