(1)  As used in this section:

Terms Used In Utah Code 51-7-17

  • Council: means the State Money Management Council created by Section 51-7-16. See Utah Code 51-7-3
  • Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • Investment agreement: includes any agreement to supply investments on one or more future dates. See Utah Code 51-7-3
  • Market value: means market value as defined in the Master Repurchase Agreement. See Utah Code 51-7-3
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Permanent funds: means funds whose principal may not be expended, the earnings from which are to be used for purposes designated by law. See Utah Code 51-7-3
  • Public funds: means money, funds, and accounts, regardless of the source from which the money, funds, and accounts are derived, that are owned, held, or administered by the state or any of its boards, commissions, institutions, departments, divisions, agencies, bureaus, laboratories, or other similar instrumentalities, or any county, city, school district, political subdivision, or other public body. See Utah Code 51-7-3
  • Public treasurer: includes the state treasurer and the official of any state board, commission, institution, department, division, agency, or other similar instrumentality, or of any county, city, school district, charter school, political subdivision, or other public body who has the responsibility for the safekeeping and investment of any public funds. See Utah Code 51-7-3
  • State: when applied to the different parts of the United States, includes a state, district, or territory of the United States. See Utah Code 68-3-12.5
  • Trustee: A person or institution holding and administering property in trust.
  • United States: includes each state, district, and territory of the United States of America. See Utah Code 68-3-12.5
(a)  “Affiliate” means, in relation to a provider:

(i)  an entity controlled, directly or indirectly, by the provider;

(ii)  an entity that controls, directly or indirectly, the provider; or

(iii)  an entity directly or indirectly under common control with the provider.

(b)  “Control” means ownership of a majority of the voting power of the entity or provider.

(2) 

(a)  A public treasurer shall consider and meet the following objectives when depositing and investing public funds:

(i)  safety of principal;

(ii)  protection of principal during periods of financial market volatility;

(iii)  need for liquidity;

(iv)  yield on investments;

(v)  recognition of the different investment objectives of operating and permanent funds; and

(vi)  maturity of investments, so that the maturity date of the investment does not exceed the anticipated date of the expenditure of funds.

(b)  A public treasurer shall invest the proceeds of general obligation bond issues, tax anticipation note issues, and funds pledged or otherwise dedicated to the payment of interest and principal of general obligation bonds and tax anticipation notes issued by the state or a political subdivision of the state in accordance with:

(i)  Section 51-7-11; or

(ii)  the terms of the borrowing instrument applicable to those issues and funds, if those terms are more restrictive than Section 51-7-11.

(c)  A public treasurer shall invest the proceeds of bonds other than general obligation bonds and the proceeds of notes other than tax anticipation notes issued by the state or a political subdivision of the state, and all funds pledged or otherwise dedicated to the payment of interest and principal of those notes and bonds:

(i)  in accordance with the terms of the borrowing instruments applicable to those bonds or notes; or

(ii)  if none of those provisions are applicable, in accordance with Section 51-7-11.

(d)  A public treasurer may invest proceeds of bonds, notes, or other money pledged or otherwise dedicated to the payment of debt service on the bonds or notes in investment agreements if:

(i)  the investment is permitted by the terms of the borrowing instrument applicable to those bonds or notes or the borrowing instrument authorizes the investment as an investment permitted by the State Money Management Act;

(ii)  either the provider of the investment agreement or an entity fully, unconditionally, and irrevocably guaranteeing the provider’s obligations under the investment agreement has received a rating of:

(A)  at least “AA-” from S&P or “Aa3” from Moody’s for investment agreements having a term of more than one year; or

(B)  at least “A-1+” from S&P or “P-1” from Moody’s for investment agreements having a term of one year or less;

(iii)  the investment agreement contains provisions approved by the public treasurer that provide that, in the event of a rating downgrade of the provider or its affiliate guarantor, as applicable, by either S&P or Moody’s below the “A” category or its equivalent, or a rating downgrade of a nonaffiliate guarantor by either S&P or Moody’s below the “AA” category or its equivalent, the provider must, within 30 days after receipt of notice of the downgrade:

(A)  collateralize the investment agreement with direct obligations of, or obligations guaranteed by, the United States of America having a market value at least equal to 105% of the amount of the money invested, valued at least quarterly, and deposit the collateral with a third-party custodian or trustee selected by the public treasurer; or

(B)  terminate the agreement without penalty and repay all of the principal invested and the interest accrued on the investment to the date of termination; and

(iv)  the public treasurer receives an enforceability opinion from the legal counsel of the investment agreement provider and, if there is a guarantee, an enforceability opinion from the legal counsel of the guarantor with respect to the guarantee.

(3) 

(a)  As used in this Subsection (3), “interest rate contract” means interest rate exchange contracts, interest rate floor contracts, interest rate ceiling contracts, or other similar contracts authorized by resolution of the governing board or issuing authority, as applicable.

(b)  A public treasurer may, with the approval of the state treasurer:

(i)  enter into interest rate contracts that the governing board or issuing authority determines are necessary, convenient, or appropriate for the control or management of debt or for the cost of servicing debt; and

(ii)  use its public funds to satisfy its payment obligations under those contracts.

(c)  Those contracts:

(i)  shall comply with the requirements established by council rules; and

(ii)  may contain payment, security, default, termination, remedy, and other terms and conditions that the governing board or issuing authority considers appropriate.

(d)  Neither interest rate contracts nor public funds used in connection with these interest rate contracts may be considered a deposit or investment.

(4)  A public treasurer shall ensure that all public funds invested in deposit instruments are invested with qualified depositories within Utah, except:

(a)  for deposits made in accordance with Section 53B-7-601 in a foreign depository institution as defined in Section 7-1-103;

(b)  reciprocal deposits, subject to rules made by the council under Subsection 51-7-18(2);

(c)  negotiable brokered certificates of deposit, subject to rules made by the council under Subsection 51-7-18(2); or

(d)  if national market rates on instruments of similar quality and term exceed those offered by qualified depositories, investments in out-of-state deposit instruments may be made only with institutions that meet quality criteria set forth by the rules of the council.

Amended by Chapter 56, 2019 General Session

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