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Title 24: Municipal and County Government

Chapter 053: Indebtedness

Subchapter 001: Indebtedness Generally
§ 1751. Definitions

As used in this chapter:

(1) “Municipal corporation” shall include a city, town, village, town school district, graded school district, or other incorporated, union, or unified school district or any entity providing educational services which is eligible to receive State aid under 16 V.S.A. chapter 123, a fire district, a union municipal district created under an intermunicipal agreement entered into and approved as provided in subchapter 3 of chapter 121 of this title, a regional mass transportation authority created under chapter 127 of this title, a local housing authority created under section 4003 of this title, a consolidated water or sewer district created under chapter 91 or chapter 105 of this title, or the unified towns and gores of Essex County.

(2) “Legislative branch” shall mean the mayor and board of aldermen of a city, the selectboard of a town, the trustees of a village, the board of school directors of a school district, the trustees or prudential committee of a graded school or fire district, and the Board of Governors of the unified towns and gores of Essex County, and, with respect to other municipal corporations, the governing body designated by statute.

(3) “Improvement” shall include, apart from its ordinary signification:

(A) The acquiring of land for municipal purposes, the construction of, extension of, additions to, or remodeling of buildings or other improvements thereto, also furnishings, equipment, or apparatus to be used for or in connection with any existing or new improvement, work, department, or other corporate purpose, and also shall include the purchase or acquisition of other capital assets, including licenses and permits, in connection with any existing or new improvement benefiting the municipal corporation, and all costs incurred by the municipality in connection with the construction or acquisition of the improvement and the financing thereof, including capitalized interest, underwriters discount, the funding of reserves, and the payment of contributions to establish eligibility and participation with respect to loans made from any State revolving fund, to the extent such payment is consistent with federal law.

(B) Pursuant to subchapter 2 of chapter 87 of this title, projects relating to renewable energy, as defined in 30 V.S.A. § 8002(17), or to eligible energy efficiency projects undertaken by owners of real property within the boundaries of the town, city, or incorporated village. Energy efficiency projects shall be those that are eligible under section 3267 of this title. (Amended 1989, No. 111, § 1, eff. June 22, 1989; 1997, No. 62, § 61, eff. June 26, 1997; 2007, No. 4, § 2; 2009, No. 45, § 15f, eff. May 27, 2009; 2013, No. 161 (Adj. Sess.), § 72.)
§ 1752. Bonds; issuance

Debt may be incurred and bonds issued under this subchapter for any improvement, but no bonds shall be issued for the purpose of providing funds for ordinary expenses of any municipal corporation, except as otherwise provided.
§ 1752a. Privately owned municipality-supported libraries

By a majority vote of those present and voting at an annual or special meeting warned for the purpose, a municipality may issue municipal bonds under this chapter for the cost of capital improvements to any privately owned municipality-supported library situated within the municipality for use of residents of the municipality; and such improvements shall be considered “improvements” for the purposes of this chapter. (Added 1987, No. 56, eff. May 15, 1987.)
§ 1753. Use of bond proceeds

(a) If after bonds have been issued and no expenditure of the proceeds has been made for the purpose or purposes for which the debt was incurred, or if a balance remains after the completion of the project or projects for which the debt was authorized, a municipal corporation by a majority of the voters present and voting on the question at a meeting or meetings of such municipal corporation held for that purpose, may authorize the expenditure of the proceeds or portion thereof for any purpose or purposes for which bonds may be issued; provided, however, that if the proceeds obtained from the issuance of bonds or any balance thereof, is not appropriated as aforesaid, then the same shall be used to pay the principal of the loan as it matures.

(b) The warning calling the meeting provided in this section shall state the amount of the proceeds and the purpose for which they are to be used, and shall fix the place where and the date on which the meeting shall be held and the hours of opening and closing of the polls. Notice of the meeting shall conform to section 1756 of this title, and the conduct of the meeting and the qualifications of voters shall conform to section 1758 of this title. (Added 1969, No. 104, eff. April 19, 1969.)
§ 1754. Validation

All outstanding bonds and notes of a municipal corporation issued prior to June 1, 1935, are hereby declared legal and binding obligations in accordance with the terms thereof.
§ 1755. Submission to voters

(a)(1) On a petition signed by at least ten percent of the voters of a municipal corporation the proposition of incurring a bonded debt to pay for public improvements shall be submitted to the qualified voters thereof at any annual or special meeting to be held for that purpose, or, when the legislative branch of a municipal corporation at a regular or special meeting called for such purpose shall determine by resolution passed by a vote of a majority of those members present and voting, that the public interest or necessity demands improvements, and that the cost of the same will be too great to be paid out of the ordinary annual income and revenue, by vote of a majority of those members present and voting, it may order the submission of the proposition of incurring a bonded debt to pay for public improvements to the qualified voters of such municipal corporation at a meeting to be held for that purpose.

(2) The warning calling the meeting shall state the object and purpose for which the indebtedness is proposed to be incurred, the estimated cost of the improvements, and the amount of bonds proposed to be issued, and shall fix the place where and the date on which the meeting shall be held and the hours of opening and closing the polls.

(b) A municipal corporation may not submit to the voters more than twice in any one-year period the proposition of incurring a bonded debt to pay for the same or a similar public improvement, except that a proposition voted on for the first time at an annual meeting that is reconsidered may be voted on in the subsequent annual meeting. (Amended 1969, No. 58, § 2, eff. April 14, 1969; 1971, No. 89, § 1; 1973, No. 235 (Adj. Sess.), § 3; 2017, No. 50, § 53.)
§ 1756. Notice of meeting; authorization

(a)(1) The clerk of the municipal corporation shall cause notice of such meeting to be published in a newspaper of known circulation in such municipality once a week for three consecutive weeks on the same day of the week, the last publication to be not less than five nor more than ten days before such meeting.

(2) Notice of such meeting shall also be posted in five public places within such municipality for two weeks immediately preceding such meeting.

(b) When a majority of all the voters present and voting on the question at such meeting vote to authorize the issuance of bonds for said public improvements, the legislative branch shall be authorized to make such public improvements and issue bonds as hereinafter provided. Blank and defective ballots shall not be counted in determining the question. (Amended 1969, No. 193 (Adj. Sess.), § 1.)
§ 1757. Validation

(a) Whenever the qualified voters of a municipal corporation, as defined in this subchapter, have voted by the requisite majority to authorize issuance of bonds to pay for any public improvement, and such proceedings are defective because of failure to comply with any of the statutory requirements therefor, although the required length of notice and notice of the purpose of such meeting has been had, such omissions may be cured by a resolution of such legislative branch by a vote of two-thirds of all its members at a regular or a special meeting called for that purpose, stating that the defect was the result of oversight, inadvertence, or mistake of law or fact.

(b) When such omission has been so supplied by such resolution, all bonds or other financing within the terms of the action of the qualified voters shall be as valid as if the statutory requirement had been complied with.
§ 1757a. Validation of consolidated water or sewer districts and bonds voted for construction

(a) No action shall be brought directly or indirectly attacking, questioning, or in any manner contesting the legality of the formation, or the existence as a body corporate and politic, of any consolidated water or sewer district created pursuant to chapter 91 or 105, respectively, of this title, after six months from the date of the recording in the office of the Secretary of State of the certificate required by section 3342 or 3673 of this title, as the case may be; nor shall any action be brought directly or indirectly attacking, questioning, or in any manner contesting the legality or validity of bonds, issued or unissued, voted by any such district or by any other municipal corporate entity, after six months from the date upon which voters in any such district or other municipal corporate entity met pursuant to warning and voted affirmatively to issue bonds to defray costs of sewer or water improvements or upon vote of a question of recission thereof whichever occurs later.

(b) This section shall be liberally construed to effect the legislative purpose to validate and make certain the legal existence of all consolidated water or sewer districts in this State and the validity of bonds issued or authorized by consolidated or other municipal corporate entities for water or sewer purposes, and to bar every right to question in any manner the existence of any such district or other municipal corporate entity or the validity of a bond voted by it for water or sewer purposes, and to bar every remedy therefor notwithstanding any defects or irregularities, jurisdictional or otherwise, after expiration of the six-month period. (Added 1975, No. 57, § 1, eff. April 18, 1975.)
§ 1758. Conduct of meetings

(a) Meetings of voters in municipal corporations under this subchapter shall be conducted in the same manner as the annual city and town meetings are conducted. The qualifications of voters at such meetings shall be the same as the qualifications of voters at annual city and town meetings. The vote on the question of issuing bonds for such improvements shall be by Australian ballot. The form of the ballot to be used shall be substantially as follows:

I. Shall the bonds of the .......... of .......... in an amount not to exceed .......... be issued for the purpose of .................... ?

If in favor of the bond issue, make a cross (x) in this square □.

If opposed to the bond issue, make a cross (x) in this square □.

In the discretion of the legislative branch, the form of the ballot may also state the maximum rate of interest to be paid on the bonds, in which case the form of the ballot to be used shall be substantially as follows:

I. Shall bonds of the .......... of .......... in an amount not to exceed .......... bearing interest not to exceed .......... percent, be issued for the purpose of .................... ?

If in favor of the bond issue, make a cross (x) in this square □.

If opposed to the bond issue, make a cross (x) in this square □.

(b) If a school board submits to its voters the proposition of incurring a bonded debt to pay for an improvement, the form of the ballot shall be as set forth in subsection (a) of this section, however:

(1) If the entire costs of the improvement are not eligible for State construction aid pursuant to 16 V.S.A. chapter 123 because the costs exceed the maximum allowed by formula established by the State Board of Education, the ballot text set forth in subsection (a) shall be preceded by the following introductory sentences:

The .......... school board proposes to incur bonded indebtedness for the purpose of .......... at the estimated total project cost of $ .......... . It is estimated that ........ percent of the project will not be eligible for State school construction aid because its (unit costs and/or allowable space) cause it to exceed the maximum cost for state participation under the State Board of Education’s formula for school construction. Therefore, the ...... percent of the project that is estimated to be ineligible under the formula shall be built at 100% school district cost without State participation. The cost of the portion of construction which is ineligible under the formula is $ .......... .

(2) The ballot may contain language conditioning commencement of the improvement by the school board on receipt of final approval by the State Board of Education for State construction aid under 16 V.S.A. § 3448(a)(5).

(3) The warning and ballot shall contain the following set forth in bold-faced type:

State funds may not be available at the time this project is otherwise eligible to receive State school construction aid. The district is responsible for all costs incurred in connection with any borrowing done in anticipation of State school construction aid.

(c) A public informational hearing adhering to the requirements of 17 V.S.A. § 2680(g) shall be held to discuss the proposition of a school district incurring a bonded debt to pay for an improvement. At such hearing, the school board shall distribute to the participants a written estimate of the percentage of the costs of the improvement that will not be eligible for State school construction aid because its unit costs or allowable space, or both, cause it to exceed the maximum cost for State participation under the State Board of Education’s formula for school construction. (Amended 1969, No. 58, § 3, eff. April 14, 1969; 1981, No. 239 (Adj. Sess.), § 29; 1995, No. 62, §§ 59, 61, eff. April 26, 1995; 1995, No. 185 (Adj. Sess.), §§ 7a, 79, eff. May 22, 1996; 1999, No. 29, § 54, eff. May 19, 1999; 2005, No. 147 (Adj. Sess.), § 44; 2017, No. 74, § 88.)
§ 1759. Denominations; payments; interest

(a)(1) Any bond issued under this subchapter shall draw interest at a rate not to exceed the rate approved by the voters of the municipal corporation in accordance with section 1758 of this title, or if no rate is specified in the vote under that section, at a rate approved by the legislative branch of the municipal corporation, such interest to be payable semiannually. Such bonds or bond shall be payable serially, the first payment to be deferred not later than from one to five years after the issuance of the bonds and subsequent payments to be continued annually in equal or diminishing amounts so that the entire debt will be paid in not more than 20 years from the date of issue.

(2) In the case of bonds issued for the purchase or development of a municipal forest, the first payment may be deferred not more than 30 years from the date of issuance thereof. Thereafter such bonds or bond shall be payable annually in equal or diminishing amounts so that the entire debt will be paid in not more than 60 years from the date of issue.

(3) In the case of bonds issued for any capital project that has a useful life of at least 30 years, the entire debt will be paid in not more than 30 years from the date of issue.

(b) General obligation bonds authorized under this subchapter for the purpose of financing the improvement, construction, acquisition, repair, renovation, and replacement of a municipal plant as defined in 30 V.S.A. § 2901 shall be paid serially, the first payment to be deferred not later than from one to five years after the issuance of the bonds, and subsequent payments to be continued annually so that the entire debt will be paid over a term equal to the useful life of the financed improvements, but not more than 40 years from the date of issue, and may be so arranged that beginning with the first year in which principal is payable, the amount of principal and interest in any year shall be as nearly equal as is practicable according to the denomination in which such bonds are issued, notwithstanding other permissible payment schedules authorized by this section. (Amended 1963, No. 136; 1969, No. 58, § 1, eff. April 14, 1969; 1969, No. 177 (Adj. Sess.), § 1, eff. March 5, 1970; 1979, No. 138 (Adj. Sess.); 1985, No. 123 (Adj. Sess.), eff. April 18, 1986; 2007, No. 75, § 41; 2013, No. 50, § E.131.2.)
§ 1760. Bonds validated—Over five percent

Notwithstanding the interest rate limitation set forth in section 1759 of this title prior to April 14, 1969, if any municipal corporation has prior to that date authorized bonds to bear interest at a rate of interest in excess of five percent, but not more than six percent, the authorization so voted is hereby ratified and confirmed and declared to be legal and valid, and such municipal corporation may issue such bonds at a rate of interest not exceeding the rate stated in the vote authorizing the issuance of the bonds. (Added 1969, No. 58, § 4, eff. April 14, 1969.)
§ 1761. Higher rates

If any municipal corporation has authorized bonds to bear interest at a rate of interest not in excess of six percent prior to March 5, 1970, and any of such bonds remain unsold on that date, the legislative branch of the municipal corporation may approve an increase in the rate of interest of such authorized but unsold bonds and the increase in such rate of interest is hereby declared to be legal and valid, and such municipal corporation may issue such bonds which shall bear interest at the rate of interest approved by the legislative branch which increased rate of interest is declared to be legal and valid. (Added 1969, No. 177 (Adj. Sess.), § 2, eff. March 5, 1970.)
§ 1762. Limits

(a) A municipal corporation shall not incur an indebtedness for public improvements which, with its previously contracted indebtedness, shall, in the aggregate, exceed ten times the amount of the last grand list of such municipal corporation. Bonds or obligations given or created in excess of the limit authorized by this subchapter and contrary to its provisions shall be void.

(b) However, the provisions of this subchapter as to the debt limit shall not apply to bonds issued under section 1752 or 1754 of this title, relating to the ordinary expenses of a municipality. (Amended 2011, No. 155 (Adj. Sess.), § 10.)
§ 1763. Specifications

The legislative branch shall determine the rate of interest or the manner of determining the same, the date, the denominations, the time and place of payment, and the form of bonds and notes to be used by the municipal corporation. The legislative branch may provide that the bonds be sold on bids fixing the rate of interest or the manner of determining the same from time to time for the period during which said bonds or notes shall remain outstanding, and if so sold, the accepted bid shall fix the rate of interest the bonds are to bear or the manner by which such rate of interest shall be determined periodically. When bonds are to be registered they shall be registered as provided by this chapter. (Amended 1985, No. 125 (Adj. Sess.), § 3, eff. April 18, 1986.)
§ 1764. Taxes to meet interest and payments

At the time of assessing the general tax levy, in addition to all other taxes, the legislative branch shall provide annually for the assessment and collection each year, until such bonds are paid, of a tax sufficient to pay the interest on such bonds and such part of the principal as shall become due prior to the time the taxes are due in the next following year.
§ 1765. Advertisement

(a)(1) Except as provided in section 4650 of this title, bonds issued under this subchapter shall be sold at par, premium, or discount, and accrued interest, after being advertised at least once not less than five nor more than 30 days before the date of sale in a newspaper published in the county or within 50 miles of the municipal corporation issuing the bonds and, in case of issues exceeding $1,000,000.00, also in some financial paper published in Boston, Massachusetts, or New York, New York.

(2) The advertisement shall state the amounts, date, and denominations of the bonds, dates of maturity, rate of interest, or that the bidding shall be based thereon, and the time and place where the bonds are to be sold.

(b)(1) The legislative branch may reject any and all bids.

(2) In case all bids are so rejected, they may advertise and call for new bids in the manner hereinbefore provided, or in case, after the bonds have been advertised for sale as provided in this subchapter, no bids have been received, or all bids have been rejected and the whole or any part of the bonds remain unsold, those unsold may, within 60 days from the date of the public sale, be sold by the legislative branch at private sale at not less than par and accrued interest.

(c) If no bids are received at the public sale, the legislative branch may at any time advertise and call for new bids or may sell the unsold bonds at private sale in the manner hereinbefore provided and may award the bonds bearing a rate of interest not in excess of the maximum rate provided in section 1759 of this title, notwithstanding any limit imposed by the voters at the meeting at which the bonds were authorized. (Amended 1969, No. 58, § 5, eff. April 14, 1969; 1989, No. 111, § 2, eff. June 22, 1989.)
§ 1766. Bonds; by whom signed

Such bonds shall be signed by the mayor and treasurer of an incorporated city, by the treasurer and selectboard or trustees, as the case may be, of a town or village, by the treasurer and trustees or prudential committee, as the case may be, of an incorporated school district, lighting or fire district, and by the treasurer and board of school directors of a town school district. The coupons to such bonds shall be signed by or bear the facsimile signature of the treasurer. When such municipal corporation has a corporate seal, such seal shall be affixed to such bonds, otherwise such bonds need not be sealed.
§ 1767. Computation of amount

(a)(1) In determining the amount of municipal indebtedness permitted by this subchapter, obligations created for current expenses, for a water supply or for electric lights, and temporary loans created in anticipation of the collection of taxes and necessary for meeting current expenses shall not be taken into account.

(2) Sinking funds and other monies set aside for the sole purpose of paying outstanding bonds shall be deducted.

(b) The provisions of this section and of section 1762 of this title shall not apply when the charter of a municipal corporation or special act otherwise limits its indebtedness.
§ 1768. Form of bond and coupon

The form of bond issued under this subchapter shall be substantially as follows:

FORM OF BOND

The (insert name of municipal corporation) in the county of _____ _____ and of Vermont promises to pay to the bearer hereof on the ________ day of ________ the sum of ______ dollars, with interest thereon at the rate of ________ percent per annum, payable semi-annually on the presentation and surrender of the interest coupons hereto attached. Both principal and interest of this bond are payable at the ________ bank in the (city, town, or village) of ________ State of ________ . This bond is issued by the (insert name of municipal corporation) under and by virtue of chapter 53 of Title 24 of Vermont Statutes Annotated, and acts in amendment of and in addition thereto and the ordinance (or resolution) of (insert name of municipal corporation) duly passed on the ________ day of ______ 20__ . This bond is one of the series of bonds of like tenor, except as to ________ numbered from ________ to ________ and issued for the purpose of defraying the cost of ________ as described in the ordinance or resolution in (insert name of municipal corporation).

It is hereby certified and recited that all acts, conditions, and things required to be done precedent to and in the issuing of these bonds have been done, have happened, and have been performed in regular and due form, as required by such law and ordinance (or resolution), and for the assessment, collection, and payment hereon of a tax to pay the same, when due, the full faith and credit of (insert name of municipal corporation) are hereby irrevocably pledged.

In testimony whereof the (name of municipal corporation) has caused this bond to be signed by its ________ and ________ and the seal of (insert name of municipal corporation) affixed hereto this ______ day of _____ .

_______________

_______________

Treasurer.

COUPON

No. ____

On the ____ day of ____ the (insert name of municipal corporation) in the State of Vermont promises to pay to bearer as provided in such bond, the sum of ____ dollars at the ____ (bank) ____ , being ____ months’ interest due that day on bond No. ____ dated ____ .

__________

Treasurer.
§§ 1769, 1770. Repealed. 2011, No. 155 (Adj. Sess.), § 11.
§ 1771. Refunding bonds; authorization

A municipal corporation that has outstanding and unpaid orders, notes, bonds, or coupons, lawfully issued, may issue other negotiable notes or bonds to pay or retire the same. Such bonds shall be signed, sold, made payable, and mature in the same manner as an original issue of bonds of a municipal corporation is signed, sold, made payable, and mature, as provided in this subchapter.
§ 1772. Refunding bonds; procedure and limitations

(a) Such municipal corporation by its legislative branch, by resolution or ordinance, shall determine the necessity for issuing refunding bonds, the amount of legal outstanding indebtedness to be refunded, what amount of new bonds shall be issued, at what time and place they shall be payable, the rate of interest thereon, or that the rate of interest shown by the accepted bid shall determine the rate of interest thereon, and when payable, the form of bond, which shall be substantially in the form provided in this subchapter, and whether the bonds shall be registered or have interest coupons attached. Such new bonds shall not be used or sold except to provide means for paying or retiring such outstanding indebtedness in accordance with the provisions of subsection (b) of this section.

(b) A municipal corporation by its legislative branch, by resolution or ordinance, may issue refunding bonds for the purpose of paying any of its bonds or notes at maturity or upon acceleration or redemption. The refunding bonds may be issued at such time prior to the maturity or redemption of the refunded bonds as the municipality deems to be in the public interest. The refunding bonds may be issued in sufficient amounts to pay or provide the principal of the bonds being refunded, together with any redemption premium thereon, any interest accrued or to accrue to the date of payment of the bonds, the expenses of issue of the refunding bonds, the expenses of redeeming the bonds being refunded, and such reserves for debt service or other capital or current expenses from the proceeds of the refunding bonds, as may be required by the resolutions under which bonds are issued. (Amended 1983, No. 24, § 2, eff. April 6, 1983; 2017, No. 74, § 89.)
§ 1773. Temporary loans

(a) If a municipal corporation votes to issue bonds in accordance with law, the officers authorized to issue the same, upon resolution of the legislative branch of the municipal corporation, may make a temporary loan, in the name of such municipal corporation, for a period of not more than one year in anticipation of the money to be derived from the sale of such bonds and may issue notes therefore. Temporary notes issued under this subsection for a shorter period than one year may be renewed or refunded by the issue of other notes maturing not more than one year from the date of the original loan except as stated in subsection (b) of this section. The maximum maturity date of the authorized bond issue need not be reduced because of a temporary loan hereunder except as stated in subsection (b) of this section.

(b) A temporary note issued under subsection (a) of this section may be renewed or refunded to mature more than one year from the date of the original temporary loan. In such a case, the authorized amount of the bond issue shall be reduced each year or portion thereof after the first year during which the temporary loan remains outstanding by a factor at least equal to the amount which will reduce the authorized amount of bonds to zero through equal annual payments over the maximum maturity allowed by law for such bonds, or such lesser maturity as may be determined by the legislative branch of the municipality. The amount of the temporary loan outstanding at any time shall not exceed the current authorized amount of the bond issue. The legislative branch of the municipal corporation shall, in each year in excess of any one year period, include in the next annual apportionment or assessment of taxes an amount equal to the amount of the reduction to be used either for the purpose of the original authorized bond issue or to satisfy the temporary note. With the approval of the voters, the period after which the authorized amount of the bond issue shall begin to be reduced may be extended to no more than three years. Temporary notes issued under this subsection shall mature no later than one year from their original date and any renewal or refunding thereof shall mature no later than ten years from the date of the original loan. The maximum maturity date of the authorized bond issue shall be reduced by a period equal to the period of temporary borrowing in excess of one year from the date of the original temporary note and for so long as the notes remain unsatisfied or outstanding.

(c) Pending the receipt of revenue in the form of grants-in-aid from any source, a municipal corporation through its legislative branch, by resolution or ordinance, may issue revenue anticipation notes in anticipation of the grants-in-aid to be received. The notes may be issued on such terms and conditions and at such times as the legislative branch shall determine. The proceeds of the notes may be used only for the purpose for which the grants-in-aid are anticipated, and no note may mature more than one year from its date; provided, however, that a note issued under this subsection may be refunded or renewed from time to time by the issuance of a note or notes dated before the date upon which the total grant-in-aid is received. (Amended 1967, No. 242 (Adj. Sess.), § 1, eff. Feb. 13, 1968; 1969, No. 285 (Adj. Sess.), § 12, eff. April 9, 1970; 1975, No. 165 (Adj. Sess.); 1979, No. 94 (Adj. Sess.), § 1, eff. March 7, 1980; 1991, No. 51.)
§ 1774. Record by treasurer

The treasurer of each governmental unit as defined in section 4551(5) of this title shall keep a record of every obligation assumed by that unit. (Amended 1977, No. 155 (Adj. Sess.), § 2, eff. March 29, 1978; 1999, No. 71 (Adj. Sess.), § 2.)
§ 1775. Cancellation and record of old bonds

When old notes, orders, or bonds are taken up, as provided in this subchapter, the treasurer of the municipal corporation shall keep a record of the same, and such old notes, orders, or bonds shall be cancelled.
§ 1776. Record

All ordinances or resolutions required by this subchapter to be enacted by the legislative branch of a municipal corporation shall be duly recorded in the office of the clerk of such municipal corporation.
§ 1777. Regulations

When a municipal corporation has established or provided a sinking fund for the retirement of a bond issue or other debt, the fund so established or provided shall be kept intact and separate from other monies at the disposal of such corporation, shall be accounted for as a pledged asset for the purpose of retiring such obligations, and shall not be appropriated or used for the current expenses of such corporation.
§ 1778. Registered obligations; authority to issue

A municipal corporation may issue registered bonds. If an original issue of bonds by such municipal corporation is registered, they shall be registered as hereinafter provided.
§ 1779. Registration on request

A municipal corporation, at the written request, duly acknowledged, of the owner or holder of one or more bonds, promissory notes, or certificates of indebtedness issued by it and payable to bearer or to a person or corporation named, or bearer, may change such bonds, notes, or certificates into registered obligations, payable only to the person or corporation whose name is properly indorsed thereon, as hereinafter provided.
§ 1780. Certificate of registration indorsed; when

When it shall be determined by a municipal corporation to issue registered bonds, the legislative branch of the municipal corporation shall direct the treasurer of such municipal corporation to indorse upon the back of each of such bonds over his or her official signature a certificate of registration in substantially the form hereinafter provided, inserting in the appropriate places the date of such registration, the name and address of the registered holder, and his or her own signature as transfer agent. Thereafter such bond shall be transferable only upon the books of such municipality upon presentation to the treasurer thereof with a written assignment duly acknowledged or proved.
§ 1781. Change of coupon bonds to registered bonds

In case a municipal corporation shall have issued coupon bonds and the owner or holder thereof has requested that such bonds be changed to registered bonds as herein provided, then upon written request of such change, duly acknowledged, the treasurer of such a municipal corporation, if directed by the city council of the city, selectboard of the town, school directors of the town school district, or other corresponding officers of the municipal corporation of which he or she is such treasurer, as the case may be, shall cut off and destroy the coupons on the bonds presented for registration and indorse upon the back of each of such bonds over his or her official signature a certificate of registration in substantially the form prescribed by section 1782 of this title, inserting in the appropriate places the date of such registration, the name and address of the registered holder, and his or her own signature as transfer agent. Thereafter such bond shall be transferable only upon the books of such municipality upon presentation to the treasurer thereof with a written assignment duly acknowledged or proved.
§ 1782. Registered bonds; form of certificate

In all cases where bonds are registered the following shall be the form of

CERTIFICATE OF REGISTRATION

It is hereby certified that upon the written request of the holder of the within bond, the coupons attached thereto, being ___________ in number, of ___________ each have been this day cut off and destroyed and that the within bond is hereby converted into a registered bond with the interest thereon payable _______________________________________ annually, and that such interest, as well as the principal, is payable to the registered holder thereof, his or her legal representatives, successors, or assigns at the time and place expressed on the face of such bond.

The within bond when registered is transferable only upon the books of the treasurer of _______________________________________ upon presentation to the treasurer with a written assignment duly acknowledged or proved.

Date _________________________________________ 20 ___________ .

Treasurer of _________________________________________

_________________________________________

Date of registration.

_________________________________________

Name and address of registered holder.

Signature of treasurer who acts as transfer agent. (Amended 2017, No. 74, § 90.)
§ 1783. Registered bonds; indorsement conclusive evidence of authority

The indorsement of such certificate of registration upon any bond, note, or certificate by such treasurer shall be conclusive evidence that such treasurer was directed by the proper officers of the municipal corporation of which he or she was treasurer to convert such bond into a registered obligation. (Amended 2017, No. 74, § 91.)
§ 1784. Registered bonds; treasurer to keep record

The treasurer of every such municipal corporation shall keep a register showing the number, date, amount, rate of interest, time when payable, and the name of the registered holder of the bonds, notes, and certificates originally registered or changed to registered obligations. (Amended 2017, No. 74, § 92.)
§ 1785. Registered bonds; conversion not to affect liability

Such conversion shall in no respect or degree weaken or impair the obligation of such municipal corporation to pay such bond, note, or certificate so converted. (Amended 2017, No. 74, § 93.)
§ 1786. Borrowing to pay current expenses in anticipation of taxes

(a) A municipal corporation, by its legislative branch, may borrow money by the issuance of its notes or orders for the purpose of paying current expenses of the municipal corporation. Such notes or orders, however, must mature within one year from date.

(b) A municipal corporation may also borrow money in anticipation of taxes in an amount not to exceed ninety percent of the amount of taxes assessed for such year and may issue its notes or orders therefor to mature not more than one year from the date of the note or order.

(c) The assistant judges may borrow money in the name of the county in anticipation of taxes.
§ 1786a. Borrowing for public improvements and capital assets

(a) The voters of a municipality may authorize specific public improvements and the acquisition of capital assets and finance the same, temporarily or permanently, through debt instruments other than bonds for a term not to exceed the reasonably anticipated useful life of the improvements or assets as provided in this section.

(b) If the improvements or assets are to be financed for a term of five years or less, they shall be approved by the voters at an annual or special meeting duly warned for the purpose in accordance with the provisions of 17 V.S.A. chapter 55. However, the requirement of this subsection shall not apply to purchases made by selectboards under the provisions of 19 V.S.A. § 304(a)(3).

(c) If the improvements or assets are to be financed for a term of more than five years, the procedural provisions of sections 1755, 1756, and 1757 of this title shall apply. A vote on the question shall be held at a duly warned annual or special meeting and shall be by Australian ballot. The ballot shall be in substantially the following form:

“Shall the voters authorize (describe public improvement or acquisition) in an amount not to exceed ($ ........ ) to be financed over a period not to exceed (number of years).”

(d) Public improvements or assets approved under subsection (c) of this section may be financed for a period of five years or less.

(e) Debt instruments authorized under this section may be refunded in the manner provided in sections 1771 and 1772 of this title. (Added 1995, No. 2, § 1, eff. Feb. 23, 1995; amended 2001, No. 64, § 22, eff. June 16, 2001.)
§ 1787. Application of chapter; charters and special acts to control

This chapter shall not affect rights allowed a municipal corporation by its charter provisions, nor any rights granted by special act of the Legislature. This chapter, except where inconsistent with such charter or special act, shall apply to the method of exercising all such rights. (Amended 1989, No. 111, § 3, eff. June 22, 1989.)
§ 1788. Existing powers continued; emergencies

The existing power of a municipality to authorize public improvements by a majority vote in a meeting duly called and held and to finance the same temporarily by the issue of orders or notes, and to issue bonds therefor, is not repealed nor affected by the provisions of this subchapter. Such municipality may refund all or any portion of such temporary orders, notes, or bonds in the method provided by sections 1771 and 1772 of this title. Nevertheless, no public improvement which has been voted upon in the method provided by sections 1755 and 1756 of this title shall be voted upon in any such meeting, except in cases of emergency, in which the vote stating the emergency shall be conclusive evidence of its existence. The existing power of a municipality to refund obligations representing indebtedness accumulated in the ordinary administration of the affairs of such municipality, whether incurred for public improvements or for current expenses, and with or without vote of such municipality, is not repealed nor affected by the provisions of this subchapter, except that the method of such refunding shall be as provided in sections 1771 and 1772 of this title.
§ 1789. Alternative financing of assets

(a) A municipality, including a fire district, either singly or as a participant in an interlocal contract entered into under sections 4901 and 4902 of this title, may acquire personal property, fixtures, technology, and intellectual property by means of leases, lease-purchase agreements, installment sales agreements, and similar agreements wherein payment and performance on the part of the municipality is conditioned expressly upon the annual approval by the municipality of an appropriation sufficient to pay when next due rents, charges, and other payments accruing under such leases and agreements.

(b) The legislative body of the municipality shall enter into leases and agreements identified in subsection (a) of this section on behalf of the municipality and under such terms as it deems to be in the best interest of the municipality.

(c) The undertaking of a municipality to make payments under a lease or agreement identified in subsection (a) of this section shall not be a general or special obligation of the municipality, but shall be treated as a current operating expense. Payments made or to be made under such lease or agreement shall not be taken into account in calculating the debt limit of a municipality for any purpose. (Added 2007, No. 79, § 5, eff. June 9, 2007.)

Subchapter 002: Indebtedness for Public Utility Purposes
§ 1821. Definitions

When used in this subchapter:

(1) “Bond” means any bond or note issued by the municipal corporation and payable out of the net revenues from the operation of a public utility project.

(2) “Cost of operation and maintenance” shall mean the expenses for operation, maintenance, repairs, and ordinary replacements properly and directly attributable to the operation or ordinary maintenance of the public utility project.

(3) “Net revenues” shall mean revenues less cost of operation and maintenance.

(4) “Project” shall mean an undertaking for the acquisition, construction, reconstruction, improvement, financing, enlargement, extension, or betterment of any of the following public utility systems:

(A) Water systems or facilities as defined in chapter 89 of this title.

(B) Sewage disposal systems or facilities as defined in chapter 97 or 101 of this title.

(C) Systems or facilities for the generation, production, transmission, or distribution of gas (natural, artificial, or mixed) for lighting, heating, or power for public and private uses, as provided in 30 V.S.A. chapter 79 or by charter or special act.

(D) Systems or facilities for the generation, production, transmission, or distribution of electric energy, including the ownership, operation, and management of a municipal plant as defined in 30 V.S.A. § 2901 and other generation, production, transmission, and distribution facilities located within and without the State.

(E) Systems, facilities, and equipment for the collection, treatment, or disposal of solid waste, including sanitary landfills, and the generation, transmission, distribution, and sale of all products and forms of energy derived therefrom.

(5) “Revenues” mean all revenues, rates, fees, charges, rents, or other income and receipts received by the municipal corporation from any source, or accrued to the municipal corporation, or any department, board, or agency thereof, in connection with the management and operation of a public utility project or system, and shall also include any interest received on any monies or securities of the municipal corporation which are pledged to the payment of the municipal corporation’s bonds, and any federal or State grants-in-aid with respect to such project or system. (Amended 1989, No. 111, § 5, eff. June 22, 1989.)
§ 1822. Powers; approval of voters

(a) In addition to the powers it may now or hereafter have, a municipal corporation otherwise authorized to own, acquire, improve, control, operate, or manage a public utility or project and to issue bonds pursuant to this subchapter, may also, by action of its legislative branch, exercise any of the following powers:

(1) to borrow money and issue bonds for the purposes of acquiring, improving, maintaining, financing, controlling, or operating the public utility or project, or for the purpose of selling, furnishing, or distributing the services, facilities, products, or commodities of such utility or project;

(2) to enter into contracts in connection with the issuance of bonds for any of the purposes enumerated in subdivision (1) of this subsection;

(3) to purchase, hold, and dispose of any of its bonds;

(4) to pledge or assign all or part of any net revenues of the public utility or project, to provide for or to secure the payment of the principal of and the interest on bonds issued in connection with such public utility or project;

(5) to do any and all things necessary or prudent to carry out the powers expressly granted or necessarily implied in this subchapter, including without limitation those powers enumerated in section 1824 of this title.

(b)(1) The bonds authorized under this section shall be in such form, shall contain such provisions, and shall be executed as may be determined by the legislative branch of the municipal corporation, but shall not be executed, issued, or made, and shall not be valid and binding, unless and until at least a majority of the legal voters of such municipal corporation present and voting at a duly warned annual or special meeting called for that purpose shall have first voted to authorize the same.

(2) The warning calling such a meeting shall state the purpose for which it is proposed to issue bonds, the estimated cost of the project, the amount of bonds proposed to be issued under this subchapter therefor, that such bonds are to be payable solely from net revenues, and shall fix the place where and the date on which such meetings shall be held and the hours of opening and closing the polls.

(3) The notice of the meeting shall be published and posted as provided in section 1756 of this title.

(4) When a majority of all the voters voting on the question at such meeting vote to authorize the issuance of bonds under this subchapter to pay for such project, the legislative body shall be authorized to issue bonds or enter into contracts, pledges, and assignments as provided in this subchapter.

(5) Sections 1757 and 1758 of this title shall apply to the proceedings taken hereunder, except that the form of ballot to be used shall be substantially as follows:

Shall bonds of the (name of municipality) to the amount of $_____ be issued under subchapter 2 of chapter 53 of Title 24, Vermont Statutes Annotated, payable only from net revenues derived from the (type) public utility system, for the purpose of paying for the following public utility project?

If in favor of the bond issue, make a cross (x) in this square □.

If opposed to the bond issue, make a cross (x) in this square □.

(c) The bonds authorized by this subchapter shall be sold at par, premium, or discount by negotiated sale, competitive bid, or to the Vermont Municipal Bond Bank.

(d) Notwithstanding the provisions of subsection (b) of this section, the legislative branch of a municipal corporation owning a municipal plant as defined in 30 V.S.A. § 2901 may authorize by resolution the issuance of bonds in an amount not to exceed 50 percent of the total assets of said municipal plant without the need for voter approval. Nothing in this subsection shall be interpreted as eliminating the requirement for approval from the Public Utility Commission pursuant to 30 V.S.A. § 108, where applicable. (Amended 1989, No. 111, § 6, eff. June 22, 1989; 2019, No. 81, § 1.)
§ 1823. Payment exclusive; effect

(a) The bonds issued and contracts entered into in connection therewith as authorized in section 1822 of this title and the interest thereon shall be payable solely and exclusively from net revenues derived from the public utility system or project and shall not constitute general indebtedness of the municipal corporation nor be an obligation or liability upon the municipal corporation to pay the same from any funds of the municipal corporation other than such net revenues. No holder or holders of any contracts entered into or bonds issued under this subchapter shall ever have the right to compel any exercise of the taxing power of the municipal corporation to pay such contracts or bonds, or the interest thereon. A statement referring to the limited nature of the contract or bond and reciting that it had been entered into or issued under this subchapter shall be made plainly to appear in or upon each contract or bond.

(b) The bonds or contracts authorized by this subchapter shall not be affected by the restrictions and limitations of subchapter 1 of this chapter relating thereto. (Amended 1989, No. 111, § 7, eff. June 22, 1989.)
§ 1824. Specific provisions

(a) Generally. Any pledge of net revenues or bond proceeds and earnings thereon made by a municipal corporation under this subchapter shall be binding from the time when the pledge is made. Net revenues or bond proceeds and earnings thereon to be pledged and thereafter received by the municipal corporation shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of any pledge shall be binding against all parties having claims of any kind in tort, contract, or otherwise against the municipal corporation, irrespective of whether the parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be filed or recorded except in the records of the municipal corporation.

(b) Special covenants. The contracts and bonds entered into and issued under section 1822 of this title may contain provisions relating to:

(1) pledging all or any part of the net revenues of the public utility system or project in order to secure the payment of the bonds, or any part thereof, subject to such agreements with bondholders as may then exist;

(2) the imposition or maintenance of rates, fees, or charges, subject to regulatory requirements, to generate revenues at least sufficient to provide for the costs of operation and maintenance of the public utility system and for payment of principal of and interest on all bonds issued in connection with such public utility as the same shall become due;

(3) the imposition or maintenance of rates, fees, and charges, subject to regulatory requirements, as a multiple of principal and interest payments on bonds of the municipality issued under this subchapter;

(4) periodic review of the financial condition of the public utility system for the purpose of estimating whether its revenues will be sufficient to comply with agreements with the holders of its bonds;

(5) limitations, terms, and conditions with respect to the refunding or redemption of the bonds;

(6) limitations, terms, and conditions with respect to the issuance of additional bonds in connection with the public utility system for which the bonds are issued, except bonds secured by a subordinate pledge of net revenues;

(7) limitations on the purpose to which the proceeds of sale of bonds may be applied and pledging the proceeds to secure the payment of the bonds or of any issue thereof;

(8) the procedure, if any, by which the terms of any agreement with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent thereto, and the manner in which consent may be given;

(9) requirements for the maintenance and operation of the utility system in accordance with prudent utility practice and regulatory requirements;

(10) vesting in a trustee or trustees, within or without the State, the right to receive all or any part of the net revenue pledged and assigned to, or for the benefit of, the holder or holders of bonds issued hereunder, and to hold, apply, and dispose of the same; and vesting in the trustee or trustees such rights, powers, and duties in trust as the trustee may need to recover the amounts pledged to the holders of the municipal corporation’s bonds and to enforce any covenants made by the municipal corporation to secure its bonds, and limiting or abrogating the right of the holders of its bonds to appoint a trustee under this subchapter or limiting the rights, powers, and duties of the trustee;

(11) prescribing what acts or omissions of the municipality shall constitute “events of default” and the terms and conditions upon which any or all of such bonds shall become or may be declared due before maturity and as to the terms and conditions upon which such declaration and its consequences may be waived;

(12) limitations on the rights, liabilities, powers, and duties arising upon the breach by it of any covenant, conditions, or obligations;

(13) a definition, subject to regulatory requirements, of the standard of care, maintenance, and operation of the public utility project, including the maintenance of insurance and the application of proceeds of policies of insurance and condemnation awards thereon;

(14) the pledge of proceeds to be derived upon the sale or disposition of the public utility project for the purpose of paying bonds issued by the municipal corporation for such project or defeasing the lien securing said bonds;

(15) limitations on the right of the municipal corporation to encumber, sell, lease, or otherwise dispose of property used in public service operations of the public utility system; except for the sale, lease, or disposition of a part of such property, which in the reasonable judgment of the municipality has become unserviceable, obsolete, worn out, or no longer necessary in the operations of the public utility system or has been replaced by other property, and except for encumbrances in connection with bonds secured by a subordinate pledge of net revenues;

(16) the bonds to be issued, the issuance of its bonds in escrow or otherwise, and the use and disposition of the proceeds thereof; provisions for the replacement of lost, destroyed, or mutilated bonds; prohibitions against extending the time for the payment of its bonds or interest thereon and to redeem its bonds and provisions for their redemption and the terms and conditions thereof; and

(17) the creation of special funds for construction or operating costs, debt service, reserve, or similar purposes and covenanting as to the use and disposition and investment of the monies held in such funds. (Amended 1989, No. 111, § 8, eff. June 22, 1989; 2017, No. 74, § 94.)
§ 1825. Construction

Nothing contained in this subchapter shall be so construed as authorizing the establishment or operation of a public utility. The provisions of this subchapter shall apply only to a public utility authorized by a special act or under the general law. Bonds may be issued hereunder for public utility projects of the municipal corporation notwithstanding that any other law may provide for the issuance of bonds for like purposes. This subchapter is remedial in nature and the powers hereby granted shall be liberally construed to effectuate the purposes hereof, and to this end the municipal corporation shall have powers necessary and prudent to carry out the purposes hereof in addition to the powers expressly conferred in this subchapter. (Amended 1989, No. 111, § 9, eff. June 22, 1989.)
§ 1826. Actions barred

(a) No action shall be brought directly or indirectly attacking, questioning, or in any manner contesting the legality or validity of municipal revenue bonds for public utility purposes, issued or unissued, voted by any municipality or by any other municipal corporate entity, after six months from the date upon which voters in any such municipality or other municipal corporate entity met pursuant to warning and voted affirmatively to issue bonds to defray costs of municipal utility purposes or upon vote of a question of recission thereof whichever occurs later.

(b) This section shall be liberally construed to effect the legislative purpose to validate bonds issued or authorized by municipalities or other municipal corporate entities for public utility purposes, and to bar every right to question in any manner the validity of a bond voted by it for public utility purposes, and to bar every remedy therefor notwithstanding any defects or irregularities, jurisdictional or otherwise, after expiration of the six-month period. (Added 1975, No. 57, § 2, eff. April 18, 1975.)
§ 1827. Enforcement of bond obligations

The municipal corporation shall have power by resolution of its legislative body, adopted in connection with the issuance of the bonds and subject to approval under 30 V.S.A. § 108 to confer upon any holder or holders of a specified amount or percentage of bonds, including a trustee or trustees for such holders, the right in the event of an “event of default” as defined in any contract with the holder or holders of such bonds or the trustee or trustees therefor:

(1) By suit, action, or proceedings in any court of competent jurisdiction to obtain the appointment of a receiver of the public utility system of the municipal corporation or any part or parts thereof. If such receiver be appointed he or she may enter and take possession of such public utility system of the municipal corporation or any part or parts thereof and operate and maintain the same, and collect and receive all revenues thereafter arising therefrom in the same manner as the municipal corporation itself might do and shall deposit such monies in a separate account or accounts and apply the same in accordance with the obligations of the municipal corporation as the court shall direct. All actions of receivers authorized under this section shall be subject to the same regulatory requirements applicable to the municipal utility. Provided, however, that notwithstanding the appointment of a receiver the municipal corporation shall retain the right subject to regulatory requirements to fix the rates, fees, and charges to be charged by the public utility system, the revenues from which are pledged to pay bonds and the interest thereon, and to receive from the receiver from time to time that portion of any revenues collected which shall be allocable to the municipal corporation on account of costs for public utility system maintenance, operation, repair, and regulation or other costs payable by the municipal corporation.

(2) By suit, action, or proceedings in any court of competent jurisdiction to require the legislative body of the municipal corporation and the treasurer of the municipal corporation to account as if it, he, or she were the trustee of an express trust. Any such resolution shall constitute a contract between the municipal corporation and the holders of bonds of such issue. (Added 1989, No. 111, § 10, eff. June 22, 1989.)
§ 1828. Rights of holders

Any holder or holders of bonds issued under this subchapter, including a trustee or trustees for holders of such bonds, shall have the right in addition to all other rights:

(1) By extraordinary relief or other suit, action, or proceedings in any court of competent jurisdiction to enforce his, her, or their rights against the municipal corporation, the legislative body, any other proper officer, agent, or employee of any of them, including the right to require the municipality, the legislative body, and any proper officer, agent, or employee of any of them, to the extent consistent with the reasonable operation of a public utility, to fix and collect rates and charges subject to State and federal regulatory approval, adequate to carry out any agreement as to, or pledge of revenues, and to require the municipal corporation, the legislative body and any officer, agent, or employee of any of them to carry out any other covenants or agreements and to perform its and their duties under this subchapter.

(2) By action or suit to enjoin any acts or things which may be unlawful or a violation of the rights of such holder of bonds. (Added 1989, No. 111, § 11, eff. June 22, 1989.)

Subchapter 003: Indebtedness for Parking Lots and Meters
§§ 1861-1874. Repealed. 2013, No. 122 (Adj. Sess.), § 1.

Subchapter 004: Form of Bonds, Notes, and Certificates
§ 1881. Form of bonds, notes, and certificates

Notwithstanding any general or special law or charter provision to the contrary, a municipal corporation may issue bonds, notes, or certificates in coupon form payable to the bearer, in registered form without coupons, or in book entry form. (Added 1983, No. 24, § 1, eff. April 6, 1983.)
§ 1882. Signature

Bonds, notes, or certificates other than those in book entry form shall be signed by the manual or facsimile signature of the treasurer of the municipal corporation or his or her deputy and countersigned by the manual or facsimile signature of the clerk of the municipal corporation or his or her deputy or in such other manner as the legislative branch of the municipal corporation shall determine, and the interest coupons thereon, if any, shall bear the facsimile signature of the treasurer of the municipal corporation. The date of issuance, place of payment, rate of interest, time of maturity, provisions with respect to redemption prior to maturity, at par or at a premium, and other particulars as to the form of such bonds, notes, or certificates within the limitations mentioned herein shall be determined by the legislative branch of the municipal corporation as it may deem for the best interest of the municipal corporation. (Added 1983, No. 24, § 1, eff. April 6, 1983.)
§ 1883. Transfer agent

(a)(1) The treasurer of the municipal corporation shall act as transfer agent or registrar for the exchange or transfer of registered bonds, notes, or certificates or maintain the records so that bonds or notes in book entry form may be effected or contract with or otherwise designate a bank, trust company, or other person to act as transfer agent or registrar for the bonds, notes, or certificates, or maintain the records so that bonds or notes in book entry form may be effected.

(2) Such bank, trust company, or other person, which may include the federal government or any of its agencies or instrumentalities, or any officer, agency, or instrumentality of the State, may be located or have its principal office inside or outside the State; provided, however, that any such transfer agent or registrar (other than the federal government or any of its agencies or instrumentalities) not domiciled in the State or having its principal business in the State, shall qualify and be authorized to do business in the State, or shall otherwise render itself amenable to personal service of process in the State and shall submit itself to personal jurisdiction in the courts of the State.

(b) Bonds, notes, or certificates in book entry form shall be effected by means of entries on the records of the treasurer of the municipal corporation or his or her designee which shall reflect the description of the issue, the principal amount, the interest rate, the maturity date, and the owner of the bonds, notes, or certificates and such other information as is deemed appropriate.

(c) The treasurer of the municipal corporation or other designated person may effect conversion between book entry bonds, notes, or certificates and registered bonds, notes, or certificates for owners of bonds, notes, or certificates who request such a change. The treasurer of the municipal corporation or other designated transfer agent or registrar shall issue a confirmation of the transaction in the form of a written advice. (Added 1983, No. 24, § 1, eff. April 6, 1983.)
§ 1884. Repealed. 2015, No. 29, § 14.
§ 1885. Application

The provisions of this subchapter shall be effective with respect to bonds, notes, or certificates which have heretofore been approved by referendum authorizing bonds in coupon and registered form, or in coupon form only, and such bonds, notes, or certificates need not be resubmitted for a further vote or referendum for the purpose of authorizing the bonds, notes, or certificates in registered form or book entry form only. (Added 1983, No. 24, § 1, eff. April 6, 1983.)
§ 1886. Additional powers

The treasurer of the municipal corporation or his or her designee shall have such additional powers as are necessary to effectuate the purposes of this act. This act supersedes any existing general or special law or charter provision with respect to the matters contained herein as they apply to the issuance of bonds, notes, or certificates but shall not diminish or restrict any powers heretofore granted by law. (Added 1983, No. 24, § 1, eff. April 6, 1983.)
§ 1887. Short title

The provisions of this subchapter shall be known as the “Vermont Municipal Bond Registration Act.” (Added 1983, No. 24, § 1, eff. April 6, 1983.)

Subchapter 005: Statewide Tax Increment Financing
§ 1891. Definitions

As used in this subchapter:

(1) “Municipality” means a city, town, or incorporated village.

(2) “District” or “TIF” means a tax increment financing district.

(3) “Legislative body” means the mayor and alderboard, the city council, the selectboard, and the president and trustees of an incorporated village, as appropriate.

(4) “Improvements” means the installation, new construction, or reconstruction of infrastructure that will serve a public purpose and fulfill the purpose of tax increment financing districts as stated in section 1893 of this subchapter, including utilities, transportation, public facilities and amenities, land and property acquisition and demolition, and site preparation. “Improvements” also means the funding of debt service interest payments for a period of up to two years, beginning on the date on which the first debt is incurred.

(5) “Original taxable value” means the total valuation as determined in accordance with 32 V.S.A. chapter 129 of all taxable real property located within the tax increment financing district as of the creation date as set forth in section 1892 of this subchapter, provided that no parcel within the district shall be divided or bisected by the district boundary.

(6) “Related costs” means expenses incurred and paid by the municipality, exclusive of the actual cost of constructing and financing improvements, that are directly related to the creation and implementation of the tax increment financing district, including reimbursement of sums previously advanced by the municipality for those purposes. Related costs may include direct municipal expenses such as departmental or personnel costs related to creating or administering the district to the extent they are paid from the tax increment realized from municipal and not education taxes and using only that portion of the municipal increment above the required percentage in servicing the debt as determined in accordance with subsection 1894(f) of this subchapter.

(7) “Financing” means debt incurred, including principal, interest, and any fees or charges directly related to that debt, or other instruments or borrowing used by a municipality to pay for improvements in a tax increment financing district, only if authorized by the legal voters of the municipality in accordance with section 1894 of this subchapter. Payment for the cost of district improvements may also include direct payment by the municipality using the district increment. However, such payment is also subject to a vote by the legal voters of the municipality in accordance with section 1894 of this subchapter and, if not included in the tax increment financing plan approved under subsection 1894(d) of this subchapter, is also considered a substantial change and subject to the review process provided by subdivision 1901(2)(B) of this subchapter. If interfund loans within the municipality are used as the method of financing, no interest shall be charged. Bond anticipation notes may be used as a method of financing; provided, however, that bond anticipation notes shall not be considered a first incurrence of debt pursuant to subsection 1894(a) of this subchapter.

(8) “Committed” means pledged and appropriated for the purpose of the current and future payment of tax increment financing incurred in accordance with section 1894 of this subchapter and related costs as defined in this section. (Added 1985, No. 87; amended 2005, No. 184 (Adj. Sess.), § 2a; 2007, No. 190 (Adj. Sess.), § 54, eff. June 6, 2008; 2013, No. 80, § 2; 2019, No. 14, § 66, eff. April 30, 2019; 2023, No. 72, § 33, eff. June 19, 2023.)
§ 1892. Creation of district

(a) Upon a finding that such action will serve the public purposes of this subchapter and subject to subsection (d) of this section, the legislative body of any municipality may create within its jurisdiction a special district to be known as a tax increment financing district. The district shall be described by its boundaries and the properties therein and the district boundary shall be shown on a plan entitled “Proposed Tax Increment Financing District (municipal name), Vermont.” The legislative body shall hold one or more public hearings, after public notice, on the proposed plan.

(b) When adopted by the act of the legislative body of that municipality, the plan shall be recorded with the municipal clerk and lister or assessor, and the creation of the district shall occur at 12:01 a.m. on April 1 of the calendar year so voted by the municipal legislative body.

(c) A municipality that has approved the creation of a district under this section may designate a coordinating agency from outside the municipality’s departments or offices to administer the district to ensure compliance with this subchapter and any statutory or other requirements and may claim this expense as a related cost. However, the coordinating agency shall not be authorized to enter into any agreement or make any covenant on behalf of the municipality.

(d) The following municipalities have been authorized to use education tax increment financing for a tax increment financing district:

(1) the City of Burlington, Downtown;

(2) the City of Burlington, Waterfront;

(3) the Town of Milton, North and South;

(4) the City of Newport;

(5) the City of Winooski;

(6) the Town of Colchester;

(7) the Town of Hartford;

(8) the City of St. Albans;

(9) the City of Barre;

(10) the Town of Milton, Town Core; and

(11) the City of South Burlington.

(e) On or before January 15, 2018, the Joint Fiscal Office, with the assistance of the consulting Legislative Economist, the Department of Taxes, the State Auditor, and the Agency of Commerce and Community Development in consultation with the Vermont Economic Progress Council, shall examine and report to the General Assembly on the use of both tax increment financing districts and other policy options for State assistance to municipalities for funding infrastructure in support of economic development and the capacity of Vermont to utilize TIF districts moving forward.

(f) The report shall include:

(1) a recommendation for a sustainable statewide capacity level for TIFs or comparable economic development tools and relevant permitting criteria;

(2) the positive and negative impacts on the State’s fiscal health of TIFs and other tools, including the General Fund and Education Fund;

(3) the economic development impacts on the State of TIFs and other tools, both positive and negative;

(4) the mechanics for ensuring geographic diversity of TIFs or other tools throughout the State; and

(5) the parameters of TIFs and other tools in other states.

(g) Beginning in 2021 and every four years thereafter, on or before January 15, the Joint Fiscal Office, with the assistance of the consulting Legislative Economist, the Department of Taxes, and the Agency of Commerce and Community Development in consultation with the Vermont Economic Progress Council, shall examine the recommendations and conclusions of the tax increment financing capacity study and report created pursuant to subsection (e) of this section, and shall submit to the Emergency Board and to the House Committees on Commerce and Economic Development and on Ways and Means and the Senate Committees on Economic Development, Housing and General Affairs and on Finance an updated summary report that includes:

(1) an assessment of any material changes from the initial report concerning TIFs and other tools and an assessment of the health and sustainability of the tax increment financing system in Vermont;

(2) short-term and long-term projections on the positive and negative fiscal impacts of the TIF districts or other tools, as applicable, that are currently active or authorized in the State;

(3) a review of the size and affordability of the net indebtedness for TIF districts and an estimate of the maximum amount of new long-term net debt that prudently may be authorized for TIF districts or other tools in the next fiscal year.

(h) Annually, based on the analysis and recommendations included in the reports required in this section, the General Assembly shall consider the amount of new long-term net debt that prudently may be authorized for TIF districts in the next fiscal year and determine whether to expand the number of TIF districts or similar economic development tools in addition to the previously approved districts referenced in subsection (d) of this section and the six additional districts authorized by 32 V.S.A. § 5404a(f). (Added 1985, No. 87; amended 2013, No. 80, § 3; 2017, No. 69, § J.2, eff. June 28, 2017; 2018, No. 11 (Sp. Sess.), § H.30.)
§ 1893. Purpose

The purpose of tax increment financing districts is to provide revenues for improvements that serve the district and related costs, which will stimulate development or redevelopment within the district, provide for employment opportunities, improve and broaden the tax base, or enhance the general economic vitality of the municipality, the region, or the State. (Added 1985, No. 87; amended 2005, No. 184 (Adj. Sess.), § 2b; 2007, No. 190 (Adj. Sess.), § 55, eff. June 6, 2008.)
§ 1894. Power and life of district

(a) Incurring indebtedness.
(1) A municipality approved under 32 V.S.A. § 5404a(h) may incur indebtedness against revenues of the tax increment financing district at any time during a period of up to five years following the creation of the district. If no debt is incurred during this five-year period, the district shall terminate, unless the Vermont Economic Progress Council grants an extension to a municipality pursuant to subsection (d) of this section. However, if any indebtedness is incurred within the first five years after the creation of the district, then the district has a total of ten years after the creation of the district to incur any additional debt.

(2) Any indebtedness incurred under subdivision (1) of this subsection may be retired over any period authorized by the legislative body of the municipality.

(3) The district shall continue until the date and hour the indebtedness is retired or, if no debt is incurred, five years following the creation of the district.

(b) Use of the education property tax increment. For only debt incurred within the period permitted under subdivision (a)(1) of this section after creation of the district, and related costs, up to 70 percent of the education tax increment may be retained for up to 20 years, beginning with the education tax increment generated the year in which the first debt incurred for improvements financed in whole or in part with incremental education property tax revenue. Upon incurring the first debt, a municipality shall notify the Department of Taxes and the Vermont Economic Progress Council of the beginning of the 20-year retention period of education tax increment.

(c) Use of the municipal property tax increment. For only debt incurred within the period permitted under subdivision (a)(1) of this section after creation of the district, and related costs, not less than 85 percent of the municipal tax increment shall be retained to service the debt, beginning the first year in which debt is incurred, pursuant to subsection (b) of this section.

(d) Approval of tax increment financing plan. The Vermont Economic Progress Council shall approve a municipality’s tax increment financing plan prior to a public vote to pledge the credit of that municipality under subsection (h) of this section. The tax increment financing plan shall include all information related to the proposed financing necessary for approval by the Council and to assure its viability and consistency with the tax increment financing district plan approved by the Council pursuant to 32 V.S.A. § 5404a(h). The tax increment financing plan may be submitted to and approved by the Council concurrently with the tax increment financing district plan. If no indebtedness is incurred within five years after the creation of the district, the municipality may submit an updated executive summary of the tax increment financing district plan and an updated tax increment financing plan to the Council to obtain approval for a five-year extension of the period to incur indebtedness; provided, however, that the updated plan is submitted prior to the five-year termination date of the district. The Council shall review the updated tax increment financing plan to determine whether the plan has continued viability and consistency with the approved tax increment financing plan. Upon approval of the updated tax increment financing plan, the Council shall grant an extension of the period to incur indebtedness of no more than five years. The submission of an updated tax increment financing plan as provided in this subsection shall operate as a stay of the termination of the district until the Council has determined whether to approve the plan.

(e) Proportionality. The municipal legislative body may commit the State education and municipal tax increments received from properties contained within the tax increment financing district for the financing of improvements and for related costs only in the same proportion by which the improvement or related costs serve the district, as determined by the Council when approved in accordance with 32 V.S.A. § 5404a(h), and in the case of an improvement that does not reasonably lend itself to a proportionality formula, the Council shall apply a rough proportionality and rational nexus test.

(f) Required share of increment. If any tax increment utilization is approved pursuant to 32 V.S.A. § 5404a(h), not more than 70 percent of the State property tax increment and not less than 85 percent of the municipal tax increment may be approved by the Council or used by the municipality to service this debt.

(g) Adjustment of percentage. During the tenth year following the creation of the tax increment financing district, the municipality shall submit an updated tax increment financing plan to the Council which shall include adjustments and updates of appropriate data and information sufficient for the Council to determine, based on tax increment financing debt actually incurred and the history of increment generated during the first ten years, whether the percentages approved under subsection (f) of this section should be continued or adjusted to a lower percentage to be retained for the remaining duration of the retention period and still provide sufficient municipal and education increment to service the remaining debt.

(h) Vote required on each instance of debt. Notwithstanding any provision of any municipal charter, each instance of borrowing to finance or otherwise pay for tax increment financing district improvements shall occur only after the legal voters of the municipality, by a majority vote of all voters present and voting on the question at a special or annual municipal meeting duly warned for the purpose, authorize the legislative body to pledge the credit of the municipality, borrow, or otherwise secure the debt for the specific purposes so warned; provided that each request to pledge the credit of the municipality for the purposes of financing tax increment financing district improvements shall include the new amount of debt proposed to be incurred and the total outstanding tax increment financing debt approved to date.

(i) Notice to voters. A municipal legislative body shall provide information to the public prior to the public vote required under subsection (h) of this section. This information shall include the amount and types of debt and related costs to be incurred, including principal, interest, and fees, terms of the debt, the improvements to be financed, the expected development to occur because of the improvements, and notice to the voters that if the tax increment received by the municipality from any property tax source is insufficient to pay the principal and interest on the debt in any year, for whatever reason, including a decrease in property value or repeal of a State property tax source, unless determined otherwise at the time of such repeal, the municipality shall remain liable for the full payment of the principal and interest for the term of indebtedness. If interfund loans within the municipality are used, the information must also include documentation of the terms and conditions of such loan. If interfund loans within the municipality are used as the method of financing, no interest shall be charged. (Added 1985, No. 87; amended 1987, No. 204 (Adj. Sess.), § 1; 2005, No. 184 (Adj. Sess.), § 2c; 2007, No. 190 (Adj. Sess.), § 56, eff. June 6, 2008; 2011, No. 45, § 15, eff. May 24, 2011; 2013, No. 80, § 4; 2013, No. 174 (Adj. Sess.), §§ 8, 9, eff. June 4, 2014; 2017, No. 69, § J.3. eff. June 28, 2017.)
§ 1895. Original taxable value

(a) Certification. As of the date the district is created, the lister or assessor for the municipality shall certify the original taxable value and shall certify to the legislative body in each year thereafter during the life of the district the amount by which the total valuation as determined in accordance with 32 V.S.A. chapter 129 of all taxable real property located within the tax increment financing district has increased or decreased relative to the original taxable value.

(b) Boundary of the district. No adjustments to the physical boundary lines of a district shall be made after the approval of a tax increment financing district plan. (Added 1985, No. 87; amended 2013, No. 80, § 5; 2013, No. 174 (Adj. Sess.), § 10, eff. June 4, 2014; 2023, No. 72, § 34, eff. June 19, 2023.)
§ 1896. Tax increments

(a) In each year following the creation of the district, the listers or assessor shall include not more than the original taxable value of the real property in the assessed valuation upon which the treasurer computes the rates of all taxes levied by the municipality and every other taxing district in which the tax increment financing district is situated; but the treasurer shall extend all rates so determined against the entire assessed valuation of real property for that year. In each year, the municipality shall hold apart, rather than remit to the taxing districts, that proportion of all taxes paid that year on the real property in the district that the excess valuation bears to the total assessed valuation. The amount held apart each year is the “tax increment” for that year. Not more than the percentages established pursuant to section 1894 of this subchapter of the municipal and State education tax increments received with respect to the district and committed for the payment for financing for improvements and related costs shall be segregated by the municipality in a special tax increment financing account and in its official books and records until all capital indebtedness of the district has been fully paid. The final payment shall be reported to the treasurer, who shall thereafter include the entire assessed valuation of the district in the assessed valuations upon which municipal and other tax rates are computed and extended and thereafter no taxes from the district shall be deposited in the district’s tax increment financing account.

(b) [Repealed.]

(c) Notwithstanding any charter provision or other provision, all property taxes assessed within a district shall be subject to the provision of subsection (a) of this section. Special assessments levied under chapters 76A or 87 of this title or under a municipal charter shall not be considered property taxes for the purpose of this section if the proceeds are used exclusively for operating expenses related to properties within the district, and not for improvements within the district, as defined in subdivision 1891(4) of this title.

(d) Amounts held apart under subsection (a) of this section shall only be used for financing and related costs as defined in section 1891 of this subchapter.

(e) In each year, a municipality shall remit not less than the aggregate tax due on the original taxable value to the Education Fund. (Added 1985, No. 87; amended 1987, No. 204 (Adj. Sess.), § 2; 2005, No. 184 (Adj. Sess.), § 2d; 2007, No. 66, § 24, eff. July 1, 2006; 2007, No. 190 (Adj. Sess.), § 57, eff. June 6, 2008; 2013, No. 80, § 6; 2013, No. 174 (Adj. Sess.), § 11, eff. June 4, 2014; 2015, No. 57, § 63; 2023, No. 72, § 35, eff. June 19, 2023.)
§ 1897. Repealed. 2013, No. 80, § 7.
§ 1898. Powers supplemental; construction

(a) The powers conferred by this subchapter are supplemental and alternative to other powers conferred by law, and this subchapter is intended as an independent and comprehensive conferral of powers to accomplish the purposes set forth herein.

(b) A municipality shall have power to issue from time to time general obligation bonds, revenue bonds, or revenue bonds also backed by the municipality’s full faith and credit in its discretion to finance the undertaking of any improvements wholly or partly within such district. If revenue bonds are issued, such bonds shall be made payable, as to both principal and interest, solely from the income proceeds, revenues, tax increments, and funds of the municipality derived from or held in connection with its undertaking and carrying out of improvements under this chapter.

(c) Bonds issued under the provisions of this chapter are declared to be issued for an essential public and governmental purpose.

(d) Bonds issued under this section shall be authorized by resolution or ordinance of the local governing body and may be payable upon demand or mature at such time or times, bear interest at such rate or rates, be in such denomination or denominations, be in registered form, carry such conversion or registration privileges, have such rank or priority, be executed in such manner, be payable in such medium or payment, at such place or places, and be subject to such terms of redemption, such other characteristics, as may be provided by such resolution or trust indenture or mortgage issued pursuant thereto.

(e) [Repealed.]

(f) Such bonds may be sold at not less than par at public or private sales held after notice published prior to such sale in a newspaper having a general circulation in the municipality.

(g) In case any of the public officials of the municipality whose signatures appear on any bonds or coupons issued under this chapter shall cease to be such officials before the delivery of such bonds, such signatures shall, nevertheless, be valid and sufficient for all purposes, the same as if such officials had remained in office until such delivery. Any provisions of any law to the contrary notwithstanding, any bonds issued pursuant to this chapter shall be fully negotiable.

(h) In any suit, action, or proceeding involving the validity or enforceability of any bond issued under this chapter or the security therefor, any such bond reciting in substance that it has been issued by the municipality in connection with an improvement, as herein defined, shall be conclusively deemed to have been issued for such purpose and such improvement shall be conclusively deemed to have been planned, located, and carried out in accordance with the provisions of this chapter.

(i) [Repealed.] (Added 1985, No. 87; amended 1987, No. 204 (Adj. Sess.), §§ 3-6; 2005, No. 184 (Adj. Sess.), § 2f; 2007, No. 190 (Adj. Sess.), § 59, eff. June 6, 2008; 2009, No. 54, § 37, eff. June 1, 2009; 2013, No. 80, § 8.)
§ 1899. Bonds as legal investments

All banks, trust companies, bankers, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, and other persons carrying on a banking or investment business; all insurance companies, insurance associations, and other persons carrying on an insurance business; and all executors, administrators, curators, trustees, and other fiduciaries, may legally invest any sinking funds, monies, or other funds belonging to them or within their control in any bonds or other obligations issued by a municipality pursuant to this chapter. It is the purpose of this section to authorize any persons, political subdivisions, and officers, public or private, to use any funds owned or controlled by them for the purchase of any such bonds or other obligations. Nothing contained in this section with regard to legal investments shall be construed as relieving any person of any duty of exercising reasonable care in selecting securities. (Added 1985, No. 87.)
§ 1900. Distribution

In addition to all other provisions of this subchapter, with respect to any tax increment financing district, of the municipal and education tax increments received in any tax year that exceed the amounts committed for the payment of the financing for improvements and related costs in the district, equal portions of each increment may be retained for the following purposes: prepayment of principal and interest on the financing, placed in a special account required by section 1896 of this subchapter and used for future financing payments, or used for defeasance of the financing. Any remaining portion of the excess municipal tax increment shall be distributed to the city, town, or village budget, in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village; and any remaining portion of the excess education tax increment shall be distributed to the Education Fund. (Added 1987, No. 204 (Adj. Sess.), § 7; amended 2005, No. 184 (Adj. Sess.), § 2g; 2007, No. 190 (Adj. Sess.), § 60, eff. June 6, 2008; 2013, No. 80, § 9.)
§ 1901. Information reporting

Every municipality with an active tax increment financing district shall:

(1) Develop a system, segregated for the tax increment financing district, to identify, collect, and maintain all data and information necessary to fulfill the reporting requirements of this section, including performance measures.

(2) Throughout the year, as required by events:

(A) provide notification to the Vermont Economic Progress Council and the Department of Taxes regarding any tax increment financing debt obligations, public votes, or votes by the municipal legislative body immediately following such obligation or vote on a form prescribed by the Council, including copies of public notices, agendas, minutes, vote tally, and a copy of the information provided to the public in accordance with subsection 1894(i) of this subchapter;

(B) submit any proposed substantial changes to be made to the approved tax increment district plan and approved financing plan to the Council for review, only after receiving approval for the substantial change through a vote of the municipal legislative body.

(3) Annually:

(A) Ensure that the tax increment financing district account required by section 1896 of this subchapter is subject to the annual audit prescribed in sections 1681 and 1690 of this title. Procedures must include verification of the original taxable value and annual and total municipal and education tax increments generated, expenditures for debt and related costs, and current balance.

(B) On or before February 15 of each year, on a form prescribed by the Council, submit an annual report to the Vermont Economic Progress Council and the Department of Taxes, including the information required by subdivision (2) of this section if not already submitted during the year, all information required by subdivision (A) of this subdivision (3), and the information required by 32 V.S.A. § 5404a(i), including performance measures and any other information required by the Council or the Department of Taxes. (Added 2007, No. 190 (Adj. Sess.), § 62, eff. June 6, 2008; amended 2013, No. 80, § 10; 2013, No. 174 (Adj. Sess.), § 12, eff. June 4, 2014; 2015, No. 11, § 27; 2015, No. 57, § 62, eff. June 11, 2015.)

Subchapter 006: Municipal Tax Increment Financing
§ 1903. Definitions

As used in this subchapter:

(1) “District” or “TIF” means a tax increment financing district.

(2) “Improvements” means the installation, new construction, or reconstruction of infrastructure to benefit a municipal tax increment financing district, including utilities, transportation, public facilities and amenities, land and property acquisition and demolition, and site preparation.

(3) “Legislative body” means the mayor and alderboard, the city council, the selectboard, or the president and trustees of an incorporated village, as appropriate.

(4) “Municipality” means a city, town, or incorporated village.

(5) “Original taxable value” means the total valuation as determined in accordance with 32 V.S.A. chapter 129 of all taxable real property located within the tax increment financing district as of the creation date as set forth in section 1904 of this subchapter, provided that no parcel within the district shall be divided or bisected by the district boundary.

(6) “Related costs” means expenses incurred and paid by the municipality, exclusive of the actual cost of constructing and financing improvements, that are directly related to the creation and implementation of a municipal tax increment financing district, including reimbursement of sums previously advanced by the municipality for those purposes, direct municipal expenses such as departmental or personnel costs related to creating or administering the project, and audit costs allocable to the district. (Added 2017, No. 69, § J.7, eff. June 28, 2017.)
§ 1904. Municipal tax increment financing district

(a) General authority. Notwithstanding any provision of subchapter 5 of this chapter or 32 V.S.A. § 5404a to the contrary, upon approval of the legislative body of any municipality, a municipality may create a municipal tax increment financing district, and may incur debt to provide funding for improvements and related costs for the district.

(b) Municipal approval; voter approval.
(1) The legislative body of the municipality shall hold one or more public hearings to consider a municipal tax increment financing plan. Following public notice, hearing, and opportunity to comment, the legislative body of the municipality may grant approval of the plan.

(2) When adopted by the act of the legislative body of that municipality, the plan shall be recorded with the municipal clerk and lister or assessor, and the creation of the district shall occur at 12:01 a.m. on April 1 of the calendar year so voted by the municipal legislative body.

(3) The municipality may only incur debt for the project if the voters of the municipality approve the debt obligation by a majority vote at a regular or special meeting for which voting upon the debt obligation was properly warned.

(4) Following final voter approval, the municipality has up to five years to incur debt pursuant to the financing plan.

(c) Life of district.
(1) A municipality may incur indebtedness against revenues of the municipal tax increment financing district over any period authorized by the legislative body of the municipality.

(2) Any indebtedness incurred under subdivision (1) of this subsection may be retired over any period authorized by the legislative body of the municipality.

(3) The district shall continue until the date and hour the indebtedness is retired or, if no debt is incurred, after the period authorized by the legislative body of the municipality to incur indebtedness.

(d) Financing. During the life of an active district, the following apply, notwithstanding any provision of law to the contrary:

(1) Valuation.
(A) Within 30 days of voter approval pursuant to subsection (b) of this section, the lister or assessor for a municipality shall certify to the legislative body of the municipality the original taxable value of a tax increment financing district as of the date the voters approved the debt obligation.

(B) On or before June 30 following voter approval and annually thereafter, the lister or assessor shall assess and certify to the legislative body the current value of a project parcel.

(2) Tax rate.
(A) The lister or assessor shall use the original taxable value of a project parcel when computing the municipal tax rate.

(B) When calculating the amount of tax due on a project parcel, the treasurer shall apply the municipal tax rate to the current assessed value, rather than the original taxable value.

(3) Tax increment.
(A) The “tax increment” is the amount of tax paid on a project parcel, as calculated pursuant to subdivision (2)(B) of this subsection (d) using the current assessed value, that exceeds the amount of tax that would have been due if the tax rate were applied to the original taxable value.

(B) The municipality may retain any share of the municipal tax increment to service the debt, beginning the first year in which debt is incurred.

(C) A municipal tax increment financing district created pursuant to this subchapter is not authorized to retain any education property tax increment.

(D) A municipality shall segregate the tax increment in a special account and in its official books and records.

(4) Use of tax increment.
(A) As of each date the municipality receives a tax payment and retains a portion of the tax increment pursuant to this section, the municipality shall use the portion of the municipal tax increment that is necessary to pay costs actually incurred as of that date for debt service and related costs.

(B) If, after paying for improvements and related costs, there remains any excess portion of the tax increment, the municipality may retain the increment to prepay principal and interest on the financing, use for future financing payments, or use for defeasance of the financing.

(e) Annual audit.
(1) The municipality shall ensure that the segregated account for the tax increment financing district required by this section is subject to the annual audit requirements prescribed in sections 1681 and 1690 of this title.

(2) Any audit procedures shall include verification of the original taxable value and current assessed value, expenditures for project debt service and related costs, annual and total tax increment funds generated, and allocation of tax increment funds. (Added 2017, No. 69, § J.7, eff. June 28, 2017.)

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