# Title 40 — Municipal Government

## Chapter 40-27 — Funding and Refunding Special Assessment Warrants

### § 40-27-01. Municipality may issue bonds to purchase special assessment warrants.

A municipality may issue bonds for the purchase of outstanding special assessment
warrants of the municipality before or after their maturity, at the best price obtainable, but not
exceeding sixty percent of the par value thereof and the interest accrued to the date of
purchase. The rate of interest on the bonds shall not exceed the rate of interest on the special
assessment warrants for the purchase of which the bonds are issued, and such bonds shall not
be sold for less than the par value thereof plus the interest accrued thereon.
### § 40-27-02. Issuance of funding bonds - Question need not be submitted to electors nor

to board of budget review.
The bonds provided for in section 40-27-01 may be issued pursuant to a resolution or
ordinance of the governing body of the municipality without submitting the question to the
electors of the municipality. The question of the issuance of such bonds need not be submitted
to the board of budget review in the manner provided for other bond issues.
### § 40-27-03. Funding bonds to mature serially - When installments fall due.

Bonds issued for the purchase of special assessment warrants shall mature serially. The
first installment shall fall due not more than three years from the date of issuance of the bonds,
and the last installment shall fall due not more than twenty years from the date of the bonds.
### § 40-27-04. Bonds to be general obligations of municipality.

Bonds issued pursuant to section 40-27-01 shall be the general obligations of the issuing
municipality, and the full faith and credit and the unlimited taxing power of such municipality
shall be pledged to their payment.
### § 40-27-05. Special fund for payment of bonds issued for purchase of special

assessment warrants - Tax levy.
The governing body of a municipality which issues bonds for the purchase of special
assessment warrants shall create a special fund for the payment of the principal and interest of
such bonds as they become due and shall credit to such fund all special assessments collected
for the payment of the special assessment warrants purchased. The governing body shall make
a general tax levy annually on all the property in the municipality which, together with the special
assessments collected, shall be sufficient to pay the principal and interest of the bonds when
they become due. The levy imposed shall not be subject to any of the tax levy limitations
imposed by section 57-15-08 or acts amendatory thereof. If any money remains in the special
fund after the payment of the principal of all the bonds and the interest thereon, such balance
may be transferred to the general fund.
### § 40-27-06. Refunding special assessment warrants or bonds - Purpose for which

issuable.
Any municipality having valid outstanding special assessment warrants or bonds issued
pursuant to this title which are due, or to become due within one year, in whole or in part as to
principal or interest or both or which are redeemable either at the option of the municipality or
with the consent of the warrantholders or bondholders may issue refunding special assessment
warrants or bonds if there is not sufficient money in the special improvement fund against which
such warrants or bonds are drawn to pay the principal or interest or both or if a deficiency is
likely to occur in the fund within one year for payment of principal or interest thereon. Such
refunding special assessment warrants or bonds may be issued for any of the following
purposes:
1. To extend the maturities of the special assessment warrants or bonds.
2. To reduce the rate of interest on the special assessment warrants or bonds.

3. To equalize the general tax which the municipality may be, or may become, obligated
to levy to discharge deficiencies in the fund against which the special assessment
warrants or bonds are drawn.
4. To consolidate two or more outstanding issues of warrants or bonds.
### § 40-27-07. Refunding warrants or bonds authorized by resolution - Contents of

resolution.
The issuance of refunding warrants or bonds may be authorized by the governing body of
the municipality by resolution. Such resolution shall describe the warrants or bonds to be
refunded and the amount, maturity, and other details of the refunding warrants or bonds.
### § 40-27-08. Contents of refunding warrants and bonds - Redemption - Negotiability -

Eligibility as investments.
The refunding warrants or bonds shall bear such date, be in such denominations, and
mature at such time or times, not exceeding thirty years from date of issue, as the governing
body shall determine. Such warrants or bonds may be made subject to redemption at any
specified time or times if it is so provided in the initial resolution. Refunding warrants or bonds
issued pursuant to this chapter may be designated as "refunding improvement warrants" or
"refunding improvement bonds" as the governing body shall determine; provided, that nothing
herein shall be deemed to subject such warrants or bonds to chapter 21-03 with reference to
general obligation bonds of the municipality. All such warrants or bonds shall be negotiable
within the meaning of and for all the purposes specified in title 41 and shall be valid investments
for fiduciary, corporate, and public funds to the same extent as improvement warrants or bonds.
### § 40-27-09. Sale or exchange of refunding warrants or bonds - Issuance - Agreement by

governing body to exchange.
Refunding warrants or bonds may be sold for cash in such manner as the governing body
may direct, and the proceeds used to pay the warrants or bonds described in the initial
resolution, or may be exchanged for such warrants or bonds, but no exchange shall be made at
less than par plus accrued interest, and no sale shall be made at less than ninety-eight percent
of par plus accrued interest on the refunding warrants or bonds. Refunding warrants or bonds
may be issued from time to time as the original warrants or bonds mature or are called for
payment and redemption or may be sold to pay, or, by agreement with the holders thereof, may
be exchanged for, warrants or bonds which are not due. The governing body may enter into an
agreement with the holders of outstanding warrants or bonds relating to an exchange of such
warrants or bonds for refunding warrants or bonds and may provide, in its discretion, that the
agreement shall be effective only when the holders of not less than seventy-five percent of the
warrants or bonds shall have entered into the agreement.
### § 40-27-10. Expense of issuing refunding special assessment warrants or bonds

chargeable to special improvement fund.
Any municipality that issues refunding special assessment warrants or bonds may incur and
pay the reasonable incidental expenses, including the cost of printing and legal fees. All such
expenses shall be payable solely out of moneys in the special improvement fund or funds from
which the refunded warrants or bonds are payable or out of money derived from the sale of
warrants or bonds drawn on the fund from which the refunding warrants or bonds are payable.
### § 40-27-11. Special fund created for payment of refunding special assessment warrants

or bonds - Procedure on paying refunded warrants or bonds.
A special fund or special funds shall be created in accordance with this section for the
payment of refunding special assessment warrants or bonds. Such special fund may be created
as a single consolidated fund for warrants or bonds issued to refund special assessment
warrants or bonds of more than one district, or a separate special fund may be created for
warrants or bonds issued to refund special assessment warrants or bonds of each district. In
either case, the refunded warrants or bonds shall not be canceled but shall be retained by the

municipality as an asset of the fund from which the refunding warrants or bonds are payable.
The special fund or funds from which the refunded warrants or bonds are payable shall be
continued, and payments therefrom shall be made on the warrants or bonds drawn thereon, in
the same manner as though none of such warrants or bonds had been refunded. All payments
made on the principal and on the interest of refunded warrants or bonds shall be credited to the
fund from which the appropriate refunding warrants or bonds are payable and shall be applied in
payment of the principal and on the interest on the refunding warrants or bonds in the manner
prescribed by the resolution authorizing the issuance of such refunding warrants or bonds. To
the extent refunding warrants or bonds are issued to refund the principal or interest, or both, of
warrants or bonds, due or to become due within one year, for which a deficiency exists or is
likely to exist in the fund or funds against which such outstanding warrants or bonds are drawn
due to nonpayment or anticipated nonpayment of special assessments, any payments of such
delinquent special assessments and such amounts of accrued interest and penalty thereon as
necessary shall be set aside for the payment or redemption of the refunding warrants or bonds
issued to fund such delinquencies.
### § 40-27-12. Rights of warrantholders or bondholders to be preserved - Tax levy for

deficiency - When levied.
A municipality issuing refunding special assessment warrants or bonds shall preserve and
enforce, for the security of the refunding warrants or bonds, all of the rights and duties which
constituted security for the refunded warrants or bonds. At the date of the maturity of the last
maturing warrant or bond of the original issue, the governing body shall levy a tax for the
payment of any deficiency in the special improvement fund against which the refunded special
assessment warrants or bonds were drawn. Such tax may be made payable in the years and in
the amounts required to pay the principal of and interest on the refunding warrants or bonds as
the same becomes due.
### § 40-27-13. Refunding callable funding bonds or refunding warrants - Terms and

conditions.
Any municipality may refund, according to the procedure set forth in this chapter, any
funding bonds issued under this chapter which are callable prior to maturity or which shall be
surrendered voluntarily for refunding, by the issuance of bonds upon the same terms and
conditions except as to interest, whenever by so doing a saving in interest can be effected. Any
municipality having valid outstanding refunding special improvement warrants or bonds issued
pursuant to this chapter, which are due, or to become due within one year, in whole or in part as
to principal or interest or both or which are redeemable either at the option of the municipality or
with the consent of the warrantholders or bondholders, may issue new refunding special
improvement bonds to refund such outstanding warrants or bonds, if there is not sufficient
money in the fund or funds against which such outstanding refunding warrants or bonds are
drawn to pay the principal or interest or both or if a deficiency is likely to occur in the fund or
funds within one year for payment of principal or interest thereon. Such new bonds may be
issued for the purpose of extending the maturities of the outstanding refunding warrants or
bonds, or reducing the debt service thereon, or equalizing the general tax which the municipality
may be, or may become, obligated to levy to discharge deficiencies in the fund or funds against
which they are drawn. Such new bonds shall be issued according to the procedure set forth in
this chapter for the issuance of the original refunding special improvement warrants or bonds. If
refunding improvement bonds are issued and sold six months or more before the earliest date
on which all outstanding refunding improvement warrants or bonds of the issue to be refunded
thereby mature or are prepayable in accordance with their terms, the proceeds of the new
bonds, including any premium and accrued interest, shall be deposited in escrow with a suitable
bank or trust company, having its principal place of business within or without the state, and
shall be invested in such amount and in securities maturing on such dates and bearing interest
at such rates as shall be required to provide funds sufficient to pay when due the interest to
accrue on each warrant or bond refunded to its maturity or, if it is prepayable and called for
redemption, to an earlier prior date upon which it may be called for redemption, and to pay and
redeem the principal amount of each such warrant or bond at maturity or, if prepayable and

called for redemption, at the earlier redemption date, and any premium required for redemption
on such date, or in the case of a crossover refunding, must be invested in securities irrevocably
appropriated to the payment of principal and interest on the refunding improvement bonds until
the date the proceeds are applied to the payment or redemption of the bonds or warrants to be
refunded. The governing body's resolution authorizing the new bonds shall irrevocably
appropriate for these purposes the escrow fund and all investments thereof, which shall be held
in safekeeping by the escrow agent, and all income therefrom, and may provide for the call for
redemption of all prepayable bonds in accordance with their terms. The securities to be
purchased with the escrow fund shall be limited to general obligations of the United States,
securities whose principal and interest payments are guaranteed by the United States, and
securities issued by the following United States government agencies: banks for cooperatives,
federal home loan banks, federal intermediate credit banks, federal land banks, and the federal
national mortgage association. Such securities shall be purchased simultaneously with the
delivery of the new bonds. Moneys on hand in the refunding improvement bond fund maintained
for the payment of the outstanding bonds, and not immediately needed for the payment of
interest or principal due, or other legally available funds of the municipality may likewise be
deposited in the escrow fund and invested in the same manner as the proceeds of the new
bonds, to the extent consistent with the provisions of resolutions authorizing the outstanding
bonds.
