41-5856. Payment of program guarantees; notification requirements; repayment
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/az/title-41/41-5856A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
A. On any draw from the debt service reserve fund to pay principal or interest on a guaranteed financing, the bank trustee, paying agent or other fiduciary for the guaranteed financing shall deliver written notice of the draw to the board and to the state treasurer within ten business days after the draw.
B. If a school does not expect to make timely payment of principal or interest on its guaranteed financing, and after any monies in any debt service reserve fund securing the guaranteed financing are fully expended, the bank trustee, paying agent or other fiduciary responsible for paying the principal and interest to investors on the guaranteed financing, at least five business days before a debt service payment date on the guaranteed financing, shall notify the board and the state treasurer in writing of the expected deficiency.
Within two business days after receipt of the notice, the state treasurer shall pay from the fund to the bank trustee, paying agent or other fiduciary the amount to be used solely for making payment of principal or interest on the guaranteed financing.
C. If the state treasurer makes a payment in connection with a guaranteed financing from the fund pursuant to subsection B of this section, the school on whose behalf the payment was made shall repay the amount of the payment plus interest at a rate that is one hundred basis points higher than the true interest rate on the guaranteed financing as determined by the board. Repayment shall be made in equal monthly installments over a twelve-month period or another period as determined by the board.
The repayments shall be made to the state treasurer for deposit in the fund. After the stated repayment period, any outstanding repayment balance shall become immediately due and payable. Any repayment amount owed to the fund that is not otherwise paid remains a lawful obligation of the school and shall be paid from any other monies lawfully available to the school.
D. In exchange for the guarantee of the payment of amounts due on guaranteed financing issued by or on behalf of an achievement district school, the board and the fund are entitled to protections and remedies relating to the repayment of the amount, if any, paid from the fund with respect to the guaranteed financing, and the payment of program participation fees. The protections and remedies may include one or more of the following:
1. The right to all or a portion of the proceeds from the sale or lease of any property serving as collateral for a guaranteed financing.
2. The right to intercept any payments or monies otherwise payable to the school.
3. The right to any insurance proceeds otherwise payable to the school.
E. On request of the board, the attorney general shall take any actions necessary to enforce repayment of fund monies by a school.