(REPRINTED WITH ADOPTED AMENDMENTS)

 

Assembly Bill No. 96–Committee on Government Affairs

 

(On Behalf of County Fiscal Officers Association)

 

February 12, 2001

____________

 

Referred to Committee on Government Affairs

 

SUMMARY—Revises certain provisions governing financial administration of local governments. (BDR 31‑338)

 

FISCAL NOTE:            Effect on Local Government: No.

                                    Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to the financial administration of local governments; authorizing additional types of investments by certain local governments; revising the authority of county treasurers to deposit county money in time accounts; revising the requirements for annual accountings by tax receivers to county auditors; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1.  Chapter 355 of NRS is hereby amended by adding thereto a

1-2  new section to read as follows:

1-3    1.  Except as otherwise provided in this section, a board of county

1-4  commissioners, a board of trustees of a county school district or the

1-5  governing body of an incorporated city may purchase for investment:

1-6    (a) Notes, bonds and other unconditional obligations for the payment

1-7  of money issued by corporations organized and operating in the United

1-8  States that:

1-9       (1) Are purchased from a registered broker-dealer;

1-10      (2) At the time of purchase have a remaining term to maturity of no

1-11  more than 5 years; and

1-12      (3) Are rated by a nationally recognized rating service as “A” or its

1-13  equivalent, or better.

1-14    (b) Collateralized mortgage obligations that are rated by a nationally

1-15  recognized rating service as “AAA” or its equivalent.

1-16    (c) Asset-backed securities that are rated by a nationally recognized

1-17  rating service as “AAA” or its equivalent.

1-18    2.  With respect to investments purchased pursuant to paragraph (a)

1-19  of subsection 1:

2-1    (a) Such investments must not, in aggregate value, exceed 20 percent

2-2  of the total portfolio as determined on the date of purchase;

2-3    (b) Not more than 25 percent of such investments may be in notes,

2-4  bonds and other unconditional obligations issued by any one

2-5  corporation; and

2-6    (c) If the rating of an obligation is reduced to a level that does not

2-7  meet the requirements of that paragraph, the obligation must be sold as

2-8  soon as possible.

2-9    3.  Subsections 1 and 2 do not:

2-10    (a) Apply to a:

2-11      (1) Board of county commissioners of a county whose population is

2-12  less than 100,000;

2-13      (2) Board of trustees of a county school district in a county whose

2-14  population is less than 100,000; or

2-15      (3) Governing body of an incorporated city whose population is less

2-16  than 100,000,

2-17  unless the purchase is effected by the state treasurer pursuant to his

2-18  investment of a pool of money from local governments or by an

2-19  investment advisor who is registered with the Securities and Exchange

2-20  Commission and approved by the state board of finance.

2-21    (b) Authorize the investment of money administered pursuant to a

2-22  contract, debenture agreement or grant in a manner not authorized by

2-23  the terms of the contract, agreement or grant.

2-24    Sec. 2.  NRS 355.170 is hereby amended to read as follows:

2-25    355.170  1.  Except as otherwise provided in this section , [and in]

2-26  NRS 354.750[,] and section 1 of this act, a board of county

2-27  commissioners, a board of trustees of a county school district or the

2-28  governing body of an incorporated city may purchase for investment the

2-29  following securities and no others:

2-30    (a) Bonds and debentures of the United States, the maturity dates of

2-31  which do not extend more than 10 years after the date of purchase.

2-32    (b) Farm loan bonds, consolidated farm loan bonds, debentures,

2-33  consolidated debentures and other obligations issued by federal land banks

2-34  and federal intermediate credit banks under the authority of the Federal

2-35  Farm Loan Act, formerly 12 U.S.C. §§ 636 to 1012, inclusive, and §§ 1021

2-36  to 1129, inclusive, and the Farm Credit Act of 1971, 12 U.S.C. §§ 2001 to

2-37  2259, inclusive, and bonds, debentures, consolidated debentures and other

2-38  obligations issued by banks for cooperatives under the authority of the

2-39  Farm Credit Act of 1933, formerly 12 U.S.C. §§ 1131 to 1138e, inclusive,

2-40  and the Farm Credit Act of 1971, 12 U.S.C. §§ 2001 to 2259, inclusive.

2-41    (c) Bills and notes of the United States Treasury, the maturity date of

2-42  which is not more than 10 years after the date of purchase.

2-43    (d) Obligations of an agency or instrumentality of the United States of

2-44  America or a corporation sponsored by the government, the maturity date

2-45  of which is not more than 10 years after the date of purchase.

2-46    (e) Negotiable certificates of deposit issued by commercial banks,

2-47  insured credit unions or savings and loan associations.

3-1    (f) Securities which have been expressly authorized as investments for

3-2  local governments or agencies, as defined in NRS 354.474, by any

3-3  provision of Nevada Revised Statutes or by any special law.

3-4    (g) Nonnegotiable certificates of deposit issued by insured commercial

3-5  banks, insured credit unions or insured savings and loan associations,

3-6  except certificates that are not within the limits of insurance provided by

3-7  an instrumentality of the United States, unless those certificates are

3-8  collateralized in the same manner as is required for uninsured deposits

3-9  by a county treasurer pursuant to NRS 356.133. For the purposes of this

3-10  paragraph, any reference in NRS 356.133 to a “county treasurer” or

3-11  “board of county commissioners” shall be deemed to refer to the

3-12  appropriate financial officer or governing body of the county, school

3-13  district or city purchasing the certificates.

3-14    (h) Subject to the limitations contained in NRS 355.177, negotiable

3-15  notes or short-time negotiable bonds issued by local governments of the

3-16  State of Nevada pursuant to NRS 350.091.

3-17    [(h)] (i) Bankers’ acceptances of the kind and maturities made eligible

3-18  by law for rediscount with Federal Reserve Banks, and generally accepted

3-19  by banks or trust companies which are members of the Federal Reserve

3-20  System. Eligible bankers’ acceptances may not exceed 180 days’ maturity.

3-21  Purchases of bankers’ acceptances may not exceed 20 percent of the

3-22  money available to a local government for investment as determined on the

3-23  date of purchase.

3-24    [(i)] (j) Obligations of state and local governments if:

3-25      (1) The interest on the obligation is exempt from gross income for

3-26  federal income tax purposes; and

3-27      (2) The obligation has been rated “A” or higher by one or more

3-28  nationally recognized bond credit rating agencies.

3-29    [(j)] (k) Commercial paper issued by a corporation organized and

3-30  operating in the United States or by a depository institution licensed by the

3-31  United States or any state and operating in the United States that:

3-32      (1) Is purchased from a registered broker-dealer;

3-33      (2) At the time of purchase has a remaining term to maturity of no

3-34  more than 270 days; and

3-35      (3) Is rated by a nationally recognized rating service as “A-1,” “P-1”

3-36  or its equivalent, or better,

3-37  except that investments pursuant to this paragraph may not, in aggregate

3-38  value, exceed 20 percent of the total portfolio as determined on the date of

3-39  purchase, and if the rating of an obligation is reduced to a level that does

3-40  not meet the requirements of this paragraph, it must be sold as soon as

3-41  possible.

3-42    [(k)] (l) Money market mutual funds which:

3-43      (1) Are registered with the Securities and Exchange Commission;

3-44      (2) Are rated by a nationally recognized rating service as “AAA” or

3-45  its equivalent; and

3-46      (3) Invest only in [securities] :

3-47        (I) Securities issued by the Federal Government or agencies of the

3-48  Federal Government [or in repurchase agreements fully collateralized by

3-49  such securities.] ;

4-1         (II) Master notes, bank notes or other short-term commercial

4-2  paper rated by a nationally recognized rating service as “A-1,” “P-1” or

4-3  its equivalent, or better, issued by a corporation organized and operating

4-4  in the United States or by a depository institution licensed by the United

4-5  States or any state and operating in the United States; or

4-6         (III) Repurchase agreements that are fully collateralized by the

4-7  obligations described in sub-subparagraphs (I) and (II).

4-8    2.  Repurchase agreements are proper and lawful investments of money

4-9  of a board of county commissioners, a board of trustees of a county school

4-10  district or a governing body of an incorporated city for the purchase or sale

4-11  of securities which are negotiable and of the types listed in subsection 1 if

4-12  made in accordance with the following conditions:

4-13    (a) The board of county commissioners, the board of trustees of the

4-14  school district or the governing body of the city shall designate in advance

4-15  and thereafter maintain a list of qualified counterparties which:

4-16      (1) Regularly provide audited and, if available, unaudited financial

4-17  statements;

4-18      (2) The board of county commissioners, the board of trustees of the

4-19  school district or the governing body of the city has determined to have

4-20  adequate capitalization and earnings and appropriate assets to be highly

4-21  credit worthy; and

4-22      (3) Have executed a written master repurchase agreement in a form

4-23  satisfactory to the board of county commissioners, the board of trustees of

4-24  the school district or the governing body of the city pursuant to which all

4-25  repurchase agreements are entered into. The master repurchase agreement

4-26  must require the prompt delivery to the board of county commissioners, the

4-27  board of trustees of the school district or the governing body of the city and

4-28  the appointed custodian of written confirmations of all transactions

4-29  conducted thereunder, and must be developed giving consideration to the

4-30  Federal Bankruptcy Act.

4-31    (b) In all repurchase agreements:

4-32      (1) At or before the time money to pay the purchase price is

4-33  transferred, title to the purchased securities must be recorded in the name

4-34  of the appointed custodian, or the purchased securities must be delivered

4-35  with all appropriate, executed transfer instruments by physical delivery to

4-36  the custodian;

4-37      (2) The board of county commissioners, the board of trustees of the

4-38  school district or the governing body of the city must enter a written

4-39  contract with the custodian appointed pursuant to subparagraph (1) which

4-40  requires the custodian to:

4-41        (I) Disburse cash for repurchase agreements only upon receipt of

4-42  the underlying securities;

4-43        (II) Notify the board of county commissioners, the board of

4-44  trustees of the school district or the governing body of the city when the

4-45  securities are marked to the market if the required margin on the agreement

4-46  is not maintained;

4-47        (III) Hold the securities separate from the assets of the custodian;

4-48  and

5-1         (IV) Report periodically to the board of county commissioners, the

5-2  board of trustees of the school district or the governing body of the city

5-3  concerning the market value of the securities;

5-4       (3) The market value of the purchased securities must exceed 102

5-5  percent of the repurchase price to be paid by the counterparty and the value

5-6  of the purchased securities must be marked to the market weekly;

5-7       (4) The date on which the securities are to be repurchased must not

5-8  be more than 90 days after the date of purchase; and

5-9       (5) The purchased securities must not have a term to maturity at the

5-10  time of purchase in excess of 10 years.

5-11    3.  The securities described in paragraphs (a), (b) and (c) of subsection

5-12  1 and the repurchase agreements described in subsection 2 may be

5-13  purchased when, in the opinion of the board of county commissioners, the

5-14  board of trustees of a county school district or the governing body of the

5-15  city, there is sufficient money in any fund of the county, the school district

5-16  or city to purchase those securities and the purchase will not result in the

5-17  impairment of the fund for the purposes for which it was created.

5-18    4.  When the board of county commissioners, the board of trustees of a

5-19  county school district or governing body of the city has determined that

5-20  there is available money in any fund or funds for the purchase of bonds as

5-21  set out in subsection 1 or 2, those purchases may be made and the bonds

5-22  paid for out of any one or more of the funds, but the bonds must be

5-23  credited to the funds in the amounts purchased, and the money received

5-24  from the redemption of the bonds, as and when redeemed, must go back

5-25  into the fund or funds from which the purchase money was taken

5-26  originally.

5-27    5.  Any interest earned on money invested pursuant to subsection 3,

5-28  may, at the discretion of the board of county commissioners, the board of

5-29  trustees of a county school district or governing body of the city, be

5-30  credited to the fund from which the principal was taken or to the general

5-31  fund of the county, school district or incorporated city.

5-32    6.  The board of county commissioners, the board of trustees of a

5-33  county school district or governing body of an incorporated city may invest

5-34  any money apportioned into funds and not invested pursuant to subsection

5-35  3 and any money not apportioned into funds in bills and notes of the United

5-36  States Treasury, the maturity date of which is not more than 1 year after the

5-37  date of investment. These investments must be considered as cash for

5-38  accounting purposes, and all the interest earned on them must be credited

5-39  to the general fund of the county, school district or incorporated city.

5-40    7.  This section does not authorize the investment of money

5-41  administered pursuant to a contract, debenture agreement or grant in a

5-42  manner not authorized by the terms of the contract, agreement or grant.

5-43    8.  As used in this section:

5-44    (a) “Counterparty” means a bank organized and operating or licensed to

5-45  operate in the United States pursuant to federal or state law or a securities

5-46  dealer which is:

5-47      (1) A registered broker-dealer;

5-48      (2) Designated by the Federal Reserve Bank of New York as a

5-49  “primary” dealer in United States government securities; and

6-1       (3) In full compliance with all applicable capital requirements.

6-2    (b) “Repurchase agreement” means a purchase of securities by a board

6-3  of county commissioners, the board of trustees of a county school district

6-4  or the governing body of an incorporated city from a counterparty which

6-5  commits to repurchase those securities or securities of the same issuer,

6-6  description, issue date and maturity on or before a specified date for a

6-7  specified price.

6-8    Sec. 3.  NRS 356.120 is hereby amended to read as follows:

6-9    356.120  [With unanimous consent of his bondsmen, a] A county

6-10  treasurer may:

6-11    1.  When one or more insured banks, insured credit unions or insured

6-12  savings and loan associations are located in the county, deposit county

6-13  money in such insured banks, credit unions or savings and loan

6-14  associations in demand [or time] accounts.

6-15    2.  When no such banks, credit unions or savings and loan associations

6-16  exist in the county, deposit county money in any insured bank, insured

6-17  credit union or insured savings and loan association in the State of Nevada

6-18  in demand [or time] accounts.

6-19    Sec. 4.  NRS 356.125 is hereby amended to read as follows:

6-20    356.125  1.  [All money placed] A county treasurer may deposit

6-21  county money in insured depository banks, insured credit unions or insured

6-22  savings and loan associations in time accounts [may be deposited] only

6-23  with the written consent of the board of county commissioners.

6-24    2.  The time accounts so established are subject to the applicable

6-25  contract between the depository and the county.

6-26    3.  The provisions of this section do not require any depository to

6-27  accept county deposits.

6-28    Sec. 5.  NRS 356.140 is hereby amended to read as follows:

6-29    356.140  1.  Demand [or] accounts and time accounts respectively

6-30  authorized by NRS 356.120 and 356.125 must be kept in the name of the

6-31  county in such manner as the board of county commissioners may

6-32  prescribe.

6-33    2.  The balance in each such account, as certified to by the proper

6-34  officer of the bank, credit union or savings and loan association in which

6-35  the money is deposited, and by oath of the county treasurer, may be

6-36  accounted for by the county as cash.

6-37    Sec. 6.  NRS 361.580 is hereby amended to read as follows:

6-38    361.580  1.  [On the third Monday in June] No later than July 31 of

6-39  each year following the redemption period as set forth in NRS 361.570, the

6-40  ex officio tax receiver shall attend at the office of the county auditor with

6-41  the assessment roll and shall render for the period ending on June 30 of

6-42  that year an account under oath to the county auditor as to the amount of

6-43  the taxes paid on the roll, the amount of taxes stricken by the board of

6-44  county commissioners and the amount of taxes delinquent on the roll.

6-45    2.  The county auditor shall audit the account and make a final

6-46  settlement with the ex officio tax receiver of all taxes charged against him

6-47  on account of the assessment roll.

 

 

7-1    Sec. 7.  This act becomes effective on July 1, 2001.

 

7-2  H