CHAPTER 21-01 Payment and Registration of Warrants

21-01-01. Definitions.

  1. The term “taxing district” when used in this chapter, unless the context thereof clearly requires otherwise, means any county, city, school district, township, park district, water conservation and flood control district, Garrison Diversion Conservancy District, county park district, joint county park district, or irrigation district in the state.
  2. The term “warrant” when used in this chapter means an order drawn by the proper taxing district officials on the treasurer, or other person acting as treasurer, of said taxing district, the warrant or order to be so drawn that when signed by the treasurer, or person acting as treasurer, in an appropriate place it becomes a check on the taxing district depository. No warrant upon the treasurer, or person acting as treasurer, may be delivered or mailed to the payee or payee’s agent or representative until such warrant has been signed by the treasurer, or person acting as treasurer, and entered on the books of the treasurer or person acting as treasurer as a check drawn on a bank depository.

Source: R.C. 1943, § 21-0101; S.L. 1955, ch. 98, § 6; 1957, ch. 176, § 1; 1957 Supp., § 21-0101; S.L. 1967, ch. 323, § 37; 1975, ch. 144, § 20.

Cross-References.

Water resource district warrants, see N.D.C.C. §§ 61-16.1-34 to 61-16.1-36.

Word defined by statute always has same meaning, see N.D.C.C. § 1-01-09.

21-01-02. Warrant — Order of payment.

Any warrant upon the treasurer of any taxing district must be paid in the order of its presentation for payment, except as otherwise provided in this chapter. Such warrant must be so drawn that when signed by the treasurer in an appropriate place it becomes a check on the taxing district depository. No warrant upon the treasurer may be delivered or mailed to the payee or payee’s agent or representative until such warrant has been signed by the treasurer and entered on the treasurer’s books as a check drawn on a bank depository.

Source: Pol. C. 1877, ch. 50, § 1; R.C. 1895, § 1298; R.C. 1899, § 1293; R.C. 1905, § 2470; C.L. 1913, § 3350; R.C. 1943, § 20-0102; S.L. 1955, ch. 98, § 7; 1957 Supp., § 21-0102.

Cross-References.

County treasurer, paying out of county money by, see N.D.C.C. § 11-14-06.

Duplicate warrants, issuance of, see N.D.C.C. § 21-06-01.

State treasurer, see N.D.C.C. ch. 54-11.

Notes to Decisions

Order of Payment.

Where city derives moneys from special assessments, such moneys become a trust fund, held by the city to redeem warrants issued for such work in the order in which the warrants were presented for payment. Red River Valley Nat'l Bank v. Fargo, 14 N.D. 88, 103 N.W. 390, 1905 N.D. LEXIS 13 (N.D. 1905).

Payment of Special Assessment Warrants.

Special assessment warrants must be paid in the order in which they mature, without regard to the fact that there may not be enough in the fund to pay warrants which mature thereafter. First Nat'l Bank v. Ford, 70 N.D. 284, 293 N.W. 789, 1940 N.D. LEXIS 172 (N.D. 1940).

21-01-03. Maximum amount of warrants or indebtedness — Violation of provisions — Liability — Penalty.

Except as otherwise provided in this chapter, no warrant purporting to be drawn upon the funds in the hands of the treasurer of any taxing district may be issued in excess of the amount of cash in the hands of the treasurer exclusive of sinking funds and funds for the payment of interest upon bond issues. No indebtedness may be incurred, and no undertakings or expenditures authorized, in excess of unencumbered uncollected taxes which have been levied during the current year plus the unencumbered uncollected taxes of the four preceding years. Any warrant issued, contract entered into, or purported indebtedness incurred, in contravention of this section is null and void, but this provision is not intended to detract from the provisions of section 21-02-03 with reference to the incontestability of certificates of indebtedness. Any officer willfully executing or participating in the execution of any warrant or contract or attempting to incur any indebtedness of any such taxing district in contravention of this section is guilty of a class A misdemeanor. Any officer executing or participating in the execution of any warrant in contravention of this section is personally liable for the payment thereof to the holder in due course.

Source: S.L. 1923, ch. 326, § 3; 1925 Supp., § 2079b3; S.L. 1933, ch. 247, § 1; R.C. 1943, § 21-0103; S.L. 1975, ch. 106, § 212.

Notes to Decisions

Criterion for Indebtedness.

The assessed valuation taken at the time the debts are incurred is the criterion. Jones v. Brightwood Indep. Sch. Dist., 63 N.D. 275, 247 N.W. 884, 1933 N.D. LEXIS 182 (N.D. 1933).

Warrants in Anticipation of Tax Levies.

Warrants, issued in anticipation of tax levies already made, do not augment existing indebtedness. Jones v. Brightwood Indep. Sch. Dist., 63 N.D. 275, 247 N.W. 884, 1933 N.D. LEXIS 182 (N.D. 1933).

21-01-04. Warrants for current expenses.

In case any taxing district is unable to sell its certificates of indebtedness, it may issue warrants in payment of current expenses in excess of cash on hand, but not in excess of eighty-five percent of taxes levied for the fiscal year of issue but uncollected and not otherwise encumbered, plus fifty percent of the uncollected and not otherwise encumbered taxes of the four preceding years, and the funds derived from the collection of taxes for the current year and such preceding years, to the extent that the same have been encumbered, constitute a special fund for the payment of warrants issued against such taxes. If warrants are issued in excess of such limitations, such warrants possess no validity as against the taxing district, but the officials knowingly and willfully issuing the same are liable personally for the payment thereof.

Source: S.L. 1923, ch. 326, § 13; 1925 Supp., § 2079b13; S.L. 1933, ch. 247, § 1; 1935, ch. 283, § 1; 1941, ch. 289, § 1; R.C. 1943, § 21-0104.

Cross-References.

Vector control district warrants, see N.D.C.C. § 23-24-10.

Notes to Decisions

Taxes Pledged to Payment of Certificates.

Taxes for the current year and certain other years are specifically pledged to the payment of the certificates. MURRAY v. MUTSCHELKNAUS, 70 N.D. 1, 291 N.W. 118, 1940 N.D. LEXIS 142 (N.D. 1940). See also 71 N.D. 306, 300 N.W. 460.

21-01-05. Warrants for salaries and official publications — Payable one-half in cash prior to other warrants.

The governing board of any political subdivision, in the event that there have not been funds in the treasury of such subdivision sufficient to pay the salaries and wages of the officials and employees, including publication fees for official printing by the official newspaper of such subdivision, in full for a period of six months, by resolution, may authorize the issuance of warrants to such officials, employees, and the official newspaper for salary, wages, and official publication fees, whereby one-half of such salaries, wages, and official publication fees must be paid in cash by the treasurer of such political subdivision to such officials, employees, and official newspaper, and a warrant issued for the balance thereof which must be registered and paid as other warrants are registered and paid. This section must be construed to relieve the treasurer of such political subdivision of liability to other warrant holders because of the payment of salaries, wages, and official publication fees as provided herein.

Source: S.L. 1923, ch. 326, § 13; 1925 Supp., § 2079b13; S.L. 1933, ch. 247, § 1; 1935, ch. 283, § 1; 1941, ch. 289, § 1; R.C. 1943, § 21-0105.

21-01-06. Registration of warrants — Rate of interest.

Whenever the law authorizes the officers of any taxing district to issue warrants in excess of the amount of cash available in any fund upon which warrants are drawn for payment, the treasurer of that taxing district, when any warrant is presented to the treasurer for payment, if not paid for want of funds, shall endorse the same “Presented for payment on , , and not paid for want of funds”, and thereupon shall enter the warrant in the treasurer’s warrant register in the order of presentation for registration. The governing body of a taxing district authorizing the issuance of warrants in excess of cash on hand shall determine the rate of interest which the warrants must bear, but in the case of counties and cities the rate may not exceed eight percent per annum from the date of registration until the expiration of the time specified for presentment for payment.

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Source: Pol. C. 1877, ch. 50, § 3; R.C. 1895, § 1300; R.C. 1899, § 1295; R.C. 1905, § 2472; C.L. 1913, § 3552; S.L. 1941, ch. 140, § 1; R.C. 1943, § 21-0106; S.L. 1967, ch. 323, § 38; 1971, ch. 249, § 3; 1999, ch. 51, § 14.

21-01-07. Warrant register — By whom kept — Form.

The treasurer of every taxing district shall keep a warrant register, which must show in columns appropriately arranged:

  1. The number and registered number, date, and amount of each warrant presented.
  2. The particular fund upon which the same is drawn.
  3. The date of presentation.
  4. The name and address of the person in whose name the same is registered, and subsequent assignees, if furnished therewith.
  5. The date of payment, when made.
  6. The amount of interest, and the total amount paid thereon, with the date when notice to the person in whose name such warrant is registered and is mailed as hereinafter provided.

Source: Pol. C. 1877, ch. 50, § 2; R.C. 1895, § 1299; R.C. 1899, § 1294; R.C. 1905, § 2471; C.L. 1913, § 3351; R.C. 1943, § 21-0107.

Notes to Decisions

Interest.

Where a warrant is drawn on the city treasurer for a contractor doing work for the city, and the treasurer endorses “not paid for want of funds,” the holder is entitled to interest from the date of endorsement. State ex rel. Kistler v. Hankinson, 53 N.D. 346, 205 N.W. 995, 1925 N.D. LEXIS 87 (N.D. 1925).

21-01-08. Treasurer to notify holder to present warrant — Order of payment.

Whenever the treasurer of a taxing district has received money belonging to any particular fund sufficient to pay the warrant drawn against such fund which by the treasurer’s warrant register appears to be next payable, such treasurer immediately shall notify by mail the person in whose name such warrant is registered, or that person’s assignee, if notified of the assignment, that unless such warrant is presented for payment on or before the date specified in such notice, the interest thereon ceases after such date. All warrants so registered must be paid in the order of their registration.

Source: S.L. 1881, ch. 140, § 1; R.C. 1895, § 1301; R.C. 1899, § 1295; R.C. 1905, § 2472; C.L. 1913, § 3352; S.L. 1941, ch. 140, § 1; R.C. 1943, § 21-0108.

Cross-References.

County warrants receivable for taxes, see N.D.C.C. § 57-20-11.

Road warrants receivable for taxes, see N.D.C.C. § 57-20-12.

Notes to Decisions

Payment in Order of Registration.

It is the duty of the treasurer of a taxing district to pay the warrants registered in the order of their registration, regardless of the fact that the fund established may not be sufficient to pay warrants subsequently maturing. First Nat'l Bank v. Ford, 70 N.D. 284, 293 N.W. 789, 1940 N.D. LEXIS 172 (N.D. 1940).

21-01-09. Cashbook and register to be footed daily and closed annually — Penalty for failure.

The treasurer of every taxing district, daily, as moneys are received, shall foot the several columns of the treasurer’s cashbook and register and carry the amounts forward. At the close of each year, in case the amount of money received by such treasurer is insufficient to pay the warrants so registered, the treasurer shall close the account in such register for that year, and shall carry forward the excess. Any treasurer who fails regularly to enter upon the treasurer’s cashbook the amounts so received or who fails to keep the treasurer’s cashbook footed from day to day, as required by this section, for the space of three days, shall forfeit for each offense the sum of one hundred dollars, to be recovered in a civil action on the treasurer’s official bond by any person holding a warrant drawn on such treasurer.

Source: Pol. C. 1877, ch. 50, §§ 5, 6; R.C. 1895, §§ 1302, 1303; R.C. 1899, § 1296; R.C. 1905, § 2473; C.L. 1913, § 3353; R.C. 1943, § 21-0109.

21-01-10. Cashbook and register open to inspection.

The cashbook and register of the treasurer of any taxing district must be open at all times to the inspection of any person in whose name any warrant is registered and unpaid.

Source: Pol. C. 1877, ch. 50, § 7; R.C. 1895, § 1304; R.C. 1899, § 1296; R.C. 1905, § 2473; C.L. 1913, § 3353; R.C. 1943, § 21-0110.

21-01-11. Failure to register warrants — Liability of treasurer.

The treasurer of any taxing district who fails to register any warrant in the order of its presentation, or to pay the same in the order of its registration, is liable on the treasurer’s official bond to each and every person the payment of whose warrant is postponed thereby, in the sum of three hundred dollars, to be recovered in a civil action.

Source: Pol. C. 1877, ch. 50, § 9; R.C. 1895, § 1305; R.C. 1899, § 1297; R.C. 1905, § 2474; C.L. 1913, § 3354; R.C. 1943, § 21-0111.

Cross-References.

Warrants, forms serially numbered, see N.D.C.C. § 46-02-17.

CHAPTER 21-02 Certificates of Indebtedness

21-02-01. Definitions.

In this chapter unless the context or subject matter otherwise requires:

  1. “Political subdivision” means a local governmental unit created by statute or by the Constitution of North Dakota for local governmental or other public purposes.
  2. “Revenues” means any of the following:
    1. Uncollected taxes.
    2. Amounts to be received from a distribution of federal moneys, including currently existing bureau of Indian affairs contracts.
    3. Amounts to be received from a distribution of moneys pursuant to a state appropriation or a state statutory or constitutional provision.
    4. Amounts to be received from a grant or loan of state or federal funds.
    5. Amounts to be received from the issuance and sale of obligations by a political subdivision.
  3. “Uncollected taxes” means taxes for the year during which a certificate of indebtedness is issued and the preceding four years that have been levied but from which moneys have not come into the public treasury by payment or by satisfaction of tax lien, exclusive of tax levies dedicated to the payment of principal of and interest on outstanding evidences of indebtedness.

Source: S.L. 1923, ch. 326, § 11; 1925 Supp., § 2079b11; R.C. 1943, § 21-0201; S.L. 1997, ch. 221, § 1; 1999, ch. 503, § 5; 2015, ch. 184, § 2, effective August 1, 2015.

21-02-02. Certificates of indebtedness — By whom issued — Term — Interest — General obligation.

Political subdivisions may borrow against revenues through the issuance of certificates of indebtedness. A certificate of indebtedness consists of an agreement on the part of a political subdivision to pay a stated sum on or before a specified date, together with interest thereon at a rate or rates resulting in an average annual net interest cost not exceeding twelve percent if the certificate is sold privately. There is no interest rate ceiling on a certificate sold at public sale or to the state of North Dakota or any of its agencies or instrumentalities. The certificate must be signed on behalf of the political subdivision by its president or chairman, or equivalent officer, and also by its auditor, business manager or secretary, or equivalent officer, and must be payable from revenues. A certificate of indebtedness issued wholly or in part against revenues that consist of levied and uncollected taxes is a general obligation of the issuing political subdivision to the extent of the levied and uncollected taxes.

Source: S.L. 1923, ch. 326, § 1; 1925, ch. 104, § 1; 1925 Supp., § 2079b1; S.L. 1933, ch. 247, § 1; R.C. 1943, § 21-0202; S.L. 1957, ch. 177, § 1; 1957 Supp., § 21-0202; S.L. 1967, ch. 323, § 39; 1971, ch. 249, § 4; 1979, ch. 309, § 1; 1981, ch. 269, § 5; 1985, ch. 280, § 1; 1997, ch. 221, § 2.

Notes to Decisions

Certificates of Indebtedness Derived from Taxes Already Levied.

The authorization of municipalities to issue certificates of indebtedness is based on the power to borrow in anticipation of revenues to be derived from taxes already levied. Tracy v. Barnes County, 69 N.D. 602, 289 N.W. 377, 1939 N.D. LEXIS 191 (N.D. 1939).

21-02-03. Certificate of county auditor.

A tax is deemed to have been levied when it has been voted by the tax levying board and certified to the county auditor. Each certificate of indebtedness issued wholly or in part against revenues that consist of levied and uncollected taxes must bear the certificate of the county auditor to the effect that it, together with all other outstanding certificates issued wholly or in part against revenues that consist of levied and uncollected taxes, is within the amount of uncollected taxes that have been levied lawfully in the then present year, plus uncollected taxes of the four preceding years. A county auditor who willfully signs a false certificate upon a certificate of indebtedness is guilty of a class A misdemeanor.

Source: S.L. 1923, ch. 326, § 1; 1925, ch. 104, § 1; 1925 Supp., § 2079b1; S.L. 1933, ch. 247, § 1; R.C. 1943, § 21-0203; S.L. 1979, ch. 309, § 2; 1997, ch. 221, § 3.

Cross-References.

County auditors, see N.D.C.C. ch. 11-13.

Penalty for class A misdemeanor, see N.D.C.C. § 12.1-32-01.

21-02-04. Signing false certificates — Penalty. [Repealed]

Repealed by S.L. 1997, ch. 221, § 10.

21-02-05. Record of certificates of indebtedness issued against levied and uncollected taxes.

The county auditor shall keep a record in which must be entered, as to each certificate of indebtedness issued by a political subdivision and certified to by the county auditor as provided in section 21-02-03, the same information as required for the recording of bonds in section 21-03-23. Upon presentment and payment in full by a political subdivision of a certificate of indebtedness which has been recorded by the county auditor pursuant to this section, the political subdivision must provide the county auditor with a certificate of redemption for the certificate, which must be recorded by the county auditor.

Source: S.L. 1923, ch. 326, § 4; 1925 Supp., § 2079b4; S.L. 1933, ch. 247, § 1; R.C. 1943, § 21-0205; S.L. 1985, ch. 280, § 2; 1997, ch. 221, § 4.

21-02-06. Certifying amount of uncollected taxes.

The county auditor, upon request of the officers of a political subdivision, shall certify to them the amount of uncollected taxes remaining upon the tax lists to the credit of the political subdivision on the last day of the preceding month, and annually shall certify such information to the clerk of each township on February fifteenth, to the auditor of each city on September tenth, and to the business manager of each school district on July tenth. The county auditor also shall certify to the clerk, auditor, business manager, or secretary, or equivalent officer, of each political subdivision, at the time of making the monthly apportionment of funds, the amount of cash collections apportioned for that month to the political subdivision and the amount derived from levies of each tax year.

Source: S.L. 1923, ch. 326, § 2; 1925 Supp., § 2079b2; S.L. 1933, ch. 247, § 1; R.C. 1943, § 21-0206; S.L. 1967, ch. 323, § 40; 1979, ch. 309, § 3; 1997, ch. 221, § 5; 2017, ch. 181, § 1, effective August 1, 2017.

21-02-07. Authorizing resolution — Sinking fund.

When a political subdivision issues a certificate of indebtedness under this chapter, the political subdivision, by resolution authorizing the issuance of the certificate of indebtedness, shall establish a sinking fund for the retirement of the certificate of indebtedness, including interest, on its due date. The resolution must also provide for the regular accumulation of money in the sinking fund from the revenues pledged to the payment of the certificate of indebtedness. Upon the accumulation of sufficient money in the sinking fund to pay the principal and interest which will be due and owing on the maturity date of the certificate of indebtedness, no additional revenues may be credited to the sinking fund.

Source: S.L. 1923, ch. 326, § 5; 1925, ch. 104, § 2; 1925 Supp., § 2079b5; S.L. 1933, ch. 247, § 1; R.C. 1943, § 21-0207; S.L. 1979, ch. 309, § 4; 1985, ch. 280, § 3; 1997, ch. 221, § 6.

Notes to Decisions

Depository Not Trustee of Sinking Fund.

Contract whereby a bank is made the depository of the sinking fund belonging to a school district does not make the bank a trustee of the fund. Marmarth Sch. Dist. v. Hall, 65 N.D. 509, 260 N.W. 411, 1935 N.D. LEXIS 137 (N.D. 1935).

Setoff Against Bank.

Where the school district’s sinking fund is in danger of being lost, it will be permitted, in equity, to set off that portion of its sinking fund deposited with insolvent bank, against its indebtedness to the bank, notwithstanding requirement that sinking fund be deposited in name of county treasurer rather than school district. Marmarth Sch. Dist. v. Hall, 65 N.D. 509, 260 N.W. 411, 1935 N.D. LEXIS 137 (N.D. 1935).

21-02-08. Percentage of current taxes used to pay delinquent certificates of indebtedness.

If sufficient funds are not collected to retire outstanding certificates of indebtedness issued wholly or in part against revenues that consist of uncollected taxes within two months after their due date, there must be set aside monthly from current tax collections, exclusive of tax levies dedicated to the payment of principal of and interest on outstanding evidences of indebtedness, not less than ten percent of the amount of the collections until the past due certificates have been paid.

Source: S.L. 1923, ch. 326, § 5; 1925, ch. 104, § 2; 1925 Supp., § 2079b5; S.L. 1933, ch. 247, § 1; R.C. 1943, § 21-0208; S.L. 1979, ch. 309, § 5; 1985, ch. 280, § 4; 1997, ch. 221, § 7.

21-02-09. Certificates — Payable in order or before maturity. [Repealed]

Repealed by S.L. 1997, ch. 221, § 10.

21-02-10. Taxing districts exempt from certain provisions. [Repealed]

Repealed by S.L. 1997, ch. 221, § 10.

21-02-11. Advertising for bids — When required — Procedure similar to bond sales.

If the governing board of a political subdivision determines to borrow upon certificates of indebtedness, the governing board shall follow the procedure and is subject to the penalties prescribed in the provisions relating to the sale of bonds in chapter 21-03.

Source: S.L. 1923, ch. 327, §§ 4, 5; 1925, ch. 105, § 3; 1925 Supp., §§ 4285a4, 4285a5; R.C. 1943, § 21-0211; S.L. 1971, ch. 249, § 5; 1977, ch. 213, § 1; 1985, ch. 280, § 7; 1997, ch. 221, § 8; 2005, ch. 89, § 26; 2019, ch. 203, § 1, effective August 1, 2019.

Cross-References.

N.D.C.C. ch. 21-03 not applicable to borrowing by means of certificate of indebtedness, see N.D.C.C. § 21-03-02.

21-02-12. Unlawful for officer to accept compensation from bidder. [Repealed]

Repealed by S.L. 1997, ch. 221, § 10.

21-02-13. Certificates of indebtedness in anticipation of revenue to be received from the state. [Repealed]

Repealed by S.L. 1997, ch. 221, § 10.

21-02-14. Presumption of validity.

After issuance by a political subdivision, a certificate of indebtedness that recites that it is issued under this chapter is conclusively presumed to be fully authorized and issued under the laws of the state, and any person or governmental unit is estopped from questioning its authorization, sale, execution, issuance, or delivery by the political subdivision.

Source: S.L. 1997, ch. 221, § 9.

21-02-15. Certificate of indebtedness exempt from state taxation — Review for exemption from federal taxation.

Payments of the principal of and interest on a certificate of indebtedness issued under this chapter are exempt from all taxes, except inheritance, estate, and transfer taxes, imposed by this state, any county or city, or any other political subdivision. However, a political subdivision shall review, or cause to be reviewed, federal tax laws and regulations to determine the federal tax-exempt status of interest payments on a certificate of indebtedness prior to the issuance and sale of the certificate on a purported federally tax-exempt basis.

Source: S.L. 1997, ch. 221, § 9.

CHAPTER 21-02.1 Evidence of Indebtedness Proceedings — Judicial Review

21-02.1-01. Proceedings to judicially confirm evidence of indebtedness proceedings.

Any political subdivision of the state authorized to issue evidence of indebtedness, prior to or subsequent to adoption of any or all of the proceedings regarding the issuance of that evidence of indebtedness or proceedings relating to the payment of that evidence of indebtedness may commence a special proceeding in district court to have those proceedings judicially examined, approved, and confirmed or disapproved.

Source: S.L. 1987, ch. 285, § 1.

21-02.1-02. Petition by political subdivision of the state for court to examine and approve evidence of indebtedness proceedings — Contents of petition.

Any political subdivision of the state may file in the district court of any county in which the political subdivision is situated, in whole or in part, a petition, prior to or subsequent to issuance of any evidence of indebtedness, requesting that any or all of the proceedings regarding the issuance or payment of the evidence of indebtedness be examined, approved, and confirmed by the court. The petition must state the facts concerning the proceedings and that the petitioner is a political subdivision of the state.

Source: S.L. 1987, ch. 285, § 2.

21-02.1-03. Hearing of petition — Notice of filing and hearing.

The court shall fix the time for the hearing of the petition provided for in this chapter and shall order the clerk of court to have published a notice of the filing of the petition, stating the time and place the court will hear the petition, and stating that any person interested in the proceedings for the issuance or payment of the evidence of indebtedness, on or before the day fixed for hearing of the petition, may answer the petition. The petition may be referred to and described in the notice as the petition of the named political subdivision requesting that the proceedings be examined, approved, and confirmed by the court. Notice must be given by publication in the official newspaper of the county in which the petition is filed, once each week for two consecutive weeks. The hearing must be held, in the discretion of the court, not less than fifteen days nor more than sixty days after the last publication of the notice.

Source: S.L. 1987, ch. 285, § 3.

21-02.1-04. Answer to petition — Defense by person interested.

Any person interested in the proceedings for issuance or sale of the evidence of indebtedness or proceedings relating to the payment of the evidence of indebtedness may answer the petition. The provisions of title 28 and the North Dakota Rules of Civil Procedure relating to the answer to a complaint are applicable to an answer to a petition. The person answering the petition must be the defendant in the special proceeding and the political subdivision must be the plaintiff. Every material statement of the petition not specifically controverted by the answer, for the purpose of the special proceeding, is to be taken as true. Each person failing to answer the petition is deemed to admit as true all the material statements of the petition. The rules of pleading and practice provided by title 28 and the North Dakota Rules of Civil Procedure which are not inconsistent with the provisions of this chapter are applicable to the special proceeding provided for in this chapter.

Source: S.L. 1987, ch. 285, § 4.

21-02.1-05. Powers of court upon trial — Amendment of petition.

At the time and place for the hearing, the court shall find and determine whether the notice of the filing of the petition has been published. When the court has determined that it has jurisdiction to hear the petition, it shall proceed with the hearing and shall conduct the hearing as in the case of a trial of a civil action without a jury. The court shall examine into and determine the legality and validity of the proceedings and all matters affecting the legality or validity of proceedings for the issuance or payment of the evidence of indebtedness. The court shall disregard any error, irregularity, or omission which does not affect the substantial rights of the parties to the hearing. The court shall permit the petition to be amended so as to conform to the evidence and facts presented at the hearing.

Source: S.L. 1987, ch. 285, § 5.

21-02.1-06. Conclusion of hearing — Findings — Decree — Costs of hearing — Filing copies of findings.

Upon the conclusion of the hearing the court shall determine the legality and validity of the proceedings for the issuance or payment of the evidence of indebtedness and shall determine the validity and legality of any other matter properly before the court. The court shall prepare its findings of fact and conclusions of law and shall order that the decree of the court be entered.

Source: S.L. 1987, ch. 285, § 6.

CHAPTER 21-03 Bonds

21-03-01. Definitions.

In this chapter, unless the context or subject matter otherwise requires:

  1. “Governing body” means a board of county commissioners, city council, board of city commissioners, school board of any school district, and the similarly constituted and acting board of any other municipality enumerated in subsection 3.
  2. “Initial resolution” means any resolution or ordinance adopted pursuant to section 21-03-09, by which a proceeding is instituted for the purpose of authorizing a municipality to borrow money and issue bonds.
  3. “Municipality” means a county, city, township, public school district, park district, recreation service district, or rural fire protection district empowered to borrow money and issue written obligations to repay the same out of public funds or revenue.
  4. “Population of a municipality” means its population according to the last officially published United States or state census, whichever was taken latest.
  5. “Recorded” means copied at length in the record book required by section 21-03-17.
  6. “Value of taxable property” or “the assessed valuation” of a municipality means the assessed value of all taxable property in such municipality as determined pursuant to chapter 57-02.

Source: S.L. 1927, ch. 196, § 1; 1935, ch. 197, § 1; R.C. 1943, § 21-0301; S.L. 1951, ch. 170, § 1; 1953, ch. 168, § 1; 1955, ch. 170, § 1; 1957, ch. 178, § 1; 1957 Supp., § 21-0301; S.L. 1961, ch. 158, § 77; 1967, ch. 323, § 41; 1977, ch. 107, § 2; 1979, ch. 282, § 4; 1981, ch. 270, § 1; 1981, ch. 806, § 2; 1993, ch. 239, § 1.

Cross-References.

Authority for counties or cities to jointly issue bonds, see N.D.C.C. § 54-40-01.

North Dakota Public Finance Authority Act, see N.D.C.C. ch. 6-09.4.

Municipal industrial development general obligation bonds subject to this chapter, see N.D.C.C. § 40-57-19.

Word defined by statute always has same meaning, see N.D.C.C. § 1-01-09.

Notes to Decisions

“School District” Defined.

The words “school district” constitute a generic term conveniently used to designate the territory that has been organized as a political or civil subdivision of the state for purpose of the administration, support and maintenance of the public schools in such territory. Baldwin v. Board of Educ., 76 N.D. 51, 33 N.W.2d 473, 1948 N.D. LEXIS 59 (N.D. 1948).

21-03-02. Provisions not applicable to certain issues.

This chapter is not applicable:

  1. To issues of bonds, warrants, or other forms of public securities issued on account of public improvements and for the payment of which special assessments are or shall be levied upon and against property benefited thereby which do not constitute, at the time of their issuance, a general obligation or fixed liability of the municipality issuing the same, nor the portion of any such issue payable by general taxation on account of assumption of a portion of the cost of such improvement under section 40-24-10 or any similar law. Nothing in this subsection may be construed to prevent the issuance of bonds by any city for the purposes specified in subdivision g of subsection 2 of section 21-03-06.
  2. To drainage bonds or irrigation bonds.
  3. To borrowing of money in anticipation of tax collections by means of certificates of indebtedness, as provided by chapter 21-02.
  4. To revenue bonds under the provisions of chapter 40-35.
  5. To bank or credit union loans authorized in title 21.

Source: S.L. 1927, ch. 196, § 1; R.C. 1943, § 21-0302; S.L. 1967, ch. 323, § 42; 1973, ch. 211, § 1; 1993, ch. 239, § 2; 1993, ch. 240, § 1; 2015, ch. 184, § 3, effective August 1, 2015.

Cross-References.

Drainage district bonds, see N.D.C.C. §§ 61-21-53 to 61-21-55.

Irrigation district bonds, see N.D.C.C. chs. 61-07 to 61-09.

Notes to Decisions

Applicability to General Obligation Bonds.

This chapter applies only to general obligation bonds, and does not pertain to those obligations payable by special assessments, nor to an indebtedness that is made payable out of a special fund. Thomas v. McHugh, 65 N.D. 149, 256 N.W. 763, 1934 N.D. LEXIS 182 (N.D. 1934).

Bonds Change Form of Debt.

The issuing of funding bonds does not increase a debt but changes its form. Hughes County v. Livingston, 104 F. 306, 43 C.C.A. 54 (8th Cir. 1900), cert. denied, 181 U.S. 623, 21 S. Ct. 926, 45 L. Ed. 1033 (1901); City of Pierre v. Dunscomb, 106 F. 611, 45 C.C.A. 499 (8th Cir. 1901), cert. denied, 181 U.S. 621, 21 S. Ct. 925, 45 L. Ed. 1032 (1901).

Deficiencies in Special Improvement Funds.

S.L. 1927, ch. 196, § 1(7) permitted the issuance of bonds to pay deficiencies in special improvement funds for which the municipality was not otherwise generally liable. Stutsman v. Arthur, 73 N.D. 504, 16 N.W.2d 449, 1944 N.D. LEXIS 86 (N.D. 1944).

21-03-03. Irregularities do not vitiate bonds.

Defects and irregularities in any proceeding had in substantial compliance with this chapter, when the issue is for a lawful purpose and is unaffected by fraud and does not exceed any constitutional or statutory limitation of amount, do not invalidate the bonds issued nor the indebtedness incurred after the bonds have been sold and the proceeds thereof received by the municipality, nor after the performance of a contract has been entered upon by a party who is to receive the said bonds or the proceeds thereof as consideration for said contract.

Source: S.L. 1927, ch. 196, § 2; R.C. 1943, § 21-0303.

21-03-03.1. Validation of certain school district bond issues. [Repealed]

Omitted.

Note.

Omitted as a statute not of a general and permanent nature. For the provisions of this section, see S.L. 1953, ch. 169, §§ 1, 2.

21-03-04. Grant of power to borrow — General limitations of indebtedness.

Every municipality may borrow money and issue municipal obligations thereof for the purpose specified and by the procedure provided in this chapter, and for no other purpose and in no other manner, except as otherwise provided in section 21-03-02. No municipality may incur indebtedness in any manner or for any purpose in an amount which, with all other outstanding indebtedness of the municipality, exceeds five percent of the assessed value of the taxable property therein, except:

  1. Any incorporated city, by a two-thirds vote of the qualified voters thereof voting upon said question at a general or special election, may increase such limit of indebtedness three percent on such assessed value beyond said five percent limit, and a school district, by a majority vote of the qualified voters thereof voting upon said question at a general or special election, may increase such limitation of indebtedness five percent on such assessed value beyond the said five percent limit.
  2. Any county or city, when authorized by a majority vote of the qualified voters thereof voting upon said question at a general or special election, may issue bonds upon any revenue-producing utility owned by such county or city, for the purchase or acquisition of such utility, or the building or establishment thereof, in amounts not exceeding the physical value of such utility, industry, or enterprise.
  3. Any incorporated city, if authorized by a majority vote of the qualified voters thereof voting upon said question at a general or special election, may become indebted in any amount not exceeding four percent of such assessed value, without regard to the existing indebtedness of said city, for the purpose of constructing or purchasing waterworks for furnishing a supply of water to the inhabitants of such city or for the purpose of constructing sewers, and for no other purposes whatever, but the aggregate of such additional indebtedness for waterworks and sewers never may exceed such four percent over and above the limitations of indebtedness in this section heretofore prescribed.

All bonds or obligations in excess of the amount of indebtedness permitted by this chapter, given by any municipality as herein defined, are void.

Source: S.L. 1927, ch. 196, § 3, subs. 1; R.C. 1943, § 21-0304; S.L. 1965, ch. 183, § 1; 1967, ch. 189, § 1.

Cross-References.

Debt limit, see N.D. Const. art. X, § 15.

Election to increase debt limit of school district, see N.D.C.C. §§ 15.1-07-03 to 15.1-07-07.

Notes to Decisions

Cost Payable from Net Proceeds of Earnings.

The cost of an electric plant proposed to be purchased or acquired by a city, payable from net proceeds of earnings of plant, and not a general obligation of the municipality, is not an indebtedness within the contemplation of the constitution or statutory law limiting indebtedness. Thomas v. McHugh, 65 N.D. 149, 256 N.W. 763, 1934 N.D. LEXIS 182 (N.D. 1934).

Collateral References.

Governmental unit’s power to issue bonds as implying power to refund them, 1 A.L.R.2d 134.

Inclusion of tax-exempt property in determining value of taxable property for debt limit purposes, 30 A.L.R.2d 903.

Limitation of actions: when limitations begin to run against actions on public securities or obligations to be paid out of a special or particular fund, 50 A.L.R.2d 271.

Law Reviews.

Solid Waste Management in North Dakota, Dean T. Massey, 49 N.D. L. Rev. 499 (1973).

21-03-05. Limitation applicable to independent municipal indebtedness.

The amount limited in section 21-03-04 includes such indebtedness only as may be incurred independently by a municipality for its own separate purposes and does not include any indebtedness, in whole or in part, that may be incurred independently by any other municipality for its own separate purposes, even though the territory and taxable property of either municipality constitutes the whole or a part of the territory and taxable property of the other.

Source: S.L. 1927, ch. 196, § 3, subs. 2; R.C. 1943, § 21-0305.

21-03-06. Purposes and specific limitations of bond issues.

Municipalities are empowered to borrow money, subject to the general limitations of amounts prescribed by sections 21-03-04 and 21-03-05, and subject, in certain cases, to the further limitations prescribed by the section, and to issue bonds thereof for the purposes enumerated in the section. Such bonds may be issued:

  1. By any county:
    1. To provide county buildings and to acquire land for county purposes, but all outstanding unpaid bonds for this purpose may not exceed in amount at any one time five percent of the value of taxable property in such county.
    2. To construct, enlarge, or repair, or aid in the construction, enlargement, or repair, of bridges within or without the county, but all outstanding unpaid bonds for this purpose may not exceed in amount at any one time one percent of the value of taxable property in the county.
    3. To provide funds for the original construction and for the improvement and maintenance of highways, but all outstanding unpaid bonds for these purposes may not exceed in amount at any one time four percent of the value of taxable property in such county.
    4. To provide funds for the construction of solid waste disposal facilities, for the acquisition of real estate for that purpose, for facilities and equipment for the collection of solid wastes, and for facilities and equipment to dispose of waste products.
    5. To provide money for the payment of any deficiency in the fund of any special improvement district whenever the special assessment or taxes levied and collected for the specific improvements are insufficient to pay the principal or interest of any special improvement warrants or bonds issued for the improvement and due and unpaid, but only to the extent of that deficiency.
    6. To provide funds for the acquiring, laying out, equipping, and improving parks and recreational facilities and to acquire land for these purposes.
    7. To provide funds to purchase not to exceed two hundred forty acres [97.12 hectares] of real estate and construct buildings and improvements for the conduct of a county fair.
  2. By any city:
    1. For the erection, purchase, construction, enlargement, or repair of municipal or public buildings for the following purposes: city halls, fire protection buildings, waterworks buildings, police stations, city markets, public baths, hospitals, libraries, museums, auditoriums, armories, gymnasiums, and music halls; and to purchase and acquire sites for such buildings, and for the equipment and furnishing thereof.
    2. For the purchase of fire engines and other equipment and materials for fire protection and for the purchase, construction, and installation of pumps, watermains, reservoirs, and other necessary facilities for fire protection.
    3. For the construction and extension of water plants or the purchase of existing plants; the construction and improvement of watermains, sewers, and drains; or for the joint construction and establishment of a water and sewer system; or for the erection, planning, construction, and establishment of a sewage disposal plant or system; or for the erection, construction, and enlargement of garbage disposal plants and to purchase sites and grounds, either within or without the limits of the city, for the disposal of sewage, garbage, and other refuse; or for the leasing or purchase of lands, either within or without the limits of the city, for the purpose of providing airports or landing fields or for the construction of buildings thereon or the procuring of equipment therefor; and other like municipal purposes.
    4. To construct, acquire, enlarge, extend, or maintain any plant or equipment, or any part of a plant or equipment, for the production, transmission, delivery or furnishing of heat, light, or power, either directly or indirectly, to or for the public, or to enlarge and extend such plants or equipment or any part thereof. This subdivision may not be construed as an amendment to sections 40-33-01 to 40-33-09, nor to section 40-33-15.
    5. To purchase, acquire, or establish any public utility and in cities having a population of more than five thousand to purchase or acquire a public transportation system. This subdivision may not be construed as impairing, altering, or affecting the powers of the public service commission in any such proceeding.
    6. To provide for acquiring, laying out, and improving parks, parkways, park buildings, public drives, boulevards, highways, streets, state highways, and cemeteries, and to acquire land for these purposes.
    7. To provide money for the payment of any deficiency in the fund of any special improvement district whenever the special assessment or taxes levied and collected for the specific improvements are then insufficient to pay the principal or interest of any special improvement warrants issued for such improvement and then due and unpaid, but only to the extent of such deficiency.
    8. For the purchase of automobiles, trucks, tractors, flushers, sprinklers, street sweepers, graders, rollers, loaders, plows, conveyors and other machinery, equipment and materials for the cleaning, flushing, and sweeping of any street, highway, avenue, alley, or public place within the city, the removal of snow and ice therefrom, and other like municipal purposes.
    9. For the purchase of trucks, garbage collectors, and other vehicles, equipment and materials for the collection, removal, and disposal of garbage, rubbish, ashes, refuse, and other wastes within the city.
    10. To provide for the acquiring and constructing of parking lots and facilities for motor vehicle parking.
    11. To provide funds for the erection, purchase, construction, enlargement, or repair of bridges, and to purchase and acquire necessary real estate, sites, or easements for such bridges.
    12. To provide funds for all works in connection with flood control and the necessary land or easements for such flood control works.
    13. To provide required matching funds for a capital construction project at a state institution of higher education located within the city for which an appropriation has been made by the legislative assembly. Bonds issued under this subdivision are deemed to be issued for corporation purposes under subsection 5 of section 40-05-01.
  3. Repealed by S.L. 1967, ch. 323, § 285.
  4. By any public school district, or the school district of the city of Fargo, to purchase, erect, enlarge, and improve school buildings and teacherages, to acquire sites therefor and for playgrounds, to furnish and equip the same with heat, light, and ventilation or other necessary apparatus, to pay advance rentals to the state school construction fund, and also to purchase schoolbus equipment which must meet the standards set up by the state superintendent of public instruction and the director of the department of transportation.
  5. By any township:
    1. For the erection of a township hall and the purchase of a site therefor; and
    2. For the construction of roads and bridges, but all outstanding unpaid bonds for road and bridge purposes may not exceed in amount at any one time one and one-half percent of the value of the taxable property in such township.
  6. By any park district which constitutes a distinct municipality, to provide for acquiring, laying out, and improving parks, parkways, boulevards, and pleasure drives, and to acquire land for these purposes, but such indebtedness may not at any time exceed one percent of the value of the taxable property in such park district.
  7. By any municipality as herein defined:
    1. For the purpose of paying any final judgment obtained against the municipality within the state of North Dakota in case the governing body does not deem it advisable to pay such judgment out of current revenues. In case the bonds authorized by this subsection cannot be sold in accordance with this chapter, they may be issued to the judgment creditor in payment of such judgment.
    2. To provide necessary funds for the payment of the principal and interest of bonds of such municipality, due or about to become due, for the payment of which the municipality has not sufficient funds, but only to the extent of such deficit; or to refund outstanding bonds of the municipality which are called for redemption and prepayment in accordance with their terms, or by the consent of the holders thereof, within six months from the date of the refunding bonds, when in the judgment of the governing body the best interests of the municipality will be served thereby, through the reduction of interest cost or the extension of maturities.
    3. To refund outstanding bonds not yet due or to become due or subject to redemption and prepayment within six months, when in the judgment of the governing body the best interests of the municipality will be served thereby, through the reduction of debt service costs or the extension or adjustment of maturities in relation to the resources available for their payment. The proceeds of the refunding bonds, including any premium and accrued interest, must be deposited in escrow with a suitable bank or trust company, having its principal place of business within or without the state, and must be invested in such amount and in securities maturing on such dates and bearing interest at such rates as are required to provide funds sufficient to pay when due the interest to accrue on each 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 bond at maturity or, if prepayable and called for redemption, at the earlier redemption date, and pay 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 bonds until the date the proceeds are applied to the payment or redemption of the bonds to be refunded. The governing body’s resolution authorizing the refunding bonds shall irrevocably appropriate for these purposes the escrow fund and all investments thereof, which must 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 must 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 must be purchased simultaneously with the delivery of the refunding bonds. Moneys on hand in the sinking 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 refunding bonds, to the extent consistent with the provisions of resolutions authorizing the outstanding bonds.
  8. By any recreation service district:
    1. For the construction and extension of water plants or the purchase of existing plants; the construction and improvement of watermains, sewers, and drains; or for the joint construction and establishment of a water and sewer system; or for the erection, planning, construction, and establishment of a sewage disposal plant or system; or for the erection, construction, and enlargement of garbage disposal plants and to purchase sites and grounds, either within or without the limits of the recreation service district, for the disposal of sewage, garbage, and other refuse; and other like recreation service district purposes.
    2. To provide for acquiring, laying out, and improving parks, parkways, park buildings, public drives, boulevards, highways, streets, state highways, and to acquire land for these purposes.
    3. To provide money for the payment of any deficiency in the fund of any special improvement district whenever the special assessment or taxes levied and collected for the specific improvements are then insufficient to pay the principal or interest of any special improvement warrants issued for such improvement and then due and unpaid, but only to the extent of such deficiency.
    4. For the purchase of trucks, garbage collectors, and other vehicles, equipment, and materials for the collection, removal, and disposal of garbage, rubbish, ashes, refuse, and other wastes within the recreation service district.
    5. For the purpose of providing services described in section 11-28.2-04.
    6. For the purpose of dredging any waters or waterways within or contiguous to the recreation service district.
  9. By any rural fire protection district for the purchase of such firefighting equipment, ambulances, or other emergency vehicles, or the acquisition, construction, and equipping of such real property and improvements thereto, as is necessary and proper to carry out the general fire protection program of the district.

4.1. By any school district having a community or junior college or off-campus educational center as provided in chapter 15-18 which has an enrollment of one thousand or more students, upon motion of the governing body, for capital construction purposes, including the construction and equipping of new buildings or repairing or renovating and equipping existing buildings. The governing body may levy a tax not exceeding two mills on the dollar of the taxable valuation of the school district for the purpose of paying the principal and interest on bonds issued pursuant to this subsection. The mill levy authorized by this subsection is in addition to any mill levy limitations provided by law. The total principal amount of bonds issued pursuant to this subsection may not exceed seven hundred thousand dollars, and any indebtedness incurred by a school district must be within debt limitations established by law. Bonds issued under this subsection must never become a general obligation of this state.

Source: S.L. 1927, ch. 196, § 4; 1929, ch. 169, § 1; 1929, ch. 170, § 1; 1931, ch. 195, § 1; 1939, ch. 173, § 1; R.C. 1943, § 21-0306; S.L. 1947, ch. 190, § 1; 1947, ch. 196, § 2; 1949, ch. 185, § 1; 1949, ch. 186, §§ 1, 2; 1953, ch. 170, § 1; 1955, ch. 174, § 1; 1957 Supp., § 21-0306; S.L. 1961, ch. 158, § 78; 1961, ch. 195, § 1; 1965, ch. 182, § 1; 1965, ch. 183, § 6; 1967, ch. 189, § 2; 1967, ch. 323, § 285; 1971, ch. 251, § 1; 1975, ch. 92, § 1; 1975, ch. 216, § 1; 1977, ch. 107, § 3; 1979, ch. 282, § 5; 1981, ch. 146, § 2; 1981, ch. 149, § 4; 1981, ch. 271, § 1; 1981, ch. 272, § 1; 1981, ch. 273, § 1; 1983, ch. 149, § 2; 1983, ch. 279, § 1; 1983, ch. 593, § 13; 1983, ch. 606, § 30; 1983, ch. 608, § 9; 1987, ch. 236, § 2; 1989, ch. 145, § 5; 1995, ch. 238, § 1; 2015, ch. 439, § 23, effective January 1, 2015.

Cross-References.

Airport property, bond issue for purchase of, see N.D.C.C. § 2-02-03.

Bridges, bonds for cost of construction, see N.D.C.C. § 24-08-07.

Housing authority bonds, see N.D.C.C. ch. 23-11.

Industrial development, provisions governing revenue bonds, see N.D.C.C. § 40-57-09.

Judgments against cities, negotiable bearer bonds authorized, see N.D.C.C. § 40-43-03.

Park commissioners, power to issue bonds, see N.D.C.C. § 40-49-12.

Parking authority, bond issues, see N.D.C.C. § 40-61-08.

Parking facilities, issuance of bonds authorized, see N.D.C.C. § 40-60-02.

Pedestrian malls, issuance of bonds authorized, see N.D.C.C. § 40-62-01.

Power of municipalities to issue bonds, generally, see §§ 40-05-01, 40-05.1-06.

Recreation system, bond issues authorized, see N.D.C.C. § 40-55-05.

Revenue bond law, see N.D.C.C. ch. 40-35.

Revenue bond refinancing law, see N.D.C.C. ch. 40-36.

Securities registration requirements, exemption from, see N.D.C.C. § 10-04-05.

Sewage or garbage disposal improvements, bond issues, see N.D.C.C. §§ 40-34-02 to 40-34-04.

Special assessment warrants, funding and refunding, see N.D.C.C. ch. 40-27.

Steam heating authorities, see N.D.C.C. § 40-33.1-04.

Transportation system, revenue bonds, see N.D.C.C. §§ 40-33-26 to 40-33-29.

Urban renewal, issuance of bonds, see N.D.C.C. § 40-58-10.

Utilities, issuance of bonds, see N.D.C.C. §§ 40-33-04, 40-33-07.

Water treatment plants, issuance of revenue bonds, see N.D.C.C. §§ 40-33-17 to 40-33-21.

Notes to Decisions

Payment of Deficiency in Special Improvement Fund.

S.L. 1927, ch. 196, as amended by S.L. 1929, ch. 170, permitted municipalities to issue funding bonds for the purpose of refunding public improvement warrants to the extent of deficiencies resulting from the failure to collect special assessments due the funds on which the warrants were drawn. Stutsman v. Arthur, 73 N.D. 504, 16 N.W.2d 449, 1944 N.D. LEXIS 86 (N.D. 1944).

Recital on Face of Bond.

An estoppel is effected against a municipal corporation by a recital on the face of bonds that all preliminary requirements have been complied with. Coler v. Dwight Sch. Township, 3 N.D. 249, 55 N.W. 587, 1893 N.D. LEXIS 19 (N.D. 1893); Flagg v. School Dist., 4 N.D. 30, 58 N.W. 499, 1894 N.D. LEXIS 14 (N.D. 1894).

Collateral References.

Power of governmental unit to issue bonds as implying power to refund them, 1 A.L.R.2d 134.

Off-street public parking facilities, 8 A.L.R.2d 373.

Stadium: validity of governmental borrowing or expenditure for purposes of acquiring, maintaining or improving stadium for use of professional athletic team, 67 A.L.R.3d 1186.

21-03-06.1. School district voter approval of building authority or other indirect funding methods — Building construction project approval.

  1. Notwithstanding any other provision of law, a school board may not enter an agreement pursuant to internal revenue service revenue ruling 63-20 under which payments of any kind would be required by the school district to any building authority or other entity that incurs indebtedness or other obligation in connection with acquisition, improvements, or construction of any property or structure at a total cost of four million dollars or more to be used by the school district unless the agreement has been approved by a vote of a majority of the qualified electors of the school district voting on the question at a regular or special school district election if the agreement is for acquisition, improvements, or construction of any property or structure for which an election would be required if the school district undertook the acquisition, improvements, or construction project through issuance of bonds of the school district.
  2. The school board of a school district may not enter an agreement pursuant to internal revenue service revenue ruling 63-20 under which payments of any kind would be required by the school district to any building authority or other entity that incurs indebtedness or other obligation regarding construction, purchase, repair, improvement, modernization, or renovation of any building or facility to be used by the school district without approval by the superintendent of public instruction in the manner provided in section 15.1-36-01, if the approval by the superintendent of public instruction would be required for the project under section 15.1-36-01 if the school district undertook the project itself.

Source: S.L. 2013, ch. 200, § 1.

21-03-07. Election required — Exceptions. [Effective for taxable years beginning after December 31, 2020]

No municipality, and no governing board thereof, may issue bonds without being first authorized to do so by a vote equal to sixty percent of all the qualified voters of such municipality voting upon the question of such issue except:

  1. As otherwise provided in section 21-03-04.
  2. The governing body may issue bonds of the municipality for the purpose and within the limitations specified by subdivision e of subsection 1 of section 21-03-06, subdivision g of subsection 2 of section 21-03-06, and subsections 4.1 and 7 of section 21-03-06 without an election.
  3. The governing body of any municipality may issue bonds of the municipality for the purpose of providing funds to meet its share of the cost of any highway project undertaken under an agreement entered into by the governing body with the United States government, the director of the department of transportation, the board of county commissioners, or any of them, including the cost of any construction, improvement, financing, planning, and acquisition of right of way of a bridge eligible for matching funds, highway routed through the municipality and of any bridges and controlled access facilities thereon and any necessary additional width or capacity of the bridge or roadway thereof greater than that required for federal or state bridge or highway purposes, and of any necessary relaying of utility mains and conduits, curbs and gutters, and the installation of utility service connections and streetlights. The portion of the total cost of the project to be paid by the municipality under the agreement, including all items of cost incurred directly by the municipality and all amounts to be paid by it for work done or contracted for by other parties to the agreement, may not exceed a sum equal to thirty percent of the total cost, including engineering and other incidental costs, of all construction and reconstruction work to be done plus fifty percent of the total cost of all right of way to be acquired in connection therewith. The initial resolution authorizing issuance of bonds under this subsection must be published in the official newspaper of the municipality. Within sixty days after publication, an owner of taxable property within the municipality may file with the auditor or chief fiscal officer of the municipality a written protest against adoption of the resolution. A protest must describe the property that is the subject of the protest. If the governing body finds protests have been signed by the owners of taxable property having an assessed valuation equal to five percent or more of the assessed valuation of all taxable property in the municipality, as most recently finally equalized, all further proceedings under the initial resolution are barred. Nothing herein may be deemed to prevent any municipality from appropriating funds for or financing out of taxes, special assessments, or utility revenues any work incidental to any such project, in the manner and to the extent otherwise permitted by law, and the cost of any work so financed may not be included in computing the portion of the project cost payable by the municipality, within the meaning of this subsection, unless the work is actually called for by the agreement between the municipality and the other governmental agencies involved.
  4. The governing body of any city may also by resolution adopted by a two-thirds vote authorize and issue general obligation bonds of the city for the purpose of providing funds to pay the cost of any improvement of the types stated below, to the extent that the governing body determines that such cost should be paid by the city and should not be assessed upon property specially benefited thereby; provided that the initial resolution authorizing such bonds must be published in the official newspaper, and any owner of taxable property within the city may, within sixty days after such publication, file with the city auditor a protest against the adoption of the resolution. If the governing body finds such protests to have been signed by the owners of taxable property having an assessed valuation equal to five percent or more of the assessed valuation of all taxable property within the city, as theretofore last finally equalized, all further proceedings under such initial resolution are barred. This procedure is authorized for the financing of the following types of improvements:
    1. Any street improvement, as defined in subsection 2 of section 40-22-01, to be made in or upon any federal or state highway or any other street designated by ordinance as an arterial street.
    2. The construction of a bridge, culvert, overpass, or underpass at the intersection of any street with a stream, watercourse, drain, or railway, and the acquisition of any land or easement required for that purpose.
    3. Any improvement incidental to the carrying out of an urban renewal project, the issuance of bonds for which is authorized by subsection 4 of section 40-58-13.
  5. The governing body of any city may also by resolution adopted by a two-thirds vote dedicate the mill levy authorized by section 57-15-42 and may authorize and issue general obligation bonds to be paid by the dedicated levy for the purpose of providing funds for the purchase, construction, reconstruction, or repair of public buildings or fire stations; provided, that the initial resolution authorizing the mill levy dedication and general obligation bonds must be published in the official newspaper, and any owner of taxable property within the city may, within sixty days after publication, file with the city auditor a protest against the adoption of the resolution. Protests must be in writing and must describe the property which is the subject of the protest. If the governing body finds such protests to have been signed by the owners of taxable property having an assessed valuation equal to five percent or more of the assessed valuation of all taxable property within the city, as theretofore last finally equalized, all further proceedings under the initial resolution are barred.
  6. The governing body of any county may also by resolution adopted by a two-thirds vote dedicate the tax levies authorized by section 57-15-06.6 and subsection 5 of section 57-15-06.7 and may authorize and issue general obligation bonds to be paid by the dedicated levy for the purposes identified under section 57-15-06.6 and subsection 5 of section 57-15-06.7; provided, that the initial resolution authorizing the tax levy dedication and general obligation bonds must be published in the official newspaper, and any owner of taxable property within the county may, within sixty days after publication, file with the county auditor a protest against the adoption of the resolution. Protests must be in writing and must describe the property which is the subject of the protest. If the governing body finds such protests to have been signed by the owners of taxable property having an assessed valuation equal to five percent or more of the assessed valuation of all taxable property within the county, as last finally equalized, all further proceedings under the initial resolution are barred.
  7. The governing body of any public school district may also by resolution adopted by a two-thirds vote dedicate the tax levies as authorized by section 15.1-09-47, 15.1-09-49, or 57-15-16 and may authorize and issue general obligation bonds to be paid by these dedicated levies for the purpose of providing funds for the purchase, construction, reconstruction, or repair of public school buildings or for the construction or improvement of a project under section 15.1-36-02 or 15.1-36-08. The initial resolution authorizing the tax levy dedication and general obligation bonds must be published in the official newspaper of the school district, and any owner of taxable property within the school district may, within sixty days after publication, file with the business manager of the school district a protest against the adoption of the resolution. Protests must be in writing and must describe the property that is the subject of the protest. If the governing body finds the protests have been signed by the owners of taxable property having an assessed valuation equal to five percent or more of the assessed valuation of all taxable property within the school district, as theretofore last finally equalized, all further proceedings under the initial resolution are barred.
  8. The governing body of any city having a population of twenty-five thousand persons or more may use the provisions of subsection 3 to provide funds to participate in the cost of any construction, improvement, financing, and planning of any bypass routes, interchanges, or other intersection improvements on a federal or state highway system which is situated in whole or in part outside of the corporate limits of the city; provided, that the governing body thereof shall determine by resolution that the undertaking of such work is in the best interest of the city for the purpose of providing access and relieving congestion or improving traffic flow on municipal streets.
  9. The governing body of a municipality or other political subdivision, located at least in part within a county that is included within a disaster or emergency executive order or proclamation of the governor under chapter 37-17.1, may by resolution adopted by a two-thirds vote authorize and issue general obligation bonds of the political subdivision without an election for the purpose of providing funds to pay costs associated with the emergency condition. The political subdivision may dedicate and levy taxes for retirement of bonds under this subsection and such levies are not subject to limitations as otherwise provided by law.
  10. The governing board of any county, city, public school district, park district, or township may by resolution adopted by a two-thirds vote dedicate the tax levy authorized by section 57-15-41 and authorize and issue general obligation bonds to be paid by the dedicated levy for the purpose of providing funds to prepay outstanding special assessments made in accordance with the provisions of title 40 against property owned by the county, city, public school district, park district, or township.
  11. The governing body of any park district that constitutes a distinct municipality may issue general obligation bonds of the park district for the purpose of providing funds to acquire, lay out, and improve parks, parkways, boulevards, and pleasure drives, and to acquire land for these purposes, but the indebtedness may not at any time exceed one percent of the assessed valuation of the taxable property in the park district. The initial resolution authorizing the issuance of general obligation bonds under this subsection must be published in the official newspaper of the park district, and any owner of taxable property within the park district may, within sixty days after publication, file with the clerk of the park district a protest against the adoption of the resolution. Protests must be in writing and must describe the property that is the subject of the protest. If the governing body finds the protests have been signed by the owners of taxable property having an assessed valuation equal to five percent or more of the assessed valuation of all taxable property within the park district, as last finally equalized, all further proceedings under the initial resolution are barred.

Nothing herein may be deemed to prevent any municipality from appropriating funds for or financing out of taxes, special assessments, or utility revenues any work incidental to any such improvement, in the manner and to the extent otherwise permitted by law.

Source: S.L. 1927, ch. 196, § 5; 1933, ch. 170, § 1; R.C. 1943, § 21-0307; S.L. 1947, ch. 192, § 1; 1947, ch. 195, § 1; 1951, ch. 171, § 1; 1957, ch. 179, § 1; 1957 Supp., § 21-0307; S.L. 1967, ch. 192, § 1; 1967, ch. 323, § 43; 1969, ch. 247, §§ 1, 2; 1971, ch. 251, § 2; 1975, ch. 217, § 1; 1975, ch. 218, § 1; 1975, ch. 219, § 1; 1977, ch. 375, § 1; 1983, ch. 82, § 44; 1983, ch. 149, § 3; 1985, ch. 281, § 1; 1989, ch. 145, § 6; 1989, ch. 209, § 8; 1989, ch. 290, § 1; 1989, ch. 291, § 1; 1993, ch. 186, § 7; 1993, ch. 241, § 1; 1995, ch. 239, § 1; 1997, ch. 222, § 1; 2001, ch. 161, § 23; 2003, ch. 48, § 19; 2015, ch. 439, § 24, effective January 1, 2015; 2017, ch. 368, § 5, effective April 10, 2017; 2019, ch. 204, § 1, effective August 1, 2019; 2021, ch. 187, § 1, eff for taxable years beginning after December 31, 2020.

Notes to Decisions

Board of Township Supervisors.

Board of township supervisors had authority to issue bonds of the township for authorized purposes in such amounts and at such periods as might be directed by two-thirds of the legal voters present and voting at any legally called township meeting held for that purpose. Molander v. Swenson, 54 N.D. 391, 210 N.W. 9, 1926 N.D. LEXIS 159 (N.D. 1926).

Question of Establishing School.

Where school district operated high school continuously for twenty-eight years and directors decided to submit the issuing of bonds for purpose of erecting a new high school building, it was not necessary to submit question of whether district would establish a high school, at the same election. Knudson v. Norman Sch. Dist., 64 N.D. 779, 256 N.W. 224, 1934 N.D. LEXIS 267 (N.D. 1934).

DECISIONS UNDER PRIOR LAW

Majority Vote Sufficient.

Majority vote was sufficient to authorize bond issue under C.L. 1913, § 3818. Logan v. Bismarck, 49 N.D. 1178, 194 N.W. 908, 1923 N.D. LEXIS 62 (N.D. 1923).

Where the legislature did not incorporate into the law requiring an election on refunding bonds any provision, either specifically or by reference, which required approval by more than a majority of electors voting at such election, such a vote was sufficient. Tracy v. Barnes County, 69 N.D. 602, 289 N.W. 377, 1939 N.D. LEXIS 191 (N.D. 1939).

Collateral References.

Inclusion of several structures or units as affecting validity of submission of proposition to voters at bond election, 4 A.L.R.2d 617.

Validity of municipal bond issue as against owners of property, annexation of which to municipality became effective after date of election at which issue was approved by voters, 10 A.L.R.2d 559.

Rescission of vote authorizing school district or other municipal bond issue, expenditure, or tax, 68 A.L.R.2d 1041.

Absentee Voters’ Laws as applied to municipal bond elections, 97 A.L.R.2d 257.

Notice: inclusion or exclusion of first and last days in computing time for giving notice of bond issue election, which must be given a certain number of days before a known future date, 98 A.L.R.2d 1331.

21-03-08. Maximum interest rate, maturity, and denominations.

No bonds issued under the provisions of this chapter may bear interest at a rate or rates and be sold privately at a price resulting in an average net interest cost higher than twelve percent per annum. There is no interest rate ceiling on those issues sold at public sale or to the state of North Dakota or any of its agencies or instrumentalities. No bonds issued under this chapter may run for a longer period than twenty years from their date. The bonds may not bear a date earlier than the date of the election authorizing their issuance, if such election is required, nor earlier than the date of the adoption of the resolution of the governing body determining to issue bonds for which no election is required.

Source: S.L. 1927, ch. 196, § 6; R.C. 1943, § 21-0308; S.L. 1963, ch. 202, § 1; 1971, ch. 249, § 6; 1981, ch. 269, § 7.

Notes to Decisions

Compliance with Statute.

A statute prescribing the denomination and time of payment of bonds must be strictly complied with. People's Bank v. School Dist., 3 N.D. 496, 57 N.W. 787, 1893 N.D. LEXIS 47 (N.D. 1893).

21-03-09. Initial resolution — Form.

Proceedings for the issuance of bonds under the authority of this chapter must be instituted by the adoption of an initial resolution therefor. Such initial resolution must state:

  1. The maximum amount of bonds proposed to be issued.
  2. The purpose for which they are proposed to be issued.
  3. The assessed valuation of all taxable property in the municipality as defined in section 21-03-01.
  4. The total amount of bonded indebtedness of the municipality.
  5. The amount of outstanding bonds of the municipality issued for a similar purpose.
  6. Any other statement of fact deemed advisable by the governing body or voters proposing the same.

Source: S.L. 1927, ch. 196, § 7, subs. a; 1931, ch. 195, § 2, subs. a; R.C. 1943, § 21-0309; S.L. 1971, ch. 249, § 7; 1971, ch. 251, § 3; 1987, ch. 73, § 7.

Notes to Decisions

Selection of Site.

It is not necessary for school board, at election called on issuance of bonds to erect and equip new high school building, to submit to voters the question of selection of site for proposed new building. Knudson v. Norman Sch. Dist., 64 N.D. 779, 256 N.W. 224, 1934 N.D. LEXIS 267 (N.D. 1934).

21-03-10. Initial resolution — How adopted.

The initial resolution may be:

  1. Adopted by a majority vote of the governing body at any regular meeting thereof or at any special meeting of which notice has been given as required by law, without any previous action thereon or request therefor by the qualified electors or property owners.
  2. Proposed by filing a copy thereof in the office of the auditor or secretary of the municipality, together with a petition signed by qualified electors of the municipality aggregating in number one-fourth of the number of qualified electors of the municipality, as shown by the pollbook for the last preceding annual or general election held therein, or if such pollbook was not kept, then as shown by a census of the qualified electors of such municipality verified by the affidavit of one of such petitioners. Such petition must ask that an election on the question of issuing such bonds be called. Upon the filing of such proposed initial resolution and petition, the governing body shall call such election in the manner specified by section 21-03-11.

Source: S.L. 1927, ch. 196, § 7, subss. b, c; R.C. 1943, § 21-0310; S.L. 1967, ch. 323, § 44; 1985, ch. 235, § 49.

21-03-10.1. School districts — Use of bond funds.

  1. The initial resolution or petition providing for the issuance of bonds, whether adopted by a majority vote of the school board of a school district or proposed by the qualified electors of the school district as provided for in section 21-03-10, may, within the discretion of those proposing such initial resolution or petition, provide for a specific school plan for which the proceeds of the bond issue must be exclusively used except as otherwise provided in section 21-03-42. Such plan must designate the general area to be served by expenditure of bond proceeds for school purposes. The area intended to be served must be described in the plan, but need not be described in the bond election ballot.
  2. A bond election ballot form in substantially the form prescribed in section 21-03-13 must be used in a school district bond election. After approval of the initial resolution by the number of qualified electors required by section 21-03-07, the proceeds of the bond issue may be used only for the purpose and in the manner designated by the school plan except as herein provided.
  3. After approval of the bond issue, no change may be made in the purpose of expenditure of the bond proceeds except that, upon a favorable vote of sixty percent of the qualified electors residing in any specific area intended to be served as provided in subsection 1, material changes may be made in such plan as it affects said area to the extent such changes do not conflict with contractual obligations incurred.

Source: S.L. 1963, ch. 203, § 1; 1985, ch. 235, § 50; 2015, ch. 181, § 1, effective August 1, 2015.

21-03-11. Elections — When and how called and held.

Upon or after the adoption of an initial resolution by the governing body, or at the first meeting of the governing body held after the filing of a petition and proposed initial resolution by the qualified electors as specified in subsection 2 of section 21-03-10, the governing body by resolution shall provide for submitting to the qualified electors of the municipality the question whether the initial resolution shall be approved. The date of the election must be not less than twenty days after the passage of the initial resolution by the governing body or in the filing of a sufficient petition therefor by the qualified electors. The governing body shall designate the date of the election, the polling hours, and polling place, which must be the same as for municipal elections therein, and shall appoint an inspector, two judges, and two clerks of election for each polling place. In case of the absence of any election official, or the official’s inability to act at the opening of the polls, the remaining election officials for the polling place shall appoint a qualified elector to fill the vacancy. The election must be conducted and the returns thereof made and canvassed as in the case of elections of members of the governing body of the municipality.

Source: S.L. 1927, ch. 196, § 8; R.C. 1943, § 21-0311; S.L. 1967, ch. 190, § 1; 1985, ch. 235, § 51; 2013, ch. 169, § 7.

Notes to Decisions

Results of Election Mandatory.

When the issuance of bonds is authorized for schoolhouse purposes by the voters of a district, the school board is bound to issue the same. Schouweiler v. Allen, 17 N.D. 510, 117 N.W. 866, 1908 N.D. LEXIS 82 (N.D. 1908).

21-03-12. Notice of election to be given.

The auditor, secretary, or similarly acting officer, by whatever name designated, of the municipality shall give notice of election by causing a notice thereof to be published once each week for at least two weeks prior to the date thereof in the official newspaper of such municipality, if any, or if it has none, in any newspaper published therein, or if no newspaper is published therein, then by posting copies of such notice in five public places in the municipality. The date of such posting or first publication must be at least fifteen days before the date of such election, exclusive of the day of such posting or first publication. Such notice must specify the date, polling hours, and polling places of such election and must contain a complete copy of the initial resolution and a statement that the question to be submitted thereat shall be whether said initial resolution shall be approved. If said question is to be submitted at a municipal election, the notice herein prescribed may be separate from the notice of such municipal election and may refer to the notice of such municipal election for the designation of polling places.

Source: S.L. 1927, ch. 196, § 9; R.C. 1943, § 21-0312; S.L. 1967, ch. 323, § 45.

Notes to Decisions

Failure to State Denominations or Rate of Interest.

Where notice of election failed to state the denominations of the bonds or the rate of interest which they were to bear, such defects rendered the election invalid, and it was illegal for the county officials to issue the bonds thus voted. Hughes v. Horsky, 18 N.D. 474, 122 N.W. 799, 1909 N.D. LEXIS 48 (N.D. 1909).

Posting of Notices.

Failure to post notices upon bulletin boards prescribed at the annual township meeting did not render the places where posted private and inconspicuous within the meaning of C.L. 1913, § 1333. Shirley v. Coal Field Sch. Dist., 46 N.D. 51, 179 N.W. 551, 1920 N.D. LEXIS 19 (N.D. 1920).

Collateral References.

Inclusion or exclusion of first and last days in computing time for giving notice of bond issue election, which must be given a certain number of days before a known future date, 98 A.L.R.2d 1331.

21-03-13. Ballot — Contents.

The ballot for a bond election must be separate from other ballots used on the same day for other elections, and must be written or printed, and must state the question in substantially the following form:

Shall the (here inserting the name of the municipality) issue its bonds in the amount of not to exceed $, (here inserting the amount) maturing within a maximum of , (here inserting the duration) resulting in an estimated additional millage of (here inserting the number of mills) mills, equal to $ (here inserting the equivalent in dollars) on each $1,000 of taxable valuation for the first taxable year, for the purpose of (here inserting the purpose)? Yes • No •

Click to view

Spoiled or blank ballots cast at such election may not be counted for or against the proposed issue.

Source: S.L. 1927, ch. 196, § 10; R.C. 1943, § 21-0313; 2015, ch. 181, § 2, effective August 1, 2015.

Notes to Decisions

Contents of Ballot.

The question of issuing bonds for the erection of a courthouse and jail in one building may be submitted and voted upon as a single question. Hughes v. Horsky, 18 N.D. 474, 122 N.W. 799, 1909 N.D. LEXIS 48 (N.D. 1909).

Separate Ballots.

The provisions of S.L. 1927, ch. 196, § 10, did not require that a proposition to increase the debt limit and a proposition to issue bonds for erection of a schoolhouse be on separate ballots. Knudson v. Norman Sch. Dist., 64 N.D. 779, 256 N.W. 224, 1934 N.D. LEXIS 267 (N.D. 1934).

21-03-14. Bonds issued without an election.

Proceedings for the issuance of bonds under this chapter, if no election is required, must be instituted by a resolution of the governing body containing the facts required for an initial resolution as prescribed by section 21-03-09. At or after the adoption of the resolution, the governing body may proceed to sell, issue, and deliver the bonds as hereinafter provided for the sale, issuance, and delivery of bonds.

Source: S.L. 1927, ch. 196, § 11, R.C. 1943, § 21-0314; S.L. 1989, ch. 292, § 1.

21-03-15. Direct, annual, irrepealable tax.

The governing body of every municipality issuing bonds under the authority of this chapter, before the delivery thereof, shall levy by recorded resolution or ordinance a direct, annual tax which, together with any other moneys provided by, or sources of revenue authorized by, the legislative assembly, shall be sufficient in amount to pay, and for the express purpose of paying, the interest on such bonds as it falls due, and also to pay and discharge the principal thereof at maturity. The municipality shall be and continue without power to repeal such levy or levies or to obstruct the collection of any such tax until such payments have been made or provided for, except that if the governing body in any year makes an irrevocable appropriation to the sinking fund of moneys actually on hand, or if there is on hand in the sinking fund an amount that would be sufficient to retire the bonds, the governing body shall cause its recording officer to certify the fact and amount to the county auditor with the direction that the county auditor should reduce by the amount so certified the amount otherwise to be included in the tax rolls next thereafter prepared. A copy of such resolution or ordinance must be certified to and filed with the county auditor, and after the issuance of such bonds, any such tax on property from year to year must be carried into the tax roll of the municipality and collected as other property taxes are collected. No further annual levy for that purpose is necessary. The governing body may, in its discretion and in anticipation of the sale of bonds, at any time after the issuance of bonds has been authorized by the electors or by resolution of the governing body when no election is required, levy and certify to the county auditor for collection a portion of the tax herein required, which must be credited against the amount otherwise required to be levied after the bonds have been sold. Any other tax or source of revenue authorized by the legislative assembly for such purposes and imposed or pledged by the municipality for those purposes is likewise irrepealable and subject to the same conditions and limitations as any taxes levied on property for the same purposes. Any annual or periodic amounts provided for the municipality issuing such bonds by the legislative assembly out of state funds for paying the interest and principal of such bonds constitute an irrepealable and continuing appropriation until the liability for all interest and principal payments of the bonds have been satisfied. When insufficient funds are available to pay the matured bonds, the county auditor shall notify the governing body of such municipality of such deficiency and the governing body thereupon may levy a direct tax on the taxable property to pay said deficiency and interest thereon. If the governing body of the issuing municipality no longer exists, the county auditor shall levy a direct tax against the taxable property in the original issuing municipality to pay said deficiency and the interest thereon. The manner of levy, certification, and collection of said tax must be the same as provided by this section for the levy, certification, and collection of taxes by this section. When such bonds are further sustained by revenue of a revenue-producing utility, industry, or enterprise, said resolution or ordinance may provide that the tax to be levied and assessed may be reduced by such amount and under such conditions as must be determined in said resolution or ordinance so long as adequate provision is always made for the payment of such bonds and interest thereon.

Source: S.L. 1927, ch. 196, § 12; 1935, ch. 199, § 1; R.C. 1943, § 21-0315; S.L. 1947, ch. 193, § 1; 1957 Supp., § 21-0315; S.L. 1961, ch. 196, § 1; 1965, ch. 183, § 7; 1971, ch. 251, § 4; 1997, ch. 223, § 1.

Notes to Decisions

Constitutional Background.

All that section 184 of the constitution requires is that the political subdivisions make provision to collect taxes to pay an indebtedness at or before the time the indebtedness is incurred. STATE v. RASMUSSON, 71 N.D. 267, 300 N.W. 25, 1941 N.D. LEXIS 166 (N.D. 1941).

21-03-16. Authority to borrow and issue bonds — When complete.

Every municipality which has first complied with all requirements prescribed for and made applicable to it by this chapter, but not otherwise, may borrow money and issue and sell its municipal bonds to the amount and for the purpose or purposes specified in the initial resolution.

Source: S.L. 1927, ch. 196, § 13; 1931, ch. 195, § 3; R.C. 1943, § 21-0316.

21-03-17. Record of proceedings.

Every municipality shall provide and keep a record book in which its auditor or secretary shall record a full and correct statement of every step or proceeding had or taken in the course of authorizing and issuing municipal bonds, including a statement of the affirmative and negative votes cast by the electors.

Source: S.L. 1927, ch. 196, § 14; R.C. 1943, § 21-0317; S.L. 1967, ch. 323, § 46.

21-03-18. Form and contents of bonds.

Every municipal bond must be a negotiable instrument payable to bearer, or to bearer or the registered owner, with or without interest coupons attached, interest to be payable annually or semiannually at the rate or rates specified in the accepted bid for the purchase of said bonds. Each bond must specify the time and place for payment of the principal and interest, and must be numbered consecutively with the other bonds of the same issue, which must begin with number one and continue upward, or if so directed by the governing body, must begin with any other number and continue upward. Each bond must bear upon its face a name indicative of the purpose of the issue specified in said initial resolution and must contain a certificate or recital of any direct, annual, irrepealable tax which has been levied by the municipality upon all the taxable property therein, together with any other tax or source of revenue which the municipality may be authorized to impose or pledge and any annual or periodic payments or distributions appropriated or allocated by the legislative assembly, sufficient to pay the interest when it falls due, and also to pay and discharge the principal of such bond at maturity, and may contain any other statement of fact not in conflict with said initial resolution. The entire issue may be composed of a bond or bonds of a single denomination or of two or more denominations.

Source: S.L. 1927, ch. 196, § 15, subs. 1; R.C. 1943, § 21-0318; S.L. 1965, ch. 183, § 2; 1971, ch. 251, § 5; 1977, ch. 214, § 1.

21-03-19. Bonds — Terms.

Bonds issued under this chapter must be authorized by resolution, bear such date or dates, be in such denomination or denominations, be in such form, be subject to redemption with or without premium, and be subject to such other terms or conditions as in the judgment of the municipality are in the public interest of the municipality, and must provide that the last installment of principal falls due not more than twenty years from the date of the bonds. The requirements of this section apply to each new issue of bonds, or if so determined by the governing body, to the bonds of a new issue combined with all of the outstanding bonds of one or more designated issues of bonds previously issued and similarly payable from taxes or other sources of revenues, or both, as the case may be.

Source: S.L. 1927, ch. 196, § 15, subs. 2; 1931, ch. 194, § 1; R.C. 1943, § 21-0319; S.L. 1971, ch. 251, § 6; 1983, ch. 280, § 1.

21-03-20. Interest — Ceases at maturity unless presented for payment.

All bonds issued pursuant to the provisions of this chapter must contain a provision that interest thereon ceases at maturity unless the holder thereof presents the same for payment and payment is refused.

Source: S.L. 1933, ch. 177, § 1; R.C. 1943, § 21-0320.

21-03-21. Execution of bonds.

Municipal bonds must be executed in the name of and for the municipality issuing them, by its qualified officers, who for that purpose shall sign the same by manual or facsimile signatures in their official capacities, as follows:

  1. For a county, the chairman of the board of county commissioners and the county auditor.
  2. For a city, the mayor or president of the board of city commissioners and the city auditor.
  3. Repealed by S.L. 1967, ch. 323, § 285.
  4. For any other municipality, the chairman or president of the governing board and the clerk or secretary thereof, or such other officer as the governing body thereof may determine.

The interest coupons attached to such bonds may be executed by the lithographed or engraved facsimile signature of such officers. The validity of every bond so executed remains unimpaired by the fact that any subscribing officer has ceased to be such officer before delivery to the purchaser. Bonds issued by a municipality having an official seal need not be sealed with such seal. The city auditor, county auditor, clerk, or secretary or such other officer as the governing body of the municipality may determine shall sign an endorsement on the back of each bond certifying that the bond is issued pursuant to law and is within the debt limit of the municipality issuing the bond.

Source: S.L. 1927, ch. 196, § 16; 1935, ch. 194, § 1; R.C. 1943, § 21-0321; S.L. 1967, ch. 323, § 285; 1973, ch. 80, § 6; 1993, ch. 239, § 3.

21-03-21.1. Attorney general to give opinion on legal sufficiency of investments. [Repealed]

Repealed by S.L. 1993, ch. 239, § 9.

21-03-22. Recording of bonds. [Repealed]

Repealed by S.L. 1993, ch. 239, § 9.

21-03-23. Bond record.

The county auditor shall keep a bond record in which must be entered, as to each issue of bonds issued by a taxing district in the county, a record of the date of issuance, the aggregate amount issued, the date of maturity of each bond, the rate of interest, the amount of the levy on taxable property for each year certified by the taxing board, the amount levied on any other object of taxation by the municipality, the amount pledged or allocated from other sources of revenue of the municipality, and the amount of any annual or periodic payments or distributions appropriated or allocated by the legislative assembly.

Source: S.L. 1923, ch. 326, § 9; 1925 Supp., § 2079b9; S.L. 1943, ch. 105, § 1; R.C. 1943, § 21-0323; S.L. 1965, ch. 183, § 3; 1979, ch. 187, § 31; 1985, ch. 282, § 2.

21-03-24. Destruction of bonds not sold within three years.

All bonds authorized pursuant to this chapter which are not delivered to the purchaser and paid for within three years of their date must be canceled. The registering and certifying officer, in the presence of at least two electors of the municipality which authorized their issuance, shall destroy such bonds by the burning thereof, and with such witnesses shall make and file in the records of that officer’s office an affidavit as to the bonds so destroyed and the time and place of such destruction. The officer also shall make a record thereof in a proper book of record in that officer’s office. A copy of such affidavit must be filed with the auditor or secretary of the municipality which authorized their issuance.

Source: S.L. 1927, ch. 196, § 16; 1935, ch. 194, § 1; R.C. 1943, § 21-0324; S.L. 1967, ch. 323, § 47.

21-03-25. Bonds — Advertised for bids — Exception.

A municipality may not sell or enter any contract for the sale of any issue of its bonds authorized by this chapter in an amount exceeding one million dollars, for whatever purpose issued, without first advertising for bids in the manner prescribed by section 21-03-26, except as provided in section 21-03-30, and except that bonds issued under the authorization of subdivision g of subsection 2 of section 21-03-06 with the consent of the warrant holders, may be exchanged for matured warrants or matured interest coupons of warrants of the special improvement fund having the deficiency on account of which such bonds are being issued, without such advertising. The par value and accrued interest of the bonds so delivered may not exceed the par value and accrued interest of the warrants and interest coupons, and accrued interest thereon, for which they are exchanged.

Source: S.L. 1927, ch. 196, § 17; 1929, ch. 170, § 2; R.C. 1943, § 21-0325; S.L. 1967, ch. 323, § 48; 1971, ch. 249, § 8; 2019, ch. 203, § 2, effective August 1, 2019.

Notes to Decisions

General Obligation Bonds.

The provisions of S.L. 1927, ch. 196, § 17, were applicable only to general obligation bonds, and did not pertain to those obligations payable by special assessments, nor to an indebtedness that is made payable out of a special fund. Thomas v. McHugh, 65 N.D. 149, 256 N.W. 763, 1934 N.D. LEXIS 182 (N.D. 1934).

21-03-26. Bonds — Call for bids — How advertised.

A notice calling for bids for each proposed issue of municipal bonds must be published at least once in the official newspaper of the municipality, or, if the municipality does not have an official newspaper, then in the county’s official newspaper, not less than ten days nor more than thirty days before the date specified therein for the receiving of such bids. Such notice may be in any form but must specify the amount of bonds offered for sale and the date of the maturity thereof. Failure to publish such notice does not impair the validity of such bonds but renders unenforceable any executory contract entered into for the sale thereof.

Source: S.L. 1927, ch. 196, § 17; R.C. 1943, § 21-0326; S.L. 1967, ch. 323, § 49; 1975, ch. 106, § 214; 1975, ch. 220, § 1; 1977, ch. 215, § 1; 1977, ch. 375, § 2; 1993, ch. 239, § 4.

Notes to Decisions

Special Obligation Bonds.

Where city is authorized to purchase electric plant and issue special obligation bonds therefor payable from net earnings only, manner of sale of such bonds is in discretion of governing board, and not within contemplation of statute requiring advertisement for bids. Thomas v. McHugh, 65 N.D. 149, 256 N.W. 763, 1934 N.D. LEXIS 182 (N.D. 1934).

21-03-27. Bids — Where received — Record.

The notice must specify the time and place at which bids will be received. The place where bids shall be received must be fixed by the governing board and may be within or outside the state. At the time and place specified, the governing board of the taxing district must be represented by one of its officials, or by the county auditor or some other person acting at the request of the board, who shall receive competitive bids, whether submitted orally or in writing. When the bids are received, the county auditor, auditor, secretary, or other person acting at the request of the board shall enter in a permanent record the amount and rate of interest of each bid and the name and address of the bidder.

Source: S.L. 1927, ch. 196, § 17, subss. 3, 4; R.C. 1943, § 21-0327; S.L. 1967, ch. 323, § 50; 1993, ch. 239, § 5.

21-03-27.1. Sealed bids.

The governing body of any municipality calling for bids for the purchase of municipal bonds, as provided in sections 21-03-26 and 21-03-27, may in its discretion determine, and may state in the notice calling for such bids, that only sealed bids shall be received and considered.

Source: S.L. 1965, ch. 184, § 1.

21-03-28. Bids — Accompanied by draft — Sale to best bidder — Rejection of all bids.

All bids must be accompanied by a certified check, cashier’s check, surety bond, or bank draft, in the amount of not less than one percent of the bid. After all bids have been received, they must be delivered forthwith to the governing body of the municipality, which shall award the sale of such bonds to the bidder who agrees to purchase them upon the terms most favorable to the municipality, unless the governing body determines to reject all bids. The governing body has the right to reject any and all bids. If no bids are received or if all bids received are rejected, the governing body may, without readvertising the bonds for sale, negotiate the sale of all of the bonds to any person upon terms complying with those specified in the notice of sale theretofore published, and if bids were rejected, more favorable to the municipality than those specified in a rejected bid. No sale may be for less than ninety-eight percent of the par value of such bonds plus the interest accrued on the bonds to the date of the delivery thereof.

Source: S.L. 1927, ch. 196, § 17, subs. 3; R.C. 1943, § 21-0328; S.L. 1969, ch. 376, § 2; 1971, ch. 251, § 7; 1993, ch. 239, § 6.

21-03-29. Unlawful for official to accept compensation from bidder.

No auditor, secretary, or other official of a municipality may accept, from a bidder or prospective bidder at a sale of bonds, a commission or any other compensation for the official’s services rendered or to be rendered in connection with the issuance, sale, or delivery of such bonds.

Source: S.L. 1927, ch. 196, § 17, subs. 5; R.C. 1943, § 21-0329; S.L. 1967, ch. 323, § 51.

21-03-30. Municipal bonds — Private sale to United States or state agencies.

The procedure prescribed in this chapter relative to calling for bids upon the sale of municipal bonds is not required in the case of bonds issued under the authorization of subdivision b or c of subsection 7 of section 21-03-06, or in case bonds are sold to:

  1. The state board of university and school lands.
  2. The Bank of North Dakota.
  3. The public finance authority.
  4. Trust funds administered by public officials.
  5. The United States of America, or any agency or instrumentality thereof.

Source: S.L. 1927, ch. 196, § 17, subs. 6; 1935, ch. 198, § 1; R.C. 1943, § 21-0330; S.L. 1947, ch. 194, § 1; 1957 Supp., § 21-0330; S.L. 1981, ch. 274, § 1; 1989, ch. 292, § 2; 2005, ch. 89, § 27.

21-03-31. Notice to state or state departments. [Repealed]

Repealed by S.L. 1993, ch. 239, § 9.

21-03-32. Departments prohibited from purchasing bonds at higher prices within five years. [Repealed]

Repealed by S.L. 1993, ch. 239, § 9.

21-03-33. Penalty for noncompliance. [Repealed]

Repealed by S.L. 1975, ch. 106, § 673.

21-03-34. Registration of ownership of bonds — How made.

The holder of any bond payable to “bearer or registered owner”, as authorized by section 21-03-18, issued by any municipality, may have the ownership thereof registered as to the principal thereof by the county auditor, or in the case of a municipality of over four thousand population, by the auditor or secretary of the municipality issuing the same, or such other officer as the governing body of the municipality may determine. Registration by such officers must be made in the bond register and must be noted on the bond.

Source: S.L. 1927, ch. 196, § 18, subs. 1; R.C. 1943, § 21-0334; S.L. 1967, ch. 323, § 53.

Cross-References.

Registration of state bonds by treasurer, see N.D.C.C. § 54-11-08.

21-03-35. Effect of registration — Discharge therefrom.

After registration of a municipal bond as provided in section 21-03-34, no transfer thereof is valid unless made on the records of the county auditor or the records of the municipality by the registered owner in person, or by the registered owner’s duly authorized attorney, and similarly noted on the bond, but the same may be discharged from registration by being transferred in like manner to bearer, and thereafter transferability by delivery is restored, but such bond again from time to time may be registered or transferred to bearer as before. Such registration, however, does not affect the negotiability of the appurtenant coupons, but every such coupon continues to be transferable by delivery only and must remain payable to bearer.

Source: S.L. 1927, ch. 196, § 18, subs. 2; R.C. 1943, § 21-0335.

21-03-36. Money borrowed or payable to be lawful money of United States.

All money borrowed by municipalities and all money received in payment of any tax levied in accordance with this chapter is lawful money of the United States, and all municipal bonds must be payable in such money.

Source: S.L. 1927, ch. 196, § 19, subs. 1; R.C. 1943, § 21-0336.

21-03-37. Appointment of fiscal agents.

The governing body of any municipality indebted on account of outstanding municipal bonds is authorized in its discretion to appoint a fiscal agent located in some city within or without the state, or if deemed convenient, one such agent, in each of two cities. Every such fiscal agent must be an incorporated bank or trust company authorized by the laws of the United States or of the state in which it is located to do a banking or trust company business. The custodian of the sinking funds of the municipality, when necessary, shall deposit with such fiscal agent such sums of money as are required for the payment of the principal or interest of municipal bonds.

Source: S.L. 1927, ch. 196, § 19, subs. 2; R.C. 1943, § 21-0337.

21-03-38. Bond proceeds — Kept in separate fund — Protection of purchaser.

All borrowed money must be paid into the treasury of the municipality borrowing it, must be kept there until used, in a fund separate and distinct from all other funds, to be used for the purpose for which it was borrowed and for no other purpose except that such funds may be temporarily invested in securities as are approved by the governing board in accordance with the provisions of section 21-03-43 and as otherwise provided by section 21-03-42, and may be withdrawn only upon order or warrants made payable out of said fund and expressing the purpose for which they were drawn. The purchaser of any bonds issued pursuant to this chapter is not obliged to see to the application of the purchase price thereof, but is protected fully in paying for such bonds by the receipt of the county treasurer or of the officer delivering such bonds. Income from the temporary investing of receipts from bond issues must be available for use for such purpose as such bond issue was approved or, upon resolution of the governing body of the municipality, must be paid into the sinking fund for use in payment of bonds issued.

Source: S.L. 1927, ch. 196, § 19, subs. 3; R.C. 1943, § 21-0338; S.L. 1961, ch. 197, § 1; 1995, ch. 54, § 14.

21-03-38.1. Disposal of bond proceeds.

The proceeds of any municipal bond sale, which have not been used for the purpose issued within three years after date of issue, may be disposed of by the governing body of the municipality as follows:

  1. Sufficient funds must be transferred to the sinking fund of the issue in an amount equal to the principal of bonds outstanding and the interest requirements.
  2. The governing body may, by a two-thirds vote of all its members, transfer the funds to any or all other debt sinking funds of the municipality.
  3. The governing body, upon approval by a majority vote of the qualified electors, voting on the question at an election called therefor, may use the funds for some other purpose authorized by law.

If any funds remain, they must be transferred to the general fund of the municipality.

Source: S.L. 1953, ch. 171, § 1; R.C. 1943, 1957 Supp., § 21-03381; S.L. 1981, ch. 275, § 1; 1997, ch. 108, § 11.

21-03-39. Ancillary contract authorized.

After any municipality has provided, as required by section 21-03-16, for an issue of bonds for a lawful purpose which can be accomplished only through performance of an executory contract by some other contracting party, such contract may be entered into before the actual execution or sale of the bonds with like effect as if the necessary cash for payments on the contract already were in the treasury.

Source: S.L. 1927, ch. 196, § 19, subs. 4; R.C. 1943, § 21-0339.

21-03-40. Sinking funds — Custodian.

The city auditor, park district treasurer, or business manager of the school district or similarly acting officer of the respective municipality is custodian of each of its sinking funds, unless the governing body by resolution appoints the county treasurer.

Source: S.L. 1923, ch. 326, § 8; 1925, ch. 197, § 1; 1925 Supp., § 2079b8; S.L. 1927, ch. 196, § 20; 1931, ch. 202, § 1; R.C. 1943, § 21-0340; S.L. 1965, ch. 185, § 1; 1967, ch. 191, § 3; 1975, ch. 144, § 21; 1993, ch. 239, § 7.

21-03-41. Sinking funds — Duty of county treasurer.

When the county treasurer is custodian of any sinking fund, the county treasurer may not remit to the treasurer of the taxing district any taxes levied or any other moneys received for the purpose of paying the interest on or retiring the principal of bonds issued, but the county treasurer shall retain the same in a separate special fund maintained as a sinking and interest fund for the bonds of such taxing district. The county treasurer shall make quarterly reports to the treasurer of the taxing district whose sinking fund the county treasurer possesses, showing all collections and amounts added to each such fund, all payments made from such fund, and the net balance in each such fund from time to time. The county treasurer shall keep the sinking funds of each taxing district on deposit in such public depository as may have furnished proper bond therefor and as may have been designated by the governing board of the taxing district. When a sinking fund is so deposited, the county treasurer is relieved of personal responsibility for its safekeeping.

Source: S.L. 1923, ch. 326, § 8; 1925, ch. 197, § 1; 1925 Supp., § 2079b8; S.L. 1931, ch. 202, § 1; R.C. 1943, § 21-0341; S.L. 1965, ch. 183, § 4.

Notes to Decisions

Bond of Depository.

Where depository has given bond payable to county as obligee conditioned upon payment by the depository of funds of said obligee, the bond does not cover deposits made by the county treasurer as custodian of funds of various political subdivisions. County Of Hettinger v. Trousdale, 72 N.D. 203, 5 N.W.2d 417 (1942).

Special Deposits.

Where county treasurer deposited all funds which he received in a general checking account, and he later purchased certificates of deposit for amounts which he collected for bond redemption, money represented by certificates of deposit and general funds represented by checking account were not held in same capacity and right. Billings County v. Federal Deposit Ins. Corp., 71 F. Supp. 696, 1947 U.S. Dist. LEXIS 2582 (D.N.D. 1947), modified, 168 F.2d 452, 1948 U.S. App. LEXIS 3185 (8th Cir. N.D. 1948).

21-03-42. Sinking fund — Sources and uses.

The sinking fund must be disbursed by the county treasurer or treasurer of the municipality, as the case may be, upon the directions therefor by resolution of the governing body of the municipality issuing such bonds. As such bonds mature, the county treasurer, upon warrant drawn upon the county treasurer by the county auditor, shall apply such sinking fund in retirement thereof, and also in payment of the interest thereon as it becomes payable. The county auditor shall draw such warrants so as to pay the interest and retire the bonds at as early a date as possible. If the bonds are retired or if the balance in the sinking fund is sufficient to retire the bonds, the county auditor shall notify the governing body of the municipality of its obligation under section 21-03-15 to terminate the levy for payment of principal and interest on the bonds. The county treasurer or treasurer of the municipality may not disburse any of such fund contrary to the provisions of this chapter, even though so directed by such governing body. The county treasurer or treasurer of the municipality may disburse such fund for the purpose of paying the principal and interest, or either, of the bonds for which such fund was created without any authorization therefor by the governing body. The sinking fund of each bond issue must be kept separate and must be designated by a name indicative of the issue of bonds on account of which it was created. The sources of such fund must be:

  1. All moneys accruing to the borrowed money fund prescribed by section 21-03-38 which at any stage are not needed for the purpose for which the money was borrowed, and any moneys becoming applicable to the sinking fund must be transmitted by the treasurer of the municipality to the county treasurer, in case such municipality has a population of four thousand or less, upon direction therefor by the governing body of the municipality.
  2. All moneys raised by taxation and received from other sources pursuant to section 21-03-15 for the purpose of paying said bond.
  3. Moneys derived from licenses or other sources, the expenditure of which is not otherwise provided for by law, as the governing body may elect to place in the sinking fund, and which must be paid over to the county treasurer for deposit in such sinking fund by the treasurer of the municipality, in case such municipality has a population of four thousand or less, upon a resolution directing such payment by the governing body.
  4. The premium, if any, for which the bonds have been sold over and above the par value and accrued interest.

Source: S.L. 1927, ch. 196, § 20, subs. 1; 1931, ch. 202, § 1; R.C. 1943, § 21-0342; S.L. 1965, ch. 183, § 5; 1997, ch. 223, § 2.

Notes to Decisions

Deposit in Name of School District.

School district was entitled to setoff against depository of sinking fund, notwithstanding statute requiring sinking fund to be deposited in name of county treasurer rather than that of school district. Marmarth Sch. Dist. v. Hall, 65 N.D. 509, 260 N.W. 411, 1935 N.D. LEXIS 137 (N.D. 1935).

21-03-43. Investment of sinking funds.

Taking care that enough cash is retained always in the sinking fund to provide for annual payments of principal and interest, the surplus, if any, may be loaned or invested under the direction of the proper governing body as follows:

  1. In the outstanding bonds for the payment of which the sinking fund is required, at any price not exceeding the principal, accrued interest, and a premium of not to exceed two years’ interest on such bonds.
  2. In interest-bearing bonds of the United States, or of the state of North Dakota, or of any municipality as defined in section 21-03-01.
  3. In conformity with the provisions of chapter 21-04.

Investments of the class specified in subsection 2 continue a part of the sinking fund and must be held in custody of the treasurer of the municipality. Bonds representing such investments may be sold by the governing body at any time, but the money received remains, until used, a part of the sinking fund.

Source: S.L. 1927, ch. 196, § 20, subss. 2, 3; R.C. 1943, § 21-0343.

21-03-44. Sinking fund — Use for unauthorized purpose.

Money may not be withdrawn from a sinking fund and appropriated to any purpose other than the purpose for which the fund was instituted until that purpose has been accomplished, except as authorized by section 6-09.4-23 and sections 21-03-42 through 21-03-45.

Source: S.L. 1927, ch. 196, § 20, subs. 4; R.C. 1943, § 21-0344; S.L. 1999, ch. 86, § 3.

Notes to Decisions

Setoff Against Indebtedness.

School district will be permitted, in equity, to set off against its indebtedness to insolvent depository bank the amount of sinking funds due, where there is danger of such funds being lost unless the setoff is allowed. Marmarth Sch. Dist. v. Hall, 65 N.D. 509, 260 N.W. 411, 1935 N.D. LEXIS 137 (N.D. 1935).

21-03-45. Sinking fund — Surplus placed in general fund.

Any surplus in a sinking fund after all of the bonds for the payment of which the fund was created have been paid and canceled and after all investments of the second and third class finally have been disposed of or realized upon, must, within two years, be placed in the general fund of the municipal treasury.

Source: S.L. 1927, ch. 196, § 20, subs. 5; R.C. 1943, § 21-0345; S.L. 1993, ch. 242, § 1.

21-03-46. Municipalities in more than one county.

When in this chapter a county officer is required to take any action with reference to the bond issues or sinking funds of any municipality of such county, if such municipality is situated partly within one county and partly within another or others, the governing body of such municipality by ordinance or recorded resolution shall designate the county whose official shall act in such capacity. In such case, collection of taxes levied in accordance with this chapter in any county wherein a portion of such municipality is situated must be transmitted and delivered to the custodian of the sinking fund of the municipality so specified by the governing body.

Source: S.L. 1927, ch. 196, § 21; R.C. 1943, § 21-0346.

21-03-47. Limitation of action.

No action may be brought or maintained in any court in this state questioning the validity of any bonds issued pursuant to this chapter, or of any tax levied pursuant hereto, unless such action has been commenced within thirty days after the adoption of the resolution of the governing body awarding the sale of such bonds.

Source: S.L. 1927, ch. 196, § 22; R.C. 1943, § 21-0347; S.L. 1977, ch. 216, § 1.

21-03-48. Penalty for diversion of sinking and interest funds. [Repealed]

Repealed by S.L. 1975, ch. 106, § 673.

21-03-49. Penalty for diversion of borrowed money fund. [Repealed]

Repealed by S.L. 1975, ch. 106, § 673.

CHAPTER 21-03.1 Registration of Public Obligations

21-03.1-01. Definitions.

As used in this chapter, the following terms have the following meanings:

  1. “Authorized officer” means any individual required or permitted, alone or with others, by any provision of law or by the issuing public entity, to execute on behalf of the public entity a certificated registered public obligation or a writing relating to an uncertificated registered public obligation.
  2. “Certificated registered public obligation” means a registered public obligation which is represented by an instrument.
  3. “Code” means the Internal Revenue Code of 1954, as amended.
  4. “Financial intermediary” means a bank, broker, clearing corporation, or other person or the nominee of any of them, which in the ordinary course of its business maintains registered public obligation accounts for its customers, when so acting.
  5. “Issuer” means a public entity which issues an obligation.
  6. “Obligation” means an agreement of a public entity to pay principal and any interest thereon, and includes a share, participation, or other interest in any such agreement.
  7. “Official actions” means the actions by statute, order, ordinance, resolution, contract, or other authorized means by which the issuer provides for issuance of a registered public obligation.
  8. “Official or official body” means the officer that is empowered under the laws of this state to provide for original issuance of an obligation of the issuer, by defining the obligation and its terms, conditions, and other incidents, the successor or successors of any such official or official body, and such other person or group of persons as shall be assigned duties of such official or official body with respect to a registered public obligation under applicable law from time to time.
  9. “Public entity” means any entity, department, or agency which is empowered under the laws of this state to issue obligations any interest with respect to which may, under any provision of law, be provided an exemption from the income tax referred to in the Code.
  10. “Registered public obligation” means an obligation issued by a public entity pursuant to a system of registration.
  11. “System of registration” and its variants means a plan that provides:
    1. With respect to a certificated registered public obligation, that:
      1. The certificated registered public obligation specify a person entitled to the registered public obligation and the rights it represents; and
      2. Transfer of the certificated registered public obligation and the rights it represents may be registered upon books maintained for that purpose by or on behalf of the issuer.
    2. With respect to an uncertificated registered public obligation, that:
      1. Books maintained by or on behalf of the issuer for the purpose of registration of the transfer of a registered public obligation specify a person entitled to the registered public obligation and the rights evidenced thereby; and
      2. Transfer of the uncertificated registered public obligation and the rights evidenced thereby be registered upon such books.
  12. “Uncertificated registered public obligation” means a registered public obligation which is not represented by an instrument.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-02. System of registration.

  1. Each issuer is authorized to establish and maintain a system of registration with respect to each obligation which it issues. The system may either be:
    1. A system pursuant to which only certificated registered public obligations are issued.
    2. A system pursuant to which only uncertificated registered public obligations are issued.
    3. A system pursuant to which both certificated and uncertificated registered public obligations are issued.
  2. The system must be established, amended, discontinued, or reinstituted for the issuer by, and must be maintained for the issuer as provided by, the official or official body.
  3. The system must be described in the registered public obligation or in the official actions which provide for original issuance of the registered public obligation, and in subsequent official actions providing for amendments and other matters from time to time. Such description may be by reference to a program of the issuer which is established by the official or official body.
  4. The system must define the method or methods by which transfer of the registered public obligation shall be effective with respect to the issuer, and by which payment of principal and any interest must be made. The system may permit the issuance of registered public obligations in any denomination to represent several registered public obligations of smaller denominations. The system may also provide for the form of any certificated registered public obligation or of any writing relating to an uncertificated registered public obligation, for identifying numbers or other designations, for a sufficient supply of certificates for subsequent transfers, for record and payment dates, for varying denominations, for communications to holders or owners of obligations, and for accounting, canceled certificate destruction registration and release of security interests and other incidental matters. Unless the issuer otherwise provides, the record date for interest payable on the first or fifteenth day of a month must be the fifteenth day or the last business day of the preceding month, respectively, and for interest payable on other than the first or fifteenth day of a month, must be the fifteenth calendar day before the interest payment date.
  5. Under a system pursuant to which both certificated and uncertificated registered public obligations are issued, both types of registered public obligations may be regularly issued, or one type may be regularly issued and the other type issued only under described circumstances or to particular described categories of owners and provision may be made for registration and release of security interests in registered public obligations.
  6. The system may include covenants of the issuer as to amendments, discontinuances, and reinstitutions of the system and the effect of such on the exemption of interest from the income tax provided for by the Code.
  7. Whenever an issuer issues an uncertificated registered public obligation, the system of registration may provide that a true copy of the official actions of the issuer relating to such uncertificated registered public obligation be maintained by the issuer or by the person, if any, maintaining such system on behalf of the issuer, so long as the uncertificated registered public obligation remains outstanding and unpaid. A copy of such official actions, verified to be such by an authorized officer, is admissible before any court of record, administrative body, or arbitration panel without further authentication.
  8. Nothing in this chapter precludes a conversion from one of the forms of registered public obligations provided for by this chapter to a form of obligations not provided for by this chapter if interest on the obligation so converted will continue to be exempt from the income tax provided for by the Code.
  9. The rights provided by other laws with respect to obligations in forms not provided for by this chapter, to the extent not inconsistent with this chapter, apply with respect to registered public obligations issued in forms authorized by this chapter.

The issuer may amend, discontinue, and reinstitute any system, from time to time, subject to covenants.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-03. Execution — Authentication.

  1. A certificated registered public obligation must be executed by the issuer by the manual or facsimile signature or signatures of authorized officers. Any signature of an authorized officer may be attested by the manual or facsimile signature of another authorized officer.
  2. In addition to the signatures referred to in subsection 1, any certificated registered public obligation or any writing relating to an uncertificated registered public obligation may include a certificate or certificates signed by the manual or facsimile signature of an authenticating agent, registrar, transfer agent, or the like.
  3. At least one signature of an authorized officer or other person required or permitted to be placed on a certificated registered public obligation must be a manual signature.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-04. Signatures.

  1. Any certificated registered public obligation signed by the authorized officers at the time of the signing thereof remains valid and binding, notwithstanding that before the issuance thereof any or all of such officers have ceased to fill their respective offices.
  2. Any authorized officer empowered to sign any certificated registered public obligation may adopt as and for the signature of such officer the signature of a predecessor in office in the event that such predecessor’s signature appears on such certificated registered public obligation. An authorized officer incurs no liability by adoption of a predecessor’s signature that would not be incurred by such authorized officer if the signature were that of such authorized officer.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-05. Seal.

When a seal is required or permitted in the execution of any certificated registered public obligation, an authorized officer may cause the seal to be printed, engraved, stamped, or otherwise placed in facsimile thereon. The facsimile seal has the same legal effect as the impression of the seal.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-06. Agents — Depositories.

  1. An issuer may appoint for such term as may be agreed, including for so long as a registered public obligation may be outstanding, corporate or other authenticating agents, transfer agents, registrars, paying, or other agents, specify the terms of their appointment, including their rights, their compensation and duties, limits upon their liabilities, and provision for their payment of liquidated damages in the event of breach of certain of the duties imposed, which liquidated damages may be made payable to the issuer, the owner, or a financial intermediary. None of such agents need have an office or do business within this state.
  2. An issuer may agree with custodian banks and financial intermediaries, and nominees of any of them, in connection with the establishment and maintenance by others of a central depository system for the transfer or pledge of registered public obligations. Any such custodian banks and financial intermediaries, and nominees, may, if qualified and acting as fiduciaries, also serve as authenticating agents, transfer agents, registrars, paying, or other agents of the issuer with respect to the same issue of registered public obligations.
  3. Nothing precludes the issuer from itself performing, either alone or jointly with other issuers, any transfer, registration, authentication, payment, or other function described in this section.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-07. Costs — Collection.

  1. An issuer, prior to or at original issuance of registered public obligations, may provide as a part of a system of registration that the transferor or transferee of the registered public obligations pay all or a designated part of the costs of the system as a condition precedent to transfer, that costs be paid out of proceeds of the registered public obligations, or that both methods be used. The portion of the costs of the system not provided to be paid for by the transferor or transferee or out of proceeds is the liability of the issuer.
  2. The issuer may as part of a system of registration provide for reimbursement or for satisfaction of its liability by payment by others. The issuer may enter into agreements with others respecting such reimbursement or payment, may establish fees and charges pursuant to such agreements or otherwise, and may provide that the amount or estimated amount of such fees and charges must be reimbursed or paid from the same sources and by means of the same collection and enforcement procedures and with the same priority and effect as with respect to the obligations.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-08. Security for deposits.

Obligations issued by public entities under the laws of this state which are in registered form, whether or not represented by an instrument, and which, except for their form, satisfy the requirements with regard to security for deposits of moneys of public agencies prescribed pursuant to any law of this state, must be deemed to satisfy all such requirements even though they are in registered form if a security interest in such obligations is perfected on behalf of the public agencies whose moneys are so deposited.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-09. Public records — Locations.

  1. Records, with regard to the ownership of or security interests in registered public obligations, are not subject to inspection or copying under any law of this state relating to the right of the public to inspect or copy public records, notwithstanding any law to the contrary.
  2. Registration records of the issuer may be maintained at such locations within or without this state as the issuer shall determine.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-10. Applicability — Determination.

  1. Unless at any time prior to or at original issuance of a registered public obligation the official or official body of the issuer determines otherwise, this chapter is applicable to such registered public obligation notwithstanding any provision of law to the contrary. When this chapter is applicable, no contrary provision applies.
  2. Nothing in this chapter limits or prevents the issuance of obligations in any other form or manner authorized by law.
  3. Unless determined otherwise pursuant to subsection 1, the provisions of this chapter are applicable with respect to obligations which have heretofore been approved by vote, referendum, or hearing, authorizing or permitting the authorization of obligations in bearer and registered form, or in bearer form only, and such obligations need not be resubmitted for a further vote, referendum, or hearing, for the purpose of authorizing or permitting the authorization of registered public obligations pursuant to this chapter.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-11. Construction.

This chapter must be construed in conjunction with the Uniform Commercial Code and the principles of contract law relative to the registration and transfer of obligations.

Source: S.L. 1983, ch. 281, § 1.

21-03.1-12. Amendment or repeal — Effect.

The state hereby covenants with the owners of any registered public obligations that it will not amend or repeal this chapter if the effect may be to impair the exemption from income taxation of interest on registered public obligations.

Source: S.L. 1983, ch. 281, § 1.

CHAPTER 21-04 Depositories of Public Funds

21-04-01. Definitions.

In this chapter, unless the context or subject matter otherwise requires:

  1. “Board” means the governing board of any public corporation, including the board of county commissioners, the city council, the board of city commissioners, the school board, the board of township supervisors, and the park board.
  2. “Clerk” means the person who performs for any public corporation the duties ordinarily performed by a clerk, including the county auditor, the city auditor, the township clerk, and the business manager of the school district.
  3. “Financial institutions” includes state and national banks insured by the federal deposit insurance corporation, state-chartered or federally chartered savings and loans insured by the federal savings and loan insurance corporation, and state-chartered or federally chartered credit unions insured by the national credit union administration.
  4. “Public corporation” includes a county, city, township, school district, and any body corporate except a private corporation.
  5. “Public funds” includes all funds derived from taxation, fees, penalties, sale of bonds, or from any other source, which belong to and are the property of a public corporation or of the state, and all sinking funds of such public corporation or of the state, and all funds from whatever source derived and for whatever purpose to be expended of which a public corporation or the state have legal custody. The term includes funds of which any board, bureau, commission, or individual, created or authorized by law, is authorized to have control as the legal custodian for any purpose whatsoever whether such funds were derived from general or special taxation or the assessment of persons or corporations for a specific purpose. The term does not include funds of students or student organizations deposited in a student financial institution approved by and under the control of the school board.
  6. “State” includes the state of North Dakota and any institution, industry, enterprise, or agency of the state.

Source: S.L. 1923, ch. 199, § 1; 1925 Supp., § 714a1; R.C. 1943, § 21-0401; S.L. 1961, ch. 158, § 79; 1967, ch. 323, § 54; 1983, ch. 282, § 1; 1995, ch. 240, § 1.

Cross-References.

Word defined by statute always has same meaning, see N.D.C.C. § 1-01-09.

Notes to Decisions

Public Corporation.

A public corporation is one created by the state for political purposes and to act as an agency in the administration of civil government, generally within a particular territory or subdivision of the state, and usually invested with subordinate and local powers of legislation. Kiner v. Well, 71 N.W.2d 743, 1955 N.D. LEXIS 129 (N.D. 1955); Hart v. Bye, 76 N.W.2d 139, 1956 N.D. LEXIS 109 (N.D. 1956); United Accounts v. Dachtler, 100 N.W.2d 93, 1959 N.D. LEXIS 119 (N.D. 1959).

Collateral References.

Interest or earnings received on public money in officer’s possession, accountability for, 5 A.L.R.2d 257.

Law Reviews.

Comment on Adams County Record v. Greater N.D. Assn., 529 N.W.2d 830 (N.D. 1995), 72 N.D. L. Rev. 745 (1996).

21-04-02. State funds to be deposited in Bank of North Dakota.

Public funds belonging to or in the custody of the state must be deposited in the Bank of North Dakota.

Source: S.L. 1919, ch. 147, § 7; I. M. November 2, 1920, § 1; S.L. 1921, p. 255; 1923, ch. 199, § 3; 1925 Supp., §§ 714a3, 5192a7; R.C. 1943, § 21-0402.

Cross-References.

Insolvent grain warehousemen, deposit of money received from, see N.D.C.C. § 60-04-08.

Nonliability of officers and sureties after deposit, see N.D.C.C. § 6-09-08.

State funds to be deposited in Bank, see N.D.C.C. § 6-09-07.

Notes to Decisions

Cancellation of Surety Bonds.

The effect of S.L. 1919, ch. 147, § 7, requiring deposit of all public funds in Bank of North Dakota was to cancel the liabilities of sureties on previously executed depository bonds, as to any deposits made subsequent to its provisions. City of Dickinson v. Dakota Nat'l Bank, 52 N.D. 204, 202 N.W. 279, 1925 N.D. LEXIS 21 (N.D. 1925).

Injunction.

State treasurer cannot be enjoined from depositing state funds and funds of state institutions in the Bank of North Dakota. State ex rel. Lemke v. District Court, 49 N.D. 27, 186 N.W. 381, 1921 N.D. LEXIS 133 (N.D. 1921).

Succession As Public Depository.

As a depository of public funds the Bank of North Dakota succeeded, under the law, to the functions of the privately owned depository banks. State ex rel. Kozitzky v. Waters, 45 N.D. 115, 176 N.W. 913, 1920 N.D. LEXIS 111 (N.D. 1920).

Law Reviews.

Comment on Adams County Record v. Greater N.D. Assn., 529 N.W.2d 830 (N.D. 1995), 72 N.D. L. Rev. 745 (1996).

21-04-03. Funds of public corporations to be deposited in designated depository.

Public funds belonging to or in the custody of any public corporation must be deposited in the Bank of North Dakota or in financial institutions which have been duly designated as depositories in the manner prescribed in this chapter.

Source: S.L. 1923, ch. 199, § 3; 1925 Supp., § 714a3; R.C. 1943, § 21-0403; S.L. 1983, ch. 282, § 2.

Notes to Decisions

Bonds of Depositories of County Funds.

The repeal of the 1921 statute did not terminate bonds given by the depository of county funds while the statute was in effect. Northern Trust Co. v. First Nat'l Bank, 52 N.D. 417, 203 N.W. 321, 1925 N.D. LEXIS 41 (N.D. 1925); Golden Valley County v. Lundin, 52 N.D. 420, 203 N.W. 317, 1925 N.D. LEXIS 39 (N.D. 1925).

Foreign Corporation Cannot Act.

A foreign corporation is not authorized to act as a depository of city funds. State ex rel. Kistler v. Hankinson, 53 N.D. 346, 205 N.W. 995, 1925 N.D. LEXIS 87 (N.D. 1925).

General Deposits in Designated Depositories.

A general deposit of state money by the state treasurer could be lawfully made only in those banks which had been designated by the state board of auditors and had qualified as state depositories, and such general deposits cannot rightfully exceed the maximum amount for which the depository bank has qualified as such. State v. Bickford, 28 N.D. 36, 147 N.W. 407 (N.D. 1914).

Liability of Treasurer.

The treasurer and his bondsmen were liable under the 1921 Depository Law for funds left on deposit in banks which did not meet the requirements of the law, if the deposits were allowed to remain in the noncomplying banks. Slope County v. Douglas, 49 N.D. 1026, 194 N.W. 385, 1923 N.D. LEXIS 36 (N.D. 1923).

Deposit by county treasurer of amount greater than depository bond constitutes breach of the official bond. Bowman County v. McIntyre, 52 N.D. 225, 202 N.W. 651, 1925 N.D. LEXIS 24 (N.D. 1925).

Number of Sureties.

The Depository Act of 1921 did not require any particular number of sureties upon a depository bond, nor was formal designation of a legal depository necessary. Dickey County v. Gesme, 51 N.D. 272, 199 N.W. 873, 1924 N.D. LEXIS 179 (N.D. 1924).

Qualified Public Depositories.

The statute requires a deposit of all funds in the custody of a treasurer of a municipal corporation in qualified public depositories. Slope County v. Douglas, 49 N.D. 1026, 194 N.W. 385, 1923 N.D. LEXIS 36 (N.D. 1923).

DECISIONS UNDER PRIOR LAW

Bank of North Dakota Exclusive Depository.

Act creating Bank of North Dakota (S.L. 1919, ch. 147) deprived county commissioners of power to designate any institution other than the Bank of North Dakota as a depository of county funds. McHenry County v. Northern Trust Co., 51 N.D. 646, 200 N.W. 888 (1924). Compare State ex rel. Kopriva v. Larson, 48 N.D. 1144, 189 N.W. 626 (1922) which seems to hold to the contrary although apparently not so regarded in the Northern Trust case.

21-04-04. Money deposited promptly — Withdrawal — Penalty.

The treasurer of a public corporation and every other person legally charged with the custody of public funds, which, according to the provisions of this chapter, must be deposited in the Bank of North Dakota or in a depository duly designated as provided in this chapter, promptly upon receipt of such funds, shall deposit the same in such depository. All such public funds must be deposited in the name of the state, state institution, or public corporation to which the same belong. Checks or drafts on funds deposited as herein provided must be drawn by the legal custodian thereof in the legal custodian’s official capacity only, and no checks or drafts on such deposits may be paid or honored by such depository unless so drawn.

Source: S.L. 1923, ch. 199, §§ 3, 15; 1925 Supp., §§ 714a3, 714a15; S.L. 1927, ch. 229, § 1; R.C. 1943, § 21-0404; S.L. 1975, ch. 106, § 215.

Notes to Decisions

Treasurer’s Receipt of Funds.

If the county treasurer, upon demand, receives public funds deposited in one bank, he is required to redeposit the same in another depository bank. Stutsman County v. Dakota Trust Co., 47 N.D. 228, 181 N.W. 586, 1921 N.D. LEXIS 91 (N.D. 1921).

21-04-05. Financial institution — Designation as depository.

Any financial institution duly incorporated in this state under and pursuant to the laws governing the incorporation of financial institutions, and any financial institution situated and doing business within this state, and the Bank of North Dakota, may be designated a depository of public funds by the proper board as herein defined. The board may select two or more financial institutions in the same county as depositories, but if more than one financial institution is designated, the board shall deal with the financial institutions selected and designated impartially, both as to the deposit of funds and the withdrawal of funds and the requirement as to bonds. The board shall take into consideration, in selecting and designating the depository or depositories, the condition of each financial institution and the capital, surplus, and general credit thereof.

Source: S.L. 1923, ch. 199, § 4; 1925 Supp., § 714a4; R.C. 1943, § 21-0405; S.L. 1983, ch. 282, § 3.

Notes to Decisions

Designation of Depository Outside County.

The county commissioners may not designate a depository bank outside of the county, if there are functioning banks in the county. Baird v. Divide County, 58 N.D. 867, 228 N.W. 226, 1929 N.D. LEXIS 291 (N.D. 1929).

Treasurer Does Not Select Depository.

It is not the treasurer’s duty to select depositories but to comply with the orders of the board of education which has the authority to designate a depository. Board of Educ. v. Nelson, 33 N.D. 462, 157 N.W. 664, 1916 N.D. LEXIS 109 (N.D. 1916).

21-04-06. Designating public depositories where there is only one financial institution or no financial institution.

In a county where only one financial institution is located or functioning, the board may designate such financial institution as a depository, or it may designate another financial institution or financial institutions, within the state, or the Bank of North Dakota, as depository in the manner and upon the conditions provided in this chapter. In a county where no financial institution is in existence or functioning, the board may designate the Bank of North Dakota, or any financial institution, outside of such county and within the state, as depository in the manner and upon the conditions provided in this chapter for the selection of depositories of public funds. In case there is no financial institution within any city, township, or school district, the governing board thereof, if it deems it more advantageous and for the best public interest and convenience, may select as a depository a conveniently located financial institution in an adjoining county, which thereupon shall qualify as a depository by giving such bond as is required from a financial institution within said county. Said bond must be approved by such governing board as to sufficiency and by the state’s attorney of the county in which such city, township, or school district is located as to form and must be deposited in the office of the county auditor of such county.

Source: S.L. 1923, ch. 199, § 5; 1925 Supp., § 714a5; S.L. 1927, ch. 238, § 1; R.C. 1943, § 21-0406; S.L. 1967, ch. 323, § 55; 1983, ch. 282, § 4.

21-04-07. Limitation on county deposit in financial institution.

In no case may the amount of county funds deposited by the board of county commissioners in any one financial institution exceed the combined capital and surplus of such financial institution. In a county where the deposits to be made by the board of county commissioners of county funds exceed the combined capital and surplus of all the financial institutions in the county, qualified as depositories, the board of county commissioners nevertheless may deposit such county funds within the county upon the condition that such financial institutions furnish sufficient bonds as required in this chapter.

Source: S.L. 1923, ch. 199, § 6; 1925 Supp., § 714a6; R.C. 1943, § 21-0407; S.L. 1983, ch. 282, § 5.

Notes to Decisions

Excessive Deposits.

Deposits in excess of the statutory amount cannot be made at the will of the treasurer, and loaned out by the depositories at will, because to do so would take away all of the security aimed at by the law. State v. Bickford, 28 N.D. 36, 147 N.W. 407 (N.D. 1914).

21-04-08. Bond of depository — Approval or disapproval — Term.

Except as is otherwise provided in sections 21-04-16 and 21-04-17, and before any deposit is made in any depository other than the Bank of North Dakota, by or in behalf of any public corporation, such depository shall furnish a bond payable to the public corporation making such deposit in an amount that at least equals the largest deposit that at any time may be in such depository. Such bond must be approved as to form by the state’s attorney and as to amount and sufficiency by the board. If the board fails or refuses to approve any such bond, the same may be presented to the judge of the district court, upon three days’ notice to the clerk of the public corporation to which such bond was submitted, and the judge shall proceed forthwith to hear and determine the sufficiency of such bond and may approve or disapprove the same as the facts warrant. If the judge approves such bond, the said financial institution must be declared a depository of the funds of such public corporation. The sureties on all bonds required by public corporations according to the provisions of this chapter shall justify as required by chapter 32-02. In lieu of such personal bond, the governing board of the public corporation involved may require the financial institution designated as a depository to file a surety bond for a sum equal to the amount of funds such financial institution may receive according to the provisions of this chapter. Such bond, when approved, must be deposited with the county auditor. Such bond must be a continuing bond and must be binding until the proper board of the public corporation shall require a new or different bond, but in no case involving the deposit of funds of public corporations may such bond be continued without a renewal thereof for a longer period than four years.

Source: S.L. 1923, ch. 199, § 7; 1925 Supp., § 714a7; S.L. 1939, ch. 102, § 1; 1941, ch. 101, § 1; R.C. 1943, § 21-0408; S.L. 1983, ch. 282, § 6.

Notes to Decisions

Additional Bonds.

Where depository of county funds furnishes additional bond during effective period of original bonds, this later bond does not discharge the sureties on former bond, in absence of showing that the later bond was furnished and accepted as a substitute for former bonds. Emmons County v. Kleppe, 61 N.D. 536, 238 N.W. 651, 1931 N.D. LEXIS 305 (N.D. 1931).

Bank of North Dakota General Depository.

S.L. 1921, ch. 56, made the Bank of North Dakota a general depository from the date it took effect, and until other banks qualified by furnishing required bond, it was the only legal depository of demand funds. Slope County v. Douglas, 49 N.D. 1026, 194 N.W. 385, 1923 N.D. LEXIS 36 (N.D. 1923).

The Bank of North Dakota is not required to furnish bonds in order to qualify as a depository. Slope County v. Douglas, 49 N.D. 1026, 194 N.W. 385, 1923 N.D. LEXIS 36 (N.D. 1923).

Bonding Provision Not Affected by Repeal of Prior Statute.

Repeal of statute which required that all county funds be deposited in the Bank of North Dakota did not repeal the provisions of such statute which required bond to be given by a depository of county funds. Golden Valley County v. Lundin, 52 N.D. 420, 203 N.W. 317, 1925 N.D. LEXIS 39 (N.D. 1925).

Bond Mandatory.

It was mandatory duty of public board to require and of depository to furnish an adequate bond, personal or surety in the discretion of the board, before one dollar of public money might be deposited in the bank. Divide County v. Baird, 55 N.D. 45, 212 N.W. 236, 1926 N.D. LEXIS 42 (N.D. 1926).

Deposit Limit.

The amount of the bond furnished is the maximum limit for deposits in the depository bank. Towner County v. Rother, 56 N.D. 707, 219 N.W. 110, 1928 N.D. LEXIS 190 (N.D. 1928).

Duration of Depository Bond.

Although county depository bonds contained no time limit, they expired by force of statute four years from date of acceptance and approval. Emmons County v. Kleppe, 61 N.D. 536, 238 N.W. 651, 1931 N.D. LEXIS 305 (N.D. 1931).

The duration of a statutory depository bond, unless renewed as provided by statute, is limited to four years from the date of its execution and delivery. Larson v. Engebretson, 66 N.D. 549, 267 N.W. 660, 1936 N.D. LEXIS 201 (N.D. 1936).

Insolvency of Depository.

Closing of depository bank because of insolvency is not breach of condition of bank’s bond to pay deposits on demand or to perform all other obligations imposed by law. Keystone Sch. Dist. No. 7 v. Oster, 55 N.D. 245, 212 N.W. 928 (1927).

Judgment Against Sureties.

Judgment against sureties upon the bond of a depository cannot be in a sum greater than the amount for which the bond was given. Emmons County v. Beal, 61 N.D. 534, 238 N.W. 655, 1931 N.D. LEXIS 304 (N.D. 1931).

Liability of Sureties Canceled.

S.L. 1919, ch. 7, § 7 canceled the liability of sureties on depository bonds when it required the deposit of public funds in the Bank of North Dakota and prohibited their deposit elsewhere. City of Dickinson v. Dakota Nat'l Bank, 52 N.D. 204, 202 N.W. 279, 1925 N.D. LEXIS 21 (N.D. 1925).

Number of Sureties.

S.L. 1921, ch. 56 required neither a formal designation by the county commissioners of a legal depository nor any particular number of sureties upon the bond furnished. Dickey County v. Gesme, 51 N.D. 272, 199 N.W. 873, 1924 N.D. LEXIS 179 (N.D. 1924).

Period of Sureties’ Liability.

Although a bond given by a depository cannot continue longer than four years, sureties are liable to the school district for amount deposited with bank during the four years and unpaid, even though bank does not default until after four years have expired. School Dist. v. Stomberg, 61 N.D. 6, 236 N.W. 728, 1931 N.D. LEXIS 237 (N.D. 1931); Emmons County v. Kleppe, 61 N.D. 536, 238 N.W. 651, 1931 N.D. LEXIS 305 (N.D. 1931).

Statute of Limitations on Surety Bond.

Where a cause of action accrued on a surety bond more than six years prior to institution of suit, the statute of limitations barred such a cause of action, and appointment of a receiver for the depository did not toll the statute. Lakeville Township v. Northwestern Trust Co., 74 N.D. 396, 22 N.W.2d 591, 1946 N.D. LEXIS 71 (N.D. 1946).

Surety or Personal Bond.

Board of county commissioners had the right to determine whether the bond given should be a surety bond or a personal bond, or bonds of both character. Towner County v. Rother, 56 N.D. 707, 219 N.W. 110, 1928 N.D. LEXIS 190 (N.D. 1928).

21-04-09. Pledge of security in place of depository bond.

The treasurer of a public corporation and every other individual legally charged with the custody of public funds may accept from any financial institution, as security for repayment of deposits, a pledge of securities in lieu of a personal or surety bond. When securities are pledged to the board of any public corporation, the treasurer or other individual legally charged with the custody of public funds shall require security in the amount of one hundred ten dollars for every one hundred dollars of public deposits. Securities that are eligible for the pledge are bills, notes, or bonds issued by the United States government, its agencies or instrumentalities, all bonds and notes guaranteed by the United States government, irrevocable standby letters of credit issued by federal home loan banks of a rating of AA or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, federal land bank bonds, bonds, notes, warrants, certificates of indebtedness, insured certificates of deposit, shares of investment companies registered under the Investment Companies Act of 1940, letters of credit issued by the Bank of North Dakota, and all other forms of securities issued by the state of North Dakota, its boards, agencies, or instrumentalities, or by any county, city, township, school district, park district, or other political subdivision of the state of North Dakota, whether payable from special revenues or supported by the full faith and credit of the issuing body, and bonds issued by any other state of the United States or other securities approved by the banking board. The securities and securities sold under agreements to repurchase as described in section 21-06-07 must be delivered to and held for safekeeping by any financial institution, other than the depository, which the depository and the public corporation may agree upon. Whenever any securities are deposited for safekeeping with a custodian, the custodian shall issue a joint receipt to the depository and the public corporation.

Any financial institution pledging securities, at any time it deems it advisable or desirable, and without the consent of the board of the public corporation, may substitute other eligible securities for all or any part of the securities pledged. The securities substituted must, at the time of the substitution, have a market value at least equal to the market value of the securities released and delivered to the depository.

In the event of the substitution the holder or custodian of the pledged securities shall, on the same day, forward by mail or electronic transmission to the public corporation and the depository financial institution a receipt specifically describing and identifying both the securities substituted and those released and returned to the depository financial institution.

A depository financial institution may fulfill the pledge of securities requirements of this section by maintaining a security pledge schedule that establishes the following:

  1. The names of all public bodies maintaining deposits with the financial institution.
  2. The amount of each deposit maintained by each public body.
  3. The amount of federal deposit insurance corporation insurance applied to each account.
  4. The net deposits exceeding federal deposit insurance corporation coverage for each account.
  5. The amount of net deposit exceeding federal deposit insurance corporation deposit insurance multiplied by one hundred ten percent for each account.
  6. The amount of securities needed to be pledged to fulfill the requirements of this section.
  7. The total number of qualified securities pledged by the financial institution under the requirements of this section.

A financial institution is in compliance with this section as long as the security pledge schedule discloses the total qualified securities pledged in excess of the total pledges needed for a total amount of deposits maintained by all the public bodies with the financial institution as verified by the custodian of the securities every three months and copies are provided to the custodian of the securities and to each of the public corporations maintaining deposits with the financial institution.

No pledge of security or bond may be required for any funds deposited with a financial institution directly or by a financial institution’s participation as a member of a deposit placement service to the extent that the deposits are insured or guaranteed by the federal deposit insurance corporation or the national credit union administration as determined by the commissioner of financial institutions or an insurance company that is qualified to offer excess deposit insurance in this state and which has a rating of A- or better by A.M. Best Company Inc., or the equivalent rating by another recognized rating organization as determined by the insurance commissioner.

Source: S.L. 1939, ch. 102, § 1; 1941, ch. 101, § 1; R.C. 1943, § 21-0409; S.L. 1957, ch. 180, § 1; 1957 Supp., § 21-0409; S.L. 1969, ch. 248, § 1; 1979, ch. 187, § 32; 1983, ch. 282, § 7; 1987, ch. 286, § 1; 1995, ch. 93, § 2; 1995, ch. 241, § 1; 1997, ch. 224, § 1; 2003, ch. 207, § 1; 2009, ch. 208, § 1; 2011, ch. 178, § 1; 2017, ch. 182, § 1, effective August 1, 2017.

Cross-References.

Federal housing administration securities as collateral, see N.D.C.C. § 6-03-49.

21-04-09.1. Letters of credit for public deposits — Security interest — Priority — Written agreement.

Letters of credit issued by the Bank of North Dakota in connection with section 21-04-09 must be secured by collateral. A security interest is created and attaches when the Bank issues a letter of credit in connection with section 21-04-09. Filing is not required for perfection of the security interest created and it is entitled to priority as to all creditors. The board of directors of a financial institution seeking a letter of credit from the Bank shall execute a written agreement with the Bank, reflect approval of the agreement in the board of director’s minutes and, as of the date of execution of the agreement, keep a copy of the agreement as an official record.

Source: S.L. 1999, ch. 228, § 1.

21-04-10. Interest payable to financial institution — Sale of pledged securities on default.

All interest which becomes due and is paid on securities pledged to secure public deposits must be paid over to the depository financial institution until such time as it defaults in the repayment of the funds of the public corporation deposited as provided herein. After thirty days from such default, upon demand in writing made by the public corporation involved, the custodian shall deliver the securities to the public corporation with which pledged, and such securities may be sold as in the case of other pledges, and the proceeds thereof, or so much thereof as may be necessary, must be applied to the repayment of the public deposit.

Source: S.L. 1939, ch. 102, § 1; 1941, ch. 101, § 1; R.C. 1943, § 21-0410; S.L. 1983, ch. 282, § 8.

21-04-11. Record of securities — Reapproval semiannually. [Repealed]

Source: S.L. 1939, ch. 102, § 1; 1941, ch. 101, § 1; R.C. 1943, § 21-0411; repealed by 2017, ch. 182, § 2, effective August 1, 2017.

21-04-12. Termination of depository relationship.

Whenever any depository financial institution desires to terminate the liability for any deposits of any public corporation for which such depository has given a bond or pledged assets for the repayment, it shall notify the board of the public corporation affected of such desire. Thereupon such public corporation immediately shall withdraw such funds from such depository and upon withdrawal, immediately shall release and surrender to such depository financial institution, the bonds or securities which are pledged for the repayment of such deposit.

Source: S.L. 1939, ch. 102, § 1; 1941, ch. 101, § 1; R.C. 1943, § 21-0412; S.L. 1983, ch. 282, § 9.

21-04-13. Board meetings — Designating depositories.

The governing board of any public corporation, except the board of supervisors of any township and the school board of any common school district, at its regular meeting in January of each even-numbered year, shall assemble and examine all outstanding bonds and require new bonds whenever necessary in order to comply with the provisions of this chapter. If no regular meeting of the board in January is required by any other law, the board shall assemble for said purpose not later than the third Tuesday in January. At such meeting, the board shall designate depositories of public funds in accordance with the provisions of this chapter.

Source: S.L. 1923, ch. 199, § 8; 1925 Supp., § 714a8; S.L. 1927, ch. 227, § 1; 1931, ch. 222, § 1; R.C. 1943, § 21-0413; S.L. 1961, ch. 158, § 80; 1969, ch. 249, § 1.

Notes to Decisions

Failure to Notify.

Where bank was designated as depository without sending notice to other banks in county, sureties on bond of depository bank were estopped from asserting that there had been no compliance with statutory requirements for designating depository. School Dist. v. Stomberg, 61 N.D. 6, 236 N.W. 728, 1931 N.D. LEXIS 237 (N.D. 1931).

Redesignation.

If depositories have already been designated and the bonds are sufficient, there is no necessity for a redesignation. Emmons County v. Kleppe, 61 N.D. 536, 238 N.W. 651, 1931 N.D. LEXIS 305 (N.D. 1931).

Responsibility to Designate.

Neither the power nor the resulting responsibility to designate depositories can be divided between the treasurer and the board, but is exclusively in hands of board. Board of Educ. v. Nelson, 33 N.D. 462, 157 N.W. 664, 1916 N.D. LEXIS 109 (N.D. 1916).

21-04-14. Proposals for deposit.

A proposal for deposit must be sealed and delivered to the clerk and must have attached to it a statement showing the financial condition of the financial institution at that time and as disclosed in the several statements of financial condition made during the last preceding twelve months. The clerk shall lay the proposals before the board at the January meeting. Such proposals must be opened by the clerk in the presence of the board and the board, thereupon, shall proceed to designate a depository of public funds under its control.

Source: S.L. 1923, ch. 199, §§ 9, 13; 1925 Supp., §§ 714a9, 714a13; S.L. 1927, ch. 227, § 2; 1931, ch. 222, § 2; R.C. 1943, § 21-0414; S.L. 1969, ch. 249, § 2; 1973, ch. 212, § 1; 1983, ch. 282, § 10.

Notes to Decisions

Failure to Require Proposals.

Failure of county to require, through proposals or otherwise, or failure of depository to pay, interest on an open checking account would not abrogate the liability of depository bond securing such payment. McHenry County v. Northern Trust Co., 51 N.D. 646, 200 N.W. 888, 1924 N.D. LEXIS 67 (N.D. 1924).

21-04-15. Townships and public school districts — Selection of depositories at any time.

The board of supervisors of any township and the school board of any public school district may designate depositories at any meeting of such board and no notice to financial institutions need be given and no formal proposals need be received.

Source: S.L. 1927, ch. 227, § 1; 1931, ch. 222, § 1; R.C. 1943, § 21-0415; S.L. 1961, ch. 158, § 81; 1983, ch. 282, § 11.

Notes to Decisions

Time Deposits.

It was the duty of the school board to designate the depositories, but only as to those in which current deposits are required to be made, and not to time deposits. Board of Educ. v. Nelson, 33 N.D. 462, 157 N.W. 664, 1916 N.D. LEXIS 109 (N.D. 1916).

21-04-16. When no bonds are required.

Whenever it appears that a bank designated by a public corporation as depository of its funds has complied with the provisions of the act of Congress relating to the guaranty of deposits in state and national banks, no bond may be required of said bank to secure the deposits of any part of said public funds up to the amount the deposit is secured in said bank under said federal act.

Source: S.L. 1937, ch. 99, § 1; R.C. 1943, § 21-0416.

21-04-17. When bonds are required.

If at any time it appears that the benefit of the federal act guarantying deposits in financial institutions has been withdrawn or is about to be withdrawn from the financial institution in which any public funds are deposited, the board having control of or supervision over such public funds immediately shall withdraw the full amount thereof from said financial institution, or forthwith shall require the usual bond required to secure the deposits of such public funds, and it is unlawful to continue any financial institution as a depository of public funds unless and until said bonds have been furnished.

Source: S.L. 1937, ch. 99, § 2; R.C. 1943, § 21-0417; S.L. 1983, ch. 282, § 12.

21-04-18. Interest or dividend rates.

Depositories of public funds in this state shall pay substantially the same rate of interest or dividend thereon as such financial institutions pay upon individual deposits.

Source: S.L. 1923, ch. 199, § 13; 1925 Supp., § 714a13; S.L. 1927, ch. 227, § 2; 1931, ch. 222, § 2; R.C. 1943, § 21-0418; S.L. 1967, ch. 191, § 4; 1983, ch. 282, § 13.

Notes to Decisions

Interest Rate upon Default.

Upon default of bank which had previously agreed to pay interest at rate of three percent per annum on average daily balances, the county was entitled to recover, on the bank’s surety bond, interest upon principal demand at seven percent per annum from time of demand on surety. Stutsman County v. Dakota Trust Co., 47 N.D. 228, 181 N.W. 586, 1921 N.D. LEXIS 91 (N.D. 1921); Guilford School Dist. v. Dakota Trust Co., 47 N.D. 235, 181 N.W. 589, 1921 N.D. LEXIS 92 (N.D. 1921).

21-04-19. Itemized statements.

Each depository shall:

  1. Furnish on the first day of each month to the public corporation, the state, or state institution, to the credit of which the deposit is held, an itemized statement of the amount in such deposit subject to check. Such statement must be verified whenever required by the state treasurer as to funds of the state institutions or by the treasurer of any public corporation as to funds of such corporation. All sums of interest accruing on funds so deposited must be credited to said deposit on the first day of each month for the preceding month.
  2. On July first of each year, furnish to the business manager of each school district, and to the county superintendent of schools of the county in which the school district is located, a statement showing the amount of deposits to the credit of each school district at the close of business on June thirtieth.

Source: S.L. 1923, ch. 199, § 14; 1925 Supp., § 714a14; S.L. 1931, ch. 221, § 1; R.C. 1943, § 21-0419.

21-04-20. Report of the treasurer. [Repealed]

Repealed by S.L. 1967, ch. 193, § 1.

21-04-21. Public corporations with less than five hundred dollars.

This chapter does not apply to a public corporation unless the amount in the treasury of such corporation equals or exceeds the sum of five hundred dollars. The board of a public corporation having on hand less than five hundred dollars, and therefore not within the provisions of this chapter, shall deposit all the funds of such public corporation nevertheless in some financial institution selected by the board thereof under such conditions and restrictions as seem adequate to such board to protect the public interest.

Source: S.L. 1923, ch. 199, § 16; 1925 Supp., § 714a16; R.C. 1943, § 21-0421; S.L. 1983, ch. 282, § 14.

21-04-22. Funds deposited — Custodian exonerated.

To the extent that public funds are deposited as provided in this chapter, the legal custodian thereof, and the sureties on the legal custodian’s bond, are exempt from all liability by reason of loss of any such funds from failure or other act of any such depository.

Source: S.L. 1923, ch. 199, § 17; 1925 Supp., § 714a17; R.C. 1943, § 21-0422.

Cross-References.

Nonliability of officers and sureties after deposit of state funds in Bank of North Dakota, see N.D.C.C. § 6-09-08.

Notes to Decisions

County Treasurer.

Where proceeds of state tax collections were lost through the failure of an officially designated public depository, county treasurer was exempted from all liability for losses arising from such failure. State v. Grand Forks County, 71 N.D. 355, 300 N.W. 827, 1941 N.D. LEXIS 177 (N.D. 1941).

School Treasurer.

Where the treasurer deposited school funds in now insolvent depository, both in compliance with the statute and pursuant to order of school board, neither the treasurer nor the sureties on his bond were liable for such lost school funds. Board of Educ. v. Nelson, 33 N.D. 462, 157 N.W. 664, 1916 N.D. LEXIS 109 (N.D. 1916).

State Treasurer.

When money deposited with state by a foreign mutual hail insurance company was deposited in the legally designated depositories, the state treasurer was not liable on his bond, if any part of same became lost through failure or bankruptcy of any of depositories. Des Moines Mut. Hail & Cyclone Ins. Ass'n v. Steen, 43 N.D. 298, 175 N.W. 195, 1919 N.D. LEXIS 37 (N.D. 1919).

21-04-23. Penalty.

Any person violating any of the provisions of this chapter is guilty of a class A misdemeanor.

Source: S.L. 1923, ch. 199, § 18; 1925 Supp., § 714a18; R.C. 1943, § 21-0423; S.L. 1975, ch. 106, § 216.

Cross-References.

Penalty for class A misdemeanor, see N.D.C.C. § 12.1-32-01.

Notes to Decisions

Duty of School Treasurer.

It was the duty of the school treasurer to deposit funds in accordance with directions of school board, or be subject to imprisonment or forfeiture, or both. Board of Educ. v. Nelson, 33 N.D. 462, 157 N.W. 664, 1916 N.D. LEXIS 109 (N.D. 1916).

21-04-24. All public funds are governed by provisions of chapter.

Any board, commission, bureau, or individual having the legal custody of any public funds that do not expressly or by name come within the provisions of the preceding sections of this chapter, nevertheless must be governed by the provisions of this chapter. They shall deposit such funds only in legal depositories and shall comply with the other provisions hereof as nearly as may be. They are subject to the penalties herein provided.

Source: S.L. 1923, ch. 199, § 19; 1925 Supp., § 714a19; R.C. 1943, § 21-0424.

CHAPTER 21-05 Claims Against Townships and Counties

21-05-01. Claims against township or county — How accounts stated.

No account or claim against any township or county of this state may be allowed by the governing body thereof until a full itemized statement in writing has been filed with the governing body or unless otherwise authorized by the governing body pursuant to contract or other action. The governing body, in its discretion, may require the filing of any additional information which it may deem necessary to the proper understanding and audit of any claim or account and it may require the filing of a sworn statement in such form as it may prescribe. The provisions of this section, however, do not apply to any claim or demand for an annual salary or per diem of jurors or witnesses fixed by or in pursuance of any statute. Whenever the county auditor is not readily available to sign and issue warrants upon the county treasurer for the payment of the salary or per diem of jurors or witnesses, the county treasurer is authorized to pay such salary or per diem upon the written order of the judge of the court in which such jurors or witnesses have served and in such cases the county treasurer shall furnish the county auditor with statements of all claims paid.

Source: S.L. 1883, ch. 112, § 87, subch. 1; R.C. 1895, § 2626; R.C. 1899, § 2626; R.C. 1905, § 3162; C.L. 1913, § 4222; R.C. 1943, § 21-0501; S.L. 1947, ch. 191, § 1; 1955, ch. 171, § 1; 1957 Supp., § 21-0501; S.L. 1983, ch. 283, § 1.

Cross-References.

Townships, actions permitted by and against, see N.D.C.C. § 58-14-01.

Townships, auditing of accounts payable by, see N.D.C.C. § 58-11-01.

Notes to Decisions

Acceptance of Payment.

Where unliquidated claims are presented to the board of county commissioners for allowance, and are considered together and allowed at a lump sum less than the amount claimed, and the warrant is drawn for the amount allowed and is accepted by the claimant, the acceptance is presumed to be in full payment of the claims presented. Paulson v. Ward County, 23 N.D. 601, 137 N.W. 486, 1912 N.D. LEXIS 122 (N.D. 1912).

Application Limited to Those Doing Business With County.

This section did not apply where counties held excess money received through improper distribution under section 39-04-39 and for which suit was brought by other counties, since application of this section is limited to those who do business with county. Richland County v. State, 180 N.W.2d 649, 1970 N.D. LEXIS 136 (N.D. 1970).

County Commissioners’ Compensation.

Statute requiring claim against county to be written, itemized, and verified applies to claims presented by county commissioners for official services. Ekblad v. Williams County, 69 N.D. 576, 289 N.W. 90, 1939 N.D. LEXIS 187 (N.D. 1939).

Eminent Domain.

Where property owner sought compensation from township for taking of his property for public purposes, he did not have to follow the provisions of C.L. 1913, § 4222. Schilling v. Carl Township, 60 N.D. 480, 235 N.W. 126, 1931 N.D. LEXIS 193 (N.D. 1931), overruled in part, Hager v. City of Devils Lake, 2009 ND 180, 773 N.W.2d 420, 2009 N.D. LEXIS 188 (N.D. 2009).

Superintendent of Schools.

Superintendent of schools was not the custodian of funds appropriated by county commissioners for clerical assistance in his office, and he was not authorized to disburse same, or to audit and allow or reject such claim for clerical assistance. State ex rel. Wiles v. Heinrich, 11 N.D. 31, 88 N.W. 734, 1902 N.D. LEXIS 176 (N.D. 1902).

Collateral References.

Compromise: power of county or its officials to compromise claim, 15 A.L.R.2d 1359.

Amount of damages stated in notice of claim against municipality or county as limiting amount of recovery, 24 A.L.R.3d 965.

21-05-02. Accounts may be verified.

The verification described in section 21-05-01 may be in substantially the following form:

Certificate

I do hereby certify that the within bill, claim, account, or demand is just and true; that the money therein charged actually was paid for the purpose therein stated; that the services therein charged actually were rendered and of the value therein charged, that no part of such bill, claim, account, or demand has been paid; and that the goods therein charged actually were delivered and were of the value charged. Sign Here If signed for a firm or company show authority on this line.

Click to view

Source: S.L. 1883, ch. 112, § 88, subch. 1; R.C. 1895, § 2627; R.C. 1899, § 2627; R.C. 1905, § 3163; C.L. 1913, § 4223; S.L. 1915, ch. 115, § 1; 1925 Supp., § 4223; R.C. 1943, § 21-0502; S.L. 1983, ch. 283, § 2.

21-05-03. Additional proof may be required.

The board of county commissioners or board of township supervisors before which any bill, claim, account, or demand against the county or township shall come for audit and approval, if deemed necessary, may require to be furnished a statement made under oath containing such other information as is deemed necessary for the further verification of any such bill, claim, account, or demand.

Source: S.L. 1915, ch. 115, § 1; 1925 Supp., § 4223; R.C. 1943, § 21-0503.

21-05-04. Penalty. [Repealed]

Repealed by S.L. 1975, ch. 106, § 673.

21-05-05. Voucher form. [Repealed]

Repealed by S.L. 1983, ch. 283, § 6.

21-05-06. What accounts not verified.

In case any account, claim, or demand against a county or township is made or presented by any administrator or executor on behalf of the estate of a deceased person, the administrator or executor may not be required to verify the same but may prove the same otherwise to the satisfaction of the governing board.

Source: S.L. 1883, ch. 112, § 88, subch. 1; R.C. 1895, § 2628; R.C. 1899, § 2628; R.C. 1905, § 3164; C.L. 1913, § 4224; R.C. 1943, § 21-0506.

21-05-07. Consideration of account — Action thereon.

Whenever an account, claim, or demand against any township or county is reviewed in the manner prescribed in section 21-05-01, the board to which the same is presented may receive and consider the same and may allow or disallow the same, in whole or in part, as to the board appears just and lawful, saving to such claimant the right of appeal in accordance with the procedure provided in section 28-34-01. Approval by the board must be recorded in the record of its proceedings and this is sufficient to indicate approval without requiring a majority of the members of the board to sign or initial the voucher or order for payment.

Source: S.L. 1883, ch. 112, § 89, subch. 1; R.C. 1895, § 2629; R.C. 1899, § 2629; R.C. 1905, § 3165; C.L. 1913, § 4225; R.C. 1943, § 21-0507; S.L. 1975, ch. 366, § 3; 1983, ch. 283, § 3; 1989, ch. 83, § 11.

Notes to Decisions

Appeal of Board’s Decision.

An appeal from a decision by the board of county commissioners must be tried de novo in the district court. Opening of Gold St. v. Newton, 3 N.W. 329, 2 Dakota 149, 1879 Dakota LEXIS 2 (Dakota 1879).

Failure to Appeal.

An action on a claim is not barred by failure to appeal from the action of the board of county commissioners thereon. Spencer v. Sully County, 33 N.W. 97, 4 Dakota 474 (1887).

Where hospital sued county for medical care provided to county prisoner, hospital was not precluded from bringing suit by its failure to timely appeal from denial of claim by county commission. Appeal was not exclusive remedy, and hospital could maintain an independent action against the county to collect the claim. United Hosp. v. D'Annunzio, 466 N.W.2d 595, 1991 N.D. LEXIS 15 (N.D. 1991).

Full Payment.

Where unliquidated claims against a county are presented to the board of county commissioners and are considered together and allowed at a lump sum less than the amount claimed, and if a warrant is drawn for the amount so allowed and accepted by the claimant, the action is presumed to be in full payment of the claims presented. Paulson v. Ward County, 23 N.D. 601, 137 N.W. 486, 1912 N.D. LEXIS 122 (N.D. 1912).

21-05-08. Penalty for auditing account not itemized.

Any person, whether or not acting as a member of any board, who audits and allows any account, claim, or demand against any county or township required to be itemized, without having the same first duly itemized, is guilty of a class B misdemeanor.

Source: S.L. 1883, ch. 112, § 90, subch. 1; R.C. 1895, § 2630; R.C. 1899, § 2630; R.C. 1905, § 3166; C.L. 1913, § 4226; R.C. 1943, § 21-0508; S.L. 1975, ch. 106, § 217; 1983, ch. 283, § 4.

Cross-References.

Penalty for Class B misdemeanor, see N.D.C.C. § 12.1-32-01.

CHAPTER 21-06 Miscellaneous Provisions

21-06-01. Duplicate obligation — Issuance.

A duplicate of any bond, warrant, interest coupon, or other obligation of the state or of any political subdivision thereof may be issued if such obligation:

  1. Becomes so mutilated or defaced as to be unfit for circulation and the same is surrendered and canceled; or
  2. Is lost or destroyed.

Such duplicate must be issued to the owner, must be marked “duplicate”, and must correspond with the canceled or lost obligation in number, date, amount, and unpaid coupons, and must be signed by the proper officers who then are in office.

Source: S.L. 1927, ch. 103, § 1; R.C. 1943, § 21-0601.

21-06-02. Payment of defaced or lost obligation.

If any instrument which might be duplicated under the provisions of this chapter is due and payable, the same may be paid by the state treasurer or the treasurer of the political subdivision, as the case may be, without the issuance of a duplicate.

Source: S.L. 1927, ch. 103, § 1; R.C. 1943, § 21-0602.

21-06-03. Duplication or payment — By whom ordered — Proof and bond or signed written agreement required.

The duplication or payment of any mutilated, defaced, lost, or destroyed obligation must be made upon resolution duly adopted:

  1. In case of a bond or interest coupon of the state, by the industrial commission.
  2. In case of any other obligation of the state, by the board, officer, or agency which authorized the issuance of the original.
  3. In case of an obligation of a political subdivision, by the governing board thereof.

Before a duplicate may be issued or payment made in connection with a lost or destroyed obligation, the owner thereof shall furnish proof of such loss or destruction whereupon the state or political subdivision, as the case may be, may require either a surety bond in the amount of the lost obligation, a signed written agreement by the owner, or similar assurance conditioned to save the obligor harmless in the premises. If the Bank of North Dakota is the owner of any such obligation, it may not be required to furnish a bond but it shall furnish proof of the loss or destruction of the obligation and shall reimburse the state or political subdivision for any loss or damage suffered by reason of the issuance of such duplicate or the payment of such obligation.

Source: S.L. 1927, ch. 103, § 2; R.C. 1943, § 21-0603; S.L. 1971, ch. 253, § 1.

21-06-04. Record to be kept.

A record of all payments, reissues, and duplicates made in connection with mutilated, defaced, lost, or destroyed obligations must be kept by the state treasurer, or by the treasurer of the political subdivision, as the case may be, showing the date of such payments, duplicates or reissues, and the person or persons to whom paid or issued. Such record at once must be certified to the proper auditing official.

Source: S.L. 1927, ch. 103, § 2; R.C. 1943, § 21-0604.

21-06-05. Documents which may be destroyed — When. [Repealed]

Source: S.L. 1941, ch. 199, §§ 1, 2; R.C. 1943, § 21-0605; S.L. 1955, ch. 172, § 1; 1957 Supp., § 21-0605; S.L. 1967, ch. 323, § 56; 1969, ch. 170, § 2; 1981, ch. 276, § 1; 1989, ch. 293, § 1; repealed by 2015, ch. 140, § 4., effective August 1, 2015.

21-06-06. Procedure for destruction of documents. [Repealed]

Source: S.L. 1941, ch. 199, § 3; R.C. 1943, § 21-0606; S.L. 1955, ch. 172, § 2; 1957 Supp., § 21-0606; S.L. 1967, ch. 323, § 57; 1969, ch. 170, § 3; 1981, ch. 276, § 2; 1989, ch. 293, § 2; repealed by 2015, ch. 140, § 4., effective August 1, 2015.

21-06-07. Political subdivisions may invest funds.

  1. Counties, cities, school districts, park districts, and townships in this state may invest moneys in their general fund, or balances in any special or temporary fund, in:
    1. Bonds, treasury bills and notes, or other securities that are a direct obligation of, or an obligation insured or guaranteed by, the treasury of the United States, or its agencies, instrumentalities, or organizations created by an act of Congress.
    2. Securities sold under agreements to repurchase written by a financial institution in which the underlying securities for the agreement to repurchase are of a type listed above.
    3. Certificates of deposit fully insured by the federal deposit insurance corporation or by the state.
    4. Certificates of deposit, savings deposits, or other deposits fully insured or guaranteed by the federal deposit insurance corporation and placed for the benefit of the public depositor by a public depository through an appropriate deposit placement service as determined by the commissioner of financial institutions.
    5. State and local securities:
      1. Any security that is a general obligation of any state or local government with taxing powers and is rated in the highest three categories by a nationally recognized rating agency.
      2. An obligation of the state housing finance agency that is rated in the highest two categories by a nationally recognized rating agency.
      3. Any security that is a general obligation of a school district and is rated in the highest two categories by a nationally recognized rating agency.
      4. Obligations of this state and general obligations of its political subdivisions.
    6. Commercial paper issued by a United States corporation rated in the highest quality category by at least two nationally recognized rating agencies and matures in two hundred seventy days or less.
  2. Bonds, treasury bills and notes, or other securities so purchased must be taken into consideration in making levies for the ensuing year, and when funds are needed for current expenses, the governing board and authorities of such municipalities may convert those obligations into cash.

Source: S.L. 1944, Sp., ch. 11, § 1; 1955, ch. 173, § 1; R.C. 1943, 1957 Supp., § 21-0607; S.L. 1967, ch. 194, § 1; 1967, ch. 323, § 58; 1995, ch. 93, § 3; 1995, ch. 242, § 1; 2009, ch. 208, § 2; 2011, ch. 178, § 2; 2013, ch. 201, § 1; 2015, ch. 182, § 1, effective August 1, 2015.

21-06-08. Authority to contract with the federal government — Delegation of authority.

The state or any department, division, bureau, commission, board, authority, agency or political subdivision thereof, may enter into any contract with the United States of America or with any agency thereof for the purchase or lease of any equipment, supplies, materials, or other property without regard to provisions of law which require:

  1. The posting of notices or public advertising for bids or of expenditures.
  2. The inviting or receiving of competitive bids.
  3. The delivery of purchases before payment.
  4. The payment of the cost of the contract out of funds theretofore included in the budget of appropriations for the year; provided, however, that the governing body or executive authority, as the case may be of any department, division, bureau, commission, board, authority, agency, or political subdivision of the state may designate by appropriate resolution or order any official or employee of its own to enter a bid or bids in its behalf at any sale of any equipment, supplies, materials, or other property owned by the United States of America or any agency thereof, and may authorize said person to make any downpayment, or payment in full, required in connection with such bidding.

Source: S.L. 1945, ch. 147, § 1; R.C. 1943, 1957 Supp., § 21-0608; S.L. 1967, ch. 195, § 1.

21-06-09. Authorization to make loans or accept grants.

The state, any of its departments, boards, bureaus, or commissions, by and with the approval of the governor, may make loans, or accept advances from the federal government, any agency or instrumentality thereof, for the purpose of aiding in financing the cost of architectural, engineering, and economic investigations and studies, surveys, designs, plans, working drawings, specifications, procedures, and other actions preliminary to the construction of public works and improvements, and may repay to the federal government, any of its agencies or instrumentalities thereof, such loans or advances at such times as the construction of said public works or improvements so planned are undertaken; and any county, city, park district, school district, and township, may likewise, by action of the governing body of the same, also make such loans and accept such advances and repay the same in the same manner. Such loans made or grants accepted may be made or accepted under such rules and regulations as the federal government, or any of its agencies or instrumentalities may prescribe. Provided, however, that neither the state, any of its boards, bureaus, departments, or commissions, nor any of the political subdivisions enumerated herein may incur any liability for the payment of such loans or advances unless the actual construction of such public works and improvements is undertaken; and provided, further, that the provisions of this section may not be construed to apply to loans, grants, or advances to the department of transportation made or to be made by the federal government, any agency or instrumentality thereof, or to such loans, grants, or advances made to political subdivisions by the said department of transportation.

Source: S.L. 1945, ch. 190, § 1; R.C. 1943, 1957 Supp., § 21-0609; S.L. 1967, ch. 323, § 59.

Cross-References.

Emergency commission may authorize acceptance and disbursement of federal funds, see N.D.C.C. § 54-16-04.1.

Municipalities, power to accept aid for public works, see N.D.C.C. §§ 40-05-01 and 40-05.1-06.

Submission of request for federal funds to office of the budget, see N.D.C.C. § 54-44.1-05.

21-06-10. Moneys received through leasing of lands acquired by United States for flood control distributed to counties for schools and roads.

The state treasurer shall pay the moneys allocated to the state under 33 U.S.C. 701(c)(3) to the counties entitled to receive them in proportion to the area of the land in the county acquired by the United States for which compensation is being provided under 33 U.S.C. 701(c)(3) as that area bears to the total of these federal lands in the state. A county receiving an allocation under this section shall disburse the moneys received as follows:

  1. One-half must be paid to the school districts in the county which have lost land subject to taxation because of the acquisition of lands by the United States for which compensation is being provided under 33 U.S.C. 701(c)(3) in proportion to the area of these federal lands in each district as that area bears to the total of such lands in all of the school districts in the county. If, however, all of the land in a district has been acquired by the United States, that district’s proportionate share of the funds allocated under this subsection must be paid into the county tuition fund and expended according to the law governing that fund.
  2. One-quarter must be paid to the county for road purposes to be expended as the county commissioners shall determine.
  3. The final quarter must be allocated among the organized townships, if any, which have lost land subject to taxation because of land acquisitions by the United States for which compensation is being provided under 33 U.S.C. 701(c)(3) and the county for road purposes in proportion to the area of these lands in each township as that area bears to the total area of these federal lands in the county. The county must be allocated a similar proportionate share based on the area of these lands in the county not within an organized township.

This section applies to all funds heretofore received or to be received by the counties entitled thereto.

Source: S.L. 1949, ch. 187, § 1; 1951, ch. 172, § 1; R.C. 1943, 1957 Supp., § 21-0610; S.L. 1979, ch. 310, § 1; 1983, ch. 284, § 1; 1985, ch. 82, § 34; 1985, ch. 283, § 1.

21-06-11. Expenditure of federal revenue-sharing moneys.

A political subdivision may expend federal revenue-sharing moneys for any purpose for which general or special fund moneys of the political subdivision may be expended, regardless of whether a tax levy by a vote of the political subdivision electorate has been made or is required for such purpose. For the purposes of this section, “political subdivision” means any county, city, township, or other unit of local government.

Source: S.L. 1975, ch. 96, § 4.

21-06-12. Use of public funds or property for nonprofit education foundations — Public purposes.

Any school district may provide use of public property or in-kind services of personnel to participate in the creation and administration of nonprofit public school education foundations, subject to an annual audit, to receive, manage, invest, and distribute funds or property provided to the foundation by private or nonschool district governmental entities, if such foundations are established to enhance the mission of the school district by providing facilities or services for recognition of staff and students that are not normally available through the funding of the school district, to administer funds received for education scholarships or endowments established by other entities, to encourage elementary, secondary, and postsecondary education, and to assist in raising, adding, investing, and distributing funds and earnings according to guidelines established by the foundation. The records of a foundation are not subject to audit under section 54-10-14.

Source: S.L. 1993, ch. 243, § 1; 2001, ch. 161, § 24.

CHAPTER 21-07 Sinking Fund Levy and Collection Records

21-07-01. County auditor to deliver to county treasurer schedule of municipal tax levies for sinking funds.

Each county auditor shall deliver to the county treasurer of the county at the time the tax lists are delivered to the county treasurer as provided by section 57-20-06, a separate detailed schedule showing separately the amount of tax and the mill rate of levy therefor for each separate levy for sinking fund certified to the county auditor by the various municipalities partly or wholly within the county, including levies for sinking funds for bonds issued by the county, each stated separately. A true and correct duplicate thereof must be kept by such county auditor among the permanent records of the county auditor’s office.

Source: S.L. 1939, ch. 127, § 1; R.C. 1943, § 21-0701.

21-07-02. County treasurer to keep record of each separate municipal levy for sinking fund.

Each county treasurer, at the close of each month, shall make a permanent office record showing separately and distinctly the amount of each separate municipal levy for sinking fund purposes included in the taxes collected. Such record at all times must show the amount of each annual levy for each separate interest and sinking fund, as shown by the schedule delivered to the county treasurer by the county auditor, which has been collected by the county treasurer.

Source: S.L. 1939, ch. 127, § 2; R.C. 1943, § 21-0702.

21-07-03. County treasurer to deliver to municipal treasurer statement showing amount remitted to sinking fund of municipality.

Each county treasurer, when remitting taxes to the treasurers of the various municipalities of the county as required by law, shall deliver to the municipal treasurer, and county treasurer as custodian, to whom remittance is made, a statement showing definitely the amount included in the sum remitted properly belonging to each separate sinking fund levied by the municipality to whose treasurer remittance is made.

Source: S.L. 1939, ch. 127, § 3; R.C. 1943, § 21-0703.

21-07-04. Penalty. [Repealed]

Repealed by S.L. 1975, ch. 106, § 673.

CHAPTER 21-08 The 1959 Bond Validating Act [Repealed]

[Repealed by S.L. 1981, ch. 277, § 2]

CHAPTER 21-09 Bond Validating Act

21-09-01. Citation. [Repealed]

Repealed by S.L. 1981, ch. 277, § 2.

21-09-02. Definitions.

The following terms, as used or referred to in this chapter, have the following meanings:

  1. “Bonds” includes bonds, notes, warrants, debentures, certificates of indebtedness, temporary bonds, temporary notes, interim receipts, interim certificates, and all instruments or obligations evidencing or representing indebtedness, or evidencing or representing the borrowing of money, or evidencing or representing a charge, lien, or encumbrance on specific revenues, income, or property of a public body, including all revenue bonds, special improvement warrants, refunding improvement bonds and warrants, and, without limitation by the enumeration of the foregoing, all other instruments and obligations, whether payable from a special fund or supported by a pledge of the full faith and credit of the public body issuing the same.
  2. “Public body” includes any county, city, township, school district, irrigation district, drainage district, special improvement district, and any other political or governmental subdivision of the state of North Dakota, and any board, commission, agency, or officer thereof.

Source: S.L. 1961, ch. 193, § 2.

Cross-References.

Word defined by statute always has same meaning, see N.D.C.C. § 1-01-09.

21-09-03. Validation of bonds and incidental proceedings.

All bonds heretofore issued by any public body for any purpose and in any manner consistent with the constitution of the state, and all proceedings heretofore taken by any such body for the authorization, issuance, sale, exchange, execution, and delivery of its bonds, and for the performance of any conditions precedent thereto, and for the provision of taxes, special assessments, and other funds to pay such bonds and interest thereon, are hereby validated, ratified, approved, and confirmed, notwithstanding any lack of power of such public body, or of the governing board, council, commission, or officers thereof, to authorize, issue, sell, exchange, execute, or deliver the same, and notwithstanding any defects, irregularities, or omissions in such proceedings or in such authorization, issuance, sale, exchange, execution, or delivery; and all bonds heretofore issued by such public bodies, and all bonds hereafter issued by them under the authority of proceedings heretofore taken are binding, legal, and enforceable obligations of such public bodies respectively.

Source: S.L. 1961, ch. 193, § 3.

21-09-04. Matters validated.

It is the intent hereof that, without limiting the generality of the foregoing:

  1. This chapter applies to all defects, irregularities and omissions, other than constitutional, in the calling, notice, or conduct of any election, any public hearing, or any meeting of a governing board, council, or commission held for the purpose of authorizing bonds or any project financed by bonds; in the creation of an improvement district, the determination of the necessity and the making of contracts for the acquisition or construction of such project; in the levy of any tax or special assessment appropriated for the payment of bonds; in the establishment of rates and charges for the service of any project; in the pledge of net revenues derived therefrom to the payment of bonds, and in the making of covenants securing such payment.
  2. This chapter applies notwithstanding any lack of power, other than constitutional, to engage in a project or any portion thereof, or to finance the same by issuing bonds; to combine two or more projects or bond issues in the same proceedings; to conduct proceedings in the sequence actually followed; or to exercise jurisdiction over the site at which any project is located, within or without the corporate limits of the public body or of the county in which it is situated or of the state of North Dakota.

Source: S.L. 1961, ch. 193, § 4.

21-09-05. Application of chapter.

The provisions of this chapter relating to validation apply to all bonds issued and proceedings taken by any public body before July 1, 2009.

Source: S.L. 1963, ch. 204, § 2; 1965, ch. 186, § 2; 1967, ch. 196, § 2; 1969, ch. 250, § 2; 1971, ch. 254, § 2; 1975, ch. 221, § 2; 1981, ch. 277, § 1; 1983, ch. 285, § 1; 1987, ch. 287, § 1; 1989, ch. 294, § 1; 1991, ch. 255, § 1; 1993, ch. 244, § 1; 1999, ch. 229, § 1; 2009, ch. 209, § 1.

CHAPTER 21-10 State Investment Board

21-10-01. State investment board — Membership — Term — Compensation — Advisory council.

  1. The North Dakota state investment board consists of:
    1. The governor;
    2. The state treasurer;
    3. The commissioner of university and school lands;
    4. The director of workforce safety and insurance;
    5. The insurance commissioner;
    6. Three members of the teachers’ fund for retirement board or the board’s designees who need not be members of the fund as selected by that board;
    7. Two of the elected members of the public employees retirement system board as selected by that board;
    8. One member of the public employees retirement system board as selected by that board; and
    9. One member of the legacy and budget stabilization fund advisory board, as selected by that board, to serve as a nonvoting member.
  2. The director of workforce safety and insurance may appoint a designee, subject to approval by the workforce safety and insurance board of directors, to attend the meetings, participate, and vote when the director is unable to attend. The teachers’ fund for retirement board may appoint an alternate designee with full voting privileges to attend meetings of the state investment board when a selected member is unable to attend. The public employees retirement system board may appoint an alternate designee with full voting privileges from the public employees retirement system board to attend meetings of the state investment board when a selected member is unable to attend.
  3. The members of the state investment board, except elected and appointed officials and the director of workforce safety and insurance or the director’s designee, are entitled to receive as compensation one hundred forty-eight dollars per day and necessary mileage and travel expenses as provided in sections 44-08-04 and 54-06-09 for attending meetings of the state investment board.
  4. The state investment board may establish an advisory council composed of individuals who are experienced and knowledgeable in the field of investments. The state investment board shall determine the responsibilities of the advisory council. Members of the advisory council are entitled to receive the same compensation as provided the members of the advisory board of the Bank of North Dakota and necessary mileage and travel expenses as provided in sections 44-08-04 and 54-06-09.

Source: S.L. 1963, ch. 205, § 1; 1985, ch. 284, § 1; 1987, ch. 190, § 4; 1989, ch. 295, § 1; 1989, ch. 667, § 4; 1991, ch. 628, § 2; 1993, ch. 245, § 1; 1997, ch. 432, § 12; 1999, ch. 230, § 1; 2003, ch. 561, § 3; 2009, ch. 514, § 1; 2011, ch. 48, § 5; 2019, ch. 205, § 1, effective August 1, 2019.

21-10-02. Board — Powers and duties.

  1. The board is charged with the investment of the funds enumerated in section 21-10-06. It shall approve general types of securities for investment by these funds and set policies and procedures regulating securities transactions on behalf of the various funds. Representatives of the funds enumerated in section 21-10-06 may make recommendations to the board in regard to investments.
  2. The board or its designated agents must be custodian of securities purchased on behalf of funds under the management of the board.
  3. The board may appoint an investment director or advisory service, or both, who must be experienced in, and hold considerable knowledge of, the field of investments. The investment director or advisory service shall serve at the pleasure of the board. The investment director or advisory service may be an individual, corporation, limited liability company, partnership, or any legal entity which meets the qualifications established herein. The board may authorize the investment director to lend securities held by the funds. These securities must be collateralized as directed by the board.
  4. The board may create investment fund pools in which the funds identified in section 21-10-06 may invest.
  5. For purposes of investment of the legacy fund, the board shall give preference to investment firms and financial institutions with a presence in the state.

Source: S.L. 1963, ch. 205, § 1; 1969, ch. 121, § 5; 1975, ch. 222, § 1; 1977, ch. 217, § 1; 1987, ch. 190, § 5; 1989, ch. 667, § 5; 1991, ch. 256, § 1; 1993, ch. 54, § 106; 2021, ch. 81, § 3, effective July 1, 2021.

21-10-02.1. Board — Policies on investment goals and objectives and asset allocation.

  1. The governing body of each fund enumerated in section 21-10-06 shall establish policies on investment goals and objectives and asset allocation for each respective fund. The policies must provide for:
    1. The definition and assignment of duties and responsibilities to advisory services and persons employed by the board.
    2. Rate of return objectives, including liquidity requirements and acceptable levels of risk.
    3. Long-range asset allocation goals.
    4. Guidelines for the selection and redemption of investments.
    5. Investment diversification, investment quality, qualification of advisory services, and amounts to be invested by advisory services.
    6. The type of reports and procedures to be used in evaluating performance.
  2. The asset allocation and any subsequent allocation changes for each fund must be approved by the governing body of that fund and the state investment board. The governing body of each fund shall use the staff and consultants of the retirement and investment office in developing asset allocation and investment policies.

Source: S.L. 1985, ch. 285, § 1; 1989, ch. 667, § 6; 1991, ch. 628, § 3; 2015, ch. 183, § 1, effective August 1, 2015.

21-10-03. Cooperation with Bank of North Dakota. [Repealed]

Repealed by S.L. 1987, ch. 190, § 14.

21-10-04. Board — Meetings.

The state investment board shall select one of its members to serve as chair, one to serve as vice chair, and shall meet at the call of the chair or upon written notice signed by two members of the board.

Source: S.L. 1963, ch. 205, § 1; 1975, ch. 222, § 3; 1985, ch. 284, § 2; 1987, ch. 190, § 6; 1991, ch. 256, § 2; 2011, ch. 179, § 1.

21-10-05. Investment director — Powers and duties.

Subject to the limitations contained in the law or the policymaking regulations or resolutions adopted by the board, the investment director may sign and execute all contracts and agreements to make purchases, sales, exchanges, investments, and reinvestments relating to the funds under the management of the board. This section is a continuing appropriation of all moneys required for the making of investments of funds under the management of the board. The investment director shall see that moneys invested are at all times handled in the best interests of the funds. Securities or investments may be sold or exchanged for other securities or investments.

The investment director shall formulate and recommend to the investment board for approval investment regulations or resolutions pertaining to the kind or nature of investments and limitations, conditions, and restrictions upon the methods, practices, or procedures for investment, reinvestment, purchase, sale, or exchange transactions that should govern the investment of funds under this chapter.

Source: S.L. 1963, ch. 205, § 1; 1987, ch. 190, § 7; 1991, ch. 256, § 3; 2007, ch. 228, § 1.

21-10-06. Funds under management of board — Accounts.

  1. Subject to the provisions of section 21-10-02, the board shall invest the following funds:
    1. State bonding fund.
    2. Teachers’ fund for retirement.
    3. State fire and tornado fund.
    4. Workforce safety and insurance fund.
    5. Public employees retirement system.
    6. Insurance regulatory trust fund.
    7. State risk management fund.
    8. Budget stabilization fund.
    9. Water projects stabilization fund.
    10. Health care trust fund.
    11. Cultural endowment fund.
    12. Petroleum tank release compensation fund.
    13. Legacy fund.
    14. Legacy earnings fund.
    15. A fund under contract with the board pursuant to subsection 3.
  2. Separate accounting must be maintained for each of the funds listed in subsection 1. The moneys of the individual funds may be commingled for investment purposes when determined advantageous.
  3. The state investment board may provide investment services to, and manage the money of, any agency, institution, or political subdivision of the state, subject to agreement with the industrial commission. The scope of services to be provided by the state investment board to the agency, institution, or political subdivision must be specified in a written contract. The state investment board may charge a fee for providing investment services and any revenue collected must be deposited in the state retirement and investment fund.

Source: S.L. 1963, ch. 205, § 1; 1969, ch. 173, § 8; 1973, ch. 280, § 2; 1983, ch. 419, § 1; 1985, ch. 394, § 1; 1985, ch. 395, § 1; 1985, ch. 397, § 2; 1987, ch. 190, § 8; 1987, ch. 288, § 2; 1989, ch. 69, § 13; 1989, ch. 667, § 7; 1995, ch. 329, § 2; 1997, ch. 329, § 1; 1999, ch. 50, § 38; 2001, ch. 431, § 7; 2003, ch. 561, § 3; 2005, ch. 38, § 5; 2009, ch. 210, § 1; 2011, ch. 179, § 2; 2015, ch. 183, § 2, effective August 1, 2015; 2021, ch. 188, § 2, effective August 1, 2021; 2021, 1st Sp. Sess. ch. 550, § 2, effective December 1, 2021.

Cross-References.

Highway patrolmen’s retirement fund, see N.D.C.C. ch. 39-03.1.

State bonding fund, see N.D.C.C. ch. 26.1-21.

State fire and tornado fund, see N.D.C.C. ch. 26.1-22.

Workmen’s compensation fund, see N.D.C.C. ch. 65-04.

21-10-06.1. Board — Investment reports.

The board shall annually prepare reports on the investment performance of each fund under its control. The reports must be uniform and must include:

  1. A list of the advisory services managing investments for the board.
  2. A list of investments at market value, compared to previous reporting period, of each fund managed by each advisory service.
  3. Earnings, percentage earned, and change in market value of each fund’s investments.
  4. Comparison of the performance of each fund managed by each advisory service to other funds under the board’s control and to generally accepted market indicators.

Source: S.L. 1985, ch. 285, § 2; 1991, ch. 256, § 4.

21-10-06.2. Investment costs.

The amounts necessary to pay for investment costs, such as investment counseling fees, trustee fees, custodial fees, performance measurement fees, expenses associated with money manager searches, expenses associated with onsite audits and reviews of investment managers, and asset allocation expenses, incurred by the state investment board are hereby appropriated and must be paid directly out of the funds listed in section 21-10-06 by the fund incurring the expense.

Source: S.L. 1987, ch. 288, § 3; 1989, ch. 667, § 8.

21-10-07. Legal investments.

The state investment board shall apply the prudent investor rule in investing for funds under its supervision. The “prudent investor rule” means that in making investments the fiduciaries shall exercise the judgment and care, under the circumstances then prevailing, that an institutional investor of ordinary prudence, discretion, and intelligence exercises in the management of large investments entrusted to it, not in regard to speculation but in regard to the permanent disposition of funds, considering probable safety of capital as well as probable income. The retirement funds belonging to the teachers’ fund for retirement and the public employees retirement system must be invested exclusively for the benefit of their members and in accordance with the respective funds’ investment goals and objectives.

Source: S.L. 1963, ch. 205, § 1; 1983, ch. 286, § 1; 1985, ch. 286, § 1; 1987, ch. 190, § 9; 1989, ch. 667, § 9.

Cross-References.

Investment of agricultural commodity assessment funds, see N.D.C.C. § 4-24-09.

21-10-07.1. Prudent investor rule — Exception.

Notwithstanding section 21-10-07, for purposes of investment of the legacy fund, the state investment board shall give preference to qualified investment firms and financial institutions with a presence in the state.

Source: S.L. 2021, ch. 81, § 2, effective July 1, 2021.

21-10-08. Reserves — Percentage limitations.

In order to meet claims and liabilities, reserves must be established and maintained in each of the funds in accordance with the investment policy and asset allocation established for each fund.

Source: S.L. 1963, ch. 205, § 1; 1967, ch. 197, § 1; 1987, ch. 190, § 10; 1991, ch. 256, § 5.

21-10-08.1. Social investment — Prohibition.

  1. As used in this section, “social investment” means the consideration of socially responsible criteria in the investment or commitment of public funds for the purpose of obtaining an effect other than a maximized return to the state.
  2. Except as otherwise provided in a state investment policy relating to the investment of the legacy fund and unless the state investment board can demonstrate a social investment would provide an equivalent or superior rate of return compared to a similar investment that is not a social investment and has a similar time horizon and risk, the state investment board may not invest state funds for the purpose of social investment.

Source: S.L. 2021, ch. 189, § 1, effective March 24, 2021.

21-10-09. Personal profit prohibited — Penalty.

No member, officer, agent, or employee of the state investment board may profit in any manner from transactions on behalf of the funds. Any person violating any of the provisions of this section is guilty of a class A misdemeanor.

Source: S.L. 1963, ch. 205, § 1; 1975, ch. 222, § 4; 1989, ch. 667, § 10.

Cross-References.

Penalty for Class A misdemeanor, see N.D.C.C. § 12.1-32-01.

21-10-10. State investment board fund — Cost of operation of board. [Repealed]

Repealed by S.L. 1989, ch. 667, § 13.

21-10-11. Legacy and budget stabilization fund advisory board.

  1. The legacy and budget stabilization fund advisory board is created to develop recommendations for the investment of funds in the legacy fund and the budget stabilization fund to present to the state investment board.
  2. The goal of investment for the legacy fund is principal preservation while maximizing total return and to provide a direct benefit to the state by investing a portion of the principal in the state. Preference must be given to qualified investment firms and financial institutions with a presence in the state for investment of the legacy fund.
  3. The board shall determine the asset allocation for the investment of the principal of the legacy fund including:
    1. A target allocation of ten percent to fixed income investments within the state, of which:
      1. Up to forty percent must be targeted for infrastructure loans to political subdivisions under section 6-09-49.1. The net return to the legacy fund under this paragraph must be fixed at a target rate of one and one-half percent;
      2. Up to sixty percent, with a minimum of four hundred million dollars, must be designated to the Bank of North Dakota’s certificate of deposit match program with an interest rate fixed at the equivalent yield of United States treasury bonds having the same term, up to a maximum term of twenty years; and
      3. Any remaining amounts must be designated for other qualified fixed income investments within the state.
    2. A target allocation of ten percent to equity investments in the state, of which:
      1. At least three percent may be targeted for investment in one or more equity funds, venture capital funds, or alternative investment funds with a primary strategy of investing in emerging or expanding companies in the state. Equity investments under this paragraph must:
        1. Be managed by qualified investment firms, financial institutions, or equity funds which have a strategy to invest in qualified companies operating or seeking to operate in the state and which have a direct connection to the state; and
        2. Have a benchmark investment return equal to the five-year average net return for the legacy fund, excluding in-state investments.
      2. The legacy and budget stabilization fund advisory board may develop guidelines for other eligible investments under this subdivision.
  4. The board consists of three members of the senate appointed by the senate majority leader, three members of the house of representatives appointed by the house majority leader, the president of the Bank of North Dakota or designee, the tax commissioner or designee, the insurance commissioner or designee, and the state treasurer or designee. The board shall select a member from the senate or house of representatives to serve as chairman for no more than one consecutive year and must meet at the call of the chairman.
  5. The board shall report at least semiannually to the budget section.
  6. Legislative members are entitled to receive compensation and expense reimbursement as provided under section 54-03-20 and reimbursement for mileage as provided by law for state officers. The legislative council shall pay the compensation and expense reimbursement for the legislative members.
  7. The legislative council shall provide staff services to the legacy and budget stabilization fund advisory board.
  8. The staff and consultants of the state retirement and investment office shall advise the board in developing asset allocation and investment policies.
  9. The board may develop a process to select a member of the board who is not a member of the state investment board to serve on the state investment board in a nonvoting capacity.

Source: S.L. 2011, ch. 179, § 3; 2019, ch. 205, § 2, effective August 1, 2019; 2021, ch. 81, § 4, effective July 1, 2021; 2021, 1st Sp. Sess. ch. 557, § 1, effective December 1, 2021.

21-10-12. Legacy fund definitions.

For the purposes of section 26 of article X of the Constitution of North Dakota:

  1. “Earnings” means net income in accordance with generally accepted accounting principles, excluding any unrealized gains or losses.
  2. “Principal” means all moneys in the legacy fund not included in earnings as defined under subsection 1.

Source: S.L. 2013, ch. 202, § 1; 2021, ch. 188, § 3, effective August 1, 2021.

21-10-13. Legacy earnings fund — State treasurer — Transfers.

  1. There is created in the state treasury the legacy earnings fund. The fund consists of all moneys transferred to the fund under subsection 2 and all interest and earnings upon moneys in the fund.
  2. Any legacy fund earnings transferred to the general fund at the end of each biennium in accordance with section 26 of article X of the Constitution of North Dakota must be immediately transferred by the state treasurer to the legacy earnings fund.
  3. For each biennium subsequent to the biennium in which the legacy fund earnings are transferred under subsection 2, the amount available for appropriation from the legacy earnings fund is seven percent of the five-year average value of the legacy fund assets as reported by the state investment board. The average value of the legacy fund assets must be calculated using the value of the assets at the end of each fiscal year for the five-year period ending with the most recently completed even-numbered fiscal year.
  4. On July first of each odd-numbered year, from the amount available for appropriation or transfer from the legacy earnings fund for the biennium, the state treasurer shall transfer funding in the following order:
    1. The first one hundred fifty million dollars to the legacy sinking and interest fund under section 6-09.4-10.1.
    2. The next sixty million dollars to the highway tax distribution fund for allocations under section 54-27-19.
    3. Any remaining funds for other purposes as designated by the legislative assembly, including:
      1. Up to fifty million dollars for tax relief pursuant to appropriations or transfers authorized by the legislative assembly;
      2. Up to thirty million dollars to the clean sustainable energy fund pursuant to appropriations or transfers authorized by the legislative assembly; and
      3. Up to thirty million dollars for university research programs, the innovation loan fund to support technology advancement, and workforce enrichment initiatives pursuant to appropriations or transfers authorized by the legislative assembly.
  5. If the amounts transferred under subsection 2 exceed the amount available for appropriation under subsection 3, an amount equal to any appropriations from the legacy sinking and interest fund for bond payments under section 6-09.4-10.1 must be retained in the legacy earnings fund through June 30, 2025, after which an amount equal to twice any appropriations from the legacy sinking and interest fund under section 6-09.4-10.1 for bond payments, but not more than one hundred fifty million dollars, must be retained in the legacy earnings fund. After deducting any amounts to be retained in the legacy earnings fund, the state treasurer shall transfer, within thirty days, any remaining amounts under this subsection in the following order:
    1. The first one hundred million dollars to the legacy fund to become part of the principal.
    2. Any remaining amount to the strategic investment and improvements fund to be used in accordance with the provisions of section 15-08.1-08.

Source: S.L. 2021, ch. 188, § 4, effective August 1, 2021.

CHAPTER 21-11 Natural Resources Development Bond Issue [Repealed]

[Repealed by S.L. 2007, ch. 493, § 9]

21-11-01. Declaration and finding of public purpose. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-02. Application for loan — Form — Contents — Preference of applications. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-03. Processing of application — Fee — Purpose. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-04. Approval or rejection of application. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-05. Approved application filed with industrial commission. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-06. Disbursements of loan — Inspection fee. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-07. Appropriation of funds. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-08. General obligation state of North Dakota bonds, natural resources power development series — Bond purpose. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-09. Preparation of bonds. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-10. Sale and delivery of bonds — Deposit of proceeds. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-11. Bonds tax exempt. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-12. Bonds a general obligation of the state of North Dakota. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-13. Tax levy. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-14. Sinking fund. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-15. Transfer of balance. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-16. Certificates of indebtedness against uncollected taxes. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-17. Investment of funds. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-18. Protection of purchaser. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

21-11-19. Limitation of action. [Repealed]

Repealed by S.L. 2007, ch. 493, § 9.

CHAPTER 21-12 Private Activity Bond Ceiling Allocation

21-12-01. Definitions.

As used in this chapter, unless the context clearly requires otherwise, the following definitions apply:

  1. “Ceiling” means the dollar amount applicable to North Dakota for any calendar year for the issuance of tax-exempt private activity bonds, as determined under the Tax Reform Act.
  2. “Governmental unit” means any political subdivision of North Dakota or other authority in the state, including the state or any of its agencies, instrumentalities, or authorities, having the authority to issue private activity bonds.
  3. “Private activity bond” means a tax-exempt evidence of indebtedness which is a private activity bond under the Tax Reform Act.
  4. “Tax Reform Act” means the Tax Reform Act of 1986 [Pub. L. 99-514] and any federal regulations issued thereunder relating to the allocation of North Dakota’s ceiling for the issuance of tax-exempt private activity bonds.

Source: S.L. 1987, ch. 289, § 1.

21-12-02. Allocation of ceiling.

In lieu of the formula set out in the Tax Reform Act for allocating the ceiling among the state’s governmental units, the governor shall, by executive order or proclamation, establish a different allocation formula which may allocate to a governmental unit a portion of the ceiling or may establish a procedure for a governmental unit to apply to the governor’s office for an allocation by the governor within the ceiling. The application established by the governor may include a request for the following information:

  1. The name of the governmental unit applying for an allocation of the ceiling.
  2. A description of the governmental unit’s proposed project or purpose for which the private activity bonds are intended to be issued.
  3. The location of the project authorized by the governmental unit.
  4. The name and address of the project owner or operator and all principal users of the project or the manager or director of the program which is the purpose for which the private activity bonds are to be issued.
  5. A certified copy of the inducement resolution adopted by the governmental unit under the Tax Reform Act approving the project or purpose and granting preliminary authorization for the issuance of the private activity bonds, or other preliminary approval of the issuance of the private activity bonds which is comparable to an inducement resolution.
  6. A preliminary opinion of a qualified bond counsel which states that the proposed bond issue qualifies as a private activity bond under applicable federal law and, if the private activity bonds are issued, that the bonds must be within the ceiling for the interest on the bonds to be exempt from federal income taxation under the Tax Reform Act.
  7. Evidence that all public hearing requirements concerning the proposed project or purpose have been met under state law and the Tax Reform Act.
  8. The allocation of the ceiling requested by the governmental unit.

Source: S.L. 1987, ch. 289, § 2.

21-12-03. Order in which allocations issued.

Allocations of the ceiling may be made on the basis of the chronological receipt of completed applications or, if completed applications are received on the same day by the governor, according to the earliest inducement resolution date, or on a case-by-case basis without regard to the date of receipt of the application or to the date of the inducement resolution.

Source: S.L. 1987, ch. 289, § 3.

21-12-04. Requirements of allocations.

The governor may establish, by executive order or proclamation, other procedures and requirements for the proper allocation of the ceiling, which may include the following:

  1. The procedure for notification of approval or disapproval of application for an allocation.
  2. The period during which the private activity bonds must be issued under an allocation and a procedure for applying for an extension of that period.
  3. A procedure for authorizing a carryforward to a governmental unit of all or a portion of the excess of North Dakota’s ceiling for any calendar year over the aggregate amount of tax-exempt private activity bonds actually issued during that calendar year by governmental units, to the extent and for the period for which a purpose is eligible to be treated as a carryforward project under the Tax Reform Act.
  4. Whether an allocation validly granted may be transferred between projects and purposes by governmental units.
  5. A procedure for reapplication if a request for an allocation by a governmental unit has been disapproved.
  6. A procedure for recapturing an allocation for which the period during which the allocation is valid has expired.
  7. Any additional procedures or requirements which the governor determines to be necessary for the proper administration and to carry out the purposes of this chapter.

Source: S.L. 1987, ch. 289, § 4.

CHAPTER 21-13 Political Subdivision Borrowing

21-13-01. Definitions.

As used in this chapter, unless the context or subject matter otherwise requires:

  1. “Political subdivision” means a local government unit created by statute or by the Constitution of North Dakota for local governmental or other public purposes.
  2. “Revenue” means any of the following:
    1. Amounts to be received from a distribution of federal moneys, including bureau of Indian affairs contracts.
    2. Amounts to be received from a distribution of state moneys pursuant to a state appropriation or a state statutory or constitutional provision.

History. § 4.

21-13-02. Political subdivision authority to enter agreement for bank or credit union loans.

A political subdivision may borrow against its anticipated revenue, from a bank or credit union located in this state. A bank or credit union loan and terms must be authorized by resolution of the governing body for the political subdivision. The resolution must identify the revenue to be used to repay the loan and any collateral that will secure repayment of the loan. The loan agreement must be signed on behalf of the political subdivision by the president, chairman, or equivalent officer, and also by the political subdivision’s auditor, business manager, secretary, or equivalent officer.

History. § 4; 2017, ch. 183, § 1, effective August 1, 2017.

21-13-03. Limit on amount of loans — Loan terms.

Except as limited by this section, a bank or a credit union and political subdivision may agree to terms and conditions of a bank or credit union loan, including the rate of interest and any collateral.

  1. A political subdivision may have no more than five hundred thousand dollars in outstanding principal on bank or credit union loans at any time.
  2. A political subdivision bank or credit union loan must be paid in full within five years from the date of loan origination.
  3. The loan documents must describe the revenues from which the loan is anticipated to be paid and may require the political subdivision to establish a separate fund for the repayment of the loan, including interest, on or before the due date.
  4. Collateral for a loan may consist only of property that is purchased with loan proceeds.

History. § 4.

21-13-04. Delinquent loans.

If designated revenues are not sufficient to pay a loan balance, in addition to the designated revenues, the political subdivision may set aside up to ten percent of the amount of the collections from current tax revenues to pay to the lending bank or credit union on a monthly basis until the delinquent loans have been paid in full.

History. § 4.