TITLE III
TOWNS, CITIES, VILLAGE DISTRICTS, AND UNINCORPORATED PLACES

Chapter 34
CAPITAL RESERVE FUNDS FOR CITIES

Section 34:1

    34:1 Establishment of Reserves Authorized. –
Any city may raise and appropriate money as provided by RSA 34:2, from any source other than money given to the city for charitable purposes, for the establishment of a capital reserve fund for the financing of all or part of the cost of:
I. The construction, reconstruction, or acquisition of a specific capital improvement, or the acquisition of a specific item or of specific items of equipment;
II. The construction, reconstruction, or acquisition of a type of capital improvement or the acquisition of a type of equipment;
III. A reappraisal by appraisers of the department of revenue administration or such other appraisers, appraisal firms or corporations approved by the commissioner of revenue administration, of the real estate in such city for tax assessment purposes;
IV. The acquisition of land;
V. The acquisition of a tax map of such city;
VI. Municipal and regional transportation improvement projects including engineering, right-of-way acquisition and construction costs of transportation facilities, and for operating and capital costs for public transportation; or
VII. The repayment of bonded debt issued for the purpose specified in the fund, in conformance with existing Internal Revenue Service rules.

Source. 1949, 181:1. RSA 34:1. 1973, 51:1. 1977, 588:45. 1985, 285:1, eff. Aug. 10, 1985. 1998, 4:2, eff. May 17, 1998. 2000, 224:2, eff. July 31, 2000. 2007, 178:1, eff. Aug. 17, 2007.

Section 34:1-a

    34:1-a Non-Capital Reserve Funds Authorized. – Any city may establish a reserve fund for the maintenance and operation of a specific public facility or type of facility, a specific item or type of equipment, or for any other distinctly-stated, specific public purpose that is not foreign to its institution or incompatible with the objects of its organization. Such funds shall be subject to all provisions and limitations of this chapter as are applicable to capital reserve funds. The legal validity of such a fund properly established shall not be affected by its designation as a "trust," "reserve," "capital reserve," or any other designation.

Source. 1995, 20:4, eff. June 11, 1995.

Section 34:2

    34:2 Hearing. – The authority granted by RSA 34:1 shall be exercised by the city council only after a public hearing on the annual budget as required by RSA 44:10, and by the adoption of a capital improvement budget and program. The public notice of said hearing shall include a statement distinctly stating the purposes for which such reserve is to be established.

Source. 1949, 181:2, eff. May 3, 1949.

Section 34:3

    34:3 Payments Into Fund. –
I. There may be paid into any such capital reserve fund such amounts as may from time to time be raised and appropriated therefor, from any source other than money given to the city for charitable purposes, within the limits as provided in RSA 34:4.
II. The city council may also by a favorable vote of 3/4 of its members, transfer to such fund after a public hearing with notice as provided in RSA 34:2, not more than 1/2 of its unencumbered surplus funds remaining on hand at the end of the fiscal year, within the limits as provided in RSA 34:4.

Source. 1949, 181:3, eff. May 3, 1949. 2000, 224:3, eff. July 31, 2000.

Section 34:4

    34:4 Limitations on Appropriations. – No city shall raise and appropriate or transfer from any of its unencumbered surplus funds in any one year for such reserves a total amount in excess of 1/4 of one percent of the last assessed valuation of the city.

Source. 1949, 181:4, eff. May 3, 1949.

Section 34:5

    34:5 Investment. – The moneys in such fund shall be kept in a separate account and not intermingled with the other funds of the city. Said capital reserve fund shall be invested only by deposit in a federally insured bank authorized to accept deposits under RSA 6:8, I and I-a, in such stocks and bonds as are legal for investment by New Hampshire savings banks, or in participation units in the public deposit investment pool established pursuant to RSA 6:45, or in obligations with principal and interest fully guaranteed by the United States government. The obligations may be held directly or in the form of securities of or other interests in any open-end or closed-end management-type investment company or investment trust registered under 15 U.S.C. section 80a-1 et seq., if the portfolio of the investment company or investment trust is limited to such obligations and repurchase agreements fully collateralized by such obligations. When so invested in good faith the trustees hereinafter named shall not be liable for the loss of such moneys. Any interest earned or capital gains realized on the moneys so invested shall accrue to and become a part of the fund. Deposits in banks shall be made in the name of the city, and it shall appear upon the book thereof that the same is a capital reserve fund. Any person who directly or indirectly receives any such funds or moneys for deposit or for investment in securities of any kind shall, prior to acceptance of such funds, make available at the time of such deposit or investment, an option to have such funds secured by collateral having a value at least equal to the amount of such funds. Such collateral shall be segregated for the exclusive benefit of the city. Only securities defined by the bank commissioner in rules adopted pursuant to RSA 383-B:3-301(e) shall be eligible to be pledged as collateral. The trustees shall formally adopt an investment policy for all investments made by them or by their agents for any trust funds in their custody in conformance with the provisions of applicable statutes. The trustees shall review and confirm the investment policy at least annually. A copy of the investment policy shall be filed with the attorney general.

Source. 1949, 181:5. RSA 34:5. 1965, 174:1. 1991, 268:6; 383:3. 1995, 20:5, eff. June 11, 1995. 1996, 209:8, eff. Aug. 9, 1996. 2007, 164:2, eff. Aug. 17, 2007. 2015, 272:41, eff. Oct. 1, 2015. 2021, 65:12, eff. Aug. 3, 2021. 2023, 36:2, eff. July 16, 2023.

Section 34:6

    34:6 Trustees of Funds. – The trustees of trust funds of the city shall have custody of all capital reserves. Said trustees shall give bond in such amount and in such form as the city council or board of aldermen shall prescribe, and any trustee who shall make payment of income or principal from any such capital reserve fund before the approval of his bond in writing by the city council or board of aldermen shall be personally liable to the city for any loss resulting from such payment, to be recovered by the city at the suit of any citizen. The expenses of said trustees in said capacity and the expense of their bonds shall be charged as incidental city charges.

Source. 1949, 181:6, eff. May 3, 1949.

Section 34:7

    34:7 Payments From Surplus. – Whenever the city councils have voted in accordance with RSA 34:3 to transfer any accumulated surplus to the capital reserve fund, the city clerk shall forward immediately to the city treasurer a certified copy of said vote; and the city treasurer on receipt of said copy shall transfer immediately to the trustees of trust funds of said city the amount specified in said vote.

Source. 1949, 181:7, eff. May 3, 1949.

Section 34:8

    34:8 Transfer of Sums Appropriated. – Whenever the city councils legally vote to raise and appropriate any sum for the capital reserve fund, the same duties shall devolve upon the city clerk and city treasurer, as specified in RSA 34:7, except that said sum must be transferred on or before the end of the fiscal year in which said vote is made.

Source. 1949, 181:8, eff. May 3, 1949.

Section 34:9

    34:9 Penalty for Failure to Perform. – Any of the above officers who shall fail to perform the duties above set forth shall be guilty of a violation for every week said failure shall continue.

Source. 1949, 181:9. RSA 34:9. 1973, 531:8, eff. at 11:59 P.M., Oct. 31, 1973.

Section 34:10

    34:10 Expenditures. –
I. The trustees of trust funds holding said capital reserve funds in trust, as hereinbefore provided, shall hold the same until such time as the city councils shall name agents of the city to carry out the objects designated by the city councils as prescribed by RSA 34:2. Expenditures from said capital reserve funds shall be made only for or in connection with the purposes for which said fund was established, or as amended as provided by RSA 34:11.
II. Notwithstanding the prohibition of debt retirement fund establishment in RSA 33:2, capital reserve funds may be used for multiple payments under a financing agreement for the purpose for which the capital reserve was established. If the financing agreement is a lease purchase agreement, the lease purchase agreement may not contain an "escape clause" or a "non-appropriation clause."

Source. 1949, 181:10, eff. May 3, 1949. 2007, 178:2, eff. Aug. 17, 2007.

Section 34:11

    34:11 Change of Purpose. – After the purpose for which a capital reserve fund is established has been determined, no change shall be made in the purpose for which said fund may be expended unless and until such change has been authorized by a favorable vote of 3/4 of all members of the city councils or board of aldermen, for a specific capital improvement or specific item or type of equipment and such change shall be made only after a public hearing held pursuant to notice as provided in RSA 34:2.

Source. 1949, 181:11, eff. May 3, 1949.

Section 34:11-a

    34:11-a Discontinuing Fund. – The authority granted by RSA 34:1 may be discontinued by the city council only after a public hearing. The public notice of such hearing shall include a statement distinctly stating the reasons for which such reserve is to be discontinued. If such fund is discontinued, the trustees of trust funds holding the account for such fund shall pay all the moneys in such fund if any, to the city treasury as applicable.

Source. 1995, 137:2, eff. May 24, 1995.

Section 34:12

    34:12 Audit; Records. – The accounts of the trustees of trust funds holding the capital reserve funds shall be audited annually by the city auditor, the securities shall be exhibited to said auditor, and said auditor shall certify the facts found by the audit and the list of all securities held. Said trustees holding said funds shall keep a record of all such capital reserve funds in a record book, which shall be open to public inspection.

Source. 1949, 181:12, eff. May 3, 1949.

Section 34:13

    34:13 Disbursements. – No person holding in custody such capital reserve fund shall make any payment of income or principal or authorize the same to be done except in accordance with the provisions hereof. Whoever violates the provisions of this section shall be guilty of a misdemeanor if a natural person, or guilty of a felony if any other person.

Source. 1949, 181:13. RSA 34:13. 1973, 529:4, eff. at 11:59 P.M., Oct. 31, 1973.

Section 34:14

    34:14 Definition. – Where the words "trustees of trust funds" are used herein they shall be construed to mean the board in any city which is charged, by the city charter, with duties of town trustees of trust funds.

Source. 1949, 181:14, eff. May 3, 1949.

Section 34:15

    34:15 Application of Chapter. – The provisions of any city charter inconsistent with the provisions hereof are hereby repealed to the extent of such inconsistency.

Source. 1949, 181:15, eff. May 3, 1949.

Section 34:16

    34:16 Professional Banking or Brokerage Assistance. –
I. Any trustee or trustees of trust funds having custody of capital reserve funds authorized by this chapter may contract with the trust department or departments of a bank, a brokerage firm, a portfolio management department, or investment advisor in the same manner and for the same purposes as described in RSA 31:38-a, III. They may also place securities in the nominee name of a trust department or departments of a bank a brokerage firm, a portfolio management department, or investment advisor to facilitate transfers for such securities. Capital reserve fund records maintained by any bank, brokerage firm, portfolio management department, or investment advisor shall be available at all times for examination by local auditors, by independent accountants or auditors retained by a municipality, or by the auditors of the department of revenue administration; and such records shall be municipal records and property. In employing such trust departments of banks, brokerage firms, portfolio management departments, or investment advisors, the trustees may enter into contracts or agreements delegating the management of such capital reserve funds to those departments or brokerage firms subject to investment guidelines adopted by the trustees under applicable statutes and subject to at least quarterly review and approval of such management by the trustees. For purposes of this section, the terms "bank," "brokerage firm," "portfolio management department," and "investment advisor" shall have the definitions set forth in RSA 31:38-a.
II. The governing body may authorize the trustees of trust funds to charge any expenses incurred pursuant to paragraph I against the capital reserve funds involved, and such authority shall remain in effect until rescinded by the governing body. No vote by the governing body to rescind such authority shall occur within 5 years of the original adoption of such article. Any professional banking and brokerage fees incurred shall be reported in the annual report of the trustees of trust funds as expenditures out of capital reserve funds.

Source. 2014, 32:4, eff. July 26, 2014.