Sec. 35. (a) When the principal of or interest on bonds issued in anticipation of the collection of special assessments is due for payment, the municipal fiscal officer shall issue certificates of indebtedness to the owner of the bonds if:

(1) there is not enough money in the municipal improvement fund to pay the principal of or interest on the bonds in full; and

(2) at least one (1) of the conditions listed in subsection (b) is met.

(b) The municipal fiscal officer shall issue certificates of indebtedness for the amounts unpaid if the principal of or interest on the bonds cannot be paid because of any of the following:

(1) The stoppage of interest due to the prepayment of assessments.

(2) The failure to collect interest to the due date of the prepaid installments.

(3) The failure to reinvest prepaid assessments in the manner prescribed by this chapter.

(4) The diversion of money paid on one (1) assessment roll and account to the payment of the principal of or interest on bonds to another assessment roll and account.

(5) The loss of improvement money due to the closing and insolvency of a bank or trust company in which the money was on deposit.

(6) Any other diversion or misapplication of money collected for payment of the principal of or interest on bonds for which the municipality is liable.

(c) The amounts of certificates of indebtedness issued under this section shall be computed in the following manner:

(1) If the certificates are issued for a deficiency resulting from prepayment of assessments, the amount:

(A) is limited to the amount of interest that would have been payable at the respective due dates of the installments of assessments if the assessments had not been prepaid; and

(B) does not include interest between the time of the due dates and the issuance of the certificates.

(2) If the certificates are issued for a deficiency resulting from a diversion of money, the amount:

(A) is limited to the amount that would have been due if the diversion had not occurred; and

(B) does not include any interest after the date on which payment of the principal of or interest on the bonds is due.

(3) If the certificates are issued for a deficiency resulting from the loss of improvement money due to the closing and insolvency of a bank or trust company in which the money was on deposit, the amount is limited to:

(A) the actual amount deposited, plus interest at the depository rate up to the time of the closing of the bank or trust company; less

(B) any amounts that are recovered from any source by reason of the deposits and loss.

(d) No part of any delinquent assessments or installments, or of any interest on the delinquent assessments after the due date of the assessments, may be included in a certificate of indebtedness.

(e) The deficiency and diversion remedial provisions of this section do not make a municipality liable in any manner for any of the following:

(1) Assessments or installments of assessments not paid by the owner of the property assessed.

(2) Interest on any unpaid assessment or installment.

As added by P.L.98-1993, SEC.8.