40:37C-9 - Security for principal, interest and premiums
40:37C-9. Security for principal, interest and premiums
The principal of and interest and premiums, if any, on any bonds issued by an authority shall be secured by a mortgage or pledge of the revenues and receipts out of which the same shall be made payable and may be secured by the pledge of all or any part of the assets of such authority, subject to such agreements with bondholders as may then prevail, or such bonds of the authority may be secured by loan and security agreements or any other instrument upon terms and conditions as the authority shall deem reasonable, including provision for the establishment and maintenance of reserve and insurance funds; provided that any such agreement or instrument shall provide for payments at least adequate to pay the principal of and interest and premiums, if any, on bonds issued to finance pollution control facilities as they become due and payable. The resolution under which the bonds are authorized to be issued may contain any agreements and provisions respecting the maintenance of the properties covered thereby; the fixing, collection and use of rents for any portions thereof leased by the authority to others; the determination, collection and application of payments to be received for the sale of any properties covered thereby; the creation and maintenance of special funds from such revenues or receipts and the limitations on the purpose to which the proceeds from the sale of the bonds may be applied and pledging such proceeds to secure the payment of the bonds; the limitations on the issuance of additional bonds and on the refunding of outstanding or other bonds; the procedure, if any, by which the terms of any such agreement may be amended or abrogated; and the rights and remedies available in the event of default, including the designation of a trustee, all as the authority shall deem advisable and not in conflict with the provisions hereof. Each pledge and agreement made for the benefit or security of any of the bonds of the authority shall continue effective until the principal of and interest and premiums, if any, on the bonds for the benefit of which the same were made shall have been fully paid or provision for such payment duly made. In the event of default in such payment or in any agreement of the authority made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any indenture executed as security therefor, said payment or agreement may be enforced by suit, action in lieu of prerogative writ, or the appointment of a receiver in equity, or any one or more of said remedies.
As further security for the bonds, an authority may enter into contracts of insurance assuring that the principal of and interest on such bonds will be paid and that rental payments, installment payments or other payments to be made by the user of the facilities will be made; provided, however, that the authority shall not be obligated under the terms of such policy to any greater extent than allowed by the provisions of this act. The cost of any such insurance contract may be paid out of the proceeds of the sale of the bonds so insured.
L.1973, c. 376, s. 9, eff. Jan. 9, 1974. Amended by L.1983, c. 298, s. 8, eff. Aug. 8, 1983.