11-17-5 - Security for bonds -- Provisions in security agreements -- Limitations -- Liens.
11-17-5. Security for bonds -- Provisions in security agreements -- Limitations --Liens.
(1) The principal of and interest on any bonds issued under this chapter:
(a) shall be secured by a pledge and assignment of the revenues out of which the bondsare made payable or by such other sinking fund or security provision as shall in the judgment ofthe governing body be reasonably designed to assure payment of the obligations to the purchasersthereof; however, the bond purchasers may not in any event have recourse against the generalfunds or general credit of the governmental offeror;
(b) may be secured by a mortgage covering all or any part of the project; and
(c) may be secured by any other security device deemed most advantageous by thegoverning body issuing the bonds.
(2) The proceedings under which the bonds are authorized to be issued under this chapterand any mortgage given to secure them may contain any agreements and provisions customarilycontained in instruments securing bonds, including, without limiting the generality of theforegoing, provisions respecting:
(a) the fixing and collection of revenues for any project covered by the proceedings ormortgage;
(b) the terms to be incorporated in the lease, installment purchase agreement, rentalagreement, mortgage, trust indenture, loan agreement, financing agreement, or other agreementfor the project;
(c) the maintenance and insurance of the project;
(d) the creation and maintenance of special funds from the revenues of projects; and
(e) the rights and remedies available in the event of a default to the bondholders or to thetrustee under a mortgage, all as the governing body deems advisable and which is not in conflictwith this chapter, except that in making any agreements or provisions a municipality or countymay not obligate itself except with respect to the project and the application of the revenues fromit and may not incur a general obligation or liability or a charge upon its general credit or againstits taxing powers.
(3) The proceedings authorizing any bonds under this chapter and any mortgage securingbonds may provide that, in the event of a default in the payment of the principal of or the intereston the bonds or in the performance of any agreement contained in the proceedings or mortgage,payment and performance may be enforced by the appointment of a receiver with power tocharge and collect the revenues from the project and to apply the revenues from the project inaccordance with the proceedings or the provisions of the mortgage.
(4) Any mortgage made under this chapter to secure bonds issued under it may alsoprovide that, in the event of a default in payment or the violation of any agreement contained inthe mortgage, the mortgage may be foreclosed or otherwise realized on in any manner permittedby law. The mortgage may also provide that any trustee under the mortgage or the holder of anyof the bonds secured by the mortgage may become the purchaser at any foreclosure sale if thehighest bidder. No breach of any agreement imposes any general obligation or liability upon amunicipality or county or any charge upon their general credit or against their taxing powers.
(5) The revenues pledged and received are immediately subject to the lien of the pledgewithout any physical delivery of any lease, purchase agreement, financing agreement, loanagreement, note, debenture, bond, or other obligation under which the revenues are payable, orany other act, except that the proceedings or agreement by which the pledge is created shall be
recorded in the records of the municipality, county, or state university. The proceedings oragreement by which the pledge is created, or a financing statement, need not be filed or recordedunder the Uniform Commercial Code, or otherwise, except in the records of the municipality,county, or state university as provided in this Subsection (5). The lien of any pledge is valid andbinding and has priority as against all parties having claims of any kind in tort, contract, orotherwise against the municipality, county, or state university, irrespective of whether the partieshave notice of the lien. Each pledge and agreement made for the benefit or security of any of therevenue bonds issued under this chapter shall continue effective until the principal, interest, andpremium, if any, on the revenue bonds have been fully paid or provision for payment has beenmade.
Amended by Chapter 378, 2010 General Session