Pledge of Revenues From Systems for Payment of Principal and Interest on Bonds; Disposition of Gross Revenues From Operation of System Generally.

  1. Law
  2. Code of Alabama
  3. Counties and Municipal Corporations.
  4. Provisions Applicable to Counties and Municipal Corporations.
  5. Municipal and County Bonds.
  6. Revenue Bonds for Waterworks, Gas, Sewer or Electric Systems.
  7. Pledge of Revenues From Systems for Payment of Principal and Interest on Bonds; Disposition of Gross Revenues From Operation of System Generally.

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Section 11-81-181

Pledge of revenues from systems for payment of principal and interest on bonds; disposition of gross revenues from operation of system generally.

(a) In the authorizing proceedings the borrower shall pledge for payment of the principal and interest on bonds issued under this article the revenues derived from operation of a system or systems of the borrower out of which such bonds are made payable; provided, that the borrower may reserve the privilege of using for any lawful purpose surplus revenues from such system or systems remaining after compliance with the provisions of this section and any additional requirements contained, as provided for in this article, in the authorizing proceedings or in a trust indenture.

(b) In the authorizing proceedings or in a trust indenture provided for therein, the borrower shall agree to deposit the gross revenues from such system or systems daily, as received by the borrower, into a "gross revenue account" and to apply the gross revenues in such account for monthly payments into the following separate and special funds, in the order in which said funds are listed:

(1) A "bond and interest redemption fund," into which the borrower shall agree to pay monthly out of said gross revenues sums sufficient to provide for the payment at maturity of the principal and interest on the bonds;
(2) An "operation and maintenance fund," into which the borrower shall agree to pay monthly out of said gross revenues sums sufficient to provide for the payment of expenses of the administration and operation of and such expenses for maintenance as may be necessary to preserve in good repair the system or systems out of the revenues from which such bonds are payable;
(3) A "debt service reserve fund," into which the borrower shall agree to pay monthly out of said gross revenues sums sufficient to build up within a reasonable period of time a reasonable reserve for payment of such principal and interest; and
(4) A "replacement and extension fund," into which there shall be set aside and paid monthly sums sufficient to build up within a reasonable period of time a reasonable reserve for capital improvements, betterments and extensions to the system or systems out of the revenues from which such bonds are payable.

(Acts 1933, Ex. Sess., No. 102, p. 88; Code 1940, T. 37, §327; Acts 1955, No. 494, p. 1127, §10.)


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