Security; Provisions in Resolution or Trust Indenture for Protection of Bondholder Rights and Remedies; Sinking Fund

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  2. Georgia Code
  3. Commerce and Trade
  4. Geo. L. Smith Ii Georgia World Congress Center
  5. Revenue Bonds
  6. Security; Provisions in Resolution or Trust Indenture for Protection of Bondholder Rights and Remedies; Sinking Fund

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  1. Subject to the limitations set forth in this chapter, the authority shall be authorized to provide, directly or through lessees of the project, such security for revenue bonds issued by it as it may determine appropriate.
    1. Without limitation of the provisions of subsection (a) of this Code section, in the discretion of the authority, any issue of revenue bonds may be secured by a trust indenture by and between the authority and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or outside the state. The trust indenture may pledge or assign rents, revenues, earnings, and funds derived from the facilities designated by the resolution authorizing the issuance of such revenue bonds or which may be otherwise available to the authority for such purposes, including but not limited to rents, revenues, earnings, and funds which are:
      1. Payable to the authority by the lessee or lessees and received by the authority from the lessee or lessees under the lease or leases by the authority of the facilities acquired or improved by the proceeds of such revenue bonds described in the resolutions authorizing the issuance of such revenue bonds;
      2. Payable to the authority under such contracts as may be entered into in accordance with Code Section 10-9-49, relating to the facilities acquired or improved by the proceeds of the revenue bonds or the use thereof or services provided through such facilities, which are designated as security for the revenue bonds;
      3. Payable to the authority under such other contracts or agreements relating to the facilities acquired or improved by the proceeds of the revenue bonds as may be designated as security for such bonds; and
      4. As may otherwise be designated as security for such bonds either: (i) derived from or in connection with the facilities acquired or improved by the proceeds of the revenue bonds or the use or operation thereof or the services provided through such facilities; or (ii) otherwise available to the authority for such purposes.
    2. Either the resolution providing for the issuance of the revenue bonds or the trust indenture may contain such provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including covenants setting forth the duties of the authority in relation to the acquisition of property; the construction of the project; the maintenance, operation, repair, and insurance of the project; and the custody, safeguarding, manner of disbursements, and application of all moneys and may also provide that any facility shall be constructed and paid for under the supervision and approval of consulting engineers or architects employed or designated by the authority. The resolution or the trust indenture may also require that the security given by contractors and by any depository of the proceeds of the bonds or revenues or other moneys be satisfactory to such purchasers and may also contain provisions concerning the conditions, if any, upon which additional revenue bonds may be issued. The indenture may set forth the rights and remedies of the bondholders and of the trustee and may restrict the individual right of action of bondholders as is customary in trust indentures securing revenue bonds and debentures of corporations.
  3. The resolution or trust indenture may provide that the rents, revenues, earnings, and funds which are designated as security for the revenue bonds shall be set aside into a sinking fund, which sinking fund shall be pledged to and charged with the payment of:
    1. The interest upon the revenue bonds as the interest falls due;
    2. The principal of the bonds as the same falls due;
    3. The necessary charges of paying agents for paying principal and interest;
    4. Any premium upon bonds retired by call or purchase as provided in this article; and
    5. Any fees, costs, or expenses payable under the revenue bonds or trust indentures.
  4. The use and disposition of the sinking fund shall be subject to such regulations as may be provided in the resolution authorizing the issuance of the revenue bonds or in the trust indenture, but, except as may otherwise be provided in the resolution or trust indenture, such sinking fund shall be a fund for the benefit of all revenue bonds without distinction or priority of one over another. Subject to the resolution authorizing the issuance of the revenue bonds or in the trust indenture, surplus moneys in the sinking fund may be applied to the purchase or redemption of such revenue bonds; and any such bonds so purchased or redeemed shall immediately be canceled and shall not again be issued.

(Code 1981, §10-9-51, enacted by Ga. L. 1988, p. 556, § 4; Ga. L. 1989, p. 1195, § 9; Ga. L. 2017, p. 774, § 10/HB 323.)

The 2017 amendment, effective May 9, 2017, part of an Act to revise, modernize, and correct the Code, deleted "which are" at the beginning of divisions (b)(1)(D)(i) and (b)(1)(D)(ii).


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