Covenants in Resolution Authorizing Issuance of Bonds; Article and Resolution as Enforceable Contract With Bondholders

  1. Law
  2. Georgia Code
  3. Local Government
  4. Bonds
  5. Revenue Bonds
  6. Covenants in Resolution Authorizing Issuance of Bonds; Article and Resolution as Enforceable Contract With Bondholders

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  1. Any resolution or resolutions authorizing the issuance of bonds under this article to finance, in whole or in part, the acquisition, construction, reconstruction, improvement, betterment, or extension of an undertaking may contain covenants, notwithstanding that such covenants may limit the exercise of powers conferred by this article, as to:
    1. The rates, fees, tolls, or charges to be charged for the services, facilities, and commodities of the undertaking;
    2. The use and disposition of the revenue of the undertaking;
    3. The creation and maintenance of reserves or sinking funds and the regulation, use, and disposition thereof;
    4. The purpose or purposes to which the proceeds of the sale of such bonds may be applied and the use and disposition of such proceeds;
    5. Events of default and the rights and liabilities arising thereupon, the terms and conditions upon which bonds issued under this article shall become or may be declared due before maturity, and the terms and conditions upon which such declaration and its consequences may be waived;
    6. A fair and reasonable payment by the governmental body to the account of the undertaking for the services, facilities, or commodities furnished such governmental body or any of its departments by the undertaking;
    7. The issuance of other or additional bonds or instruments payable from or a charge against the revenue of the undertaking;
    8. The insurance to be carried thereon and the use and disposition of insurance moneys;
    9. Books of account and the inspection and audit thereof;
    10. Limitations or restrictions as to the leasing or other disposition of the undertaking while any of the bonds or the interest thereon remains outstanding and unpaid; and
    11. The continuous operation and maintenance of the undertaking.
  2. The provisions of this article and of any such resolution or resolutions shall be a contract with every holder of such bonds; and the duties of the governmental body, the governing body, and the officers of the governmental body under this article and under any such resolution or resolutions shall be enforceable by any bondholder by mandamus or other appropriate action or proceeding at law or in equity.

(Ga. L. 1937, p. 761, § 6; Ga. L. 1987, p. 3, § 36.)

Law reviews.

- For comment on Smith v. Hospital Auth., 210 Ga. 801, 82 S.E.2d 827 (1954), see 17 Ga. B. J. 258 (1954).

JUDICIAL DECISIONS

Constitutionality.

- See Lawson v. City of Moultrie, 194 Ga. 699, 22 S.E.2d 592 (1942).

Proceeds of bonds constitute trust fund.

- When revenue anticipation bonds are provided for and validated for a particular purpose, the proceeds thereof constitute a trust fund which cannot be diverted from such purpose and applied to some other purpose. Smith v. Hospital Auth., 210 Ga. 801, 82 S.E.2d 827 (1954), for comment, see 17 Ga. B. J. 258 (1954).

Covenants against disposing of undertaking enforceable.

- Covenants against leasing or otherwise disposing of an undertaking, revenues of which are pledged in accordance with the contract between a governing authority and the authority's bondholders under the Revenue Bond Law (O.C.G.A. Art. 3, Ch. 82, T. 36), constitute a contract between such governing body and each bondholder which is enforceable by the latter under the provisions of this section. Hicks v. State, 99 Ga. App. 302, 108 S.E.2d 187 (1959).

Cited in Miller v. Head, 186 Ga. 694, 198 S.E. 680 (1938); Johnson v. State, 107 Ga. App. 16, 128 S.E.2d 651 (1962).

RESEARCH REFERENCES

C.J.S.

- 64A C.J.S., Municipal Corporations, §§ 2135, 2136, 2184 et seq.


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