Sec. 4. A municipality may enter into a loan agreement with any person and loan the proceeds of any grant received by the municipality to that person with the repayment of the loan to be secured by the pledge of a note or other secured or unsecured debt obligation of that person. The municipality may pledge the revenues from the note or other secured or unsecured debt obligation of that person or of any entity organized for economic development purposes to the payment of bonds issued under this chapter. In no event may a municipality pledge revenues other than from the sources authorized in this chapter as security for the bonds issued under this chapter. A municipality may not issue bonds under this chapter if principal and interest payments on those bonds would exceed revenues to be derived by the municipality from the notes or other secured or unsecured debt obligations of any person that has entered into a loan agreement with the municipality under this chapter, or from other sources of principal and interest payments under this chapter. Any municipality may issue bonds under this chapter whether the revenues pledged to secure the bonds are to be derived from a loan agreement entered into before or after March 1, 1984. The validity of any bonds issued under this chapter is not dependent on or affected by the validity of the loan agreement at the time it was executed and delivered. All loan agreements between municipalities and persons borrowing grant proceeds entered into before March 1, 1984, are fully legalized and declared valid.
As added by P.L.23-1984, SEC.18.