Loan — Guarantees and Revenue Bonds of a Municipality
Checkout our iOS App for a better way to browser and research.
Any associated municipality or any municipally-owned energy distribution system acting by resolution of the governing body of its associated municipality is hereby authorized and empowered to:
Make loans to its energy acquisition corporation;
Guarantee or assume the payment of the principal of and interest on any bonds or notes issued by such corporation or the payment or performance of any obligations of the corporation incurred in connection with the purchase of gas or electrical power by the corporation;
Pledge the revenues of its energy distribution system to secure the payment of the principal of and interest on any bonds or notes of the corporation or to secure its guaranty of such bonds or notes;
Pledge the revenues of its energy distribution system to secure the payment of obligations incurred in connection with the purchase of gas or electrical power, as appropriate, by the corporation or to secure its guaranty of any such obligations.
Any loan, or payment under such guarantee or pledge, shall be made solely out of the funds otherwise available to the energy distribution system for the benefit of which the bonds or notes were issued or the obligations were incurred and shall not be a general obligation of the associated municipality. Any loan, guarantee or pledge of revenues shall be subject to any contractual limitations undertaken by the associated municipality or energy distribution system for the incurrence of indebtedness or the lending of its credit to others.
Any pledge of, or lien on, revenues of the energy distribution system to secure the payment of any bonds, notes or obligations of such corporation pursuant to this chapter shall be valid and binding from the time the pledge or lien is created or granted and shall inure to the benefit of the holder or holders of such bonds or notes or the obligee under any such obligation until the payment or satisfaction in full of the obligation. The priority of any pledge or lien with respect to competing pledges or liens shall be determined by the date such pledge or lien is created or granted. Neither the resolution, the indenture, nor any other instrument granting, creating or giving notice of the pledge or lien need be filed or recorded to preserve or protect the validity or priority of such pledge or lien.
Any pledge or lien created or granted pursuant to the terms of this section shall not be subject to the mortgage tax imposed by § 67-4-409(b) and any other tax that is imposed upon the privilege of recording any instrument giving notice of the creation of a lien, security interest or pledge, and such exemption shall apply to any transaction to which the municipality is a party pursuant to this chapter, whether as the secured party or the debtor.
Any associated municipality is hereby authorized to issue its revenue bonds in the manner provided by title 9, chapter 21 for the purpose of raising funds to lend to its energy acquisition corporation, such revenue bonds to be payable solely from the revenues derived from the energy distribution system owned by such associated municipality.
An associated municipality shall not have the power to assume or guarantee bonds, notes or other obligations of a corporation in such a way as to pledge the full faith and credit and taxing power of the associated municipality to the payment of the obligations.