§ 280t. Security agreements securing borrower obligations; pledges of general revenues or
project revenues
(a) Governmental obligations may be secured by one or more security agreements between
the governmental unit and a corporate trustee, which may be a trust company or bank
having the powers of a trust company within or without the State, or directly between
the Board and the governmental unit. A borrower obligation, other than governmental
obligations, may be secured by one or more security agreements between the Board and
the qualified borrower. Any security agreements entered into pursuant to this section
shall be in such form and shall be executed as provided in the applicable loan agreement
or as otherwise agreed to between the Board and the qualified borrower.
(b) Any security agreement directly or indirectly securing governmental obligations, other
than governmental obligations issued in accordance with this subchapter, may pledge
or assign, and create security interests in, all or any part of the general revenues
of the governmental unit. Any security agreement securing borrower obligations issued
in accordance with this section may pledge or assign, and create security interests
in, all or any part of the project revenues of the qualified borrower, but, in the
case of a governmental unit, shall not otherwise pledge or assign any other general
revenues of the governmental unit unless otherwise authorized by the applicable bond
act. Any security agreement may contain such provisions for protecting and enforcing
the rights, security, and remedies of the Board, or the holders of the borrower obligations,
as may be determined by the Board and the qualified borrower, including provisions
defining defaults and providing for remedies, including the acceleration of maturities,
and:
(1) in the case of borrower obligations issued under this section, the appointment of
a receiver of the project financed thereby and the system of which it is a part; and
(2) in the case of public entities, the use of a State aid intercept mechanism; and covenants
setting forth the duties of, and limitations on, the qualified borrower in relation
to the custody, safeguarding, investment, and application of monies, including general
revenues and project revenues, the issue of additional and refunding borrower obligations
and other bonds, notes, or obligations on a parity or superior thereto, the establishment
of reserves, the establishment of sinking funds for the payment of borrower obligations,
and the use of surplus proceeds. A security agreement securing borrower obligations
issued in accordance with this section also may include covenants and provisions not
in violation of law regarding the acquisition, construction, operation, and carrying
out of the qualified project financed by such obligations, the system of which it
is a part and any other revenue producing facilities from which the qualified borrower
may pledge or assign any of its project revenues as appropriate, as security for payments
made thereon.
(c) Any pledge of general revenues or project revenues made by a qualified borrower shall
be valid and binding and shall be deemed continuously perfected for the purposes of
the State commercial code, Title 9 and Title 9A, and any other law from the time made.
The general revenues, project revenues, monies, rights, and proceeds so pledged and
then held or thereafter acquired or received by the qualified borrower shall immediately
be subject to the lien of such pledge without any physical delivery or segregation
thereof or further act, and the lien of such pledge shall be valid and binding against
all parties having claims of any kind in tort, contract or otherwise, regardless of
whether such parties have notice thereof. Neither the security agreement or any other
agreement by which a pledge is created need be filed or recorded except in the records
of the governmental unit and no filing need be made under the provisions of the State
commercial code.
(d) In the case of a governmental unit, a pledge of general revenues or project revenues
in accordance with this subchapter shall constitute a sufficient appropriation thereof
for the purposes of any provisions for appropriation for so long as such pledge shall
be in effect and, notwithstanding any law to the contrary, such revenues shall be
applied as required by the pledge and the security agreement evidencing the same without
further appropriation. (Added 1997, No. 43, § 1.)