The Vermont Statutes Online

Title 24 : Municipal and County Government

Chapter 053 : Indebtedness

Subchapter 002 : INDEBTEDNESS FOR PUBLIC UTILITY PURPOSES

• § 1824. Specific provisions

  (a) Generally. Any pledge of net revenues or bond proceeds and earnings thereon made by a municipal corporation under this subchapter shall be binding from the time when the pledge is made. Net revenues or bond proceeds and earnings thereon to be pledged and thereafter received by the municipal corporation shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of any pledge shall be binding against all parties having claims of any kind in tort, contract, or otherwise against the municipal corporation, irrespective of whether the parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be filed or recorded except in the records of the municipal corporation.

  (b) Special covenants. The contracts and bonds entered into and issued under section 1822 of this title may contain provisions relating to:

  (1) pledging all or any part of the net revenues of the public utility system or project in order to secure the payment of the bonds, or any part thereof, subject to such agreements with bondholders as may then exist;

  (2) the imposition or maintenance of rates, fees, or charges, subject to regulatory requirements, to generate revenues at least sufficient to provide for the costs of operation and maintenance of the public utility system and for payment of principal of and interest on all bonds issued in connection with such public utility as the same shall become due;

  (3) the imposition or maintenance of rates, fees, and charges, subject to regulatory requirements, as a multiple of principal and interest payments on bonds of the municipality issued under this subchapter;

  (4) periodic review of the financial condition of the public utility system for the purpose of estimating whether its revenues will be sufficient to comply with agreements with the holders of its bonds;

  (5) limitations, terms, and conditions with respect to the refunding or redemption of the bonds;

  (6) limitations, terms, and conditions with respect to the issuance of additional bonds in connection with the public utility system for which the bonds are issued, except bonds secured by a subordinate pledge of net revenues;

  (7) limitations on the purpose to which the proceeds of sale of bonds may be applied and pledging the proceeds to secure the payment of the bonds or of any issue thereof;

  (8) the procedure, if any, by which the terms of any agreement with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent thereto, and the manner in which consent may be given;

  (9) requirements for the maintenance and operation of the utility system in accordance with prudent utility practice and regulatory requirements;

  (10) vesting in a trustee or trustees, within or without the State, the right to receive all or any part of the net revenue pledged and assigned to, or for the benefit of, the holder or holders of bonds issued hereunder, and to hold, apply, and dispose of the same; and vesting in the trustee or trustees such rights, powers, and duties in trust as the trustee may need to recover the amounts pledged to the holders of the municipal corporation’s bonds and to enforce any covenants made by the municipal corporation to secure its bonds, and limiting or abrogating the right of the holders of its bonds to appoint a trustee under this subchapter or limiting the rights, powers, and duties of the trustee;

  (11) prescribing what acts or omissions of the municipality shall constitute “events of default” and the terms and conditions upon which any or all of such bonds shall become or may be declared due before maturity and as to the terms and conditions upon which such declaration and its consequences may be waived;

  (12) limitations on the rights, liabilities, powers, and duties arising upon the breach by it of any covenant, conditions, or obligations;

  (13) a definition, subject to regulatory requirements, of the standard of care, maintenance, and operation of the public utility project, including the maintenance of insurance and the application of proceeds of policies of insurance and condemnation awards thereon;

  (14) the pledge of proceeds to be derived upon the sale or disposition of the public utility project for the purpose of paying bonds issued by the municipal corporation for such project or defeasing the lien securing said bonds;

  (15) limitations on the right of the municipal corporation to encumber, sell, lease, or otherwise dispose of property used in public service operations of the public utility system; except for the sale, lease, or disposition of a part of such property, which in the reasonable judgment of the municipality has become unserviceable, obsolete, worn out, or no longer necessary in the operations of the public utility system or has been replaced by other property, and except for encumbrances in connection with bonds secured by a subordinate pledge of net revenues;

  (16) the bonds to be issued, the issuance of its bonds in escrow or otherwise, and the use and disposition of the proceeds thereof; provisions for the replacement of lost, destroyed, or mutilated bonds; prohibitions against extending the time for the payment of its bonds or interest thereon and to redeem its bonds and provisions for their redemption and the terms and conditions thereof; and

  (17) the creation of special funds for construction or operating costs, debt service, reserve, or similar purposes and covenanting as to the use and disposition and investment of the monies held in such funds. (Amended 1989, No. 111, § 8, eff. June 22, 1989; 2017, No. 74, § 94.)