S*1522 Session 108 (1989-1990)
S*1522(Rat #0599, Act #0502 of 1990) General Bill, By Senate Finance
A Bill to amend Chapter 117 and 119 of Title 59, Code of Laws of South
Carolina, 1976, relating to Clemson University and the University of South
Carolina by adding Articles 7 and 3 respectively so as to authorize the Boards
of Trustees of each university to issue auxiliary facilities revenue bonds in
order to provide funds for the acquisition, construction, renovation, or
equipping of auxiliary facilities, to provide that the bonds must be secured
by a lien on and pledge of revenues derived from the facilities and
operations, to provide procedures relating to the authorization of the bonds,
and to provide that no time limit is set for the issuance of bonds; to
designate Sections 59-117-10 through 59-117-100 as Article 1, Chapter 117,
Title 59 and entitled "General Provisions"; and to authorize the Board of
Trustees of the College of Charleston to borrow one million, two hundred
thousand dollars to issue bonds or notes for the renovation and expansion of
the College's cafeteria facilities.-amended title
04/11/90 Senate Introduced, read first time, placed on calendar
without reference SJ-18
04/17/90 Senate Read second time SJ-20
04/17/90 Senate Ordered to third reading with notice of
amendments SJ-20
04/19/90 Senate Amended SJ-42
04/19/90 Senate Read third time and sent to House SJ-52
04/24/90 House Introduced and read first time HJ-17
04/24/90 House Referred to Committee on Ways and Means HJ-18
04/26/90 House Committee report: Favorable with amendment Ways
and Means HJ-18
05/09/90 House Read second time HJ-45
05/10/90 House Read third time and enrolled HJ-13
05/24/90 Ratified R 599
05/29/90 Signed By Governor
05/29/90 Effective date 05/29/90
05/29/90 Act No. 502
06/19/90 Copies available
(A502, R599, S1522)
AN ACT TO AMEND CHAPTERS 119 AND 117 OF TITLE 59, CODE OF LAWS OF
SOUTH CAROLINA, 1976, RELATING TO CLEMSON UNIVERSITY AND THE
UNIVERSITY OF SOUTH CAROLINA, BY ADDING ARTICLES 7 AND 3 RESPECTIVELY
SO AS TO AUTHORIZE THE BOARDS OF TRUSTEES OF EACH UNIVERSITY TO ISSUE
AUXILIARY FACILITIES REVENUE BONDS IN ORDER TO PROVIDE FUNDS FOR THE
ACQUISITION, CONSTRUCTION, RENOVATION, OR EQUIPPING OF AUXILIARY
FACILITIES, TO PROVIDE THAT THE BONDS MUST BE SECURED BY A LIEN ON AND
PLEDGE OF REVENUES DERIVED FROM THE FACILITIES AND OPERATIONS, TO
PROVIDE PROCEDURES RELATING TO THE AUTHORIZATION OF THE BONDS, AND TO
PROVIDE THAT NO TIME LIMIT IS SET FOR THE ISSUANCE OF BONDS; TO
DESIGNATE SECTIONS 59-117-10 THROUGH 59-117-100 AS ARTICLE 1, CHAPTER
117, TITLE 59 AND ENTITLED "GENERAL PROVISIONS"; AND TO
AUTHORIZE THE BOARD OF TRUSTEES OF THE COLLEGE OF CHARLESTON TO BORROW
ONE MILLION, TWO HUNDRED THOUSAND DOLLARS TO ISSUE BONDS OR NOTES FOR
THE RENOVATION AND EXPANSION OF THE COLLEGE'S CAFETERIA FACILITIES.
Be it enacted by the General Assembly of the State of South Carolina:
Auxiliary facilities revenue bonds for Clemson University
SECTION 1. Chapter 119 of Title 59 of the 1976 Code is amended by
adding:
"Article 7
Auxiliary Facilities Revenue Bonds
Section 59-119-710. (A) The General Assembly finds that it is
desirable to provide continuing and general statutory authority for
Clemson University to incur debt for, among other things, the purposes
of providing funds to acquire, construct, renovate, and equip certain
revenue-producing auxiliary facilities, which debt is secured by a
pledge of the revenues derived from the operation of some or all of
the facilities. Clemson University has demonstrated need for
additional funds to provide for acquisition, construction, renovation,
and equipping of these facilities. These facilities are needed to
replace or renovate aging facilities and to provide additional
facilities all to the end that the educational environment at Clemson
University will be enhanced for the benefit of present and potential
students at Clemson University.
(B) Consideration has been given to this need and to the methods
of funding it. It has been determined to be in the best interests of
the people of this State to authorize Clemson University to acquire,
construct, renovate, and equip additional facilities and to incur
indebtedness for these purposes which is payable from the revenues
derived from the operation of these facilities to the extent and under
the conditions provided for in this article.
Section 59-119-720. As used in this article:
(1) Bond' or bonds' means any note, bond, installment
contract, or other evidence of indebtedness issued pursuant to this
chapter.
(2) Clemson' means Clemson University.
(3) Facilities' means any or all of the following
facilities operated to provide for the students, faculty, or staff at
Clemson: dining or food service facilities; laundry facilities;
canteen facilities; vending machines; convenience stores; any other
facilities for the sale of sundry items; health services; book stores;
parking lots and vehicle registration; and all furniture, furnishings
and equipment in them, which are now owned by Clemson, or which may be
acquired by Clemson for any of these purposes.
(4) Revenues' of any facilities means the entire receipts
of Clemson from the operation of the facilities. Net revenues' means
these receipts reduced by the necessary expenses for operation and
maintenance of the facilities.
(5) Board' means the State Budget and Control Board.
(6) Trustees' means the Board of Trustees of Clemson or
any successor body.
Section 59-119-730. The trustees are authorized to acquire
additional facilities and to improve and renovate existing facilities
to the extent they determine to be necessary; and the proceeds of
bonds authorized by this article are made available for that purpose.
The trustees also are authorized to refund bonds that may from time to
time be outstanding pursuant to this article by exchange or otherwise.
Section 59-119-740. Upon receiving the approval of the board
and upon review by the Joint Bond Review Committee, the trustees may
from time to time borrow such sums as may be necessary to accomplish
the purpose of this article and to evidence these borrowings by bonds
issued pursuant to this article in such aggregate principal amount as
they determine, except that other provisions of this article to the
contrary notwithstanding, there may not be outstanding at any time
bonds issued pursuant to this article in excess of twenty-five million
dollars.
Section 59-119-750. Bonds issued pursuant to this article must
be payable from the revenues or the net revenues derived by Clemson
from these facilities as designated by the trustees with respect to
the bonds. The trustees may abandon the use of any portion of the
facilities or sell or dispose of any portion of the facilities upon
receipt of a written recommendation by the chief financial officer of
Clemson to the effect that the action will not adversely affect the
ability of Clemson to discharge its obligations to the holders of
bonds issued pursuant to this article and upon the further conditions
as prescribed in the resolution of the trustees providing for the
issuance of bonds. The bonds issued pursuant to this article may be
further secured by the additional pledges of other revenues or fees of
Clemson as it may be authorized to grant pursuant to other laws of
this State.
Section 59-119-760. The faith and credit of the State may not
be pledged for the payment of the principal and interest of the bonds,
and there must be on the face of each bond a statement plainly worded
to that effect. Neither the trustees nor any other person signing the
bonds is personally liable for them.
Section 59-119-770. In order to avail themselves of the
authorizations set forth in this article, the trustees shall adopt
resolutions providing for the issuance of bonds of Clemson, within the
limitations mentioned in this article which must prescribe the tenor,
terms, and conditions of the bonds. The bonds must be issued as
serial or term bonds, maturing in equal or unequal amounts, at such
times and on such occasions as the trustees determine. The last
maturing bonds of any issue must be expressed to mature not later than
fifty years from their date, and the first maturing bonds of any
issue, issued pursuant to this article, falls due within five years
from their date. They must bear such rates of interest, payable on
such occasion, as the trustees prescribe, and the bonds must be in
such denominations, payable in such medium of payment, and at such
place as such resolutions prescribe. All bonds may be issued with a
provision permitting their redemption on any interest payment date
before their respective maturities. Bonds made subject to redemption
before their stated maturities may contain a provision requiring the
payment of a premium for the privilege of exercising the right of
redemption, in such amount or amounts as the trustees prescribe in the
resolutions authorizing their issuance. All bonds that are subject to
redemption must contain a statement to that effect on the face of each
bond. The resolutions authorizing their issuance must contain
provisions specifying the manner of call and the notice of call that
must be given.
Section 59-119-780. The bonds authorized by this article and
all interest to become due on them have the tax exempt status
prescribed by Section 12-1-60.
Section 59-119-790. It is lawful for all executors,
administrators, guardians, and fiduciaries, all sinking fund
commissions, the board, as trustee of the South Carolina Retirement
System, and all other governmental entities within this State to
invest any monies in their hands in the bonds.
Section 59-119-800. The bonds and coupons, if any, attached to
the bonds, are executed manually or by facsimile in the name of
Clemson in the manner and by persons as the trustees from time to time
determine, and the seal of Clemson must be affixed to or impressed or
reproduced on each bond. Any coupons attached to the bonds must be
authenticated by the facsimile signature of one or more of the persons
signing the bonds. The bonds, in the discretion of the trustees, may
be registerable as to principal and interest on books kept for them by
or on behalf of Clemson, including by a corporate registrar. The
delivery of the executed bonds is valid notwithstanding changes in
officers or in the seal occurring after the execution.
Notwithstanding the foregoing, the bonds, in the discretion of the
trustees, may be issued as fully registered noncertificated book-entry
securities.
Section 59-119-810. The bonds must be disposed of in such
manner as the trustees determine, except that no sale, privately
negotiated without public advertisement, may be made unless the
approval of the board is obtained. If the trustees elect to sell the
bonds at public sale, at least one advertisement of them must appear
in some newspaper of general circulation in this State not less than
seven days before the date fixed for the opening of bids. The bonds
may be sold at such discount or for such premium as may be determined
by the trustees or their designee as being in the best interest of
Clemson.
Section 59-119-820. To the end that the payment of the
principal and interest of the bonds authorized by this article is
secured adequately, the trustees of Clemson may:
(1) issue bonds in such amount within the limitations
provided for in this article, as the trustees consider necessary. It
is lawful for the trustees to use a portion of the principal proceeds
derived from any sale of bonds, except bonds issued to effect
refunding of outstanding bonds, to meet the payment of interest on the
bonds for a period equal to the period of construction of the
facilities to be financed with the proceeds of such bonds, plus a
period not exceeding six months. It is recognized by the General
Assembly that until the facilities to be constructed with the proceeds
of the loan are completed an undue burden may be imposed upon the
existing revenues at that time;
(2) pledge the revenues or the net revenues of the
facilities as designated by the trustees in connection with the
issuance of the bonds, whether then or after that time to be existing
and to pledge any otherwise available gifts, grants, or donations to
Clemson for the payment of the principal of and interest on the bonds
as they respectively mature. However, any surplus of the revenues or
net revenues available after the payment of costs of operation and
maintenance of the facilities and of debt service on the bonds, and
the establishment of any debt service reserve obligation under the
proceedings providing for the issuance of the bonds, is placed in a
contingency and improvement fund for the facilities in order to
restore depreciated or obsolete items of the facilities, to make
improvements to the facilities, to defray the cost of unforeseen
contingencies with regard to the facilities, to prevent defaults under
such bonds, or to redeem any of the bonds;
(3) further secure the bonds with a pledge of any
additional revenues or fees of Clemson as may be authorized under
other laws of this State;
(4) covenant that no facilities owned by Clemson may be
used free of charge, or to specify and limit the facilities which may
be used free of charge;
(5) covenant to establish and maintain a system of rules
as will insure the continuous use and occupancy of the facilities,
whose revenues are pledged to secure any bonds;
(6) covenant that an adequate schedule of charges be
established and maintained for the facilities designated by the
trustees, whose revenues or net revenues are pledged to secure the
bonds, to the extent necessary to produce sufficient revenues to:
(a) pay the cost of operating and maintaining the
facilities, whose revenues or net revenues are pledged for the payment
of the bonds, including the cost of fire, extended coverage and use,
and occupancy insurance;
(b) pay the principal and interest of the bonds as
they respectively become due;
(c) create and at all times maintain an adequate debt
service reserve fund to meet the payment of the principal and
interest; and
(d) create and at all times maintain an adequate
reserve for contingencies and for major repairs and replacement.
(7) covenant against the mortgaging or disposing of the
facilities designated by the trustees, whose revenues or net revenues
are pledged for the payment of the bonds, and against permitting or
suffering any lien to be created on them, equal or superior to the
lien created for the benefit of such bonds. The trustees are
empowered to discontinue the use of or demolish obsolete facilities
and to reserve the right, under the terms they prescribe, to issue
additional bonds on a parity with the bonds authorized by this
article, if at some later date they obtain legislative authorization
for the issuance of additional bonds;
( 8) covenant as to the use of the proceeds derived from
the sale of any bonds issued pursuant to this article;
( 9) provide for the terms, form, registration, exchange,
execution and authentication of bonds, and for the replacement of
lost, destroyed, or mutilated bonds;
(10) make covenants with respect to the use of the
facilities, to be constructed with the proceeds of the bonds
authorized by this article, and of the other facilities, whose
revenues must be pledged for the payment of the bonds;
(11) covenant that all revenues or net revenues of the
particular facilities pledged for the payment of the bonds must be
segregated into special funds and that the funds must be used solely
for the purposes for which they are intended and for no other purpose;
(12) covenant for the mandatory redemption of bonds on the
terms and conditions as the resolutions authorizing the bonds
prescribe;
(13) provide for early defeasance of bonds through the
establishment of special escrow accounts maintained by a corporate
trustee, which may be the State Treasurer, of cash or United States
government obligations, or obligations of agencies of them, which
escrows may be funded with proceeds of bonds issued under the
provisions of this article or revenues or other funds available to
Clemson;
(14) prescribe the procedure, if any, by which the terms of
the contract with the bondholders may be amended, the number of bonds
whose holders must consent to it, and the manner in which consent is
given;
(15) covenant as to the maintenance of the facilities,
whose revenues must be pledged for the payment of the bonds, the
insurance to be carried on them, and the use and disposition of
proceeds from any insurance policy;
(16) prescribe the events of default and the terms and
conditions upon which all or any bonds become or may be declared due
before maturity and the terms and conditions upon which the
declaration and its consequences may be waived;
(17) impose a statutory lien upon the facilities designated
by the trustees, the revenues or net revenues of which must be pledged
to secure the bonds. The lien must extend to the facilities, to their
appurtenances and extension, to their additions, improvements and
enlargements to the extent specified in the resolutions and must inure
to the benefit of the holders of the bonds secured by the lien. The
facilities remain subject to the statutory lien until the payment in
full of the principal and interest of the bonds. A holder of a bond,
or any of the coupons representing interest on them, either at law or
in equity, by suit, action, mandamus, or other proceedings, may
protect and enforce the statutory lien, and by suit, action, mandamus,
or other proceedings may enforce and compel performance of all duties
of the trustees, including the fixing of sufficient rates, the proper
segregation of the revenues, and the proper application of them.
However, the statutory lien may not be construed to give the bond or
coupon holder authority to compel the sale of any of the facilities or
any part of them;
(18) covenant that if there is a default in the payment of
the principal of or interest upon any of the bonds, a court having
jurisdiction in any proper action may appoint a receiver to administer
and operate the facilities designated by the trustees, whose revenues
or net revenues are pledged for the payment of the bonds, with power
to fix rates and charges for the facilities, sufficient to provide for
the payment of the expense of operating and maintaining the
facilities, and to apply the income and revenues of the facilities to
the payment of the bonds, and the interest on them;
(19) establish on or before the delivery of any bonds
issued pursuant to this article a debt service reserve fund and to
cause it to be deposited with a corporate trustee, who may be the
State Treasurer, and to that end, the trustees are empowered to
utilize any monies available for that purpose, including revenues
previously accumulated from the facilities before the issuance of
bonds. In the discretion of the trustees, in lieu of cash, the debt
service reserve fund may be funded with a surety bond, insurance
policy, letter of credit, line of credit, or similar guarantee. At
the discretion of the trustees, Clemson may purchase an insurance
policy insuring payment of both principal and interest on any issuance
of bonds under the provisions of this article;
(20) appoint a corporate trustee, who may be the State
Treasurer, or paying agent to whom must be paid all or any portion of
the revenues or net revenues pledged to the payment of the bonds or
derived from the operation of the facilities, and to prescribe the
manner in which these revenues or net revenues must be utilized and
disposed of. The corporate trustee shall serve in a fiduciary
capacity as trustee for the bondholders under the resolutions of the
trustees authorizing the issuance of bonds.
Section 59-119-830. No time limit is set for the issuance of
bonds pursuant to this article."
Trustees of College of Charleston authorized to borrow
SECTION 2. The Board of Trustees for the College of Charleston,
as the governing body of the College of Charleston, may borrow, at
public or private sale, not exceeding one million two hundred thousand
dollars, upon terms and conditions as the board, with the approval of
the State Budget and Control Board, determines to issue its bonds or
notes evidencing the borrowing. The board may use the proceeds to
defray the cost of issuing the bonds or notes and the cost of the
renovation and expansion of the College of Charleston's cafeteria
facilities, including the retirement of indebtedness issued for that
purpose. For the payment of the loan and the interest on the loan,
there must be pledged certain revenues derived by the board from the
sale of meals at the cafeteria facilities at the College of
Charleston, and no other funds may be used. In the proceedings
providing for the issuance of the bonds or notes the board shall
impose, or require the imposition of, charges for meals at the College
of Charleston's cafeteria facilities adequate to defray the cost of
the meals and to meet the payment of principal and interest on the
bonds or notes as they become due. The borrowing must be evidenced by
one or more bonds or notes of the board payable as to principal and
interest solely from the revenues to be pledged for the authorized
bonds or notes. The bonds or notes and the interest to become due on
them have the tax-exempt status prescribed in Section 12-1-60 of the
1976 Code and may be issued on a parity with, or junior to, any other
bonds or notes secured by a pledge of the revenues.
Code sections designated
SECTION 3. Sections 59-117-10 through 59-117-100 of the 1976 Code
are designated as Article 1, Chapter 117, Title 59 and entitled
"General Provisions".
Auxiliary facilities revenue bonds for University of South Carolina
SECTION 4. Chapter 117 of Title 59 of the 1976 Code is amended by
adding:
"Article 3
Auxiliary Facilities Revenue Bonds
Section 59-117-210. (A) The General Assembly finds that it is
desirable to provide continuing and general statutory authority for
the University of South Carolina to incur debt for, among other
things, the purposes of providing funds to acquire, construct,
renovate, and equip certain revenue-producing auxiliary facilities,
which debt is secured by a pledge of the revenues derived from the
operation of some or all of the facilities. The University of South
Carolina has demonstrated need for additional funds to provide for
acquisition, construction, renovation, and equipping of these
facilities. These facilities are needed to replace or renovate aging
facilities and to provide additional facilities all to the end that
the educational environment at the University of South Carolina will
be enhanced for the benefit of present and potential students at the
University of South Carolina.
(B) Consideration has been given to this need and to the methods
of funding it. It has been determined to be in the best interests of
the people of this State to authorize the University to acquire,
construct, renovate, and equip additional facilities and to incur
indebtedness for these purposes which is payable from the revenues
derived from the operation of these facilities to the extent and under
the conditions provided for in this article.
Section 59-117-220. As used in this article:
(1) Bond' or bonds' means any note, bond, installment
contract, or other evidence of indebtedness issued pursuant to this
article.
(2) University' means the University of South Carolina.
(3) Facilities' means any or all of the following
facilities operated to provide for the students, faculty, or staff at
the University: dining or food service facilities; laundry facilities;
canteen facilities; vending machines; convenience stores; any other
facilities for the sale of sundry items; health services; book stores;
parking lots and vehicle registration; and all furniture, furnishings
and equipment in them, which are now owned by the University, or which
may be acquired by the University for any of these purposes.
(4) Revenues' of any facilities means the entire receipts
of the University from the operation of the facilities. Net
revenues' means these receipts reduced by the necessary expenses for
operation and maintenance of the facilities.
(5) Board' means the State Budget and Control Board.
(6) Trustees' means the Board of Trustees of the
University or any successor body.
Section 59-117-230. The trustees are authorized to acquire
additional facilities and to improve and renovate existing facilities
to the extent they determine to be necessary, and the proceeds of
bonds authorized by this article are made available for that purpose.
The trustees also are authorized to refund bonds that may from time to
time be outstanding pursuant to this article by exchange or otherwise.
Section 59-117-240. Upon receiving the approval of the board
and upon review by the Joint Bond Review Committee, the trustees may
from time to time borrow such sums as may be necessary to accomplish
the purpose of this article and to evidence these borrowings by bonds
issued pursuant to this article in such aggregate principal amount as
they determine, except that other provisions of this article to the
contrary notwithstanding, there may not be outstanding at any time
bonds issued pursuant to this article in excess of twenty-five million
dollars.
Section 59-117-250. Bonds issued pursuant to this article must
be payable from the revenues or the net revenues derived by the
University from these facilities as designated by the trustees with
respect to the bonds. The trustees may abandon the use of any portion
of the facilities or sell or dispose of any portion of the facilities
upon receipt of a written recommendation by the chief financial
officer of the University to the effect that the action will not
adversely affect the ability of the University to discharge its
obligations to the holders of bonds issued pursuant to this article
and upon the further conditions as prescribed in the resolution of the
trustees providing for the issuance of bonds. The bonds issued
pursuant to this article may be further secured by the additional
pledges of other revenues or fees of the University as it may be
authorized to grant pursuant to other laws of this State.
Section 59-117-260. The faith and credit of the State may not
be pledged for the payment of the principal and interest of the bonds,
and there must be on the face of each bond a statement plainly worded
to that effect. Neither the trustees nor any other person signing the
bonds is personally liable for them.
Section 59-117-270. In order to avail themselves of the
authorizations set forth in this article, the trustees shall adopt
resolutions providing for the issuance of bonds of the University,
within the limitations mentioned in this article which must prescribe
the tenor, terms, and conditions of the bonds. The bonds must be
issued as serial or term bonds, maturing in equal or unequal amounts,
at such times and on such occasions as the trustees determine. The
last maturing bonds of any issue must be expressed to mature not later
than fifty years from their date, and the first maturing bonds of any
issue, issued pursuant to this article, falls due within five years
from their date. They must bear such rates of interest, payable on
such occasion, as the trustees prescribe, and the bonds must be in
such denominations, payable in such medium of payment, and at such
place as such resolutions prescribe. All bonds may be issued with a
provision permitting their redemption on any interest payment date
before their respective maturities. Bonds made subject to redemption
before their stated maturities may contain a provision requiring the
payment of a premium for the privilege of exercising the right of
redemption, in such amount or amounts as the trustees prescribe in the
resolutions authorizing their issuance. All bonds that are subject to
redemption must contain a statement to that effect on the face of each
bond. The resolutions authorizing their issuance must contain
provisions specifying the manner of call and the notice of call that
must be given.
Section 59-117-280. The bonds authorized by this article and
all interest to become due on them have the tax exempt status
prescribed by Section 12-1-60.
Section 59-117-290. It is lawful for all executors,
administrators, guardians, and fiduciaries, all sinking fund
commissions, the board, as trustee of the South Carolina Retirement
System, and all other governmental entities within this State to
invest any monies in their hands in the bonds.
Section 59-117-300. The bonds and coupons, if any, attached to
the bonds, are executed manually or by facsimile in the name of the
University in the manner and by persons as the trustees from time to
time determine, and the seal of the University must be affixed to or
impressed or reproduced on each bond. Any coupons attached to the
bonds must be authenticated by the facsimile signature of one or more
of the persons signing the bonds. The bonds, in the discretion of the
trustees, may be registerable as to principal and interest on books
kept for them by or on behalf of the University, including by a
corporate registrar. The delivery of the executed bonds is valid
notwithstanding changes in officers or in the seal occurring after the
execution. Notwithstanding the foregoing, the bonds, in the discretion
of the trustees, may be issued as fully registered noncertificated
book-entry securities.
Section 59-117-310. The bonds must be disposed of in such
manner as the trustees determine, except that no sale, privately
negotiated without public advertisement, may be made unless the
approval of the board is obtained. If the trustees elect to sell the
bonds at public sale, at least one advertisement of them must appear
in some newspaper of general circulation in this State not less than
seven days before the date fixed for the opening of bids. The bonds
may be sold at such discount or for such premium as may be determined
by the trustees or their designee as being in the best interest of the
University.
Section 59-117-320. To the end that the payment of the
principal and interest of the bonds authorized by this article is
secured adequately, the trustees of the University may:
(1) issue bonds in such amount within the limitations provided for
in this article, as the trustees consider necessary. It is lawful for
the trustees to use a portion of the principal proceeds derived from
any sale of bonds, except bonds issued to effect refunding of
outstanding bonds, to meet the payment of interest on the bonds for a
period equal to the period of construction of the facilities to be
financed with the proceeds of such bonds, plus a period not exceeding
six months. It is recognized by the General Assembly that until the
facilities to be constructed with the proceeds of the loan are
completed an undue burden may be imposed upon the existing revenues at
that time;
(2) pledge the revenues or the net revenues of the facilities as
designated by the trustees in connection with the issuance of the
bonds, whether then or after that time to be existing and to pledge
any otherwise available gifts, grants, or donations to the University
for the payment of the principal of and interest on the bonds as they
respectively mature. However, any surplus of the revenues or net
revenues available after the payment of costs of operation and
maintenance of the facilities and of debt service on the bonds, and
the establishment of any debt service reserve obligation under the
proceedings providing for the issuance of the bonds, is placed in a
contingency and improvement fund for the facilities in order to
restore depreciated or obsolete items of the facilities, to make
improvements to the facilities, to defray the cost of unforeseen
contingencies with regard to the facilities, to prevent defaults under
such bonds, or to redeem any of the bonds;
(3) further secure the bonds with a pledge of any additional
revenues or fees of the University as may be authorized under other
laws of this State;
(4) covenant that no facilities owned by the University may be used
free of charge, or to specify and limit the facilities which may be
used free of charge;
(5) covenant to establish and maintain a system of rules as will
insure the continuous use and occupancy of the facilities, whose
revenues are pledged to secure any bonds;
(6) covenant that an adequate schedule of charges be established
and maintained for the facilities designated by the trustees, whose
revenues or net revenues are pledged to secure the bonds, to the
extent necessary to produce sufficient revenues to:
(a) pay the cost of operating and maintaining the facilities,
whose revenues or net revenues are pledged for the payment of the
bonds, including the cost of fire, extended coverage and use, and
occupancy insurance;
(b) pay the principal and interest of the bonds as they
respectively become due;
(c) create and at all times maintain an adequate debt service
reserve fund to meet the payment of the principal and interest; and
(d) create and at all times maintain an adequate reserve for
contingencies and for major repairs and replacement.
(7) covenant against the mortgaging or disposing of the facilities
designated by the trustees, whose revenues or net revenues are pledged
for the payment of the bonds, and against permitting or suffering any
lien to be created on them, equal or superior to the lien created for
the benefit of such bonds. The trustees are empowered to discontinue
the use of or demolish obsolete facilities and to reserve the right,
under the terms they prescribe, to issue additional bonds on a parity
with the bonds authorized by this article, if at some later date they
obtain legislative authorization for the issuance of additional bonds;
(8) covenant as to the use of the proceeds derived from the sale of
any bonds issued pursuant to this article;
(9) provide for the terms, form, registration, exchange, execution
and authentication of bonds, and for the replacement of lost,
destroyed, or mutilated bonds;
(10) make covenants with respect to the use of the facilities, to be
constructed with the proceeds of the bonds authorized by this article,
and of the other facilities, whose revenues must be pledged for the
payment of the bonds;
(11) covenant that all revenues or net revenues of the particular
facilities pledged for the payment of the bonds must be segregated
into special funds and that the funds must be used solely for the
purposes for which they are intended and for no other purpose;
(12) covenant for the mandatory redemption of bonds on the terms and
conditions as the resolutions authorizing the bonds prescribe;
(13) provide for early defeasance of bonds through the establishment
of special escrow accounts maintained by a corporate trustee, which
may be the State Treasurer, of cash or United States government
obligations, or obligations of agencies of them, which escrows may be
funded with proceeds of bonds issued under the provisions of this
article or revenues or other funds available to the University;
(14) prescribe the procedure, if any, by which the terms of the
contract with the bondholders may be amended, the number of bonds
whose holders must consent to it, and the manner in which consent is
given;
(15) covenant as to the maintenance of the facilities, whose
revenues must be pledged for the payment of the bonds, the insurance
to be carried on them, and the use and disposition of proceeds from
any insurance policy;
(16) prescribe the events of default and the terms and conditions
upon which all or any bonds become or may be declared due before
maturity and the terms and conditions upon which the declaration and
its consequences may be waived;
(17) impose a statutory lien upon the facilities designated by the
trustees, the revenues or net revenues of which must be pledged to
secure the bonds. The lien must extend to the facilities, to their
appurtenances and extension, to their additions, improvements and
enlargements to the extent specified in the resolutions and must inure
to the benefit of the holders of the bonds secured by the lien. The
facilities remain subject to the statutory lien until the payment in
full of the principal and interest of the bonds. A holder of a bond,
or any of the coupons representing interest on them, either at law or
in equity, by suit, action, mandamus, or other proceedings, may
protect and enforce the statutory lien, and by suit, action, mandamus,
or other proceedings may enforce and compel performance of all duties
of the trustees, including the fixing of sufficient rates, the proper
segregation of the revenues, and the proper application of them.
However, the statutory lien may not be construed to give the bond or
coupon holder authority to compel the sale of any of the facilities or
any part of them;
(18) covenant that if there is a default in the payment of the
principal of or interest upon any of the bonds, a court having
jurisdiction in any proper action may appoint a receiver to administer
and operate the facilities designated by the trustees, whose revenues
or net revenues are pledged for the payment of the bonds, with power
to fix rates and charges for the facilities, sufficient to provide for
the payment of the expense of operating and maintaining the
facilities, and to apply the income and revenues of the facilities to
the payment of the bonds, and the interest on them;
(19) establish on or before the delivery of any bonds issued
pursuant to this article a debt service reserve fund and to cause it
to be deposited with a corporate trustee, who may be the State
Treasurer, and to that end, the trustees are empowered to utilize any
monies available for that purpose, including revenues previously
accumulated from the facilities before the issuance of bonds. In the
discretion of the trustees, in lieu of cash, the debt service reserve
fund may be funded with a surety bond, insurance policy, letter of
credit, line of credit, or similar guarantee. At the discretion of
the trustees, the University may purchase an insurance policy insuring
payment of both principal and interest on any issuance of bonds under
the provisions of this article;
(20) appoint a corporate trustee, who may be the State Treasurer, or
paying agent to whom must be paid all or any portion of the revenues
or net revenues pledged to the payment of the bonds or derived from
the operation of the facilities, and to prescribe the manner in which
these revenues or net revenues must be utilized and disposed of. The
corporate trustee shall serve in a fiduciary capacity as trustee for
the bondholders under the resolutions of the trustees authorizing the
issuance of bonds.
Section 59-117-330. No time limit is set for the issuance of
bonds pursuant to this article."
Time effective
SECTION 5. This act takes effect upon approval by the Governor.
Approved the 29th day of May, 1990.
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