2012 Arkansas Code
Title 4 - Business and Commercial Law
Subtitle 3 - Corporations And Associations
Chapter 35 - Water Authority Act
Subchapter 3 - -- Bond Provisions
§ 4-35-303 - Security for bonds.

(a) The principal of and interest on bonds may be secured by a pledge of the revenues of a water authority of that project financed by the water authority through its issuance of bonds or from any other source that the water authority may deem necessary and appropriate and may be secured by the creation of a forecloseable mortgage and security interest encumbering the real property of the water authority or security interest in all personal property and revenues of the water authority as set forth in the indenture.

(b) The trustee under any indenture may be a trust company or bank having trust powers, whether located within or without the state.

(c) The bond resolution of the water authority authorizing the bonds or indenture may contain, all as the board of directors shall deem advisable and as shall not be in conflict with the provisions of this subchapter, any agreements and provisions customarily contained in instruments securing evidences of indebtedness, including, without limiting the generality of the foregoing:

(1) Provisions respecting the nature and extent of the security;

(2) The collection, segregation, and application of the revenues generated from the operation of any project covered by the bonds, the resolution, or the indenture;

(3) Covenants to always operate the project as a revenue-producing undertaking and to charge and collect, including the obligation to increase from time to time, sufficient revenue to maintain income at required levels;

(4) The maintenance and insurance of the project;

(5) The creation and maintenance of reserve and other special funds; and

(6) The rights and remedies available in the event of default to the holders of the bonds or the trustees under the indenture, bond, or resolution.

(d) If there is any default by a water authority in payment of the principal of or the interest on the bonds or in any of the agreements on the part of the water authority that may properly be included in any indenture, bond, or resolution securing the bonds, the bondholders or the trustee under any bond, resolution, or indenture, as authorized in the bond, resolution, or indenture may either in law or in equity, by suit, action, mandamus, or other proceeding enforce payment of the principal or interest and compel performance of all duties of the board and officers of the water authority and shall be entitled as a matter of right and regardless of the sufficiency of any such security to the appointment of a receiver in equity with all the powers of the receiver for the operation and maintenance of the project covered by the indenture, bond, or resolution and the collection, segregation, and applications of income and revenues therefrom.

(e) The indenture, bond, or resolution may contain provisions regarding the rights and remedies of any trustee thereunder and the holders of the bonds and the coupons and restricting the individual rights of action of the holders of the bonds and coupons.

(f) (1) In the event of a default in the payment of the principal of or interest on any bonds issued under the provisions of this chapter, any court having jurisdiction may appoint a receiver to take charge of the facilities upon or in which there is a mortgage lien or security interest securing the bonds in default.

(2) The receiver shall have the power and authority to operate and maintain the facilities in receivership, to charge and collect payments, fees, rents, and charges sufficient to provide for the payment of any costs of receivership and operating expenses of the project in receivership, and to apply the revenues derived from the facilities in receivership in conformity with this chapter and the resolution or trust indenture securing the bonds in default.

(3) When the default has been cured, the receivership shall be ended and the facilities returned to the water authority.

(g) The relief provided in this section shall be construed to be in addition and supplemental to the other remedies provided in this chapter and the remedies that may be provided in the resolution or trust indenture authorizing or securing the bonds and shall be so granted and administered as to accord full recognition to priority rights of bondholders as to the pledge of revenues from and mortgage lien on or security interest in facilities as specified in and fixed by the resolution or trust indenture authorizing or securing successive issues of bonds.