2010 Tennessee Code
Title 49 - Education
Chapter 3 - Finances
Part 11 - Educational Institutions Law of 1943
49-3-1107 - Security for bonds.

49-3-1107. Security for bonds.

The board, in connection with the issuance of bonds to acquire any project for an institution or in order to secure the payment of the bonds and interest on the bonds, shall have power by resolution to:

     (1)  Fix and maintain:

          (A)  Fees, rentals and other charges from students, faculty members and others using or being served by, or having the right to be served by, the project;

          (B)  Matriculation, hospital, laboratory, athletic, admission and other fees from students, faculty members and others matriculated, attending or employed at the institution, and from the public in general for facilities afforded by the institution, which shall be uniform for all those similarly situated; and

          (C)  Fees, rentals and other charges from students, faculty members and others using or being served by, or having the right to use, or having the right to be served by, existing buildings, stadia, and other structures at the institutions, which fees, rentals and other charges shall be the same as those applicable to the project and if it is similar in nature and purpose to such existing buildings, stadia and other structures at the institution, there may be allowed reasonable differentials based on the conditions, type, location and relative convenience of the project and the existing buildings, stadia and other structures, but the differentials shall be uniform as to all such students or faculty members and others similarly accommodated;

     (2)  Provide that the bonds shall be secured by a first and paramount lien on the income and revenue, but not the real property of the institution, derived from, and which shall be payable from:

          (A)  Fees, rentals, and other charges from students, faculty members and others using or being served by, or having the right to use, or having the right to be served by, the project, and any existing buildings, stadia, and other structures; and

          (B)  Matriculation, hospital, laboratory, athletic, admission and other fees from students, faculty members and others matriculated, attending or employed at the institution, and from the public in general, for the facilities afforded by the institution;

     (3)  Pledge and assign to, or in trust for the benefit of, the holder or holders of the bonds an amount of the income and revenue derived from:

          (A)  Fees, rentals and other charges from students, faculty members and others using or being served by, or having the right to use, or having the right to be served by, the project, and any existing buildings, stadia and other structures; and

          (B)  Matriculation, hospital, laboratory, athletic, admission and other fees from students, faculty members and others matriculated, attending or employed at the institution, and from the public in general, for the facilities afforded by the institution, which shall be sufficient to pay when due the bonds issued under this part to acquire the project, and interest on the bonds, and to create and maintain reasonable reserves for the bonds;

     (4)  Covenant with or for the benefit of the holder or holders of the bonds that, so long as any of the bonds remain outstanding and unpaid, the institution will fix, maintain and collect in such installments as may be agreed upon, an amount of the fees, rentals and other charges from students, faculty members and others using or being served by, or having the right to use, or having the right to be served by, the project, and any existing buildings, stadia and other structures that, together with an amount of the matriculation, hospital, laboratory, athletic, admission and other fees from students, faculty members and others matriculated, attending or employed at the institution, and from the public in general, for the facilities afforded by the institution, shall be sufficient to pay when due the bonds and interest on the bonds, and to create and maintain reasonable reserves for the bonds, and to pay the costs of operation and maintenance of the project, including, but not limited to, reserves for extraordinary repairs, insurance and maintenance, which costs of operation and maintenance shall be determined by the board in its absolute discretion;

     (5)  Make and enforce and agree to make and enforce parietal rules that ensure the use of the project by all students in attendance at the institution to the maximum extent to which the project is capable of serving the students, or if the project is designed for occupancy as living quarters for the faculty members, by as many faculty members as may be served by the project;

     (6)  Covenant that so long as any of the bonds remain outstanding and unpaid, it will not, except upon such terms and conditions as may be determined:

          (A)  Voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge having priority to or being on a parity with the lien of the bonds upon any of the income and revenues derived from fees, rentals and other charges from students, faculty members and others using or being served by, or having the right to use, or having the right to be served by, the project and any existing buildings, stadia and other structures, and from matriculation, hospital, laboratory, athletic admission and other fees from students, faculty members and others matriculated, attending or employed at the institution, and from the public in general, for the facilities afforded by the institution;

          (B)  Convey or otherwise alienate the project or the real estate upon which the project is located, except at a price sufficient to pay all the bonds then outstanding and interest accrued on the bonds, and then only in accordance with any agreements with the holder or holders of the bonds; or

          (C)  Mortgage or otherwise voluntarily create or cause to be created any encumbrance on the project or the real estate upon which it is located;

     (7)  Covenant as to the procedure by which the terms of any contract with the holder or holders of the bonds may be amended or abrogated, the amount or percentage of bonds the holder or holders of which must consent to the amendment or abrogation, and the manner in which consent may be given;

     (8)  Invest in a trustee or trustees the right to receive all or any part of the income and revenue pledged and assigned to, or for the benefit of, the holder or holders of the bonds and to hold, apply and dispose of the income and revenue and the right to enforce any covenant made to secure or pay or in relation to the bonds; execute and deliver a trust agreement or trust agreements that may set forth the powers and duties and the remedies available to the trustee or trustees and limiting the liabilities of the trustee or trustees and describing what occurrences constitute events of default, and prescribing the terms and conditions upon which the trustee or trustees or the holder or holders of bonds of any specified amount or percentage of the bonds may exercise such rights and enforce any and all such covenants and resort to such remedies as may be appropriate;

     (9)  Vest in a trustee or trustees or the holder or holders of any specified amount or percentage of bonds the right to apply to any court of competent jurisdiction for and have granted the appointment of a receiver or receivers of the income and revenue pledged and assigned to or for the benefit of the holder or holders of the bonds, which receiver or receivers may have and be granted such powers and duties as the court may order or decree for the protection of the bondholders; and

     (10)  Make covenants with any federal agency to perform any and all acts and to do any and all things as may be necessary or convenient or desirable in order to secure the bonds, or as may in the judgment of the board tend to make the bonds more marketable, notwithstanding that the acts or things may not be enumerated in this section, it being the intention of this section to give the board power to make all covenants, to perform all acts and to do all things, not inconsistent with the constitution of this state, in the issuance of the bonds and for their security, that a private business corporation might do.

[Acts 1943, ch. 135, § 5; C. Supp. 1950, § 2316.5 (Williams, § 2316.17); T.C.A. (orig. ed.), § 49-3505.]  

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