§ 44543 Bond Security Trust Agreements

Key Takeaways

•This law lets a group (called 'the authority') borrow money by selling bonds to pay for big projects.
•The money from these bonds can be kept safe by a bank or trust company to make sure it’s used right.
•The rules for how the money is used and paid back can be written in a special agreement to protect the people who buy the bonds.
•If something goes wrong, the agreement can say how to fix it, like who can take action to protect the money.

Example

A city wants to build a new park but doesn’t have enough money right now.

The city can sell bonds (like IOUs) to people to get the money. A bank holds the money and makes sure it’s only used for the park. The agreement says the city will pay the money back over time, and if they don’t, the bank can step in to protect the people who bought the bonds.

(a) In the discretion of the authority, any bonds issued under the provisions of this division may be secured by a trust agreement by and between the authority and a trustee or trustees, which may be any trust company or bank having the powers of a trust company within or without the state. The trust agreement or the resolution providing for the issuance of bonds may pledge or assign the revenues to be received or proceeds of any contract or contracts pledged and may convey or mortgage the project or projects, or any portion thereof, to be financed out of the proceeds of bonds. The trust agreement or resolution providing for the issuance of bonds may contain provisions for protecting and enforcing the rights and remedies of the bondholders, or any provider of credit enhancement, as may be reasonable and proper and not in violation of law, including particular provisions as have hereinabove been specifically authorized to be included in any resolution or resolutions of the authority authorizing bonds thereof. Any bank or trust company doing business under the laws of this state that may act as depository of the proceeds of bonds or of revenues or other moneys may furnish these indemnifying bonds or pledge securities as may be required by the authority. Any trust agreement may set forth the rights and remedies of the bondholders and of the trustee or trustees, and may restrict the individual right of action by bondholders or any provider of credit enhancement. In addition to the foregoing, any trust agreement or resolution may contain other provisions as the authority may deem reasonable and proper for the security of the bondholders. Notwithstanding any other law, the Treasurer shall not be deemed to have a conflict of interest by reason of acting as trustee pursuant to this division. (b) All expenses incurred in carrying out the provisions of a trust agreement or resolution may be treated as a part of the cost of the operation of a project. (Amended by Stats. 2010, Ch. 414, Sec. 3. (SB 1477) Effective September 28, 2010.)

Key Takeaways

•This law lets a group (called 'the authority') borrow money by selling bonds to pay for big projects.
•The money from these bonds can be kept safe by a bank or trust company to make sure it’s used right.
•The rules for how the money is used and paid back can be written in a special agreement to protect the people who buy the bonds.
•If something goes wrong, the agreement can say how to fix it, like who can take action to protect the money.

Example

A city wants to build a new park but doesn’t have enough money right now.

Key Takeaways

Example

Key Terms

References

§ 44543 Bond Security Trust Agreements

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References