§ 14-235-215 - Issuance of revenue bonds and notes generally.
14-235-215. Issuance of revenue bonds and notes generally.
(a) (1) Nothing contained in this subchapter shall be so construed as to authorize or permit any municipality to make any contract or to incur any obligation of any kind or nature except such as shall be payable solely from the funds provided under the authority of this subchapter.
(2) (A) (i) Funds for the payment of the entire cost of the works and for the payment of any extraordinary expenses or liabilities arising from the ownership and operation of the works including, without limitation, liabilities to customers of the works relating to rates charged by the municipality for use of the works shall be provided by funds derived from the operation of the works, by funds of the municipality appropriated for that purpose, and by the issuance of municipal revenue bonds, the principal and interest of which shall be payable solely from the special fund provided in 14-235-221 for payment.
(ii) The bonds shall not, in any respect, be a corporate indebtedness of the municipality within the meaning of any statutory or constitutional limitations on them.
(B) All the details of the bonds shall be determined by ordinance of the municipality.
(b) (1) (A) Any municipality owning or operating a sewage system, however constructed or acquired, and desiring to construct improvements and betterments to it, may borrow money to be used for these purposes, to refinance or retire existing indebtedness related to the sewage system, or to provide funds for preliminary expense prior to the issuance of revenue bonds or to provide interim financing pending receipt of federal or state grant-in-aid of loan disbursements.
(B) Such a loan shall be evidenced by revenue promissory notes as set out in this section.
(2) The money so borrowed shall be deposited in a revenue note fund and shall be used solely for the purposes authorized in this section.
(3) The notes evidencing the loan shall be authorized by the legislative body of the municipality and shall be due in not exceeding five (5) years from date and shall bear interest at such rate or rates as provided in the ordinance authorizing their issuance, interest being payable semiannually.
(4) (A) The note or notes shall be payable solely from the revenues derived from the sewage system and shall not, in any event, constitute an indebtedness of the municipality within the meaning of the constitutional provisions or limitations.
(B) It shall be plainly stated on the face of each note that the same has been issued under the provisions of this subchapter and that it does not constitute an indebtedness of the municipality within any constitutional or statutory limitations.
(5) The notes shall be subordinate to any outstanding revenue bonds theretofore issued by the municipality.
(6) (A) It shall be no objection to the subsequent issue of any revenue bonds that a portion of the proceeds received from the sale of the revenue bonds is to be used to retire the indebtedness permitted by this section.
(B) If the proceeds of the bonds are so used, then the improvements constructed or purchased with the proceeds of the loan authorized by this section shall be considered to be a portion of improvements constructed or purchased with the revenue bonds subsequently issued.
(7) All interest paid on the revenue bonds shall be exempt from State of Arkansas income tax.