Sec. 3-76s. Defaults in principal or interest payments on municipal refunding bonds; remedies.
Sec. 3-76s. Defaults in principal or interest payments on municipal refunding
bonds; remedies. (a) Upon the issuance and delivery of any municipal refunding bonds
to the state by any municipality, that municipality is deemed to agree that on the failure
of that municipality to pay interest or principal on any of the municipal refunding bonds
owed or held by the state when payable, all defenses to nonpayment are waived.
(b) If at any time a municipality is in default on the payment of the principal of or
interest on any municipal refunding bonds of such municipality then held or owned by
the state, upon demand by the Treasurer, the officer of such defaulting municipality
empowered by law to receive revenues or tax receipts shall set apart from the first
revenues or tax receipts not pledged or otherwise required by law to be applied to another
purpose thereafter received by such municipality an amount sufficient to pay the principal and interest due and owing on such bonds and shall immediately apply such amount
to cure such default.
(c) Notwithstanding any other law as to time or duration of default or percentage
of holders or owners of bonds or notes entitled to exercise rights of holders or owners
of bonds or notes in default, or to invoke any remedies or powers thereof or of any
trustee in connection therewith or of any board, body, agency or commission of the state
having jurisdiction in the matter of circumstance, the Treasurer, acting on behalf of the
state, may thereupon avail himself of all other remedies, rights and provisions of law
applicable in that circumstance, and the failure to exercise or exert any rights or remedies
within any time or period provided by law may not be raised as a defense by the defaulting
municipality. The Treasurer may carry out the provisions of this section and exercise
all of the rights and remedies and provisions of law herein provided or referred to.
(d) To the extent that the Treasurer or any other officer of the state is the custodian
of any moneys made available by reason of any grant, allocation or appropriation by
the state or agencies thereof payable to a municipality at any time subsequent to the
failure of such municipality to pay the principal of or interest on municipal refunding
bonds of such municipality then owned or held by the state, the Treasurer or such officer
shall withhold the payment of that money from that municipality until the amount of
the principal or interest then due and unpaid has been paid to the state, or until the
Treasurer or such officer shall determine that arrangements, satisfactory to the Treasurer,
have been made for the payment of such principal and interest provided, however, that
such moneys shall not be withheld from such defaulting municipality if such withholding
will adversely affect the receipt of any federal grant or aid in connection with such
moneys.
(P.A. 73-591, S. 19, 21.)