8148 - Deeds of trust and other agreements with bondholders and noteholders.
§ 8148. Deeds of trust and other agreements with bondholders and noteholders. (a) General rule.--A local government unit shall have the power to enter into any deed of trust, trust indenture or other agreement with any bank, bank and trust company, trust company or other person or persons in the United States having power to enter into such agreements or accept such trusts, including any Federal agency, as security for any notes or bonds of the local government unit providing for the following: (1) The payment of the interest on and principal of the notes or bonds; the authentication of the original issue; the custody of sinking funds or other funds held or to be held pending presentation of coupons, notes or bonds for payment; the custody of debt service reserve funds or other funds to be held as reserves; the disbursement of interest to holders of fully registered bonds or notes; the cremation or other destruction of coupons, bonds or notes which have been paid; and registration, exchanges and transfers and the maintenance of records of those transactions. (2) The construction, improvement, operation, maintenance and repair of any project being financed. (3) Limitations on the purposes to which the proceeds of the bonds then or thereafter to be issued in connection with the project, or of any loan or grant by the United States or the Commonwealth, may be applied. (4) The rights and remedies of such trustee or other person and the holder of the bonds or notes, which may include reasonable restrictions upon the individual right of action of the holders. (5) The terms and provisions, including stated maturities and sinking fund and other reserve fund provisions, not in conflict with the limitations imposed by this subpart, but which may be more limiting, of or provided for the bonds or notes being issued or which may hereafter be issued in connection with the project being financed. (b) Revenue and guaranteed revenue bonds.--In connection with any revenue bonds or guaranteed revenue bonds, such deeds of trust, trust indentures or other agreements may contain provisions as to the following: (1) The rate of rents, charges, rates or tolls to be imposed for the use of the project being financed or the rendering of services through the use of the project, or both, to ensure a sufficiency of revenues to cover operating expenses, debt service and an appropriate surplus. (2) The setting aside of reserves or other earmarked funds, and limitation upon the use, investment and disposition thereof for the better security of the bonds or notes. (3) Limitations on the issue of additional bonds or notes ranking equally or having priority in claim on revenues with the bonds being issued. (4) Any other or additional agreements with the holders of bonds or notes as may be customary in these agreements, provided no delegation of essential governmental powers is made. (c) Ordinance provisions in lieu of agreement.--In lieu of a deed of trust, trust indenture or other agreement specified in this section, the bond ordinance of the local government unit may contain similar provisions which shall be a contract between the local government unit and the holders from time to time of its bonds or notes. (d) Limitation on delegation of function.--No deed of trust shall delegate the performance of essential governmental functions to a trustee, fiscal agent or receiver. For purposes of this section, the matters enumerated are not deemed to be essential governmental functions. Cross References. Section 8148 is referred to in sections 8103, 8105 of this title.