Sec. 7-491. Issuance of notes and bonds. - Connecticut Statutes

      Sec. 7-491. Issuance of notes and bonds. (a) Subject to the provisions of section 7-492 and any general statute, special act or municipal charter or ordinance to the contrary notwithstanding, a municipality shall have the power and is hereby authorized to issue from time to time its notes and bonds in such principal amounts as the municipality shall determine to be necessary to provide sufficient funds for achieving the purposes of this chapter, including the making of mortgage loans and loans to sponsors, the acquisition of development property, the establishment of reserves to secure such notes and bonds, interest on such notes and bonds during construction and for one year thereafter, and the payment of expenses incident to or necessary for furtherance of the purposes of this chapter.

      (b) A municipality shall have the power, from time to time, to issue (1) notes to renew notes and (2) bonds to pay notes, including the interest thereon and, whenever it deems refunding expedient, to refund any bonds by the issuance of new bonds, whether the bonds to be refunded have or have not matured, and to issue bonds partly to refund bonds then outstanding for any of the purposes of this chapter. The refunding bonds may be exchanged for the bonds to be refunded or sold and the proceeds applied to the purchase, redemption or payment of such bonds.

      (c) The notes and bonds shall be authorized by resolution of the municipality, shall bear such date or dates and shall mature at such time or times not exceeding forty years from the date thereof in the case of bonds issued to finance housing and facilities related thereto or thirty years from the date thereof in all other cases, as such resolution may provide. The bonds may be issued as serial bonds or as term bonds or as a combination thereof. The notes and bonds shall bear interest at such rate or rates, be in such denominations, be in such form, either bearer or registered, carry such exchange, transfer and registration privileges, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption as such resolution may provide. The notes and bonds may be sold by the municipality at public or private sale, at such price or prices as the municipality shall determine.

      (d) Any resolution authorizing notes or bonds or any issue thereof may contain provisions, which shall be a part of the contract or contracts with the holders thereof, as to: (1) Pledging all or part of any revenues to secure the payment of the notes or bonds or of any issue thereof, subject to such agreements with noteholders or bondholders as may then exist; (2) pledging all or any part of the development property in which the municipality has acquired an interest from the proceeds of bonds and notes to secure the payment of the notes or bonds or of any issue of notes or bonds, subject to such agreements with noteholders or bondholders as may then exist; (3) the use and disposition of the gross income from mortgages owned by the municipality for the purposes of this chapter and payment of principal of mortgages owned by the municipality for the purposes of this chapter; (4) the setting aside of reserves or sinking funds and the regulation and disposition thereof; (5) limitations on the purposes to which the proceeds of sale of notes or bonds may be applied and pledging such proceeds to secure the payment of the notes or bonds or of any issue thereof; (6) limitations on the issuance of additional notes or bonds; the terms upon which additional notes or bonds may be issued and secured; and the refunding of outstanding or other notes or bonds; (7) the procedure, if any, by which the terms of any contract with noteholders or bondholders may be amended or abrogated, the amount of notes or bonds the holders of which must consent thereto, and the manner in which such consent may be given; (8) limitations on the amount of moneys to be expended by the municipality for its operating expenses; (9) vesting in a trustee or trustees property, rights, powers and duties in trust as the municipality may determine, which may include any or all of the rights, powers and duties of the trustee appointed by the bondholders pursuant to this chapter, and limiting or abrogating the right of the bondholders to appoint a trustee under this chapter or limiting the rights, powers and duties of such trustee; (10) the acts or omissions to act which shall constitute a default in the obligations and duties of the municipality to the holders of the notes or bonds and providing for the rights and remedies of the holders of the notes or bonds in the event of such default, including the right to appointment of a receiver; provided, however, such rights and remedies shall not be inconsistent with the general laws of the state and the other provisions of this chapter; (11) any other matters, of like or different character, which in any way affect the security or protection of the holders of the notes or bonds.

      (e) If the resolution of a municipality authorizing the issuance of bonds or notes so states, the validity of such bonds or notes may be contested only if an action, suit or proceeding contesting such validity is commenced within sixty days after the date of publication of such resolution.

      (f) Prior to the issuance of any bonds and notes, a municipality shall find and determine that the intended use of the proceeds of such bonds and notes is in the public interest and will advance the carrying out of the purposes of this chapter. Such determination shall be based upon a record of proceedings which shall include such matters as the municipality shall consider relevant to such determination.

      (g) Any pledge made by the municipality shall be valid and binding from the time when the pledge is made, and the revenues or property so pledged and thereafter received by the municipality shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act. The lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the municipality, irrespective of whether such parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be recorded.

      (h) Neither the officials nor members of the legislative body of the municipality nor any other authorized person executing such notes or bonds shall be subject to any personal liability by reason of the issuance thereof.

      (i) The municipality, subject to such agreements with noteholders or bondholders as may then exist, shall have power, out of any funds available therefor, to purchase notes or bonds of the municipality, which shall thereupon be cancelled, at a price not exceeding (1) if the notes or bonds are then redeemable, the redemption price then applicable plus accrued interest to the next interest payment date thereof or (2) if the notes or bonds are not then redeemable, the redemption price applicable on the first date after such purchase upon which the notes or bonds become subject to redemption plus accrued interest to such date.

      (j) In the discretion of the municipality, the bonds may be secured by a trust indenture by and between the municipality and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the state. Such trust indenture may contain such provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including covenants setting forth the duties of the municipality in relation to the exercise of its powers pursuant to this chapter and the custody, safeguarding and application of all moneys. The municipality may provide by such trust indenture for the payment of the proceeds of the bonds and the revenues to the trustee under such trust indenture or other depository, and for the method of disbursement thereof, with such safeguards and restrictions as it may determine. All expenses incurred in carrying out such trust indenture may be treated as a part of the operating expenses of the municipality. If the bonds shall be secured by a trust indenture, the bondholders shall have no authority to appoint a separate trustee to represent them.

      (k) Whether or not the notes and bonds are of such form and character as to be negotiable instruments under the terms of the Uniform Commercial Code, the notes and bonds are hereby made negotiable instruments within the meaning of and for all purposes of the Uniform Commercial Code, subject only to the provisions of the notes and bonds for registration.

      (July Sp. Sess. P.A. 75-2, S. 12, 25; P.A. 89-230, S. 1, 4.)

      History: P.A. 89-230 amended Subsec. (c) to provide for forty-year maturity limits for bonds which finance housing and related facilities.