§ 5265 - Financing agreements - Vermont Statutes

§ 5265. Financing agreements

(a) Any financing agreement authorized by this chapter shall be a general obligation of the educational institution and require that the institution:

(1) represent that, at the time that it executes a financing agreement, it has been assigned a long-term credit rating that is at least investment grade from at least one nationally recognized rating agency without regard to credit enhancement;

(2) pledge revenues at least equal to annual debt service to the authority to secure the educational institution's obligations under its financing agreement;

(3) covenant to maintain on semiannual report dates unrestricted assets, as specified by the authority, at least equal to 10 percent of total expenses, as specified by the authority, for the most recent fiscal year;

(4) covenant to have revenues in each year at least equal to 105 percent of operating expenses and debt service on its debt in such year, excluding items such as depreciation and any other items specified by the authority, of which revenues, up to five percent may consist of annual endowment income, or of tuition income collected one-time and held exclusively for this purpose; and

(5) covenant to operate in a nonsectarian and nondiscriminatory manner.

(b) Each educational institution is hereby given the power to make the representations and agree to the covenants set forth in subsection (a) of this section.

(c) In addition to the provisions described in subsection (a) of this section, any financing agreement may contain provisions, which may be a part of the contract with the holders of the bonds or notes of the authority, as to:

(1) pledging all or any part of the moneys, earnings, income and revenues of the educational institution, to secure payments required under the terms of the financing agreement;

(2) the rates, rental fees and other charges to be fixed and collected by the educational institution, the amounts to be raised in each year thereby, and the use and disposition of those moneys, earnings, income and revenues;

(3) the setting aside of reserves and the creation of special funds and the regulation and disposition thereof;

(4) the procedure, if any, by which the terms of the financing agreement may be amended, the amount of bonds or notes the holders of which must consent thereto, and the manner in which the consent may be given;

(5) vesting in a trustee or trustees such specified properties, rights, powers and duties as shall be deemed necessary or desirable for the security of the holders of the bonds or notes of the authority issued for the facility;

(6) the obligations of the educational institution with respect to the replacement, reconstruction, maintenance, operation, repairs and insurance of its facilities;

(7) defining the acts or omissions to act constituting a default in the obligations and duties of the educational institution under a financing agreement, and providing for the rights and remedies of the authority of its bondholders or noteholders if default occurs; and

(8) any other matters of like or different character, which may be deemed necessary or desirable for the security or protection of the authority or the holders of its bonds or notes.

(d) Whenever the authority finances a facility for any educational institution, the educational institution shall be responsible for the operation, maintenance and replacement costs thereof, and the covenant to pay under the financing agreement shall be absolute and unconditional.

(e) To obtain funds for the acquisition or construction or financing of any facilities and for other purposes authorized under this chapter, the authority may from time to time issue negotiable bonds and notes as provided in this chapter. (Added 1999, No. 121 (Adj. Sess.), § 1.)