Pennsylvania Act 1937-507 — SECOND CLASS CITIES, NON-DEBT BONDS

Act text

SECOND CLASS CITIES, NON-DEBT BONDS
                 Act of Jul. 1, 1937, P.L. 2631, No. 507              Cl. 11
                                  AN ACT

     Authorizing and regulating the issuing, by cities of the second
        class, of non-debt revenue bonds for the construction or
        acquisition of waterworks, and for extensions and
        improvements to waterworks; providing for the redemption of
        such bonds and the payment of interest thereon from rentals
        and charges imposed upon consumers; and establishing the
        rights of bondholders.

        Section 1.  Be it enacted, &c., That for the purpose of
     financing the cost and expense of constructing or acquiring any
     waterworks or constructing extensions to or improving existing
     waterworks, any city of the second class may issue non-debt
     revenue bonds secured solely by a pledge in whole or in part of
     the annual rentals or charges imposed upon consumers of water.
     Said bonds shall not pledge the credit, not create any debt nor
     be a charge against the general revenues nor be a lien against
     any property of the city, but shall be a lien upon and payable
     solely from the annual rentals or charges imposed upon
     consumers.
        Section 2.  Whenever any city of the second class has enacted
     an ordinance or resolution imposing a water rental or charge
     upon consumers, and has pledged sufficient of the revenues to be
     derived therefrom for the payment of the interest and sinking
     fund charges on such non-debt revenue bonds, it shall have power
     to authorize the issue and sale of such non-debt revenue bonds
     from time to time as the work of construction proceeds, and
     sufficient additional non-debt revenue bonds as may be necessary
     may be issued and sold to provide for the interest and sinking
     fund charges accruing thereon, until said waterworks, extensions
     or improvements have been completed and have been in operation
     for not exceeding one year, in order to provide sufficient
     revenues until such time as rentals or charges may be collected
     from consumers.
        Nothing in this section shall be construed to abridge or
     restrict or in any way impair the right of any city to create
     indebtedness in accordance with existing laws.
        Section 3.  When any city of the second class shall issue
     such non-debt revenue bonds, the authorities thereof may sell
     the same or any portion thereof at private sale to the United
     States of America or any agency, instrumentality or corporation
     thereof, or to the sinking fund of the city. Any bonds not so
     sold shall be sold to the highest responsible bidder after
     public notice by advertisement once a week for three weeks in at
     least one newspaper of general circulation published in the
     city. No bid for such bonds at less than par value shall be
     accepted. Where bonds shall be advertised for sale as herein
     provided and no bids have been received, then it shall be lawful
     for such city to sell the same at private sale for not less than
     par value and accrued interest.
        Section 4.  All such bonds shall be payable in not more than
     thirty years from the date of their issue, shall be issued in
     series payable in annual installments as may be determined by
     the city, and bear interest at a rate not exceeding six per
     centum per annum.
        Section 5.  Said bonds shall have all the qualities of
     negotiable instruments under the law merchant and the negotiable
     instruments law of the Commonwealth of Pennsylvania.
        Section 6.  Any city of the second class may enter into any
     deeds of trust, indentures or other agreements with any bank or
     trust company or other person or persons in the United States
     having power to enter into the same, including any Federal
     agency, as security for such bonds, and may assign and pledge
     all or any of the revenues or receipts of the waterworks
     thereunder. Such deed of trust, indenture or other agreement may
     contain such provisions as may be customary in such instruments
     or as the city may authorize, including (but without limitation)
     provisions as to--(1) the construction, improvement, operation,
     maintenance, and repair of the waterworks and the duties of the
     city with reference thereto, (2) the application of funds and
     the safeguarding of funds on hand or on deposit, (3) the rights
     and remedies of said trustee and the holders of the bonds (which
     may include restrictions upon the individual right of action of
     such bondholders), and (4) the terms and provisions of the bonds
     or the resolutions authorizing the issuance of the same.
        Section 7.  The rights and the remedies herein conferred upon
     or granted to the bondholders shall be in addition to, and not
     in limitation of, any rights and remedies lawfully granted to
     such bondholders by the resolution or resolutions or ordinance
     or ordinances providing for the issuance of bonds or by any deed
     of trust, indenture or other agreement under which the same may
     be issued. In the event that the city shall default in the
     payment of principal of or interest on any of the bonds after
     the said principal or interest shall become due, whether at
     maturity or upon call for redemption, and such default shall
     continue for a period of thirty days, or in the event that the
     city shall fail or refuse to comply with the provisions of this
     act or shall default in any agreement make with the holders of
     the bonds, the holders of twenty-five per centum in aggregate
     principal amount of the bonds then outstanding by instrument or
     instruments filed in the office of the recorder of deeds of the
     county and proved or acknowledged in the same manner as a deed
     to be recorded, may appoint a trustee to represent the
     bondholders for the purposes herein provided. Such trustee, and
     any trustee under any deed of trust, indenture or other
     agreement may, and upon written request of the holders of
     twenty-five per centum (or such other percentage as may be
     specified in any deed of trust, indenture or other agreement
     aforesaid) in principal amount of the bonds then outstanding,
     shall in his or its own name--
        (a)  By mandamus or other suit, action or proceeding at law
     or in equity, enforce all rights of the bondholders, including
     the right to require the city to collect rates, rentals and
     other charges adequate to carry out any agreement as to or
     pledge of the revenues or receipts of the waterworks, and to
     require the city to carry out any other agreements with or for
     the benefit of the bondholders, and to perform its and their
     duties under this act.
        (b)  Bring suit upon the bonds.
        (c)  By action or suit in equity, require the city to account
     as if it were the trustee of an express trust for the
     bondholders.
        (d)  By action or suit in equity, enjoin any acts or things
     which may be unlawful or in violation of the rights of the
     bondholders.
        (e)  By notice in writing to the city declare all bonds due
     and payable, and if all defaults shall be made good, then, with
     the consent of the holders of twenty-five per centum (or such
     other percentage as may be specified in any deed of trust,
     indenture or other agreement aforesaid) of the principal amount
     of the bonds then outstanding, to annul such declaration and its
     consequences.
        The court of common pleas of the county shall have
     jurisdiction of any suit, action or proceedings by the trustee
     on behalf of the bondholders. Any trustee, whether appointed as
     aforesaid or acting under a deed of trust, indenture or other
     agreement, and whether or not all bonds have been declared due
     and payable, shall be entitled as of right to the appointment of
     a receiver who may enter and take possession of the waterworks
     or any part or parts thereof, the revenues or receipts from
     which are or may be applicable to the payment of the bonds so in
     default, and operate and maintain the same and collect and
     receive all rentals and other revenues thereafter arising
     therefrom, in the same manner as the city, and shall deposit all
     such moneys in a separate account and apply the same in such
     manner as the court shall direct in any suit, action or
     proceeding by the trustee. The fees, counsel fees, and expenses
     of the trustee and of the receiver, if any, and all costs and
     disbursements allowed by the court shall be a first charge on
     any revenues and receipts derived from the waterworks, the
     revenues or receipts from which are or may be applicable to the
     payment of the bonds so in default. Said trustee shall, in
     addition to the foregoing, have and possess all of the powers
     necessary or appropriate for the exercise of any functions
     specifically set forth herein or incident to the general
     representation of the bondholders in the enforcement and
     protection of their rights.
        Section 8.  This act shall become effective immediately upon
     its final enactment.