Code of Alabama - Title 16: Education - Section 16-65-6 - Bonds generally

Section 16-65-6 - Bonds generally.

(a) Issuance of bonds. The authority is authorized and empowered to issue its bonds from time to time for the purpose of making equipment loans to finance equipment costs incurred or to be incurred by educational institutions. Such bonds may be in such aggregate principal amount as the board of directors shall determine to be necessary to pay the equipment costs included in such financing. The authority may pay from the proceeds of the sale of its bonds all expenses, including publication and printing charges, attorneys' fees, financial advisory fees, and other expenses which the board of directors may deem necessary or advantageous in connection with the authorization, advertisement, sale, execution, and issuance of its bonds or the making of equipment loans from the proceeds thereof.

(b) Source of payment. All bonds issued by the authority shall be limited obligations of the authority payable solely from any combination of the following:

(1) The revenues, receipts, funds, and other property of the authority derived from the repayment of equipment loans made with proceeds of such bonds.

(2) Amounts derived from any letter of credit, insurance policy, or any other form of credit enhancement applicable to the bonds or equipment loans made from the proceeds thereof.
(3) Any reserve fund, debt service fund, or other fund established for the purpose of making or providing for the payment of debt service on such bonds.
(4) Any earnings on the proceeds of bonds invested by the authority pending their disbursement.
Bonds shall not be general obligations of the authority, shall not be payable from any state appropriations, and shall not create a debt or obligation of the state.

(c) Pledge of revenues, receipts, and other security. The principal of, premium, if any, and interest on any bonds issued by the authority shall be secured by a pledge of the revenues, receipts, funds, and other property out of which the same may be payable and may be secured by a trust indenture conveying as security for such bonds all or any part of the property of the authority from which the revenues or receipts so pledged may be so derived.

(d) Agreements respecting collection and disposition of proceeds; pledge of bond revenues; liens. The resolution of the board of directors under which any bonds are authorized to be issued and any trust indenture relating thereto may contain any agreements and provisions respecting the collection and disposition of the revenues and receipts subject to such trust indenture, the creation and maintenance of special funds from such revenues and receipts, the rights, duties, and remedies of the parties to any such instrument and the parties for the benefit of whom such instrument is made, and the rights and remedies available in the event of default, all as the board of directors shall deem advisable. Any pledge made with respect to bonds shall be valid and binding from the time such pledge is made; the revenues, receipts, funds, and other properties so pledged shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act; and the lien of such pledge shall be valid and binding as against all parties having claims of any kind against the authority irrespective of whether any such parties have notice thereof. Neither the resolution of the board of directors authorizing the bonds nor any other instrument by which such pledge is created need be recorded. Each pledge, agreement, or trust indenture made for the benefit or security of any holders of the bonds of the authority shall continue effective until the principal of and interest on the bonds for the benefit of which the same were made shall have been fully paid.

(e) Default. In the event of default in such payment or in any agreements of the authority made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any trust indenture executed as security therefor, such default may be enforced by writ of mandamus or any other available remedy under state law.

(f) Execution. All bonds issued by the authority shall be signed by the president or the vice president of the authority and attested by its secretary, and the seal of the authority shall be affixed thereto and attested to by the secretary. The signatures of the president and the secretary may be facsimile signatures and a facsimile of the seal of the authority may be imprinted on bonds if the board of directors provides for the manual authentication of bonds by a trustee or paying agent. Delivery of any bonds so executed shall be valid notwithstanding any change in the officers of the authority or in the seal of the authority after its delivery.

(g) General provisions respecting form, interest rate, maturities, sale, and negotiability of bonds. Bonds may be executed and delivered by the authority at any time and from time to time, shall be in such form and denominations and of such tenor and maturities, shall contain such provisions not inconsistent with the provisions of this chapter, and shall bear such rate or rates of interest, payable and evidenced in such manner, or may bear no interest, as may be provided by resolution of the board of directors. Bonds of the authority may be sold at either public or private sale in such manner and at such price or prices and at such time or times as may be determined by the board of directors to be most advantageous. The authority may pay all fees, expenses, premiums, and commissions incurred in connection with the issuance of any of its bonds. All bonds shall be construed to be negotiable instruments although payable solely from a specified source. The board of directors of the authority may provide, with the participating educational institutions approval, that such bonds shall bear interest at a rate or rates fixed at the time of the issuance thereof, or at fixed rates which may be changed from time to time during the term of such bonds in accordance with an objective procedure determined by such board of directors at the time of the issuance of such bonds, or at a floating rate or rates which may change from time to time in connection with published interest rates or indexes that reflect an objective response to market changes and interest rates by banks, governmental agencies, or other generally recognized public or private sources of information concerning interest rates. The board of directors may also provide, in its discretion, that interest on such bonds may be payable in cash at fixed intervals, or through one or more payments which reflect compound interest computed at specified intervals on accrued but unpaid interest, or through a discount in the sales price for such bonds equivalent to compound interest on such bonds for all or part of the term thereof, or through any combination of the foregoing methods of providing for the payment of interest.

(Acts 1997, No. 97-388, p. 632, §6.)

Last modified: May 3, 2021