Pennsylvania Act 1937-260 — FIRST CLASS CITIES, SEWER BONDS

Act text

FIRST CLASS CITIES, SEWER BONDS
                  Act of May 28, 1937, P.L. 947, No. 260              Cl. 11
                                  AN ACT

     Relating to cities of the first class, authorizing the issuance
        of non-debt revenue bonds to finance sewer improvements.

        Section 1.  Be it enacted, &c., That for the purpose of
     financing the cost or expense, or its share of the cost or
     expense, of constructing, reconstructing, extending, improving
     or acquiring a sewer, sewer system or sewage treatment works,
     any city of the first class may issue non-debt revenue bonds
     secured solely by a pledge, in whole or in part, of the annual
     rentals or charges for the use of such sewer, sewer system or
     sewage treatment works. Said bonds shall not pledge the credit,
     nor 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 for the use of said sewer, sewer system or sewage
     treatment works.
        Whenever any city has enacted an ordinance or resolution
     imposing a sewer rental or charge upon properties to be served
     by such sewer system or sewage treatment works when the same is
     completed, and has pledged sufficient of the revenues to be
     derived therefrom for the payment of 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 sewer
     system or sewage treatment works has been completed and has been
     in operation for not exceeding one year, in order to provide
     sufficient revenues until such time as sewer rentals or charges
     may be collected from the owners of properties being served.
        Nothing in this act shall be construed to abridge or
     restrict, or in any way impair the right of any city of the
     first class to create indebtedness in accordance with existing
     laws.
        Section 2.  Whenever any city of the first 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. When bonds shall be advertised for sale, as herein
     provided, and no bids have been received, then it shall be
     lawful for the city to sell the same at private sale for not
     less than par value and accrued interest.
        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
     shall bear interest at a rate not exceeding six per centum per
     annum.
        Said bonds shall have all the qualities of negotiable
     instruments under the law merchant and the negotiable
     instruments law of the Commonwealth of Pennsylvania.
        Any city 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 sewer system or sewage treatment works 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 any sewer system or sewage treatment
     works, 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 3.  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 made 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 sewer system or sewage
     treatment works, 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 sewer
     system or sewage treatment works, 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 sewer
     system or sewage treatment works, 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.