Arizona § 48-1063 - Securing principal and interest; lien of pledge

§ 48-1063. Securing principal and interest; lien of pledge

A. To secure the principal and interest on the bonds the board of directors by resolution may:

1. Establish and segregate a pledged revenues fund and if appropriate, one or more accounts and subaccounts, to secure bonds or other obligations of the district. Any of the accounts or subaccounts may be pledged or assigned to the bondholders as security for the bonds or to a trustee who may be appointed to act on behalf of the bondholders.

2. Provide that bonds issued under this article may be secured by a first lien on all or part of the monies paid into a pledged revenues fund or into any account or subaccount in the pledged revenues fund.

3. Pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the pledged revenues fund or an account or subaccount as is necessary to secure and pay the principal, interest and any premium on the bonds as they come due.

4. Establish priorities among bondholders based on criteria adopted by the board of directors.

5. Set aside, regulate and dispose of reserves and sinking funds.

6. Provide that the proceeds from the sale of the bonds or from any other revenues of the district may be used to fully or partly fund any reserves or sinking accounts established by the bond resolution.

7. Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given.

8. Provide for payment of bond related expenses from the proceeds of the sale of the bonds or other revenues available to the district.

9. Provide for the services of trustees, co-trustees, agents, registrars, paying agents, consultants and other specialized services with respect to the bonds.

10. Take any other action which may affect the security and protection of the bonds or interest on the bonds.

B. Any pledge made under this article is valid and binding from the time the pledge is made. The monies pledged and received by the district to be placed in a pledged revenues fund are immediately subject to the lien of the pledge without any future physical delivery or further act. Any lien of any pledge is valid and binding against all parties who have claims of any kind in tort, contract or otherwise against the district, regardless of whether the parties have notice of the lien. The official resolution or trust indenture or any instrument by which this pledge is created, when placed in the district's records, is notice to all concerned of the creation of the pledge, and those instruments need not be recorded in any other place to perfect the pledge.