Title 45
Towns and Cities

Chapter 33.2
Municipal Tax Increment Financing Act

§ 45-33.2-7. Security for bonds — Trust agreements.

(a) In the discretion of the officers authorized to sell the bonds, but subject to the provisions of the vote authorizing the bonds, bonds issued under this chapter may be secured by one or more trust agreements between the city or town and a corporate trustee or trustees, which may be any trust company or bank having the powers of a trust company within or without the state. A trust agreement under this section shall be in a form and executed in a manner that may be determined by the officers. A trust agreement may pledge or assign project revenues, in whole or in part. It may contain provisions for protecting and enforcing the rights, security, and remedies of the bondholders as may be reasonable and proper and not in violation of law, including without limiting the generality of the preceding, provisions defining defaults and providing for remedies in the event of defaults, which may include the acceleration of maturities, and covenants stating duties of, and limitations on, the city or town in relation to carrying out and otherwise administering the project or projects, the custody, safeguarding, investment and application of project revenues, the issue of additional bonds under this chapter, the determination of tax increments, the fixing of fees and charges, if any, in relation to the project or projects, the collection of project revenues, the use of any surplus bond proceeds, the establishment of reserves, and the replacement of bonds or coupons which become mutilated or are destroyed or lost. Subject to the provisions of this chapter, moneys subject to the trust agreement shall be held, invested, and applied as provided in the trust agreement; provided, that moneys not deposited in trust with a corporate trustee shall be in the custody of the city or town treasurer.

(b) It is lawful for any bank or trust company to act as a depository or trustee of the proceeds of bonds or of other moneys under any trust agreement and to furnish indemnifying bonds or to pledge securities that may be required by the trust agreement. The trust agreement or resolution may establish the rights and remedies of the bondholders and the trustee, and may restrict the individual right of action by bondholders. All expenses incurred in carrying out the provisions of the trust agreement or resolution may be treated as current operating expenses.