§ 37-95-120 — Agreements with governmental agencies or persons

(1)
Governmental agencies or persons may enter into lease, sale, or loan agreements
with the authority with respect to any project, and governmental agencies or
persons may also enter into purchase agreements with the authority for the
purchase of the capacity use or service of any project. Such lease, sale, loan, or
purchase agreements may be for a term covering the life of a project, or for any
other term, or for an indefinite period. Pursuant to any such agreements, such
governmental agencies or persons may obligate themselves to make payments in
amounts which shall be sufficient to enable the authority to meet its expenses, the
interest and principal payments (whether at maturity or upon sinking fund
redemption) for its bonds, its reasonable reserves for debt service, operation and
maintenance, and renewals and replacements, and the requirements of any rate
covenant with respect to debt service coverage contained in any resolution, trust
indenture, or other security instrument.

(2) Purchase agreements between the authority and any governmental
agency or persons may contain such other terms and conditions as the authority
and the purchasers may determine, including provisions whereby the purchaser is
obligated to pay for the output, capacity, or use of any project irrespective of
whether such output, capacity, or use is produced or delivered to the purchaser or
whether any water development project contemplated by any such agreement is
completed, operable, or operating, and notwithstanding suspension, interruption,
interference, reduction, or curtailment of the output, use, or service of such project.
Subject to local charter and state constitutional limitations, such purchase
agreements may also provide that if one or more of the purchasers defaults in the
payment of its obligations under any such purchase agreement, the remaining
purchasers which also have such agreements shall be required to accept and pay
for, and shall be entitled proportionately to use or otherwise dispose of, the output,
capacity, or use of the project contracted for by the defaulting purchaser.

(3) The obligations of a governmental agency or persons under an
agreement with the authority or arising out of the default by any other purchaser
with respect to such an agreement shall not, unless otherwise lawful, be construed
to constitute a debt of the governmental agency or persons. To the extent provided
in agreements with the authority, such obligations shall constitute special
obligations of the governmental agency or persons, payable solely from the
revenues and other moneys derived by the governmental agency or persons from
their utility systems, and shall be treated as expenses of operating such systems.

Legislative History

Source: L. 81: Entire article added, p. 1810, � 1, effective July 1. L. 83: (3) amended, p. 1443, � 5, effective June 10.