§ 9:2347 — Bonds of public trust

Louisiana § 9:2347

• Jurisdiction: Louisiana
• Title 9: Civil Code-Ancillaries

Text

§2347. Bonds of public trust
A. To provide funds for and to fulfill and achieve its authorized public functions or
purposes, a public trust may incur debt and issue bonds, notes or other evidences of
indebtedness, hereinafter referred to collectively as "bonds" subject to the following:
(1) If the beneficiary of the public trust is a parish, municipality, or a political or
governmental subdivision thereof, and such bonds or other debt obligations are issued for the
purpose of providing, constructing, expanding, or altering public facilities which are to be
operated, maintained, or administered by any such parish, municipality, or political or
governmental subdivision thereof, such bonds shall be approved by a vote of a majority of
the qualified electors of the beneficiary who vote in a special election held for that purpose
in the manner provided by Chapter 6-A of Title 18 (R.S. 18:1281 et seq.) of the Louisiana
Revised Statutes of 1950. Furthermore, in all other cases, if the beneficiary of the trust is a
parish, municipality, or a political or governmental subdivision thereof, all bonds and other
debt obligations shall be issued only after the trust has adopted an appropriate resolution
giving notice of its intention to issue such bonds or other debt obligations, which resolution
shall include a general description of the bonds or other debt obligations to be issued and the
security therefor, and notice of this intention shall be published once a week for four weeks
in a newspaper in the locality of the beneficiary or in the parish where it is located, the first
publication to appear at least thirty days before the public meeting of the trust at which the
trust will meet in open and public session to hear any objections to the proposed issuance of
such bonds or other debt obligations. The notice of intent so published shall state the date,
time, and place of the public hearing and shall state, and the law is hereby declared to be, that
if at such hearing a petition duly signed by electors of the beneficiary in a number not less
than five per cent of the electors of the beneficiary voting at the last special or general
election object to the issuance of the proposed bonds or other debt obligations, then such
bonds or other debt obligations shall not be issued until approved by a vote of a majority of
the qualified electors of the beneficiary who vote in a special election held for the purpose
in the manner provided by Chapter 6-A of Title 18 (R.S. 18:1281 et seq.) of the Louisiana
Revised Statutes of 1950. Any such petition shall be accompanied by a certificate of the
parish registrar of voters certifying that the signers of the petition are qualified electors of the
beneficiary and the number of signers amounts to not less than five per cent of the electors
in said beneficiary in number, voting at the last special or general election. All bonds and
other debt obligations issued hereunder for the purpose of providing, developing, securing
and improving the water storage, treatment, supply and distribution services and facilities and
sanitary and storm sewer collection, disposal, treatment and drainage services and facilities,
shall be issued in accordance with the provisions of Subpart B or C, Part I of Chapter 10,
Title 33 of the Louisiana Revised Statutes of 1950, and any and all other laws of the state
pertaining to revenue bonds for public utilities.
(2) All such bonds shall be negotiable instruments, and shall be solely the obligations
of the trust and not of the state of Louisiana or the beneficiary. The bonds and the income
thereof shall be exempt from all taxation in the state of Louisiana. The bonds shall be
payable out of the income, revenues and receipts derived or to be derived from the trust
properties and facilities maintained and operated by the trust or received by the trust from
any other sources whatsoever, including, but not by way of limitation, other monies which,
by law or contract, may be made available to the trust. In addition to the pledge of income,
revenues or receipts to secure said bonds, the trust may further secure their payment by a
conventional mortgage upon any or all of the properties constructed or acquired or to be
constructed or acquired by it. Such bonds shall be authorized and issued by resolution
adopted by a two-thirds vote of the trustees of the trust and shall be of such series, bear such
date or dates, mature at such time or times, bear interest at such rate or rates not exceeding
the maximum rate at which revenue bonds of the beneficiary can be issued and sold, be in
such denominations, be in such form, either coupon or fully registered without coupons,
carry such registration and exchangeability privileges, be payable at such place or places, be
subject to such terms of redemption and be entitled to such priorities on the income, revenues
and receipts of the trust as such resolution may provide. The bonds shall be signed by such
officers as the trust shall determine and one of such signatures may be facsimile. Coupon
bonds shall have attached thereto interest coupons bearing the facsimile signatures of such
officer or officers as the trust shall designate. Any such bonds may be issued and delivered,
notwithstanding that one or more of the officers signing such bonds or the officer or officers
whose facsimile signature or signatures may be on the coupons shall have ceased to be such
officer or officers at the time such bonds shall actually have been delivered. Such bonds may
be sold in such manner and from time to time as may be determined by the trust to be most
beneficial and the trust may pay all expenses and commissions which it may deem necessary
or advantageous in connection with the issuance and sale thereof subject to the provisions
of Subsection (K) of this Section.
(3) Bonds and notes issued hereunder are hereby declared legal investments and are
hereby made securities in which all insurance companies and associations and other persons
carrying on an insurance business, trust companies, banks, bankers, banking associations,
savings banks and savings associations, including savings and loan associations, credit
unions, building and loan associations, investment companies, executors, administrators,
trustees and other fiduciaries, pension, profit-sharing, retirement funds and other persons
carrying on a banking business, and all other persons who are authorized to invest in revenue
bonds may properly and legally invest funds, including capital in their control or belonging
to them. Such bonds and notes are hereby made securities which may properly and legally
be deposited with and received by any state or municipal or public officer or any agency or
political subdivisions of the state for any purpose for which the deposit of revenue bonds is
authorized by law. Nothing contained herein shall authorize the investment of public
pension or retirement funds in public trust bonds or other obligations.
B. The trust may in any resolution authorizing the issuance of such bonds enter into
such covenants with the future holder or holders of the bonds as to the management and
operation of the trust properties or facilities, the imposition and collection of fees and charges
for services and facilities furnished by the trust, the disposition of such fees and revenues,
the issuance of future bonds and the creation of future liens and encumbrances against such
facilities and the revenues therefrom, the carrying of insurance on the facilities, the keeping
of books and records, and other pertinent matters, as may be deemed proper by the trust to
assure the marketability of the bonds, provided such covenants are not inconsistent with the
provisions of this Chapter. Any holder of the bonds or of any of the coupons thereto attached
may by appropriate legal action compel performance of all duties required of the trust and
officials by this Chapter or by the resolution authorizing the issuance of bonds if not
inconsistent with the provisions of this Chapter. If any bond issued hereunder is permitted
to go into default as to principal or interest, any court of competent jurisdiction may pursuant
to the application of the holder of the bond, appoint a receiver for the facilities of the trust,
which receiver shall be under the duty of operating the facilities and collecting and
distributing the revenues thereof pledged to the payment of the bonds, pursuant to the
provisions and requirements of this Chapter and the resolution authorizing the bonds. As
hereinbefore provided, such bonds may in the discretion of the trust be additionally secured
by mortgage on all or any part of the trust properties or facilities acquired, constructed,
extended or improved with the proceeds thereof, and the trust shall have full discretion to
make such provisions as it may see fit for the making and enforcement of such mortgage and
the provisions to be therein contained.
C. If more than one series of bonds is issued hereunder payable from the revenues
of any facility, priority of lien on such revenues shall depend on the time of delivery of the
bonds, each series enjoying a lien prior and superior to that enjoyed by any series of bonds
subsequently delivered, except that where provision is made in the proceedings authorizing
any issue or series of bonds for the issuance of additional bonds in the future on a parity
therewith pursuant to procedures or restrictions provided in such proceedings, additional
bonds may be issued in the future on a parity with such issue or series in the manner so
provided in such proceedings.
D. The trust may issue bonds under this Chapter payable from revenues to be derived
from two or more facilities owned and operated by the trust (whether or not such facilities
are related or used in conjunction) for the purpose of constructing, acquiring, extending or
improving any one or more of the facilities, which bonds may be additionally secured by a
mortgage upon such facilities; provided, however, in no event shall the bonds constitute a
claim against any property or revenue of the trust not specifically pledged or hypothecated
for payment of such bonds.
E. Any resolution authorizing the issuance of bonds hereunder shall provide for the
creation of a sinking fund into which shall be paid from the revenues of the trust properties
and facilities financed by the proceeds of the bonds, subject only to prior payment of the
reasonable and necessary expenses of operating and maintaining such properties and
facilities, sums fully sufficient to pay the principal and interest of the bonds as the bonds
become due and payable, and to create such reserve for contingencies as may be required by
the resolution. The monies in the sinking fund shall be applied to the payment of interest on
and principal of the bonds or to the purchase of retirement of the bonds prior to maturity in
the manner provided in the resolution.
F. The trust may authorize the issuance of refunding bonds of the trust for the
purpose of refunding outstanding bonds issued pursuant to this Chapter. Such refunding
bonds may either be sold and the proceeds applied to or deposited in escrow for the
retirement of the outstanding bonds, or may be delivered in exchange for the outstanding
bonds. The refunding bonds shall be authorized in all respects as original bonds are herein
required to be authorized, and the authority in authorizing the refunding bonds shall provide
for the security of the bonds, the sources from which the bonds are to be paid and for the
rights of the holders thereof in all respects as herein provided for other bonds issued under
authority of this Chapter. The trust may also provide that the refunding bonds shall have the
same priority of lien on the revenues pledged for their payment as was enjoyed by the bonds
refunded.
G. It shall be provided in the resolution authorizing any bonds hereunder that such
bonds shall recite that they are issued under authority of this Chapter. Such recital shall
conclusively import full compliance with all of the provisions of this Chapter and all bonds
issued containing such recital shall be incontestable for any cause whatsoever after thirty
days from the date of publication of the notice of sale of the bonds as provided for
hereinafter.
H. All bond issues of a public trust shall be submitted to and approved by the State
Bond Commission prior to the issuance and delivery of said bonds. All bonds of a public
trust shall be sold by such public trust except when the state is the beneficiary of the
financing. Provided, bonds of a public trust issued in connection with any projects or
facilities of the trust for the provisions of industrial, manufacturing, or other economic
development facilities and activities shall be sold in accordance with the provisions of R.S.
39:991, et seq., subject to the requirement that a notice of intent to sell such bonds shall be
published at least seven days in advance of the sale date. After approval by the State Bond
Commission as required herein and at least seven days prior to the sale of such bonds, the
public trust shall cause to be published a notice of sale in a newspaper of general circulation
in the parish of the beneficiary's situs, or if the state or any state agency be the beneficiary,
such publication shall be in the official state journal, and in a financial journal or newspaper
containing a section devoted to municipal bond news published in either New Orleans,
Louisiana, or New York, New York. This notice of sale shall state if any proposals have
been made for the purchase of the bonds and that other proposals will be considered and that
the proposal most advantageous to the issuer will be accepted at the time of the sale. After
adoption of the resolution or other proceedings authorizing the sale of bonds, the resolution
or other proceedings shall be published in a newspaper of general circulation in the parish
of the beneficiary's situs, or, if the state or any state agency be the beneficiary, such
publication shall be in the official state journal. For a period of thirty days from the date of
publication of the notice of sale, any person or persons in interest shall have the right to
contest the legality of the notice of sale, resolution or other proceedings authorizing the
issuance of the bonds and the legality of the bond issue for any cause, after which time no
one shall have any cause or right of action to contest the legality of said resolution or other
proceedings or of the bonds authorized thereby for any cause whatsoever If no suit, action
or proceedings are begun contesting the validity of the bonds within the thirty days herein
prescribed, the authority to issue the bonds and to provide for the payment thereof, the
legality thereof and of all of the provisions of the resolution or other proceedings authorizing
the issuance of the bonds shall be conclusively presumed, and no court shall have authority
to inquire into such matters. Such bonds shall have all the qualities of negotiable instruments
under the law merchant and the commercial laws of the state of Louisiana.
I. All bonds, notes or other evidences of indebtedness issued by a public trust shall
be special obligations of the trust and shall be deemed to have been issued on behalf of the
beneficiary of the trust. In no event shall any bonds, notes or other evidences of indebtedness
of a trust constitute an obligation, either general or special, of the state of Louisiana or the
beneficiary of the trust within the meaning of any constitutional or statutory provision
whatsoever, and the bonds shall contain a recital to that effect.
J. If the bond issue of the trust requires the expenditure of any state funds in the
acquisition of any facilities or properties for use by the trust or if any contractual obligation
is to be undertaken or incurred by the state in excess of one year in connection therewith, a
two-thirds vote of both the members of the State Bond Commission and the Joint Legislative
Committee on the Budget approving such action shall be required as a condition to such
action.
K. The trustee or trustees may employ a financial advisor to furnish services in
preparing any bond issues for the issuance and may contract for the payment of his services
provided however, no continuing fee arrangement with a financial advisor shall exist after
the delivery of any bonds and all bond issues upon which the financial advisor provides
services shall be sold only at an advertised public sale. All financial advisors fees and any
underwriters discount must be approved in writing by the State Bond Commission and the
attorney general's office. Any attorneys fees in connection with the financing and the
acquisition or construction of the project to be financed shall be subject to approval of the
attorney general. Whoever violates this Subsection shall be subject to the imposition of the
penalties provided in R.S. 42:264.
L. All bonds heretofore issued under the provisions of Act 135 of the 1970 Regular
Session of the Louisiana Legislature are hereby validated, ratified and confirmed and
declared to be valid and binding obligations of the public trust in accordance with the terms
of their issuance. All proceedings heretofore had in connection with the issuance of such
bonds are hereby ratified, validated and confirmed. However, the provisions of this Chapter
shall apply to any new or additional bonds issued by any public trusts in existence at the time
of the effective date of this Chapter, notwithstanding that said public trusts may have
previously issued and have outstanding any bonds and/or notes.
M.(1) The property of any public trust, having as its beneficiary a parish,
municipality, or a political or governmental subdivision thereof which is authorized under
its trust indenture to engage in or issue bonds to finance projects for substantially all of the
public purposes set forth in R.S. 9:2341(B)(1), acquired or held for one or more of said
purposes, is hereby declared to be public property used for essential public and governmental
purposes. Accordingly, such public trust, and all of its properties at any time owned by it and
the income therefrom and all bonds issued by it and the income therefrom, shall be exempt
from all taxes of the parish or municipality, the state, or any political subdivision thereof or
any other taxing body, provided, however, that such public trust may require the lessee of
each of the projects of the public trust to pay annually to parish or municipal taxing
authorities or to any other taxing body, through the normal collecting agency, a sum in lieu
of ad valorem taxes to compensate such authorities for any services rendered by them to such
projects, which sum shall not be in excess of the ad valorem taxes such lessee would have
been obligated to pay to such authorities had it been the owner of such project during the
period for which such payment is made. Such payments to be made in lieu of taxes together
with any fees and charges of such public trust, to the extent in the aggregate they do not
exceed the amount of taxes that would be paid if the lessee were the owner, shall constitute
statutory impositions within the meaning of R.S. 47:2128. No provision of this Subsection
shall become effective until approved by resolution of the parish, municipality, or a political
or governmental subdivision thereof which is the beneficiary of such public trust.
(2) A public trust which has as its beneficiary a parish, municipality, or a political
or governmental subdivision thereof shall be required to obtain the approval by resolution
of the parish or municipal governing authority in whose geographic boundaries the public
trust is undertaking a project or facility which is an authorized public function or purpose as
provided for in R.S. 9:2341(B), prior to commencing the undertaking of such project or
facility if any portion of the project or facility which is an authorized public function or
purpose of the trust is located outside the geographic boundaries of the beneficiary.

Legislative History

Acts 1970, No. 135, §8; Amended by Acts 1976, No. 699, §1, eff. Aug. 4, 1976; Acts 1978, No. 778, §1; Acts 1986, No. 977, §1, eff. July 14, 1986; Acts 2007, No. 93, §1, eff. June 22, 2007; Acts 2010, No. 1042, §1, eff. July 8, 2010; Acts 2011, No. 344, §1; Acts 2020, No. 197, §1.