§ 40-33.2-05 — Bonds and notes

North Dakota § 40-33.2-05

• Jurisdiction: North Dakota
• Title 40: Municipal Government
• Ch. 40-33.2: Municipal Power Agencies

Text

1. A municipal power agency may from time to time issue its bonds or notes in such
principal amounts as the municipal power agency shall deem necessary to provide
sufficient funds to carry out any of its corporate purposes and powers, including the
acquisition or construction of any project to be owned or leased, as lessor or lessee,
by the municipal power agency, or the acquisition of any interest therein or any right to
capacity thereof, the funding or refunding of the principal of, or interest or redemption
premiums on, any bonds or notes issued by it whether or not such bonds or notes or
interest to be funded or refunded have or have not become due, the establishment or
increase of reserves to secure or to pay such bonds or notes or interest thereon, and
the payment of all other costs or expenses of the municipal power agency incident to
and necessary or convenient to carry out its corporate purposes and powers.

2. Except as may be otherwise expressly provided by this chapter or by resolution of the
municipal power agency, every issue of bonds or notes of the agency shall be payable
out of any revenues or funds of the agency, subject only to any agreements with the
holders of particular bonds or notes pledging any particular revenues or funds. A
municipal power agency may issue any types of bonds or notes as it may determine,
including bonds or notes as to which the principal and interest are payable exclusively
from the revenues from one or more projects, or from an interest therein or a right to
capacity thereof, or from one or more revenue-producing contracts made by the
municipal power agency with any person, or from its revenues generally. Any bonds or
notes may be additionally secured by a pledge of any grant, subsidy, or contribution
from any person or a pledge of any income or revenues, funds, or moneys of the
municipal power agency from any source. Any pledge of revenues or other funds
made by a municipal power agency pursuant to this chapter shall be valid and binding
from the date the pledge is made. The revenues and other funds pledged and held or
thereafter received by the agency or any fiduciary shall immediately be subject to the
lien of the pledge without physical delivery or further act, and the lien of the pledge
shall be valid and binding as against all parties having claims of any kind in tort,
contract, or otherwise against the agency without regard to whether the parties have
notice. Neither the resolution, trust agreement, or security agreement by which a
pledge is created nor any financing statement, continuation statement, or other
instrument relating to the pledge need be filed or recorded in any manner. Subsection
10 shall not apply to any pledge of or grant of a security interest in any revenues or
funds of a municipal power agency to secure any bonds or notes issued by a
municipal power agency.
3. All bonds and notes of a municipal power agency shall be negotiable within the
meaning and for all the purposes of title 41, subject only to any registration
requirement.
4. Except when the agency agreement or bylaws prescribe otherwise, bonds or notes of
a municipal power agency shall be authorized by resolution of its board of directors
and approved by not less than sixty percent of the qualified electors in each of the
member cities voting on the question at any regular or special election and may be
issued under such resolution or under a trust indenture or other security agreement, in
one or more series, and shall bear such date or dates, mature at such time or times,
bear interest at such rate or rates, be in such denominations, be in such form, either
coupon or registered, carry such conversion, registration, and exchange privileges,
have such rank or priority, be executed in such manner, be payable in such medium of
payment at such place or places within or outside the state or within or outside the
United States, be subject to such terms of redemption with or without premiums, and
contain or be subject to such other terms as the resolution, trust indenture, or other
security agreement may provide, and shall not be restricted by the provisions of any
other law limiting the amounts, maturities, interest rates, or other terms of obligations
of cities, public agencies, or private persons.
5. Any bonds or notes may be issued and delivered, notwithstanding that one or more of
the officers executing them shall have ceased to hold office at the time when the
bonds or notes are actually delivered.
6. Pending preparation of definitive bonds, a municipal power agency may issue
temporary bonds which shall be exchanged for the definitive bonds.
7. Bonds or notes of a municipal power agency may be sold at public or private sale for
such price or prices and in such manner as the agency determines.
8. Bonds or notes of a municipal power agency may be issued under the provisions of
this chapter, and rents, rates, and charges may be established pursuant to section
40-33.2-07 and pledged for the security of bonds or notes and interest and redemption
premiums thereon, without obtaining the consent of any department, division,
commission, board, bureau, or agency of this state and without any other proceeding
or the happening of any other condition or occurrence except as specifically required
by this chapter.

9. The resolution, trust indenture, or other security agreement under which any bonds or
notes are issued shall constitute a contract with the holders of the bonds or notes, and
may contain provisions, among others, prescribing:
a. The terms and provisions of the bonds or notes.
b. The mortgage or pledge of and the grant of a security interest in any property and
all or any part of the revenue from any project or any revenue-producing contract
made by the municipal power agency with any person to secure the payment of
bonds or notes, subject to any agreements with the holders of bonds or notes
which might then exist.
c. The custody, collection, securing, investment, and payment of any revenues,
assets, money, funds, or property with respect to which the municipal power
agency may have any rights or interest.
d. The rates or charges for electric energy sold by, or services rendered by, the
municipal power agency, the amount to be raised by the rates or charges, and the
use and disposition of any or all revenue.
e. The creation of reserves or sinking funds and the regulation and disposition
thereof.
f. The purposes to which the proceeds from the sale of any bonds or notes then or
thereafter to be issued may be applied, and the pledge of the proceeds to secure
the payment of the bonds or notes.
g. Limitations on the issuance of any additional bonds or notes, the terms upon
which additional bonds or notes may be issued and secured, and the refunding of
outstanding bonds or notes.
h. The rank or priority of any bonds or notes with respect to any lien or security.
i. The creation of special funds or moneys to be held in trust or otherwise for
operating expenses, payment, or redemption of bonds or notes, reserves, or
other purposes, and the use and disposition of moneys held in these funds.
j. The procedure by which the terms of any contract with or for the benefit of the
holders of bonds or notes may be amended or abrogated, the amount of bonds or
notes the holders of which must consent thereto, and the manner in which
consent may be given.
k. The definition of the acts or omissions to act which shall constitute a default in the
duties of the municipal power agency to holders of its bonds or notes and the
rights and remedies of the holders in the event of default, including, if the
municipal power agency so determines, the right to accelerate the due date of the
bonds or notes or the right to appoint a receiver or receivers of the property or
revenues thereof subject to the lien of the resolution, trust indenture, or other
security agreement.
l. Any other or additional agreements with or for the benefit of the holders of bonds
or notes or any covenants or restrictions necessary or desirable to safeguard the
interests of the holders.
m. The custody of any of its properties or investments, the safekeeping thereof, the
insurance to be carried thereon, and the use and disposition of insurance
proceeds.
n. The vesting in a trustee or trustees, within or outside the state, of such properties,
rights, powers, and duties in trust as the municipal power agency may determine
or the limiting or abrogating of the rights of the holders of any bonds or notes to
appoint a trustee, or the limiting of the rights, powers, and duties of such trustee.
o. The appointment of and the establishment of the duties and obligations of any
paying agent or other fiduciary within or outside the state.
10. For the security of bonds or notes issued or to be issued by a municipal power agency,
the municipal power agency may, subject to approval by not less than sixty percent of
the qualified electors in each of the member cities voting on the question at any
regular or special election, mortgage or execute deeds of trust of the whole or any part
of its property and franchises. Such mortgages or deeds of trust may by their terms
include after-acquired property and shall be valid and effectual for that purpose as if

such after-acquired property were owned by, and in possession of, the municipal
power agency giving such mortgage or deed of trust at the time of the execution
thereof. Any mortgage, or deed of trust covering the whole or any part of easements or
other interests in real estate less than fee simple used in the generation or
transmission of electric power, and covering fixtures annexed to the real estate in
which the municipal power agency has an easement or other less than fee simple
interest, may be filed in the office of the secretary of state with or as part of the
financing statement covering the fixtures. Such filing of the mortgage or deed of trust
shall have the same effect, and shall be notice of the rights and interest of the
mortgagee or trustee in such easements and other less than fee simple interests in
real estate and in such fixtures to the same extent as if such mortgage or deed of trust
were duly recorded in the office of the recorder of the county or counties in which the
real estate subject to such easements or less than fee simple interests is situated. Any
such mortgage or deed of trust so filed shall be deemed to contain a sufficient
description to give notice of the rights and interests of the mortgagee or trustee in the
easements and other less than fee simple interests in the real estate used in the
generation or transmission of electric power if such mortgage or deed of trust states
that the securing includes rights of way of or generation or transmission systems of or
lines of the municipal power agency, or all property owned by the municipal power
agency. This subsection shall not apply to any real estate owned by the municipal
power agency in fee simple. All filings required under title 41 to perfect a security
interest against the personal property or fixtures of a municipal power agency shall be
made and maintained in the office of the secretary of state.
11. Neither the officials, the directors, nor the members of a municipal power agency nor
any person executing bonds or notes shall be liable personally on the bonds or notes
or be subject to any personal liability or accountability by reason of the issuance
thereof. A municipal power agency shall have power to indemnify and to purchase and
maintain insurance on behalf of any director, officer, employee, or agent of the
municipal power agency in connection with any action or proceeding, other than an
action by or in the right of the municipal power agency, by reason of the fact that the
person's status as a director, officer, employee, or agent of the municipal power
agency, or as a director, officer, employee, or agent of another entity at the municipal
power agency's request, against expenses, including attorney's fees, judgments, fines,
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such action or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in the best interests of the municipal
power agency, and with respect to any criminal action or proceeding, had no reason to
believe the conduct was unlawful. No indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of duty to the municipal power
agency unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of liability but in
view of all of the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper. The
termination of any action or proceeding in any manner shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interests of the municipal power agency,
and with respect to any criminal actions or proceedings, had reasonable cause to
believe that the conduct was unlawful.
12. A municipal power agency shall have power to purchase, out of any funds available
therefor, its bonds or notes, and to hold, pledge, cancel, or resell the bonds or notes,
subject to and in accordance with any agreements with the holders.
13. The principal of and interest upon any bonds or notes issued by a municipal power
agency shall be payable solely from the revenues or funds pledged or available for
their payment as authorized in this chapter. Each bond and note shall contain a
statement that the principal and interest is payable solely from revenues or funds of

the municipal power agency and that neither the state nor any political subdivision
thereof, other than the municipal power agency, nor any city which is a member of the
municipal power agency is obligated to pay the principal or interest and that neither the
faith and credit nor the taxing power of the state or any political subdivision thereof or
of any such city is pledged to the payment of the principal or interest on the bonds or
notes. This subsection does not preclude the use of tax or other revenue by a city for
payment of amounts due and performance of covenants under any contract of the city
as provided in subsection 3 of section 40-33.2-08.
14. Bonds and notes of a municipal power agency issued under the provisions of this
chapter and the income therefrom shall be exempt from all taxation by the state or any
political subdivision thereof, excepting inheritance, estate, or transfer taxes.
15. Any holder of bonds or notes issued by a municipal power agency under the
provisions of this chapter, and the trustee under any resolution, trust indenture, or
other security agreement under which any bonds or notes are issued, except to the
extent that the rights herein granted may be restricted by the resolution, trust
indenture, or security agreement, may bring suit upon the bonds or notes and may,
either at law or in equity, by suit, action, mandamus, or other proceedings, which may
include the appointment of a receiver to take control of the business and properties of
the municipal power agency, protect and enforce any or all of its rights granted
hereunder or under the resolution, trust indenture, or security agreement, and may
enforce and compel the performance of any or all duties and obligations under this
chapter and any or all covenants or obligations under the resolution, trust indenture, or
security agreement to be performed by the municipal power agency or by any officer
thereof, including the fixing, charging, and collecting of rents, rates, fees, and charges.