Texas Local Government Code 501.209 – Trust Agreement
(a) Bonds issued under this subtitle may be secured by a trust agreement between the corporation and a trust company or bank having the powers of a trust company. The trust company or bank may be located in or outside of this state.
(b) The trust agreement may:
(1) pledge or assign the lease, sale, or loan revenues to be received with respect to a project from a lessee, purchaser, or borrower for the payment of the principal of and interest and any premium on the bonds as the bonds become due and payable;
(2) provide for the creation and maintenance of reserves for a purpose described by Subdivision (1);
(3) state the rights and remedies of the bondholders and the trustee;
(4) restrict the individual right of action by bondholders in a manner that is customary in trust agreements or trust indentures securing bonds and debentures of private corporations; and
(5) include any additional provision that the corporation considers reasonable and proper for the security of the bondholders.
Terms Used In Texas Local Government Code 501.209
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Property: means real and personal property. See Texas Government Code 311.005
- Trustee: A person or institution holding and administering property in trust.
(c) The trust agreement or a resolution approving the issuance of the bonds may provide for the protection and enforcement of the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including covenants providing the duties relating to:
(1) the acquisition of property and the construction, improvement, maintenance, repair, operation, and insurance of the project in connection with which the bonds are authorized; and
(2) the custody, protection, and application of all money.
(d) A bank or trust company incorporated under the laws of this state that acts as depository of the bond proceeds or of revenues may furnish indemnifying bonds or pledge securities as required by the corporation.
(e) All expenses incurred in carrying out the trust agreement may be treated as a part of the cost of operating the project.