Alaska Stat. § 44.83.110 – Trust indentures and trust agreements

(a) In the discretion of the authority, an issue of bonds may be secured by a trust indenture or trust agreement between the authority and a corporate trustee (which may be a trust company, bank, or national banking association, with corporate trust powers, located inside or outside the state) or by a secured loan agreement or other instrument or under a resolution giving powers to a corporate trustee by means of which the authority may
1. (1) make and enter into any and all the covenants and agreements with the trustee or the holders of the bonds that the authority may determine to be necessary or desirable, including, without limitation, covenants, provisions, limitations, and agreements as to
  1. (A) the application, investment, deposit, use, and disposition of the proceeds of bonds of the authority or of money or other property of the authority or in which it has an interest;
  2. (B) the fixing and collection of rentals, charges, fees, or other consideration for, and the other terms to be incorporated in, contracts with respect to a project or to generated power;
  3. (C) the assignment by the authority of its rights in contracts with respect to a project or to generated power or in a mortgage or other security interest created with respect to a project or generated power to a trustee for the benefit of bondholders;
  4. (D) the terms and conditions upon which additional bonds of the authority may be issued;
  5. (E) the vesting in a trustee of rights, powers, duties, funds, or property in trust for the benefit of bondholders, including, without limitation, the right to enforce payment, performance, and all other rights of the authority or of the bondholders, under a lease, power of contract, contract of sale, mortgage, security agreement, or trust agreement with respect to a project by injunction or other proceeding or by taking possession of by agent or otherwise and operating a project and collecting rents or other consideration and applying the same in accordance with the trust agreement;
2. (2) pledge, mortgage, or assign money, leases, agreements, property, or other rights or assets of the authority either presently in hand or to be received in the future, or both; and
3. (3) provide for any other matters of like or different character that in any way affect the security or protection of the bonds.
(b) Notwithstanding any other provisions of this chapter, the trust indenture, trust agreement, secured loan agreement, or other instrument or the resolution constituting a contract with bondholders shall contain a covenant by the authority that it will at all times maintain rates, fees, or charges sufficient to pay, and that a contract entered into by the authority for the sale, transmission, or distribution of power shall contain rates, fees, or charges sufficient to pay the costs of operation and maintenance of the project, the principal of and interest on bonds issued under the trust agreement as the same severally become due and payable, to provide for debt service coverage as considered necessary by the authority for the marketing of its bonds and to provide for renewals, replacements, and improvements of the project, and to maintain reserves required by the terms of the trust agreement. This subsection does not require a covenant that varies from a covenant entered into in accordance with the provisions of former AS 44.83.380 — 44.83.425.
(c) For the purpose of securing any one or more issues of its bonds, the authority may establish one or more special funds, called “capital reserve funds”, and shall pay into those capital reserve funds the proceeds of the sale of its bonds and any other money that may be made available to the authority for the purposes of those funds from any other source. The funds shall be established only if the authority determines that the establishment would enhance the marketability of the bonds. All money held in a capital reserve fund, except as provided in this section, shall be used as required, solely for (1) the payment of the principal of, and interest on, bonds or of the sinking fund payments with respect to those bonds, (2) the purchase or redemption of bonds, or (3) the payment of a redemption premium required to be paid when those bonds are redeemed before maturity; however, money in a fund may not be withdrawn from it at any time in an amount that would reduce the amount of that fund to less than the capital reserve requirement set out in (2) of this subsection, except for the purpose of making, with respect to those bonds, payment, when due, of principal, interest, redemption premiums, and the sinking fund payments for the payment of which other money of the authority is not available. Income or interest earned by, or increment to, a capital reserve fund, due to the investment of the fund or any other amounts in it, may be transferred by the authority to other funds or accounts of the authority to the extent that the transfer does not reduce the amount of the capital reserve fund below the capital reserve fund requirement.
(d) If the authority decides to issue bonds secured by such a capital reserve fund, the bonds may not be issued if the amount in the capital reserve fund is less than such an amount as may be established by resolution of the authority (called the “capital reserve fund requirement”), unless the authority, at the time of issuance of the obligations, deposits in the capital reserve fund from the proceeds of the obligations to be issued or from other sources, an amount which, together with the amount then in the fund, will not be less than the capital reserve fund requirement.
(e) In computing the amount of a capital reserve fund for the purpose of this section, securities in which all or a portion of the funds are invested shall be valued by some reasonable method established by the authority by resolution. Valuation on a particular date shall include the amount of any interest earned or accrued to that date.
(f) The chairman of the authority shall annually, no later than January 2, make and deliver to the governor and the legislature a certificate stating the sum, if any, required to restore any capital reserve fund to the capital reserve fund requirement. The legislature may appropriate such a sum, and all sums appropriated during the then current fiscal year by the legislature for such restoration shall be deposited by the authority in the proper capital reserve fund. Nothing in this section creates a debt or liability of the state.
(g) When the authority has created and established a capital reserve fund, the commissioner of revenue may lend surplus money in the general fund to the authority for deposit in a capital reserve fund in an amount equal to the capital reserve fund requirement. The loans shall be made on such terms and conditions as may be agreed upon by the commissioner of revenue and the authority, including without limitation terms and conditions providing that the loans need not be repaid until the obligations of the authority secured and to be secured by the capital reserve fund are no longer outstanding.
(h) If the authority decides to covenant to issue or to issue bonds secured by a capital reserve fund, the bonds may not be issued until 10 days after the authority has mailed notification to the state bond committee and the Legislative Budget and Audit Committee by certified mail of its intention to establish a capital reserve fund to secure the bond issue. The notification shall include the amount of the capital reserve fund to be established, the amount of bonds proposed to be issued, and the total cost of the project for which the bonds are to be issued. The notification shall be accompanied by an estimate by the authority of the need to withdraw money from the capital reserve fund during the term of the bond issue, the amount that it may be necessary to withdraw, and the time at which withdrawals are estimated to be needed. The authority shall annually prepare a revised estimate, considering the same factors, and a statement of all withdrawals that have occurred from the date of issuance of the bonds to the end of the calendar year. The revised estimate and statement shall be submitted to the state bond committee and the Legislative Budget and Audit Committee by January 30 of the succeeding year.