Court Opinion

ID: 3795460
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:40:21.965938+00
Date Added: 2024-06-11T14:13:11.139689
License: Public Domain

System Bonds — Appointment — Additional Trustees The Board of Regents of Oklahoma Colleges is authorized under 70 O.S. 4004 [70-4004](a)(5) (1968) to appoint an additional trustee when issuing parity revenue bonds on a Bond System, even though a single Trustee Bank was designated to maintain a Sinking Fund, Reserve Fund, and Repair and Replacement Fund when the Bond System was created.  The Attorney General has had under consideration your request of recent date concerning the following matter: Some of the colleges under the jurisdiction of the Board of Regents of Oklahoma Colleges have what is known as "System Bonds" payable from a System of dormitories or other self-liquidating improvements, the Bond Resolutions of which authorize additional parity bonds to be issued in the future based on certain coverage for a period of time. Parity bonds have been issued from time to time payable from the revenues of the System as augmented. There is in each Bond Resolution provision made for a Sinking Fund or Reserve Account, and in some instances a Repair and Replacement Fund to be in the possession of a Trustee Bank. Prospective bidders for parity revenue bonds have stated that they would be interested in bidding on such bonds or would bid a better rate of interest in the event they could be chosen as Trustee Bank.  You inquire: When a System is created and there is designated a Trustee Bank to maintain the Sinking Fund, Reserve Fund and Repair and Replacement Fund, is this Board authorized in future issues of parity revenue bonds of the said System to designate an additional trustee under the provisions of 70 O.S. 4004 [70-4004] (1967)? 70 O.S. 4004 [70-4004](a)(5) (1967) reads: ". . . The board is authorized by appropriate provisions in the resolution or resolutions authorizing the bonds: . .  "To vest in a trustee or trustees the right to receive an or any part of the income and revenues pledged and assigned to or for the benefit of the holder or holders of bonds issued hereunder and to hold, apply and dispose of the same, and the right to enforce any covenant made to secure the bonds and to execute and deliver a trust agreement or agreements which may set forth the powers and duties and the remedies available to such trustee or trustees, and may limit the liabilities thereof and prescribe the terms and conditions upon which such trustee or trustees, or the holder or holders of the bonds in any specified amount or percentage may exercise such rights and enforce any or all such covenants and resort to such remedies as may be appropriate."(Emphasis added) It is clear that the terms of this section contemplate either one trustee or more than one trustee and to assure sufficient funds from either trustee where there is more than one, the statute allows payment of "all or any part of the income and revenues".  We take notice that all revenue bonds issued by the Board are issued pursuant to 70 O.S. 4001 [70-4001] to 70 O.S. 4013 [70-4013] [70-4013] (1967), and this fact is set out on the face of every bond. Each bondholder purchases the bonds with knowledge that the Board has authority in future parity bonds of the same System to designate an additional trustee to receive part of the income and revenues pledged and assigned to the benefit of the holder or holders of bonds issued under the statute and further to execute and deliver a trust agreement or agreements setting out the powers and duties of the trustee or trustees.  The rights of the bondholders are not affected in any way by the appointment of an additional trustee. There would be only one sinking fund which is held in part by two trustee banks and the bondholders may look to either trustee bank for payment. The same is true as to the Reserve Account and the Repair and Replacement Fund. Therefore, it is the opinion of the Attorney General that the Board of Regents of Oklahoma Colleges are authorized under 70 O.S. Section 4004[70-4004] [70-4004](a)(5) (1967) to appoint an additional trustee when issuing parity revenue bonds on a Bond System, even though a single Trustee Bank was designated to maintain a Sinking Fund, Reserve Fund, and Repair and Replacement Fund when the Bond System was created.  (Sam I. Hellman)