Chapter 114 - Connecticut City and Town Development Act

Sec. 7-482. Definitions. As used in this chapter:

(a) “Annual sinking fund payment” means the amount of money specified in the resolution authorizing term bonds secured by a capital reserve fund as payable into a sinking fund during a particular fiscal year for the retirement of term bonds secured by a capital reserve fund which mature after such fiscal year, but shall not include any amount payable by reason only of the maturity of a bond;

(b) “Bonds”, “notes”, “other obligations” means any bonds, notes or other evidences of indebtedness, respectively, issued by a municipality pursuant to this chapter;

(c) “Capital reserve fund” means any capital reserve fund established by a municipality in accordance with section 7-492;

(d) “Development property” means any real or personal property, interest therein, improvements thereon, appurtenances thereto and air or other rights in connection therewith, including land, buildings, plants, structures, systems, works, machinery and equipment acquired or to be acquired by purchase, gift or otherwise by a sponsor or by a municipality and dedicated by resolution to the purposes of this chapter;

(e) “Facility charges” means tolls, rents, rates, fees or other charges in this chapter, in connection with, or for the use or services of, or otherwise relating to, any development property owned or controlled by the municipality in furtherance of the purposes of this chapter;

(f) “Governmental unit” means the United States of America or the state or any city, town, consolidated town and city or consolidated town and borough or any subdivision, department, agency, instrumentality, authority, board, commission, bureau, division or legal entity heretofore or hereafter created, designated or established by or for the United States of America or the state or any city or town;

(g) “Legislative body” means the council, commission, board, body or town meeting, by whatever name it may be known, having or exercising the general legislative powers and functions of a municipality;

(h) “Maximum capital reserve fund requirement” applies only to bonds secured by a capital reserve fund and means, as of any particular date of computation, an amount of money equal to the greatest of the respective amounts, for the then current or any future fiscal year of the municipality, of annual debt service secured by a capital reserve fund of the municipality, such annual debt service secured by a capital reserve fund for any fiscal year, being the amount of money equal to the aggregate of (1) all interest payable during such fiscal year on all such bonds of the municipality outstanding on said date of computation, plus (2) the principal amount of all such bonds of the municipality outstanding on said date of computation which matures during such fiscal year, plus (3) the amount of all annual sinking fund payments payable during such fiscal year with respect to any such bonds of the municipality outstanding on said date of computation;

(i) “Municipality” means any city, town, consolidated town and city or consolidated town and borough in the state which shall by resolution make the findings and determinations required by section 7-485 and which shall exercise all powers granted and make all findings and determinations required under this chapter by means of resolution;

(j) “Operating expenses” means all costs and expenses of a municipality or its delegate incurred in connection with any action taken pursuant to this chapter, including but not limited to salaries and wages, expenses of administering staff functions, fees of professional consultants, legal fees, charges incurred for servicing of mortgage loans or loans to sponsors, money management, office rents, utility charges, costs of supplies, furnishings, equipment, machinery and apparatus, maintenance and repair of property and other expenses incurred in connection with the foregoing;

(k) “Purposes of this chapter” means ameliorating the deterioration of municipalities by preserving and expanding employment opportunities and the tax base of municipalities by undertaking or assisting in the financing, development or construction of housing, industrial, commercial, parking, retail, office, hotel, warehouse, recreational or transportation facilities or any combination thereof and any service facilities related thereto or supportive thereof;

(l) “Resolution” means any resolution adopted by the legislative body of a municipality or by the governing body of any governmental unit or nonprofit corporation to which a municipality has delegated powers under the provisions of section 7-486, after (1) notice of the proposed resolution has been placed on record in the office of the municipal clerk for public inspection and (2) a summary of the proposed resolution has been published at least once in a newspaper of general circulation within the municipality, both setting forth the time and place of the public hearing provided for in subdivision (3) of this subsection and (3) a public hearing has been held thereon not less than five days nor more than fourteen days subsequent to the placing on record of such notice and the publication of such summary. Such resolution shall be adopted by a majority vote of the members of the legislative body of the municipality, provided where the legislative body of the municipality is the town meeting, a resolution may be adopted upon approval of a majority of those electors present and voting on the resolution at the town meeting. Any resolution shall become effective upon adoption, unless otherwise specified in such resolution, except (A) a resolution adopted pursuant to section 7-492, and (B) a resolution adopted pursuant to section 7-485 that has been submitted to the electors of the municipality for their approval;

(m) “Revenues” means fees, rentals, tolls, charges and other receipts, income or moneys made, received or derived by or paid for the account of a municipality from, in connection with or arising out of any development property, and may include subsidies, grants and other payments or portions thereof from governmental units which, under their terms, may be pledged by a municipality in accordance with the provisions of this chapter;

(n) “Sponsor” means individuals, joint ventures, partnerships, limited partnerships, trusts, business corporations, nonprofit corporations, cooperatives, condominiums, associations, public bodies or any other legal entities or combination thereof, who have filed with the clerk of the municipality a list of the names and addresses of each of its members or stockholders, if any, except in the case of a corporation the stock of which is traded in the open market or over the counter or listed on any stock exchange, and who have been approved by a municipality as financially qualified to own, construct, acquire, rehabilitate, operate, manage or maintain development property in furtherance of the purposes of this chapter; and

(o) “State” means the state of Connecticut.

(July Sp. Sess. P.A. 75-2, S. 3, 25; P.A. 84-428, S. 2, 4; P.A. 16-133, S. 1.)

History: P.A. 84-428 amended Subdiv. (d) by allowing acquisition of such property interests by a sponsor, as defined in Subdiv. (n) of this section, in addition to acquisition by a municipality as allowed prior to this amendment; P.A. 16-133 amended Subsec. (l) by deleting provision re exception for resolution adopted pursuant to Sec. 7-485 or 7-492 and adding provisions re exceptions for such resolutions as Subparas. (A) and (B).

Sec. 7-483. Powers granted to municipalities. In furtherance of the purposes of this chapter, which are hereby deemed to be municipal purposes, for which municipal funds may be expended, each municipality shall, in addition to those powers otherwise conferred by any general statute, special act or municipal charter or ordinance, have the following powers, except as otherwise limited by this chapter, and provided the exercise of such powers by a municipality shall be in accordance with the procedures established by this chapter:

(a) To acquire, receive by gift or otherwise, purchase, acquire options to purchase, own and hold as lessee or lessor any development property which is located within the borders of the municipality. Any lease shall be binding upon the municipality as lessor or lessee, including, without limitation, the term or any extension thereof and the obligation to appropriate funds as necessary to meet rent and other obligations as provided within such lease.

(b) To construct, reconstruct, rehabilitate, improve, alter, equip, maintain or repair or provide for the construction, reconstruction, improvement, alteration, equipment or maintenance or repair of any development property and let, award and enter into construction contracts, purchase orders and other contracts with respect thereto upon such terms and conditions as the municipality shall determine to be reasonable, including but not limited to reimbursement for the planning, designing, financing, construction, reconstruction, improvement, equipping, furnishing, operation and maintenance of any such development property and the settlement of any claims arising therefrom and the establishment and maintenance of reserve funds with respect to the financing of such development property.

(c) To sell, lease as lessor or lessee, grant options to purchase or to renew a lease, assign, exchange, mortgage as security for notes or bonds issued pursuant to section 7-491 or otherwise dispose of or encumber and to manage or operate any development property.

(d) To accept gifts, grants or loans of funds, property or services from any source, public or private, and comply, subject to the provisions of this chapter, with the terms and conditions thereof.

(e) To prepare or cause to be prepared plans, specifications, designs and estimates of costs for the construction, reconstruction, rehabilitation, improvement, alteration, equipping, maintenance or repair of any development property, and from time to time to modify these plans, specifications, designs or estimates.

(f) To make mortgage loans or other loans or advances to sponsors as provided in section 7-488.

(g) When it becomes necessary and feasible for a municipality to safeguard itself from losses, to acquire, purchase, foreclose on, manage or operate, hold or dispose of development property, take assignments of rentals and leases and make and enter into all contracts, leases, agreements and arrangements necessary or incidental to the protection of its interests under any law, mortgage contract or agreement.

(h) In order to further the purposes of this chapter or to assure the payment of the principal and interest on bonds or notes of the municipality, to purchase, acquire and take assignments of notes, mortgages and other forms of security and evidences of indebtedness, purchase, acquire, attach, accept or take title to any development property by conveyance or by foreclosure, and sell, lease or rent any development property for a use specified in this chapter.

(i) To borrow money and to issue its bonds or notes or other obligations and to fund or refund the same and provide for the rights of the holders thereof as provided in this chapter.

(j) To charge and collect facility charges as provided in section 7-490.

(k) To make and enter into all contracts and agreements necessary or incidental to the performance of its duties and the exercise of its powers in furtherance of the purposes of this chapter, including contracts and agreements with sponsors.

(l) In connection with any application or commitment for assistance under this chapter, to make and collect such fees and charges as the municipality shall determine to be reasonable.

(m) To make, modify, amend or repeal rules and regulations with respect to its operations, properties and facilities.

(n) To sue and be sued and plead and be impleaded with respect to any action taken pursuant to powers granted by this chapter.

(o) To appoint, employ or retain attorneys, accountants, architectural, engineering and financial consultants, assistants, agents and other employees as it may deem necessary or desirable and to fix their compensation.

(July Sp. Sess. P.A. 75-2, S. 4, 25.)

Sec. 7-484. Actions to be undertaken by means of separate resolutions. No action in the exercise of any powers granted under the provisions of this chapter shall be undertaken by a municipality or by any governmental unit or nonprofit corporation to which a municipality has delegated powers pursuant to section 7-486, without the approval of each such action by the legislative body of such municipality or by the governing body of such governmental unit or nonprofit corporation, which approval shall be by means of a separate resolution, and findings and determinations made or required to be made under the provisions of this chapter shall be made by means of a separate resolution.

(July Sp. Sess. P.A. 75-2, S. 5, 25.)

Sec. 7-485. Required municipal findings and determinations. Discretionary referendum. (a) No power granted to a municipality under this chapter may be exercised unless and until the municipality shall have found and determined by resolution that conditions substantially as described in section 7-481 exist in the municipality, are continuing and may be ameliorated by the exercise of the powers granted under this chapter. Such resolution shall include the following findings and determinations and the following standards for the implementation of the powers granted under this chapter: (1) An unreasonable number of residents of the municipality are subject to hardship in finding employment and adequate, safe and sanitary housing; (2) conditions of blight and deterioration exist in parts of the municipality or the municipality would substantially benefit from the renovation, rehabilitation or construction of commercial or residential properties; (3) private enterprise is not meeting such need for employment, housing, the reduction of blight and deterioration, or the renovation, rehabilitation or construction of commercial or residential properties; (4) the need for employment and adequate, safe and sanitary housing will be lessened and the municipality will be revitalized by the exercise of the powers granted under this chapter; (5) adequate provisions shall be made for the payment of the cost of acquisition, construction, operation, maintenance and insurance of all development property; (6) a feasible method exists and shall be utilized for the relocation into safe and sanitary dwellings of comparable rent of families and individuals displaced as a consequence of the exercise of any power granted under this chapter and such families and individuals shall not suffer disproportionate injuries as a result of actions authorized by this chapter for the public benefit; (7) development property shall not be acquired or disposed of without due consideration of the environmental and economic impact of such acquisition or disposition and the adequacy of existing or proposed municipal services; (8) the acquisition or disposition of all development property shall advance the public interest, general health, safety and welfare, and development, growth and prosperity of the municipality.

(b) Each resolution adopted pursuant to subsection (a) of this section may be submitted to the electors of the municipality for their approval. If the legislative body of a municipality votes to submit a resolution to the electors of the municipality, not later than fourteen days after the adoption of such resolution a copy of such resolution shall be published in a newspaper having a general circulation within the municipality in which such resolution was adopted together with a notice of the time that a referendum shall be held on the question of approval of such resolution. The question of approval of such resolution shall be submitted to the electors of such municipality at a special election called for such purpose to be held not less than thirty days, nor more than sixty days, after adoption of such resolution, in conformity with the provisions of section 9-369 or, if a regular municipal election is to be held more than sixty days, but not more than one hundred twenty days, after the adoption of such resolution, such question shall be so submitted at such regular election and a vote thereon shall be taken in the manner prescribed by said section 9-369. If a majority of those voting in any such referendum vote to approve such resolution, such resolution shall thereupon become effective. If less than a majority of those voting in any such referendum vote to approve such resolution, it shall become null and void.

(c) Any resolution adopted pursuant to this section shall specify the period for which such resolution shall be effective, provided no such resolution shall be effective for a period in excess of five years from the effective date of such resolution. Upon the expiration of the effective period of any resolution adopted pursuant to this section: (1) Any indebtedness contracted, encumbrances made or commitments entered into by a municipality by resolution or contracts executed pursuant to resolution, including all proceedings related thereto, shall be valid and binding in accordance with their terms respectively and shall be of full force and effect if incurred, adopted or executed respectively during the period in which such resolution referred to in this section is effective and the municipality shall have all powers herein conferred with respect thereto notwithstanding the expiration of such period; and (2) the municipality which adopted such resolution shall not be authorized to exercise any powers created by this chapter, provided any such municipality shall be authorized to continue to exercise all powers created by this chapter in regard to any development property in regard to which any contract or lease has been previously entered into by such municipality with a sponsor or in regard to which any bonds or notes have been issued by such municipality.

(July Sp. Sess. P.A. 75-2, S. 6, 25; P.A. 16-133, S. 2.)

History: P.A. 16-133 amended Subsec. (a) by adding “parts of” and provision re municipality would substantially benefit from renovation, rehabilitation or construction of commercial or residential properties in Subdiv. (2), and adding reference to renovation, rehabilitation or construction of commercial or residential properties in Subdiv. (3), amended Subsec. (b) by substituting “may” for “shall” in provision re submittal to electors, and made technical changes.

Sec. 7-486. Delegation of powers. (a) A municipality shall have the power to delegate any power reserved to the municipality under the provisions of this chapter, except the powers provided for in sections 7-485, 7-491, 7-492 and 7-498, to any governmental unit created by or under the jurisdiction or control of the municipality or to any nonprofit corporation as defined in and organized and existing under the provisions of chapter 602 or any predecessor statutes thereto, provided that in making any such delegation of power the municipality shall impose by resolution such restrictions as may be appropriate to assure the carrying out of the purposes of this chapter.

(b) Whenever a municipality delegates any power to any governmental unit or nonprofit corporation pursuant to subsection (a) of this section, the municipality shall require each director, officer, member and other responsible official, as the case may be, of such governmental unit or nonprofit corporation to execute a surety bond in the penal sum of fifty thousand dollars or, in lieu thereof, such governmental unit or nonprofit corporation shall execute a blanket surety bond covering all members and employees of such governmental unit or nonprofit corporation, each surety bond to be conditioned upon the faithful performance of the duties of the office or offices covered, to be executed by a surety company authorized to transact business in this state as surety and to be approved by the legal counsel of the municipality and filed in the office of the clerk of the municipality. The cost of each such bond shall be paid by such governmental unit or nonprofit corporation. Whenever a municipality delegates any power pursuant to this chapter to a nonprofit corporation, such corporation (1) shall be deemed a public agency for the purposes of subdivision (1) of section 1-200, provided negotiations regarding any development property shall be subject to the provisions of subdivision (6) of subsection (b) of section 1-210 and (2) shall be subject to the provisions of any special act, municipal charter or ordinance requiring (A) bonds or other security for the performance of contracts for demolition, construction or rehabilitation or (B) competitive or public bidding, except as provided in section 7-501.

(c) No nonprofit corporation, to which a municipality has delegated powers pursuant to this section, shall serve as a sponsor for the purposes of this chapter.

(July Sp. Sess. P.A. 75-2, S. 7, 25; P.A. 96-256, S. 171, 209; P.A. 97-47, S. 46.)

History: P.A. 96-256 amended Subsec. (a) to replace reference to “chapter 600” with “chapter 602 or any predecessor statutes thereto”, effective January 1, 1997; P.A. 97-47 made a technical change in Subsec. (b).

Cited. 28 CA 622.

Sec. 7-487. Laws governing city and town development. (a) This chapter shall not supersede any other general statute, special act, municipal charter or ordinance, with regard to zoning regulations of the municipality adopted pursuant to section 8-2, or any special act, inland wetlands regulations adopted pursuant to section 22a-42a, such environmental regulations, orders, permits or licenses promulgated, issued or adopted by the Commissioner of Energy and Environmental Protection or any municipality pursuant to the authority granted under titles 22a and 25, local building requirements, the requirements of any plan of conservation and development for the municipality which has been approved by a municipal planning commission pursuant to section 8-23 or any redevelopment plan or urban renewal plan for the municipality which has been approved by a redevelopment agency pursuant to section 8-127. In addition the physical improvement, use and enjoyment of development property shall be subject to all general statutes, special acts, municipal charters and ordinances and all state or local regulations.

(b) No vote, whether taken prior to or subsequent to August 8, 1975, by the legislative body of a municipality pursuant to section 8-2 to exempt municipal property from the regulations prescribed by the zoning commission of such municipality shall apply to development property.

(July Sp. Sess. P.A. 75-2, S. 8, 25; P.A. 95-335, S. 13, 26; P.A. 11-80, S. 1.)

History: P.A. 95-335 amended Subsec. (a) to change “plan of development” to “plan of conservation and development”, effective July 1, 1995; pursuant to P.A. 11-80, “Commissioner of Environmental Protection” was changed editorially by the Revisors to “Commissioner of Energy and Environmental Protection” in Subsec. (a), effective July 1, 2011.

Sec. 7-488. Power of municipality to make loans. (a) A municipality shall have the power to make loans, which for the purposes of this section shall also include commitments to make loans, temporary loans and advances in anticipation of permanent loans, to any sponsor to provide funds in furtherance of the purposes of this chapter; provided such loans shall be made only after the municipality finds and determines that similar loans are not otherwise available to such sponsors, wholly or in part, from private lenders upon reasonably equivalent terms and conditions.

(b) All loans shall be subject to any rules and regulations of the municipality established by resolution with respect to the making of such loans, and the use of the proceeds of all loans shall be restricted to only those activities which are in furtherance of the purposes of this chapter. Loans shall be evidenced by a note or bond, shall be secured or unsecured, shall be in such amounts, shall bear such date or dates, shall mature at such time or times, may be subject to prepayment and may contain such other provisions consistent with the purposes of this chapter as the municipality shall by resolution determine. Each such loan shall be authorized by a separate resolution of the legislative body of the municipality.

(July Sp. Sess. P.A. 75-2, S. 9, 25.)

Sec. 7-489. Sale, lease, disposition and use of development property. (a) A municipality shall have power to sell, lease or otherwise dispose of all or part of any development property to any governmental unit or sponsor and to make agreements of any kind with any governmental unit or sponsor for the use or operation thereof, for such consideration and for such period or periods of time and upon such other terms and conditions as the municipality may fix and agree upon. In the exercise of such power, the municipality may make any improved or unimproved development property available for use by a governmental unit or sponsor in accordance with the purposes of this chapter at its use value, being the value, whether expressed in terms of rental or capital price, at which the municipality determines such property should be made available in order that it may be developed or used for the purposes of this chapter.

(b) In order to assure that development property is developed or used in accordance with the purposes of this chapter, a municipality, upon the sale, lease or other disposition of such property, shall obligate purchasers, lessees or other users (1) to use such property for the purposes of this chapter, (2) to begin the building or installation of their improvements on any such property, and to complete the same, within such periods of time as the municipality may fix as reasonable, and (3) to comply with such other conditions as are necessary or desirable to carry out the purposes of this chapter. Any such obligations imposed on a purchaser of real property shall be covenants and conditions running with the land for as long as any bonds issued in connection with such development property are outstanding.

(July Sp. Sess. P.A. 75-2, S. 10, 25; P.A. 06-196, S. 43.)

History: P.A. 06-196 made technical changes in Subsec. (b), effective June 7, 2006.

Sec. 7-490. Imposition and collection of facility charges. (a) A municipality shall have the power to charge and collect facility charges. Such facility charges may be charged to and collected from any governmental unit or sponsor and such governmental unit or sponsor shall be liable for and shall pay such facility charges to the municipality at the time when and place where such charges become due and payable. No governmental unit shall be required to pay any facility charges unless such governmental unit has agreed to pay such charges. Facility charges payable by a governmental unit subject to the limitations on indebtedness provided in subsection (b) of section 7-374 shall not be included in any calculation of debt of such governmental unit subject to such limitation, and agreements to pay facility charges may be entered into by any governmental unit notwithstanding any statutory debt limitations, including any limitation on indebtedness provided in said subsection (b) of section 7-374.

(b) The facility charges fixed, charged and collected by a municipality with respect to any such development property shall comply with the terms of any lease or other agreement of the municipality with regard to such development property and, subject to the provisions of any contract with noteholders or bondholders and any such lease or other agreement, the facility charges fixed, charged and collected by the municipality may be increased or decreased by the amount of increase or decrease of the expenses of the municipality attributable to the development property for which facility charges are made. Such expenses may include, but not be limited to, operating expenses and expenses of maintenance, insurance, improvements, replacements, reconstruction and any other payments, amounts necessary to pay the principal of and interest or redemption price on any bonds or notes, and amounts necessary to maintain such reserves as may be required by the terms of any lease or other agreement of the municipality or as may be deemed necessary or convenient and desirable by the municipality.

(July Sp. Sess. P.A. 75-2, S. 11, 25.)

Sec. 7-491. Issuance of notes and bonds. (a) Subject to the provisions of section 7-492 and any general statute, special act or municipal charter or ordinance to the contrary notwithstanding, a municipality shall have the power and is hereby authorized to issue from time to time its notes and bonds in such principal amounts as the municipality shall determine to be necessary to provide sufficient funds for achieving the purposes of this chapter, including the making of mortgage loans and loans to sponsors, the acquisition of development property, the establishment of reserves to secure such notes and bonds, interest on such notes and bonds during construction and for one year thereafter, and the payment of expenses incident to or necessary for furtherance of the purposes of this chapter.

(b) A municipality shall have the power, from time to time, to issue (1) notes to renew notes and (2) bonds to pay notes, including the interest thereon and, whenever it deems refunding expedient, to refund any bonds by the issuance of new bonds, whether the bonds to be refunded have or have not matured, and to issue bonds partly to refund bonds then outstanding for any of the purposes of this chapter. The refunding bonds may be exchanged for the bonds to be refunded or sold and the proceeds applied to the purchase, redemption or payment of such bonds.

(c) The notes and bonds shall be authorized by resolution of the municipality, shall bear such date or dates and shall mature at such time or times not exceeding forty years from the date thereof in the case of bonds issued to finance housing and facilities related thereto or thirty years from the date thereof in all other cases, as such resolution may provide. The bonds may be issued as serial bonds or as term bonds or as a combination thereof. The notes and bonds shall bear interest at such rate or rates, be in such denominations, be in such form, either bearer or registered, carry such exchange, transfer and registration privileges, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption as such resolution may provide. The notes and bonds may be sold by the municipality at public or private sale, at such price or prices as the municipality shall determine.

(d) Any resolution authorizing notes or bonds or any issue thereof may contain provisions, which shall be a part of the contract or contracts with the holders thereof, as to: (1) Pledging all or part of any revenues to secure the payment of the notes or bonds or of any issue thereof, subject to such agreements with noteholders or bondholders as may then exist; (2) pledging all or any part of the development property in which the municipality has acquired an interest from the proceeds of bonds and notes to secure the payment of the notes or bonds or of any issue of notes or bonds, subject to such agreements with noteholders or bondholders as may then exist; (3) the use and disposition of the gross income from mortgages owned by the municipality for the purposes of this chapter and payment of principal of mortgages owned by the municipality for the purposes of this chapter; (4) the setting aside of reserves or sinking funds and the regulation and disposition thereof; (5) limitations on the purposes to which the proceeds of sale of notes or bonds may be applied and pledging such proceeds to secure the payment of the notes or bonds or of any issue thereof; (6) limitations on the issuance of additional notes or bonds; the terms upon which additional notes or bonds may be issued and secured; and the refunding of outstanding or other notes or bonds; (7) the procedure, if any, by which the terms of any contract with noteholders or bondholders may be amended or abrogated, the amount of notes or bonds the holders of which must consent thereto, and the manner in which such consent may be given; (8) limitations on the amount of moneys to be expended by the municipality for its operating expenses; (9) vesting in a trustee or trustees property, rights, powers and duties in trust as the municipality may determine, which may include any or all of the rights, powers and duties of the trustee appointed by the bondholders pursuant to this chapter, and limiting or abrogating the right of the bondholders to appoint a trustee under this chapter or limiting the rights, powers and duties of such trustee; (10) the acts or omissions to act which shall constitute a default in the obligations and duties of the municipality to the holders of the notes or bonds and providing for the rights and remedies of the holders of the notes or bonds in the event of such default, including the right to appointment of a receiver; provided, however, such rights and remedies shall not be inconsistent with the general laws of the state and the other provisions of this chapter; (11) any other matters, of like or different character, which in any way affect the security or protection of the holders of the notes or bonds.

(e) If the resolution of a municipality authorizing the issuance of bonds or notes so states, the validity of such bonds or notes may be contested only if an action, suit or proceeding contesting such validity is commenced within sixty days after the date of publication of such resolution.

(f) Prior to the issuance of any bonds and notes, a municipality shall find and determine that the intended use of the proceeds of such bonds and notes is in the public interest and will advance the carrying out of the purposes of this chapter. Such determination shall be based upon a record of proceedings which shall include such matters as the municipality shall consider relevant to such determination.

(g) Any pledge made by the municipality shall be valid and binding from the time when the pledge is made, and the revenues or property so pledged and thereafter received by the municipality shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act. The lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the municipality, irrespective of whether such parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be recorded.

(h) Neither the officials nor members of the legislative body of the municipality nor any other authorized person executing such notes or bonds shall be subject to any personal liability by reason of the issuance thereof.

(i) The municipality, subject to such agreements with noteholders or bondholders as may then exist, shall have power, out of any funds available therefor, to purchase notes or bonds of the municipality, which shall thereupon be cancelled, at a price not exceeding (1) if the notes or bonds are then redeemable, the redemption price then applicable plus accrued interest to the next interest payment date thereof or (2) if the notes or bonds are not then redeemable, the redemption price applicable on the first date after such purchase upon which the notes or bonds become subject to redemption plus accrued interest to such date.

(j) In the discretion of the municipality, the bonds may be secured by a trust indenture by and between the municipality and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the state. Such trust indenture may contain such provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including covenants setting forth the duties of the municipality in relation to the exercise of its powers pursuant to this chapter and the custody, safeguarding and application of all moneys. The municipality may provide by such trust indenture for the payment of the proceeds of the bonds and the revenues to the trustee under such trust indenture or other depository, and for the method of disbursement thereof, with such safeguards and restrictions as it may determine. All expenses incurred in carrying out such trust indenture may be treated as a part of the operating expenses of the municipality. If the bonds shall be secured by a trust indenture, the bondholders shall have no authority to appoint a separate trustee to represent them.

(k) Whether or not the notes and bonds are of such form and character as to be negotiable instruments under the terms of the Uniform Commercial Code, the notes and bonds are hereby made negotiable instruments within the meaning of and for all purposes of the Uniform Commercial Code, subject only to the provisions of the notes and bonds for registration.

(July Sp. Sess. P.A. 75-2, S. 12, 25; P.A. 89-230, S. 1, 4.)

History: P.A. 89-230 amended Subsec. (c) to provide for forty-year maturity limits for bonds which finance housing and related facilities.

Sec. 7-492. Capital reserve fund established. Petition. Referendum. (a)(1) The municipality may create and establish a capital reserve fund and shall pay into such capital reserve fund (A) any moneys appropriated and made available by the state or municipality for the purpose of such fund, (B) any proceeds of sale of notes or bonds, to the extent provided in the resolution or resolutions of the municipality authorizing the issuance thereof and (C) any other moneys which may be made available to the municipality for the purpose of such fund from any other source or sources. All moneys held in the capital reserve fund, except as hereinafter provided, shall be used, as required, solely for the payment of the principal of bonds secured by the capital reserve fund as the same mature or the annual sinking fund payments, the purchase or redemption of such bonds, the payment of interest on such bonds or the payment of any redemption premium required to be paid when such bonds are redeemed prior to maturity; provided moneys in such fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of such fund to less than the maximum capital reserve fund requirement, except for the purposes of paying interest on such bonds, principal of such bonds and annual sinking fund payments, as the same become due and for the payment of which other moneys of the municipality are not available. Any income or interest earned by, or increment to, the capital reserve fund due to the investment thereof or any amount in excess of the maximum capital reserve fund requirement may be transferred by the municipality to other funds or accounts of the municipality established pursuant to this chapter to the extent it does not reduce the amount of the capital reserve fund below the maximum capital reserve fund requirement.

(2) A municipality shall not issue bonds secured by the capital reserve fund at any time if upon issuance the amount in the capital reserve fund will be less than the maximum capital reserve fund requirement, unless the municipality, at the time of issuance of such bonds, shall deposit in such fund from the proceeds of the bonds so to be issued, or otherwise, an amount which, together with the amount then in such fund, will not be less than the maximum capital reserve fund requirement.

(3) In computing the amount of the capital reserve fund for the purposes of this section, securities held as a part thereof shall be valued in the manner provided in the resolution or resolutions authorizing the issuance of bonds secured by the capital reserve fund.

(4) In order to further secure bonds and notes secured by a capital reserve fund and to assure order in its budgeting process, a municipality may, if deemed necessary or appropriate in furtherance of the purposes of this chapter, include in the resolution authorizing the issuance of such bonds and notes provision for the municipality to covenant and agree with the holders of such bonds and notes that on or before the first day in April in each year the amount necessary to restore the capital reserve fund to the maximum capital reserve fund requirement, as such amount shall be certified by the treasurer or other officer acting as the chief financial officer of the municipality on or before the first day of December next preceding, shall be paid from the general fund of the municipality and shall constitute a legal pledge, charge and lien upon its income and receipts, and next upon its real property, any general statute, special act or municipal charter or ordinance to the contrary notwithstanding. Such covenant and agreement shall constitute a pledge of the credit and taxing power of the municipality and the holders of bonds and notes so secured shall have the specific right to compel the exercise of the taxing power of the municipality. Any provision of this subdivision to the contrary notwithstanding, any such deficiency in the capital reserve fund so certified by the treasurer or other such financial officer of the municipality shall be satisfied first from the revenues of the development property specifically pledged to the payment of bonds or notes secured by such capital reserve fund, and no holder of any such bond or note may bring any action, suit or proceeding, in law or equity, nor compel by mandamus or injunction the exercise of the taxing power of the municipality, or forfeiture of its property, unless and until all remedies with respect to such pledged revenues have been exhausted. The substance and extent of such covenant and agreement shall be plainly stated on the face of each note and bond to which it is applicable. All amounts paid over from the general fund of the municipality as provided in this subdivision shall, subject to the rights of the holders of any notes or bonds of the municipality theretofore or thereafter issued, be repaid to the general fund from (A) moneys in a capital reserve fund in excess of the maximum capital reserve fund requirement, (B) any revenues not required for any other of the purposes of this chapter and (C) proceeds from the sale or other disposition of the development property acquired from the proceeds of bonds and notes secured by such capital reserve fund. Within fourteen days after the adoption of a resolution pursuant to this subdivision, the resolution or a summary of such resolution shall be published in a newspaper having a general circulation within the municipality in which such resolution was adopted. If, within thirty days of such publication, five per cent of the electors of such municipality, who are registered as electors on the last completed, revised registry list of such municipality, file with the clerk of such municipality a petition requesting a referendum with respect to such resolution, the question of approval of such resolution shall be submitted to the electors of such municipality at a special election called for such purpose to be held not less than thirty days, nor more than sixty days, after the filing of such petition, in conformity with the provisions of section 9-369, or if a regular municipal election is to be held more than sixty days, but not more than one hundred twenty days, after the filing of such petition, such question shall be so submitted at such regular election and a vote thereon shall be taken in the manner prescribed by said section 9-369. If a majority of those voting in any such referendum shall vote to approve such resolution, such resolution shall thereupon become effective. If less than a majority of those voting in any such referendum vote to approve such resolution, such resolution shall be null and void. If no such petition is filed within thirty days after the publication of the newspaper notice of adoption of any such resolution, the municipal clerk shall verify that fact to the legislative body of the municipality and such resolution shall thereupon become effective.

(5) Notwithstanding any other provisions contained in this chapter, the aggregate amount of bonds secured by such capital reserve funds authorized to be created and established by this section and by such covenant and agreement of the municipality as set forth in this section shall be included in the debt of the municipality as defined in subdivision (1) of subsection (b) of section 7-374, and shall be subject to the limitations on such debt and on total debt set forth in said subsection (b) of section 7-374, and the aggregate amount of such bonds shall not exceed five per centum of the grand list, as defined in section 7-374, and the proceeds of such bonds shall not be used for residential housing development property, except where such residential housing development property is a part of an undertaking designed to accomplish or further one or more purposes of this chapter in addition to the purpose of residential housing. No bonds shall be secured by a capital reserve fund unless the municipality by resolution or resolutions finds and determines that revenues derived from development property financed from the proceeds of such bonds shall be sufficient (A) to pay the applicable principal of and interest on such bonds, (B) to establish, maintain and increase any reserves deemed by the municipality to be advisable to secure the payment of the principal of and interest on such bonds, (C) unless the contract with the governmental unit or sponsor obligates the governmental unit or sponsor to pay for the maintenance and insurance of such property, to pay the cost of maintaining such property in good repair and keeping it properly insured and (D) to pay such other costs of such property as may be required, and further, in the case of sponsors, that such sponsor is found by the municipality to be financially responsible and presumptively able to comply with the terms and conditions of any lease, conditional sale or credit agreement or loan agreement, agreement of sale, mortgage or other agreement as made by it with the municipality with respect to such property.

(b) The municipality may create and establish such other fund or funds, including other capital reserve funds with the same force and effect and upon the same terms and conditions and subject to the same limitations as provided in subsection (a) of this section, as may be necessary or desirable in furtherance of the purposes of this chapter.

(July Sp. Sess. P.A. 75-2, S. 13, 25.)

Sec. 7-493. Bonds and notes to be special obligation of municipality. Applicability of statutory debt limitation. Bonds and notes issued pursuant to this chapter shall be special obligations of the municipality and shall not be payable from nor charged upon any funds other than the revenues pledged to the payment thereof, nor shall the municipality issuing the same be subject to any liability thereon except to the extent of such pledged revenues. No holder or holders of any bonds or notes shall have the right to compel any exercise of the taxing power of the municipality to pay any bonds or notes or the interest thereon, nor to enforce payment thereon against any property of the municipality except the development property mortgaged or otherwise encumbered under the provisions and for the purposes of this chapter. The bonds and notes shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the municipality, except the development property mortgaged or otherwise encumbered under the provisions and for the purposes of this chapter. The substance of such limitation shall be plainly stated on the face of each bond and note, with appropriate modification in the case of bonds and notes secured by the covenant and pledge of a municipality to restore the capital reserve fund to the maximum capital reserve fund requirement. The foregoing provisions of this section shall be subject to the provisions of section 7-492 when applicable, including particularly the provisions of said section with respect to notes and bonds secured by such covenant and pledge of a municipality, and all bonds and notes so secured shall be disclosed and listed in all reports made or required in connection with any indebtedness of the municipality which is subject to any statutory limitation. Except as otherwise provided in subdivision (5) of subsection (a) of section 7-492, bonds and notes issued pursuant to this chapter shall not be subject to any statutory limitation on the indebtedness of the municipality and such bonds and notes when issued shall not be included in computing the aggregate indebtedness of the municipality in respect to and to the extent of any such limitation.

(July Sp. Sess. P.A. 75-2, S. 14, 25.)

Sec. 7-494. Municipal moneys to be deposited in separate accounts. Annual audits. (a) All moneys of a municipality derived in furtherance of the purposes of this chapter, except as otherwise authorized or provided in this chapter, shall be deposited as soon as practicable in a separate account or accounts in banks or trust companies organized under the laws of the state or in national banking associations doing business in the state. The moneys in such accounts shall be paid out on checks signed by such officer or employee of the municipality as the municipality shall authorize. All deposits of such moneys shall, if required by the municipality, be secured by obligations of the United States of America or of the state or of the municipality of a market value equal at all times to the amount of the deposit and all banks and trust companies are authorized to give such security for such deposits. Notwithstanding the provisions of this section, a municipality shall have power to contract with the holders of any of its notes or bonds as to the custody, collection, securing, investment and payment of any moneys of the municipality derived in furtherance of the purposes of this chapter and of any moneys held in a trust or otherwise for the payment of notes or bonds, and to carry out such contract. Moneys held in trust or otherwise for the payment of notes or bonds or in any way to secure notes or bonds and deposits of such moneys may be secured in the same manner as moneys of the municipality, and all banks and trust companies are authorized to give such security for such deposits.

(b) Subject to the provisions of any contract with noteholders and bondholders, a municipality issuing notes or bonds pursuant to this chapter shall prescribe a system of accounts. All such accounts shall be kept separate from other accounts of the municipality and shall be used for the purposes of this chapter and for no other purpose.

(c) All accounts of a municipality established in furtherance of the purposes of this chapter shall be annually audited by an independent certified public accountant, and a report of such audit and the books and records of the municipality kept with respect to any action taken or account established under this chapter, including books and records pertaining to its receipts, disbursements, contracts, reserve funds, sinking funds and investments, shall be open to public inspection.

(July Sp. Sess. P.A. 75-2, S. 15, 25.)

Sec. 7-495. Municipal default or noncompliance. Appointment of trustee. (a) In the event that a municipality shall default in the payment of principal of or interest on any issue of notes or bonds after the same shall become due, whether at maturity or upon call for redemption, and such default shall continue for a period of thirty days, or in the event that a municipality shall fail or refuse to comply with the provisions of this chapter, or shall default in any agreement made with the holders of any issue of notes or bonds, the holders of twenty-five per cent in aggregate principal amount of the notes or bonds of such issue then outstanding, by instrument or instruments filed in the office of the clerk of such municipality and proved or acknowledged in the same manner as a deed to be recorded, may appoint a trustee to represent the holders of such notes or bonds for the purposes herein provided.

(b) Such trustee may, and upon written request of the holders of twenty-five per cent in principal amount of such notes or bonds then outstanding shall, in his or its own name: (1) By suit, action or proceeding in accordance with the general statutes enforce all rights of the noteholders or bondholders, including the right to require the municipality to carry out any agreement with such holders and to perform its duties under this chapter; (2) bring suit upon such notes or bonds; (3) by action or suit, require the municipality to account as if it were the trustee of an express trust for the holders of such notes or bonds; (4) by action or suit, enjoin any acts or things which may be unlawful or in violation of the rights of the holders of such notes or bonds; (5) declare all such notes or bonds due and payable, and if all defaults shall be made good, then, with the consent of the holders of twenty-five per cent of the principal amount of such notes or bonds then outstanding, annul such declaration and its consequences.

(c) The Superior Court shall have jurisdiction of any suit, action or proceeding by the trustee on behalf of such noteholders or bondholders. The venue of any such suit, action or proceeding shall be laid in the municipality against which any such remedy is sought.

(d) Before declaring the principal of notes or bonds due and payable, the trustee shall first give thirty days' notice in writing to the municipality.

(July Sp. Sess. P.A. 75-2, S. 16, 25.)

Sec. 7-496. Notes and bonds made securities. The notes and bonds of municipalities are hereby made securities in which all public officers and bodies of this state and all municipalities and municipal subdivisions, all insurance companies and associations and other persons carrying on an insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries, and all other persons whatsoever who are now or may hereafter be authorized to invest in bonds or in other obligations of the state, may properly and legally invest funds, including capital, in their control or belonging to them. The notes and bonds are also hereby made securities which may be deposited with and may be received by all public officers and bodies of the state and all municipalities for any purpose of which the deposit of bonds or other obligations of the state is now or may hereafter be authorized.

(July Sp. Sess. P.A. 75-2, S. 17, 25; P.A. 80-483, S. 22, 186.)

History: P.A. 80-483 deleted reference to building and loan associations.

Sec. 7-497. Income from notes and bonds tax-exempt; exception. It is hereby determined that the powers conferred upon municipalities by this chapter are in all respects for the benefit of the people of the state and for the improvement of their health, safety, welfare, comfort and security, and that the purposes of this chapter are public purposes and that municipalities will be performing an essential governmental function in the exercise of the powers conferred upon them by this chapter. The state covenants with the purchasers and all subsequent holders and transferees of notes and bonds issued by a municipality, in consideration of the acceptance of and payment for the notes and bonds, that the notes and bonds of the municipality issued pursuant to this chapter and the income therefrom shall at all times be free from taxation, except for estate and gift taxes and taxes on transfers. Municipalities are authorized to include this covenant of the state in any agreement with the holder of such notes or bonds.

(July Sp. Sess. P.A. 75-2, S. 18, 25.)

Sec. 7-498. Development property may be tax-exempt. Any development property may be exempted from any property tax imposed by the municipality; provided any municipality may enter into an agreement, approved by resolution, providing for a payment or payments in lieu of taxes with respect to any such property, or providing that any such property is subject to all or any portion of local property taxes. In no case shall development property be exempt in whole or in part from such property tax for a period or periods, in the aggregate, in excess of twenty years. This section shall not affect, modify, alter or invalidate any agreement entered into by any municipality prior to August 8, 1975, relating to local property taxes to be paid on any municipally owned property.

(July Sp. Sess. P.A. 75-2, S. 19, 25; P.A. 84-428, S. 3, 4.)

History: P.A. 84-428 amended the description of development property, which may be exempt from property tax, by deleting the condition that such property must be owned by a municipality to be so exempted.

Sec. 7-499. Agreement with bond holders. The state does hereby pledge to and agree with the holders of any notes or bonds that the state will not limit or alter the rights hereby vested in a municipality to fulfill the terms of any agreements made with said holders thereof, or in any way impair the rights and remedies of such holders until such notes and bonds, together with the interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully met and discharged. A municipality is authorized to include this pledge and agreement of the state in any agreement with the holders of such notes or bonds.

(July Sp. Sess. P.A. 75-2, S. 20, 25.)

Sec. 7-500. Exclusive procedure for issuance of bonds. Notwithstanding the provisions of any other general statute, special act, municipal charter or ordinance to the contrary, no proceedings, notice or approval shall be required for the issuance of any bonds or notes or any instrument as security therefor, except as provided by sections 7-491 to 7-499, inclusive.

(July Sp. Sess. P.A. 75-2, S. 21, 25.)

Sec. 7-501. Competitive or public bidding requirements. This chapter shall not supersede any provision of any general statute, special act, municipal charter or ordinance with regard to competitive or public bidding for the sale, lease or other disposition of property or for the award of contracts for demolition, construction or rehabilitation, except that any contract or agreement for the disposition of any interest by a municipality, or a governmental unit or nonprofit corporation to which a municipality has delegated powers under the provisions of section 7-486, in development property and any contract or agreement relative to the improvement of development property, the construction of improvements thereon or the rehabilitation thereof, which is entered into by a municipality, or a governmental unit or nonprofit corporation to which a municipality has delegated powers under the provisions of section 7-486, with a sponsor who is going to use or occupy such development property, may be entered into without regard to any such requirement.

(July Sp. Sess. P.A. 75-2, S. 22, 25.)

Sec. 7-502. Applicability of payment bond, prevailing wage and other employee benefit laws. (a) The provisions of section 31-53 shall apply to contractual arrangements for the construction, reconstruction or rehabilitation of development property.

(b) The provisions of sections 49-41 to 49-43, inclusive, shall apply to any construction, reconstruction or rehabilitation of development property undertaken by a municipality or a governmental unit or nonprofit corporation to which a municipality has delegated powers pursuant to section 7-486.

(c) The provisions of sections 7-467 to 7-473c, inclusive, 7-474 to 7-477, inclusive, and of chapter 561 and any provisions of any special act, municipal charter or ordinance granting to employees rights of organization, representation and collective bargaining shall apply to any powers exercised or actions undertaken pursuant to this chapter by a municipality or a governmental unit or nonprofit corporation to which a municipality has delegated powers pursuant to section 7-486.

(July Sp. Sess. P.A. 75-2, S. 23, 25.)

Sec. 7-503. Chapter grants no authority for municipality to acquire, own, develop or improve real property outside its borders. Nothing in this chapter shall be construed to give authority to a municipality to proceed under this chapter to acquire, own, develop or otherwise improve real property outside of its own borders.

(July Sp. Sess. P.A. 75-2, S. 24, 25.)