Certificates issued under this section must be backed by pledged utility revenues, and certificate holders get a lien and enforcement rights if payment defaults.
§4284. Pledge of revenues of utility; lien of certificate holders; enforcement of obligations of municipality; receivership Any certificates of indebtedness issued hereunder shall be negotiable and shall be secured by a pledge of the revenues of all or a portion of the incoming revenues derived from the operation of the revenue producing public utility not otherwise pledged or dedicated. The amount of income and revenue so pledged and dedicated shall be sufficient at all times to pay the principal and interest of the certificates as they mature; but there shall be made proper provisions for the current maintenance and operation of the utility and for establishing a reasonable depreciation and replacement fund. A lien upon the revenues and franchises shall exist in favor of the holders of the certificates of indebtedness, and the holders of the coupons attached thereto for the payment thereof, the lien to be effective until all of the certificates and coupons shall have been paid in full. In the event of default of payment of principal or interest of the certificates or coupons, any holder thereof shall have a preferential right of action to enforce and protect by suit, action, mandamus, receivership, or other proceedings the lien hereby conferred. He may bring such proceedings to compel performance of all obligations required to be performed by the governing authority of the municipality by the provisions of this Sub-part. If a receiver is appointed, he shall have an exclusive permit and franchise to maintain and operate the property and by all means to continue to supply to the public the commodities, products, or services theretofore supplied by the utility. He shall have the rights, powers, and privileges enjoyed by the municipality in the operation of the utility. This franchise shall continue for the period (not exceeding twenty years from the date of the receivership) fixed in the proceedings authorizing the certificates and shall not be subject to any statutory limitations pertaining to the granting of municipal franchises, not especially contained in this Sub-part. The receivership shall expire upon the payment in full of the certificates and coupons.