(a) A municipality may authorize and approve (1) the execution and delivery of project funding agreements, and (2) the issuance and sale of project obligations, grant account loan obligations and interim funding obligations, in accordance with such statutory and charter requirements as govern the authorization and approval of borrowings and the making of contracts generally by the municipality or in accordance with the provisions of subsection (e) of this section. Project loan obligations, grant account loan obligations and interim funding obligations shall be duly executed and accompanied by an approving legal opinion of bond counsel of recognized standing in the field of municipal law whose opinions are generally accepted by purchasers of municipal bonds and shall be subject to the debt limitation provisions of section 7-374; except that project loan obligations, grant account loan obligations and interim funding obligations issued in order to meet the requirements of any abatement order of the commissioner shall not be subject to the debt limitation provisions of section 7-374, provided the municipality files a certificate, signed by its chief fiscal officer, with the commissioner demonstrating to the satisfaction of the commissioner that the municipality has a plan for levying a system of charges, assessments or other revenues which are sufficient, together with other available funds of the municipality, to repay such obligations as the same become due and payable.

(b) Each recipient which enters into a project funding agreement shall protect, defend and hold harmless the state, its agencies, departments, agents and employees from and against any and all claims, suits, actions, demands, costs and damages arising from or in connection with the performance or nonperformance by the recipient, or any of its officers, employees or agents, of the recipient's obligations under any project funding agreement as such project funding agreement may be amended or supplemented from time to time. Each such recipient may insure against the liability imposed by this subsection through any insurance company organized within or without this state authorized to write such insurance in this state or may elect to act as self-insurer of such liability, provided such indemnity shall not be limited by any such insurance coverage.

(c) Whenever a recipient has entered into a project funding agreement and has authorized the issuance of project loan obligations or grant account loan obligations, it may authorize the issuance of interim funding obligations. Proceeds from the issuance and sale of interim funding obligations shall be used to temporarily finance an eligible project pending receipt of the proceeds of a project loan obligation, a grant account loan obligation or project grant. Such interim funding obligations may be issued and sold to the state for the benefit of the Clean Water Fund or issued and sold to any other lender on such terms and in such manner as shall be determined by a recipient. Such interim funding obligations may be renewed from time to time by the issuance of other notes, provided the final maturity of such notes shall not exceed six months from the date of completion of the planning and design phase or the construction phase, as applicable, of an eligible project, as determined by the commissioner or, if the project is an eligible drinking water project, by the Commissioner of Public Health. Such notes and any renewals of a municipality shall not be subject to the requirements and limitations set forth in sections 7-378, 7-378a and 7-264. The provisions of section 7-374 shall apply to such notes and any renewals thereof of a municipality; except that project loan obligations, grant account loan obligations and interim funding obligations issued in order to meet the requirements of an abatement order of the commissioner shall not be subject to the debt limitation provisions of section 7-374, provided the municipality files a certificate, signed by its chief fiscal officer, with the commissioner demonstrating to the satisfaction of the commissioner that the municipality has a plan for levying a system of charges, assessments or other revenues sufficient, together with other available funds of the municipality, to repay such obligations as the same become due and payable. The officer or agency authorized by law or by vote of the recipient to issue such interim funding obligations shall, within any limitation imposed by such law or vote, determine the date, maturity, interest rate, form, manner of sale and other details of such obligations. Such obligations may bear interest or be sold at a discount and the interest or discount on such obligations, including renewals thereof, and the expense of preparing, issuing and marketing them may be included as a part of the cost of an eligible project. Upon the issuance of a project loan obligation or grant account loan obligation, the proceeds thereof, to the extent required, shall be applied forthwith to the payment of the principal of and interest on all interim funding obligations issued in anticipation thereof and upon receipt of a project grant, the proceeds thereof, to the extent required, shall be applied forthwith to the payment of the principal of and interest on all grant anticipation notes issued in anticipation thereof or, in either case, shall be deposited in trust for such purpose with a bank or trust company, which may be the bank or trust company, if any, at which such obligations are payable.

(d) Project loan obligations, grant account loan obligations, interim funding obligations or any obligation of a municipality that satisfies the requirements of Title VI of the federal Water Pollution Control Act or the federal Safe Drinking Water Act or other related federal act may, as determined by the commissioner or, if the project is an eligible drinking water project, by the Commissioner of Public Health, be general obligations of the issuing municipality and in such case each such obligation shall recite that the full faith and credit of the issuing municipality are pledged for the payment of the principal thereof and interest thereon. To the extent a municipality is authorized pursuant to sections 22a-475 to 22a-483, inclusive, to issue project loan obligations or interim funding obligations, such obligations may be secured by a pledge of revenues and other funds derived from its sewer system or public water supply system, as applicable. Each pledge and agreement made for the benefit or security of any of such obligations shall be in effect until the principal of, and interest on, such obligations have been fully paid, or until provision has been made for payment in the manner provided in the resolution authorizing their issuance or in the agreement for the benefit of the holders of such obligations. In any such case, such pledge shall be valid and binding from the time when such pledge is made. Any revenues or other receipts, funds or moneys 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 project loan obligation, interim funding obligation, project funding agreement nor any other instrument by which a pledge is created need be recorded. All securities or other investments of moneys of the state permitted or provided for under sections 22a-475 to 22a-483, inclusive, may, upon the determination of the State Treasurer, be purchased and held in fully marketable form, subject to provision for any registration in the name of the state. Securities or other investments at any time purchased, held or owned by the state may, upon the determination of the State Treasurer and upon delivery to the state, be accompanied by such documentation, including approving bond opinion, certification and guaranty as to signatures and certification as to absence of litigation, and such other or further documentation as shall from time to time be required in the municipal bond market or required by the state.

(e) Notwithstanding the provisions of the general statutes, any special act or any municipal charter governing the authorization of bonds, notes or obligations or the appropriation of funds, or governing the application for, and expenditure of, grants or loans, or governing the authorization of contracts or financing agreements or governing the pledging of sewer or water revenues or funds, a municipality may, by resolution approved by its legislative body and by (1) its water pollution control authority or sewer authority, if any, authorize a project loan and project grant agreement between the municipality and the state pursuant to sections 22a-475 to 22a-483, inclusive, and appropriate funds and authorize project loan obligations and interim funding obligations of the municipality paid and secured solely by a pledge of revenues, funds and moneys of the municipality and the water pollution control authority or sewer authority, if any, derived from its sewer system, to pay for and finance the total project costs of an eligible water quality project, pursuant to a project loan and project grant agreement between the municipality and the state pursuant to sections 22a-475 to 22a-483, inclusive, or (2) by its water authority, if any, authorize a project loan and project grant agreement between the municipality and the state pursuant to sections 22a-475 to 22a-483, inclusive, and appropriate funds and authorize project loan obligations and interim funding obligations of the municipality paid and secured solely by a pledge of revenues, funds and moneys of the municipality and the water authority, if any, derived from its public water supply system, to pay for and finance the total project costs of an eligible water quality project, pursuant to a project loan agreement between the municipality and the state pursuant to sections 22a-475 to 22a-483, inclusive. The provisions of chapter 103 shall apply to the obligations authorized by this section, to the extent such section is not inconsistent with this subsection. A project loan and project grant agreement authorized by such resolution may contain covenants and agreements with respect to, and may pledge the revenues, funds and moneys derived from, the sewer system or public water system to secure such project loan obligations and interim funding obligations, including, but not limited to, covenants and agreements with respect to holding or depositing such revenues, funds and moneys in separate accounts and agreements described in section 7-266. As used in this subsection, “legislative body” means (A) the board of selectmen in a town that does not have a charter, special act or home rule ordinance relating to its government, (B) the council, board of aldermen, representative town meeting, board of selectmen or other elected legislative body described in a charter, special act or home rule ordinance relating to government in a city, consolidated town and city, consolidated town and borough or a town having a charter, special act, consolidation ordinance or home rule ordinance relating to its government, (C) the board of burgesses or other elected legislative body in a borough, or (D) the district committee or other elected legislative body in a district, metropolitan district or other municipal corporation.

(f) Any recipient which is not a municipality shall execute and deliver project loan obligations and interim financing obligations in accordance with applicable law and in such form and with such requirements as may be determined by the commissioner or by the Commissioner of Public Health if the project is an eligible drinking water project. The Commissioner of Public Health and the Public Utilities Regulatory Authority as required by section 16-19e shall review and approve all costs that are necessary and reasonable prior to the award of the project funding agreement with respect to an eligible drinking water project. The Public Utilities Regulatory Authority, where appropriate, shall include these costs in the recipient's rate structure in accordance with section 16-19e.

(P.A. 86-420, S. 5, 12; P.A. 87-571, S. 5, 7; P.A. 89-377, S. 5, 8; June Sp. Sess. P.A. 90-1, S. 5, 6, 10; P.A. 92-201, S. 1, 2; P.A. 96-181, S. 114, 121; May Sp. Sess. P.A. 04-2, S. 69; P.A. 10-117, S. 38, 39; P.A. 11-80, S. 1.)

History: P.A. 87-571 added provisions re interim funding obligations; P.A. 89-377 added provisions concerning opinions of bond counsel, exempted obligations issued in order to meet abatement orders from limits in Sec. 7-374, added Subsec. (b) concerning hold harmless provisions and amended Subsec. (d) to provide that obligations may, as determined by the commissioner, rather than shall, be general obligations of the municipality and to add provisions concerning marketability; June Sp. Sess. P.A. 90-1 amended Subsecs. (a) and (c) to provide that the exemption from the debt limitation of Sec. 7-374 for projects under abatement orders will be allowed only when the municipality has satisfied the commissioner that it has a repayment plan for such debt; P.A. 92-201 amended Subsec. (d) to clarify the nature of the pledge of revenues and the lien of any such pledge and added Subsec. (e) concerning pledges of revenues; P.A. 96-181 added Subsec. (f) re review and approval of costs of a recipient which is not a municipality by the Commissioner of Public Health and the Department of Public Utility Control and made technical and conforming changes related to inclusion of the federal Safe Drinking Water Act, effective July 1, 1996; May Sp. Sess. P.A. 04-2 amended Subsec. (c) to provide that notes of a municipality under section shall not be subject to Sec. 7-264, amended Subsec. (d) to authorize the securing of obligations of municipalities under section by other funds derived from water or sewer systems and to add provision re pledges and agreements for the benefit or security of obligations under section, amended Subsec. (e) to qualify the provisions of law that are not applicable to the municipal powers under section, to authorize project loan and project grant agreements and to specify the provisions which such agreements may include, and made technical and conforming changes, effective May 12, 2004, and applicable to any pledge, lien or security interest of this state or any political subdivision of this state, which was in existence on October 1, 2003, or created after October 1, 2003; P.A. 10-117 amended Subsecs. (c) and (d) by adding “or, if the project is an eligible drinking water project, by the Commissioner of Public Health” and amended Subsec. (f) by adding provisions re responsibilities of Commissioner of Public Health if project is an eligible drinking water project; pursuant to P.A. 11-80, “Department of Public Utility Control” was changed editorially by the Revisors to “Public Utilities Regulatory Authority” in Subsec. (f), effective July 1, 2011.