Security for local building authority bonds

(1) The principal of and interest on bonds that a local building authority issues under this part: (a) shall be secured by a pledge and assignment of the revenue that the local building authority receives under its lease agreement with respect to the project that was financed with the bond proceeds; (b) may be secured by: (i) a mortgage covering some or all of the project; (ii) a pledge and assignment of the lease agreement for that project; (iii) money held in a reserve fund; and (iv) any other security device with respect to the project that the local building authority considers most advantageous. (2) A proceeding under which a mortgage is given to secure the bonds of a local building authority may contain any agreement or provision listed in Section 17D-2-503 that could be contained in a proceeding under which a local building authority is authorized to issue bonds under this part. (3) A mortgage to secure bonds issued by a local building authority under this part may provide that: (a) upon default in its payment or the violation of any covenant or agreement contained in the mortgage, the mortgage may be foreclosed in the manner permitted by law; and (b) the trustee or holder of any bond secured by the mortgage may become the purchaser at a foreclosure sale, if the trustee or holder is the highest bidder.