(a) A municipality may issue bonds or notes to finance energy improvement projects subject to assessment under AS 29.55.105.

(b) Bonds or notes issued under this section may not be general obligations of the municipality. The bonds or notes must be secured by one or more of the following, as provided by the governing body of the municipality in the resolution or ordinance approving the bonds or notes:

(1) payments of assessments on benefited property in one or more specified regions designated under AS 29.55.100;

(2) reserves established by the municipality from grants, bonds, or net proceeds or other lawfully available funds;

(3) municipal bond insurance, lines of credit, public or private guaranties, standby bond purchase agreements, collateral assignments, mortgages, or any other available means of providing credit support or liquidity; and

(4) any other funds lawfully available for purposes consistent with AS 29.55.100 - 29.55.165.

(c) A municipal pledge of assessments, funds, or contractual rights in connection with the issuance of bonds or notes by the municipality under this section is a first lien on the assessments, funds, or contractual rights pledged in favor of the person to whom the pledge is given, without further action by the municipality. The lien is valid and binding against any other person, with or without notice.

(d) Bonds or notes issued under this section must further one or more of the following essential public and governmental purposes:

(1) improvement of the reliability of local electrical systems;

(2) reduction of energy costs;

(3) reduction of energy demand on local utilities;

(4) reduction of emissions affecting local air quality;

(5) economic stimulation and development;

(6) enhancement of property values;

(7) enhancement of employment opportunities.