CHAPTER 3. PRIVATE HOLDING COMPANIES
IC 20-47-3
Chapter 3. Private Holding Companies
IC 20-47-3-1
Application
Sec. 1. This chapter does not apply to a charter school.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-2
"School building"
Sec. 2. As used in this chapter, "school building" means a buildingused as part of or in connection with the operation of schools andincludes the:
(1) site for the building;
(2) equipment for the building; and
(3) appurtenances to the building, such as heating facilities,water supply, sewage disposal, landscaping, walks, drives, andplaygrounds.
However, the term does not include a building that is designed forand to be used exclusively for interschool athletic contests.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-3
Powers; lease of school building; maximum term of lease; petition;required terms of joint lease involving more than one schoolcorporation
Sec. 3. (a) Subject to subsection (b), a school corporation maylease a school building or buildings for the use of:
(1) the school corporation; or
(2) a joint or consolidated school district of which the schoolcorporation is a part or to which it contributes;
for a term not to exceed fifty (50) years.
(b) A school corporation may not enter into a lease under thissection unless:
(1) a petition for the lease signed by at least fifty (50) patronsof the school corporation has been filed with the governingbody of the school corporation; and
(2) the governing body, after investigation, determines that aneed exists for the school building.
(c) If two (2) or more school corporations propose to jointly enterinto a lease under this section, joint meetings of the governing bodiesof the school corporations may be held, but action taken at a jointmeeting is not binding on any of those school corporations unlessapproved by a majority of the governing body of each of those schoolcorporations. A lease executed by two (2) or more schoolcorporations as joint lessees must:
(1) set out the amount of the total lease rental to be paid by eachlessee, which may be as agreed upon; and
(2) provide that:
(A) there is no right of occupancy by any lessee unless the
total rental is paid as stipulated in the lease; and
(B) all rights of joint lessees under the lease are inproportion to the amount of lease rental paid by each lessee.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-4
Qualifications of lessor corporation
Sec. 4. A school corporation or corporations may enter into alease or lease with option to purchase under this chapter only with:
(1) a corporation organized under Indiana law or admitted to dobusiness in Indiana; or
(2) a religious organization (or the organization's agent) that isexempt from federal income taxation under Section 501 of theInternal Revenue Code.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-5
Required terms of lease agreement; option to purchase
Sec. 5. (a) Except as provided in subsections (d) and (e), a leasemust provide that the school corporation or corporations have anoption to:
(1) renew the lease for a further term on like conditions; and
(2) purchase the property covered by the lease;
with the terms and conditions of the purchase to be specified in thelease, subject to the approval of the department of local governmentfinance.
(b) If the option to purchase the property covered by the lease isexercised, the school corporation or corporations, to procure fundsto pay the purchase price, may issue and sell bonds under theprovisions of the general statute governing the issue and sale ofbonds of the school corporation or corporations. The purchase pricemay not be more than the purchase price set forth in the lease plus:
(1) two percent (2%) of the purchase price as prepaymentpenalty for purchase within the first five (5) years of the leaseterm; or
(2) one percent (1%) of the purchase price as prepaymentpenalty for purchase in the second five (5) years of the leaseterm;
and thereafter the purchase shall be without prepayment penalty.
(c) However:
(1) if the school corporation or corporations have not exercisedan option to purchase the property covered by the lease at theexpiration of the lease; and
(2) upon the full discharge and performance by the schoolcorporation or corporations of their obligations under the lease;
the property covered by the lease becomes the absolute property ofthe school corporation or corporations, and the lessor corporationshall execute proper instruments conveying to the school corporationor corporations good and merchantable title to that property.
(d) The following provisions apply to a school corporation that is
located in Dubois County and enters into a lease with a religiousorganization or the organization's agent as authorized under section4 of this chapter:
(1) The lease is not required to include on behalf of the schoolcorporation an option to purchase the property covered by thelease.
(2) The lease must include an option to renew the lease.
(3) The property covered by the lease is not required to becomethe absolute property of the school corporation as provided insubsection (c).
(e) In the case of a lease for which a school corporation:
(1) after June 30, 2008, makes a preliminary determination asdescribed in IC 6-1.1-20-3.1 or IC 6-1.1-20-3.5 or a decision asdescribed in IC 6-1.1-20-5; or
(2) in the case of a lease not subject to IC 6-1.1-20-3.1,IC 6-1.1-20-3.5, or IC 6-1.1-20-5, adopts a resolution orordinance authorizing the lease after June 30, 2008;
the terms and conditions of the purchase that are specified in thelease are not subject to the approval of the department of localgovernment finance.
As added by P.L.2-2006, SEC.170. Amended by P.L.146-2008,SEC.517.
IC 20-47-3-6
Lessor corporation; submission of preliminary plans
Sec. 6. (a) A lessor corporation proposing to build a schoolbuilding or buildings must submit preliminary plans, specifications,and estimates for the building or buildings to the lessee or lesseesbefore the execution of the lease. Final plans and specifications mustbe submitted to the state department of health, state fire marshal, andother agencies designated by law to pass on plans and specificationsfor school buildings. The final plans and specifications must beapproved by those agencies in writing and by the lessee or lesseesbefore the construction of the school building or school buildings.
(b) IC 4-21.5 does not apply to the formulation, issuance, oradministrative review of an approval by an agency under subsection(a). However, IC 4-21.5 does apply to the judicial review and civilenforcement of an approval by an agency under subsection (a).
As added by P.L.2-2006, SEC.170.
IC 20-47-3-7
Permissible provisions of lease; payment of taxes; insurance
Sec. 7. A lease entered into under this chapter may provide that asa part of the lease rental for the school building or buildings thelessee or lessees shall:
(1) pay all taxes and assessments levied against or on accountof the leased property;
(2) maintain insurance on the leased property for the benefit ofthe lessor corporation; and
(3) assume all responsibilities for repair and alterations of the
leased property during the term of the lease.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-8
Lease preceding acquisition of land
Sec. 8. (a) Except as provided in subsection (b), a schoolcorporation or corporations may, in anticipation of the acquisition ofa site and the construction and erection of a school building orbuildings, and, subject to the approval of the department of localgovernment finance, enter into a lease with a lessor corporationbefore the actual acquisition of the site and the construction anderection of the building or buildings. However, the lease entered intoby the school corporation or school corporations may not provide forthe payment of any lease rental by the lessee or lessees until thebuilding or buildings are ready for occupancy, at which time thestipulated lease rental may begin. The lessor corporation shallfurnish a bond to the approval of the lessee or lessees conditioned onthe final completion of the building or buildings within a period notto exceed one (1) year from the date of the execution of the lease,unavoidable delays excepted.
(b) In the case of a lease for which a school corporation:
(1) after June 30, 2008, makes a preliminary determination asdescribed in IC 6-1.1-20-3.1 or IC 6-1.1-20-3.5 or a decision asdescribed in IC 6-1.1-20-5; or
(2) in the case of a lease not subject to IC 6-1.1-20-3.1,IC 6-1.1-20-3.5, or IC 6-1.1-20-5, adopts a resolution orordinance authorizing the lease after June 30, 2008;
the approval of the department of local government finance is notrequired.
As added by P.L.2-2006, SEC.170. Amended by P.L.146-2008,SEC.518.
IC 20-47-3-9
Required public hearing; notice of lease terms
Sec. 9. (a) After the lessor corporation and the school corporationor corporations have agreed upon the terms and conditions of a leaseproposed to be entered into under this chapter, and before the finalexecution of the lease, a notice shall be given by publication to allpersons interested of a hearing or joint hearing to be held before thegoverning body or governing bodies of the school corporationsauthorized to approve the lease. The hearing must be not earlier than:
(1) ten (10) days afer publication of the notice, if newconstruction is proposed; or
(2) thirty (30) days after publication of the notice, ifimprovement or expansion is proposed.
(b) The notice required by subsection (a) must:
(1) be published one (1) time in:
(A) a newspaper of general circulation printed in the Englishlanguage in the school corporation;
(B) a newspaper described in clause (A) in each school
corporation if the proposed lease is a joint lease; or
(C) if no such paper is published in the school corporation,in any newspaper of general circulation published in thecounty;
(2) name the date, time, and place of the hearing; and
(3) set forth a brief summary of the principal terms of the leaseagreed upon, including the:
(A) location of the property to be leased;
(B) name of the proposed lessor corporation;
(C) character of the property to be leased;
(D) rental to be paid; and
(E) number of years the lease is to be in effect.
The cost of publication of the notice shall be paid by the lessorcorporation.
(c) The proposed lease, drawings, plans, specifications, andestimates for the school building or buildings must be available forinspection by the public during the ten (10) day or thirty (30) dayperiod described in subsection (a) and at the hearing under section 10of this chapter.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-10
Conduct of public hearing; lease authorization procedures
Sec. 10. (a) At the hearing, all interested persons have a right tobe heard upon the necessity for the execution of the proposed leaseand whether the rental to be paid to the lessor corporation under theproposed lease is a fair and reasonable rental for the proposedbuilding. The hearing may be adjourned to a later date or dates.
(b) Not later than thirty (30) days following the termination of thehearing, the governing body or bodies of the school corporation orcorporations may by a majority vote of all members of the governingbody or bodies:
(1) authorize the execution of the lease as originally agreedupon; or
(2) make modifications to the proposed lease as agreed uponwith the lessor corporation.
However, the lease rentals as set out in the published notice may notbe increased.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-11
Notice of signing of lease; appeal
Sec. 11. (a) If the execution of the lease as originally agreed uponor as modified by agreement is authorized by the governing body orbodies of the school corporation or corporations, the governing bodyshall give notice of the signing of the lease by publication one (1)time in:
(1) a newspaper of general circulation printed in the Englishlanguage in the school corporation;
(2) a newspaper described in subdivision (1) in each school
corporation if the proposed lease is a joint lease; or
(3) if no such newspaper is published in the school corporation,in any newspaper of general circulation published in the county.
(b) This subsection does not apply to leases for which a schoolcorporation after June 30, 2008, makes a preliminary determinationas described in IC 6-1.1-20-3.1 or IC 6-1.1-20-3.5 or a decision asdescribed in IC 6-1.1-20-5, or, in the case of leases not subject toIC 6-1.1-20-3.1, IC 6-1.1-20-3.5, or IC 6-1.1-20-5, adopts aresolution or ordinance authorizing the lease after June 30, 2008.Within thirty (30) days after the publication of notice undersubsection (a), ten (10) or more taxpayers in the school corporationor corporations who:
(1) will be affected by the proposed lease; and
(2) are of the opinion that:
(A) no necessity exists for the execution of the lease; or
(B) the proposed rental provided for in the lease is not a fairand reasonable rental;
may file a petition in the office of the county auditor of the county inwhich the school corporation or corporations are located. Thepetition must set forth the taxpayers' objections to the lease and factsshowing that the execution of the lease is unnecessary or unwise, orthat the lease rental is not fair and reasonable, as the case may be.
(c) Upon the filing of a petition under subsection (b), the countyauditor shall immediately certify a copy of the petition and any otherdata that is necessary to present the questions involved to thedepartment of local government finance. Upon receipt of the certifiedpetition and data, if any, the department of local government financeshall fix a date, time, and place for the hearing of the matter, whichmay not be less than five (5) nor more than thirty (30) days afterreceipt of the petition and data, if any. The department of localgovernment finance shall:
(1) conduct the hearing in the school corporation orcorporations or in the county where the school corporation orcorporations are located; and
(2) give notice of the hearing to the members of the governingbody or bodies of the school corporation or corporations and tothe first ten (10) taxpayer petitioners upon the petition by aletter signed by the commissioner or deputy commissioner ofthe department of local government finance, and enclosed withfull prepaid postage addressed to the taxpayer petitioners attheir usual place of residence, at least five (5) days before thehearing.
The decision of the department of local government finance on theappeal, upon the necessity for the execution of the lease, and as towhether the rental is fair and reasonable, is final.
As added by P.L.2-2006, SEC.170. Amended by P.L.146-2008,SEC.519.
IC 20-47-3-12
Limitation on time to file appeal Sec. 12. An action to contest the validity of the lease or to enjointhe performance of any of the terms and conditions of the lease maynot be instituted at any time later than:
(1) thirty (30) days after publication of notice of the executionof the lease by the governing body or bodies of the schoolcorporation or corporations; or
(2) if an appeal is allowed under section 11 of this chapter andhas been taken to the department of local government finance,thirty (30) days after the decision of the department of localgovernment finance.
As added by P.L.2-2006, SEC.170. Amended by P.L.146-2008,SEC.520.
IC 20-47-3-13
Acquisition of land for building site; sale to lessor corporation
Sec. 13. The lessor corporation shall acquire, own, and hold in feesimple the land on which a school building or buildings are to beerected under this chapter. A school corporation that proposes tolease a school building, either alone or jointly with another schoolcorporation, and owns the land on which it desires to be erected thebuilding or buildings may sell and transfer that land to the lessorcorporation in fee simple, subject to the following conditions:
(1) Before the sale may take place, the governing body of theschool corporation must file a petition with the circuit court ofthe county in which the school corporation is located,requesting the appointment of:
(A) one (1) disinterested freeholder of the school corporationas an appraiser; and
(B) two (2) disinterested appraisers licensed underIC 25-34.1;
who are residents of Indiana to determine the fair market valueof the land. One (1) of the appraisers described in clause (B)must reside not more than fifty (50) miles from the land.
(2) Upon appointment, the three (3) appraisers shall proceed tofix the fair market value of the land and shall report the amountfixed to the circuit court within two (2) weeks after theappointment.
(3) The school corporation may sell the land to the lessorcorporation for an amount not less than the amount fixed by thethree (3) appraisers as the fair market value, which shall be paidin cash upon delivery of the deed by the school corporation tothe lessor corporation. However, if the land was acquired by theschool corporation within three (3) years immediately precedingthe date of the filing of the petition with the circuit court, theland may not be sold for an amount less than the amount paidby the school corporation for the land.
As added by P.L.2-2006, SEC.170. Amended by P.L.113-2006,SEC.16.
IC 20-47-3-14 Required levy; payment of obligations
Sec. 14. A school corporation that executes a lease under thischapter shall annually appropriate and pay out of the debt servicefund an amount sufficient to pay the lease rental required under thelease. The appropriation and rate are reviewable by other bodiesvested by law with the authority to determine that the levy issufficient to raise the amount required to meet the rental requiredunder the lease.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-15
Exemption of lessor corporation property from taxes
Sec. 15. School buildings leased by a lessor corporation enteringinto a lease with a school corporation or corporations under thischapter are exempt from all state, county, and other taxes. However,the rental payments to a lessor corporation under the terms of sucha lease are subject to all applicable taxes under Indiana law.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-16
Statutory construction; supplemental legislation; limitation ofapplication of other laws
Sec. 16. This chapter shall be construed as being supplemental toall other laws covering the acquisition, use, and maintenance ofschool buildings by school corporations. However, as to schoolbuildings constructed or leased under this chapter, it is not necessaryto comply with the provisions of other laws concerning theacquisition, use, and maintenance of school buildings by schoolcorporations except as specifically required in this chapter.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-17
Lessor corporation; sale of bonds and securities; mortgage bonds
Sec. 17. (a) A corporation qualifying as a lessor corporation underthis chapter may issue and sell bonds and other securities. Mortgagebonds issued by a lessor corporation that are a first lien on the leasedproperty are legal and proper investments for state banks and trustcompanies, insurance companies, and fiduciaries.
(b) Bonds and other securities issued by a lessor corporationunder this section need not be sold under IC 5-1-11, and approval ofthe securities commissioner is not required in connection with theissuance and sale of the bonds.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-18
Termination of lease; disposition of surplus revenues
Sec. 18. (a) Upon the termination of a lease entered into under thischapter, the lessor corporation shall return to the school corporationany money held by the lessor corporation that exceeds the amountneeded to retire bonds issued under this chapter and to dissolve the
lessor corporation.
(b) A school corporation shall deposit the money received undersubsection (a) in its debt service fund or its capital projects fund.
As added by P.L.2-2006, SEC.170.