CHAPTER 10. LEASING AND LEASE-PURCHASING STRUCTURES
IC 36-1-10
Chapter 10. Leasing and Lease-Purchasing Structures
IC 36-1-10-1
Application of chapter
Sec. 1. (a) Except as provided in subsection (b), this chapterapplies to:
(1) political subdivisions and agencies of political subdivisionsthat determine to acquire structures, transportation projects, orsystems by lease or lease-purchase;
(2) a convention and visitor bureau established under IC 6-9-2that determines to acquire a visitor center by lease or leasepurchase; and
(3) a convention and visitor commission established byIC 6-9-11 that determines to acquire a sports and recreationfacility by lease or lease purchase.
(b) This chapter does not apply to:
(1) the lease of library buildings under IC 36-12-10, unless thelibrary board of the public library adopts a resolution to proceedunder this chapter instead of IC 36-12-10;
(2) the lease of school buildings under IC 20-47;
(3) a hospital established and operated under IC 16-22 orIC 16-23;
(4) a health and hospital corporation established and operatedunder IC 16-22-8; or
(5) boards of aviation commissioners established underIC 8-22-2.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.104-1983,SEC.3; P.L.54-1983, SEC.26; P.L.182-1985, SEC.14; P.L.130-1987,SEC.4; P.L.37-1988, SEC.9; P.L.343-1989(ss), SEC.12; P.L.2-1993,SEC.196; P.L.46-1998, SEC.9; P.L.11-2001, SEC.7; P.L.1-2005,SEC.232; P.L.2-2006, SEC.186; P.L.194-2007, SEC.10.
IC 36-1-10-2
Definitions
Sec. 2. As used in this chapter:
"Leasing agent" means the board or officer of a politicalsubdivision or agency with the power to lease structures.
"Parking facility" refers to a parking facility as defined inIC 36-9-1.
"Structure" means:
(1) a building used in connection with the operation of apolitical subdivision; or
(2) a parking facility.
The term includes the site, the equipment, and appurtenances to thebuilding or parking facility.
"System" means:
(1) a computer (as defined in IC 36-8-15-4);
(2) a communications system (as defined in IC 36-8-15-3(1));or (3) mobile or remote equipment that is coordinated by or linkedwith a computer or communications system.
"Transportation project" means a road or highway project jointlyundertaken by the Indiana department of transportation and anycounty through which a toll road project under IC 8-15-2 passes. Atransportation project must be located within an area described inIC 8-15-2-1(a)(3) or IC 8-15-2-1(a)(4).
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.37-1988,SEC.10; P.L.343-1989(ss), SEC.13; P.L.18-1990, SEC.289.
IC 36-1-10-3
Persons entitled to lease property to political subdivision or agency
Sec. 3. Any of the following persons may lease property to apolitical subdivision or agency under this chapter:
(1) A profit or not-for-profit corporation organized underIndiana law or admitted to do business in Indiana.
(2) A partnership, association, limited liability company, orfirm.
(3) An individual.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.8-1993,SEC.517.
IC 36-1-10-4
Repealed
(Repealed by P.L.1-1990, SEC.356.)
IC 36-1-10-4.1
Leasing agents; compliance with chapter; procedure in leasewithout option to purchase
Sec. 4.1. (a) A leasing agent who wants to lease a structure ortransportation project must comply with this chapter. A leasing agentwho wants to lease a system must comply with this chapter orIC 5-22.
(b) A leasing agent who enters into a lease under this sectionwithout an option to purchase must follow the procedure prescribedby section 5 of this chapter.
As added by P.L.1-1990, SEC.357. Amended by P.L.49-1997,SEC.68.
IC 36-1-10-5
Leases without option to purchase; procedure
Sec. 5. Notwithstanding sections 6, 12, 16, and 17 of this chapter,the following procedure shall be followed whenever a lease does notcontain an option to purchase:
(1) The term of the lease may not be longer than ten (10) years;however, a lease may be for a longer term if the lease isapproved by the department of local government finance.
(2) The lease must provide that the lease is subject to annualappropriation by the appropriate fiscal body.
(3) The leasing agent must have a copy of the lease filed and
kept in a place available for public inspection.
A leasing agent may lease part of a structure.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.131-1984,SEC.4; P.L.330-1985, SEC.1; P.L.90-2002, SEC.462.
IC 36-1-10-6
Limitation on term of lease
Sec. 6. A leasing agent may not enter into a lease for a period ofmore than fifty (50) years.
As added by Acts 1981, P.L.57, SEC.36.
IC 36-1-10-7
Lease of structures, systems, or transportation projects; petition;need
Sec. 7. A leasing agent may not lease a structure, transportationproject, or system unless:
(1) the leasing agent receives a petition signed by fifty (50) ormore taxpayers of the political subdivision or agency; and
(2) the fiscal body of the political subdivision determines, afterinvestigation, that the structure, transportation project, orsystem is needed.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.330-1985,SEC.2; P.L.37-1988, SEC.12; P.L.343-1989(ss), SEC.15.
IC 36-1-10-8
Joint leasing
Sec. 8. (a) If two (2) or more leasing agents propose to enter intoa lease jointly, joint meetings of the leasing agents may be held.However, joint leasing must be approved by each leasing agent'sfiscal body.
(b) A lease executed by two (2) or more leasing agents as jointlessees must set out the amount of the total rental to be paid by each.A lessee has no right of occupancy or use of the transportationproject or system until the total rental is paid as stipulated by thecontract.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.37-1988,SEC.13; P.L.343-1989(ss), SEC.16.
IC 36-1-10-9
Leases; terms and conditions; options to renew or purchase;exercise of option to purchase
Sec. 9. (a) The lease may provide that the leasing agent has anoption to renew the lease for a further term or to purchase theproperty. The terms and conditions of the purchase must be specifiedin the lease.
(b) Whenever the leasing agent exercises an option to purchasethe property, then the political subdivision or agency may issue andsell bonds for the purpose of procuring money to pay the purchaseprice. If the leasing agent does not exercise an option to purchase theproperty, then upon the expiration of the lease and upon full
performance by the leasing agent, the property becomes the absoluteproperty of the political subdivision or agency. The lessor shallconvey title to the political subdivision or agency.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.74-1987,SEC.18.
IC 36-1-10-10
Plans, specifications, and estimates for structures, systems, andtransportation projects
Sec. 10. (a) A lessor proposing to build, acquire, improve,remodel, or expand a structure for lease to a political subdivision oragency shall submit plans, specifications, and estimates to the leasingagent before executing a lease. The leasing agent shall submit theplans and specifications to the division of fire and building safety orthe building law compliance officer, and other agencies designatedby law.
(b) A lessor proposing to acquire a transportation project orsystem may enter into a lease without submitting plans, designs, orspecifications to any political subdivision or agency. However,before the execution of the lease, the lessor must submit to the lesseeor lessees an estimate of the cost and a description of thetransportation project or system.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.8-1984,SEC.122; P.L.37-1988, SEC.14; P.L.188-1988, SEC.1;P.L.343-1989(ss), SEC.17; P.L.1-2006, SEC.552.
IC 36-1-10-11
Property held in fee simple; sale procedure
Sec. 11. (a) The lessor must hold in fee simple land on which astructure is to be erected, acquired, improved, remodeled, orexpanded. The lessor must hold in fee simple a structure that is to beacquired, improved, remodeled, or expanded.
(b) The leasing agent may sell land or a structure owned by thepolitical subdivision or agency to the lessor under the followingprocedure if the political subdivision wants to lease a structureproposed to be built, acquired, improved, remodeled, or expanded onthat land:
(1) The leasing agent shall appoint two (2) appraisers toappraise the fair market value of the land or structure.
(2) The appraisers must be professionally engaged in makingappraisals or licensed under IC 25-34.1.
(3) The appraisers shall return their appraisal to the leasingagent within two (2) weeks after the date of their appointment.
(4) The leasing agent shall sell the land or structure for not lessthan the appraised value. However, if the political subdivisionor agency acquired the land or structure during the three (3)years preceding the date of the appointment of the appraisers,the land or structure may not be sold for an amount less than theamount paid by the political subdivision or agency for the landor structure. (5) The leasing agent shall be paid in cash upon the agent'sdelivery of the deed.
(6) The leasing agent is not required to comply with any otherlaw relating to the sale of land or structures by a politicalsubdivision.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.188-1988,SEC.2.
IC 36-1-10-12
Lease in anticipation of acquisition or construction of structure,system, or transportation project
Sec. 12. (a) The leasing agent may, in anticipation of theacquisition of a site on which a structure is to be constructed,acquired, improved, remodeled, or expanded, enter into a contract tolease a structure from the lessor before the actual acquisition of thesite and the construction, acquisition, improvement, remodeling, orexpansion of the structure. The lease may not provide for payment ofany rental by the leasing agent if a new structure is to be constructeduntil it is complete and ready for occupancy. However, the lease mayprovide for payment of lease rental for any part of the structure to beused by the political subdivision or its agency for any period duringimprovement, remodeling, or expansion of the structure.
(b) A leasing agent may, in anticipation of the acquisition of asystem, enter into a lease with the lessor before the completion of theacquisition. A leasing agent may, in anticipation of the acquisition orconstruction of a transportation project, enter into a lease with thelessor before the completion of construction or acquisition. Such alease must require the payment of lease rental by the lessee or lesseesto begin when acquisition of the system, or a discrete, functional partof the system, or acquisition or construction of the transportationproject, has been completed and is ready for use, but not before thattime. An opinion or report of an independent expert that the system,or a discrete, functional part of the system, or a transportation projectis complete and ready for use is conclusive and binding on all partiesand on all taxpayers of an eligible entity.
(c) The lease may provide that the leasing agent shall pay all taxesand assessments, maintain insurance for the benefit of the lessor, andassume all responsibilities for repair and alterations during the termof the lease.
(d) The leasing agent may require the lessor, as a condition ofentering into a lease, to furnish a bond guaranteeing the lease in anamount specified by the leasing agent.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.74-1987,SEC.19; P.L.37-1988, SEC.15; P.L.188-1988, SEC.3;P.L.343-1989(ss), SEC.18.
IC 36-1-10-13
Hearing; procedure; execution of lease
Sec. 13. (a) After the leasing agent and the lessor have agreedupon the terms and conditions of the lease but before the execution
of the lease, the leasing agent shall publish notice, in accordancewith IC 5-3-1, of a public hearing to be held before the leasing agent.The cost of the publication of the notice shall be paid by the lessor.Notice of the hearing must be given at least ten (10) days before thehearing is held.
(b) The notice must state the date, place, and hour of the hearingand provide a summary of the principal terms of the lease.Additionally, the notice must contain the name of the proposedlessor, the location and character of the structure, transportationproject, or system to be leased, the rental to be paid, and the numberof years the lease is to be in effect.
(c) The proposed lease, drawings, plans, specifications, andestimates for the structure, or description and cost estimate of thetransportation project or system, are open to public inspection duringthe ten (10) day period and at the hearing.
(d) All persons are entitled to be heard at the hearing as towhether the execution of the lease is necessary and whether therental is fair and reasonable for the proposed structure or system.After the hearing, which may be adjourned from time to time, theleasing agent may modify, confirm, or rescind the proposed lease, butthe rental as set out in the published notice may not be increased. Theleasing agent may rely on the testimony of independent experts as tothe fairness and reasonableness of the lease.
(e) If the execution of the lease as originally agreed upon or asmodified is authorized by the leasing agent, the leasing agent shallgive notice of the execution of the lease by publication in accordancewith IC 5-3-1.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.74-1987,SEC.20; P.L.37-1988, SEC.16; P.L.343-1989(ss), SEC.19;P.L.25-1995, SEC.82.
IC 36-1-10-14
Disagreement with execution of lease; petition; hearing; decision
Sec. 14. (a) If lease rentals are payable, in whole or in part, fromproperty taxes, ten (10) or more taxpayers in the political subdivisionwho disagree with the execution of a lease under this chapter mayfile a petition in the office of the county auditor of the county inwhich the leasing agent is located, within thirty (30) days afterpublication of notice of the execution of the lease. The petition muststate the taxpayer's objections and the reasons why the lease isunnecessary or unwise.
(b) The county auditor shall immediately certify a copy of thepetition, together with other data necessary to present the questionsinvolved, to the department of local government finance. Uponreceipt of the certified petition and other data, the department oflocal government finance shall fix a time and place for the hearing ofthe matter. The hearing shall be held not less than five (5) nor morethan thirty (30) days after the receipt of the certified documents.
(c) The hearing shall be held in the political subdivision where thepetition arose. (d) Notice of the hearing shall be given by the department of localgovernment finance to the leasing agent and to the first ten (10)taxpayer petitioners listed on the petition by a letter signed by thecommissioner or deputy commissioner of the department. The lettershall be sent to the first ten (10) taxpayer petitioners at their usualplace of residence at least five (5) days before the date of the hearing.The decision by the department of local government finance on theobjections presented in the petition is final.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.37-1988,SEC.17; P.L.90-2002, SEC.463.
IC 36-1-10-15
Actions to contest validity of lease or to enjoin performance underlease
Sec. 15. An action to contest the validity of a lease under thischapter, or to enjoin performance under the lease, must be broughtwithin thirty (30) days after publication of notice of the execution ofthe lease by the leasing agent or, if an appeal has been taken to thedepartment of local government finance, then within thirty (30) daysafter the decision of the department.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.90-2002,SEC.464.
IC 36-1-10-16
Conveyance of structure to lessor and lease back; purchase price;option to purchase
Sec. 16. (a) A political subdivision or agency owning a structurewith respect to which its revenue bonds are outstanding may, torefinance those bonds, convey the structure to the lessor in fee simpleand lease it from the lessor in accordance with this chapter, subjectto the approval of the department of local government finance.
(b) The price of a purchase under this section must be at least thesum of:
(1) the principal amount of the outstanding revenue bonds;
(2) interest on those bonds to the maturity date of bonds notsubject to redemption before maturity and to the firstredemption date of bonds subject to redemption beforematurity; and
(3) the redemption premiums on all bonds subject to redemptionbefore maturity.
An amount not less than this sum shall be deposited in trust for thepayment of the outstanding revenue bonds in a manner consistentwith the ordinance or trust agreement under which the bonds wereissued. The money deposited in the trust, and investment incomefrom it, not required for the payment of the bonds, shall be appliedto the payment of the obligations issued by the lessor for theacquisition of the structure, and to a corresponding reduction ofrentals for the leasing agent.
(c) Each lease entered into under this section must include anoption permitting the political subdivision or agency to purchase the
structure at a price not exceeding the amount required to retire alloutstanding obligations issued by the lessor to acquire the propertycovered by the lease. The lease and sale of a parking facility underthis section does not preclude the lease of air rights.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.90-2002,SEC.465.
IC 36-1-10-17
Annual appropriation and tax levy
Sec. 17. (a) A political subdivision or agency that executes a leaseunder this chapter shall, subject to subsection (d), make an annualappropriation and tax levy at a rate to provide sufficient money topay the rental payable from property taxes stipulated in the lease.
(b) The appropriation and levy are subject to review by otherbodies that have the authority to ascertain that the levy is sufficientto raise the amount required to pay the rental payable from propertytaxes under the lease.
(c) The appropriation and levy may be reduced in any year to theextent other money or any reimbursement under IC 36-7-14-39 arepledged or available for the payment of the lease rental.
(d) A political subdivision or agency that executes a lease for atransportation project may only levy a tax under this section for anamount necessary to restore debt service reserve funds and may notlevy a tax for lease rental payments.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.37-1988,SEC.18; P.L.343-1989(ss), SEC.20.
IC 36-1-10-18
Tax exemption of leased structures, systems, and transportationprojects; taxation of rental paid lessor
Sec. 18. Structures, transportation projects, and systems leased bya lessor contracting with the political subdivision or agency underthis chapter are exempt from all state, county, and other taxes.However, the rental paid to a lessor under the terms of a lease issubject to taxation.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.37-1988,SEC.19; P.L.343-1989(ss), SEC.21.
IC 36-1-10-19
Assignment or conveyance of lease; conveyance of structure,system, or transportation project
Sec. 19. A lessor may assign or convey a lease entered into underthis chapter to any other person as set forth in the lease. A lessor mayconvey the structures, transportation projects, or system to anyperson. However, an assignment or conveyance under this sectiondoes not affect the terms and conditions of the lease.
As added by Acts 1981, P.L.57, SEC.36. Amended by P.L.37-1988,SEC.20; P.L.343-1989(ss), SEC.22.
IC 36-1-10-20 Repealed
(Repealed by P.L.25-1995, SEC.94.)
IC 36-1-10-20.1
Repealed
(Repealed by P.L.25-1995, SEC.94.)
IC 36-1-10-21
Not-for-profit corporations; issuance and sale of bonds and othersecurities
Sec. 21. (a) A not-for-profit corporation qualifying as a lessorcorporation under this chapter may issue and sell bonds and othersecurities. Mortgage bonds issued by a lessor corporation that are afirst lien on the leased property shall be considered legal and properinvestments for state banks and trust companies, insurancecompanies, and fiduciaries.
(b) Bonds issued by a lessor corporation may be sold at a privatesale, a negotiated sale, or a public sale. If bonds are sold at publicsale, they shall be sold pursuant to IC 5-1-11, but the notice of saleshall be published in the manner required for bonds of the county inwhich the leased property is or will be located.
(c) Approval of the securities commissioner is not required inconnection with the issuance and sale of the bonds.
As added by P.L.2-1989, SEC.23.