CHAPTER 10. LEASING OF LIBRARY PROPERTY
IC 36-12-10
Chapter 10. Leasing of Library Property
IC 36-12-10-1
Application of chapter
Sec. 1. This chapter applies to the following public corporations:
(1) A municipal corporation that operates and maintains libraryfacilities.
(2) Any other public corporation, established by statute, thatoperates and maintains library facilities.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-2
Power to lease library buildings; conditions; joint lease contracts
Sec. 2. (a) A public corporation may lease a library building orbuildings for the use of the public corporation or of any joint orconsolidated public corporation of which the public corporation is apart or to which the public corporation contributes, under thefollowing conditions:
(1) A lease may not be entered into for a period of more thanforty (40) years.
(2) Before a lease is entered into, there must first be filed withthe governing authority of the public corporation a petitionsigned by fifty (50) or more resident taxpayers of the publiccorporation.
(3) After investigation, the governing authority must determinethat a need exists for the library building or buildings.
(4) The governing authority must determine that the publiccorporation cannot provide the necessary funds to pay the costor the public corporation's proportionate share of the cost of thelibrary building or buildings required to meet the present needs.
(b) If two (2) or more public corporations propose to enter into alease jointly, joint meetings of the governing authority of thecorporations may be held. Action taken is binding on a publiccorporation only if the action is approved by the public corporation'sgoverning authority. A lease executed by two (2) or more publiccorporations as joint lessees must set out the amount of the totallease rental agreed upon to be paid by each. A lessee is entitled tooccupancy only if the total rental is paid as stipulated in the lease.All rights of joint lessees under the lease must be proportionate to theamount of lease rental paid by each.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-3
Authorized purposes of leases; limitations on profit; disposition ofexcess funds
Sec. 3. (a) A public corporation may enter into a lease under thischapter only with a nonprofit corporation organized under Indianalaw for the sole purpose of:
(1) acquiring real property; (2) building, improving, constructing, or renovating a suitablelibrary building or buildings, including the necessary equipmentand appurtenances;
(3) leasing the library facilities to the public corporation orcorporations; and
(4) collecting the rentals and applying the proceeds from therentals in the manner provided in this chapter.
(b) The lessor corporation shall act entirely without profit to thecorporation and the corporation's officers, directors, and membersbut is entitled to the return of capital actually invested, whichincludes:
(1) incorporation and organization expenses;
(2) financing costs;
(3) carrying charges;
(4) legal, contractors', and architects' fees; and
(5) any other capital cost.
The lessor corporation is also entitled to sums sufficient to payinterest on outstanding securities or loans, and the cost ofmaintaining the corporation's existence and keeping the corporation'sproperty free of encumbrance.
(c) Upon receipt of any amount of lease rental by the lessorcorporation above the amount necessary to meet incidental corporateexpenses and to pay interest on corporate securities or loans, theexcess funds shall be applied to the redemption and cancellation ofthe corporation's outstanding securities or loans as soon as this maybe done.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-4
Provisions of lease
Sec. 4. (a) All contracts of lease must provide that:
(1) the public corporation or corporations have an option torenew the lease for a further term, with like conditions; or
(2) the property covered by the lease may be purchased after six(6) years from the execution of the lease and before theexpiration of the term of the lease, on the date or dates in eachyear that are fixed, at a price equal to the amount required toenable the lessor corporation owning the site to:
(A) liquidate by paying all indebtedness, with accrued andunpaid interest; and
(B) recover the expenses and charges of liquidation.
(b) However, the purchase price prescribed by subsection (a)(2)may not exceed the capital actually invested in the property by thelessor corporation represented by outstanding securities orindebtedness plus the cost of transferring the property and liquidatingthe lessor corporation.
(c) A lease may not provide that any public corporation is underan obligation to purchase the leased library facilities or under anobligation in respect to the creditors, members, or other securityholders of the lessor corporation.As added by P.L.1-2005, SEC.49.
IC 36-12-10-5
Submission of plans and specifications to certain state agencies;approval
Sec. 5. (a) The lessor corporation proposing to provide a librarybuilding or buildings, including necessary equipment andappurtenances, shall submit to the lessee or lessees, before theexecution of a lease, preliminary plans, specifications, and estimatesfor the building or buildings.
(b) The final plans and specifications shall be submitted to thestate department of health, state fire marshal, and any other agenciesthat are designated by law to pass on plans and specifications forlibrary buildings. The final plans and specifications must beapproved by these agencies and the lessee or lessees in writing beforethe construction of the building or buildings.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-6
Authorized provisions of lease; payment of taxes, insurance, andrepairs
Sec. 6. The lease may provide that, as a part of the lease rental forthe library building or buildings, the lessee or lessees shall agree to:
(1) pay all taxes and assessments levied against or on accountof the leased property;
(2) maintain insurance on the property for the benefit of thelessor corporation; and
(3) assume all responsibilities for repair and alterations withregard to the building or buildings during the term of the lease.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-7
Leases in anticipation of completion of building; bond
Sec. 7. (a) The public corporation or corporations may, inanticipation of the acquisition of real property and any necessaryconstruction of a library building or buildings, including thenecessary equipment and appurtenances, enter into a lease with thelessor corporation before actual acquisition of real property and anyconstruction of the building or buildings. However, the lease may notprovide for the payment of lease rental by the lessee or lessees untilthe building or buildings are complete and ready for occupancy, atwhich time the stipulated lease rental payments may begin.
(b) The contractor must be required under the lease to furnish tothe lessor corporation a bond satisfactory to the corporationconditioned upon the final completion of the building or buildingswithin a period that may be provided in the contract.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-8
Notice and hearing on terms and conditions of proposed lease Sec. 8. (a) When the lessor corporation and the public 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, notice of a hearing shall be given bypublication to all interested persons. The hearing shall be held beforethe governing authority, on a day not earlier than ten (10) days afterthe publication of the notice.
(b) The notice of the hearing shall be published one (1) time in anewspaper of general circulation printed in the English language inthe district of the public corporation or in each public corporationdistrict if the proposed lease is a joint lease. If a newspaper is notpublished in the district, the notice shall be published in anynewspaper of general circulation published in the county. The noticemust name the date, place, and time of the hearing and set forth abrief summary of the principal terms of the lease agreed upon,including:
(1) the location;
(2) the name of the proposed lessor corporation and characterof the property to be leased;
(3) the rental to be paid; and
(4) the number of years the contract is to be in effect.
The proposed lease, drawings, plans, specifications, and estimates forthe library building or buildings must be available for inspection bythe public during the ten (10) day period under subsection (a) and atthe meeting. All interested persons are entitled to be heard at thehearing regarding the necessity for the execution of the lease, andwhether the rental provided for in the lease to be paid to the lessorcorporation is a fair and reasonable rental for the proposed buildingor buildings. The hearing may be adjourned to a later date or dates,and following the hearing, the governing authority may eitherauthorize the execution of the lease as originally agreed upon or maymake modifications that have been agreed upon by the lessorcorporation. The lease rentals as set out in the published notice maynot be increased. The cost of the publication of the notice shall bepaid by the lessor corporation.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-9
Notice of lease signing; appeal to department of local governmentfinance; limitation on actions to contest validity of lease
Sec. 9. (a) If the execution of the lease as originally agreed upon,or as modified by agreement, is authorized by the library board, thelibrary board shall give notice of the signing of the lease bypublication one (1) time in a newspaper of general circulation printedin the English language in the district of the public corporation or ineach public corporation district if the proposed lease is a joint lease.If a newspaper is not published in the district, the notice shall bepublished in any newspaper of general circulation published in thecounty.
(b) Fifty (50) or more taxpayers in the public corporation or
corporations who will be affected by the proposed lease and who areof the opinion that the execution of the lease is not necessary or thatthe proposed rental is not a fair and reasonable rental may file apetition in the office of the county auditor of the county in which thepublic corporation or corporations are located. The petition must befiled not later than thirty (30) days after the publication of notice ofthe execution of the lease and must set forth objections 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, the county auditor shallimmediately certify to the department of local government finance acopy of the petition, together with other data that may be necessaryto present the questions involved. Upon receipt of the certifiedpetition and information, the department of local government financeshall fix a time and place for a hearing of the matter not less than five(5) or more than thirty (30) days after the department's receipt of thepetition and information. The hearing shall be held in the publiccorporation or corporations or in the county where the publiccorporations are located.
(d) Notice of the hearing shall be given by the department of localgovernment finance to the members of the library board and to thefirst ten (10) taxpayer petitioners on the petition by a letter signed bythe department of local government finance. The postage of thenotice shall be prepaid, and the notice shall be addressed to thepersons at their usual place of residence and mailed at least five (5)days before the date of the hearing. The decision of the departmentof local government finance on the appeal regarding the necessity forthe execution of the lease and whether the rental is fair andreasonable is final. A lease may be amended by the parties byfollowing the procedure under this chapter.
(e) An action to contest the validity of the lease or an amendmentto the lease or to enjoin the performance of any of the terms andconditions of the lease must be brought not later than thirty (30) daysafter publication of notice of the execution of the lease or anamendment to the lease by the library board of the public corporationor corporations. If an appeal has been taken to the department oflocal government finance, action must be brought not later than thirty(30) days after the decision of the department.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-10
Title to real property; sale; procedure
Sec. 10. (a) The lessor corporation shall hold in fee simple the realproperty on which the library building or buildings exists or will beconstructed. A public corporation or corporations proposing to leasethe library building or buildings, either alone or jointly with anotherpublic corporation that owns the property, may sell the property tothe lessor corporation in fee simple.
(b) Before a sale under this section may take place, the governingauthority of the public corporation shall file a petition with the
circuit court of the county in which the public corporation is locatedrequesting the appointment of:
(1) one (1) disinterested freeholder of the public corporation asan appraiser; and
(2) two (2) disinterested appraisers licensed under IC 25-34.1;
who are residents of Indiana to determine the fair market value of thereal property. One (1) of the appraisers described under subdivision(2) must reside not more than fifty (50) miles from the property.Upon their appointment, the three (3) appraisers shall fix the fairmarket value of the real property and report this amount to the circuitcourt not later than two (2) weeks from the date of their appointment.The public corporation may then sell the real property to the lessorcorporation for an amount not less than the amount fixed as the fairmarket value by the appraisers. The amount shall be paid in cashupon delivery of the deed by the public corporation to the lessorcorporation.
As added by P.L.1-2005, SEC.49. Amended by P.L.113-2006,SEC.24.
IC 36-12-10-11
Authority of lessor corporation to issue stocks, bonds, and othersecurities; sale procedure
Sec. 11. (a) A corporation qualifying as a lessor corporation underthis chapter may, in furtherance of the corporation's purposes, issueand sell bonds and other securities. Mortgage bonds issued by alessor corporation that are a first lien on the leased property are legaland proper investments for state banks and trust companies,insurance companies, and fiduciaries. The bonds may be callable,with or without premiums, with accrued and unpaid interest uponnotice provided in the mortgage indenture.
(b) All bonds and other securities issued by the lessor corporationmust be advertised and sold in accordance with IC 5-1-11 at anyinterest rate.
(c) The approval of the securities division of the secretary of stateis not required in connection with the issuance and sale of bonds orother securities of a public corporation.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-12
General obligation bonds
Sec. 12. A public corporation may issue the corporation's generalobligation bonds to procure funds to pay the cost of acquisition ofreal property. The bonds must be authorized, issued, and sold inaccordance with IC 6-1.1-20.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-13
Tax levy to pay lease rentals
Sec. 13. A public corporation that executes a lease under thischapter shall annually levy a special tax, in addition to other taxes
authorized by law, sufficient to produce each year the necessaryfunds with which to pay the lease rental stipulated to be paid by thepublic corporation under the lease. A levy under this section shall bereviewed in accordance with IC 6-1.1-17. The first tax levy shall bemade at the first annual tax levy period following the date of theexecution of the lease. The first annual levy must be sufficient to paythe estimated amount of the first annual lease rental payment to bemade under the lease.
As added by P.L.1-2005, SEC.49.
IC 36-12-10-14
Tax exemptions
Sec. 14. All property owned by a lessor corporation contractingwith a public corporation or corporations under this chapter and allstock and other securities, including the interest or dividends issuedby a lessor corporation, are exempt from all state, county, and othertaxes, excluding the financial institutions tax and the inheritancetaxes.
As added by P.L.1-2005, SEC.49.