CHAPTER 4. FINANCING; ISSUANCE OF BONDS; LEASES
IC 36-7.6-4
Chapter 4. Financing; Issuance of Bonds; Leases
IC 36-7.6-4-1
Development authority fund; accounts; debt service
Sec. 1. (a) A development board shall establish and administer adevelopment authority fund.
(b) A development authority fund consists of the following:
(1) Amounts transferred under section 2 of this chapter by eachcounty and municipality that is a member of the developmentauthority.
(2) Appropriations, grants, or other distributions made to thefund by the state.
(3) Money received from the federal government.
(4) Gifts, contributions, donations, and private grants made tothe fund.
(c) On the date a development authority issues bonds for anypurpose under this article, which are secured in whole or in part bythe development authority fund, the development board shallestablish and administer two (2) accounts within the developmentauthority fund. The accounts must be the general account and thelease rental account. After the accounts are established, all moneytransferred to the development authority fund under subsection (b)(1)shall be deposited in the lease rental account and used only for thepayment of or to secure the payment of obligations of an eligiblepolitical subdivision under a lease entered into by the eligiblepolitical subdivision and the development authority under thischapter. However, any money deposited in the lease rental accountand not used for the purposes of this subsection shall be returned bythe secretary-treasurer of the development authority to the unit thatcontributed the money to the development authority.
(d) Notwithstanding subsection (c), if the amount of all moneytransferred to a development authority fund under subsection (b)(1)for deposit in the lease rental account in any one (1) calendar year isgreater than an amount equal to the product of:
(1) one and twenty-five hundredths (1.25); multiplied by
(2) the total of the highest annual debt service on any bondsthen outstanding to their final maturity date, which have beenissued under this article and are not secured by a lease, plus thehighest annual lease payments on any leases to their finalmaturity, which are then in effect under this article;
then all or a part of the excess may instead be deposited in thegeneral account.
(e) All other money and revenue of a development authority maybe deposited in the general account or the lease rental account at thediscretion of the development board. Money on deposit in the leaserental account may be used only to make rental payments on leasesentered into by the development authority under this article. Moneyon deposit in the general account may be used for any purposeauthorized by this article. (f) A development authority fund shall be administered by thedevelopment authority that established the development authorityfund.
(g) Money in a development authority fund shall be used by thedevelopment authority to carry out this article and does not revert toany other fund.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-2
Revenue transfers to fund
Sec. 2. (a) Beginning January 1 of the year following the year inwhich a development authority is established, the fiscal officer ofeach county and each municipality that is a member of thedevelopment authority shall transfer the amount determined undersubsection (b) to the development authority for deposit in thedevelopment authority fund.
(b) The amount of the transfer required each year by subsection(a) from each county and each municipality is equal to the amountthat would be distributed to the county or the municipality ascertified distributions of county economic development income taxrevenue raised from a county economic development income tax rateof five-hundredths of one percent (0.05%) in the county.
(c) Notwithstanding subsection (b), if the additional countyeconomic development income tax under IC 6-3.5-7-28 is in effectin a county, the obligations of the county and each municipality inthe county under this section are satisfied by the transfer to thedevelopment fund of all county economic development income taxrevenue derived from the additional tax and deposited in the countyregional development authority fund.
(d) The following apply to the transfers required by this section:
(1) The transfers shall be made without appropriation by thefiscal body of the county or the fiscal body of the municipality.
(2) Except as provided in subdivision (3), the fiscal officer ofeach county and each municipality that is a member of thedevelopment authority shall transfer twenty-five percent (25%)of the total transfers due for the year before the last businessday of January, April, July, and October of each year.
(3) County economic development income tax revenue derivedfrom the additional county economic development income taxunder IC 6-3.5-7-28 must be transferred to the developmentfund not more than thirty (30) days after being deposited in thecounty regional development fund.
(4) This subdivision does not apply to a county in which theadditional county economic development income tax underIC 6-3.5-7-28 has been imposed or to any municipality in thecounty. The transfers required by this section may be madefrom any local revenue (other than property tax revenue) of thecounty or municipality, including excise tax revenue, incometax revenue, local option tax revenue, riverboat tax revenue,distributions, incentive payments, or money deposited in the
county's or municipality's local major moves construction fundunder IC 8-14-16.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-3
Bond issues
Sec. 3. (a) Subject to subsection (h), a development authority mayissue bonds for the purpose of obtaining money to pay the cost of:
(1) acquiring real or personal property, including existingcapital improvements;
(2) acquiring, constructing, improving, reconstructing, orrenovating one (1) or more projects; or
(3) funding or refunding bonds issued under this chapter,IC 8-5-15, IC 8-22-3, IC 36-9-3, or prior law.
(b) The bonds are payable solely from:
(1) the lease rentals from the lease of the projects for which thebonds were issued, insurance proceeds, and any other fundspledged or available; and
(2) except as otherwise provided by law, revenue received bythe development authority and amounts deposited in thedevelopment authority fund.
(c) The bonds must be authorized by a resolution of thedevelopment board of the development authority that issues thebonds.
(d) The terms and form of the bonds must either be set out in theresolution or in a form of trust indenture approved by the resolution.
(e) The bonds must mature within forty (40) years.
(f) A development board shall sell the bonds only to the Indianabond bank established by IC 5-1.5-2-1 upon the terms determined bythe development board and the Indiana bond bank.
(g) All money received from any bonds issued under this chaptershall be applied solely to the payment of the cost of acquiring,constructing, improving, reconstructing, or renovating one (1) ormore projects, or the cost of refunding or refinancing outstandingbonds, for which the bonds are issued. The cost may include:
(1) planning and development of equipment or a facility and allbuildings, facilities, structures, equipment, and improvementsrelated to the facility;
(2) acquisition of a site and clearing and preparing the site forconstruction;
(3) equipment, facilities, structures, and improvements that arenecessary or desirable to make the project suitable for use andoperations;
(4) architectural, engineering, consultant, and attorney's fees;
(5) incidental expenses in connection with the issuance and saleof bonds;
(6) reserves for principal and interest;
(7) interest during construction;
(8) financial advisory fees;
(9) insurance during construction; (10) municipal bond insurance, debt service reserve insurance,letters of credit, or other credit enhancement; and
(11) in the case of refunding or refinancing, payment of theprincipal of, redemption premiums (if any) for, and interest onthe bonds being refunded or refinanced.
(h) A development authority may not issue bonds under thisarticle unless the development authority first finds that each contractfor the construction of a facility and all buildings, facilities,structures, and improvements related to that facility to be financed inwhole or in part through the issuance of the bonds requires paymentof the common construction wage required by IC 5-16-7.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-4
Bonding; complete authority
Sec. 4. This chapter contains full and complete authority for theissuance of bonds. No law, procedure, proceedings, publications,notices, consents, approvals, orders, or acts by a development boardor any other officer, department, agency, or instrumentality of thestate or of any political subdivision is required to issue any bonds,except as prescribed in this article.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-5
Bonding; security; trust indenture
Sec. 5. (a) A development authority may secure bonds issuedunder this chapter by a trust indenture between the developmentauthority and a corporate trustee, which may be any trust companyor national or state bank in Indiana that has trust powers.
(b) The trust indenture may:
(1) pledge or assign revenue received by the developmentauthority, amounts deposited in the development authority fund,and lease rentals, receipts, and income from leased projects, butmay not mortgage land or projects;
(2) contain reasonable and proper provisions for protecting andenforcing the rights and remedies of the bondholders, includingcovenants setting forth the duties of the development authorityand development board;
(3) set forth the rights and remedies of bondholders andtrustees; and
(4) restrict the individual right of action of bondholders.
(c) Any pledge or assignment made by the development authorityunder this section is valid and binding in accordance withIC 5-1-14-4 from the time that the pledge or assignment is made,against all persons whether they have notice of the lien or not. Anytrust indenture by which a pledge is created or an assignment madeneed not be filed or recorded. The lien is perfected against thirdparties in accordance with IC 5-1-14-4.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-6
Bond refunding; leases
Sec. 6. (a) Bonds issued under IC 8-5-15, IC 8-22-3, IC 36-9-3, orprior law may be refunded as provided in this section.
(b) An eligible political subdivision may:
(1) lease all or a part of land or a project or projects to adevelopment authority, which may be at a nominal lease rentalwith a lease back to the eligible political subdivision,conditioned upon the development authority assuming bondsissued under IC 8-5-15, IC 8-22-3, IC 36-9-3, or prior law andissuing its bonds to refund those bonds; and
(2) sell all or a part of land or a project or projects to adevelopment authority for a price sufficient to provide for therefunding of those bonds and lease back the land or project orprojects from the development authority.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-7
Leases; findings
Sec. 7. (a) Before a lease may be entered into by an eligiblepolitical subdivision under this chapter, the eligible politicalsubdivision must find that the lease rental provided for is fair andreasonable.
(b) A lease of land or a project from a development authority toan eligible political subdivision:
(1) may not have a term exceeding forty (40) years;
(2) may not require payment of lease rentals for a newlyconstructed project or for improvements to an existing projectuntil the project or improvements to the project have beencompleted and are ready for occupancy or use;
(3) may contain provisions:
(A) allowing the eligible political subdivision to continue tooperate an existing project until completion of theacquisition, improvements, reconstruction, or renovation ofthat project or any other project; and
(B) requiring payment of lease rentals for land, for anexisting project being used, reconstructed, or renovated, orfor any other existing project;
(4) may contain an option to renew the lease for the same or ashorter term on the conditions provided in the lease;
(5) must contain an option for the eligible political subdivisionto purchase the project upon the terms stated in the lease duringthe term of the lease for a price equal to the amount required topay all indebtedness incurred on account of the project,including indebtedness incurred for the refunding of thatindebtedness;
(6) may be entered into before acquisition or construction of aproject;
(7) may provide that the eligible political subdivision shallagree to: (A) pay any taxes and assessments on the project;
(B) maintain insurance on the project for the benefit of thedevelopment authority;
(C) assume responsibility for utilities, repairs, alterations,and any costs of operation; and
(D) pay a deposit or series of deposits to the developmentauthority from any funds available to the eligible politicalsubdivision before the commencement of the lease to securethe performance of the eligible political subdivision'sobligations under the lease; and
(8) must provide that the lease rental payments by the eligiblepolitical subdivision shall be made from the developmentauthority fund established under section 1 of this chapter andmay provide that the lease rental payments by the eligiblepolitical subdivision shall be made from:
(A) net revenues of the project;
(B) any other funds available to the eligible politicalsubdivision; or
(C) both sources described in clauses (A) and (B).
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-8
Leases; complete authority
Sec. 8. This chapter contains full and complete authority forleases between a development authority and an eligible politicalsubdivision. No law, procedure, proceedings, publications, notices,consents, approvals, orders, or acts by a development authority or theeligible political subdivision or any other officer, department,agency, or instrumentality of the state or any political subdivision isrequired to enter into any lease, except as prescribed in this article.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-9
Plan approval
Sec. 9. If the lease provides for a project or improvements to aproject to be constructed by a development authority, the plans andspecifications shall be submitted to and approved by all agenciesdesignated by law to pass on plans and specifications for publicbuildings.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-10
Agreements; common wall; easements; licenses
Sec. 10. A development authority and an eligible politicalsubdivision may enter into common wall (party wall) agreements orother agreements concerning easements or licenses. Theseagreements shall be recorded with the recorder of the county inwhich the project is located.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-11
Leases or sale of projects or land to development authorities
Sec. 11. (a) An eligible political subdivision may lease for anominal lease rental, or sell to a development authority, one (1) ormore projects or parts of a project or land on which a project islocated or is to be constructed.
(b) Any lease of all or a part of a project by an eligible politicalsubdivision to a development authority must be for a term equal tothe term of the lease of that project back to the eligible politicalsubdivision.
(c) An eligible political subdivision may sell property to adevelopment authority for the amount the eligible politicalsubdivision determines to be in the best interest of the eligiblepolitical subdivision. The development authority may pay thatamount from the proceeds of bonds of the development authority.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-12
Option to purchase property
Sec. 12. If an eligible political subdivision exercises its option topurchase leased property, the eligible political subdivision may issueits bonds as authorized by statute.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-13
Tax exemption
Sec. 13. (a) All:
(1) property owned by a development authority;
(2) revenue of a development authority; and
(3) bonds issued by a development authority, the interest on thebonds, the proceeds received by a holder from the sale of bondsto the extent of the holder's cost of acquisition, proceedsreceived upon redemption before maturity, proceeds received atmaturity, and the receipt of interest in proceeds;
are exempt from taxation in Indiana for all purposes except thefinancial institutions tax imposed under IC 6-5.5 or a stateinheritance tax imposed under IC 6-4.1.
(b) All securities issued under this chapter are exempt from theregistration requirements of IC 23-19 and other securities registrationstatutes.
As added by P.L.232-2007, SEC.7. Amended by P.L.1-2009,SEC.169.
IC 36-7.6-4-14
Bonds; legal investments
Sec. 14. Bonds issued under this chapter are legal investments forprivate trust funds and the funds of banks, trust companies, insurancecompanies, building and loan associates, credit unions, savingsbanks, private banks, loan and trust and safe deposit companies, ruralloan and savings associations, guaranty loan and savings
associations, mortgage guaranty companies, small loan companies,industrial loan and investment companies, and other financialinstitutions organized under Indiana law.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-15
Bonds; contesting validity
Sec. 15. An action to contest the validity of bonds to be issuedunder this chapter may not be brought after the time limitations setforth in IC 5-1-14-13.
As added by P.L.232-2007, SEC.7.
IC 36-7.6-4-16
Transfers; failure to make transfer; duty of state treasurer
Sec. 16. (a) This section applies if:
(1) a county or municipality that is a member of a developmentauthority fails to make a transfer or a part of a transfer requiredby section 2 of this chapter; and
(2) the development authority has bonds or other debt or leaseobligations outstanding.
(b) The treasurer of state shall do the following:
(1) Withhold an amount equal to the amount of the transfer orpart of the transfer under section 2 of this chapter that thecounty or municipality failed to make from money in thepossession of the state that would otherwise be available fordistribution to the county or municipality under any other law.
(2) Pay the amount withheld under subdivision (1) to thedevelopment authority.
As added by P.L.232-2007, SEC.7. Amended by P.L.146-2008,SEC.775.
IC 36-7.6-4-17
Covenants
Sec. 17. (a) If there are bonds outstanding that have been issuedunder this article by a development authority and are not secured bya lease, or if there are leases in effect under this article, the generalassembly covenants that it will not reduce the amount required to betransferred under section 2 of this chapter from a county ormunicipality that is a member of a development authority to thedevelopment authority below an amount that would produce one andtwenty-five hundredths (1.25) multiplied by the total of the highestannual debt service on the bonds to their final maturity plus thehighest annual lease payments on the leases to their final terminationdate.
(b) The general assembly also covenants that it will not:
(1) repeal or amend this article in a manner that wouldadversely affect owners of outstanding bonds, or the paymentof lease rentals, secured by the amounts pledged under thischapter; or
(2) in any way impair the rights of owners of bonds of a
development authority, or the owners of bonds secured by leaserentals, secured by a pledge of revenues under this chapter;
except as otherwise set forth in subsection (a).
As added by P.L.232-2007, SEC.7.