Sec. 7-121a. Municipal loans to nonpublic schools for construction or renovation.
Sec. 7-121a. Municipal loans to nonpublic schools for construction or renovation. (a) Any municipality may, by vote of its legislative body, borrow funds on the faith
and credit of such municipality for the purpose of lending such funds to any financially
responsible nonpublic school located in such municipality for construction or renovation
of physical facilities for educational purposes, provided the obligor in such loan is a
person or persons, the board of trustees or similar body legally authorized to contract
for such obligations on behalf of such school. No municipality shall, as a result of such
borrowing, incur indebtedness for this purpose in excess of ten per cent of its annual
receipts from taxation. No such loan shall exceed thirty per cent of the appraised fair
market value of the buildings and real property of such school or forty per cent of the
assessed value of the capital assets of such school, whichever is less.
(b) Any such loan shall be used exclusively for purposes of construction or renovation of physical facilities of such school for educational purposes. Such loan shall be
secured by a first mortgage on school real estate owned by said obligor and further
secured by security interest or lien with respect to (1) all capital assets of said obligor
held for school purposes, (2) current income on such school's endowment funds to the
extent that such interest or lien may be exercised with respect to such income, (3) the
proceeds of any fund raising efforts on behalf of such school by such person or persons,
board of trustees or similar body. The interest rate on any such loan shall be one per
cent in excess of the current borrowing rate paid by such municipality. Such loan shall
be amortized in equal semiannual installments of interest and principal over not more
than thirty years.
(c) In the event of default on any installment for a period of ninety days, the entire
outstanding principal balance with interest and all costs of collection including a reasonable attorney's fee shall become due and payable. In such event, such municipality shall
commence and continue legal proceedings to collect the amount due such municipality.
(P.A. 74-287, S. 1-3.)