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 library
facilities.
(2) Any other public corporation, established by statute, that
operates 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 or
buildings for the use of the public corporation or of any joint or
consolidated public corporation of which the public corporation is a
part or to which the public corporation contributes, under the
following conditions:
(1) A lease may not be entered into for a period of more than
forty (40) years.
(2) Before a lease is entered into, there must first be filed with
the governing authority of the public corporation a petition
signed by fifty (50) or more resident taxpayers of the public
corporation.
(3) After investigation, the governing authority must determine
that a need exists for the library building or buildings.
(4) The governing authority must determine that the public
corporation cannot provide the necessary funds to pay the cost
or the public corporation's proportionate share of the cost of the
library building or buildings required to meet the present needs.
(b) If two (2) or more public corporations propose to enter into a
lease jointly, joint meetings of the governing authority of the
corporations may be held. Action taken is binding on a public
corporation only if the action is approved by the public corporation's
governing authority. A lease executed by two (2) or more public
corporations as joint lessees must set out the amount of the total
lease rental agreed upon to be paid by each. A lessee is entitled to
occupancy only if the total rental is paid as stipulated in the lease.
All rights of joint lessees under the lease must be proportionate to the
amount 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 of
excess funds
Sec. 3. (a) A public corporation may enter into a lease under this
chapter only with a nonprofit corporation organized under Indiana
law for the sole purpose of:
(1) acquiring real property;
(2) building, improving, constructing, or renovating a suitable
library building or buildings, including the necessary equipment
and appurtenances;
(3) leasing the library facilities to the public corporation or
corporations; and
(4) collecting the rentals and applying the proceeds from the
rentals in the manner provided in this chapter.
(b) The lessor corporation shall act entirely without profit to the
corporation and the corporation's officers, directors, and members
but is entitled to the return of capital actually invested, which
includes:
(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 pay
interest on outstanding securities or loans, and the cost of
maintaining the corporation's existence and keeping the corporation's
property free of encumbrance.
(c) Upon receipt of any amount of lease rental by the lessor
corporation above the amount necessary to meet incidental corporate
expenses and to pay interest on corporate securities or loans, the
excess funds shall be applied to the redemption and cancellation of
the corporation's outstanding securities or loans as soon as this may
be 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 to
renew 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 the
expiration of the term of the lease, on the date or dates in each
year that are fixed, at a price equal to the amount required to
enable the lessor corporation owning the site to:
(A) liquidate by paying all indebtedness, with accrued and
unpaid 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 the
lessor corporation represented by outstanding securities or
indebtedness plus the cost of transferring the property and liquidating
the lessor corporation.
(c) A lease may not provide that any public corporation is under
an obligation to purchase the leased library facilities or under an
obligation in respect to the creditors, members, or other security
holders 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 library
building or buildings, including necessary equipment and
appurtenances, shall submit to the lessee or lessees, before the
execution of a lease, preliminary plans, specifications, and estimates
for the building or buildings.
(b) The final plans and specifications shall be submitted to the
state department of health, state fire marshal, and any other agencies
that are designated by law to pass on plans and specifications for
library buildings. The final plans and specifications must be
approved by these agencies and the lessee or lessees in writing before
the 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, and
repairs
Sec. 6. The lease may provide that, as a part of the lease rental for
the library building or buildings, the lessee or lessees shall agree to:
(1) pay all taxes and assessments levied against or on account
of the leased property;
(2) maintain insurance on the property for the benefit of the
lessor corporation; and
(3) assume all responsibilities for repair and alterations with
regard 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, in
anticipation of the acquisition of real property and any necessary
construction of a library building or buildings, including the
necessary equipment and appurtenances, enter into a lease with the
lessor corporation before actual acquisition of real property and any
construction of the building or buildings. However, the lease may not
provide for the payment of lease rental by the lessee or lessees until
the building or buildings are complete and ready for occupancy, at
which time the stipulated lease rental payments may begin.
(b) The contractor must be required under the lease to furnish to
the lessor corporation a bond satisfactory to the corporation
conditioned upon the final completion of the building or buildings
within 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 corporation
or corporations have agreed upon the terms and conditions of a lease
proposed to be entered into under this chapter and before the final
execution of the lease, notice of a hearing shall be given by
publication to all interested persons. The hearing shall be held before
the governing authority, on a day not earlier than ten (10) days after
the publication of the notice.
(b) The notice of the hearing shall be published one (1) time in a
newspaper of general circulation printed in the English language in
the district of the public corporation or in each public corporation
district if the proposed lease is a joint lease. If a newspaper is not
published in the district, the notice shall be published in any
newspaper of general circulation published in the county. The notice
must name the date, place, and time of the hearing and set forth a
brief summary of the principal terms of the lease agreed upon,
including:
(1) the location;
(2) the name of the proposed lessor corporation and character
of 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 for
the library building or buildings must be available for inspection by
the public during the ten (10) day period under subsection (a) and at
the meeting. All interested persons are entitled to be heard at the
hearing regarding the necessity for the execution of the lease, and
whether the rental provided for in the lease to be paid to the lessor
corporation is a fair and reasonable rental for the proposed building
or buildings. The hearing may be adjourned to a later date or dates,
and following the hearing, the governing authority may either
authorize the execution of the lease as originally agreed upon or may
make modifications that have been agreed upon by the lessor
corporation. The lease rentals as set out in the published notice may
not be increased. The cost of the publication of the notice shall be
paid 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 government
finance; 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, the
library board shall give notice of the signing of the lease by
publication one (1) time in a newspaper of general circulation printed
in the English language in the district of the public corporation or in
each public corporation district if the proposed lease is a joint lease.
If a newspaper is not published in the district, the notice shall be
published in any newspaper of general circulation published in the
county.
(b) Fifty (50) or more taxpayers in the public corporation or
corporations who will be affected by the proposed lease and who are
of the opinion that the execution of the lease is not necessary or that
the proposed rental is not a fair and reasonable rental may file a
petition in the office of the county auditor of the county in which the
public corporation or corporations are located. The petition must be
filed not later than thirty (30) days after the publication of notice of
the execution of the lease and must set forth objections and facts
showing that the execution of the lease is unnecessary or unwise or
that the lease rental is not fair and reasonable, as the case may be.
(c) Upon the filing of a petition, the county auditor shall
immediately certify to the department of local government finance a
copy of the petition, together with other data that may be necessary
to present the questions involved. Upon receipt of the certified
petition and information, the department of local government finance
shall 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 the
petition and information. The hearing shall be held in the public
corporation or corporations or in the county where the public
corporations are located.
(d) Notice of the hearing shall be given by the department of local
government finance to the members of the library board and to the
first ten (10) taxpayer petitioners on the petition by a letter signed by
the department of local government finance. The postage of the
notice shall be prepaid, and the notice shall be addressed to the
persons at their usual place of residence and mailed at least five (5)
days before the date of the hearing. The decision of the department
of local government finance on the appeal regarding the necessity for
the execution of the lease and whether the rental is fair and
reasonable is final. A lease may be amended by the parties by
following the procedure under this chapter.
(e) An action to contest the validity of the lease or an amendment
to the lease or to enjoin the performance of any of the terms and
conditions of the lease must be brought not later than thirty (30) days
after publication of notice of the execution of the lease or an
amendment to the lease by the library board of the public corporation
or corporations. If an appeal has been taken to the department of
local 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 real
property on which the library building or buildings exists or will be
constructed. A public corporation or corporations proposing to lease
the library building or buildings, either alone or jointly with another
public corporation that owns the property, may sell the property to
the lessor corporation in fee simple.
(b) Before a sale under this section may take place, the governing
authority of the public corporation shall file a petition with the
circuit court of the county in which the public corporation is located
requesting the appointment of:
(1) one (1) disinterested freeholder of the public corporation as
an 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 the
real 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 fair
market value of the real property and report this amount to the circuit
court not later than two (2) weeks from the date of their appointment.
The public corporation may then sell the real property to the lessor
corporation for an amount not less than the amount fixed as the fair
market value by the appraisers. The amount shall be paid in cash
upon delivery of the deed by the public corporation to the lessor
corporation.
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 other
securities; sale procedure
Sec. 11. (a) A corporation qualifying as a lessor corporation under
this chapter may, in furtherance of the corporation's purposes, issue
and sell bonds and other securities. Mortgage bonds issued by a
lessor corporation that are a first lien on the leased property are legal
and 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 upon
notice provided in the mortgage indenture.
(b) All bonds and other securities issued by the lessor corporation
must be advertised and sold in accordance with IC 5-1-11 at any
interest rate.
(c) The approval of the securities division of the secretary of state
is not required in connection with the issuance and sale of bonds or
other 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 general
obligation bonds to procure funds to pay the cost of acquisition of
real property. The bonds must be authorized, issued, and sold in
accordance 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 this
chapter shall annually levy a special tax, in addition to other taxes
authorized by law, sufficient to produce each year the necessary
funds with which to pay the lease rental stipulated to be paid by the
public corporation under the lease. A levy under this section shall be
reviewed in accordance with IC 6-1.1-17. The first tax levy shall be
made at the first annual tax levy period following the date of the
execution of the lease. The first annual levy must be sufficient to pay
the estimated amount of the first annual lease rental payment to be
made 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 contracting
with a public corporation or corporations under this chapter and all
stock and other securities, including the interest or dividends issued
by a lessor corporation, are exempt from all state, county, and other
taxes, excluding the financial institutions tax and the inheritance
taxes.
As added by P.L.1-2005, SEC.49.