Section 22-26A-5 - Lease purchase arrangements; terms.
22-26A-5. Lease purchase arrangements; terms.
Lease purchase arrangements:
A. may have payments payable annually or more frequently as determined by the local school board;
B. may be subject to prepayment at the option of the local school board at such time or times and upon such terms and conditions with or without the payment of such premium or premiums as determined by the local school board;
C. may have a final payment date not exceeding thirty years after the date of execution;
D. may be acquired or executed at a public or negotiated sale;
E. may be entered into between the local school board and the owner of the building or other real property who may be a trustee or other person that issues or sells certificates of participation or other interests in the payments to be made under the lease purchase arrangement, the proceeds of which may be used to acquire the building or other real property;
F. shall specify the principal and interest component of each payment made under the lease purchase arrangement; provided that the net effective interest rate shall not exceed the maximum permitted by the Public Securities Act [6-14-1 NMSA 1978];
G. shall provide that, if the school district makes capital improvements to the building or other real property, there shall be no change in the lease payments or final payment without a written amendment approved by the department;
H. shall provide that, if state or school district funds, above those required for lease payments, are used to construct or acquire improvements, the cost of the improvements shall constitute a lien on the real estate in favor of the school district and then, if the lease purchase arrangement is terminated prior to the final payment and the release of the security interest or the transfer of title at the option of the school district:
(1) the school district may foreclose on the real estate lien; or
(2) the current market value of the building or other real property at the time of termination, as determined by an independent appraisal certified by the taxation and revenue department, in excess of the outstanding principal due under the lease purchase arrangement shall be paid to the school district;
I. shall provide that there is no legal obligation for the school district to continue the lease purchase arrangement from year to year or to purchase the building or other real property;
J. shall provide that the lease purchase arrangement shall be terminated if sufficient money is not available to meet any current lease payment;
K. shall provide that, with the prior approval of the lessor, which shall not be unreasonably withheld, the lease purchase arrangement is assignable without cost to the school district, if the lessee is a charter school, to a locally chartered or state-chartered charter school or to the state or one of its institutions, instrumentalities or other political subdivisions. The assignee shall acquire all rights and benefits of its predecessor in interest under the terms and conditions of the lease purchase arrangement; and
L. shall provide that amendments to the lease purchase arrangement, except amendments that would improve the building or other real property without additional financial obligations to the school district, shall be approved by the department.