53B-21-108 - Financing project by contract or lease agreement instead of by bond issue -- Authority of board -- Term of lease -- Terms of agreement -- Board covenants.
53B-21-108. Financing project by contract or lease agreement instead of by bondissue -- Authority of board -- Term of lease -- Terms of agreement -- Board covenants.
(1) Whenever the board, by resolution, finds and declares it preferable to acquire aproject under this chapter by purchase or lease of the facilities constituting the project under anagreement which provides the consideration for the purchase or lease to be paid in installmentsduring a period not exceeding 40 years, rather than through the issuance of revenue bonds by theboard in the manner provided in this chapter, it may do so upon compliance with this section.
(2) The board may lease any portion of the campus of the institution necessary as a sitefor a project which the board is authorized to acquire under Section 53B-20-103, to any person,for a term not exceeding 40 years.
(3) The agreement authorized to be entered into by the board shall provide that the personshall construct, improve, remodel, add to, or extend a project of the type and constructiondescribed in the agreement on the part of the campus to be leased to the person, or on such realproperty as may be acquired for that purpose by the person.
(4) The agreement shall further provide for the leasing of the project, including necessaryequipment, furnishings, and land, from the person to the board executing the agreement, for aperiod not exceeding 40 years.
(5) Prior to the execution of the agreement, the person proposing to lease the project,including the necessary equipment, furnishings, and land, to the board shall submit to the board allplans, specifications, and estimates for the project.
(6) The plans, specifications, and estimates shall be approved by resolution of the boardprior to the execution of the agreement.
(7) The board may, by appropriate provisions in the agreement:
(a) covenant as to the use which will be made of the project;
(b) covenant as to the operation, maintenance, and supervision of the project;
(c) covenant to collect fees and charges from all students and other persons availingthemselves of the use of the accommodations and facilities of the project;
(d) covenant to levy and collect student building fees from all regular and part-timestudents enrolled in the institution for the use and availability of the project;
(e) covenant as to the collection, use, and disposition of the proceeds arising from thecollection of all the revenues, fees, and charges;
(f) covenant to impose and collect fees and charges in amounts adequate to pay all costsincurred in maintaining and operating the project and to pay the amortization of the acquisitioncost of the project, including necessary equipment and furnishings, and interest on the unpaid partof the acquisition cost, whether represented by rental installments or otherwise;
(g) covenant to pledge all revenues, fees, and charges, including student building fees,arising from the ownership and operation of the project to the payment of the rental installmentsprovided for under the terms of the contract or lease agreement;
(h) covenant as to the rights, liabilities, powers, and duties arising from the breach of anycovenant or agreement contained in the agreement;
(i) covenant and agree to carry any insurance on the project, and its use and occupancy,as the board considers desirable, and to provide that the cost of the insurance shall be included asa part of the cost of operating the project;
(j) covenant to make and enforce such parietal rules and regulations with reference to theuse of the facilities comprising the project, or any part of the project, and with reference to
requiring any class of students to use the project, or any part of the project, as the boarddetermines desirable for the institution; and
(k) covenant against the pledging of the revenues, fees, and charges, including studentbuilding fees, arising from the ownership and operation of the project for any purpose other thanthe payment of the rental installments required to be paid under the agreement, or against theissuance of any obligations payable therefrom, unless the pledge or obligations are madesubordinate to the agreement. Nothing in this section prevents the board from providingconditions and terms under which pledges may be made and obligations issued on a parity withthe pledge of revenues, fees, and charges under the agreement.
(8) It shall be specifically provided in the agreement that the board is not obligated to paythe rental installments or amortization of the acquisition cost of the project, and interest on theunpaid part of the acquisition cost, from any source other than the revenues, fees, and chargesarising from the ownership and operation of the project, including student building fees levied forthe use and availability of the facilities of the project.
(9) Each agreement shall provide that the rental installments, or amortization of theacquisition cost of the project, including necessary equipment, furnishings, and land, and intereston the unpaid part of the acquisition cost, are not an obligation of the state, and that ad valoremtaxes or appropriations from the state may not be used to pay or discharge the amounts requiredto be paid under the agreement.
(10) The agreement shall also provide that when the amortized acquisition cost, asrepresented by the rental installments, has been paid in full and when all obligations, if any, issuedby the person to finance the cost of the acquisition of the project have been paid in full as to bothprincipal and interest, the agreement terminates and title to the project, including the land uponwhich the project is situated, and all equipment and furnishings, vests in the board.
(11) The agreement may provide that the board may purchase the project, including theland upon which the project is situated, and all equipment and furnishings, which is subject to theagreement upon terms wherein rental installments previously made, or a portion of them, arededucted from the cost of acquisition of the project, including the land upon which the project issituated, and all equipment and furnishings, as provided for in the agreement.
(12) The board may furnish without charge heat, light, water, power, and similar facilitiesfor any project leased by the board for operation by the board under this section, and all projectsacquired and constructed under this section are exempt from taxation.
(13) The agreement may provide that the board may lease the project, including the landupon which the project is situated, and all equipment and furnishings, to any person for a term notexceeding 40 years for operation by any person.
(14) A lease may not be entered into unless the rental to be paid to the board by theperson is sufficient to satisfy the rental to be paid by the board to the person from which theproject was originally leased. But in no event may the rental paid to the board be less than thefair rental value of the property leased.
Enacted by Chapter 167, 1987 General Session