CHAPTER 3. PRIVATE HOLDING COMPANIES
IC 20-47-3
Chapter 3. Private Holding Companies
IC 20-47-3-1
Application
Sec. 1. This chapter does not apply to a charter school.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-2
"School building"
Sec. 2. As used in this chapter, "school building" means a building
used as part of or in connection with the operation of schools and
includes the:
(1) site for the building;
(2) equipment for the building; and
(3) appurtenances to the building, such as heating facilities,
water supply, sewage disposal, landscaping, walks, drives, and
playgrounds.
However, the term does not include a building that is designed for
and to be used exclusively for interschool athletic contests.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-3
Powers; lease of school building; maximum term of lease; petition;
required terms of joint lease involving more than one school
corporation
Sec. 3. (a) Subject to subsection (b), a school corporation may
lease a school building or buildings for the use of:
(1) the school corporation; or
(2) a joint or consolidated school district of which the school
corporation is a part or to which it contributes;
for a term not to exceed fifty (50) years.
(b) A school corporation may not enter into a lease under this
section unless:
(1) a petition for the lease signed by at least fifty (50) patrons
of the school corporation has been filed with the governing
body of the school corporation; and
(2) the governing body, after investigation, determines that a
need exists for the school building.
(c) If two (2) or more school corporations propose to jointly enter
into a lease under this section, joint meetings of the governing bodies
of the school corporations may be held, but action taken at a joint
meeting is not binding on any of those school corporations unless
approved by a majority of the governing body of each of those school
corporations. A lease executed by two (2) or more school
corporations as joint lessees must:
(1) set out the amount of the total lease rental to be paid by each
lessee, which may be as agreed upon; and
(2) provide that:
(A) there is no right of occupancy by any lessee unless the
total rental is paid as stipulated in the lease; and
(B) all rights of joint lessees under the lease are in
proportion to the amount of lease rental paid by each lessee.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-4
Qualifications of lessor corporation
Sec. 4. A school corporation or corporations may enter into a
lease or lease with option to purchase under this chapter only with:
(1) a corporation organized under Indiana law or admitted to do
business in Indiana; or
(2) a religious organization (or the organization's agent) that is
exempt from federal income taxation under Section 501 of the
Internal Revenue Code.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-5
Required terms of lease agreement; option to purchase
Sec. 5. (a) Except as provided in subsections (d) and (e), a lease
must provide that the school corporation or corporations have an
option to:
(1) renew the lease for a further term on like conditions; and
(2) purchase the property covered by the lease;
with the terms and conditions of the purchase to be specified in the
lease, subject to the approval of the department of local government
finance.
(b) If the option to purchase the property covered by the lease is
exercised, the school corporation or corporations, to procure funds
to pay the purchase price, may issue and sell bonds under the
provisions of the general statute governing the issue and sale of
bonds of the school corporation or corporations. The purchase price
may not be more than the purchase price set forth in the lease plus:
(1) two percent (2%) of the purchase price as prepayment
penalty for purchase within the first five (5) years of the lease
term; or
(2) one percent (1%) of the purchase price as prepayment
penalty for purchase in the second five (5) years of the lease
term;
and thereafter the purchase shall be without prepayment penalty.
(c) However:
(1) if the school corporation or corporations have not exercised
an option to purchase the property covered by the lease at the
expiration of the lease; and
(2) upon the full discharge and performance by the school
corporation or corporations of their obligations under the lease;
the property covered by the lease becomes the absolute property of
the school corporation or corporations, and the lessor corporation
shall execute proper instruments conveying to the school corporation
or corporations good and merchantable title to that property.
(d) The following provisions apply to a school corporation that is
located in Dubois County and enters into a lease with a religious
organization or the organization's agent as authorized under section
4 of this chapter:
(1) The lease is not required to include on behalf of the school
corporation an option to purchase the property covered by the
lease.
(2) The lease must include an option to renew the lease.
(3) The property covered by the lease is not required to become
the absolute property of the school corporation as provided in
subsection (c).
(e) In the case of a lease for which a school corporation:
(1) after June 30, 2008, makes a preliminary determination as
described in IC 6-1.1-20-3.1 or IC 6-1.1-20-3.5 or a decision as
described in IC 6-1.1-20-5; or
(2) in the case of a lease not subject to IC 6-1.1-20-3.1,
IC 6-1.1-20-3.5, or IC 6-1.1-20-5, adopts a resolution or
ordinance authorizing the lease after June 30, 2008;
the terms and conditions of the purchase that are specified in the
lease are not subject to the approval of the department of local
government finance.
As added by P.L.2-2006, SEC.170. Amended by P.L.146-2008,
SEC.517.
IC 20-47-3-6
Lessor corporation; submission of preliminary plans
Sec. 6. (a) A lessor corporation proposing to build a school
building or buildings must submit preliminary plans, specifications,
and estimates for the building or buildings to the lessee or lessees
before the execution of the lease. Final plans and specifications must
be submitted to the state department of health, state fire marshal, and
other agencies designated by law to pass on plans and specifications
for school buildings. The final plans and specifications must be
approved by those agencies in writing and by the lessee or lessees
before the construction of the school building or school buildings.
(b) IC 4-21.5 does not apply to the formulation, issuance, or
administrative review of an approval by an agency under subsection
(a). However, IC 4-21.5 does apply to the judicial review and civil
enforcement of an approval by an agency under subsection (a).
As added by P.L.2-2006, SEC.170.
IC 20-47-3-7
Permissible provisions of lease; payment of taxes; insurance
Sec. 7. A lease entered into under this chapter may provide that as
a part of the lease rental for the school building or buildings the
lessee or lessees shall:
(1) pay all taxes and assessments levied against or on account
of the leased property;
(2) maintain insurance on the leased property for the benefit of
the lessor corporation; and
(3) assume all responsibilities for repair and alterations of the
leased property during the term of the lease.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-8
Lease preceding acquisition of land
Sec. 8. (a) Except as provided in subsection (b), a school
corporation or corporations may, in anticipation of the acquisition of
a site and the construction and erection of a school building or
buildings, and, subject to the approval of the department of local
government finance, enter into a lease with a lessor corporation
before the actual acquisition of the site and the construction and
erection of the building or buildings. However, the lease entered into
by the school corporation or school corporations may not provide for
the payment of any lease rental by the lessee or lessees until the
building or buildings are ready for occupancy, at which time the
stipulated lease rental may begin. The lessor corporation shall
furnish a bond to the approval of the lessee or lessees conditioned on
the final completion of the building or buildings within a period not
to exceed one (1) year from the date of the execution of the lease,
unavoidable delays excepted.
(b) In the case of a lease for which a school corporation:
(1) after June 30, 2008, makes a preliminary determination as
described in IC 6-1.1-20-3.1 or IC 6-1.1-20-3.5 or a decision as
described in IC 6-1.1-20-5; or
(2) in the case of a lease not subject to IC 6-1.1-20-3.1,
IC 6-1.1-20-3.5, or IC 6-1.1-20-5, adopts a resolution or
ordinance authorizing the lease after June 30, 2008;
the approval of the department of local government finance is not
required.
As added by P.L.2-2006, SEC.170. Amended by P.L.146-2008,
SEC.518.
IC 20-47-3-9
Required public hearing; notice of lease terms
Sec. 9. (a) After the lessor corporation and the school 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, a notice shall be given by publication to all
persons interested of a hearing or joint hearing to be held before the
governing body or governing bodies of the school corporations
authorized to approve the lease. The hearing must be not earlier than:
(1) ten (10) days afer publication of the notice, if new
construction is proposed; or
(2) thirty (30) days after publication of the notice, if
improvement or expansion is proposed.
(b) The notice required by subsection (a) must:
(1) be published one (1) time in:
(A) a newspaper of general circulation printed in the English
language in the school corporation;
(B) a newspaper described in clause (A) in each school
corporation if the proposed lease is a joint lease; or
(C) if no such paper is published in the school corporation,
in any newspaper of general circulation published in the
county;
(2) name the date, time, and place of the hearing; and
(3) set forth a brief summary of the principal terms of the lease
agreed upon, including the:
(A) location of the property to be leased;
(B) name of the proposed lessor corporation;
(C) character of the property to be leased;
(D) rental to be paid; and
(E) number of years the lease is to be in effect.
The cost of publication of the notice shall be paid by the lessor
corporation.
(c) The proposed lease, drawings, plans, specifications, and
estimates for the school building or buildings must be available for
inspection by the public during the ten (10) day or thirty (30) day
period described in subsection (a) and at the hearing under section 10
of this chapter.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-10
Conduct of public hearing; lease authorization procedures
Sec. 10. (a) At the hearing, all interested persons have a right to
be heard upon the necessity for the execution of the proposed lease
and whether the rental to be paid to the lessor corporation under the
proposed lease is a fair and reasonable rental for the proposed
building. The hearing may be adjourned to a later date or dates.
(b) Not later than thirty (30) days following the termination of the
hearing, the governing body or bodies of the school corporation or
corporations may by a majority vote of all members of the governing
body or bodies:
(1) authorize the execution of the lease as originally agreed
upon; or
(2) make modifications to the proposed lease as agreed upon
with the lessor corporation.
However, the lease rentals as set out in the published notice may not
be increased.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-11
Notice of signing of lease; appeal
Sec. 11. (a) If the execution of the lease as originally agreed upon
or as modified by agreement is authorized by the governing body or
bodies of the school corporation or corporations, the governing body
shall give notice of the signing of the lease by publication one (1)
time in:
(1) a newspaper of general circulation printed in the English
language in the school corporation;
(2) a newspaper described in subdivision (1) in each school
corporation if the proposed lease is a joint lease; or
(3) if no such newspaper is published in the school corporation,
in any newspaper of general circulation published in the county.
(b) This subsection does not apply to leases for which a school
corporation after June 30, 2008, makes a preliminary determination
as described in IC 6-1.1-20-3.1 or IC 6-1.1-20-3.5 or a decision as
described in IC 6-1.1-20-5, or, in the case of leases not subject to
IC 6-1.1-20-3.1, IC 6-1.1-20-3.5, or IC 6-1.1-20-5, adopts a
resolution or ordinance authorizing the lease after June 30, 2008.
Within thirty (30) days after the publication of notice under
subsection (a), ten (10) or more taxpayers in the school corporation
or corporations who:
(1) will be affected by the proposed lease; and
(2) are of the opinion that:
(A) no necessity exists for the execution of the lease; or
(B) the proposed rental provided for in the lease is not a fair
and reasonable rental;
may file a petition in the office of the county auditor of the county in
which the school corporation or corporations are located. The
petition must set forth the taxpayers' objections to the lease 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 under subsection (b), the county
auditor shall immediately certify a copy of the petition and any other
data that is necessary to present the questions involved to the
department of local government finance. Upon receipt of the certified
petition and data, if any, the department of local government finance
shall fix a date, time, and place for the hearing of the matter, which
may not be less than five (5) nor more than thirty (30) days after
receipt of the petition and data, if any. The department of local
government finance shall:
(1) conduct the hearing in the school corporation or
corporations or in the county where the school corporation or
corporations are located; and
(2) give notice of the hearing to the members of the governing
body or bodies of the school corporation or corporations and to
the first ten (10) taxpayer petitioners upon the petition by a
letter signed by the commissioner or deputy commissioner of
the department of local government finance, and enclosed with
full prepaid postage addressed to the taxpayer petitioners at
their usual place of residence, at least five (5) days before the
hearing.
The decision of the department of local government finance on the
appeal, upon the necessity for the execution of the lease, and as to
whether the rental is fair and reasonable, is final.
As added by P.L.2-2006, SEC.170. Amended by P.L.146-2008,
SEC.519.
IC 20-47-3-12
Limitation on time to file appeal
Sec. 12. An action to contest the validity of the lease or to enjoin
the performance of any of the terms and conditions of the lease may
not be instituted at any time later than:
(1) thirty (30) days after publication of notice of the execution
of the lease by the governing body or bodies of the school
corporation or corporations; or
(2) if an appeal is allowed under section 11 of this chapter and
has been taken to the department of local government finance,
thirty (30) days after the decision of the department of local
government finance.
As added by P.L.2-2006, SEC.170. Amended by P.L.146-2008,
SEC.520.
IC 20-47-3-13
Acquisition of land for building site; sale to lessor corporation
Sec. 13. The lessor corporation shall acquire, own, and hold in fee
simple the land on which a school building or buildings are to be
erected under this chapter. A school corporation that proposes to
lease a school building, either alone or jointly with another school
corporation, and owns the land on which it desires to be erected the
building or buildings may sell and transfer that land to the lessor
corporation in fee simple, subject to the following conditions:
(1) Before the sale may take place, the governing body of the
school corporation must file a petition with the circuit court of
the county in which the school corporation is located,
requesting the appointment of:
(A) one (1) disinterested freeholder of the school corporation
as an appraiser; and
(B) two (2) disinterested appraisers licensed under
IC 25-34.1;
who are residents of Indiana to determine the fair market value
of the land. One (1) of the appraisers described in clause (B)
must reside not more than fifty (50) miles from the land.
(2) Upon appointment, the three (3) appraisers shall proceed to
fix the fair market value of the land and shall report the amount
fixed to the circuit court within two (2) weeks after the
appointment.
(3) The school corporation may sell the land to the lessor
corporation for an amount not less than the amount fixed by the
three (3) appraisers as the fair market value, which shall be paid
in cash upon delivery of the deed by the school corporation to
the lessor corporation. However, if the land was acquired by the
school corporation within three (3) years immediately preceding
the date of the filing of the petition with the circuit court, the
land may not be sold for an amount less than the amount paid
by the school corporation for the land.
As added by P.L.2-2006, SEC.170. Amended by P.L.113-2006,
SEC.16.
IC 20-47-3-14
Required levy; payment of obligations
Sec. 14. A school corporation that executes a lease under this
chapter shall annually appropriate and pay out of the debt service
fund an amount sufficient to pay the lease rental required under the
lease. The appropriation and rate are reviewable by other bodies
vested by law with the authority to determine that the levy is
sufficient to raise the amount required to meet the rental required
under the lease.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-15
Exemption of lessor corporation property from taxes
Sec. 15. School buildings leased by a lessor corporation entering
into a lease with a school corporation or corporations under this
chapter are exempt from all state, county, and other taxes. However,
the rental payments to a lessor corporation under the terms of such
a lease are subject to all applicable taxes under Indiana law.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-16
Statutory construction; supplemental legislation; limitation of
application of other laws
Sec. 16. This chapter shall be construed as being supplemental to
all other laws covering the acquisition, use, and maintenance of
school buildings by school corporations. However, as to school
buildings constructed or leased under this chapter, it is not necessary
to comply with the provisions of other laws concerning the
acquisition, use, and maintenance of school buildings by school
corporations except as specifically required in this chapter.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-17
Lessor corporation; sale of bonds and securities; mortgage bonds
Sec. 17. (a) A corporation qualifying as a lessor corporation under
this chapter may 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.
(b) Bonds and other securities issued by a lessor corporation
under this section need not be sold under IC 5-1-11, and approval of
the securities commissioner is not required in connection with the
issuance and sale of the bonds.
As added by P.L.2-2006, SEC.170.
IC 20-47-3-18
Termination of lease; disposition of surplus revenues
Sec. 18. (a) Upon the termination of a lease entered into under this
chapter, the lessor corporation shall return to the school corporation
any money held by the lessor corporation that exceeds the amount
needed to retire bonds issued under this chapter and to dissolve the
lessor corporation.
(b) A school corporation shall deposit the money received under
subsection (a) in its debt service fund or its capital projects fund.
As added by P.L.2-2006, SEC.170.