15-55 Construction of Revenue-Producing Buildings - North Dakota Statutes

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CHAPTER 15-55CONSTRUCTION OF REVENUE-PRODUCING BUILDINGS15-55-01.Portions of campuses set aside for authorized revenue-producingbuildings or other revenue-producing campus improvements. Subject to and in accordance
with the terms of this chapter, the state board of higher education, for and on behalf of the
institutions under its supervision and control, from time to time, may set aside such portions of
the respective campuses of said institutions as may be necessary and suitable for the
construction thereon of such revenue-producing buildings or other revenue-producing campus
improvements as, from time to time, may be authorized by the legislative assembly, and
including additions to existing buildings or other campus improvements used for such purposes,
and may construct such campus improvements and buildings or additions thereon and may
equip, furnish, maintain, and operate such buildings and other campus improvements.15-55-02. Board may borrow money and issue bonds - Conditions - Bonds tax free.For the purpose of paying all or part of, but not to exceed, the cost of construction, equipment,
and furnishing of any such buildings or any addition to existing buildings, or other campus
improvements, or in order to refund any outstanding bonds or interim financing issued for such
purpose, the state board of higher education may borrow money on the credit of the income and
revenue to be derived from the operation of the said building or buildings or other campus
improvements, and, in anticipation of such collections of such income and revenues, may issue
negotiable bonds in such an amount as, in the opinion of the board, may be necessary for such
purposes, all within the limits of the authority granted by the legislative assembly in each
instance, and may provide for the payment of such bonds and the rights of the holders thereof as
provided in this chapter. The bonds may bear such date or dates; mature at such time or times
not exceeding fifty years from their date; be in such denomination or denominations; be in such
form, either coupon or registered; carry such registration and conversion privileges; be executed
in such manner; be payable in such medium of payment at such place or places; be subject to
such terms of redemption with or without premium; bear such rate or rates of interest; and be
subject to such other terms or conditions as may be provided by resolution or resolutions to be
adopted by the board. The bonds may be sold in such manner and at such price or prices as
may be considered by the board to be advisable. The average net interest cost to maturity for
any bond issues sold at private sale may not exceed twelve percent per annum. There is no
interest rate ceiling on those issues sold at public sale or to the state of North Dakota or any of its
agencies or instrumentalities. Any grants agreed to be made by the United States of America or
any agency or instrumentality thereof to reduce the interest cost of bonds, whether or not
pledged to the payment of the bonds or interest thereon as part of the income and revenue to be
derived from the operation of the buildings or improvements pledged to the payment of the issue,
must be considered as a reduction in the interest costs of the bonds with respect to which the
grant is made, for purposes of the rate limitations on interest costs provided herein. The bonds
have all of the qualities and incidents of negotiable paper and are not subject to taxation by the
state of North Dakota, or by any county, municipality, or political subdivision therein. The board,
in its discretion, may authorize one issue of bonds hereunder for the construction, furnishing, and
equipment of more than one building or other campus improvement and may make the bonds
payable from the combined revenues of all buildings or other campus improvements acquired in
whole or in part with the proceeds thereof, and when bonds are so issued, the words "the
building", as herein used, refers to all the buildings or other campus improvements so acquired.15-55-02.1. Refunding bonds. Bonds may be refunded, but no bonds may be refundedunder this chapter unless the bonds either mature or are callable for prior redemption under their
terms within thirty years from the date of issuance of the refunding bonds, or unless the holder or
holders of the bonds voluntarily surrender them for exchange or payment. Outstanding bonds of
more than one issue or series and bonds for refunding and other bonds to construct, furnish, or
equip any building or addition or other campus improvement for which bonds are authorized may
be combined into one issue or series and may provide for and restrict the combination of future
series with the issue. Except as otherwise provided in this section, the bonds must have such
details and must be authorized and issued in the manner provided in this chapter. Refunding
bonds so issued may carry forward for the payment of the refunding bonds such security andPage No. 1sources of payment as were pledged to the payment of the bonds refunded, and a combined
issue of refunding and other bonds may combine such security and sources of payment with a
pledge of the revenues of buildings or other campus improvements acquired in whole or in part
from the proceeds of the issue, including the security and sources of payment of any future
series of refunding bonds or revenues of any building or other campus improvement acquired
from the proceeds of a future series if and to the extent that provision is made for combination of
future series with the issue. The word "building" as used in this section means all the buildings or
other campus improvements the revenues of which are pledged. Any bonds issued for refunding
purposes may be delivered in exchange for the outstanding bonds authorized to be refunded,
sold at either public or private sale, or sold in part and exchanged in part. There is no interest
rate ceiling on those issues issued solely for refunding purposes. The sale price may exceed the
principal amount of refunding bonds and the excess may be used to provide for payment of
redemption premiums of the bonds to be refunded and to provide for expenses of the issuance
and sale of the bonds and the retirement of the outstanding bonds. All other proceeds of the sale
must be, to the extent needed, immediately applied to the retirement of the bonds to be refunded,
or the proceeds or investments thereof must be placed in escrow to be held and applied to the
payment of the bonds to be refunded, or in the case of crossover refunding, must be invested in
securities irrevocably appropriated to the payment of principal and interest on the refunding
bonds until the date the proceeds are applied to the payment or redemption of the bonds to be
refunded.The proceeds may, in the discretion or pursuant to covenant of the board, be invested inobligations of the United States of America, or in obligations fully guaranteed by the United
States of America, but the obligations so purchased must have such maturities and bear such
rates of interest payable at such times as will assure the existence of money sufficient to pay the
bonds to be refunded when due or when redeemed pursuant to call for redemption, together with
any interest and redemption premiums.The proceeds or obligations so purchased must bedeposited in trust with the trustee for the refunded bonds, or with the banking corporation,
association, or limited liability company which is the paying agent for the refunded bonds, or with
the state treasurer, to be held, liquidated, and the proceeds of such liquidation paid out for the
payment of the bonds to be refunded and interest and redemption premiums thereon as the
refunded bonds become due or subject to redemption under call for redemption previously made,
or upon earlier voluntary surrender thereof with the consent of the board. The determination of
the board in issuing refunding bonds that the issuance and sale of refunding bonds is necessary
for the best interests of the institution and that the limitations herein imposed upon the issuance
of refunding bonds have been met is conclusive in the absence of fraud or arbitrary and gross
abuse of discretion.15-55-03. Bonds are special obligations and board may insert special provisions inbonds. The bonds issued under the provisions of this chapter may not be an indebtedness of
the state of North Dakota nor of the institution for which they are issued nor of the state board of
higher education thereof, nor of the individual members, officers or agents thereof nor may any
building or other campus improvement or the land upon which it is situated, or any part thereof
be security for or be levied upon or sold for the payment of said bonds, but the said bonds must
be special obligations payable solely from the revenues to be derived from the operation of the
building or other campus improvement, and the board is authorized and directed to pledge all or
any part of such revenues to the payment of principal and interest on the bonds. In order to
secure the prompt payment of such principal and interest and the proper application of the
revenues pledged thereto, the board is authorized by appropriate provisions in the resolution or
resolutions authorizing the bonds:1.To covenant as to the use and disposition of the proceeds of the sale of such bonds;2.To covenant as to the operation of the building or other campus improvement and
the collection and disposition of the revenues derived from such operation;3.To covenant as to the rights, liabilities, powers, and duties arising from the breach of
any covenant or agreement into which it may enter in authorizing and issuing the
bonds;Page No. 24.To covenant and agree to carry such insurance on the building or other campus
improvement, and the use and occupancy thereof as may be considered desirable
and, in its discretion, to provide that the cost of such insurance shall be considered
as part of the expense of operating the building or other campus improvement;5.To vest in a trustee or trustees for the bondholders the right to receive all or any part
of the income and revenues pledged and assigned to or for the benefit of the holder
or holders of bonds issued hereunder and to hold, apply, and dispose of the same,
and the right to enforce any covenant made to secure the bonds and to execute and
deliver a trust agreement or agreements which may set forth the powers and duties
and the remedies available to such trustee or trustees and may limit the liabilities
thereof and prescribe the terms and conditions upon which such trustee or trustees
or the holder or holders of the bonds in any specified amount or percentage may
exercise such rights and enforce any or all such covenants and resort to such
remedies as may be appropriate;6.To fix rents, charges, and fees to be imposed in connection with and for the use of
the building or other campus improvement and the facilities supplied thereby, which
rents, charges, and fees shall be considered to be income and revenues derived
from the operation of the building or campus improvement, and are hereby expressly
required to be fully sufficient to assure the prompt payment of principal and interest
on the bonds as each becomes due, and to make and enforce such rules and
regulations with reference to the use of the building or campus improvement, and
with reference to requiring any class or classes of students to use the buildings or
other campus improvements as it may deem desirable for the welfare of the
institutions and its students or for the accomplishments of the purposes of this
chapter;7.To covenant to maintain a maximum percentage of occupancy of the building or
other campus improvement;8.To covenant against the issuance of any other obligations payable from the
revenues to be derived from the building or other campus improvement; and9.To make covenants other than and in addition to those herein expressly mentioned
of such character as may be considered necessary or advisable to affect the
purposes of this chapter.All such agreements and covenants entered into by the board are enforceable by appropriate
action or suit at law or in equity, which may be brought by any holder or holders of bonds issued
hereunder.15-55-04. Board may enter into contract with federal agencies. The board may enterinto any agreements or contracts with the United States of America or any agency or
instrumentality thereof which it may consider advisable or necessary in order to obtain a grant of
funds or other aid to be used in connection with the proceeds of the bonds in paying the cost of
the construction, furnishing, and equipment of the building or other campus improvement.15-55-04.1.Lease of revenue-producing buildings.The state board of highereducation may, at such times as it deems necessary, enter into agreements with other persons,
including any federal or state agency, for the lease of revenue-producing buildings, constructed
or purchased under the provisions of this chapter, upon such terms and conditions as the board
deems proper. However, any such lease entered into pursuant to this section must be limited to
a maximum term of ten years.15-55-05. Deposit and use of proceeds of bonds - Authorizing issuing of warrants -Contracts. The proceeds from the sale of the bonds herein authorized must be deposited to the
credit of the board and kept in a separate fund in the state treasury, in the Bank of North Dakota
or in a bank which is a duly designated depository for state funds and is a member of the federalPage No. 3deposit insurance corporation. Provided, that when such funds are deposited in a bank other
than the Bank of North Dakota or a bank which is not a duly designated depository for state
funds, such bank must be required to pledge, as security for such deposit, securities in an
amount equal to the sum by which such deposit exceeds the amount of federal deposit insurance
corporation insurance. Securities which are eligible for such pledge are notes or bonds issued by
the United States government, its agencies or instrumentalities, all bonds and notes guaranteed
by the United States government, federal land bank bonds, or bonds issued by any state of the
United States. In lieu of the deposit of such securities, a surety bond may be accepted from the
bank designated as a depository in a sum equal to the amount of funds such bank may receive in
excess of the amount guaranteed by the federal deposit insurance corporation. Such proceeds
must be used solely for the purpose for which the bonds are authorized except that the board
may invest such funds in direct obligations of, or obligations the principal of and interest on which
are guaranteed by, the United States of America, or obligations of the state of North Dakota or of
any municipality as defined in section 21-03-01 prior to or during building or other campus
improvement construction except to the extent such investment is prohibited or restricted by any
covenant made with or for the benefit of bondholders. The board is authorized to make all
contracts and to cause the execution of all instruments which in its discretion may be deemed
necessary or advisable to provide for the construction, furnishing, and equipment of the building
or other campus improvement or for the sale of the bonds or for interim financing deemed
necessary or advisable pending the sale of the bonds and pledging the proceeds of the bonds.15-55-05.1. Interim financing. The board may provide for interim financing pendingcompletion of revenue-producing projects at state institutions of higher learning and financing the
cost thereof and may authorize the issuance and sale of special interim warrants for that
essential governmental purpose, such warrants to be paid with interest from:1.The proceeds of definitive bonds issued in accordance with this chapter;2.Warrants issued to refund outstanding warrants; or3.The combined net revenues to be derived from the operation of buildings and
campus improvements for which bonds are outstanding with which the definitive
bonds to be issued for such project will be on a parity.The board shall arrange for the proper preparation and sale of the warrants and shallissue the warrants in an aggregate principal amount not exceeding the sum of bonds authorized
and necessary to finance completion of the project. Interim warrants are subject to call and
prepayment on thirty days' prior written notice to the place of payment at par and accrued interest
to date of prepayment at the option of the board; must mature not more than three years from
their date; and may bear such rate or rates of interest as the board may provide, not exceeding
an average net interest cost of twelve percent per annum on issues sold at private sale. There is
no interest rate ceiling on warrant issues sold at public sale or to the state of North Dakota or any
of its agencies or instrumentalities. Interim warrants may be sold on the basis of ninety-five
percent of par plus accrued interest to date of delivery. All warrants for a particular project must
mature within three years from the date of issuing the first warrants for the project. If warrants
are issued to refund warrants, the refunded warrants must be paid and canceled upon the
issuance of the refunding warrants, or the proceeds at the sale of the refunding warrants,
excepting the accrued interest received, must be used to purchase direct obligations of the
United States of America. Such obligations must mature at such time or times, with interest
thereon or the proceeds received therefrom, to provide funds adequate to pay, when due or
called for redemption prior to maturity, the warrants to be refunded together with the interest
accrued thereon and any redemption premium due thereon. Such proceeds or obligations of the
United States of America must, with all other funds legally available for such purpose, be
deposited in escrow with a banking corporation or national banking association located in and
doing business in the state of North Dakota, with power to accept and execute trusts, or any
successor thereto, which is also a member of the federal deposit insurance corporation and of
the federal reserve system. The proceeds or obligations are to be held in an irrevocable trust
solely for and until the payment and redemption of the warrant to be refunded. Any balance
remaining in escrow after the payment and retirement of the warrants to be refunded must bePage No. 4returned to the board to be used and held for use as revenues pledged for the payment of the
definitive bonds. Interim warrants have all of the qualities and incidents of negotiable paper and
are not subject to taxation by the state of North Dakota or by any county, municipality, or political
subdivision therein. Interim warrants are eligible for investment of funds the same as definitive
bonds are or would be eligible for investment under section 15-55-08.Such warrants may not constitute a general obligation indebtedness of the state of NorthDakota nor of the institution for which they are issued nor of the state board of higher education
nor of the individual members, officers, or agents thereof; are payable solely as provided in this
section; and the warrants issued and sold must so state.15-55-06.Designations of agent and depositories - Disposition and use ofrevenues - Funds created. All income and revenues derived from the operation of any building
or other campus improvement financed or the revenues of which are pledged in the manner
provided in this chapter must be collected by such officer or agent of the institution where the
building or other campus improvement is located as the state board of higher education from
time to time may designate and must be accounted for by such officer or agent, deposited, and
remitted as in this section provided. The said board, in its resolution authorizing the bonds or in
the trust agreement or agreements executed and delivered by the board, shall provide for the
disposition of and accounting for all such revenues by such officer or agent, including the
designation of a depository or depositories, the payment of expenses of operation and
maintenance, the remittance of revenues to the paying agent designated in the bonds for
payment of principal of and interest on the bonds when due, and the investment and disposition
of revenues not immediately required for payment of expenses, principal, and interest. The
board may designate as a depository for such revenues and funds either the state treasury or the
Bank of North Dakota or the trustee under the trust agreement for the bondholders or a bank
which is a duly designated depository for state funds or as provided in section 15-55-05. The
said board may, in its resolution authorizing the bonds or in the trust agreement or agreements
executed and delivered by the board, provide for an expense fund to be retained by the collecting
officer for the purpose of paying and may direct the collecting officer to pay the accrued or
anticipated expenses of operation and maintenance of the building or campus improvement, and
if the board so directs or if such expense fund is so provided, the collecting officer may pay such
expenses as so directed by the board or from said fund. The funds required to be remitted to the
state treasurer, if any, and any funds derived from revenues pledged to the bondholders must be
held by the collecting officer or in the depository for such funds designated by the board in a
special fund or funds, to be applied solely to the payment of the principal and interest on said
bonds, and the establishment of a reserve for future payments until all of said bonds and interest
thereon have been fully paid; provided, that to the extent not prohibited or restricted by any
covenant made with or for the benefit of the bondholders, the board may invest any such funds in
direct obligations of, or obligations the principal of and interest on which are guaranteed by, the
United States of America, or obligations of the state of North Dakota or of any municipality as
defined in section 21-03-01 and may devote revenues not currently required for payment of
principal and interest, for the creation or maintenance of a debt service reserve, or for expenses
of operation and maintenance to such purposes as the board from time to time may designate,
including replacing the furnishings and equipment of such building or buildings or campus
improvements and improving said building or buildings or campus improvements.15-55-07. Endorsement of bonds - Attorney general to approve - Incontestable -Exception. All bonds issued under the provisions of this chapter must have endorsed thereon a
statement to the effect that the same do not constitute an obligation of the state of North Dakota,
the state board of higher education, nor the individual members, officers, or agents thereof, nor of
the institution upon the campus of which the building or campus improvement is located, and that
the said bonds are payable solely and only out of the revenues to be produced and received from
the operation of said building or campus improvement. Such bonds must be submitted to the
attorney general of North Dakota for examination and when such bonds have been examined
and certified as legal obligations by the attorney general in accordance with such requirements
as the attorney general may make, are incontestable in any court in this state unless suit thereon
is brought in a court having jurisdiction thereof within thirty days from the date of such approval.
Bonds so approved by the attorney general are prima facie valid and binding obligationsPage No. 5according to their terms and the only defense which may be offered thereto in any suit instituted
after such thirty-day period has expired is forgery, fraud, or violation of the constitution.15-55-08. Who may invest in bonds. Any bank or trust company organized under thelaws of this state may invest its capital and surplus in bonds issued under this chapter. Any state
board, bureau, institution, or industry having the power to invest public funds or the funds of such
board, bureau, institution, or industry may invest said funds in bonds issued pursuant to this
chapter in the same manner and under the same restrictions as are provided by law for other
investments. The officers having charge of any sinking fund of any county, city, town, township,
or school district thereof may invest the sinking fund of such county, city, town, township, or
school district in bonds issued under the provisions thereof. The bonds are authorized collateral
security for the deposit of any public funds and for the investment of trust funds.15-55-09. Construction of chapter not to permit obligating of state. Nothing in thischapter may be construed to authorize or permit the state board of higher education, or any
officer or agency of the state, to create any state debts, or to incur any obligations of any kind or
nature, except as are payable solely and only from the special funds to be created from the
revenues of the building or buildings or other campus improvements erected or constructed
under the terms and provisions of this chapter, nor may the state of North Dakota or any funds or
moneys of this state other than the special funds derived from the income of said building or
buildings or campus improvements respectively ever be deemed obligated for the payment of the
said bonds or any part thereof.15-55-10. Limitation on buildings and other campus improvements and issuanceof bonds. No building or other campus improvement may be erected or constructed under this
chapter, and no bonds may be issued for the payment of the cost of any building or other
campus improvement under this chapter, unless authorized by legislative act, nor may any
building or other campus improvement be erected at a cost exceeding the amount fixed by the
legislative assembly as the maximum to be expended for the building or other campus
improvement undertaken under this chapter. The legislative authorization may be aggregated
and the appropriation of the proceeds of the bonds for the construction of the buildings or
improvements are not subject to cancellation under section 54-44.1-11. Authorization for the
issuance of bonds by the legislative assembly expires four years after the effective date of the
authorization unless bonds have been issued for the construction of buildings or improvements in
the amounts so authorized or a contract for the design of the building has been signed by the
state board of higher education before the expiration date or the authorization specifies a
different expiration date. Refunding bonds may be issued by the state board of higher education
under this chapter without legislative act to refund, at or before the maturity of or pursuant to any
privilege of prepayment reserved in or granted with respect to, any bonds issued to pay the cost
of buildings or other campus improvements designated and authorized by legislative act.15-55-11. Issuance and sale of tax-exempt bonds authorized - Amount. Omitted.15-55-12. Bonds not a general obligation of state or its institutions. Omitted.15-55-13. Additional revenue-producing buildings authorized. Omitted.15-55-14.Rental income from unencumbered revenue-producing buildings orother campus improvements may be applied to bond retirement. The state board of higher
education, when issuing bonds under the provisions of this chapter and the powers herein
granted, has additional powers as follows:1.When the state board of higher education has issued bonds as provided in this
chapter for the purpose of securing funds for all or part of the cost of construction,
equipment, and furnishing of any new revenue-producing building or other campus
improvement for any of the state-supported institutions of higher learning of the state
of North Dakota, or for the purpose of refunding any such bonds, said board is
hereby authorized to cover, from time to time, into the interest and principal payment
fund for bonds issued, or into a fund for operation and maintenance of the building orPage No. 6other campus improvement so financed or into a fund for repair or replacement of
the building or other campus improvement, its equipment and furnishings, the rental
or income from revenue-producing buildings or other campus improvements which
are not encumbered or impressed with any lien and which are located upon the
campuses of such institutions.2.In case of destruction of such revenue-producing buildings or campus improvements
by fire, tornado, cyclone, or other cause, the proceeds from insurance on such
revenue-producing buildings or campus improvements shall be covered into the
bond payment fund for the payment of bonds issued under this chapter unless such
insurance may be and is used for the repair or replacement of the building or
campus improvement, its equipment and furnishings.3.Therentalincomefromsaidrevenue-producingbuildingsorotherrevenue-producing campus improvements, and the proceeds of insurance thereon
may be irrepealably pledged to the payment of the principal and interest of the
bonds issued as in this chapter provided, or to the expenses of operation and
maintenance or repair or replacement of the building or campus improvement, its
equipment and furnishings.4.The bonds issued under the provisions of this chapter may not be an indebtedness
or obligation of the state of North Dakota or of any of the state institutions nor of any
board, bureau, or officer of the state of North Dakota, but such bonds must be
payable solely out of income and revenue as provided in this chapter.The rental income from the revenue-producing buildings or other revenue-producing campus
improvements, as defined herein, of any educational institutions of higher learning of the state
shall be covered only into a fund for a revenue-producing building or other revenue-producing
campus improvement for such educational institution and not to any other institution.15-55-15. Bond issues - Amounts and purposes (1955). Omitted.15-55-16. Bond issues - Amounts and purposes (1957). Omitted.15-55-17. Bond issues - Amounts and purposes (1959). Omitted.15-55-18. School district retirement of bonds for junior colleges and off-campuseducational centers. Repealed by S.L. 1999, ch. 154,