Reprinted

February 2, 2010





HOUSE BILL No. 1297

_____


DIGEST OF HB 1297 (Updated February 1, 2010 5:26 pm - DI 92)



Citations Affected: IC 21-29; IC 21-32; IC 21-33; IC 21-34; IC 21-35.

Synopsis: Financing public university projects. Makes changes in the law governing the financing of capital projects by state educational institutions. Allows a state educational institution to enter an energy cost savings contract if the institution reasonably expects that the cost of the project will not exceed the expected savings within 20 years (instead of the 10 year period specified by current law). Provides that a provider may include a guaranty in an energy cost savings contract that the savings will meet or exceed the cost of the project not later than 20 years after the installation of the project (instead of the 10 year period specified by current law). Repeals a requirement that certain revenue bonds be approved in an appropriation act of the general assembly.

Effective: Upon passage.





Klinker, Cherry, Pelath, Smith M




    January 13, 2010, read first time and referred to Committee on Education.
    January 28, 2010, reported _ Do Pass.
    February 1, 2010, read second time, amended, ordered engrossed.





Reprinted

February 2, 2010

Second Regular Session 116th General Assembly (2010)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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HOUSE BILL No. 1297



    A BILL FOR AN ACT to amend the Indiana Code concerning education.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 21-29-3-2; (10)HB1297.2.1. -->     SECTION 1. IC 21-29-3-2, AS ADDED BY P.L.2-2007, SECTION 270, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. This chapter shall not be construed as limiting or restricting the investment powers otherwise provided state educational institutions, including the power to adopt and implement investment policies under IC 21-29-2-1 and IC 21-29-2-2.
SOURCE: IC 21-32-1-2; (10)HB1297.2.2. -->     SECTION 2. IC 21-32-1-2, AS ADDED BY P.L.2-2007, SECTION 273, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. (a) "Bonds" includes:
        (1) bonds;
         (2) notes;
        (2) (3) debentures; and
        (3) (4) other evidences of indebtedness.
    (b) The term does not include:
        (1) certificates of participation in lease purchase agreements;
        (2) installment contracts; or
        (3) instruments similar to installment contracts or certificates

of participation in lease purchase agreements.

SOURCE: IC 21-32-2-2; (10)HB1297.2.3. -->     SECTION 3. IC 21-32-2-2, AS ADDED BY P.L.2-2007, SECTION 273, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. A state educational institution may do any of the following:
        (1) Borrow funds on a temporary basis in anticipation of the issuance of long term obligations.
        (2) Use the proceeds of a temporary borrowing for any purpose for which the institution could issue or incur obligations under IC 21-33-3-5, IC 21-34, IC 21-35-2, IC 21-35-3, or IC 21-35-5.
        (3) Issue a temporary borrowing:
            (A) in the form of a bond, note, commercial paper, or any other form;
            (B) upon the terms and conditions and with the provisions (including redemption provisions);
            (C) at the rate or rates of interest (fixed or variable); and
            (D) subject to subdivision (5), in the denominations;
        as the state educational institution determines under subdivision (6).
        (4) Negotiate the terms of any temporary borrowing.
        (5) Make the denominations determined under subdivision (3)(D) convertible into different denominations.
        (6) Make the determinations under subdivision (3) by any of the following:
            (A) The adoption of a resolution.
            (B) The approval of a form of indenture between the state educational institution and a designated corporate trustee.
SOURCE: IC 21-32-3-7; (10)HB1297.2.4. -->     SECTION 4. IC 21-32-3-7, AS ADDED BY P.L.2-2007, SECTION 273, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 7. (a) As used in this section, "check" includes electronic transfer by wire transfer or other similar means.
    (a) (b) A state educational institution may not:
        (1) accept a bid for the bonds, other than a bid submitted by the federal government or any agency of the federal government; or
        (2) execute and deliver a contract of sale for the bonds;
unless the bid or contract is accompanied by a certified check or cashier's check in an amount equal to one percent (1%) of the principal amount of the bonds sold.
    (b) (c) The check required by subsection (a) (b) must be:
        (1) payable to the state educational institution issuing the bonds; and
        (2) drawn on a bank or trust company, in or out of state, that is

insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation.
    (c) (d) The state educational institution shall:
        (1) hold the check required by subsection (a) (b) as a guaranty of the performance of:
            (A) the bid, if the bid is accepted; or
            (B) the contract, if the contract is signed; and
        (2) return the check required under subsection (a) (b) to a bidder if that bidder's bid is not accepted.
    (d) (e) If a bid is accepted and the bidder fails to perform the bid, the check required under subsection (a) (b) and the proceeds of the check are:
        (1) the property of the state educational institution; and
        (2) considered liquidated damages to the state educational institution arising from the default.
    (e) (f) A contract for the purchase of bonds at negotiated sale must provide that if the purchaser fails to perform the purchaser's obligation to pay for the bonds, the check required under subsection (a) (b) and the proceeds from the check are:
        (1) the property of the state university or college; and
        (2) considered liquidated damages to the state educational institution arising from the default.

SOURCE: IC 21-33-4-5; (10)HB1297.2.5. -->     SECTION 5. IC 21-33-4-5, AS ADDED BY P.L.2-2007, SECTION 274, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. After reviewing proposals submitted under this chapter, a state educational institution may enter into energy cost savings contracts with a qualified provider if the state educational institution reasonably expects that the cost of a qualified energy savings project recommended in the proposal would not exceed the amount to be saved in either energy or operational costs, or both, within the ten (10) twenty (20) year period following the date installation is complete if the recommendations in the proposal are followed. An energy cost savings contract may also include a guaranty from the qualified provider to the state educational institution that either the energy or operational cost savings, or both, will meet or exceed the cost of the energy cost savings projects not later than ten (10) twenty (20) years after the date installation is complete.
SOURCE: IC 21-34-1-2; (10)HB1297.2.6. -->     SECTION 6. IC 21-34-1-2, AS ADDED BY P.L.2-2007, SECTION 275, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. This article, except IC 21-34-11-5, does not apply to the acquisition, construction, financing, or refinancing of any revenue producing facility that a state educational institution is

authorized to acquire, construct, or finance under IC 21-35-2 or IC 21-35-3.

SOURCE: IC 21-34-1-7; (10)HB1297.2.7. -->     SECTION 7. IC 21-34-1-7, AS ADDED BY P.L.2-2007, SECTION 275, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 7. (a) "Building facility" means the following:
        (1) Any buildings, structures, improvements, or facilities.
        (2) Any utilities, other services, and appurtenances related to an item described in subdivision (1) (including facilities for the production and transmission of heat, light, water and power, sewage disposal facilities, streets and walks, and parking facilities).
        (3) The land required for items described in subdivision (1) or (2).
     (b) The term includes:
         (1) equipment;
        (2) software; and
        (3) costs of customization, installation, and training in regard to equipment or software, or both.

SOURCE: IC 21-34-1-12; (10)HB1297.2.8. -->     SECTION 8. IC 21-34-1-12, AS ADDED BY P.L.2-2007, SECTION 275, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 12. "Fee replacement" means payments to a state educational institution to be used to pay indebtedness resulting from financing the cost of:
        (1) planning;
        (2) purchasing;
        (3) rehabilitation;
        (4) construction;
        (5) repair;
        (6) leasing;
        (7) lease-purchasing; or
        (8) otherwise acquiring;
land, buildings, facilities, and equipment to be used for academic and educational, administrative, or instructional purposes.
SOURCE: IC 21-34-1-13; (10)HB1297.2.9. -->     SECTION 9. IC 21-34-1-13, AS ADDED BY P.L.2-2007, SECTION 275, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 13. "Grant" means money received under a written agreement or written agreements for a grant or gift from any one (1) or more of the following sources:
        (1) The United States government or its agencies.
        (2) The state or any of its agencies. or
        (3) A private corporation, individual, trust, or foundation, to be used for the if the money is provided for the purpose of acquisition, improvement, renovation, or construction of building

facilities that a state educational institution may lawfully undertake.

SOURCE: IC 21-34-1-14.2; (10)HB1297.2.10. -->     SECTION 10. IC 21-34-1-14.2 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 14.2. "Grant anticipation note" refers to a note executed to evidence a grant anticipation loan.
SOURCE: IC 21-34-7-2; (10)HB1297.2.11. -->     SECTION 11. IC 21-34-7-2, AS ADDED BY P.L.2-2007, SECTION 275, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. A grant anticipation loan may not exceed eighty percent (80%) of the estimated aggregate amount of the grant or grants in anticipation of which the loan is made. The board of trustees of the state educational institution shall make prepayments of the outstanding balance of its note or retire one (1) or more of its series of outstanding notes promptly upon partial receipt of grant funds so that the outstanding amount of any loan does not exceed the balance of the grant funds yet to be received. The grant anticipation note must be structured to amortize and to pay principal of and interest on the loan in accordance with anticipated receipts of the grant or grants. A grant anticipation note may also be payable from other revenues or amounts available for pledge under IC 21-34-6-2.
SOURCE: IC 21-34-10-1; (10)HB1297.2.12. -->     SECTION 12. IC 21-34-10-1, AS ADDED BY P.L.2-2007, SECTION 275, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. (a) Bonds may not be issued by the board of trustees of a state educational institution under this article without the specific approval of: the:
        (1) the budget agency, if:
            (A) the bonds are issued for the refunding or advance refunding of any outstanding bonds approved under this chapter; and
            (B) the board of trustees of the issuing state educational institution makes the findings described in subsection (b); or

         (2) the budget committee,
        (2) the budget agency, and
        (3) the governor, if subdivision (1) does not apply.
(b) The budget agency may request and consider the recommendation of the staff of the Indiana finance authority with respect to the approval of a bond issue under this section.
     (b) The board of trustees of a state educational institution may provide for refunding or advance refunding of any outstanding

bonds under subsection (a)(1) whenever the board of trustees of the state educational institution finds that the refunding or advance refunding will benefit the state educational institution because:
        (1) a net savings to the state educational institution will be effected; or
        (2) the net present value of principal and interest payments on the bonds is less than the net present value of the principal and interest payments on the outstanding bonds to be refunded.

SOURCE: IC 21-34-11; (10)HB1297.2.13. -->     SECTION 13. IC 21-34-11 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]:
     Chapter 11. Research Intensive State Educational Institutions
    Sec. 1.    This chapter is supplemental to the authorizations contained in IC 21-34-6 through IC 21-34-10 and applies to a research intensive state educational institution as specified in this chapter.
    Sec. 2. As used in this chapter, "general revenues" means the general revenues of a research intensive state educational institution, including mandatory student fees and tuition and state appropriations for the general operating support of the research intensive state educational institution, subject to any prior or parity lien granted in favor of bondholders under IC 21-35-2, IC 21-35-3, or IC 21-35-5. However, the term does not include specifically dedicated appropriations and gift, grant, or investment revenues specifically dedicated under law or by the instrument creating the revenues for other purposes.
    Sec. 3. As used in this chapter, "research" means an activity carried out for a purpose described in IC 21-35-3-2(2)(A) or IC 21-35-3-2(2)(B).
    Sec. 4.    As used in this chapter, "research intensive state educational institution" means Purdue University.
    Sec. 5.    In addition to the purposes specified in IC 21-34-6-1 for which bonds may be issued, and notwithstanding IC 21-34-1-2, the board of trustees of a research intensive state educational institution may issue bonds under IC 21-34-6 through IC 21-34-10 to:
        (1) pay part or all of the cost to create or enhance endowments used to establish, attract, and retain faculty or to establish distinguished professorships or similar designations;
        (2) pay part or all of the cost to build or acquire research equipment or research facilities, including renovations;
        (3) pay part or all of the cost to establish or invest in research programs, excluding compensation costs;
        (4) pay part or all of the cost to establish and invest in research centers in partnerships with federal, state, industrial, and university sponsors, excluding compensation costs;
        (5) pay part or all of the cost to provide bridge funding for research support, excluding compensation costs; and
        (6) pay part or all of the costs of any facility improvement, equipment, or work authorized under IC 21-35-2, IC 21-35-3, and IC 21-35-5.
    Sec. 6.    In addition to the sources specified in IC 21-34-6-2, the board of trustees of a research intensive state educational institution may issue bonds under IC 21-34-6 through IC 21-34-10 that are payable from general revenues, subject to any prior or parity liens as set forth in section 2 of this chapter or IC 21-34-6-2.
    Sec. 7. (a) Notwithstanding IC 21-34-10-2, IC 21-33-3-5, IC 21-33-3-9, IC 21-35-2-2, IC 21-35-2-23, or any other law, the board of trustees of a research intensive state educational institution may issue bonds:
        (1) payable from the sources specified in section 6 of this chapter; or
        (2) payable from or secured by the revenues or revenue generating assets specified in IC 21-34-6-2;
without the prior approval of the general assembly for either the bonds or the project to be financed by the bonds so long as the bonds are not eligible for, or the subject of, fee replacement appropriations.
    (b) IC 21-34-10-1 and IC 21-34-10-5 apply to bonds authorized by this section.

SOURCE: IC 21-35-3-7; (10)HB1297.2.14. -->     SECTION 14. IC 21-35-3-7, AS ADDED BY P.L.2-2007, SECTION 276, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 7. (a) This section and any other provisions of this chapter related to implementing this section apply only to the following state educational institutions:
        (1) Indiana University.
        (2) Purdue University.
    (b) The board of trustees of Indiana University and the board of trustees of Purdue University may, if the boards of trustees of the state educational institutions find that a necessity exists, erect, construct, reconstruct, extend, remodel, improve, complete, equip, furnish, operate, control, and manage research facilities, if revenue from state, federal, local, or private gifts, grants, contractual payments, or

reimbursements is available in an amount that is reasonably expected to at least equal the annual debt service requirements of the bonds and the costs to operate the research facility for each fiscal year that the bonds are outstanding at or in connection with any of the following campuses of Indiana University or Purdue University:
        (1) Purdue University-West Lafayette Campus.
        (2) Indiana University-Purdue University at Indianapolis (IUPUI).
        (3) Indiana University-Bloomington Campus.
    (c) Student fees and money appropriated by the general assembly may not be used to pay the debt service requirements or the maintenance expenses of a research facility. facilities, to the extent they are financed under this chapter.

SOURCE: IC 21-35-2-22; (10)HB1297.2.15. -->     SECTION 15. IC 21-35-2-22 IS REPEALED [EFFECTIVE UPON PASSAGE].
SOURCE: ; (10)HB1297.2.16. -->     SECTION 16. An emergency is declared for this act.