Senate Study Bill 3070 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON SCHULTZ) A BILL FOR An Act regarding port authorities, including by allowing port 1 authorities to enter into certain loan agreements and lease 2 contracts. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5606XC (1) 89 th/ns
S.F. _____ Section 1. Section 28J.1, subsections 1 and 3, Code 2022, 1 are amended to read as follows: 2 1. “Authorized purposes” means an activity that enhances, 3 fosters, aids, provides, or promotes transportation, 4 infrastructure, utility service, flood and erosion control, 5 economic development, housing, recreation, education, 6 governmental operations, culture, or research within the 7 jurisdiction of a port authority. 8 3. “City” means the same as defined in section 362.2 , and 9 also includes a city enterprise as defined in section 384.24 . 10 Sec. 2. Section 28J.1, subsection 6, paragraphs d, f, and g, 11 Code 2022, are amended to read as follows: 12 d. The cost of machinery, furnishings, equipment, financing 13 charges, interest prior to and during construction and for 14 no more than twelve months after completion of construction, 15 engineering, architectural services, technical services, 16 preliminary reports, property valuations, consequential 17 damages or costs, provisions for contingencies, supervision, 18 inspection, testing, and expenses of research and development 19 with respect to a facility. 20 f. The interest upon the revenue bonds , and pledge 21 orders , loan agreements, lease contracts, and certificates of 22 participation in or other participatory interests or evidences 23 of any obligation under a loan agreement or lease contract, 24 during the period or estimated period of construction and 25 for twelve months thereafter, or for twelve months after the 26 acquisition date, and upon reserve funds as the port authority 27 deems advisable in connection with a facility and the issuance 28 of port authority revenue bonds , and pledge orders , loan 29 agreements, lease contracts, and certificates of participation 30 in or other participatory interests or evidences of any 31 obligation under a loan agreement or lease contract . 32 g. The costs of issuance of port authority revenue bonds , 33 and pledge orders , loan agreements, lease contracts, and 34 certificates of participation in or other participatory 35 -1- LSB 5606XC (1) 89 th/ns 1/ 22
S.F. _____ interests or evidences of any obligations under a loan 1 agreement or lease contract . 2 Sec. 3. Section 28J.1, subsections 7 and 8, Code 2022, are 3 amended to read as follows: 4 7. “Facility” or “port authority facility” means any 5 public works project, intermodal freight or transportation 6 facility, project for which tax-exempt financing is authorized 7 by the Internal Revenue Code, and real or personal property 8 or improvements owned, leased, constructed, or otherwise 9 controlled or financed by or for a port authority and that 10 is related to or in furtherance of one or more authorized 11 purposes. 12 8. “Governmental agency” means a department, division, 13 or other unit of state government of this state or any other 14 state, city, county, any political subdivision, township, or 15 other governmental subdivision, or any city utility, any other 16 public corporation , special purpose district, authority, or 17 agency created under the laws of this state, any other state, 18 the United States, or any department or agency thereof, or any 19 agency, commission, or authority established pursuant to an 20 interstate compact or agreement or combination thereof. 21 Sec. 4. Section 28J.1, Code 2022, is amended by adding the 22 following new subsection: 23 NEW SUBSECTION . 8A. “Net revenues” means revenues less 24 operating expenses. 25 Sec. 5. Section 28J.1, subsections 11, 12, and 14, Code 26 2022, are amended to read as follows: 27 11. “Political subdivision” means a city, county, 28 city-county consolidation, or multicounty consolidation, or 29 combination thereof municipality as defined in section 16.151 . 30 12. “Political subdivisions comprising the port authority” 31 means the each political subdivisions subdivision which created 32 or participated in the creation of the port authority under 33 section 28J.2 , or which joined an existing port authority under 34 section 28J.4 . 35 -2- LSB 5606XC (1) 89 th/ns 2/ 22
S.F. _____ 14. “Port authority revenue bonds” or “revenue bonds” means 1 revenue bonds and revenue refunding bonds issued pursuant to 2 section 28J.21 . 3 Sec. 6. Section 28J.1, Code 2022, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 15A. “Public works project” means a 6 project of a type that a political subdivision is authorized 7 to undertake as otherwise provided by law, including 8 but not limited to public roads and other transportation 9 infrastructure, utility systems such as water treatment 10 facilities and sewage treatment facilities, or a project as 11 defined in section 384.80. 12 Sec. 7. Section 28J.1, subsection 16, Code 2022, is amended 13 to read as follows: 14 16. “Revenues” means rental rents, fees , income, rates, 15 tolls, receipts, and other charges or revenues received by a 16 port authority or derived from the operations of a facility 17 or for the use or services of a facility, a gift or grant 18 received with respect to a facility, moneys received with 19 respect to the lease, sublease, sale, including installment 20 sale or conditional sale, or other disposition of a facility, 21 moneys received in repayment of and for interest on any 22 loans made by the port authority to a person or governmental 23 agency, proceeds of port authority revenue bonds for payment 24 of principal, premium, or interest on the bonds authorized 25 by the port authority, proceeds or borrowings under port 26 authority loan agreements for payment of principal, premium, 27 or interest on the port authority obligations thereunder, 28 proceeds or borrowings under lease contracts for the payment of 29 lease payments thereunder, proceeds under any certificates of 30 participation in or other participatory interests or evidences 31 of any obligations under a loan agreement or lease contract, 32 proceeds from any insurance, condemnation, or guarantee 33 pertaining to the financing of the facility, and income and 34 profit from the investment of the proceeds of port authority 35 -3- LSB 5606XC (1) 89 th/ns 3/ 22
S.F. _____ revenue bonds , proceeds, or borrowings under loan agreements, 1 lease contracts, or proceeds of certificates of participation 2 in or other participatory interests or evidences of any 3 obligation under any loan agreement or lease contract or of any 4 revenues. 5 Sec. 8. Section 28J.2, subsection 1, Code 2022, is amended 6 to read as follows: 7 1. Two One or more political subdivisions may by resolution 8 create a port authority under this chapter by resolution 9 anywhere in this state, regardless of proximity to a body of 10 water . If a proposal to create a port authority receives a 11 favorable majority of the members of the elected legislative 12 body of each of the political subdivisions, the port authority 13 is created at the time provided in the resolution. The 14 jurisdiction of a port authority includes the territory 15 described in section 28J.8 . 16 Sec. 9. Section 28J.2, Code 2022, is amended by adding the 17 following new subsection: 18 NEW SUBSECTION . 5. A port authority is an entity separate 19 from the political subdivisions comprising the port authority. 20 The powers granted to the port authority pursuant to this 21 chapter are in addition to other powers, and constitute 22 independent powers that may be exercised by the port authority 23 whether or not the political subdivisions comprising the 24 port authority have or may exercise any of those powers 25 individually. 26 Sec. 10. Section 28J.3, subsection 1, Code 2022, is amended 27 to read as follows: 28 1. The political subdivisions comprising a port authority 29 may appropriate and expend public funds and make contributions 30 to the port authority to finance or subsidize the operation and 31 authorized purposes of the port authority and pay the costs 32 and expenses incurred by the port authority in carrying out 33 any operations or authorized purposes of the port authority . 34 Political subdivisions comprising the port authority may 35 -4- LSB 5606XC (1) 89 th/ns 4/ 22
S.F. _____ enter into agreements with each other or the port authority 1 providing for the contributions to the port authority to be 2 made by each of the political subdivisions and providing for 3 the obligations of each of the political subdivisions to pay, 4 finance, or subsidize the costs and expenses incurred by the 5 port authority. Political subdivisions comprising the port 6 authority may, by resolution, authorize and appropriate funds 7 for any contribution, payment, or financing required to be 8 made under such agreement by the use of any method available 9 to government agencies for providing funds or financing under 10 section 28J.16. A port authority shall control tax revenues 11 allocated to the facilities the port authority administers and 12 all revenues derived from the operation of the port authority, 13 the sale of its property, interest on investments, or from any 14 other source related to the port authority. 15 Sec. 11. Section 28J.5, subsections 1, 2, and 5, Code 2022, 16 are amended to read as follows: 17 1. A port authority created pursuant to section 28J.2 shall 18 be governed by a board of directors. Members of a board of 19 directors of a port authority created by two or more political 20 subdivisions shall be divided among the political subdivisions 21 comprising the port authority in such proportions as the 22 political subdivisions may agree and shall be appointed by the 23 respective political subdivision’s elected legislative body. 24 Members of a board of directors of a port authority created by 25 one political subdivision shall be appointed by the political 26 subdivision’s governing body. 27 2. The number of directors comprising the board of a port 28 authority created by two or more political subdivisions shall 29 be determined by agreement between the political subdivisions 30 comprising the port authority , and which . The number of 31 directors comprising the board of directors of a port authority 32 created by one political subdivision shall consist of the 33 number of directors the political subdivision considers 34 necessary. The number may be changed by resolution of each 35 -5- LSB 5606XC (1) 89 th/ns 5/ 22
S.F. _____ of the political subdivisions comprising the port authority 1 and in accordance with any agreement between the political 2 subdivisions comprising the port authority . 3 5. The board may provide procedures for the removal of a 4 director who fails to attend three consecutive regular meetings 5 of the board. If a director is so removed, a successor shall 6 be appointed for the remaining term of the removed director in 7 the same manner provided for the original appointment. The 8 appointing body Any political subdivisions comprising the port 9 authority may at any time remove a director appointed by it for 10 misfeasance, nonfeasance, or malfeasance in office and appoint 11 a successor for the remaining term of the removed director in 12 the same manner as provided for by the original appointment . 13 Sec. 12. Section 28J.8, subsection 1, Code 2022, is amended 14 to read as follows: 15 1. The area of jurisdiction of a port authority shall 16 include all of the territory of the port authority facility and 17 of the political subdivisions comprising the port authority 18 and, if the port authority owns or leases a railroad line or 19 airport, the territory on which the railroad’s line, terminals, 20 and related facilities or the airport’s runways, terminals, 21 and related facilities are located, regardless of whether the 22 territory is located in the political subdivisions comprising 23 the port authority. 24 Sec. 13. Section 28J.9, subsections 4, 8, and 10, Code 2022, 25 are amended to read as follows: 26 4. Acquire, construct, furnish, equip, maintain, repair, 27 sell, exchange, lease, lease with an option to purchase, 28 convey interests in real or personal property, and operate any 29 property of the port authority within or outside the territory 30 of the political subdivisions comprising the port authority in 31 furtherance of any authorized purpose, including in connection 32 with transportation, recreational, governmental operations, or 33 cultural activities in furtherance of an authorized purpose . 34 8. Issue port authority revenue bonds beyond the limit 35 -6- LSB 5606XC (1) 89 th/ns 6/ 22
S.F. _____ of bonded indebtedness provided by law, payable solely from 1 revenues as provided in section 28J.21 , and enter into loan 2 agreements and lease contracts as provided in section 28J.21A, 3 for the purpose of providing funds to pay the costs of any 4 facility or facilities of the port authority or parts thereof. 5 10. Enjoy and possess the same legislative and executive 6 rights, privileges, and powers granted cities under chapter 7 chapters 28F, 364 , and 384, and counties under chapter 331 , 8 including the exercise of police power but excluding the power 9 to levy taxes. 10 Sec. 14. Section 28J.11, subsection 2, Code 2022, is amended 11 to read as follows: 12 2. Impair the powers of a political subdivision to develop 13 or improve a port and terminal authority facility except as 14 restricted by section 28J.15 . 15 Sec. 15. Section 28J.13, Code 2022, is amended to read as 16 follows: 17 28J.13 Annual budget —— use of rents and charges. 18 The board shall annually prepare a budget for the port 19 authority. Revenues received by the port authority shall be 20 used for the general expenses of the port authority and to 21 pay interest, amortization, and retirement charges on , and 22 principal of, money borrowed and to make payments under lease 23 contracts . Except as provided in section 28J.26 , if there 24 remains, at the end of any fiscal year, a surplus of such funds 25 after providing for the above uses, the board shall pay such 26 surplus into the general funds of the political subdivisions 27 comprising the port authority as agreed to by the subdivisions. 28 Sec. 16. Section 28J.15, Code 2022, is amended to read as 29 follows: 30 28J.15 Limitation on certain powers of political 31 subdivisions. 32 A political subdivision creating or participating in the 33 creation of a port authority in accordance with section 28J.2 34 shall not, during the time the port authority is in existence, 35 -7- LSB 5606XC (1) 89 th/ns 7/ 22
S.F. _____ exercise the rights and powers provided in chapters 28A , 28K , 1 and 384 relating to the political subdivision’s authority over 2 a port, wharf, dock, harbor , or other facility substantially 3 similar to that political subdivision’s authority under a port 4 authority granted under this chapter , except as provided in 5 section 28J.2 . 6 Sec. 17. Section 28J.16, subsection 1, paragraphs a and c, 7 Code 2022, are amended to read as follows: 8 a. A port authority may charge, alter, and collect rental 9 rents, fees , or other charges or revenues for the use or 10 services of any port authority facility and contract for the 11 use or services of a facility, and fix the terms, conditions, 12 rental rents, fees, or other charges for the use or services. 13 c. The rental rents, fees , or other charges , and other 14 revenues of a port authority shall not be subject to 15 supervision or regulation by any other authority, commission, 16 board, bureau, or governmental agency of the state and the 17 contract may provide for acquisition of all or any part of 18 the port authority facility for such consideration payable 19 over the period of the contract or otherwise as the port 20 authority determines to be appropriate, but subject to the 21 provisions of any resolution authorizing the issuance of port 22 authority revenue bonds , loan agreements, lease contracts, 23 or certificates of participation in or other participatory 24 interests or evidences of any obligations under a loan 25 agreement or lease contract, or of any trust agreement securing 26 the bonds , loan agreements, lease contracts, or certificates of 27 participation in or other participatory interests or evidences 28 of any obligation under a loan agreement or lease contract . 29 Sec. 18. Section 28J.16, subsection 2, paragraph a, Code 30 2022, is amended to read as follows: 31 a. A governmental agency may cooperate with the port 32 authority in the acquisition , operation, or construction of a 33 port authority facility and shall enter into such agreements 34 with the port authority as may be appropriate, which shall 35 -8- LSB 5606XC (1) 89 th/ns 8/ 22
S.F. _____ provide for contributions by the parties in a proportion as may 1 be agreed upon and other terms as may be mutually satisfactory 2 to the parties including the authorization of the construction 3 of the facility by one of the parties acting as agent for all 4 of the parties and the ownership , operation, and control of 5 the facility by the port authority to the extent necessary or 6 appropriate. 7 Sec. 19. Section 28J.17, subsection 1, paragraph a, Code 8 2022, is amended to read as follows: 9 a. A port authority may enter into a contract or other 10 arrangement with a person, railroad, utility company, 11 corporation, governmental agency including sewerage, drainage, 12 conservation, conservancy, or other improvement districts in 13 this or other states, or the governments or agencies of foreign 14 countries as may be necessary or convenient for the exercise 15 of the powers granted by this chapter . The port authority 16 may purchase, lease, or acquire land or other property in 17 any county of this state and in adjoining states for the 18 accomplishment of authorized purposes of the port authority, or 19 for the improvement of the harbor and port authority facilities 20 over which the port authority may have jurisdiction including 21 development of port authority facilities in adjoining states. 22 The authority granted in this section to enter into contracts 23 or other arrangements with the federal government includes the 24 power to enter into any contracts, arrangements, or agreements 25 that may be necessary to hold and save harmless the United 26 States from damages due to the construction and maintenance by 27 the United States of work the United States undertakes. 28 Sec. 20. Section 28J.19, Code 2022, is amended to read as 29 follows: 30 28J.19 Property tax exemption. 31 A port authority shall be exempt from and shall not be 32 required to pay taxes on real property that is purchased by a 33 port authority or real property belonging to a port authority 34 that is used exclusively for an authorized purpose , as provided 35 -9- LSB 5606XC (1) 89 th/ns 9/ 22
S.F. _____ in section 427.1, subsection 34 . 1 Sec. 21. NEW SECTION . 28J.21A Loan agreements —— lease 2 contracts —— trust agreements. 3 1. Definitions. As used in this section, unless the context 4 otherwise requires: 5 a. “Lease contract” includes any certificates of 6 participation or other participatory interests in the lease 7 contract or obligations arising out of the lease contract. 8 b. “Loan agreement” includes any notes, certificates, or any 9 other participatory interests issued to evidence the parties’ 10 obligations arising out of the loan agreement. 11 2. Loan agreements. A port authority may enter into loan 12 agreements to borrow money to pay the costs of any facility, or 13 parts thereof, or to refund other obligations which are payable 14 from the net revenues of the port authority at lower, the same, 15 or higher rates of interest in accordance with the all of the 16 following terms and procedures: 17 a. A loan agreement entered into by a port authority may 18 contain provisions similar to those in loan agreements between 19 private parties, including but not limited to any of the 20 following: 21 (1) The loan agreement may provide for the issuance 22 of notes, certificates of participation, or any other 23 participatory interests to evidence the parties’ obligations. 24 (2) The loan agreement may provide for maturity in one or 25 more installments. 26 (3) The loan agreement may be in registered form and carry 27 registration and conversion privileges. 28 (4) The loan agreement may be payable as to principal and 29 interest at times and places as specified. 30 (5) The loan agreement may be subject to terms of redemption 31 prior to maturity with or without a premium. 32 (6) The loan agreement may be in one or more denominations. 33 b. A provision of a loan agreement which stipulates that 34 a portion of the payments be applied as interest is subject 35 -10- LSB 5606XC (1) 89 th/ns 10/ 22
S.F. _____ to chapter 74A and such interest may be at a variable rate or 1 rates changing from time to time in accordance with a base or 2 formula. Other laws relating to interest rates do not apply 3 and the provisions of chapter 75 are not applicable. 4 c. The board may authorize a loan agreement to be 5 payable solely from the net revenues of a port authority by 6 substantially following the authorization procedures of section 7 28J.21 for the issuance of revenue bonds. The resolution 8 authorizing the loan agreement may also prescribe additional 9 provisions, terms, conditions, and covenants that the port 10 authority deems advisable, consistent with this chapter, 11 including provisions for creating and maintaining reserve 12 funds and for the authorization of additional loan agreements 13 ranking on a parity with such loan agreements and additional 14 loan agreements junior and subordinate to such loan agreement, 15 and that such loan agreement shall rank on a parity with or 16 be junior and subordinate to any loan agreement which may be 17 then outstanding. A port authority loan agreement shall be 18 a contract between the port authority and the lender and the 19 resolution shall be made part of the contract. 20 d. A loan agreement to which a port authority is a party 21 is an obligation of the political subdivisions comprising the 22 port authority for the purposes of chapters 502 and 636, and 23 is a lawful investment for any bank, trust company, savings 24 association, deposit guaranty association, investment company, 25 insurance company, insurance association, executor, guardian or 26 trustee, and any fiduciary responsible for the investment of 27 funds or having charge of the loan retirement funds or sinking 28 funds of any port authority, governmental agency, or taxing 29 district of this state, any pension and annuity retirement 30 system, the Iowa public employees’ retirement system, the 31 police officers and fire fighters retirement systems under 32 chapters 410 and 411, or a revolving fund of a governmental 33 agency of this state, and are acceptable as security for the 34 deposit of public funds under chapter 12C. 35 -11- LSB 5606XC (1) 89 th/ns 11/ 22
S.F. _____ 3. Lease contracts. A port authority may enter into lease 1 contracts for real or personal property comprising a port 2 authority facility, or parts thereof, in accordance with all of 3 the following terms and procedures: 4 a. A port authority shall lease property only for a term 5 which does not exceed the economic life of the property, as 6 determined by the board. 7 b. A lease contract entered into by a port authority may 8 contain provisions similar to those found in lease contracts 9 between private parties, including but not limited to any of 10 the following: 11 (1) The lease contract may provide for the issuance of 12 certificates of participation or other participatory interests 13 in the lease contracts or any obligations thereunder. 14 (2) The lease contract may provide for the lessee to pay any 15 of the costs of operation or ownership of the leased property 16 and for the right to purchase the leased property. 17 c. A provision of a lease contract which stipulates that a 18 portion of the rent or lease payments be applied as interest 19 is subject to the provisions of chapter 74A and such interest 20 may be at a variable rate or rates changing from time to time 21 in accordance with a base or formula. Other laws relating to 22 interest rates shall not apply and the provisions of chapter 23 75 are not applicable. 24 d. The board may authorize a lease contract payable solely 25 from the net revenues of a port authority by substantially 26 following the authorization procedures set forth in section 27 28J.21 for the issuance of port authority revenue bonds. The 28 resolution authorizing the lease contract may also prescribe 29 additional provisions, terms, conditions, and covenants which 30 the port authority deems advisable, consistent with this 31 chapter, including provisions for creating and maintaining 32 reserve funds and the authorization of additional lease 33 contracts ranking on a parity with such lease contracts and 34 additional lease contracts junior and subordinate to such lease 35 -12- LSB 5606XC (1) 89 th/ns 12/ 22
S.F. _____ contracts, and that such lease contracts shall rank on a parity 1 with or be junior and subordinate to any lease contract which 2 may be then outstanding. A port authority lease contract shall 3 be a contract between the port authority and the lessor and the 4 resolution shall be part of the contract. 5 e. A lease contract to which a port authority is a party 6 is an obligation of the political subdivisions comprising the 7 port authority for the purposes of chapters 502 and 636, and 8 is a lawful investment for any bank, trust company, savings 9 association, deposit guaranty association, investment company, 10 insurance company, insurance association, executor, guardian or 11 trustee, and any fiduciary responsible for the investment of 12 funds or having charge of the lease retirement funds or sinking 13 funds of any port authority, governmental agency or taxing 14 district of this state, any pension and annuity retirement 15 system, the Iowa public employees’ retirement system, the 16 police officers and fire fighters retirement systems under 17 chapters 410 and 411, or a revolving fund of a governmental 18 agency of this state, and are acceptable as security for the 19 deposit of public funds under chapter 12C. 20 f. A contract for construction by a private party of 21 property to be leased by a port authority is not a contract for 22 a public improvement and shall not be subject to the provisions 23 of chapter 26 and section 28J.3, subsection 3. This paragraph 24 applies to all contracts that are subject to this subsection, 25 notwithstanding section 28J.9, subsection 18, or any other 26 provision of law that might otherwise apply, including a 27 requirement of notice, competitive bidding or selection, or 28 for the provision of security. However, if a contract is 29 funded in advance by means of the lessor depositing moneys to 30 be administered by a port authority with the port authority’s 31 obligation to make rent or lease payments commencing with 32 its receipt of moneys, a contract for construction of the 33 property in question awarded by the port authority is a public 34 improvement and is subject to the provisions of chapter 26. 35 -13- LSB 5606XC (1) 89 th/ns 13/ 22
S.F. _____ 4. Trust agreements. 1 a. In the discretion of the port authority, a loan agreement 2 or a lease contract authorized under this section and the port 3 authority’s obligations thereunder may be secured by a trust 4 agreement between the port authority and a corporate trustee 5 that may be any trust company or bank having the powers of a 6 trust company within this or any other state. Subject to the 7 other provisions of this paragraph, the corporate trustee may 8 also be the lender under a loan agreement or the lessor under a 9 lease contract authorized under this section. 10 b. The trust agreement may provide for the issuance of 11 notes to evidence the port authority’s obligations under a loan 12 agreement to which the port authority is a party. The trust 13 agreement may also provide for the issuance of certificates 14 of participation or other participatory interests in a lease 15 contract to which a port authority is a party. The trust 16 agreement, or any resolution authorizing the loan agreement or 17 the lease contract, may pledge or assign revenues of the port 18 authority to be received as payment of obligations under the 19 loan agreement or the lease contract and may contain provisions 20 for protecting and enforcing the rights and remedies of the 21 lender, the lessor, or the holders of notes evidencing the 22 port authority’s obligations under the loan agreement. These 23 provisions may include covenants setting forth the duties of 24 the port authority in relation to the acquisition of property, 25 the construction, improvement, maintenance, repair, operation, 26 and insurance of the port authority facility in connection 27 with which the loan agreement or the lease contract is 28 authorized, the rentals or other charges to be imposed for the 29 use or services of any port authority facility, the custody, 30 safeguarding, and application of all moneys, and provisions for 31 the employment of consulting engineers in connection with the 32 construction or operation of any port authority facility. 33 c. A bank or trust company incorporated under the laws 34 of this state that acts as the depository of the proceeds or 35 -14- LSB 5606XC (1) 89 th/ns 14/ 22
S.F. _____ borrowings provided under the loan agreement or lease contract 1 or of revenues, shall furnish any indemnifying bonds and may 2 pledge any securities that are required by the port authority. 3 The trust agreement may set forth the rights and remedies of 4 the lender, the lessor, or the holders of notes evidencing the 5 port authority’s obligations under the loan agreement and may 6 restrict the individual right of action by the lender, the 7 lessor, or the holders of notes evidencing the port authority’s 8 obligations under the loan agreement as is customary in trust 9 agreements or trust indentures securing similar loan agreements 10 or lease contracts. The trust agreement may contain any other 11 provisions that the port authority determines reasonable and 12 proper for the security of the lender, the lessor, or the 13 holders of notes evidencing the port authority’s obligations 14 under the loan agreement. All expenses incurred in carrying 15 out the provisions of the trust agreement may be treated as 16 a part of the cost of the operation of the port authority 17 facility. 18 5. Exclusions. Port authority loan agreements and lease 19 contracts authorized under this chapter shall not constitute 20 a debt, indebtedness, or a pledge of the faith and credit of 21 the port authority or the state or any political subdivision 22 of the state, within the meaning of any state constitutional 23 provision or statutory limitation, nor constitute or give rise 24 to a pecuniary liability of the port authority, any political 25 subdivisions comprising the port authority, the state, or 26 any political subdivision of the state, or a charge against 27 the general credit or taxing power of the port authority. 28 Any political subdivisions comprising the port authority, 29 the state, or any political subdivision of the state, and 30 the holders or owners of the obligations owed under a loan 31 agreement or lease contract shall not have taxes levied by the 32 state or by a taxing authority of a governmental agency of the 33 state for the payment of the principal of or interest owed on 34 such obligations. However, a loan agreement or lease contract 35 -15- LSB 5606XC (1) 89 th/ns 15/ 22
S.F. _____ and the obligation owed thereunder are payable solely from the 1 revenues and funds pledged for their payment as authorized 2 by this chapter. All loan agreements and lease contracts 3 authorized under this chapter and the evidence of obligations 4 owed under such loan agreements or lease contracts such shall 5 contain a statement to the effect that the loan agreement or 6 lease contract authorized under this chapter and the evidence 7 of obligations owed under the loan agreement or lease contract, 8 as to both principal and interest, are not debts of the port 9 authority or the state or any political subdivision of the 10 state, but are payable solely from revenues and funds pledged 11 for their payment. 12 6. Judicial proceedings. 13 a. The sole remedy for a breach or default of a term of 14 any port authority loan agreement or lease contract authorized 15 under this chapter is a proceeding in law or in equity by 16 suit, action, or mandamus to enforce and compel performance of 17 the duties required by this chapter and of the terms of the 18 resolution authorizing the loan agreement or lease contract, 19 or to obtain the appointment of a receiver to take possession 20 of and operate the port authority and to perform the duties 21 required by this chapter and the terms of the resolution 22 authorizing the loan agreement or lease contract. 23 b. An action shall not be brought after fifteen days from 24 the time the loan agreement or lease contract is authorized by 25 the port authority with regards to any of the following: 26 (1) The legality of the port authority loan agreement or 27 lease contract. 28 (2) The power of a port authority to authorize the port 29 authority loan agreement or lease contract. 30 (3) The effectiveness of any proceedings relating to the 31 authorization of the port authority loan agreement or lease 32 contract. 33 Sec. 22. Section 28J.25, Code 2022, is amended to read as 34 follows: 35 -16- LSB 5606XC (1) 89 th/ns 16/ 22
S.F. _____ 28J.25 Funds and property held in trust —— use and deposit of 1 funds. 2 All revenues, funds, properties, and assets acquired by the 3 port authority under this chapter , whether as proceeds from the 4 sale of port authority revenue bonds, pledge orders, borrowings 5 under a loan agreement, entering into a lease contract, 6 proceeds from the issuance of certificates of participation 7 or any other participatory interests in such loan agreement 8 or lease contract or as revenues, shall be held in trust for 9 the purposes of carrying out the port authority’s powers and 10 duties, shall be used and reused as provided in this chapter , 11 and shall at no time be part of other public funds. Such funds, 12 except as otherwise provided in a resolution authorizing port 13 authority revenue bonds or pledge orders, the loan agreement or 14 lease contract, or in a trust agreement securing the same, or 15 except when invested pursuant to section 28J.26 , shall be kept 16 in depositories selected by the port authority in the manner 17 provided in chapter 12C , and the deposits shall be secured 18 as provided in that chapter. The resolution authorizing the 19 issuance of revenue bonds or pledge orders, the loan agreement 20 or lease contract, or the trust agreement securing such bonds 21 or pledge orders, shall provide that any officer to whom, or 22 any bank or trust company to which, such moneys are paid shall 23 act as trustee of such moneys and hold and apply them for the 24 purposes hereof, subject to such conditions as this chapter and 25 such resolution or trust agreement provide. 26 Sec. 23. Section 28J.26, subsection 1, Code 2022, is amended 27 to read as follows: 28 1. If a port authority has surplus funds after making all 29 deposits into all funds required by the terms, covenants, 30 conditions, and provisions of outstanding revenue bonds, pledge 31 orders, loan agreements, or lease contracts and refunding bonds 32 which are payable from the revenues of the port authority 33 and after complying with all of the requirements, terms, 34 covenants, conditions, and provisions of the proceedings and 35 -17- LSB 5606XC (1) 89 th/ns 17/ 22
S.F. _____ resolutions pursuant to which revenue bonds, pledge orders, 1 and refunding bonds are issued or the loan agreement or lease 2 contract is authorized , the board may transfer the surplus 3 funds to any other fund of the port authority in accordance 4 with this chapter and chapter 12C , provided that a transfer 5 shall not be made if it conflicts with any of the requirements, 6 terms, covenants, conditions, or provisions of a resolution 7 authorizing the issuance of revenue bonds, pledge orders, 8 or other obligations which are or loan agreements or lease 9 contracts payable from the revenues of the port authority which 10 are then outstanding. 11 Sec. 24. Section 427.1, subsection 34, Code 2022, is amended 12 to read as follows: 13 34. Port authority property. The property of a port 14 authority created pursuant to section 28J.2 , when devoted to 15 public use and not held for pecuniary profit , or property 16 purchased by a port authority . 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill relates to the powers and duties of port 21 authorities. 22 Under Code chapter 28J, the bill modifies the defined 23 terms “authorized purposes”, “city”, “cost”, “facility” or 24 “port authority facility”, “governmental agency”, “political 25 subdivision”, “political subdivisions comprising the port 26 authority”, “port authority revenue bonds” or “revenue bonds”, 27 and “revenues”. The bill creates and defines the terms “net 28 revenues” and “public works project”. 29 The bill allows for the creation of a port authority by one 30 or more political subdivisions, rather than by two or more 31 political subdivisions. The bill provides for the creation of 32 a port authority anywhere in this state regardless of proximity 33 to a body of water. The bill also provides that a port 34 authority is an entity separate from the political subdivisions 35 -18- LSB 5606XC (1) 89 th/ns 18/ 22
S.F. _____ comprising the port authority. The powers granted to the 1 port authority may be exercised whether or not the political 2 subdivisions comprising the port authority may exercise those 3 same powers. 4 The bill provides that the political subdivisions 5 comprising the port authority may make contributions to the 6 port authority, in addition to appropriating or expending 7 public funds as set forth in current law, to finance or 8 subsidize the operation and authorized purposes of the port 9 authority, and pay the costs and expenses incurred by the 10 port authority in carrying out any operations or authorized 11 purposes of the port authority. Under the bill, political 12 subdivisions comprising the port authority are allowed to 13 enter into agreements with each other or the port authority 14 providing for the contributions to the port authority to be 15 made by each of the political subdivisions and providing for 16 the obligations of each of the political subdivisions to pay, 17 finance, or subsidize the costs and expenses incurred by the 18 port authority. 19 The bill makes conforming changes to Code section 28J.5 20 relating to the membership of the board of directors of a port 21 authority created by one political subdivision. The bill 22 further provides that any political subdivisions comprising the 23 port authority may appoint a successor for the remaining term 24 of a removed director. 25 The bill modifies the powers of a port authority as it 26 relates to its property regardless of whatever the property is 27 within or outside the territory of the political subdivisions 28 comprising the port authority if in furtherance of any 29 authorized purpose. The bill further allows a port authority 30 to enter into loan agreements and lease contracts, as provided 31 for in the bill, and to exercise the same powers granted to 32 cities under Code chapters 28F (joint financing of public works 33 and facilities) and 384 (city finance). 34 The bill allows a port authority to use its revenues for 35 -19- LSB 5606XC (1) 89 th/ns 19/ 22
S.F. _____ principal on borrowed money and payments under lease contracts. 1 The bill further provides that a contract regarding rentals or 2 charges for use of services of a port authority may provide 3 for acquisition of the port authority facility subject to the 4 provisions of any resolution authorizing the issuance of port 5 authority revenue bonds, loan agreements, lease contracts, or 6 any trust agreement securing such bonds, loan agreements, or 7 lease contracts. 8 The bill allows a governmental agency to cooperate with the 9 port authority in the operation of a port authority facility. 10 The bill provides that real property that is purchased by a 11 port authority is not subject to certain property taxes. 12 Under the provisions of the bill, a port authority may enter 13 into certain loan agreements and lease contracts. A port 14 authority may enter into loan agreements to borrow money to 15 pay the costs of any facility, or parts thereof, or to refund 16 other obligations which are payable from the net revenues of 17 the port authority at lower, the same, or higher rates of 18 interests. A port authority may enter into lease contracts 19 for real or personal property comprising a port authority 20 facility, but can only lease property for a term that does not 21 exceed the economic life of the property. The bill details 22 certain provisions similar to those in loan agreements and 23 lease contracts between private parties that a loan agreement 24 or lease contract entered into by a port authority may contain. 25 The bill provides certain conditions for when a loan agreement 26 or lease contract stipulates that a portion of the payments 27 be applied as interest. The board of a port authority can 28 authorize a loan agreement or lease contract, along with 29 prescribing additional terms and provisions, by resolution and 30 such resolution becomes part of the loan agreement or lease 31 contract. A loan agreement or lease contract in which a port 32 authority is a party is an obligation of political subdivisions 33 comprising the port authority. A contract for construction by 34 a private party of property to be leased by a port authority 35 -20- LSB 5606XC (1) 89 th/ns 20/ 22
S.F. _____ is not a contract for public improvement, except under certain 1 conditions. 2 The bill authorizes loan agreements or lease contracts to be 3 secured by a trust agreement between the port authority and a 4 corporate trustee, and further provides how the trust agreement 5 functions. 6 The bill provides that loan agreements and lease contracts 7 authorized by the bill do not constitute a debt, indebtedness, 8 or a pledge of faith and credit of the port authority or of 9 the state or any political subdivisions of the state nor do 10 any such agreements give rise to pecuniary liability as to 11 these entities or act as a charge against the general credit 12 or taxing power of the port authority. The bill provides that 13 any political subdivisions comprising the port authority, the 14 state, or any political subdivisions of the state, and the 15 holders or owners of obligations owed under a loan agreement 16 or lease contract cannot have taxes levied by the state or 17 by a taxing authority of a governmental agency of the state 18 for the payment of the principal of or interest owed on such 19 obligations. 20 Under the bill, the sole remedy for a breach or default of 21 any port authority loan agreement or lease contract authorized 22 by the bill is a proceeding in law or in equity to enforce and 23 compel performance of required duties and the terms of the 24 resolution authorizing the loan agreement or lease contract, 25 or to obtain the appointment of a receiver to take possession 26 and operate the port authority to perform the required duties 27 and terms. An action cannot be brought after 15 days from the 28 time the loan agreement or lease contract is authorized by the 29 port authority if the action regards the legality of the loan 30 agreement or lease contract, the power of the port authority 31 to authorize the loan agreement or lease contract, or the 32 effectiveness of any proceeding relating to the authorization 33 of the loan agreement or lease contract. 34 The bill makes conforming changes to Code sections 28J.8, 35 -21- LSB 5606XC (1) 89 th/ns 21/ 22
S.F. _____ 28J.11, 28J.15, 28J.17, 28J.25, and 28J.26. 1 -22- LSB 5606XC (1) 89 th/ns 22/ 22