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Senate Study Bill 3070 - IntroducedA Bill ForAn Act 1regarding port authorities, including by allowing port
2authorities to enter into certain loan agreements and lease
3contracts.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 28J.1, subsections 1 and 3, Code 2022,
2are amended to read as follows:
31. “Authorized purposes” means an activity that enhances,
4fosters, aids, provides, or promotes transportation,
5infrastructure, utility service, flood and erosion control,
6 economic development, housing, recreation, education,
7governmental operations, culture, or research within the
8jurisdiction of a port authority.
93. “City” means the same as defined in section 362.2, and
10also includes a city enterprise as defined in section 384.24.
11 Sec. 2. Section 28J.1, subsection 6, paragraphs d, f, and g,
12Code 2022, are amended to read as follows:
13d. The cost of machinery, furnishings, equipment, financing
14charges, interest prior to and during construction and for
15no more than twelve months after completion of construction,
16engineering, architectural services, technical services,
17preliminary reports, property valuations, consequential
18damages or costs, provisions for contingencies, supervision,
19inspection, testing, and expenses of research and development
20with respect to a facility.
21f. The interest upon the revenue bonds, and pledge
22orders, loan agreements, lease contracts, and certificates of
23participation in or other participatory interests or evidences
24of any obligation under a loan agreement or lease contract,
25 during the period or estimated period of construction and
26for twelve months thereafter, or for twelve months after the
27acquisition date, and upon reserve funds as the port authority
28deems advisable in connection with a facility and the issuance
29of port authority revenue bonds, and pledge orders, loan
30agreements, lease contracts, and certificates of participation
31in or other participatory interests or evidences of any
32obligation under a loan agreement or lease contract.
33g. The costs of issuance of port authority revenue bonds,
34 and pledge orders, loan agreements, lease contracts, and
35certificates of participation in or other participatory
-1-1interests or evidences of any obligations under a loan
2agreement or lease contract.
3 Sec. 3. Section 28J.1, subsections 7 and 8, Code 2022, are
4amended to read as follows:
57. “Facility” or “port authority facility” means any
6public works project, intermodal freight or transportation
7facility, project for which tax-exempt financing is authorized
8by the Internal Revenue Code, and real or personal property
9or improvements owned, leased, constructed, or otherwise
10controlled or financed by or for a port authority and that
11is related to or in furtherance of one or more authorized
12purposes.
138. “Governmental agency” means a department, division,
14or other unit of state government of this state or any other
15state, city, county, any political subdivision, township, or
16other governmental subdivision, or any city utility, any other
17public corporation, special purpose district, authority, or
18agency created under the laws of this state, any other state,
19the United States, or any department or agency thereof, or any
20agency, commission, or authority established pursuant to an
21interstate compact or agreement or combination thereof.
22 Sec. 4. Section 28J.1, Code 2022, is amended by adding the
23following new subsection:
24 NEW SUBSECTION. 8A. “Net revenues” means revenues less
25operating expenses.
26 Sec. 5. Section 28J.1, subsections 11, 12, and 14, Code
272022, are amended to read as follows:
2811. “Political subdivision” means a city, county,
29city-county consolidation, or multicounty consolidation, or
30combination thereof municipality as defined in section 16.151.
3112. “Political subdivisions comprising the port authority”
32means the each political subdivisions subdivision which created
33or participated in the creation of the port authority under
34section 28J.2, or which joined an existing port authority under
35section 28J.4.
-2- 114. “Port authority revenue bonds” or “revenue bonds” means
2revenue bonds and revenue refunding bonds issued pursuant to
3section 28J.21.
4 Sec. 6. Section 28J.1, Code 2022, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 15A. “Public works project” means a
7project of a type that a political subdivision is authorized
8to undertake as otherwise provided by law, including
9but not limited to public roads and other transportation
10infrastructure, utility systems such as water treatment
11facilities and sewage treatment facilities, or a project as
12defined in section 384.80.
13 Sec. 7. Section 28J.1, subsection 16, Code 2022, is amended
14to read as follows:
1516. “Revenues” means rental rents, fees, income, rates,
16tolls, receipts, and other charges or revenues received by a
17port authority or derived from the operations of a facility
18or for the use or services of a facility, a gift or grant
19received with respect to a facility, moneys received with
20respect to the lease, sublease, sale, including installment
21sale or conditional sale, or other disposition of a facility,
22moneys received in repayment of and for interest on any
23loans made by the port authority to a person or governmental
24agency, proceeds of port authority revenue bonds for payment
25of principal, premium, or interest on the bonds authorized
26by the port authority, proceeds or borrowings under port
27authority loan agreements for payment of principal, premium,
28or interest on the port authority obligations thereunder,
29proceeds or borrowings under lease contracts for the payment of
30lease payments thereunder, proceeds under any certificates of
31participation in or other participatory interests or evidences
32of any obligations under a loan agreement or lease contract,
33 proceeds from any insurance, condemnation, or guarantee
34pertaining to the financing of the facility, and income and
35profit from the investment of the proceeds of port authority
-3-1revenue bonds, proceeds, or borrowings under loan agreements,
2lease contracts, or proceeds of certificates of participation
3in or other participatory interests or evidences of any
4obligation under any loan agreement or lease contract or of any
5revenues.
6 Sec. 8. Section 28J.2, subsection 1, Code 2022, is amended
7to read as follows:
81. Two One or more political subdivisions may by resolution
9 create a port authority under this chapter by resolution
10 anywhere in this state, regardless of proximity to a body of
11water. If a proposal to create a port authority receives a
12favorable majority of the members of the elected legislative
13body of each of the political subdivisions, the port authority
14is created at the time provided in the resolution. The
15jurisdiction of a port authority includes the territory
16described in section 28J.8.
17 Sec. 9. Section 28J.2, Code 2022, is amended by adding the
18following new subsection:
19 NEW SUBSECTION. 5. A port authority is an entity separate
20from the political subdivisions comprising the port authority.
21The powers granted to the port authority pursuant to this
22chapter are in addition to other powers, and constitute
23independent powers that may be exercised by the port authority
24whether or not the political subdivisions comprising the
25port authority have or may exercise any of those powers
26individually.
27 Sec. 10. Section 28J.3, subsection 1, Code 2022, is amended
28to read as follows:
291. The political subdivisions comprising a port authority
30may appropriate and expend public funds and make contributions
31to the port authority to finance or subsidize the operation and
32authorized purposes of the port authority and pay the costs
33and expenses incurred by the port authority in carrying out
34any operations or authorized purposes of the port authority.
35Political subdivisions comprising the port authority may
-4-1enter into agreements with each other or the port authority
2providing for the contributions to the port authority to be
3made by each of the political subdivisions and providing for
4the obligations of each of the political subdivisions to pay,
5finance, or subsidize the costs and expenses incurred by the
6port authority. Political subdivisions comprising the port
7authority may, by resolution, authorize and appropriate funds
8for any contribution, payment, or financing required to be
9made under such agreement by the use of any method available
10to government agencies for providing funds or financing under
11section 28J.16. A port authority shall control tax revenues
12allocated to the facilities the port authority administers and
13all revenues derived from the operation of the port authority,
14the sale of its property, interest on investments, or from any
15other source related to the port authority.
16 Sec. 11. Section 28J.5, subsections 1, 2, and 5, Code 2022,
17are amended to read as follows:
181. A port authority created pursuant to section 28J.2 shall
19be governed by a board of directors. Members of a board of
20directors of a port authority created by two or more political
21subdivisions shall be divided among the political subdivisions
22comprising the port authority in such proportions as the
23political subdivisions may agree and shall be appointed by the
24respective political subdivision’s elected legislative body.
25Members of a board of directors of a port authority created by
26one political subdivision shall be appointed by the political
27subdivision’s governing body.
282. The number of directors comprising the board of a port
29authority created by two or more political subdivisions shall
30be determined by agreement between the political subdivisions
31comprising the port authority, and which. The number of
32directors comprising the board of directors of a port authority
33created by one political subdivision shall consist of the
34number of directors the political subdivision considers
35necessary. The number may be changed by resolution of each
-5-1of the political subdivisions comprising the port authority
2and in accordance with any agreement between the political
3subdivisions comprising the port authority.
45. The board may provide procedures for the removal of a
5director who fails to attend three consecutive regular meetings
6of the board. If a director is so removed, a successor shall
7be appointed for the remaining term of the removed director in
8the same manner provided for the original appointment. The
9appointing body Any political subdivisions comprising the port
10authority may at any time remove a director appointed by it for
11misfeasance, nonfeasance, or malfeasance in office and appoint
12a successor for the remaining term of the removed director in
13the same manner as provided for by the original appointment.
14 Sec. 12. Section 28J.8, subsection 1, Code 2022, is amended
15to read as follows:
161. The area of jurisdiction of a port authority shall
17include all of the territory of the port authority facility and
18 of the political subdivisions comprising the port authority
19and, if the port authority owns or leases a railroad line or
20airport, the territory on which the railroad’s line, terminals,
21and related facilities or the airport’s runways, terminals,
22and related facilities are located, regardless of whether the
23territory is located in the political subdivisions comprising
24the port authority.
25 Sec. 13. Section 28J.9, subsections 4, 8, and 10, Code 2022,
26are amended to read as follows:
274. Acquire, construct, furnish, equip, maintain, repair,
28sell, exchange, lease, lease with an option to purchase,
29convey interests in real or personal property, and operate any
30property of the port authority within or outside the territory
31of the political subdivisions comprising the port authority in
32furtherance of any authorized purpose, including in connection
33with transportation, recreational, governmental operations, or
34cultural activities in furtherance of an authorized purpose.
358. Issue port authority revenue bonds beyond the limit
-6-1of bonded indebtedness provided by law, payable solely from
2revenues as provided in section 28J.21, and enter into loan
3agreements and lease contracts as provided in section 28J.21A,
4 for the purpose of providing funds to pay the costs of any
5facility or facilities of the port authority or parts thereof.
610. Enjoy and possess the same legislative and executive
7rights, privileges, and powers granted cities under chapter
8 chapters 28F, 364, and 384, and counties under chapter 331,
9including the exercise of police power but excluding the power
10to levy taxes.
11 Sec. 14. Section 28J.11, subsection 2, Code 2022, is amended
12to read as follows:
132. Impair the powers of a political subdivision to develop
14or improve a port and terminal authority facility except as
15restricted by section 28J.15.
16 Sec. 15. Section 28J.13, Code 2022, is amended to read as
17follows:
1828J.13 Annual budget — use of rents and charges.
19The board shall annually prepare a budget for the port
20authority. Revenues received by the port authority shall be
21used for the general expenses of the port authority and to
22pay interest, amortization, and retirement charges on, and
23principal of, money borrowed and to make payments under lease
24contracts. Except as provided in section 28J.26, if there
25remains, at the end of any fiscal year, a surplus of such funds
26after providing for the above uses, the board shall pay such
27surplus into the general funds of the political subdivisions
28comprising the port authority as agreed to by the subdivisions.
29 Sec. 16. Section 28J.15, Code 2022, is amended to read as
30follows:
3128J.15 Limitation on certain powers of political
32subdivisions.
33A political subdivision creating or participating in the
34creation of a port authority in accordance with section 28J.2
35shall not, during the time the port authority is in existence,
-7-1exercise the rights and powers provided in chapters 28A, 28K,
2and 384 relating to the political subdivision’s authority over
3a port, wharf, dock, harbor, or other facility substantially
4similar to that political subdivision’s authority under a port
5authority granted under this chapter, except as provided in
6section 28J.2.
7 Sec. 17. Section 28J.16, subsection 1, paragraphs a and c,
8Code 2022, are amended to read as follows:
9a. A port authority may charge, alter, and collect rental
10 rents, fees, or other charges or revenues for the use or
11services of any port authority facility and contract for the
12use or services of a facility, and fix the terms, conditions,
13rental rents, fees, or other charges for the use or services.
14c. The rental rents, fees, or other charges, and other
15revenues of a port authority shall not be subject to
16supervision or regulation by any other authority, commission,
17board, bureau, or governmental agency of the state and the
18contract may provide for acquisition of all or any part of
19the port authority facility for such consideration payable
20over the period of the contract or otherwise as the port
21authority determines to be appropriate, but subject to the
22provisions of any resolution authorizing the issuance of port
23authority revenue bonds, loan agreements, lease contracts,
24or certificates of participation in or other participatory
25interests or evidences of any obligations under a loan
26agreement or lease contract, or of any trust agreement securing
27the bonds, loan agreements, lease contracts, or certificates of
28participation in or other participatory interests or evidences
29of any obligation under a loan agreement or lease contract.
30 Sec. 18. Section 28J.16, subsection 2, paragraph a, Code
312022, is amended to read as follows:
32a. A governmental agency may cooperate with the port
33authority in the acquisition, operation, or construction of a
34port authority facility and shall enter into such agreements
35with the port authority as may be appropriate, which shall
-8-1provide for contributions by the parties in a proportion as may
2be agreed upon and other terms as may be mutually satisfactory
3to the parties including the authorization of the construction
4of the facility by one of the parties acting as agent for all
5of the parties and the ownership, operation, and control of
6the facility by the port authority to the extent necessary or
7appropriate.
8 Sec. 19. Section 28J.17, subsection 1, paragraph a, Code
92022, is amended to read as follows:
10a. A port authority may enter into a contract or other
11arrangement with a person, railroad, utility company,
12corporation, governmental agency including sewerage, drainage,
13conservation, conservancy, or other improvement districts in
14this or other states, or the governments or agencies of foreign
15countries as may be necessary or convenient for the exercise
16of the powers granted by this chapter. The port authority
17may purchase, lease, or acquire land or other property in
18any county of this state and in adjoining states for the
19accomplishment of authorized purposes of the port authority, or
20for the improvement of the harbor and port authority facilities
21over which the port authority may have jurisdiction including
22development of port authority facilities in adjoining states.
23The authority granted in this section to enter into contracts
24or other arrangements with the federal government includes the
25power to enter into any contracts, arrangements, or agreements
26that may be necessary to hold and save harmless the United
27States from damages due to the construction and maintenance by
28the United States of work the United States undertakes.
29 Sec. 20. Section 28J.19, Code 2022, is amended to read as
30follows:
3128J.19 Property tax exemption.
32A port authority shall be exempt from and shall not be
33required to pay taxes on real property that is purchased by a
34port authority or real property belonging to a port authority
35that is used exclusively for an authorized purpose, as provided
-9-1in section 427.1, subsection 34.
2 Sec. 21. NEW SECTION. 28J.21A Loan agreements — lease
3contracts — trust agreements.
41. Definitions. As used in this section, unless the context
5otherwise requires:
6a. “Lease contract” includes any certificates of
7participation or other participatory interests in the lease
8contract or obligations arising out of the lease contract.
9b. “Loan agreement” includes any notes, certificates, or any
10other participatory interests issued to evidence the parties’
11obligations arising out of the loan agreement.
122. Loan agreements. A port authority may enter into loan
13agreements to borrow money to pay the costs of any facility, or
14parts thereof, or to refund other obligations which are payable
15from the net revenues of the port authority at lower, the same,
16or higher rates of interest in accordance with the all of the
17following terms and procedures:
18a. A loan agreement entered into by a port authority may
19contain provisions similar to those in loan agreements between
20private parties, including but not limited to any of the
21following:
22(1) The loan agreement may provide for the issuance
23of notes, certificates of participation, or any other
24participatory interests to evidence the parties’ obligations.
25(2) The loan agreement may provide for maturity in one or
26more installments.
27(3) The loan agreement may be in registered form and carry
28registration and conversion privileges.
29(4) The loan agreement may be payable as to principal and
30interest at times and places as specified.
31(5) The loan agreement may be subject to terms of redemption
32prior to maturity with or without a premium.
33(6) The loan agreement may be in one or more denominations.
34b. A provision of a loan agreement which stipulates that
35a portion of the payments be applied as interest is subject
-10-1to chapter 74A and such interest may be at a variable rate or
2rates changing from time to time in accordance with a base or
3formula. Other laws relating to interest rates do not apply
4and the provisions of chapter 75 are not applicable.
5c. The board may authorize a loan agreement to be
6payable solely from the net revenues of a port authority by
7substantially following the authorization procedures of section
828J.21 for the issuance of revenue bonds. The resolution
9authorizing the loan agreement may also prescribe additional
10provisions, terms, conditions, and covenants that the port
11authority deems advisable, consistent with this chapter,
12including provisions for creating and maintaining reserve
13funds and for the authorization of additional loan agreements
14ranking on a parity with such loan agreements and additional
15loan agreements junior and subordinate to such loan agreement,
16and that such loan agreement shall rank on a parity with or
17be junior and subordinate to any loan agreement which may be
18then outstanding. A port authority loan agreement shall be
19a contract between the port authority and the lender and the
20resolution shall be made part of the contract.
21d. A loan agreement to which a port authority is a party
22is an obligation of the political subdivisions comprising the
23port authority for the purposes of chapters 502 and 636, and
24is a lawful investment for any bank, trust company, savings
25association, deposit guaranty association, investment company,
26insurance company, insurance association, executor, guardian or
27trustee, and any fiduciary responsible for the investment of
28funds or having charge of the loan retirement funds or sinking
29funds of any port authority, governmental agency, or taxing
30district of this state, any pension and annuity retirement
31system, the Iowa public employees’ retirement system, the
32police officers and fire fighters retirement systems under
33chapters 410 and 411, or a revolving fund of a governmental
34agency of this state, and are acceptable as security for the
35deposit of public funds under chapter 12C.
-11- 13. Lease contracts. A port authority may enter into lease
2contracts for real or personal property comprising a port
3authority facility, or parts thereof, in accordance with all of
4the following terms and procedures:
5a. A port authority shall lease property only for a term
6which does not exceed the economic life of the property, as
7determined by the board.
8b. A lease contract entered into by a port authority may
9contain provisions similar to those found in lease contracts
10between private parties, including but not limited to any of
11the following:
12(1) The lease contract may provide for the issuance of
13certificates of participation or other participatory interests
14in the lease contracts or any obligations thereunder.
15(2) The lease contract may provide for the lessee to pay any
16of the costs of operation or ownership of the leased property
17and for the right to purchase the leased property.
18c. A provision of a lease contract which stipulates that a
19portion of the rent or lease payments be applied as interest
20is subject to the provisions of chapter 74A and such interest
21may be at a variable rate or rates changing from time to time
22in accordance with a base or formula. Other laws relating to
23interest rates shall not apply and the provisions of chapter
2475 are not applicable.
25d. The board may authorize a lease contract payable solely
26from the net revenues of a port authority by substantially
27following the authorization procedures set forth in section
2828J.21 for the issuance of port authority revenue bonds. The
29resolution authorizing the lease contract may also prescribe
30additional provisions, terms, conditions, and covenants which
31the port authority deems advisable, consistent with this
32chapter, including provisions for creating and maintaining
33reserve funds and the authorization of additional lease
34contracts ranking on a parity with such lease contracts and
35additional lease contracts junior and subordinate to such lease
-12-1contracts, and that such lease contracts shall rank on a parity
2with or be junior and subordinate to any lease contract which
3may be then outstanding. A port authority lease contract shall
4be a contract between the port authority and the lessor and the
5resolution shall be part of the contract.
6e. A lease contract to which a port authority is a party
7is an obligation of the political subdivisions comprising the
8port authority for the purposes of chapters 502 and 636, and
9is a lawful investment for any bank, trust company, savings
10association, deposit guaranty association, investment company,
11insurance company, insurance association, executor, guardian or
12trustee, and any fiduciary responsible for the investment of
13funds or having charge of the lease retirement funds or sinking
14funds of any port authority, governmental agency or taxing
15district of this state, any pension and annuity retirement
16system, the Iowa public employees’ retirement system, the
17police officers and fire fighters retirement systems under
18chapters 410 and 411, or a revolving fund of a governmental
19agency of this state, and are acceptable as security for the
20deposit of public funds under chapter 12C.
21f. A contract for construction by a private party of
22property to be leased by a port authority is not a contract for
23a public improvement and shall not be subject to the provisions
24of chapter 26 and section 28J.3, subsection 3. This paragraph
25applies to all contracts that are subject to this subsection,
26notwithstanding section 28J.9, subsection 18, or any other
27provision of law that might otherwise apply, including a
28requirement of notice, competitive bidding or selection, or
29for the provision of security. However, if a contract is
30funded in advance by means of the lessor depositing moneys to
31be administered by a port authority with the port authority’s
32obligation to make rent or lease payments commencing with
33its receipt of moneys, a contract for construction of the
34property in question awarded by the port authority is a public
35improvement and is subject to the provisions of chapter 26.
-13- 14. Trust agreements.
2a. In the discretion of the port authority, a loan agreement
3or a lease contract authorized under this section and the port
4authority’s obligations thereunder may be secured by a trust
5agreement between the port authority and a corporate trustee
6that may be any trust company or bank having the powers of a
7trust company within this or any other state. Subject to the
8other provisions of this paragraph, the corporate trustee may
9also be the lender under a loan agreement or the lessor under a
10lease contract authorized under this section.
11b. The trust agreement may provide for the issuance of
12notes to evidence the port authority’s obligations under a loan
13agreement to which the port authority is a party. The trust
14agreement may also provide for the issuance of certificates
15of participation or other participatory interests in a lease
16contract to which a port authority is a party. The trust
17agreement, or any resolution authorizing the loan agreement or
18the lease contract, may pledge or assign revenues of the port
19authority to be received as payment of obligations under the
20loan agreement or the lease contract and may contain provisions
21for protecting and enforcing the rights and remedies of the
22lender, the lessor, or the holders of notes evidencing the
23port authority’s obligations under the loan agreement. These
24provisions may include covenants setting forth the duties of
25the port authority in relation to the acquisition of property,
26the construction, improvement, maintenance, repair, operation,
27and insurance of the port authority facility in connection
28with which the loan agreement or the lease contract is
29authorized, the rentals or other charges to be imposed for the
30use or services of any port authority facility, the custody,
31safeguarding, and application of all moneys, and provisions for
32the employment of consulting engineers in connection with the
33construction or operation of any port authority facility.
34c. A bank or trust company incorporated under the laws
35of this state that acts as the depository of the proceeds or
-14-1borrowings provided under the loan agreement or lease contract
2or of revenues, shall furnish any indemnifying bonds and may
3pledge any securities that are required by the port authority.
4The trust agreement may set forth the rights and remedies of
5the lender, the lessor, or the holders of notes evidencing the
6port authority’s obligations under the loan agreement and may
7restrict the individual right of action by the lender, the
8lessor, or the holders of notes evidencing the port authority’s
9obligations under the loan agreement as is customary in trust
10agreements or trust indentures securing similar loan agreements
11or lease contracts. The trust agreement may contain any other
12provisions that the port authority determines reasonable and
13proper for the security of the lender, the lessor, or the
14holders of notes evidencing the port authority’s obligations
15under the loan agreement. All expenses incurred in carrying
16out the provisions of the trust agreement may be treated as
17a part of the cost of the operation of the port authority
18facility.
195. Exclusions. Port authority loan agreements and lease
20contracts authorized under this chapter shall not constitute
21a debt, indebtedness, or a pledge of the faith and credit of
22the port authority or the state or any political subdivision
23of the state, within the meaning of any state constitutional
24provision or statutory limitation, nor constitute or give rise
25to a pecuniary liability of the port authority, any political
26subdivisions comprising the port authority, the state, or
27any political subdivision of the state, or a charge against
28the general credit or taxing power of the port authority.
29Any political subdivisions comprising the port authority,
30the state, or any political subdivision of the state, and
31the holders or owners of the obligations owed under a loan
32agreement or lease contract shall not have taxes levied by the
33state or by a taxing authority of a governmental agency of the
34state for the payment of the principal of or interest owed on
35such obligations. However, a loan agreement or lease contract
-15-1and the obligation owed thereunder are payable solely from the
2revenues and funds pledged for their payment as authorized
3by this chapter. All loan agreements and lease contracts
4authorized under this chapter and the evidence of obligations
5owed under such loan agreements or lease contracts such shall
6contain a statement to the effect that the loan agreement or
7lease contract authorized under this chapter and the evidence
8of obligations owed under the loan agreement or lease contract,
9as to both principal and interest, are not debts of the port
10authority or the state or any political subdivision of the
11state, but are payable solely from revenues and funds pledged
12for their payment.
136. Judicial proceedings.
14a. The sole remedy for a breach or default of a term of
15any port authority loan agreement or lease contract authorized
16under this chapter is a proceeding in law or in equity by
17suit, action, or mandamus to enforce and compel performance of
18the duties required by this chapter and of the terms of the
19resolution authorizing the loan agreement or lease contract,
20or to obtain the appointment of a receiver to take possession
21of and operate the port authority and to perform the duties
22required by this chapter and the terms of the resolution
23authorizing the loan agreement or lease contract.
24b. An action shall not be brought after fifteen days from
25the time the loan agreement or lease contract is authorized by
26the port authority with regards to any of the following:
27(1) The legality of the port authority loan agreement or
28lease contract.
29(2) The power of a port authority to authorize the port
30authority loan agreement or lease contract.
31(3) The effectiveness of any proceedings relating to the
32authorization of the port authority loan agreement or lease
33contract.
34 Sec. 22. Section 28J.25, Code 2022, is amended to read as
35follows:
-16- 128J.25 Funds and property held in trust — use and deposit of
2funds.
3All revenues, funds, properties, and assets acquired by the
4port authority under this chapter, whether as proceeds from the
5sale of port authority revenue bonds, pledge orders, borrowings
6under a loan agreement, entering into a lease contract,
7proceeds from the issuance of certificates of participation
8or any other participatory interests in such loan agreement
9or lease contract or as revenues, shall be held in trust for
10the purposes of carrying out the port authority’s powers and
11duties, shall be used and reused as provided in this chapter,
12and shall at no time be part of other public funds. Such funds,
13except as otherwise provided in a resolution authorizing port
14authority revenue bonds or pledge orders, the loan agreement or
15lease contract, or in a trust agreement securing the same, or
16except when invested pursuant to section 28J.26, shall be kept
17in depositories selected by the port authority in the manner
18provided in chapter 12C, and the deposits shall be secured
19as provided in that chapter. The resolution authorizing the
20issuance of revenue bonds or pledge orders, the loan agreement
21or lease contract, or the trust agreement securing such bonds
22or pledge orders, shall provide that any officer to whom, or
23any bank or trust company to which, such moneys are paid shall
24act as trustee of such moneys and hold and apply them for the
25purposes hereof, subject to such conditions as this chapter and
26such resolution or trust agreement provide.
27 Sec. 23. Section 28J.26, subsection 1, Code 2022, is amended
28to read as follows:
291. If a port authority has surplus funds after making all
30deposits into all funds required by the terms, covenants,
31conditions, and provisions of outstanding revenue bonds, pledge
32orders, loan agreements, or lease contracts and refunding bonds
33which are payable from the revenues of the port authority
34and after complying with all of the requirements, terms,
35covenants, conditions, and provisions of the proceedings and
-17-1resolutions pursuant to which revenue bonds, pledge orders,
2and refunding bonds are issued or the loan agreement or lease
3contract is authorized, the board may transfer the surplus
4funds to any other fund of the port authority in accordance
5with this chapter and chapter 12C, provided that a transfer
6shall not be made if it conflicts with any of the requirements,
7terms, covenants, conditions, or provisions of a resolution
8authorizing the issuance of revenue bonds, pledge orders,
9or other obligations which are or loan agreements or lease
10contracts payable from the revenues of the port authority which
11are then outstanding.
12 Sec. 24. Section 427.1, subsection 34, Code 2022, is amended
13to read as follows:
1434. Port authority property. The property of a port
15authority created pursuant to section 28J.2, when devoted to
16public use and not held for pecuniary profit, or property
17purchased by a port authority.
18EXPLANATION
19The inclusion of this explanation does not constitute agreement with
20the explanation’s substance by the members of the general assembly.
21This bill relates to the powers and duties of port
22authorities.
23Under Code chapter 28J, the bill modifies the defined
24terms “authorized purposes”, “city”, “cost”, “facility” or
25“port authority facility”, “governmental agency”, “political
26subdivision”, “political subdivisions comprising the port
27authority”, “port authority revenue bonds” or “revenue bonds”,
28and “revenues”. The bill creates and defines the terms “net
29revenues” and “public works project”.
30The bill allows for the creation of a port authority by one
31or more political subdivisions, rather than by two or more
32political subdivisions. The bill provides for the creation of
33a port authority anywhere in this state regardless of proximity
34to a body of water. The bill also provides that a port
35authority is an entity separate from the political subdivisions
-18-1comprising the port authority. The powers granted to the
2port authority may be exercised whether or not the political
3subdivisions comprising the port authority may exercise those
4same powers.
5The bill provides that the political subdivisions
6comprising the port authority may make contributions to the
7port authority, in addition to appropriating or expending
8public funds as set forth in current law, to finance or
9subsidize the operation and authorized purposes of the port
10authority, and pay the costs and expenses incurred by the
11port authority in carrying out any operations or authorized
12purposes of the port authority. Under the bill, political
13subdivisions comprising the port authority are allowed to
14enter into agreements with each other or the port authority
15providing for the contributions to the port authority to be
16made by each of the political subdivisions and providing for
17the obligations of each of the political subdivisions to pay,
18finance, or subsidize the costs and expenses incurred by the
19port authority.
20The bill makes conforming changes to Code section 28J.5
21relating to the membership of the board of directors of a port
22authority created by one political subdivision. The bill
23further provides that any political subdivisions comprising the
24port authority may appoint a successor for the remaining term
25of a removed director.
26The bill modifies the powers of a port authority as it
27relates to its property regardless of whatever the property is
28within or outside the territory of the political subdivisions
29comprising the port authority if in furtherance of any
30authorized purpose. The bill further allows a port authority
31to enter into loan agreements and lease contracts, as provided
32for in the bill, and to exercise the same powers granted to
33cities under Code chapters 28F (joint financing of public works
34and facilities) and 384 (city finance).
35The bill allows a port authority to use its revenues for
-19-1principal on borrowed money and payments under lease contracts.
2The bill further provides that a contract regarding rentals or
3charges for use of services of a port authority may provide
4for acquisition of the port authority facility subject to the
5provisions of any resolution authorizing the issuance of port
6authority revenue bonds, loan agreements, lease contracts, or
7any trust agreement securing such bonds, loan agreements, or
8lease contracts.
9The bill allows a governmental agency to cooperate with the
10port authority in the operation of a port authority facility.
11The bill provides that real property that is purchased by a
12port authority is not subject to certain property taxes.
13Under the provisions of the bill, a port authority may enter
14into certain loan agreements and lease contracts. A port
15authority may enter into loan agreements to borrow money to
16pay the costs of any facility, or parts thereof, or to refund
17other obligations which are payable from the net revenues of
18the port authority at lower, the same, or higher rates of
19interests. A port authority may enter into lease contracts
20for real or personal property comprising a port authority
21facility, but can only lease property for a term that does not
22exceed the economic life of the property. The bill details
23certain provisions similar to those in loan agreements and
24lease contracts between private parties that a loan agreement
25or lease contract entered into by a port authority may contain.
26The bill provides certain conditions for when a loan agreement
27or lease contract stipulates that a portion of the payments
28be applied as interest. The board of a port authority can
29authorize a loan agreement or lease contract, along with
30prescribing additional terms and provisions, by resolution and
31such resolution becomes part of the loan agreement or lease
32contract. A loan agreement or lease contract in which a port
33authority is a party is an obligation of political subdivisions
34comprising the port authority. A contract for construction by
35a private party of property to be leased by a port authority
-20-1is not a contract for public improvement, except under certain
2conditions.
3The bill authorizes loan agreements or lease contracts to be
4secured by a trust agreement between the port authority and a
5corporate trustee, and further provides how the trust agreement
6functions.
7The bill provides that loan agreements and lease contracts
8authorized by the bill do not constitute a debt, indebtedness,
9or a pledge of faith and credit of the port authority or of
10the state or any political subdivisions of the state nor do
11any such agreements give rise to pecuniary liability as to
12these entities or act as a charge against the general credit
13or taxing power of the port authority. The bill provides that
14any political subdivisions comprising the port authority, the
15state, or any political subdivisions of the state, and the
16holders or owners of obligations owed under a loan agreement
17or lease contract cannot have taxes levied by the state or
18by a taxing authority of a governmental agency of the state
19for the payment of the principal of or interest owed on such
20obligations.
21Under the bill, the sole remedy for a breach or default of
22any port authority loan agreement or lease contract authorized
23by the bill is a proceeding in law or in equity to enforce and
24compel performance of required duties and the terms of the
25resolution authorizing the loan agreement or lease contract,
26or to obtain the appointment of a receiver to take possession
27and operate the port authority to perform the required duties
28and terms. An action cannot be brought after 15 days from the
29time the loan agreement or lease contract is authorized by the
30port authority if the action regards the legality of the loan
31agreement or lease contract, the power of the port authority
32to authorize the loan agreement or lease contract, or the
33effectiveness of any proceeding relating to the authorization
34of the loan agreement or lease contract.
35The bill makes conforming changes to Code sections 28J.8,
-21-128J.11, 28J.15, 28J.17, 28J.25, and 28J.26.
-22-th/ns
2authorities to enter into certain loan agreements and lease
3contracts.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 28J.1, subsections 1 and 3, Code 2022,
2are amended to read as follows:
31. “Authorized purposes” means an activity that enhances,
4fosters, aids, provides, or promotes transportation,
5infrastructure, utility service, flood and erosion control,
6 economic development, housing, recreation, education,
7governmental operations, culture, or research within the
8jurisdiction of a port authority.
93. “City” means the same as defined in section 362.2, and
10also includes a city enterprise as defined in section 384.24.
11 Sec. 2. Section 28J.1, subsection 6, paragraphs d, f, and g,
12Code 2022, are amended to read as follows:
13d. The cost of machinery, furnishings, equipment, financing
14charges, interest prior to and during construction and for
15no more than twelve months after completion of construction,
16engineering, architectural services, technical services,
17preliminary reports, property valuations, consequential
18damages or costs, provisions for contingencies, supervision,
19inspection, testing, and expenses of research and development
20with respect to a facility.
21f. The interest upon the revenue bonds, and pledge
22orders, loan agreements, lease contracts, and certificates of
23participation in or other participatory interests or evidences
24of any obligation under a loan agreement or lease contract,
25 during the period or estimated period of construction and
26for twelve months thereafter, or for twelve months after the
27acquisition date, and upon reserve funds as the port authority
28deems advisable in connection with a facility and the issuance
29of port authority revenue bonds, and pledge orders, loan
30agreements, lease contracts, and certificates of participation
31in or other participatory interests or evidences of any
32obligation under a loan agreement or lease contract.
33g. The costs of issuance of port authority revenue bonds,
34 and pledge orders, loan agreements, lease contracts, and
35certificates of participation in or other participatory
-1-1interests or evidences of any obligations under a loan
2agreement or lease contract.
3 Sec. 3. Section 28J.1, subsections 7 and 8, Code 2022, are
4amended to read as follows:
57. “Facility” or “port authority facility” means any
6public works project, intermodal freight or transportation
7facility, project for which tax-exempt financing is authorized
8by the Internal Revenue Code, and real or personal property
9or improvements owned, leased, constructed, or otherwise
10controlled or financed by or for a port authority and that
11is related to or in furtherance of one or more authorized
12purposes.
138. “Governmental agency” means a department, division,
14or other unit of state government of this state or any other
15state, city, county, any political subdivision, township, or
16other governmental subdivision, or any city utility, any other
17public corporation, special purpose district, authority, or
18agency created under the laws of this state, any other state,
19the United States, or any department or agency thereof, or any
20agency, commission, or authority established pursuant to an
21interstate compact or agreement or combination thereof.
22 Sec. 4. Section 28J.1, Code 2022, is amended by adding the
23following new subsection:
24 NEW SUBSECTION. 8A. “Net revenues” means revenues less
25operating expenses.
26 Sec. 5. Section 28J.1, subsections 11, 12, and 14, Code
272022, are amended to read as follows:
2811. “Political subdivision” means a city, county,
29city-county consolidation, or multicounty consolidation, or
30combination thereof municipality as defined in section 16.151.
3112. “Political subdivisions comprising the port authority”
32means the each political subdivisions subdivision which created
33or participated in the creation of the port authority under
34section 28J.2, or which joined an existing port authority under
35section 28J.4.
-2- 114. “Port authority revenue bonds” or “revenue bonds” means
2revenue bonds and revenue refunding bonds issued pursuant to
3section 28J.21.
4 Sec. 6. Section 28J.1, Code 2022, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 15A. “Public works project” means a
7project of a type that a political subdivision is authorized
8to undertake as otherwise provided by law, including
9but not limited to public roads and other transportation
10infrastructure, utility systems such as water treatment
11facilities and sewage treatment facilities, or a project as
12defined in section 384.80.
13 Sec. 7. Section 28J.1, subsection 16, Code 2022, is amended
14to read as follows:
1516. “Revenues” means rental rents, fees, income, rates,
16tolls, receipts, and other charges or revenues received by a
17port authority or derived from the operations of a facility
18or for the use or services of a facility, a gift or grant
19received with respect to a facility, moneys received with
20respect to the lease, sublease, sale, including installment
21sale or conditional sale, or other disposition of a facility,
22moneys received in repayment of and for interest on any
23loans made by the port authority to a person or governmental
24agency, proceeds of port authority revenue bonds for payment
25of principal, premium, or interest on the bonds authorized
26by the port authority, proceeds or borrowings under port
27authority loan agreements for payment of principal, premium,
28or interest on the port authority obligations thereunder,
29proceeds or borrowings under lease contracts for the payment of
30lease payments thereunder, proceeds under any certificates of
31participation in or other participatory interests or evidences
32of any obligations under a loan agreement or lease contract,
33 proceeds from any insurance, condemnation, or guarantee
34pertaining to the financing of the facility, and income and
35profit from the investment of the proceeds of port authority
-3-1revenue bonds, proceeds, or borrowings under loan agreements,
2lease contracts, or proceeds of certificates of participation
3in or other participatory interests or evidences of any
4obligation under any loan agreement or lease contract or of any
5revenues.
6 Sec. 8. Section 28J.2, subsection 1, Code 2022, is amended
7to read as follows:
81. Two One or more political subdivisions may by resolution
9 create a port authority under this chapter by resolution
10 anywhere in this state, regardless of proximity to a body of
11water. If a proposal to create a port authority receives a
12favorable majority of the members of the elected legislative
13body of each of the political subdivisions, the port authority
14is created at the time provided in the resolution. The
15jurisdiction of a port authority includes the territory
16described in section 28J.8.
17 Sec. 9. Section 28J.2, Code 2022, is amended by adding the
18following new subsection:
19 NEW SUBSECTION. 5. A port authority is an entity separate
20from the political subdivisions comprising the port authority.
21The powers granted to the port authority pursuant to this
22chapter are in addition to other powers, and constitute
23independent powers that may be exercised by the port authority
24whether or not the political subdivisions comprising the
25port authority have or may exercise any of those powers
26individually.
27 Sec. 10. Section 28J.3, subsection 1, Code 2022, is amended
28to read as follows:
291. The political subdivisions comprising a port authority
30may appropriate and expend public funds and make contributions
31to the port authority to finance or subsidize the operation and
32authorized purposes of the port authority and pay the costs
33and expenses incurred by the port authority in carrying out
34any operations or authorized purposes of the port authority.
35Political subdivisions comprising the port authority may
-4-1enter into agreements with each other or the port authority
2providing for the contributions to the port authority to be
3made by each of the political subdivisions and providing for
4the obligations of each of the political subdivisions to pay,
5finance, or subsidize the costs and expenses incurred by the
6port authority. Political subdivisions comprising the port
7authority may, by resolution, authorize and appropriate funds
8for any contribution, payment, or financing required to be
9made under such agreement by the use of any method available
10to government agencies for providing funds or financing under
11section 28J.16. A port authority shall control tax revenues
12allocated to the facilities the port authority administers and
13all revenues derived from the operation of the port authority,
14the sale of its property, interest on investments, or from any
15other source related to the port authority.
16 Sec. 11. Section 28J.5, subsections 1, 2, and 5, Code 2022,
17are amended to read as follows:
181. A port authority created pursuant to section 28J.2 shall
19be governed by a board of directors. Members of a board of
20directors of a port authority created by two or more political
21subdivisions shall be divided among the political subdivisions
22comprising the port authority in such proportions as the
23political subdivisions may agree and shall be appointed by the
24respective political subdivision’s elected legislative body.
25Members of a board of directors of a port authority created by
26one political subdivision shall be appointed by the political
27subdivision’s governing body.
282. The number of directors comprising the board of a port
29authority created by two or more political subdivisions shall
30be determined by agreement between the political subdivisions
31comprising the port authority, and which. The number of
32directors comprising the board of directors of a port authority
33created by one political subdivision shall consist of the
34number of directors the political subdivision considers
35necessary. The number may be changed by resolution of each
-5-1of the political subdivisions comprising the port authority
2and in accordance with any agreement between the political
3subdivisions comprising the port authority.
45. The board may provide procedures for the removal of a
5director who fails to attend three consecutive regular meetings
6of the board. If a director is so removed, a successor shall
7be appointed for the remaining term of the removed director in
8the same manner provided for the original appointment. The
9appointing body Any political subdivisions comprising the port
10authority may at any time remove a director appointed by it for
11misfeasance, nonfeasance, or malfeasance in office and appoint
12a successor for the remaining term of the removed director in
13the same manner as provided for by the original appointment.
14 Sec. 12. Section 28J.8, subsection 1, Code 2022, is amended
15to read as follows:
161. The area of jurisdiction of a port authority shall
17include all of the territory of the port authority facility and
18 of the political subdivisions comprising the port authority
19and, if the port authority owns or leases a railroad line or
20airport, the territory on which the railroad’s line, terminals,
21and related facilities or the airport’s runways, terminals,
22and related facilities are located, regardless of whether the
23territory is located in the political subdivisions comprising
24the port authority.
25 Sec. 13. Section 28J.9, subsections 4, 8, and 10, Code 2022,
26are amended to read as follows:
274. Acquire, construct, furnish, equip, maintain, repair,
28sell, exchange, lease, lease with an option to purchase,
29convey interests in real or personal property, and operate any
30property of the port authority within or outside the territory
31of the political subdivisions comprising the port authority in
32furtherance of any authorized purpose, including in connection
33with transportation, recreational, governmental operations, or
34cultural activities in furtherance of an authorized purpose.
358. Issue port authority revenue bonds beyond the limit
-6-1of bonded indebtedness provided by law, payable solely from
2revenues as provided in section 28J.21, and enter into loan
3agreements and lease contracts as provided in section 28J.21A,
4 for the purpose of providing funds to pay the costs of any
5facility or facilities of the port authority or parts thereof.
610. Enjoy and possess the same legislative and executive
7rights, privileges, and powers granted cities under chapter
8 chapters 28F, 364, and 384, and counties under chapter 331,
9including the exercise of police power but excluding the power
10to levy taxes.
11 Sec. 14. Section 28J.11, subsection 2, Code 2022, is amended
12to read as follows:
132. Impair the powers of a political subdivision to develop
14or improve a port and terminal authority facility except as
15restricted by section 28J.15.
16 Sec. 15. Section 28J.13, Code 2022, is amended to read as
17follows:
1828J.13 Annual budget — use of rents and charges.
19The board shall annually prepare a budget for the port
20authority. Revenues received by the port authority shall be
21used for the general expenses of the port authority and to
22pay interest, amortization, and retirement charges on, and
23principal of, money borrowed and to make payments under lease
24contracts. Except as provided in section 28J.26, if there
25remains, at the end of any fiscal year, a surplus of such funds
26after providing for the above uses, the board shall pay such
27surplus into the general funds of the political subdivisions
28comprising the port authority as agreed to by the subdivisions.
29 Sec. 16. Section 28J.15, Code 2022, is amended to read as
30follows:
3128J.15 Limitation on certain powers of political
32subdivisions.
33A political subdivision creating or participating in the
34creation of a port authority in accordance with section 28J.2
35shall not, during the time the port authority is in existence,
-7-1exercise the rights and powers provided in chapters 28A, 28K,
2and 384 relating to the political subdivision’s authority over
3a port, wharf, dock, harbor, or other facility substantially
4similar to that political subdivision’s authority under a port
5authority granted under this chapter, except as provided in
6section 28J.2.
7 Sec. 17. Section 28J.16, subsection 1, paragraphs a and c,
8Code 2022, are amended to read as follows:
9a. A port authority may charge, alter, and collect rental
10 rents, fees, or other charges or revenues for the use or
11services of any port authority facility and contract for the
12use or services of a facility, and fix the terms, conditions,
13rental rents, fees, or other charges for the use or services.
14c. The rental rents, fees, or other charges, and other
15revenues of a port authority shall not be subject to
16supervision or regulation by any other authority, commission,
17board, bureau, or governmental agency of the state and the
18contract may provide for acquisition of all or any part of
19the port authority facility for such consideration payable
20over the period of the contract or otherwise as the port
21authority determines to be appropriate, but subject to the
22provisions of any resolution authorizing the issuance of port
23authority revenue bonds, loan agreements, lease contracts,
24or certificates of participation in or other participatory
25interests or evidences of any obligations under a loan
26agreement or lease contract, or of any trust agreement securing
27the bonds, loan agreements, lease contracts, or certificates of
28participation in or other participatory interests or evidences
29of any obligation under a loan agreement or lease contract.
30 Sec. 18. Section 28J.16, subsection 2, paragraph a, Code
312022, is amended to read as follows:
32a. A governmental agency may cooperate with the port
33authority in the acquisition, operation, or construction of a
34port authority facility and shall enter into such agreements
35with the port authority as may be appropriate, which shall
-8-1provide for contributions by the parties in a proportion as may
2be agreed upon and other terms as may be mutually satisfactory
3to the parties including the authorization of the construction
4of the facility by one of the parties acting as agent for all
5of the parties and the ownership, operation, and control of
6the facility by the port authority to the extent necessary or
7appropriate.
8 Sec. 19. Section 28J.17, subsection 1, paragraph a, Code
92022, is amended to read as follows:
10a. A port authority may enter into a contract or other
11arrangement with a person, railroad, utility company,
12corporation, governmental agency including sewerage, drainage,
13conservation, conservancy, or other improvement districts in
14this or other states, or the governments or agencies of foreign
15countries as may be necessary or convenient for the exercise
16of the powers granted by this chapter. The port authority
17may purchase, lease, or acquire land or other property in
18any county of this state and in adjoining states for the
19accomplishment of authorized purposes of the port authority, or
20for the improvement of the harbor and port authority facilities
21over which the port authority may have jurisdiction including
22development of port authority facilities in adjoining states.
23The authority granted in this section to enter into contracts
24or other arrangements with the federal government includes the
25power to enter into any contracts, arrangements, or agreements
26that may be necessary to hold and save harmless the United
27States from damages due to the construction and maintenance by
28the United States of work the United States undertakes.
29 Sec. 20. Section 28J.19, Code 2022, is amended to read as
30follows:
3128J.19 Property tax exemption.
32A port authority shall be exempt from and shall not be
33required to pay taxes on real property that is purchased by a
34port authority or real property belonging to a port authority
35that is used exclusively for an authorized purpose, as provided
-9-1in section 427.1, subsection 34.
2 Sec. 21. NEW SECTION. 28J.21A Loan agreements — lease
3contracts — trust agreements.
41. Definitions. As used in this section, unless the context
5otherwise requires:
6a. “Lease contract” includes any certificates of
7participation or other participatory interests in the lease
8contract or obligations arising out of the lease contract.
9b. “Loan agreement” includes any notes, certificates, or any
10other participatory interests issued to evidence the parties’
11obligations arising out of the loan agreement.
122. Loan agreements. A port authority may enter into loan
13agreements to borrow money to pay the costs of any facility, or
14parts thereof, or to refund other obligations which are payable
15from the net revenues of the port authority at lower, the same,
16or higher rates of interest in accordance with the all of the
17following terms and procedures:
18a. A loan agreement entered into by a port authority may
19contain provisions similar to those in loan agreements between
20private parties, including but not limited to any of the
21following:
22(1) The loan agreement may provide for the issuance
23of notes, certificates of participation, or any other
24participatory interests to evidence the parties’ obligations.
25(2) The loan agreement may provide for maturity in one or
26more installments.
27(3) The loan agreement may be in registered form and carry
28registration and conversion privileges.
29(4) The loan agreement may be payable as to principal and
30interest at times and places as specified.
31(5) The loan agreement may be subject to terms of redemption
32prior to maturity with or without a premium.
33(6) The loan agreement may be in one or more denominations.
34b. A provision of a loan agreement which stipulates that
35a portion of the payments be applied as interest is subject
-10-1to chapter 74A and such interest may be at a variable rate or
2rates changing from time to time in accordance with a base or
3formula. Other laws relating to interest rates do not apply
4and the provisions of chapter 75 are not applicable.
5c. The board may authorize a loan agreement to be
6payable solely from the net revenues of a port authority by
7substantially following the authorization procedures of section
828J.21 for the issuance of revenue bonds. The resolution
9authorizing the loan agreement may also prescribe additional
10provisions, terms, conditions, and covenants that the port
11authority deems advisable, consistent with this chapter,
12including provisions for creating and maintaining reserve
13funds and for the authorization of additional loan agreements
14ranking on a parity with such loan agreements and additional
15loan agreements junior and subordinate to such loan agreement,
16and that such loan agreement shall rank on a parity with or
17be junior and subordinate to any loan agreement which may be
18then outstanding. A port authority loan agreement shall be
19a contract between the port authority and the lender and the
20resolution shall be made part of the contract.
21d. A loan agreement to which a port authority is a party
22is an obligation of the political subdivisions comprising the
23port authority for the purposes of chapters 502 and 636, and
24is a lawful investment for any bank, trust company, savings
25association, deposit guaranty association, investment company,
26insurance company, insurance association, executor, guardian or
27trustee, and any fiduciary responsible for the investment of
28funds or having charge of the loan retirement funds or sinking
29funds of any port authority, governmental agency, or taxing
30district of this state, any pension and annuity retirement
31system, the Iowa public employees’ retirement system, the
32police officers and fire fighters retirement systems under
33chapters 410 and 411, or a revolving fund of a governmental
34agency of this state, and are acceptable as security for the
35deposit of public funds under chapter 12C.
-11- 13. Lease contracts. A port authority may enter into lease
2contracts for real or personal property comprising a port
3authority facility, or parts thereof, in accordance with all of
4the following terms and procedures:
5a. A port authority shall lease property only for a term
6which does not exceed the economic life of the property, as
7determined by the board.
8b. A lease contract entered into by a port authority may
9contain provisions similar to those found in lease contracts
10between private parties, including but not limited to any of
11the following:
12(1) The lease contract may provide for the issuance of
13certificates of participation or other participatory interests
14in the lease contracts or any obligations thereunder.
15(2) The lease contract may provide for the lessee to pay any
16of the costs of operation or ownership of the leased property
17and for the right to purchase the leased property.
18c. A provision of a lease contract which stipulates that a
19portion of the rent or lease payments be applied as interest
20is subject to the provisions of chapter 74A and such interest
21may be at a variable rate or rates changing from time to time
22in accordance with a base or formula. Other laws relating to
23interest rates shall not apply and the provisions of chapter
2475 are not applicable.
25d. The board may authorize a lease contract payable solely
26from the net revenues of a port authority by substantially
27following the authorization procedures set forth in section
2828J.21 for the issuance of port authority revenue bonds. The
29resolution authorizing the lease contract may also prescribe
30additional provisions, terms, conditions, and covenants which
31the port authority deems advisable, consistent with this
32chapter, including provisions for creating and maintaining
33reserve funds and the authorization of additional lease
34contracts ranking on a parity with such lease contracts and
35additional lease contracts junior and subordinate to such lease
-12-1contracts, and that such lease contracts shall rank on a parity
2with or be junior and subordinate to any lease contract which
3may be then outstanding. A port authority lease contract shall
4be a contract between the port authority and the lessor and the
5resolution shall be part of the contract.
6e. A lease contract to which a port authority is a party
7is an obligation of the political subdivisions comprising the
8port authority for the purposes of chapters 502 and 636, and
9is a lawful investment for any bank, trust company, savings
10association, deposit guaranty association, investment company,
11insurance company, insurance association, executor, guardian or
12trustee, and any fiduciary responsible for the investment of
13funds or having charge of the lease retirement funds or sinking
14funds of any port authority, governmental agency or taxing
15district of this state, any pension and annuity retirement
16system, the Iowa public employees’ retirement system, the
17police officers and fire fighters retirement systems under
18chapters 410 and 411, or a revolving fund of a governmental
19agency of this state, and are acceptable as security for the
20deposit of public funds under chapter 12C.
21f. A contract for construction by a private party of
22property to be leased by a port authority is not a contract for
23a public improvement and shall not be subject to the provisions
24of chapter 26 and section 28J.3, subsection 3. This paragraph
25applies to all contracts that are subject to this subsection,
26notwithstanding section 28J.9, subsection 18, or any other
27provision of law that might otherwise apply, including a
28requirement of notice, competitive bidding or selection, or
29for the provision of security. However, if a contract is
30funded in advance by means of the lessor depositing moneys to
31be administered by a port authority with the port authority’s
32obligation to make rent or lease payments commencing with
33its receipt of moneys, a contract for construction of the
34property in question awarded by the port authority is a public
35improvement and is subject to the provisions of chapter 26.
-13- 14. Trust agreements.
2a. In the discretion of the port authority, a loan agreement
3or a lease contract authorized under this section and the port
4authority’s obligations thereunder may be secured by a trust
5agreement between the port authority and a corporate trustee
6that may be any trust company or bank having the powers of a
7trust company within this or any other state. Subject to the
8other provisions of this paragraph, the corporate trustee may
9also be the lender under a loan agreement or the lessor under a
10lease contract authorized under this section.
11b. The trust agreement may provide for the issuance of
12notes to evidence the port authority’s obligations under a loan
13agreement to which the port authority is a party. The trust
14agreement may also provide for the issuance of certificates
15of participation or other participatory interests in a lease
16contract to which a port authority is a party. The trust
17agreement, or any resolution authorizing the loan agreement or
18the lease contract, may pledge or assign revenues of the port
19authority to be received as payment of obligations under the
20loan agreement or the lease contract and may contain provisions
21for protecting and enforcing the rights and remedies of the
22lender, the lessor, or the holders of notes evidencing the
23port authority’s obligations under the loan agreement. These
24provisions may include covenants setting forth the duties of
25the port authority in relation to the acquisition of property,
26the construction, improvement, maintenance, repair, operation,
27and insurance of the port authority facility in connection
28with which the loan agreement or the lease contract is
29authorized, the rentals or other charges to be imposed for the
30use or services of any port authority facility, the custody,
31safeguarding, and application of all moneys, and provisions for
32the employment of consulting engineers in connection with the
33construction or operation of any port authority facility.
34c. A bank or trust company incorporated under the laws
35of this state that acts as the depository of the proceeds or
-14-1borrowings provided under the loan agreement or lease contract
2or of revenues, shall furnish any indemnifying bonds and may
3pledge any securities that are required by the port authority.
4The trust agreement may set forth the rights and remedies of
5the lender, the lessor, or the holders of notes evidencing the
6port authority’s obligations under the loan agreement and may
7restrict the individual right of action by the lender, the
8lessor, or the holders of notes evidencing the port authority’s
9obligations under the loan agreement as is customary in trust
10agreements or trust indentures securing similar loan agreements
11or lease contracts. The trust agreement may contain any other
12provisions that the port authority determines reasonable and
13proper for the security of the lender, the lessor, or the
14holders of notes evidencing the port authority’s obligations
15under the loan agreement. All expenses incurred in carrying
16out the provisions of the trust agreement may be treated as
17a part of the cost of the operation of the port authority
18facility.
195. Exclusions. Port authority loan agreements and lease
20contracts authorized under this chapter shall not constitute
21a debt, indebtedness, or a pledge of the faith and credit of
22the port authority or the state or any political subdivision
23of the state, within the meaning of any state constitutional
24provision or statutory limitation, nor constitute or give rise
25to a pecuniary liability of the port authority, any political
26subdivisions comprising the port authority, the state, or
27any political subdivision of the state, or a charge against
28the general credit or taxing power of the port authority.
29Any political subdivisions comprising the port authority,
30the state, or any political subdivision of the state, and
31the holders or owners of the obligations owed under a loan
32agreement or lease contract shall not have taxes levied by the
33state or by a taxing authority of a governmental agency of the
34state for the payment of the principal of or interest owed on
35such obligations. However, a loan agreement or lease contract
-15-1and the obligation owed thereunder are payable solely from the
2revenues and funds pledged for their payment as authorized
3by this chapter. All loan agreements and lease contracts
4authorized under this chapter and the evidence of obligations
5owed under such loan agreements or lease contracts such shall
6contain a statement to the effect that the loan agreement or
7lease contract authorized under this chapter and the evidence
8of obligations owed under the loan agreement or lease contract,
9as to both principal and interest, are not debts of the port
10authority or the state or any political subdivision of the
11state, but are payable solely from revenues and funds pledged
12for their payment.
136. Judicial proceedings.
14a. The sole remedy for a breach or default of a term of
15any port authority loan agreement or lease contract authorized
16under this chapter is a proceeding in law or in equity by
17suit, action, or mandamus to enforce and compel performance of
18the duties required by this chapter and of the terms of the
19resolution authorizing the loan agreement or lease contract,
20or to obtain the appointment of a receiver to take possession
21of and operate the port authority and to perform the duties
22required by this chapter and the terms of the resolution
23authorizing the loan agreement or lease contract.
24b. An action shall not be brought after fifteen days from
25the time the loan agreement or lease contract is authorized by
26the port authority with regards to any of the following:
27(1) The legality of the port authority loan agreement or
28lease contract.
29(2) The power of a port authority to authorize the port
30authority loan agreement or lease contract.
31(3) The effectiveness of any proceedings relating to the
32authorization of the port authority loan agreement or lease
33contract.
34 Sec. 22. Section 28J.25, Code 2022, is amended to read as
35follows:
-16- 128J.25 Funds and property held in trust — use and deposit of
2funds.
3All revenues, funds, properties, and assets acquired by the
4port authority under this chapter, whether as proceeds from the
5sale of port authority revenue bonds, pledge orders, borrowings
6under a loan agreement, entering into a lease contract,
7proceeds from the issuance of certificates of participation
8or any other participatory interests in such loan agreement
9or lease contract or as revenues, shall be held in trust for
10the purposes of carrying out the port authority’s powers and
11duties, shall be used and reused as provided in this chapter,
12and shall at no time be part of other public funds. Such funds,
13except as otherwise provided in a resolution authorizing port
14authority revenue bonds or pledge orders, the loan agreement or
15lease contract, or in a trust agreement securing the same, or
16except when invested pursuant to section 28J.26, shall be kept
17in depositories selected by the port authority in the manner
18provided in chapter 12C, and the deposits shall be secured
19as provided in that chapter. The resolution authorizing the
20issuance of revenue bonds or pledge orders, the loan agreement
21or lease contract, or the trust agreement securing such bonds
22or pledge orders, shall provide that any officer to whom, or
23any bank or trust company to which, such moneys are paid shall
24act as trustee of such moneys and hold and apply them for the
25purposes hereof, subject to such conditions as this chapter and
26such resolution or trust agreement provide.
27 Sec. 23. Section 28J.26, subsection 1, Code 2022, is amended
28to read as follows:
291. If a port authority has surplus funds after making all
30deposits into all funds required by the terms, covenants,
31conditions, and provisions of outstanding revenue bonds, pledge
32orders, loan agreements, or lease contracts and refunding bonds
33which are payable from the revenues of the port authority
34and after complying with all of the requirements, terms,
35covenants, conditions, and provisions of the proceedings and
-17-1resolutions pursuant to which revenue bonds, pledge orders,
2and refunding bonds are issued or the loan agreement or lease
3contract is authorized, the board may transfer the surplus
4funds to any other fund of the port authority in accordance
5with this chapter and chapter 12C, provided that a transfer
6shall not be made if it conflicts with any of the requirements,
7terms, covenants, conditions, or provisions of a resolution
8authorizing the issuance of revenue bonds, pledge orders,
9or other obligations which are or loan agreements or lease
10contracts payable from the revenues of the port authority which
11are then outstanding.
12 Sec. 24. Section 427.1, subsection 34, Code 2022, is amended
13to read as follows:
1434. Port authority property. The property of a port
15authority created pursuant to section 28J.2, when devoted to
16public use and not held for pecuniary profit, or property
17purchased by a port authority.
18EXPLANATION
19The inclusion of this explanation does not constitute agreement with
20the explanation’s substance by the members of the general assembly.
21This bill relates to the powers and duties of port
22authorities.
23Under Code chapter 28J, the bill modifies the defined
24terms “authorized purposes”, “city”, “cost”, “facility” or
25“port authority facility”, “governmental agency”, “political
26subdivision”, “political subdivisions comprising the port
27authority”, “port authority revenue bonds” or “revenue bonds”,
28and “revenues”. The bill creates and defines the terms “net
29revenues” and “public works project”.
30The bill allows for the creation of a port authority by one
31or more political subdivisions, rather than by two or more
32political subdivisions. The bill provides for the creation of
33a port authority anywhere in this state regardless of proximity
34to a body of water. The bill also provides that a port
35authority is an entity separate from the political subdivisions
-18-1comprising the port authority. The powers granted to the
2port authority may be exercised whether or not the political
3subdivisions comprising the port authority may exercise those
4same powers.
5The bill provides that the political subdivisions
6comprising the port authority may make contributions to the
7port authority, in addition to appropriating or expending
8public funds as set forth in current law, to finance or
9subsidize the operation and authorized purposes of the port
10authority, and pay the costs and expenses incurred by the
11port authority in carrying out any operations or authorized
12purposes of the port authority. Under the bill, political
13subdivisions comprising the port authority are allowed to
14enter into agreements with each other or the port authority
15providing for the contributions to the port authority to be
16made by each of the political subdivisions and providing for
17the obligations of each of the political subdivisions to pay,
18finance, or subsidize the costs and expenses incurred by the
19port authority.
20The bill makes conforming changes to Code section 28J.5
21relating to the membership of the board of directors of a port
22authority created by one political subdivision. The bill
23further provides that any political subdivisions comprising the
24port authority may appoint a successor for the remaining term
25of a removed director.
26The bill modifies the powers of a port authority as it
27relates to its property regardless of whatever the property is
28within or outside the territory of the political subdivisions
29comprising the port authority if in furtherance of any
30authorized purpose. The bill further allows a port authority
31to enter into loan agreements and lease contracts, as provided
32for in the bill, and to exercise the same powers granted to
33cities under Code chapters 28F (joint financing of public works
34and facilities) and 384 (city finance).
35The bill allows a port authority to use its revenues for
-19-1principal on borrowed money and payments under lease contracts.
2The bill further provides that a contract regarding rentals or
3charges for use of services of a port authority may provide
4for acquisition of the port authority facility subject to the
5provisions of any resolution authorizing the issuance of port
6authority revenue bonds, loan agreements, lease contracts, or
7any trust agreement securing such bonds, loan agreements, or
8lease contracts.
9The bill allows a governmental agency to cooperate with the
10port authority in the operation of a port authority facility.
11The bill provides that real property that is purchased by a
12port authority is not subject to certain property taxes.
13Under the provisions of the bill, a port authority may enter
14into certain loan agreements and lease contracts. A port
15authority may enter into loan agreements to borrow money to
16pay the costs of any facility, or parts thereof, or to refund
17other obligations which are payable from the net revenues of
18the port authority at lower, the same, or higher rates of
19interests. A port authority may enter into lease contracts
20for real or personal property comprising a port authority
21facility, but can only lease property for a term that does not
22exceed the economic life of the property. The bill details
23certain provisions similar to those in loan agreements and
24lease contracts between private parties that a loan agreement
25or lease contract entered into by a port authority may contain.
26The bill provides certain conditions for when a loan agreement
27or lease contract stipulates that a portion of the payments
28be applied as interest. The board of a port authority can
29authorize a loan agreement or lease contract, along with
30prescribing additional terms and provisions, by resolution and
31such resolution becomes part of the loan agreement or lease
32contract. A loan agreement or lease contract in which a port
33authority is a party is an obligation of political subdivisions
34comprising the port authority. A contract for construction by
35a private party of property to be leased by a port authority
-20-1is not a contract for public improvement, except under certain
2conditions.
3The bill authorizes loan agreements or lease contracts to be
4secured by a trust agreement between the port authority and a
5corporate trustee, and further provides how the trust agreement
6functions.
7The bill provides that loan agreements and lease contracts
8authorized by the bill do not constitute a debt, indebtedness,
9or a pledge of faith and credit of the port authority or of
10the state or any political subdivisions of the state nor do
11any such agreements give rise to pecuniary liability as to
12these entities or act as a charge against the general credit
13or taxing power of the port authority. The bill provides that
14any political subdivisions comprising the port authority, the
15state, or any political subdivisions of the state, and the
16holders or owners of obligations owed under a loan agreement
17or lease contract cannot have taxes levied by the state or
18by a taxing authority of a governmental agency of the state
19for the payment of the principal of or interest owed on such
20obligations.
21Under the bill, the sole remedy for a breach or default of
22any port authority loan agreement or lease contract authorized
23by the bill is a proceeding in law or in equity to enforce and
24compel performance of required duties and the terms of the
25resolution authorizing the loan agreement or lease contract,
26or to obtain the appointment of a receiver to take possession
27and operate the port authority to perform the required duties
28and terms. An action cannot be brought after 15 days from the
29time the loan agreement or lease contract is authorized by the
30port authority if the action regards the legality of the loan
31agreement or lease contract, the power of the port authority
32to authorize the loan agreement or lease contract, or the
33effectiveness of any proceeding relating to the authorization
34of the loan agreement or lease contract.
35The bill makes conforming changes to Code sections 28J.8,
-21-128J.11, 28J.15, 28J.17, 28J.25, and 28J.26.
-22-th/ns