Ind. Code ch. 5-1.2-7

in effect

Ind. Code § 5-1.2-7-1 Purpose

Sec. 1. The general purpose of this chapter is to provide financing for health facilities and health facility property. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-2 Applicability

Sec. 2. This chapter applies only to health facilities and health facility property and not to any other facilities or projects financed by the authority. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-3 County commissioner approval; presuppose and include approval by county council; voting requirements for valid lease

Sec. 3. (a) For purposes of this chapter, county commissioner action or approval for the appropriation and expenditure of county tax money shall presuppose and include approval by the county council. (b) A lease entered into by the board of county commissioners with the authority is valid or binding upon the county only if the lease is approved by a majority vote of the county council. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-4 Competitive bidding requirement

Sec. 4. Health facility property financed under this chapter is not subject to any statutory requirement of competitive bidding or other restriction imposed on the procedure for award of contracts or the lease, sale, or other disposition of health facility property with regard to any action taken under this chapter. However, if the prospective lessee or purchaser requests in writing, the authority shall call for the construction bids in a manner determined by the authority with the approval of the lessee or purchaser. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-5 Powers of the authority

Sec. 5. (a) The authority has all the powers necessary to carry out and effectuate its public purposes under this chapter, including initiating a program of providing health facility property to be operated by participating providers in health facilities. In furtherance of this objective, the authority may also do one (1) or more of the following: (1) Provide, or cause to be provided by a participating provider, by acquisition, lease, construction, fabrication, repair, restoration, reconditioning, refinancing, or installation, health facility property to be located within a health facility. (2) Lease as lessor any item of health facility property for those rentals and upon the terms and conditions as the authority considers advisable and are not in conflict with this chapter. (3) To charge to and apportion among participating providers its administrative costs and expenses incurred in the exercise of the powers and duties conferred by this chapter and IC 5-1.2-4. (4) Assist, coordinate, and participate with other issuers of tax exempt bonds and public officials in other states in connection with financings or refinancings on behalf of multiple state health facilities. Assistance, coordination, and participation provided under this subdivision may include conducting any hearings required by state or federal law in order for bonds to be issued by public officials in other states if part of the proceeds of the bonds will be used by participating providers in Indiana. Neither the state of Indiana nor the authority, nor any officers, agents, or employees of the state or the authority, are subject to any liability resulting from assistance to or coordination or participation with other issuers of tax exempt bonds under this subsection. Any assistance, coordination, or participation provided under this subdivision is given with the understanding that the issuers of tax exempt bonds or borrowers will agree to indemnify and hold harmless the state of Indiana and the authority and their officers, agents, and employees from all claims and liability arising from any action against the state of Indiana or the authority relating to the bonds. (5) Employ and enter into agreements with, and delegate to, any person as the authority sees fit, the power to manage the routine affairs of the authority, including the originating and processing of any applications from participating providers for the lease or purchase from the authority, or financing, reimbursing, or refinancing by the authority, of health facility property and to service the leases, installment purchase contracts, and loan agreements between the authority and the participating providers. (6) Establish eligibility standards for participating providers, without complying with IC 4-22-2. However, these standards have the force of law if the standards are adopted after a public hearing for which notice has been published in a newspaper published in the city of Indianapolis, at least ten (10) days in advance of the hearing. (7) Contract with any entity securing the payment of bonds under IC 5-1.2-4-1(a)(10) and IC 5-1.2-4-1(a)(32), authorizing the entity to approve the participating providers that can finance or refinance health facility property with proceeds from the bond issue secured by that entity. (8) Lease to a participating provider specific items of health facility property upon terms and conditions that the authority considers proper, to charge and collect rents for the health facility property, to terminate such a lease upon the failure of the lessee to comply with any of its obligations under the lease or otherwise as the lease provides, and to include in the lease provisions that the lessee has the option to renew the term of the lease for the periods and at the rents as may be determined by the authority or to purchase any or all of the health facility property to which the lease applies. (9) Loan to a participating provider under an installment purchase contract or loan agreement money to finance, reimburse, or refinance the cost of specific items of health facility property and to take back a secured or unsecured promissory note evidencing such a loan and a security interest in the health facility property financed or refinanced with the loan, upon the terms and conditions as the authority considers proper. (10) Sell or otherwise dispose of any unneeded or obsolete health facility property under terms and conditions as determined by the authority. (11) Maintain, repair, replace, and otherwise improve or cause to be maintained, repaired, replaced, and otherwise improved any health facility property owned by the authority. (12) Obtain or aid in obtaining property insurance on all health facility property owned or financed, or to accept payment if any health facility property is damaged or destroyed. (13) Enter into any agreement, contract, or other instrument with respect to any insurance, guarantee, or letter of credit, accepting payment in the manner and form as provided in the insurance, guarantee, or letter of credit if a participating provider defaults, and to assign the insurance, guarantee, or letter of credit as security for bonds issued by the authority. (b) No part of the revenues or assets of the authority may inure to the benefit of or be distributable to its members or officers or other private persons. Any net earnings of the authority beyond that necessary for retirement of authority indebtedness or to implement the public purposes of this chapter inure to the benefit of the state. Upon termination or dissolution of the authority, all rights and properties of the authority pass to and are vested in the state, subject to the rights of lienholders and other creditors. As added by P.L.189-2018, SEC.25. Amended by P.L.10-2019, SEC.17.

Ind. Code § 5-1.2-7-6 Security; transactions with participating providers

Sec. 6. Before exercising any of the powers conferred by section 5 of this chapter, the authority may: (1) require that the lease, installment purchase contract, or loan agreement involved be insured by a loan insurer, be guaranteed by a loan guarantor, or be secured by a letter of credit; and (2) require any other type of security from the participating providers that the authority considers reasonable and necessary. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-7 Power to issue bonds; proceeds; use

Sec. 7. (a) The authority may issue, sell, and deliver its bonds, in accordance with IC 5-1.2-4 and this chapter, for the purpose of paying for or making loans to participating providers for the financing, reimbursing, or refinancing of all or any part of the cost of health facility property, to finance the acquisition of health facility property for lease or sale to participating providers, and any other purposes authorized by this chapter. (b) The authority may provide for the issuance of bonds of the authority for the purpose of refunding any bonds of the authority then outstanding, including the payment of any redemption premium on these bonds and any interest accrued or to accrue to the earliest or any subsequent date of redemption, purchase or maturity of these bonds, and, if considered advisable by the authority, for the additional purpose of paying all or any part of the cost of health facility property. (c) The proceeds of any bonds issued for the purpose of refunding outstanding bonds may, in the discretion of the authority, be applied to the purchase or retirement at maturity or redemption of the outstanding bonds either on their earliest or any subsequent redemption date or upon the purchase or at the maturity of the bonds and may, pending such an application, be placed in escrow to be applied to the purchase or retirement at maturity or redemption on the date as may be determined by the authority. Subject to the provisions of any trust indenture to the contrary, any of the escrowed proceeds, pending such a use, may be invested and reinvested in obligations as are determined by the authority to assure the prompt payment of the principal and interest and redemption premium, if any, on the outstanding bonds to be so refunded. The interest, income, and profits, if any, earned or realized on such an investment may also be applied to the payment of the outstanding bonds to be so refunded. Only after the terms of the escrow have been fully satisfied and carried out, any balance of the proceeds and interest, income, and profits, if any, earned or realized on the investments shall be returned to the authority or the participating providers for use by them in any lawful manner. All the bonds are subject to this chapter in the same manner and to the same extent as other bonds issued under this chapter. (d) The proceeds of the bonds (other than refunding bonds) of each issue shall be used for the payment of all or part of the cost of, or for the making of a loan in the amount of all or part of the cost of, the health facility property for which the bonds have been authorized and, at the option of the authority, for the deposit to a reserve fund or reserve funds for the bonds. However, the authority may be paid, out of money from the proceeds of the sale and delivery of its bonds issued in accordance with this chapter, all of the authority's out-of-pocket expenses and costs in connection with the issuance, sale, and delivery of the bonds, and the costs of obtaining insurance, guarantees, and letters of credit securing payment of the bonds and the lease and the loan and installment purchase payments, plus an amount equal to the compensation paid to any employees of the authority for the time those employees have spent on activities relating to the issuance, sale, and delivery of the bonds. Bond proceeds shall be disbursed in the manner and under the restrictions determined by the authority. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-8 Bond resolutions or related instruments; provisions

Sec. 8. Any bond resolution or related trust indenture, indenture of mortgage, or deed of trust may contain provisions, which must be a part of the contract with the holders of the bonds to be authorized, as to pledging or assigning the revenues generated by the health facility property, pledging or assigning the notes and mortgage, lease, or other security given by the participating providers whose health facility property has been financed with the proceeds of the bonds or other specified revenues or property of the authority. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-9 Bonds; additional security authorized

Sec. 9. Bonds of the authority issued to finance or refinance a health facility or health facility property may also be secured by and payable from: (1) a pooling of leases whereby the authority may assign its rights, as lessor, and pledge rents under two (2) or more leases of health facility property with two (2) or more participating providers, as lessees; or (2) a pooling of notes and mortgages or other security instruments whereby the authority may assign its rights as payee or secured party and pledge the revenues under two (2) or more notes and loan agreements from two (2) or more participating providers; upon the terms as may be provided for in bond resolutions or other instruments under which the bonds are issued. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-10 Payment of expenses

Sec. 10. All expenses incurred in carrying out this chapter shall be payable solely from funds provided under this chapter, and no liability may be incurred by the authority or the state beyond the extent to which money has been provided under this chapter. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-11 Public property; tax exemption

Sec. 11. All property acquired or held by the authority under this chapter is declared to be public property used for public and governmental purposes, and all property, income from the property and bonds issued under this chapter, interest payable on the bonds and income derived from the bonds, are exempt from all taxes, direct or indirect, imposed by the state, any county, any city, or any political subdivision of the state. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-12 Construction of chapter

Sec. 12. Nothing in this chapter may be construed as a restriction or limitation upon any powers which the authority might otherwise have under any other law of this state, and this chapter is cumulative to these powers. This chapter shall be construed to provide a complete, additional, and alternative method for the doing of the things authorized, and shall be construed as supplemental to powers conferred by any other laws. The adoption by the authority of bylaws and rules, and the issuance of bonds by the authority under this chapter need not comply with the requirements of any other state laws applicable to the adoption of bylaws and rules and the issuance of bonds, notes, and other obligations. No proceedings, notice, or approval is required for the issuance of any bonds or any instrument or the security for the bonds or instruments, or for the proper conduct of the authority's business, affairs, or operations, except as provided in this chapter. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-13 Leases by county with the authority

Sec. 13. (a) A county may lease land and buildings, including the necessary equipment and appurtenances, from the authority for hospital purposes. No lease on a particular building shall be entered into for a period of more than forty (40) years. However, a lease is renewable for less than forty (40) years. (b) A lease entered into by a county may require the funding of a reserve fund for the benefit of the authority or the authority's assigns. To assure the maintenance of the required reserve amount in any reserve fund, the county council may appropriate for deposit in the reserve fund the sum certified by the county fiscal officer to the county council that is necessary to restore the reserve fund to an amount equal to the required reserve amount. The county fiscal officer shall annually before July 1 prepare and deliver a certificate to the county council stating the sum required to restore the reserve fund to the appropriate reserve amount. Nothing in this subsection creates a debt or liability of the county to make an appropriation. (c) All amounts received because of money appropriated by the county to a reserve fund must be held by the authority under the lease and applied in accordance with the lease. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-14 Leases before construction, erection, or renovation of buildings

Sec. 14. A county may, in anticipation of the construction, erection, or renovation of a building (including the necessary equipment and appurtenances), make and enter into a lease with the authority before the actual acquisition of a site and the construction, erection, or renovation of the building. The lease shall not provide for the payment of any lease rental by the lessee until the building is ready for occupancy. However, if a building is to be acquired and renovated under this chapter, a county may, in anticipation of the acquisition and renovation, make and enter into a lease upon terms and conditions that are agreed upon by the county and the authority, including: (1) terms and conditions upon which the county may continue to operate the building until completion of the renovation; and (2) the payment of a lease rental by the lessee during the period of renovation. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-15 Payment of lease rental

Sec. 15. (a) Any lease executed under section 13 or 14 of this chapter may provide for the payment of the lease rental in any one (1) of the following ways as established in the lease: (1) Entirely from the levy of taxes. (2) Entirely from the net revenues of the hospital of which the leased building is a part. (3) In part from the levy of taxes and in part from the net revenues described in subdivision (2). (b) If any lease provides for the payment of lease rental in whole or in part from net revenues of the hospital, the lease may also provide that the county and the board of trustees or board of managers of the hospital set aside and hold as a reserve for this purpose excess net revenues over and above the amount required to pay lease rental payable from net revenues. The reserve fund may not exceed an amount equal to the amount of lease rental payable from net revenues for two (2) years. The reserve fund shall be held and used only for the purpose of paying lease rental payable from net revenues, if the net revenues at any time are insufficient to pay lease rentals. The amount in the reserve fund may be invested in the manner and to the extent provided in the lease. All interest or other income from the investment shall become part of the reserve fund unless the reserve fund contains the maximum amount required to be in the reserve fund. The following apply if the reserve fund contains the maximum amount required to be in the reserve fund: (1) If any of the lease rental is payable from taxes, the interest or other income shall be transferred to the fund to be used for the payment of the lease rental provided to be paid from taxes. (2) If none of the lease rental is payable from taxes, the interest or other income shall become a part of the reserve fund. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-16 Payment of lease rental from cumulative building fund

Sec. 16. In addition to the ways specified in section 15 of this chapter for the payment of lease rental, any lease executed under this chapter may provide for the payment of lease rental from a cumulative building fund established by the lessee under IC 16-22-5-3 (or IC 16-12.1-4-4 before its repeal). Part or all of a cumulative building fund and the tax levied for that cumulative building fund may be committed and pledged to the payment of the lease rental. To the extent that the amount committed and pledged is insufficient to pay the lease rental, the lease shall provide that any remaining lease rental shall be paid entirely from the net revenues of the hospital of which the leased building is a part. So long as the lease remains in effect: (1) any amount of cumulative building fund so committed and pledged may not be expended by the lessee for any other purpose; and (2) the tax levy committed and pledged for the cumulative building fund may not be reduced or rescinded by the county council. Notwithstanding any other provision of this chapter, if a lease provides for payment of lease rental under this section, no approval of the county council is required for the lease, the terms and conditions of the lease, or the sale of the land by the county to the authority under this chapter. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-17 Notice of public hearing; notice of execution of lease; action to contest validity of lease; taxpayer objections to lease

Sec. 17. (a) When the authority, the board of trustees or board of managers of the hospital, the board of commissioners of the county, and a majority of the county council have agreed upon the terms and conditions of any lease proposed to be entered into under section 13 or 14 of this chapter, and before the final execution of the lease, the county auditor shall give notice by publication of a public hearing to be held in the county by the board of commissioners. The hearing shall take place on a day not earlier than ten (10) days after the publication of the notice. The notice of the hearing shall be published one (1) time in a newspaper of general circulation printed in the English language and published in the county. The notice shall do the following: (1) Name the day, place, and hour of the hearing. (2) Set forth a brief summary of the principal terms of the lease agreed upon, including the character and location of the property to be leased, the lease rental to be paid, and the number of years the contract is to be in effect. (3) State a location where the proposed lease, drawings, plans, specifications, and estimates may be examined. The proposed lease and the drawings, plans, specifications, and estimates of construction cost for the building shall be open to inspection by the public during the ten (10) day period and at the hearing. All interested persons shall have a right to be heard at the hearing on the necessity for the execution of the lease and whether the lease rental under the lease is fair and reasonable. The hearing may be adjourned to a later date with the place of the hearing fixed before adjournment. Following the hearing, the board of commissioners may either authorize the execution of the lease as originally agreed upon or may make modifications that are agreed upon by the authority, the board of trustees or board of managers of the hospital, and the county council. The authorization shall be by an order that is entered in the official records of the board of commissioners. The lease contract shall be executed on behalf of the county by the board of commissioners. (b) If the execution of the lease as originally agreed upon or as modified by agreement is authorized, notice of the signing of the lease shall be given on behalf of the county by publication one (1) time in a newspaper of general circulation printed in the English language and published in the county. Except as provided in subsection (d), ten (10) or more taxpayers in the county whose tax rate will be affected by the proposed lease and who may be of the opinion that no necessity exists for the execution of the lease or that the lease rental under the lease is not fair and reasonable may file a petition in the office of the county auditor, within thirty (30) days after publication of notice of the execution of the lease, that sets forth the taxpayers' objections and facts supporting those objections. Upon the filing of a petition, the county auditor shall immediately certify a copy of the petition together with any other data as may be necessary in order to present the questions involved to the department of local government finance. Upon receipt of the certified petition and information, the department of local government finance shall fix a time for the hearing of the matter that is not less than five (5) or more than fifteen (15) days after receipt. The department of local government finance may either hold the hearing in the affected county or through electronic means. Notice of the hearing shall be given by the department of local government finance to the board of county commissioners and to the first ten (10) taxpayer petitioners upon the petition by certified mail sent to the addresses listed on the petition at least five (5) days before the date of the hearing. (c) No action to contest the validity of the lease or to enjoin the performance of any of the terms and conditions of the lease shall be instituted at any time later than thirty (30) days after publication of notice of the execution of the lease, or, if an appeal has been taken to the department of local government finance, within thirty (30) days after the decision of the department. (d) The authority for taxpayers to object to a proposed lease under subsection (b) does not apply if the authority complies with the procedures for the issuance of bonds and other evidence of indebtedness described in IC 6-1.1-20. As added by P.L.189-2018, SEC.25. Amended by P.L.38-2021, SEC.3.

Ind. Code § 5-1.2-7-18 Options to renew and to purchase; obligations of county; general obligation bonds

Sec. 18. (a) A lease under this chapter may provide that the lessee has an option to renew the lease for a like or lesser term, on the conditions that are provided in the lease. A lease shall contain an option to purchase: (1) at any time after ten (10) years from the execution of the lease and before the expiration of the term of lease on the date fixed in the lease; and (2) at a price equal to: (A) the amount required to enable the authority to redeem all outstanding securities payable out of the rentals provided for in the lease, all premiums payable on the redemption, and accrued and unpaid interest; and (B) all other expenses, indebtedness, and obligations of the authority attributable to the acquisition, construction, renovation, and leasing of the building. (b) A lease may not provide or be construed to provide that the county is under any obligation to purchase the leased building or under any obligation with respect to any creditor or bondholder of the authority. (c) A county exercising an option to purchase may issue general obligation bonds for the purpose of procuring funds with which to pay the purchase price of the building. The general obligation bonds shall be authorized, issued, and sold in the manner provided by law for the authorization, issuance, and sale of general obligation bonds of the county for other purposes. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-19 Approval of plans, specifications, and cost estimates

Sec. 19. On behalf of the authority, the board of directors or board of managers of the hospital shall, before the execution of a lease, submit to and receive the approval of the board of commissioners of the county of the plans, specifications, and estimates of cost for the building or renovation. The plans and specifications shall be submitted to and approved by the state board of health, the department of homeland security, and other state agencies that are required by law to pass on plans and specifications for public buildings. As added by P.L.189-2018, SEC.25. Amended by P.L.187-2021, SEC.3.

Ind. Code § 5-1.2-7-20 Sale of county land to the authority

Sec. 20. A county desiring to have a building erected or renovated on land owned or to be acquired by the county may sell that land or building to the authority. Before the sale may take place, the county commissioners shall file a petition with the circuit court, superior court, or probate court of the county requesting the appointment of: (1) one (1) disinterested freeholder of the county as an appraiser; and (2) two (2) disinterested appraisers licensed under IC 25-34.1; who are residents of Indiana to determine the fair market value of the land or building. One (1) of the appraisers described under subdivision (2) must reside not more than fifty (50) miles from the land or building. Upon appointment, the appraisers shall fix the fair market value of the land or building and shall report that value within two (2) weeks after the date of their appointment. The county may then sell the land or building to the authority for an amount not less than the amount fixed by the appraisers as the fair market value. The amount shall be paid in cash upon delivery of the deed by the county to the authority. If a cumulative building fund exists at the time of the sale, the proceeds from the sale shall be placed in that fund. If a cumulative building fund does not exist at the time of the sale, the proceeds from the sale shall be paid into the county hospital fund with the principal of and interest on the fund to be used solely by the county hospital for the purposes set forth in IC 16-22-5-3 (or IC 16-12.1-4-4 before its repeal on July 1, 1993). A sale of land or a building by a county to the authority shall be authorized by the board of commissioners by an order that shall be entered in the official records of the board. The deed shall be executed on behalf of the county by the board of county commissioners. As added by P.L.189-2018, SEC.25.

Ind. Code § 5-1.2-7-21 Party wall agreements

Sec. 21. A county and an authority that have entered into, or propose to enter into, a lease under this chapter may enter into party wall agreements or other agreements concerning the attaching of an addition to a hospital building, if the agreement is: (1) approved by the board of trustees or board of managers of the hospital; and (2) recorded in the office of the recorder of the county in which the hospital is located. An agreement may provide for an easement or license to construct a part of an addition over or above the existing hospital building. As added by P.L.189-2018, SEC.25.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/5Fetched: 10/17/2026