2016 North Dakota Century Code Title 15.1 Elementary and Secondary Education Chapter 15.1-36 School Construction
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CHAPTER 15.1-36
SCHOOL CONSTRUCTION
15.1-36-01. School construction projects - Approval.
1. Notwithstanding the powers and duties of school boards provided by law, the
superintendent of public instruction shall approve the construction, purchase, repair,
improvement, modernization, or renovation of any public school building or facility
before commencement of the project if the cost of the project, as estimated by the
school board, is in excess of one hundred fifty thousand dollars.
2. The superintendent of public instruction may not approve a project unless the school
district proposing the project:
a. Demonstrates the need for the project and the educational utility of the project or
demonstrates potential utilization of the project by a future reorganized school
district;
b. (1) Demonstrates that the student population has been stable or has increased
during the preceding five school years and is expected to be stable or to
increase during the ensuing five school years; or
(2) Demonstrates by clear and convincing evidence that, despite a declining
student population, there are no feasible alternatives to the proposed
project; and
c. Demonstrates the capacity to pay for the project under rules adopted by the
superintendent of public instruction pursuant to chapter 28-32.
3. a. If the superintendent of public instruction denies the project, the school board
may appeal the superintendent's decision to the state board of public school
education. In considering the appeal, the state board shall review:
(1) The need for the project;
(2) The educational utility of the project;
(3) The potential use of the project by a future reorganized school district;
(4) The capacity of the district to pay for the project; and
(5) Any other objective factors relative to the appeal.
b. The decision of the state board is final.
4. This section is applicable to any construction, purchase, repair, improvement,
renovation, or modernization, even if the school board pays for the project in whole or
in part with moneys received on account of the leasing of lands acquired by the United
States for flood control, navigation, and allied purposes in accordance with 33 U.S.C.
701c-3 or in accordance with moneys received under the American Recovery and
Reinvestment Act of 2009.
5. For purposes of this chapter, "facility" includes a public school parking lot, public
school athletic complex, or any other improvement to real property owned by the
school district.
15.1-36-02. School construction projects - Loans.
1. In order to provide school construction loans, the board of university and school lands
may authorize the use of:
a. Fifty million dollars, or so much of that amount as may be necessary, from the
coal development trust fund, established pursuant to section 21 of article X of the
Constitution of North Dakota and subsection 1 of section 57-62-02; and
b. One hundred fifty million dollars from the strategic investment and improvements
fund, established pursuant to section 15-08.1-08, for the period ending June 30,
2015.
2. In order to be eligible for a loan under this section, the board of a school district shall:
a. Propose a construction project with a cost of at least one million dollars and an
expected utilization of at least thirty years;
b. Obtain the approval of the superintendent of public instruction for the construction
project under section 15.1-36-01; and
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Submit to the superintendent of public instruction an application containing all
information deemed necessary by the superintendent, including potential
alternative sources or methods of financing the construction project.
If an eligible school district's taxable valuation per student is less than eighty percent of
the state average taxable valuation per student, the district is entitled to receive:
a. A school construction loan equal to the lesser of twenty million dollars or ninety
percent of the actual project cost;
b. An interest rate discount equal to at least one hundred but not more than four
hundred basis points below the prevailing tax-free bond rates; and
c. A term of repayment that may extend up to twenty years.
If an eligible school district's taxable valuation per student is equal to at least eighty
percent but less than ninety percent of the state average taxable valuation per student,
the district is entitled to receive:
a. A school construction loan equal to the lesser of fifteen million dollars or eighty
percent of the actual project cost;
b. An interest rate buydown equal to at least one hundred but not more than three
hundred fifty basis points below the prevailing tax-free bond rates; and
c. A term of repayment that may extend up to twenty years.
If an eligible school district's taxable valuation per student is equal to at least ninety
percent of the state average taxable valuation per student, the district is entitled to
receive:
a. A school construction loan equal to the lesser of ten million dollars or seventy
percent of the actual project cost;
b. An interest rate discount equal to at least one hundred but not more than three
hundred basis points below the prevailing tax-free bond rates; and
c. A term of repayment that may extend up to twenty years.
The board of a school district may submit its loan application to the superintendent of
public instruction before or after receiving authorization of a bond issue in accordance
with chapter 21-03. If the vote to authorize a bond issue precedes the application for a
loan, the application must be acted upon by the superintendent expeditiously but no
later than one hundred eighty days from the date it is received by the superintendent.
The superintendent of public instruction shall consider each loan application in the
order it received approval under section 15.1-36-01.
If the superintendent of public instruction approves the loan, the superintendent may
determine the loan amount, the term of the loan, and the interest rate, in accordance
with the requirements of this section. A school district's interest rate may not be less
than one percent, regardless of any rate discount for which the district might otherwise
qualify under this section.
a. If a school district seeking a loan under this section received an allocation of the
oil and gas gross production tax during the previous fiscal year in accordance
with chapter 57-51, the board of the district shall provide to the board of university
and school lands, and to the state treasurer, its evidence of indebtedness
indicating that the loan originated under this section.
b. If the evidence of indebtedness is payable solely from the school district's
allocation of the oil and gas gross production tax in accordance with section
57-51-15, the loan does not constitute a general obligation of the school district
and may not be considered a debt of the district.
c. If a loan made to a school district is payable solely from the district's allocation of
the oil and gas gross production tax in accordance with section 57-51-15, the
terms of the loan must require that the state treasurer withhold the dollar amount
or percentage specified in the loan agreement, from each of the district's oil and
gas gross production tax allocations, in order to repay the principal and interest of
the evidence of indebtedness. The state treasurer shall deposit the amount
withheld into the fund from which the loan originated.
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Any evidence of indebtedness executed by the board of a school district under
this subsection is a negotiable instrument and not subject to taxation by the state
or any political subdivision of the state.
For purposes of this section, a "construction project" means the purchase, lease,
erection, or improvement of any structure or facility by a school board, provided the
acquisition or activity is within a school board's authority.
15.1-36-02.1. School construction projects - Reorganized districts - Interest subsidy.
1. If under chapter 15.1-12 two or more school districts prepare a reorganization plan,
agree in that plan to pursue a construction project, and obtain the approval of the
superintendent of public instruction in accordance with this chapter, the newly
reorganized district is eligible to receive up to three hundred basis points of interest
rate buydown on the lesser of:
a. Thirteen million five hundred thousand dollars; or
b. A percentage of the total project cost determined by:
(1) Allowing five percent for each school district that participated in the
reorganization;
(2) Allowing
five
percent
for
each
one
hundred-square-mile
[259-square-kilometer] increment that is added to the square miles
[kilometers] of the geographically largest district participating in the
reorganization;
(3) Allowing five percent for every ten students added to the enrollment of the
district having the greatest number of enrolled students and participating in
the reorganization; and
(4) Capping the allowable percentage at ninety percent of the total project cost.
2. In addition to the requirements of subsection 1, the percentage of cost subsidy
determined under subdivision b of subsection 1 must equal at least twenty percent of
the total project cost.
15.1-36-03. School construction project loans - Management by Bank of North
Dakota.
If the superintendent of public instruction approves a loan application under section
15.1-36-02, the superintendent shall forward the application to the Bank of North Dakota. The
Bank shall manage and service each school construction loan issued under this chapter and
shall execute all necessary loan instruments. The Bank may charge a loan recipient a fee for
managing and servicing the loan. The Bank shall receive payments of principal and interest
from the school districts and shall remit the payments of principal and interest to the board of
university and school lands. The board shall use or deposit the payments in accordance with
section 57-62-02 and section 21 of article X of the Constitution of North Dakota.
15.1-36-04. Evidences of indebtedness.
The board of a school district may issue and sell evidences of indebtedness under chapter
21-03 to finance the construction or improvement of a project approved under this chapter. The
principal amount of the loan and the evidences of indebtedness to repay the loan may not
exceed the loan amount for which the district is eligible under this chapter. Evidences of
indebtedness issued under this chapter constitute a general obligation of the school district.
15.1-36-05. Construction of public school building - Violations - Penalty.
1. A person is guilty of an infraction if the person:
a. Draws plans or specifications for the construction of a public school building or
facility in violation of this chapter;
b. Superintends the construction of a public school building or facility in violation of
this chapter;
c. Constructs a public school building or facility in violation of this chapter; or
d. Violates any other provision of this chapter.
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2.
A member of a school board is guilty of an infraction if the member concurred in a
violation of this chapter by the board.
15.1-36-06. School construction loans - Bank of North Dakota.
1. In addition to any construction loans made available under section 15.1-36-02, the
Bank of North Dakota may provide up to two hundred fifty million dollars to eligible
school districts for school construction loans, except that the total of all loans provided
under this section during the first year of the 2015-17 biennium may not exceed fifty
percent of the total amount authorized under this subsection.
2. To be eligible for a loan under this section, the board of a school district shall:
a. Propose a new construction or remodeling project with a cost of at least
one million dollars and an expected utilization of at least thirty years;
b. Obtain the approval of the superintendent of public instruction for the project
under section 15.1-36-01;
c. (1) Request from the tax commissioner a statement of the estimated tax
increase, in mills and dollars, which would be applicable to a residential
parcel of average true and full value within the county in which the school
district is headquartered, if a loan under this section and any associated
school construction bond issue were to be authorized in accordance with
chapter 21-03;
(2) Request from the tax commissioner a statement of the estimated tax
increase, in mills and dollars, which would be applicable to an acre of
cropland and to an acre of noncropland, of average true and full value within
the county in which the school district is headquartered, if a loan under this
section and any associated school construction bond issue were to be
authorized in accordance with chapter 21-03;
(3) Publish in the official newspaper of the district the information from the
statements required by this subdivision with the notice of the election to
authorize the school construction bond issuance in accordance with section
21-03-12; and
(4) Post on the school district's website the information from the statements
preceding the date of the election to authorize the school construction bond
issuance in accordance with chapter 21-03;
d. Receive authorization for a bond issue in accordance with chapter 21-03; and
e. Submit a completed application to the Bank of North Dakota.
3. With the advice and consent of the superintendent of public instruction, the Bank of
North Dakota shall award the loans in accordance with a prioritization system that is
based on a review of all applications filed during the twelve-month period preceding
April first and gives consideration to:
a. Student occupancy and academic needs in the district;
b. The age of existing structures to be replaced or remodeled;
c. Building design proposals that are based on safety and vulnerability
assessments;
d. Community support;
e. Cost; and
f. Any other criteria established in rule by the superintendent of public instruction,
after consultation with an interim committee appointed by the legislative
management.
4. The term of a loan under this section is twenty years, unless a shorter term is
requested by the board of a school district in its application.
5. The interest rate on a loan under this section may not exceed two percent, until July 1,
2025. Thereafter, the interest rate on the remainder of a loan under this section:
a. May not exceed the Bank of North Dakota's base rate; or
b. May be a fixed rate.
6. If a school district's unobligated general fund balance on the preceding June thirtieth
exceeds the limitation set forth under section 15.1-27-35.3, the loan amount to which
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that district is entitled under this section may not exceed eighty percent of the project's
cost.
The maximum loan amount to which a school district is entitled under this section is
twenty million dollars.
15.1-36-07. School construction loans - Bank of North Dakota.
1. In addition to any construction loans made available under section 15.1-36-02, the
Bank of North Dakota may provide up to two hundred million dollars from the school
construction assistance loan fund to eligible school districts for school construction
loans, except that the total of all loans provided under this section prior to July 1, 2018,
may not exceed fifty percent of the total amount authorized under this subsection.
2. To be eligible for a loan under this section, the board of a school district shall:
a. Propose a new construction or remodeling project with a cost of at least
one million dollars and an expected utilization of at least thirty years;
b. Obtain the approval of the superintendent of public instruction for the project
under section 15.1-36-01;
c. (1) Request from the tax commissioner a statement of the estimated tax
increase, in mills and dollars, which would be applicable to a residential
parcel of average true and full value within the county in which the school
district is headquartered, if a loan under this section and any associated
school construction bond issue were to be authorized in accordance with
chapter 21-03;
(2) Request from the tax commissioner a statement of the estimated tax
increase, in mills and dollars, which would be applicable to an acre of
cropland and to an acre of noncropland, of average true and full value within
the county in which the school district is headquartered, if a loan under this
section and any associated school construction bond issue were to be
authorized in accordance with chapter 21-03;
(3) Publish in the official newspaper of the district the information from the
statements required by this subdivision with the notice of the election to
authorize the school construction bond issuance in accordance with section
21-03-12; and
(4) Post on the school district's website the information from the statements
preceding the date of the election to authorize the school construction bond
issuance in accordance with chapter 21-03;
d. Receive authorization for a bond issuance in accordance with chapter 21-03; and
e. Submit a completed application to the Bank of North Dakota.
3. With the advice and consent of the superintendent of public instruction, the Bank of
North Dakota shall award the loans in accordance with a prioritization system that is
based on a review of all applications filed during the twelve-month period preceding
April first and gives consideration to:
a. Student occupancy and academic needs in the district;
b. The age of existing structures to be replaced or remodeled;
c. Building design proposals that are based on safety and vulnerability
assessments;
d. Community support;
e. Cost; and
f. Any other criteria established in rule by the superintendent of public instruction,
after consultation with an interim committee appointed by the legislative
management.
4. The term of a loan under this section is twenty years, unless a shorter term is
requested by the board of a school district in its application.
5. The interest rate on a loan under this section may not exceed two percent. The
legislative assembly shall, however, conduct a biennial review of interest rates
applicable to new loans.
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If a school district's unobligated general fund balance on the preceding June thirtieth
exceeds the limitation set forth under section 15.1-27-35.3, the loan amount to which
that district is entitled under this section may not exceed eighty percent of the project's
cost.
The maximum loan amount to which a school district is entitled under this section is
twenty million dollars.
a. The Bank of North Dakota shall manage and service each loan under this section
and shall execute all necessary loan instruments. The Bank may charge a school
district a fee for managing and servicing the loan.
b. The Bank shall receive payments of principal and interest from school districts
and shall deposit such payments in the school construction assistance loan fund.
15.1-36-08. School construction assistance loan fund - Continuing appropriation.
1. The school construction assistance loan fund is a special revolving loan fund in the
state treasury. The fund consists of:
a. All moneys appropriated or transferred to the fund by the legislative assembly;
b. One hundred fifty million dollars from the strategic investment and improvements
fund, which had been allocated by the sixty-third legislative assembly for school
construction loans in accordance with section 15.1-36-02; and
c. All interest or other earnings of the fund, and all repayments of loans made from
the fund.
2. Moneys in the fund are appropriated on a continuing basis for the purpose of providing
low-interest school construction loans, in accordance with this chapter.
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