2016 North Dakota Century Code Title 40 Municipal Government Chapter 40-57 Municipal Industrial Development Act
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CHAPTER 40-57
MUNICIPAL INDUSTRIAL DEVELOPMENT ACT
40-57-01. Short title.
This chapter may be cited as the Municipal Industrial Development Act of 1955.
40-57-02. Definitions.
As used in this chapter, unless a different meaning clearly appears from the context:
1. "Municipality" means counties as well as municipalities of the types listed in subsection
4 of section 40-01-01 and, in the case of parking projects, municipal parking
authorities created pursuant to section 40-61-02 and the public finance authority or
any successor in interest to the public finance authority for the purpose of issuing
revenue bonds under this chapter. In acting as a municipality under this chapter, the
public finance authority or its successor in interest shall follow the provisions of this
chapter to the extent applicable or practicable but it need not comply with the notice
and hearing provisions contained in sections 40-57-04 and 40-57-04.1 or the
provisions of section 40-57-10. In the event of a conflict between the provisions of this
chapter and chapter 6-09.4, the provisions of chapter 6-09.4 govern.
2. "Project" means any real property, buildings, and improvements on real property,
including water and sewer lines and other underground infrastructure, and the
buildings on the real property, and any equipment located on the real property or in the
buildings, or elsewhere, or personal property, including working capital, which is used
or useful in connection with a revenue-producing enterprise, or any combination of two
or more revenue-producing enterprises, engaged or to be engaged in:
a. Assembling, fabricating, manufacturing, mixing, or processing of any agricultural,
mineral, or manufactured products, or any combination thereof.
b. Storing, warehousing, distributing, or selling any products of agriculture, mining,
or manufacture.
c. Providing child care facilities or hospital, nursing home, or other health care
facilities and service.
d. Improvements or equipment used or to be used for the abatement or control of
environmental pollution in connection with any new or existing revenue-producing
enterprise.
e. Public career and technical education.
f. Any other industry or business not prohibited by the constitution or laws of the
state of North Dakota.
In no event, however, does the term "project" include those undertakings defined in
chapter 40-35, with the exception of projects referred to in this subsection.
3. "Revenue agreement" means a written agreement between a municipality and a
contracting party with respect to a project, whereby the contracting party agrees to pay
to the municipality or its order amounts sufficient at all times to pay when due the
principal of, premium, if any, and interest on all bonds issued by the municipality with
respect to that project. A revenue agreement may be in the form of a lease, mortgage,
direct or installment sale contract, loan agreement, take-or-pay or similar agreement,
and be secured in a manner the parties agree to or be unsecured.
40-57-03. Powers of municipality.
Any municipality, in addition to the powers prescribed elsewhere by the laws of this state,
shall have the power to:
1. Acquire whether by purchase, lease, or gift, from any source whatsoever, any real
property, buildings, improvements on real property or buildings, including easements,
profits, rights in land and water rights deemed necessary in connection therewith, and
to construct, reconstruct, improve, better, or extend to real property, buildings, and
improvements on real property and buildings of any project which shall be located
within this state; provided, that the property acquired for the project shall be located
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wholly within the boundaries of the municipality acquiring it unless a contract or
agreement between that municipality and any other municipality in which part or all of
the property is located is entered into as authorized by subsection 8.
Issue revenue bonds, in anticipation of the collection of revenues of the project, to
finance, in whole or in part, the cost of the project, whether then in existence or not.
Lease projects to any industrial or commercial enterprise or nonprofit corporation or to
any school district for career and technical education purposes, in such manner that
rents to be charged for the use of such projects shall be fixed, and revised from time to
time as necessary, so as to produce income and revenue sufficient to provide for the
prompt payment of interest upon all bonds issued hereunder, to create a sinking fund
to pay the principal of such bonds when due, and to provide for the operation,
maintenance, insurance on, and depreciation of such projects, and any taxes thereon.
With respect to any project, enter into revenue agreements providing for the
municipality to loan the proceeds derived from the issuance of bonds pursuant to this
chapter to the contracting party to be used to pay costs of the project and providing for
the repayment of the loan by the contracting party, and which may provide for such
loans or bonds to be secured by a mortgage on and security in the project or such
other security as may be determined by the municipality, whether delivered or granted
to the municipality, the holder or holders of said bonds, a trustee therefor or otherwise.
Pledge to the punctual payment of said bonds and the interest thereof, all or any part
of the revenues of such project, including the revenues of projects which shall be
acquired or constructed subsequent to the issuance of such bonds, as well as
revenues of projects existing when such bonds were issued.
Mortgage or otherwise encumber said projects in favor of the holder, or holders, of
said revenue bonds, or a trustee therefor; provided, that in creating any such
mortgages or encumbrances, a municipality shall not have the power to obligate itself
except with respect to the project.
Make all contracts, execute all instruments, and do all things necessary or convenient
in the exercise of the powers herein granted, or in the performance of its covenants or
duties, or in order to secure the payments of its bonds.
Enter into and perform such contracts and agreements with other municipalities,
political subdivisions, and state agencies, authorities, and institutions as the respective
governing bodies of the same may deem proper and feasible for or concerning the
planning, construction, lease, or other acquisition, and the financing of such facilities,
and the maintenance thereof. Any such municipalities so contracting with each other
may also provide in their contract or agreement for a board, commission, or such other
body as their governing bodies may deem proper for the supervision and general
management of the facilities of the project.
Accept from any authorized agency of the federal government loans or grants for the
planning, construction, acquisition, leasing, or other provision of any project, and to
enter into agreements with such agency respecting such loans or grants.
Sell and convey all properties acquired in connection with such projects, including
without limitation the sale and conveyance thereof subject to such mortgage as herein
provided, and the sale and conveyance thereof to the lessee under an option granted
in the lease of the project, for such price and at such time as the governing body of the
municipality may determine; provided, however, that no sale or conveyance of such
properties shall ever be made in such manner as to impair the rights or interests of the
holder, or holders, of any bonds issued under the authority of this chapter.
Issue revenue bonds to refund, in whole or in part, bonds previously issued under this
chapter.
If the project financed by the municipality consists of the construction, reconstruction,
improvement, or betterment of real property, buildings and improvements on real
property, and buildings, the provisions of chapter 48-01.2 and other applicable statutes
shall apply; except that the municipality, in the revenue agreement and resolution or
mortgage defining the terms and conditions upon which the project is to be
constructed and financed, or in a preliminary agreement establishing the general terms
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of the revenue agreement and financing of the project when constructed, may permit a
contracting party which is not a governmental entity or a public institution, subject to
such terms and conditions as the municipality shall find necessary or desirable and
proper, to provide for the construction, acquisition, and installation of the buildings,
improvements, and equipment to be included in the project by any means available to
the contracting party, whether or not the procedure followed by the contracting party is
in conformity with said chapter 48-01.2.
No municipality may operate any project referred to in this chapter as a business or in any
manner whatsoever, except as the lessor, contract vendor, secured party, or lender thereof. No
debt on the general credit of the municipality may be incurred in any manner for any purpose
under this chapter. No municipality may pay out of its general fund for, or otherwise contribute to
the cost of, construction of a project.
40-57-04. Resolution authorizing project and the issuance of revenue bonds - Public
notice and hearing - No election required.
The acquisition, construction, reconstruction, improvement, betterment, extension, or
financing of any project, and the issue of bonds in anticipation of the collection of the revenues
of the project to provide funds to pay for the cost of the project, may be authorized by an
ordinance or resolution of the governing body adopted at a regular or special meeting of the
governing body by the affirmative vote of a majority of its members. Before the issuance of
revenue bonds under this chapter, the governing body shall give notice and hold a public
hearing on the proposed bond issue. Notice of the hearing must be published in the official
newspaper of the municipality once a week for two successive weeks before the time set for the
hearing. The notice must specify the time and place of the hearing, and the amount and
purpose of the proposed bond issue. The governing body may not approve the bond issue
unless it appears, after the public hearing, that approval is in the public interest of the
municipality. No election is required to authorize the use of any of the powers conferred by this
chapter. No public hearing is required before the issuance of refunding bonds issued under
section 40-57-19.1.
40-57-04.1. Notice to competitors - Authority to issue bonds limited if project would
compete with existing enterprises.
Prior to approval of the issuance of any bonds under authority of this chapter, except
refunding bonds issued pursuant to section 40-57-19.1, the governing body of the municipality
shall, when a competitive project is involved, include notice of the competitive nature of the
proposed project in the public notice required to be published prior to the public hearing required
under section 40-57-04. The governing body shall not approve the bond issue unless it appears
that the impact and effect of the issue upon existing industry and business will not result in an
unfair advantage for the proposed project to the substantial detriment of existing enterprises.
40-57-05. Approval of public officer not required.
The consent of any governmental body or public officer of the state is not required to
authorize the issuance or sale of bonds or the making of any mortgage in connection therewith.
40-57-06. Certificate of convenience or necessity not required.
It shall not be necessary for any municipality proceeding under this chapter to obtain any
certificate of convenience or necessity, franchise, license, permit, or other authorization from
any bureau, board, commission, or other instrumentality of the state in order to acquire,
construct, reconstruct, improve, better, or extend any project or for the issuance of bonds in
connection therewith.
40-57-07. Cost of project - How determined.
In determining the cost of a project, the governing body may include all costs and estimated
costs of the issuance of the revenue bonds; all engineering, inspection, fiscal, and legal
expenses; any bond reserves and the interest that it is estimated will accrue during the
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construction period and for six months thereafter on money borrowed or which it is estimated
will be borrowed under this chapter; and the cost of retiring any existing indebtedness that the
governing body of the municipality determines to be necessary or desirable and in furtherance
of the public health or welfare, regardless of whether the existing indebtedness constitutes all or
a portion of the cost being financed by the issuance of the bonds.
40-57-08. Excess revenues not to revert to general fund of municipality - Exception.
Any revenues of any and all projects in excess of the amount required to pay interest upon
all bonds issued hereunder, to create a sinking fund to pay the principal of such bonds, when
due, to provide for the operation, maintenance, insurance, taxes, and depreciation of such
project, shall not revert to the general fund of the municipality. However, at such time as there
shall be outstanding no revenue bonds issued by the municipality, any excess of revenues may
be transferred to the general fund of the municipality in such amounts and at such times as the
governing body of the municipality may deem proper and feasible.
40-57-09. Provisions governing revenue bonds.
The resolution or ordinance authorizing the issuance of revenue bonds under this chapter,
or ordinance or resolution adopted subsequent to the adoption of the original resolution or
ordinance, shall prescribe:
1. The rate or rates of interest which such bonds shall bear;
2. Whether the bonds shall be in one or more series;
3. The date or dates which such bonds shall bear;
4. The time or times, not exceeding forty years from their respective dates, when such
bonds shall mature;
5. The medium in which such bonds shall be payable;
6. The place or places where such bonds shall be payable;
7. Whether or not such bonds shall carry registration privileges, and what such privileges,
if any, shall be;
8. The terms of redemption, if any, to which such bonds shall be subject;
9. The manner in which such bonds shall be executed;
10. The terms, covenants, and conditions which such bonds shall contain; and
11. The form, either coupon or registered, in which such bonds shall be issued.
40-57-09.1. Industrial development revenue bond guarantee program - Bond issuance
fee - Appropriation.
Repealed by S.L. 1985, ch. 467, § 1.
40-57-10. Sale of revenue bonds.
Revenue bonds shall be sold at not less than ninety-five percent of par plus any accrued
interest. Such bonds may be sold at private sale, or such bonds may be sold at public sale after
notice of such sale has been published once at least five days prior to such sale in a newspaper
circulating in the municipality. State or national banks may purchase bonds from each issue of
revenue bonds issued under the provisions of this chapter in an amount not to exceed at any
time twenty-five percent of the unimpaired capital and surplus of the bank.
40-57-11. Bonds and receipts or certificates issued pending preparation of bonds Negotiability.
Pending the preparation of the definitive bonds, interim certificates or receipts, in the form
and with the provisions the governing body may determine, may be issued pursuant to this
chapter. The bonds and interim receipts or certificates shall be negotiable within the meaning of
and for all purposes specified in title 41.
40-57-12. Validity of bonds.
Revenue bonds bearing the signatures of the appropriate officers who are in office on the
date of the signing thereof shall be valid and binding obligations notwithstanding that before the
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delivery thereof and payment therefor, any or all of the persons whose signatures appear
thereon shall have ceased to be officers of the municipality issuing the same. The validity of said
bonds shall not be dependent on nor be affected by the validity or regularity of any proceedings
relating to the acquisition, purchase, construction, reconstruction, improvement, betterment, or
extension of the project for which said bonds are issued. The ordinance or resolution authorizing
said bonds may provide that the bonds shall contain a recital that they are issued pursuant to
this chapter, and such recital shall be conclusive evidence of their validity and of the regularity of
their issuance.
40-57-13. Bonds exempt from taxation - Exception.
Bonds issued under the provisions of this chapter, and the income therefrom, shall be
exempt from any taxes, except inheritance, estate, and transfer taxes.
40-57-14. Covenants that may be inserted in ordinance or resolution authorizing
bonds.
1. Any ordinance or resolution authorizing the issuance of bonds under this chapter to
finance, in whole or in part, the cost of any project may contain covenants,
notwithstanding that the covenants may limit the exercise of powers conferred by this
chapter, as to:
a. The rents or payments to be charged with respect to the project.
b. The use and disposition of the revenues of the projects.
c. The creation and maintenance of sinking funds and the regulation, use, and
disposition thereof.
d. The creation and maintenance of funds to provide for maintaining the project and
replacement of those properties that are subject to depreciation.
e. The purpose, or purposes, to which the proceeds of this sale of bonds may be
applied and the use and disposition of the proceeds.
f. The nature of mortgages or other encumbrances on the project made in favor of
the holder of the bonds, or a trustee therefor.
g. The events of default and the rights and liabilities arising thereon and the terms
and conditions upon which the holders of bonds issued under this chapter may
bring any suit or action on the bonds or on any coupons thereof.
h. The issuance of other or additional bonds or instruments payable from or
constituting a charge against the revenue of the project.
i. The insurance to be carried upon the project and the use and disposition of
insurance moneys.
j. The keeping of books of account and the inspection and audit thereof.
k. The terms and conditions upon which the bonds become or may be declared due
before maturity and the terms and conditions upon which the declaration and its
consequences may be waived.
l. The rights, liabilities, powers, and duties arising upon the breach by the
municipality of any covenants, conditions, or obligations.
m. The vesting in a trustee of the rights to enforce any covenants made to secure, to
pay, or in relation to, the bonds and the powers and duties of the trustee and the
limitation of liabilities thereof.
n. The terms and conditions upon which the holder of the bonds, or the holders of
any proportion or percentage of them, may enforce any covenants made under
this chapter or any duties imposed thereby.
o. A procedure by which the terms of any ordinance or resolution authorizing bonds
or of any other contract with bondholders, including an indenture of trust or similar
instrument, may be amended or abrogated, and the amount of bonds the holders
of which must consent thereto, and the manner in which consent may be given.
p. The subordination of the security of any bonds issued and the payment of
principal and interest thereof, to the extent deemed feasible and desirable by the
governing body, to other bonds or obligations of a municipality issued to finance
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the project or that may be outstanding when the bonds thus subordinated are
issued and delivered.
Nothing in this chapter authorizes any municipality to do anything or for any purpose
that would result in the creation or incurring of a debt or indebtedness or the issuance
of any instrument that would constitute a bond or debt within the meaning of any
provisions, limitation, or restriction of the Constitution of North Dakota relating to the
creation or incurring of a debt or indebtedness or the issuance of an instrument
constituting a bond or debt.
40-57-15. Liability of municipality for bonds - Taxing power prohibited - Bond not a
lien.
Revenue bonds issued under this chapter shall not be payable from nor charged upon any
funds other than the revenue pledged to the payment thereof, nor shall the municipality issuing
the same be subject to any liability thereon. No holder or holders of any such bonds shall ever
have the right to compel any exercise of the taxing power of the municipality to pay any such
bonds or the interest thereon, nor to enforce payment thereon against any property of the
municipality except those projects, or portions thereof, mortgaged or otherwise encumbered
under the provisions and for the purpose of this chapter. Such bonds shall not constitute a
charge, lien, nor encumbrance, legal or equitable, upon any property of the municipality, except
those projects, or portions thereof, mortgaged or otherwise encumbered under the provisions
and for the purposes of this chapter.
Each bond under this chapter shall recite in substance that the bond, including interest
thereon, is payable solely from the revenue pledged to the payment thereof, except that such
bond may be secured by a mortgage or other encumbrance on the project, or portion thereof, as
authorized in this chapter, and that the bond does not constitute a debt of the municipality within
the meaning of any constitutional or statutory limitation.
40-57-16. Remedies of bondholders in general.
Subject to any contractual limitations binding upon the holders of any issue of revenue
bonds, or a trustee therefor, including the restriction of the exercise of any remedy to a specified
proportion or percentage of such holders, any holder of bonds, or any trustee therefor, for the
equal benefit and protection of all bondholders similarly situated may:
1. By mandamus or other suit, action, or proceeding at law or in equity, enforce its rights
against the municipality and its governing body and any of its officers, agents, and
employees and may require and compel such municipality or such governing body or
any such officers, agents, or employees to perform and carry out its and their duties
and obligations under this chapter and its and their covenants and agreements with
bondholders.
2. By action or suit in equity, require the municipality and the governing body thereof to
account as if they were the trustees of an express trust.
3. By action or suit in equity, enjoin any acts or things which may be unlawful or in
violation of the rights of the bondholders.
4. Bring suit upon the bonds.
5. Foreclose any mortgage or lien given under the authority of this chapter, and cause
the property standing as security to be sold under any proceedings permitted by law.
No right or remedy conferred by this chapter upon any bondholder, or upon any trustee therefor,
is intended to be exclusive of any other right or remedy, but each such right or remedy is
cumulative and in addition to every other right or remedy and may be exercised without
exhausting and without regard to any other remedy conferred by this chapter, or by any other
law in this state.
40-57-17. Exemptions from taxation.
Repealed by S.L. 1975, ch. 387, § 6.
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40-57-18. Construction.
The powers conferred by this chapter shall be in addition and supplemental to and not in
substitution for, and the limitations imposed by this chapter shall not affect the powers conferred
by, any other law. Revenue bonds may be issued under this chapter without regard to any other
provisions of the laws of this state. The project may be financed or acquired, purchased,
constructed, reconstructed, improved, bettered, and extended, and bonds may be issued under
this chapter for said purposes, notwithstanding that any other law may provide for the financing,
acquisition, purchase, construction, reconstruction, improvement, betterment, and extension of
a like project or for the issuance of bonds for like purposes, and without regard to the
requirements, restrictions, debt, or other limitations or other provisions contained in any other
law, including any requirement for any restriction or limitation on the incurring of indebtedness or
the issuance of bonds. Insofar as the provisions of this chapter are inconsistent with any other
law of this state, the provisions of this chapter shall be controlling with reference to the issuance
of revenue bonds and the security therefor.
40-57-19. General obligation bonds - Issuance - Levy.
Repealed by S.L. 2015, ch. 439, § 104.
40-57-19.1. Refunding bonds.
Repealed by S.L. 2015, ch. 439, § 104.
40-57-20. Declaration and finding of public purpose.
The legislative assembly declares and finds that it is and has been the purpose of this
chapter to sanction, authorize, and encourage activities in the public interest and for the welfare
of the state, its municipal subdivisions, and people by assisting establishment of additional
industrial plants and activities within the state and increasing production of wealth and adding to
the volume of employment, particularly during those seasons when employment in farming and
ranching is slack, thus alleviating unemployment among the people of the state.
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