CHAPTER 9-54
ECONOMIC DEVELOPMENT PROJECTS
9-54-1 Purpose of chapter.
9-54-2 Power to issue bonds, acquire or construct projects and enter revenue agreements--Location of projects.
9-54-2.1 Power to issue revenue bonds, purchase or discharge debt of nonprofit corporation operating health care or housing facility and enter revenue agreements--Location of project.
9-54-2.2 Restriction on use of bonds for elderly housing projects.
9-54-3 "Revenue bonds" defined.
9-54-3.1 "Revenue agreement" defined.
9-54-4 Costs to be covered by bonds--Authorization, issuance and sale of bonds.
9-54-5 Amount of bond issue limited by costs.
9-54-6 Bonds not general obligations nor payable by taxation--Recitals in bonds.
9-54-7 Mortgage of project and pledge of revenues to payment of bonds--Trust funds--Other covenants and agreements.
9-54-8 Lease or sale payments sufficient to pay bonds and costs--Payments in lieu of property taxes.
9-54-8.1 Lease with option to purchase--Title acquired before bonds retired--Pledge for payment of bonds.
9-54-9 Municipal obligations restricted by contractual payments from facilities.
9-54-10 County and sanitary district powers.
9-54-11 Municipal joint or cooperative agreements.
9-54-12 Compliance with federal requirements for tax exemption.
9-54-1. Purpose of chapter.
The purpose of this chapter is to stimulate and develop the general economic welfare and prosperity of the state through the promotion and advancement of industrial, commercial, manufacturing, agricultural, natural resources, postsecondary technical education, limited to bonding for public postsecondary technical institutions in operation on July 1, 1981, research, data collection, health service, housing for the elderly, housing for the handicapped, primary, secondary, and postsecondary education, recreational development, and the reduction of water and air pollution resulting from such developments; to encourage and assist in the location of new business and industry in this state and the expansion of existing business development; to assist in the construction of postsecondary technical education facilities, for public postsecondary technical institutions in operation on July 1, 1981; and to promote the economic stability of the state by providing greater employment opportunities and diversification of industry thus promoting the general welfare of the citizens by authorizing all municipalities of the state to issue revenue bonds to finance projects comprising real or personal property or both, useful for any of these purposes.
The purpose of this chapter is also to promote health services, housing for the elderly and housing for the handicapped at reasonable costs, thus promoting the general welfare of the citizens, by authorizing all municipalities of the state to issue revenue bonds to pay, purchase or discharge all or any part of the outstanding indebtedness of any nonprofit corporation incurred in the purchase, construction, reconstruction, acquisition of sites for, enlargement, improvement, or remodeling of health service facilities, housing for the elderly or housing for the handicapped.
Source: SL 1964, ch 148, § 1; SL 1972, ch 45, § 3; SL 1973, ch 59, § 1; SL 1981, ch 77, § 1; SL 1981, ch 78; SL 1998, ch 46, § 1.
9-54-2. Power to issue bonds, acquire or construct projects and enter revenue agreements--Location of projects.
For the purposes stated in § 9-54-1, any municipality may issue revenue bonds, the proceeds of which shall be used only to purchase, construct, reconstruct, acquire sites for, enlarge, improve, or remodel buildings, structures, or equipment, and to enter into revenue agreements as defined in § 9-54-3.1 with any person, firm, limited liability company, corporation, or governmental entity, the projects to be situated in any municipality or its environs without limitation as to distance, providing the governing body of the municipality declares that the project, if in being, would promote the welfare of the municipality.
Source: SL 1964, ch 148, § 2; SL 1972, ch 45, § 4; SL 1973, ch 59, § 2; SL 1981, ch 77, § 2; SL 1984, ch 43, § 98A; SL 1994, ch 351, § 9.
9-54-2.1. Power to issue revenue bonds, purchase or discharge debt of nonprofit corporation operating health care or housing facility and enter revenue agreements--Location of project.
With respect to hospitals, nursing homes, other health care facilities, housing for the elderly, housing for the handicapped, wellness centers, or primary, secondary, or postsecondary schools to be operated by any nonprofit corporation, for any purpose stated in § 9-54-1, a municipality may issue revenue bonds to pay, purchase, or discharge all or any part of the outstanding indebtedness of a nonprofit corporation incurred in the purchase, construction, reconstruction, acquisition of sites for, enlargement, improvement, or remodeling of hospitals, nursing homes, other health care facilities, housing for the elderly, housing for the handicapped, wellness centers, or primary, secondary, or postsecondary schools, including, to the extent deemed necessary or desirable by the municipality, any unpaid interest on indebtedness accrued or to accrue to the date on which the indebtedness is finally paid, and any premium the municipality determines to be necessary or desirable to be paid to pay, purchase, or decease outstanding indebtedness, and to enter into revenue agreements as defined in § 9-54-3.1, with any nonprofit corporation, the projects to be situated in any municipality or its environs without limitation as to distance, providing the governing body of the municipality declares that the project would promote the welfare of the municipality. Nothing in this section is intended to prohibit the use of revenue bonds to pay outstanding indebtedness of any person, firm, limited liability company, corporation, or governmental entity to the extent now permitted by law.
Source: SL 1981, ch 77, § 3; SL 1982, ch 28, § 2; SL 1984, ch 43, § 98B; SL 1991, ch 75, § 1; SL 1994, ch 351, § 10; SL 1998, ch 46, § 2.
9-54-2.2. Restriction on use of bonds for elderly housing projects.
Any housing for the elderly financed by revenue bonds shall be operated by either a nonprofit corporation or a corporation wholly owned, either directly or indirectly, by a nonprofit corporation.
Source: SL 1981, ch 77, § 9; SL 1984, ch 62; SL 1990, ch 67; SL 1991, ch 76.
9-54-3. "Revenue bonds" defined.
Revenue bonds, as the term is used in this chapter, are bonds to be paid exclusively from the revenue produced by the project financed by the use of the proceeds thereof, including but not limited to payments due under any revenue agreement, or under any bond or other obligation issued in payment therefor or any mortgage, pledge, or security agreement given with respect to the project or any other property of the lessee, purchaser, or borrower with respect to the project.
Source: SL 1964, ch 148, § 7; SL 1973, ch 59, § 3; SL 1981, ch 77, § 4.
9-54-3.1. "Revenue agreement" defined.
Revenue agreement, as the term is used in this chapter, is any written agreement between a municipality and another person, firm, limited liability company, corporation, or governmental entity with respect to a project whereby such other person, firm, limited liability company, corporation, or governmental entity agrees to pay to the municipality or to 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 includes, but is not limited to, a lease, a direct or installment sale contract, or a loan agreement.
Source: SL 1981, ch 77, § 5; SL 1994, ch 351, § 11.
9-54-4. Costs to be covered by bonds--Authorization, issuance and sale of bonds.
Bonds may be issued in amounts as may be necessary to provide sufficient funds to pay all the costs of purchase or construction of each project which under accepted accounting practice are capital costs, including goodwill and other intangible costs, as well as site, engineering, and all other expenses of its planning and completion , together with additional amounts as may be agreed to by the lessee, purchaser, or borrower with respect to the project and the purchasers of the bonds as a discount or underwriters' fee, and to pay interest accruing before completion of the project, to establish a reserve securing payment of the bonds, and, with respect to hospitals, nursing homes, other health care facilities, housing for the elderly, housing for the handicapped or wellness centers, comprising a project, the cost of paying, purchasing or discharging any outstanding indebtedness or other cost as authorized in § 9-54-2.1. Bonds issued under the provisions of this chapter shall be authorized, issued and sold in accordance with chapter 6-8B, except that no election is required.
Source: SL 1964, ch 148, § 4; SL 1973, ch 59, § 4; SL 1981, ch 77, § 6; SL 1984, ch 43, § 98C; SL 1991, ch 75, § 2; SL 1998, ch 47, § 1.
9-54-5. Amount of bond issue limited by costs.
In no case shall any revenue bonds be issued for an amount in excess of the actual cost of the project, including the site therefor and all other items referred to in § 9-54-4.
Source: SL 1964, ch 148, § 6; SL 1973, ch 59, § 5.
9-54-6. Bonds not general obligations nor payable by taxation--Recitals in bonds.
Revenue bonds issued pursuant to this chapter shall not be general obligations of the municipality nor shall they be payable in any manner by taxation. Such revenue bonds shall recite the authority under which they are issued, and shall state that they are issued in conformity with the provisions, restrictions, and limitations of this chapter, and that such bonds and the interest thereon are to be paid from the revenue received from the project financed, in whole or in part, by the issuance of the revenue bonds.
Source: SL 1964, ch 148, § 8; SL 1973, ch 59, § 6; SL 1984, ch 43, § 98E.
9-54-7. Mortgage of project and pledge of revenues to payment of bonds--Trust funds--Other covenants and agreements.
The governing body of the municipality may, by ordinance, resolution, or by a trust indenture executed under authority of a resolution or ordinance, pledge the revenues of the project and any other security of whatsoever nature, offered by the lessee, purchaser, or borrower with respect to the project, and may mortgage the project, for the payment of the bonds and the interest thereon, and provide that the revenues shall be set apart in one or more special trust funds for that purpose. The resolution, ordinance, or indenture may include covenants and agreements as the governing body deems necessary or desirable to secure the bonds, including the establishment of a reserve from the bond proceeds, and may authorize a trustee appointed under an indenture to enforce all rights and remedies of the municipality under the revenue agreement with respect to the project.
Source: SL 1964, ch 148, § 5; SL 1969, ch 188, § 1; SL 1973, ch 59, § 7; SL 1981, ch 77, § 7; SL 1984, ch 43, § 98D.
9-54-8. Lease or sale payments sufficient to pay bonds and costs--Payments in lieu of property taxes.
Revenue agreements pursuant to § 9-54-3.1 shall provide for contractual payments sufficient to pay the principal, premium, if any, and interest on any bonds issued by the municipality under the resolution or ordinance or trust indenture, when due or subject to mandatory redemption, and also to pay all taxes, special assessments and other governmental charges levied or imposed with respect to the project, and to pay all costs of insurance, operation, and maintenance thereof. The agreements shall also reimburse the municipality for the cost of any other obligation assumed by the municipality in connection with the project. Revenue agreements in the form of a lease or sale contract shall further provide for payment of a sum equal to the amount of property taxes which would be due if the lessee or purchaser were the owner of the project, to be prorated among the taxing districts involved and taking into consideration reductions permitted pursuant to § 10-6-137 for the term of the agreement.
Source: SL 1964, ch 148, § 3; SL 1973, ch 59, § 8; SL 1975, ch 93, § 1; SL 1981, ch 77, § 8; SL 1981, ch 79; SL 1984, ch 43, § 98F; SL 2020, ch 39, § 12; SL 2021, ch 44, § 44.
9-54-8.1. Lease with option to purchase--Title acquired before bonds retired--Pledge for payment of bonds.
Any lease agreement may grant an option to the lessee to purchase the project at a price and upon other conditions sufficient to assure the payment and redemption of the bonds and payment and reimbursement of all such other charges and costs. Any lease or sale agreement may provide for acquisition of title to the project by the lessee or purchaser in advance of the retirement of the bonds, if such retirement is assured by the deposit with the municipality or the trustee of funds or of bonds or other obligations issued by the lessee or purchaser to the municipality, or bonds or other obligations issued or guaranteed by the United States or an agency thereof, which are payable as to principal and interest at the times and in the amounts required to pay the municipality's bonds at or before maturity and all interest and redemption premiums thereon when due. In this event the payments of principal and interest on such obligations, and any mortgage or pledge of property or funds securing such payments, shall be irrevocably pledged for the payment of the bonds, interest and redemption premiums and payment and reimbursement of all other costs.
Source: SDCL, § 9-54-8 as added by SL 1973, ch 59, § 8.
9-54-9. Municipal obligations restricted by contractual payments from facilities.
Nothing in this chapter shall be so construed as to authorize or permit any municipality to make any contract or to incur any obligation of any kind or nature except such as shall be payable solely out of the contractual payments from such facilities.
Source: SL 1964, ch 148, § 4.
9-54-10. County and sanitary district powers.
Any county shall have the same powers as a municipality under this chapter. Any sanitary district shall have the same powers as a municipality under this chapter with respect to any project providing sewer service or control of water pollution.
Source: SL 1972, ch 45, § 5.
9-54-11. Municipal joint or cooperative agreements.
Any municipality, in order to accomplish the purposes provided in this chapter, may enter into agreements with any other public agency or agencies for joint or cooperative action and such agreements shall be governed by the provisions of chapter 1-24.
Source: SL 1972, ch 45, § 2.
9-54-12. Compliance with federal requirements for tax exemption.
Notwithstanding any provision under the laws of the State of South Dakota, a municipality in order to accomplish the purposes provided in this section and chapter 6-8B may perform all acts necessary to comply with the requirements of § 103 of the Internal Revenue Code of 1954, as amended, and any regulation promulgated pursuant to § 103 to insure that all interest from bonds issued under this chapter is tax exempt.
All hearings or acts necessary to comply with § 103(k) of the Internal Revenue Code of 1954, as amended, and any regulations promulgated pursuant to § 103(k) are exempt from the requirements and procedures of chapter 1-26.
The Governor is the approving representative for the state for the purpose of complying with the applicable provisions of § 103(k) of the Internal Revenue Code of 1954, as amended, and any regulation promulgated pursuant to § 103(k) necessary to insure that all interest from bonds issued is tax exempt.
Source: SL 1984, ch 43, § 58.
