# Title 15 — Education

## Chapter 15-55 — Construction of Revenue-Producing Buildings

### § 15-55-01. Portions of campuses set aside for authorized revenue-producing buildings

or other revenue-producing campus improvements.
Subject to and in accordance with the terms of this chapter, the state board of higher
education, for and on behalf of the institutions under its supervision and control, from time to
time, may set aside such portions of the respective campuses of said institutions as may be
necessary and suitable for the construction thereon of such revenue-producing buildings or
other revenue-producing campus improvements as, from time to time, may be authorized by the
legislative assembly, and including additions to existing buildings or other campus
improvements used for such purposes, and may construct such campus improvements and
buildings or additions thereon and may equip, furnish, maintain, and operate such buildings and
other campus improvements.
### § 15-55-02. Board may borrow money and issue bonds - Conditions - Bonds tax free.

For the purpose of paying all or part of, but not to exceed, the cost of construction,
equipment, and furnishing of any such buildings or any addition to existing buildings, or other
campus improvements, or in order to refund any outstanding bonds or interim financing issued
for such purpose, the state board of higher education may borrow money on the credit of the
income and revenue to be derived from the operation of the said building or buildings or other
campus improvements, and, in anticipation of such collections of such income and revenues,
may issue negotiable bonds in such an amount as, in the opinion of the board, may be
necessary for such purposes, all within the limits of the authority granted by the legislative
assembly in each instance, and may provide for the payment of such bonds and the rights of the
holders thereof as provided in this chapter. The bonds may bear such date or dates; mature at
such time or times not exceeding fifty years from their date; be in such denomination or
denominations; be in such form, either coupon or registered; carry such registration and
conversion privileges; be executed in such manner; be payable in such medium of payment at
such place or places; be subject to such terms of redemption with or without premium; bear
such rate or rates of interest; and be subject to such other terms or conditions as may be
provided by resolution or resolutions to be adopted by the board. The bonds may be sold in
such manner and at such price or prices as may be considered by the board to be advisable.
The average net interest cost to maturity for any bond issues sold at private sale may not
exceed twelve percent per annum. There is no interest rate ceiling on those issues sold at
public sale or to the state of North Dakota or any of its agencies or instrumentalities. Any grants
agreed to be made by the United States of America or any agency or instrumentality thereof to
reduce the interest cost of bonds, whether or not pledged to the payment of the bonds or
interest thereon as part of the income and revenue to be derived from the operation of the
buildings or improvements pledged to the payment of the issue, must be considered as a
reduction in the interest costs of the bonds with respect to which the grant is made, for purposes
of the rate limitations on interest costs provided herein. The bonds have all of the qualities and
incidents of negotiable paper and are not subject to taxation by the state of North Dakota, or by
any county, municipality, or political subdivision therein. The board, in its discretion, may
authorize one issue of bonds hereunder for the construction, furnishing, and equipment of more
than one building or other campus improvement and may make the bonds payable from the
combined revenues of all buildings or other campus improvements acquired in whole or in part
with the proceeds thereof, and when bonds are so issued, the words "the building", as herein
used, refers to all the buildings or other campus improvements so acquired.
### § 15-55-02.1. Refunding bonds.

Bonds may be refunded, but no bonds may be refunded under this chapter unless the
bonds either mature or are callable for prior redemption under their terms within thirty years
from the date of issuance of the refunding bonds, or unless the holder or holders of the bonds
voluntarily surrender them for exchange or payment. Outstanding bonds of more than one issue

or series and bonds for refunding and other bonds to construct, furnish, or equip any building or
addition or other campus improvement for which bonds are authorized may be combined into
one issue or series and may provide for and restrict the combination of future series with the
issue. Except as otherwise provided in this section, the bonds must have such details and must
be authorized and issued in the manner provided in this chapter. Refunding bonds so issued
may carry forward for the payment of the refunding bonds such security and sources of payment
as were pledged to the payment of the bonds refunded, and a combined issue of refunding and
other bonds may combine such security and sources of payment with a pledge of the revenues
of buildings or other campus improvements acquired in whole or in part from the proceeds of the
issue, including the security and sources of payment of any future series of refunding bonds or
revenues of any building or other campus improvement acquired from the proceeds of a future
series if and to the extent that provision is made for combination of future series with the issue.
The word "building" as used in this section means all the buildings or other campus
improvements the revenues of which are pledged. Any bonds issued for refunding purposes
may be delivered in exchange for the outstanding bonds authorized to be refunded, sold at
either public or private sale, or sold in part and exchanged in part. There is no interest rate
ceiling on those issues issued solely for refunding purposes. The sale price may exceed the
principal amount of refunding bonds and the excess may be used to provide for payment of
redemption premiums of the bonds to be refunded and to provide for expenses of the issuance
and sale of the bonds and the retirement of the outstanding bonds. All other proceeds of the
sale must be, to the extent needed, immediately applied to the retirement of the bonds to be
refunded, or the proceeds or investments thereof must be placed in escrow to be held and
applied to the payment of the bonds to be refunded, or in the case of crossover refunding, must
be invested in securities irrevocably appropriated to the payment of principal and interest on the
refunding bonds until the date the proceeds are applied to the payment or redemption of the
bonds to be refunded.
The proceeds may, in the discretion or pursuant to covenant of the board, be invested in
obligations of the United States of America, or in obligations fully guaranteed by the United
States of America, but the obligations so purchased must have such maturities and bear such
rates of interest payable at such times as will assure the existence of money sufficient to pay
the bonds to be refunded when due or when redeemed pursuant to call for redemption, together
with any interest and redemption premiums. The proceeds or obligations so purchased must be
deposited in trust with the trustee for the refunded bonds, or with the banking corporation,
association, or limited liability company which is the paying agent for the refunded bonds, or
with the state treasurer, to be held, liquidated, and the proceeds of such liquidation paid out for
the payment of the bonds to be refunded and interest and redemption premiums thereon as the
refunded bonds become due or subject to redemption under call for redemption previously
made, or upon earlier voluntary surrender thereof with the consent of the board. The
determination of the board in issuing refunding bonds that the issuance and sale of refunding
bonds is necessary for the best interests of the institution and that the limitations herein
imposed upon the issuance of refunding bonds have been met is conclusive in the absence of
fraud or arbitrary and gross abuse of discretion.
### § 15-55-03. Bonds are special obligations and board may insert special provisions in

bonds.
The bonds issued under the provisions of this chapter may not be an indebtedness of the
state of North Dakota nor of the institution for which they are issued nor of the state board of
higher education thereof, nor of the individual members, officers or agents thereof nor may any
building or other campus improvement or the land upon which it is situated, or any part thereof
be security for or be levied upon or sold for the payment of said bonds, but the said bonds must
be special obligations payable solely from the revenues to be derived from the operation of the
building or other campus improvement, and the board is authorized and directed to pledge all or
any part of such revenues to the payment of principal and interest on the bonds. In order to
secure the prompt payment of such principal and interest and the proper application of the
revenues pledged thereto, the board is authorized by appropriate provisions in the resolution or
resolutions authorizing the bonds:

1. To covenant as to the use and disposition of the proceeds of the sale of such bonds;
2. To covenant as to the operation of the building or other campus improvement and the
collection and disposition of the revenues derived from such operation;
3. To covenant as to the rights, liabilities, powers, and duties arising from the breach of
any covenant or agreement into which it may enter in authorizing and issuing the
bonds;
4. To covenant and agree to carry such insurance on the building or other campus
improvement, and the use and occupancy thereof as may be considered desirable
and, in its discretion, to provide that the cost of such insurance shall be considered as
part of the expense of operating the building or other campus improvement;
5. To vest in a trustee or trustees for the bondholders the right to receive all or any part of
the income and revenues pledged and assigned to or for the benefit of the holder or
holders of bonds issued hereunder and to hold, apply, and dispose of the same, and
the right to enforce any covenant made to secure the bonds and to execute and
deliver a trust agreement or agreements which may set forth the powers and duties
and the remedies available to such trustee or trustees and may limit the liabilities
thereof and prescribe the terms and conditions upon which such trustee or trustees or
the holder or holders of the bonds in any specified amount or percentage may exercise
such rights and enforce any or all such covenants and resort to such remedies as may
be appropriate;
6. To fix rents, charges, and fees to be imposed in connection with and for the use of the
building or other campus improvement and the facilities supplied thereby, which rents,
charges, and fees shall be considered to be income and revenues derived from the
operation of the building or campus improvement, and are hereby expressly required
to be fully sufficient to assure the prompt payment of principal and interest on the
bonds as each becomes due, and to make and enforce such rules and regulations
with reference to the use of the building or campus improvement, and with reference to
requiring any class or classes of students to use the buildings or other campus
improvements as it may deem desirable for the welfare of the institutions and its
students or for the accomplishments of the purposes of this chapter;
7. To covenant to maintain a maximum percentage of occupancy of the building or other
campus improvement;
8. To covenant against the issuance of any other obligations payable from the revenues
to be derived from the building or other campus improvement; and
9. To make covenants other than and in addition to those herein expressly mentioned of
such character as may be considered necessary or advisable to affect the purposes of
this chapter.
All such agreements and covenants entered into by the board are enforceable by appropriate
action or suit at law or in equity, which may be brought by any holder or holders of bonds issued
hereunder.
### § 15-55-04. Board may enter into contract with federal agencies.

The board may enter into any agreements or contracts with the United States of America or
any agency or instrumentality thereof which it may consider advisable or necessary in order to
obtain a grant of funds or other aid to be used in connection with the proceeds of the bonds in
paying the cost of the construction, furnishing, and equipment of the building or other campus
improvement.
### § 15-55-04.1. Lease of revenue-producing buildings.

The state board of higher education may, at such times as it deems necessary, enter into
agreements with other persons, including any federal or state agency, for the lease of
revenue-producing buildings, constructed or purchased under the provisions of this chapter,
upon such terms and conditions as the board deems proper. However, any such lease entered
into pursuant to this section must be limited to a maximum term of ten years.

### § 15-55-05. Deposit and use of proceeds of bonds - Authorizing issuing of warrants -

Contracts.
The proceeds from the sale of the bonds herein authorized must be deposited to the credit
of the board and kept in a separate fund in the state treasury, in the Bank of North Dakota or in
a bank which is a duly designated depository for state funds and is a member of the federal
deposit insurance corporation. Provided, that when such funds are deposited in a bank other
than the Bank of North Dakota or a bank which is not a duly designated depository for state
funds, such bank must be required to pledge, as security for such deposit, securities in an
amount equal to the sum by which such deposit exceeds the amount of federal deposit
insurance corporation insurance. Securities which are eligible for such pledge are notes or
bonds issued by the United States government, its agencies or instrumentalities, all bonds and
notes guaranteed by the United States government, federal land bank bonds, or bonds issued
by any state of the United States. In lieu of the deposit of such securities, a surety bond may be
accepted from the bank designated as a depository in a sum equal to the amount of funds such
bank may receive in excess of the amount guaranteed by the federal deposit insurance
corporation. Such proceeds must be used solely for the purpose for which the bonds are
authorized except that the board may invest such funds in direct obligations of, or obligations
the principal of and interest on which are guaranteed by, the United States of America, or
obligations of the state of North Dakota or of any municipality as defined in section 21-03-01
prior to or during building or other campus improvement construction except to the extent such
investment is prohibited or restricted by any covenant made with or for the benefit of
bondholders. The board is authorized to make all contracts and to cause the execution of all
instruments which in its discretion may be deemed necessary or advisable to provide for the
construction, furnishing, and equipment of the building or other campus improvement or for the
sale of the bonds or for interim financing deemed necessary or advisable pending the sale of
the bonds and pledging the proceeds of the bonds.
### § 15-55-05.1. Interim financing.

The board may provide for interim financing pending completion of revenue-producing
projects at state institutions of higher learning and financing the cost thereof and may authorize
the issuance and sale of special interim warrants for that essential governmental purpose, such
warrants to be paid with interest from:
1. The proceeds of definitive bonds issued in accordance with this chapter;
2. Warrants issued to refund outstanding warrants; or
3. The combined net revenues to be derived from the operation of buildings and campus
improvements for which bonds are outstanding with which the definitive bonds to be
issued for such project will be on a parity.
The board shall arrange for the proper preparation and sale of the warrants and shall issue
the warrants in an aggregate principal amount not exceeding the sum of bonds authorized and
necessary to finance completion of the project. Interim warrants are subject to call and
prepayment on thirty days' prior written notice to the place of payment at par and accrued
interest to date of prepayment at the option of the board; must mature not more than three years
from their date; and may bear such rate or rates of interest as the board may provide, not
exceeding an average net interest cost of twelve percent per annum on issues sold at private
sale. There is no interest rate ceiling on warrant issues sold at public sale or to the state of
North Dakota or any of its agencies or instrumentalities. Interim warrants may be sold on the
basis of ninety-five percent of par plus accrued interest to date of delivery. All warrants for a
particular project must mature within three years from the date of issuing the first warrants for
the project. If warrants are issued to refund warrants, the refunded warrants must be paid and
canceled upon the issuance of the refunding warrants, or the proceeds at the sale of the
refunding warrants, excepting the accrued interest received, must be used to purchase direct
obligations of the United States of America. Such obligations must mature at such time or times,
with interest thereon or the proceeds received therefrom, to provide funds adequate to pay,
when due or called for redemption prior to maturity, the warrants to be refunded together with
the interest accrued thereon and any redemption premium due thereon. Such proceeds or
obligations of the United States of America must, with all other funds legally available for such

purpose, be deposited in escrow with a banking corporation or national banking association
located in and doing business in the state of North Dakota, with power to accept and execute
trusts, or any successor thereto, which is also a member of the federal deposit insurance
corporation and of the federal reserve system. The proceeds or obligations are to be held in an
irrevocable trust solely for and until the payment and redemption of the warrant to be refunded.
Any balance remaining in escrow after the payment and retirement of the warrants to be
refunded must be returned to the board to be used and held for use as revenues pledged for the
payment of the definitive bonds. Interim warrants have all of the qualities and incidents of
negotiable paper and are not subject to taxation by the state of North Dakota or by any county,
municipality, or political subdivision therein. Interim warrants are eligible for investment of funds
the same as definitive bonds are or would be eligible for investment under section 15-55-08.
Such warrants may not constitute a general obligation indebtedness of the state of North
Dakota nor of the institution for which they are issued nor of the state board of higher education
nor of the individual members, officers, or agents thereof; are payable solely as provided in this
section; and the warrants issued and sold must so state.
### § 15-55-06. Designations of agent and depositories - Disposition and use of revenues -

Funds created.
All income and revenues derived from the operation of any building or other campus
improvement financed or the revenues of which are pledged in the manner provided in this
chapter must be collected by such officer or agent of the institution where the building or other
campus improvement is located as the state board of higher education from time to time may
designate and must be accounted for by such officer or agent, deposited, and remitted as in this
section provided. The said board, in its resolution authorizing the bonds or in the trust
agreement or agreements executed and delivered by the board, shall provide for the disposition
of and accounting for all such revenues by such officer or agent, including the designation of a
depository or depositories, the payment of expenses of operation and maintenance, the
remittance of revenues to the paying agent designated in the bonds for payment of principal of
and interest on the bonds when due, and the investment and disposition of revenues not
immediately required for payment of expenses, principal, and interest. The board may designate
as a depository for such revenues and funds either the state treasury or the Bank of North
Dakota or the trustee under the trust agreement for the bondholders or a bank which is a duly
designated depository for state funds or as provided in section 15-55-05. The said board may, in
its resolution authorizing the bonds or in the trust agreement or agreements executed and
delivered by the board, provide for an expense fund to be retained by the collecting officer for
the purpose of paying and may direct the collecting officer to pay the accrued or anticipated
expenses of operation and maintenance of the building or campus improvement, and if the
board so directs or if such expense fund is so provided, the collecting officer may pay such
expenses as so directed by the board or from said fund. The funds required to be remitted to the
state treasurer, if any, and any funds derived from revenues pledged to the bondholders must
be held by the collecting officer or in the depository for such funds designated by the board in a
special fund or funds, to be applied solely to the payment of the principal and interest on said
bonds, and the establishment of a reserve for future payments until all of said bonds and
interest thereon have been fully paid; provided, that to the extent not prohibited or restricted by
any covenant made with or for the benefit of the bondholders, the board may invest any such
funds in direct obligations of, or obligations the principal of and interest on which are guaranteed
by, the United States of America, or obligations of the state of North Dakota or of any
municipality as defined in section 21-03-01 and may devote revenues not currently required for
payment of principal and interest, for the creation or maintenance of a debt service reserve, or
for expenses of operation and maintenance to such purposes as the board from time to time
may designate, including replacing the furnishings and equipment of such building or buildings
or campus improvements and improving said building or buildings or campus improvements.

### § 15-55-07. Endorsement of bonds - Attorney general to approve - Incontestable -

Exception.
All bonds issued under the provisions of this chapter must have endorsed thereon a
statement to the effect that the same do not constitute an obligation of the state of North
Dakota, the state board of higher education, nor the individual members, officers, or agents
thereof, nor of the institution upon the campus of which the building or campus improvement is
located, and that the said bonds are payable solely and only out of the revenues to be produced
and received from the operation of said building or campus improvement. Such bonds must be
submitted to the attorney general of North Dakota for examination and when such bonds have
been examined and certified as legal obligations by the attorney general in accordance with
such requirements as the attorney general may make, are incontestable in any court in this
state unless suit thereon is brought in a court having jurisdiction thereof within thirty days from
the date of such approval. Bonds so approved by the attorney general are prima facie valid and
binding obligations according to their terms and the only defense which may be offered thereto
in any suit instituted after such thirty-day period has expired is forgery, fraud, or violation of the
constitution.
### § 15-55-08. Who may invest in bonds.

Any bank or trust company organized under the laws of this state may invest its capital and
surplus in bonds issued under this chapter. Any state board, bureau, institution, or industry
having the power to invest public funds or the funds of such board, bureau, institution, or
industry may invest said funds in bonds issued pursuant to this chapter in the same manner and
under the same restrictions as are provided by law for other investments. The officers having
charge of any sinking fund of any county, city, town, township, or school district thereof may
invest the sinking fund of such county, city, town, township, or school district in bonds issued
under the provisions thereof. The bonds are authorized collateral security for the deposit of any
public funds and for the investment of trust funds.
### § 15-55-09. Construction of chapter not to permit obligating of state.

Nothing in this chapter may be construed to authorize or permit the state board of higher
education, or any officer or agency of the state, to create any state debts, or to incur any
obligations of any kind or nature, except as are payable solely and only from the special funds
to be created from the revenues of the building or buildings or other campus improvements
erected or constructed under the terms and provisions of this chapter, nor may the state of
North Dakota or any funds or moneys of this state other than the special funds derived from the
income of said building or buildings or campus improvements respectively ever be deemed
obligated for the payment of the said bonds or any part thereof.
### § 15-55-10. Limitation on buildings and other campus improvements and issuance of

bonds.
No building or other campus improvement may be erected or constructed under this
chapter, and no bonds may be issued for the payment of the cost of any building or other
campus improvement under this chapter, unless authorized by legislative act, nor may any
building or other campus improvement be erected at a cost exceeding the amount fixed by the
legislative assembly as the maximum to be expended for the building or other campus
improvement undertaken under this chapter. The legislative authorization may be aggregated
and the appropriation of the proceeds of the bonds for the construction of the buildings or
improvements are not subject to cancellation under section 54-44.1-11. Authorization for the
issuance of bonds by the legislative assembly expires four years after the effective date of the
authorization unless bonds have been issued for the construction of buildings or improvements
in the amounts so authorized or a contract for the design of the building has been signed by the
state board of higher education before the expiration date or the authorization specifies a
different expiration date. Refunding bonds may be issued by the state board of higher education
under this chapter without legislative act to refund, at or before the maturity of or pursuant to

any privilege of prepayment reserved in or granted with respect to, any bonds issued to pay the
cost of buildings or other campus improvements designated and authorized by legislative act.
### § 15-55-11. Issuance and sale of tax-exempt bonds authorized - Amount.

Omitted.
### § 15-55-12. Bonds not a general obligation of state or its institutions.

Omitted.
### § 15-55-13. Additional revenue-producing buildings authorized.

Omitted.
### § 15-55-14. Rental income from unencumbered revenue-producing buildings or other

campus improvements may be applied to bond retirement.
The state board of higher education, when issuing bonds under the provisions of this
chapter and the powers herein granted, has additional powers as follows:
1. When the state board of higher education has issued bonds as provided in this chapter
for the purpose of securing funds for all or part of the cost of construction, equipment,
and furnishing of any new revenue-producing building or other campus improvement
for any of the state-supported institutions of higher learning of the state of North
Dakota, or for the purpose of refunding any such bonds, said board is hereby
authorized to cover, from time to time, into the interest and principal payment fund for
bonds issued, or into a fund for operation and maintenance of the building or other
campus improvement so financed or into a fund for repair or replacement of the
building or other campus improvement, its equipment and furnishings, the rental or
income from revenue-producing buildings or other campus improvements which are
not encumbered or impressed with any lien and which are located upon the campuses
of such institutions.
2. In case of destruction of such revenue-producing buildings or campus improvements
by fire, tornado, cyclone, or other cause, the proceeds from insurance on such
revenue-producing buildings or campus improvements shall be covered into the bond
payment fund for the payment of bonds issued under this chapter unless such
insurance may be and is used for the repair or replacement of the building or campus
improvement, its equipment and furnishings.
3. The rental income from said revenue-producing buildings or other revenue-producing
campus improvements, and the proceeds of insurance thereon may be irrepealably
pledged to the payment of the principal and interest of the bonds issued as in this
chapter provided, or to the expenses of operation and maintenance or repair or
replacement of the building or campus improvement, its equipment and furnishings.
4. The bonds issued under the provisions of this chapter may not be an indebtedness or
obligation of the state of North Dakota or of any of the state institutions nor of any
board, bureau, or officer of the state of North Dakota, but such bonds must be payable
solely out of income and revenue as provided in this chapter.
The rental income from the revenue-producing buildings or other revenue-producing campus
improvements, as defined herein, of any educational institutions of higher learning of the state
shall be covered only into a fund for a revenue-producing building or other revenue-producing
campus improvement for such educational institution and not to any other institution.
### § 15-55-15. Bond issues - Amounts and purposes (1955).

Omitted.
### § 15-55-16. Bond issues - Amounts and purposes (1957).

Omitted.

### § 15-55-17. Bond issues - Amounts and purposes (1959).

Omitted.
### § 15-55-18. School district retirement of bonds for junior colleges and off-campus

educational centers.
Repealed by S.L. 1999, ch. 154, § 2.
### § 15-55-19. Powers and procedure.

Repealed by S.L. 1999, ch. 154, § 2.
### § 15-55-20. Financial records required.

Each institution under the control of the state board of higher education which has
constructed student housing, a food service facility, or a student union under the provisions of
this chapter shall maintain records of financial accounts to provide a record of revenues
received and expenses incurred in the use of such revenue-producing building. The definition of
"expenses incurred" includes, but is not limited to, the estimated value of heat, electricity, water,
repairs, insurances, and janitorial and maintenance services provided. From the information
recorded in such records, appropriate financial statements must be prepared and included in the
institutions' published and audited annual or biennial financial reports.
### § 15-55-21. Expenses to be paid from gross revenues.

Repealed by S.L. 1987, ch. 3, § 17.
