bond" or "grant anticipation revenue note" means a bond or note, respectively, secured by lease rentals relating to highway improvement projects and anticipated to be paid from federal transportation revenues deposited in the grant anticipation fund.
    Sec. 3. As used in this chapter, "highway improvement project" means a project for which the department may use federal transportation revenues.
    Sec. 4. The authority may, by resolution, issue grant anticipation revenue bonds or notes for any purpose that is authorized by IC 8-14.5-6 and for which the department may use federal transportation revenues. When issuing grant anticipation revenue bonds or notes, the authority is subject to the provisions of 25 IAC 5 concerning equal opportunities for minority business enterprises and women's business enterprises to participate in procurement and contracting processes.
    Sec. 5. (a) Before grant anticipation revenue bonds or notes may be issued under this chapter, the department shall prepare a revenue declaration providing a specified amount or percentage of federal transportation revenues received by the state during a state fiscal year to be deposited in the grant anticipation fund and the number of years those deposits shall be made. A revenue declaration prepared under this section is subject to approval of the budget agency and the authority.
    (b) The total amount of lease rentals securing grant anticipation revenue bonds or notes issued under this chapter and scheduled to be paid during any state fiscal year, determined as of the date of issuance of each series of grant anticipation revenue bonds or notes, may not exceed an amount equal to fifty percent (50%) of the remainder of:
        (1) the total amount of federal transportation revenues apportioned or allocated to the department during the federal fiscal year immediately preceding the state fiscal year in which such series of bonds or notes is issued; minus
        (2) seven hundred sixteen million seventy-four thousand three hundred eighteen dollars ($716,074,318), which is the total amount of federal transportation revenues apportioned or allocated to the department during the federal fiscal year beginning October 1, 2001, and ending September 30, 2002.
    (c) All other provisions of IC 8-14.5-6 apply to the issuance of grant anticipation revenue bonds or notes under this chapter.
    Sec. 6. Grant anticipation revenue bonds or notes:
        (1) constitute the corporate obligations of the authority;

authority established by IC 8-9.5-8-2.
    Sec. 3. "Bonds" refers to bonds of the authority issued under IC 8-14.6-6.
    Sec. 4. "Capitalized interest" means interest cost on bonds or notes before and during the period of construction of the local road project for which the bonds or notes were issued, and for a period not to exceed one (1) year after completion of construction.
    Sec. 5. "Construction" means the construction, acquisition, reconstruction, improvement, and extension of a local road project.
    Sec. 6. "Costs" as applied to any local road project includes any item or cost of a capital nature incurred in the construction of a local road project, including:
        (1) the cost of construction;
        (2) the cost of acquisition of all land, rights-of-way, property, rights, easements, and any other legal or equitable interests acquired by the authority for the construction, including the cost of any relocations incident to the acquisition;
        (3) the cost of demolishing or removing any buildings, structures, or improvements on property acquired by the authority, including the cost of:
            (A) acquiring any property to which the buildings, structures, or improvements may be moved; or
            (B) acquiring any property that may be exchanged for property acquired by the authority;
        (4) financing charges;
        (5) costs of issuance of bonds or notes, including costs of credit enhancement, such as bond or note insurance;
        (6) remarketing or conversion fees;
        (7) bond or note discount;
        (8) capitalized interest;
        (9) the cost of funding any reserves to secure the payment of bonds or notes;
        (10) engineering and legal expenses, costs of plans, specifications, surveys, estimates, and any necessary feasibility studies;
        (11) other expenses necessary or incident to determining the feasibility or practicability of constructing any local road project;
        (12) administrative expenses of the authority or one (1) or more local units relating to any local road project financed by bonds or notes;
        (13) reimbursement of one (1) or more local units for:

legal or equitable interest it considers necessary or convenient for carrying out this article, including disposal of unused or surplus property.
    Sec. 6. The authority may acquire by purchase, whenever it considers a purchase expedient, any land, rights-of-way, property, rights, easements, or other legal or equitable interests as it considers necessary or convenient for the construction and operation of any local road project. A purchase under this section shall be made upon the terms and at the price agreed upon between the authority and the property owner.
    Sec. 7. The authority may make and enter into all contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers under this article or any other law. These contracts or agreements are not subject to any approvals other than the approval of the authority and may be for any term of years and contain any terms that are considered reasonable by the authority.
    Sec. 8. The authority may employ and fix the compensation of financial advisors and underwriters, bond counsel, other attorneys with the approval of the attorney general, and other employees, independent contractors, and agents as necessary in its judgment to carry out this article. The authority is subject to the provisions of 25 IAC 5 concerning equal opportunities for minority business enterprises and women's business enterprises to participate in procurement and contracting processes.
    Sec. 9. The authority may accept gifts, devises, bequests, grants, appropriations, revenue sharing, other financing and assistance, and any other aid from any source and agree to and comply with conditions attached to the aid.
    Sec. 10. The authority may accept the transfer of any local road project to the authority.
    Sec. 11. (a) Except as provided in subsection (b), the authority may, in the manner provided by IC 8-23-7, acquire by appropriation any land, rights-of-way, property, rights, easements, or other legal or equitable interests necessary or convenient for the construction or the efficient operation of any local road project. However, compensation for the property taken shall first be made in money as provided by law.
    (b) The authority may take or disturb property or facilities that:
        (1) belong to any public utility or to a common carrier engaged in interstate commerce;
        (2) are required for the proper and convenient operation of

the public utility or common carrier; and
        (3) are not located within the limits of local road projects being constructed under this article;
only if provision is made for the restoration, relocation, or duplication of the property or facilities elsewhere at the cost of the authority.
    Sec. 12. The authority may do all things necessary or proper to carry out this article.
    Sec. 13. A local unit may convey, transfer, lease, or sell, with or without consideration, real property of any nature (including buildings, structures, improvements, land, rights-of-way, easements, and legal or equitable interests), title to which is held in the name of the local unit, to the authority, without being required to advertise or solicit bids or proposals, in order to accomplish the governmental purposes of this article.
    Sec. 14. All property of the authority is public property devoted to an essential public and governmental function and purpose and is exempt from all taxes and special assessments of the state or any political subdivision of the state.
    Chapter 4. Contracts With Local Units
    Sec. 1. The authority is responsible for the construction, leasing, and ownership of local road projects. With respect to each local road project, the authority and one (1) or more local units may enter into a contract for the purposes set forth in this chapter. If the authority and the local unit or units decide to enter into a contract under this chapter, the authority and the local unit or units may enter into a separate contract for each local road project or a master contract for several local road projects.
    Sec. 2. A contract under this chapter must:
        (1) provide for the construction and ownership of the local road project; and
        (2) describe the local road project or local road projects, setting forth in general terms principal features such as geographic location, widths of rights-of-way, number of lanes in each direction, width of traffic lanes, widths of shoulders, location and nature of tunnels, overpasses, underpasses, interchanges, bridges, approaches, and connecting roads, streets, and highways.
    Sec. 3. The contract may include the following:
        (1) Provisions for payment by the authority to the local unit or units of all costs incurred by the local unit or units in the performance of the contracts, including all costs of

construction, salaries, wages, and associated costs of personnel attributable to performance of the contract.
        (2) Other terms and conditions that the authority and the local unit or units consider appropriate.
    Sec. 4. Notwithstanding any other law, a local unit may enter into a contract with the authority by negotiating the contract with the authority and without complying with the requirements of any other law. A local unit shall observe any existing contractual commitments to the holders of bonds or notes or other persons when entering into a contract.
    Chapter 5. Leases With Local Units
    Sec. 1. (a) In addition to its other powers, one (1) or more local units may enter into a lease or leases with the authority under section 2 or 3 of this chapter for any or all of the purposes set forth in this article. Notwithstanding any other law, a local unit may enter into a lease with the authority by negotiating the lease with the authority and without complying with the requirements of any other law. A local unit shall observe any existing contractual commitments to the holders of bonds or notes or other persons when entering into a lease.
    (b) The authority has all the powers necessary and incidental to carry out the terms and conditions of leases under this chapter.
    (c) If the authority and one (1) or more local units decide to enter into a lease under this chapter, the authority and the local unit or units may enter into a separate lease for each local road project or may enter into one (1) or more master leases for several local road projects.
    Sec. 2. (a) A lease entered into under this section must include the following:
        (1) A statement that the term of the lease is for a period coextensive with the biennium used for state budgetary and appropriation purposes with a fractional period when the lease begins, if necessary.
        (2) A statement that the term of the lease is extended from biennium to biennium, with the extensions not to exceed a lease term of twenty-five (25) years, unless either the authority or the local unit or units give notice of nonextension at least six (6) months before the end of a biennium, in which event the lease expires at the end of the biennium in which the notice is given.
        (3) A provision plainly stating that the lease does not constitute an indebtedness of the state or any local unit within

the meaning or application of any constitutional provision or limitation, and that lease rentals are payable by the local unit or units solely from the sources described in section 6 of this chapter, for the actual use or availability for use of local road projects provided by the authority, with payment commencing not earlier than the time the use or availability commences.
        (4) Provisions requiring the local unit or units to pay rent at times and in amounts sufficient to pay in full:
            (A) the debt service payable under the terms of any bonds or notes issued by the authority and outstanding with respect to any local road project, including any required additions to reserves for the bonds or notes maintained by the authority; and
            (B) additional rent as provided by the lease;
        subject to the appropriation of money by the local unit or units to pay lease rentals.
        (5) Provisions requiring the local unit or units to operate and maintain the local road project or local road projects during the term of the lease.
        (6) A provision in each master lease for two (2) or more local road projects requiring that each local road project added to the master lease shall be covered by a supplemental lease describing the particular local road project, stating the additional rental payable and providing that all lease covenants, including the obligation to pay the original and additional rent under any supplement, shall be unitary and include all local road projects covered, whether by the master lease or a supplemental lease.
    (b) A lease entered into under this section may contain other terms and conditions that the authority and the local unit or units consider appropriate.
    (c) The fiscal officer (as defined in IC 36-1-2-7) of the local unit shall request an appropriation from the local unit for payment of lease rentals on any lease entered into under this section in writing at a time sufficiently in advance of the date for payment of the lease rentals so that an appropriation may be made in the normal budgetary process of the local unit.
    Sec. 3. (a) A lease entered into under this section must include the following:
        (1) The term of the lease, which may not exceed the weighted average useful life of the local road project or local road

projects.
        (2) A provision plainly stating that the lease does not constitute an indebtedness of the state or any local unit within the meaning or application of any constitutional provision or limitation, and that lease rentals are payable by the local unit or units solely for the annual use or availability for use of local road projects provided by the authority, with payment commencing not earlier than the time the use or availability commences.
        (3) Provisions requiring the local unit or units to pay rent at times and in amounts sufficient to pay in full the following:
            (A) The debt service payable under the terms of any bonds or notes issued by the authority and outstanding with respect to any local road project, including any required additions to reserves for the bonds or notes maintained by the authority.
            (B) Additional rent as provided by the lease.
        (4) Provisions requiring the local unit or units to operate and maintain the local road project or local road projects during the term of the lease.
        (5) A provision in each master lease for two (2) or more local road projects requiring that each local road project added to the master lease shall be covered by a supplemental lease describing the particular local road project, stating the additional rental payable and providing that all lease covenants, including the obligation to pay the original and additional rent under any supplement, shall be unitary and include all local road projects covered, whether by the master lease or a supplemental lease.
    (b) A lease entered into under this section may contain other terms and conditions that the authority and the local unit or units consider appropriate.
    Sec. 4. If a local unit fails at any time to pay to the authority when due any lease rentals on any lease under this chapter, the chairman of the authority shall immediately report the unpaid amount in writing to the general assembly and the governor.
    Sec. 5. A local unit or units may lease any property under its control to the authority for construction of a local road project, which local road project may be leased to the local unit or units.
    Sec. 6. (a) A local unit shall pay lease rentals for leases entered into under this chapter from revenues from any combination of the following sources:

Indiana.
    Chapter 6. Issuance of Bonds and Notes
    Sec. 1. Subject to sections 2 and 5 of this chapter, and before July 1, 2007, the authority shall, by resolution, issue and sell bonds or notes of the authority to provide funds to carry out this article with respect to the construction of a local road project or local road projects or the refunding of any bonds or notes, together with any reasonable costs associated with a refunding.
    Sec. 2. Before the issuance of bonds or notes, the authority must receive the approval of the budget agency.
    Sec. 3. (a) The construction of a local road project may not be financed under this article if, at the time the lease with respect to the local road project is initially entered into, the weighted average useful life of the local road project is less than five (5) years.
    (b) For purposes of this section and section 5 of this chapter, a certificate of the local unit, supported by a statement from the local unit's consulting engineer, as to the weighted average useful life of the local road project is conclusive with respect to the matters contained in the certificate.
    (c) If any bonds or notes bear interest at a variable or adjustable rate, lease rentals under any lease or leases attributable to debt service shall be fixed over the term of the lease or leases based on the fair and reasonable value of the local road project or local road projects leased.
    Sec. 4. (a) Before issuing a series of bonds or notes, the authority shall publish a notice of its determination to issue the bonds or notes. The notice shall be published:
        (1) one (1) time in two (2) newspapers published and of general circulation in the city of Indianapolis; and
        (2) one (1) time in one (1) newspaper published and of general circulation in each local unit that proposes to enter into a lease of the local road projects to be financed by the bonds or notes.
    (b) No action to contest the validity of:
        (1) any contract entered into by one (1) or more local units and the authority before the bonds or notes are issued;
        (2) any lease entered into by one (1) or more local units and the authority before the bonds or notes are issued to secure a series of bonds or notes; or
        (3) a series of bonds or notes issued by the authority;
may be brought against the authority after the fifteenth day following publication of the notice required by subsection (a)(1) or

against a local unit after the fifteenth day following publication of the notice under subsection (a)(2).
    (c) If a lease or contract is entered into under this chapter after bonds or notes relating to the lease or contract are issued, the authority may publish notice of execution of the lease or contract as set forth in subsection (a). No action against the authority to contest the validity of such a lease or contract may be brought after the fifteenth day following publication of the notice under subsection (a)(1) or against a local unit after the fifteenth day following publication of the notice under subsection (a)(2).
    (d) If an action against the authority or a local unit challenging a lease, a contract, bonds, or notes is not brought within the time prescribed by this section, the lease, contract, bonds, or notes shall be conclusively presumed to be fully authorized and valid under the laws of the state and any person or entity is estopped from further questioning the authorization, validity, execution, delivery, or issuance of the contract, lease, bonds, or notes.
    Sec. 5. (a) The bonds or notes must indicate on their face:
        (1) the maturity date or dates, as determined under subsection (b);
        (2) the interest rate or rates (whether fixed, variable, or a combination of fixed and variable) or the manner in which the interest rate or rates will be determined if variable or adjustable rates are used;
        (3) registration privileges and place of payment, including provisions for book entry obligations as set forth in IC 5-1-15;
        (4) the conditions and terms under which the bonds or notes may be redeemed or prepaid before maturity; and
        (5) the source of payment as set forth in section 10 of this chapter.
    (b) The weighted average life of the bonds or notes may not exceed the sum of:
        (1) the weighted average useful life of the local road project or local road projects to be financed from the proceeds of the bonds or notes; plus
        (2) the period of construction of the local road project or local road projects.
    Sec. 6. The bonds or notes:
        (1) shall be executed by the manual or facsimile signature of the chairman or vice chairman of the authority;
        (2) shall be attested by the manual or facsimile signature of the secretary-treasurer or assistant secretary-treasurer of the

authority;
        (3) shall be imprinted or impressed with the seal of the authority by any means;
        (4) may be authenticated by a trustee, registrar, or paying agent; and
        (5) constitute valid and binding obligations of the authority, even if the chairman, vice chairman, secretary-treasurer, or assistant secretary-treasurer whose manual or facsimile signature appears on the bonds or notes no longer holds that office.
    Sec. 7. The bonds or notes, when issued, have all the qualities of negotiable instruments, subject to provisions for registration, under IC 26 and are incontestable in the hands of a bona fide purchaser or owner of the bonds or notes for value.
    Sec. 8. The bonds or notes may be sold by the authority at a public or a negotiated sale at a time or times determined by the authority and at a premium or discount as determined by the authority. In determining the amount of bonds or notes to be issued and sold, the authority may include the costs of construction or of refunding bonds or notes, including reasonable debt service reserves, and all other expenses necessary or incident to the construction of the local road project, a refunding, or the issuance of the bonds or notes.
    Sec. 9. The proceeds of the bonds or notes are appropriated for the purpose for which the bonds or notes may be issued and the proceeds shall be deposited and disbursed in accordance with any provisions and restrictions that the authority may provide in the resolution or trust agreement authorizing the issuance of the bonds or notes. The maturities of the bonds or notes, the rights of the owners, and the rights, duties, and obligations of the authority are governed in all respects by this article and the resolution or trust agreement.
    Sec. 10. The bonds or notes:
        (1) constitute the corporate obligations of the authority;
        (2) do not constitute an indebtedness of the state or any local unit within the meaning or application of any constitutional provision or limitation; and
        (3) are payable solely as to both principal and interest from:
            (A) the revenues from a lease to one (1) or more local units, if any;
            (B) proceeds of bonds or notes, if any; or
            (C) investment earnings on proceeds of bonds or notes.

on and principal of bonds or notes of the authority as the interest and principal become due and payable and for the retirement of bonds or notes. The money may not be withdrawn if a withdrawal would reduce the amount in the reserve fund to an amount less than the required debt service reserve, except for payment of interest then due and payable on bonds or notes and the principal of bonds or notes then maturing and payable, whether by reason of maturity or mandatory redemption, for which payments other money of the bank is not then available. As used in this chapter, "required debt service reserve" means, as of the date of computation, the amount required to be on deposit in the reserve fund as provided by resolution or trust agreement of the authority.
    (c) Money in any reserve fund that exceeds the required debt service reserve, whether by reason of investment or otherwise, may be withdrawn at any time by the authority and transferred to another fund or account of the authority, subject to the provisions of any agreement with the holders of any bonds or notes.
    Sec. 2. For purposes of valuation, investments in the reserve fund shall be valued at par, or if purchased at less than par, at cost unless otherwise provided by resolution or trust agreement of the authority. Valuation on a particular date shall include the amount of interest then earned or accrued to that date on the money or investments in the reserve fund.
    Sec. 3. (a) In order to assure the maintenance of the required debt service reserve in any reserve fund, the general assembly may annually appropriate to the authority for deposit in one (1) or more of the funds the sum, certified by the authority to the general assembly, that is necessary to restore one (1) or more of the funds to an amount equal to the required debt service reserve. Before December 1 of each year, the authority shall make and deliver to the general assembly a certificate stating the sum required to restore the funds to that amount. Nothing in this subsection creates a debt or liability of the state to make any appropriation.
    (b) All amounts received on account of money appropriated by the state to any reserve fund shall be held and applied in accordance with section 1(b) of this chapter. However, at the end of each fiscal year, if the amount in any reserve fund exceeds the required debt service reserve, any amount representing earnings or income received on account of any money appropriated to the reserve fund that exceeds the expenses of the authority for that fiscal year may be transferred to the state general fund.
    Sec. 4. Subject to the provisions of any agreement with its