(1) The general assembly hereby finds and declares that: (a) The state board of land commissioners lacks a consistent mechanism to make investments in large, economically viable commercial real property holdings; (b) The state could operate more efficiently if reasonably priced, well-situated lease space were available; (c) The state board of land commissioners can generate reasonable and consistent revenues for the state school lands by acquiring commercial real property and leasing space to state agencies and other tenants; and (d) It is the general assembly's intent that annual payments on financed purchase of an asset or certificate of participation agreements that the state board of land commissioners instructed the state treasurer to enter into pursuant to this section be made solely from the state board of land commissioners financed fund with transfers first from commercial real property revenues, second from the reserve established in the state board of land commissioners financed fund, and, in the event of any shortfall, from the state board of land commissioners investment and development fund. (2) (a) Notwithstanding section 24-82-801, the state board of land commissioners may instruct the state treasurer to enter into financed purchase of an asset or certificate of participation agreements on behalf of the state school lands for the acquisition, construction, renovation, and improvement of commercial real property that the board will then offer as lease space for state agencies or other tenants only if: (I) The state board of land commissioners has reviewed the leased space needs for state agencies with the office of the state architect; (II) The state board of land commissioners has evaluated the project with the assistance of the office of the state architect and the office of state planning and budgeting against the capitol complex master plan if the project is related to capitol complex leased space needs; (III) The projected annual rent costs of the state agencies that will be located in the property plus any current rental payment or rental payment projected to be received from other nonstate agency tenants for each fiscal year during the maximum term of the proposed financed purchase of an asset or certificate of participation agreement will exceed the annual financed purchase of an asset or certificate of participation payment for the property; (IV) A financial plan for the financed purchase of an asset or certificate of participation transaction that includes the items described in subsection (2)(c) of this section has been approved by the office of state planning and budgeting and reviewed and recommended by the capital development committee of the general assembly pursuant to subsection (3) of this section; (V) The state board of land commissioners approves the terms of the financed purchase of an asset or certificate of participation agreements and any ancillary agreements; (VI) The state board of land commissioners ensures that the agreements for the financed purchase of an asset or certificate of participation transaction accurately reflect the financial plan approved by the office of state planning and budgeting and the capital development committee; and (VII) The state controller has approved all agreements pursuant to section 24-30-202, C.R.S. (b) For purposes of this subsection (2), "annual rent costs" means base rent typically found in the leased space line item in the general appropriation bill plus all operation, maintenance, and related costs paid to a lessor or other third party. (c) The financial plan must include all necessary parameters of the financed purchase of an asset or certificate of participation agreement, including but not limited to leased-space needs, subleasing agreements, income, expenses, capital maintenance costs, interest rates, reserve requirements, amortization, expected return on investment, and overall benefit to the permanent school fund as related to the state board's duties enumerated in section 10 of article IX of the state constitution. The financial plan must also include any other financial consideration that the office of state planning and budgeting or the capital development committee might request after their review of the financial plan. The state board may utilize the services of the state's financial advisors in order to prepare the financial plan. (d) The state board shall adopt a policy that at minimum specifies that leased space is available to a state agency through the application of this section when such a leased space arrangement is mutually beneficial to the state board and the state agency seeking to lease space. (e) The state treasurer shall issue the financed purchase of an asset or certificate of participation agreements as specified in section 24-36-121. (3) If the office of state planning and budgeting approves the financial plan, it shall submit the financial plan to the capital development committee of the general assembly. The capital development committee shall review the financial plan and refer its recommendations regarding the financial plan, with written comments, to the state board of land commissioners. (4) (a) The maximum total amount of annual payments of principal and interest payable by the state during any fiscal year under the terms of all outstanding financed purchase of an asset or certificate of participation agreements entered into by the state treasurer as instructed by the state board pursuant to this section may not exceed the lesser of: (I) The total amount of annual payments of principal and interest required to be paid per fiscal year on all outstanding financed purchase of an asset or certificate of participation agreements so long as the principal portions of the outstanding financed purchase of an asset or certificate of participation agreements do not exceed fifty million dollars; or (II) Five million dollars per fiscal year in total annual lease payments of principal and interest required to be paid on all outstanding financed purchase of an asset or certificate of participation agreements. (b) The term of any financed purchase of an asset or certificate of participation agreement entered into by the state treasurer as instructed by the state board pursuant to this section may not exceed the shorter of the remaining useful life of the building or twenty-five years. (c) Annual payments on financed purchase of an asset or certificate of participation agreements that the state board of land commissioners instructed the state treasurer to enter into pursuant to this section must be made solely from the state board of land commissioners financed fund with transfers first from the commercial real property operating fund created in section 36-1-153.7, second from the reserve described in subsection (7)(d) of this section, and, in the event of any shortfall, from the state board of land commissioners investment and development fund created in section 36-1-153. (5) A financed purchase of an asset or certificate of participation agreement entered into by the state treasurer on behalf of the state board pursuant to this section shall provide that all payment obligations of the state under the agreement are subject to annual appropriation by the general assembly and that obligations are not deemed or construed as creating an indebtedness of the state within the meaning of any provision of the state constitution or the laws of the state concerning or limiting the creation of indebtedness by the state and do not constitute a multiple fiscal year direct or indirect debt or other financial obligation of the state within the meaning of section 20 (4) of article X of the state constitution. (6) (a) A financed purchase of an asset or certificate of participation agreement entered into by the state treasurer on behalf of the state board pursuant to this section may contain such terms, provisions, and conditions as the state treasurer deems appropriate. The provisions shall allow the board, on behalf of the state school lands, to receive title to the commercial real property that is the subject of the agreement on or prior to the expiration of the entire term of the agreement, including all optional renewal terms. Such financed purchase of an asset or certificate of participation agreement may further provide for the issuance, distribution, and sale of instruments evidencing rights to receive rentals and other payments made and to be made under the agreement. Such instruments shall not be notes, bonds, or any other evidence of indebtedness of the state within the meaning of any provision of the state constitution or the laws of the state concerning or limiting the creation of indebtedness by the state. Interest paid under a financed purchase of an asset or certificate of participation agreement, including interest represented by such instruments, is exempt from Colorado income tax. (b) A financed purchase of an asset or certificate of participation agreement entered into by the state treasurer on behalf of the state board pursuant to this section may require the state to provide insurance; except that no insurance is authorized that would cause the annual financed purchase of an asset or certificate of participation payment to exceed the annual rent costs of the state agencies prior to the financed purchase of an asset or certificate of participation agreement plus any rent projected to be received from other nonstate agency tenants. (c) Any provision of the fiscal rules promulgated pursuant to section 24-30-202 (1) and (13) that the state controller deems to be incompatible or inapplicable with respect to a financed purchase of an asset or certificate of participation agreement entered into by the state treasurer on behalf of the state board pursuant to this section or any ancillary agreement may be waived by the state controller or his or her designee. (d) If a financed purchase of an asset or certificate of participation agreement entered into by the state treasurer on behalf of the state board pursuant to this section is executed, during the term of the financed purchase of an asset or certificate of participation agreement, money that at the time of the execution is appropriated to a state agency for rental payments shall be transferred to the commercial real property operating fund created in section 36-1-153.7. (7) (a) The state board of land commissioners financed fund is hereby created in the state treasury. The principal of the fund consists of: (I) Transfers from the commercial real property operating fund created in section 36-1- 153.7 as directed by the state board; (II) Transfers from the state board of land commissioners investment and development fund created in section 36-1-153 as directed by the state board; and (III) Other revenues as requested by the state board and approved by the general assembly. (b) All interest and income earned on the deposit and investment of money in the state board of land commissioners financed fund are credited to the fund and may not be transferred to the general fund or any other fund at the end of any fiscal year. Any uncommitted fund balance at the end of a fiscal year, not including any amount held in reserve as required in subsection (7)(d) of this section, is transferred to the permanent school fund. (c) Money in the state board of land commissioners financed fund is subject to annual appropriation by the general assembly in the capital section of the annual general appropriation act to make payments required by financed purchase of an asset or certificate of participation agreements entered into pursuant to this section. (d) For each fiscal year commencing on or after July 1, 2014, a reserve consisting of ten percent of the principal of all outstanding financed purchase of an asset or certificate of participation agreements entered into pursuant to this section must be maintained. The reserve may only be expended upon a specific appropriation by the general assembly to meet any financed purchase of an asset or certificate of participation payments required by financed purchase of an asset or certificate of participation agreements entered into pursuant to this section if there are insufficient revenues to cover the payment. The reserve must be replenished within three years of expenditure. (e) The state controller shall, in cooperation with the state board and the state treasurer, establish accounts in the state board of land commissioners financed fund as necessary to ensure the proper accounting for all financed purchase of an asset or certificate of participation transactions. (8) Net revenue from the disposal of the commercial real property originally acquired through a financed purchase of an asset or certificate of participation agreement authorized in this section shall be reinvested in land pursuant to section 36-1-124.5. (9) (a) Repealed. (b) The state auditor shall conduct or cause to be conducted a performance audit of the financed purchase of an asset or certificate of participation program authorized by this section. The state auditor shall submit findings, conclusions, and recommendations resulting from the performance audit to the members of the legislative audit committee, the members of the joint budget committee, and the members of the capital development committee, or any successor committees, no later than twelve months after the issuance of the first financed purchase of an asset or certificate of participation agreement.
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