1. (1) A local building authority and its creating local entity may enter into a lease agreement with respect to a project that the local building authority:

   1. (a) has constructed, acquired, improved, or extended on behalf of the creating local entity; or
   2. (b) will construct, acquire, improve, or extend on behalf of the creating local entity.

2. (2)

   1. (a) A local building authority and its creating local entity may enter into a lease agreement before the local building authority's acquisition of a site or construction of the project.

   2. (b) Each lease agreement described in Subsection (2)(a) shall:

      1. (i) provide that the creating local entity is not required to make a lease payment until acquisition or construction of the project is completed; and

      2. (ii) require the local building authority to furnish or cause the construction contractor to furnish a bond satisfactory to the creating local entity, conditioned upon:

         1. (A) final completion of the project as expeditiously as reasonably possible from the date of the execution of the lease agreement; and

         2. (B) delivery of possession of the project to the creating local entity free and clear of all liens and encumbrances, except:

            1. (I) taxes, liens, and encumbrances on the local building authority's interest in the leased property; and
            2. (II) easements and restrictions that the creating local entity accepts.

Enacted by Chapter 360, 2008 General Session