Code of Alabama
Article 5 - Municipal Hospital Building Authorities.
Section 22-21-140 - Lease Agreements With Municipality.

(a) Authorization of lease. The authority and the municipality are hereby respectively authorized to enter into one or more lease agreements with each other whereunder one or more projects or any part thereof shall be leased by the authority to the municipality. No such lease agreement shall be for a term longer than the then current fiscal year in which it is made. Any such lease agreement made, however, may contain a grant to the municipality of successive options to renew such lease agreement, on the conditions specified therein, for additional terms; but no such additional term shall be for a period longer than the fiscal year in which such renewal shall be made. The lease agreement may contain provisions as to the method by which such renewal may be effected.
(b) Payments limited to current revenues of the municipality for current fiscal year. The obligation on the part of the municipality to pay the rental required to be paid and to perform the agreements on the part of the municipality required to be performed during any fiscal year during which the lease agreement is in effect shall constitute a general obligation of the municipality, and the municipality is authorized to pledge its full faith and credit for the payment of such rental and the performance of such agreements; provided, that the rental required to be paid and the agreements required to be performed by the municipality under the lease agreement during any fiscal year during which the lease agreement is in effect shall be payable solely out of the current revenues of the municipality for such fiscal year.
(c) Special pledge. As additional security for the payment of the rental required to be paid and for performance of the agreements on the part of the municipality required to be performed during the first or initial term of any lease agreement made by the authority with the municipality, the municipality is authorized to pledge specially so much of the following revenues and tax proceeds as may be necessary to pay the rental and to perform the agreements which are required in the lease agreement to be paid and performed during the said initial term:
(1) The revenues that may be received by the municipality during the said initial term from the operation of the project covered by the lease agreement remaining after the payment of all reasonable expenses during the said initial term for the operation and maintenance of the said project; and
(2) The proceeds that may be received by the municipality during the said initial term from any tax or taxes, the proceeds of which the municipality is authorized in Section 11-81-16 to pledge for the benefit of bonds of the municipality.
Whenever a lease agreement containing such a special pledge is renewed under its terms for an additional term, such special pledge shall be deemed effective for such additional term without the necessity of a new pledge being made or a new lease agreement being entered into for that purpose, and the exercise of the option to renew shall be construed as a renewal also of the said special pledge; provided, that said special pledge shall be applicable only to specially pledged revenues that are received by the municipality during the fiscal year for which the lease agreement is renewed. Each such special pledge that shall be so effected by renewal of the lease agreement for an additional term shall be deemed to relate to, and to have been made as of, the date on which the lease agreement was made and shall take precedence over any pledge of the specially pledged revenues which might be made by the municipality and over any claim which might arise against the specially pledged revenues between the date on which the lease agreement was made and the first day of the additional term for which the lease agreement shall be so renewed. Any pledge of specially pledged revenues made by the municipality under the provisions of any contract made by it subsequent to the date of the lease agreement containing such special pledge shall be subordinate to the special pledge contained in the lease agreement.
(d) Obligation to levy taxes specially pledged. In any instance where a lease agreement contains a pledge of specially pledged revenues, the municipality shall levy during each fiscal year that the lease agreement shall be in effect, and shall use so much of the proceeds from the tax or taxes so specially pledged as may be necessary to pay the rentals and perform the agreements on the part of the municipality which are required in the lease agreement to be paid and performed during such fiscal year.
(e) General provisions. Any lease agreement may contain such covenants as shall not be inconsistent with this article. The rental required to be paid and the agreements required to be performed by the municipality under the provisions of the lease agreement shall never create an indebtedness of the municipality within the meaning of Section 225 of the constitution of the state. If any space available for rent in any project which shall have been leased, in whole or in part, to the municipality should become vacant after acquisition or construction of the project by the authority, then until such time as all such vacant space shall have been filled or rented, neither the municipality, nor any officer, department or agency thereof, shall thereafter enter into any rental agreement or renew any then existing rental agreement, for other space in or about the municipality to be used for the same purposes for which such vacant space in the project is capable of being used.

Structure Code of Alabama