Section 11-62-13

Limitations as to operation of facilities - Administration or management of facilities by third parties under employment arrangements or management contracts.

(a) The user of any facility acquired, improved, financed, or in any way provided or assisted by any authority pursuant to the provisions of this chapter shall not employ any third party that is not a governmental agency or a not-for-profit organization to administer or manage such facility unless the following conditions with respect to such third party and the employment arrangement or management contract between such user and such third party are satisfied:

(1) Such user shall be completely unrelated to such third party and shall be free from any aspect of control or undue influence by such third party, it being the intention of this chapter that prohibited control or undue influence shall be deemed to arise from circumstances such as the promotion or encouragement of the organization of such user by such third party for the primary purpose of having such user own or lease any facility that is to be managed by such third party, the selection or nomination by such third party of any of the members of the initial or any subsequent governing body of such user or the past or present existence of any substantial business relationship between any member of the governing body of such user and any person who has a substantial economic interest in such third party or who by reason of being a partner, officer, director or stockholder of such third party has any significant influence in the management of its affairs;

(2) Such user shall retain ultimate control of the operation of such facility, including, without limiting the generality of the foregoing, the power to make all significant decisions relating to the financial management of such facility, the power to employ, or to terminate the employment of, the chief administrator of such facility and all other employees holding positions of significant responsibility in the management of such facility and the power to determine all terms and conditions upon which the benefits and services provided by such facility shall be made available to persons needing or desiring to use the same;

(3) The employment arrangement or management contract between such user and such third party shall fix the compensation of such third party on a basis that is reasonably related to the value of the services performed by such third party and that does not transfer to such third party a substantial part of the financial burdens or benefits of the ownership of such facility; and

(4) No management contract between such user and such third party shall have a term greater than three years, including in such term any period for which such contract may be renewed or extended at the option of such third party.

(b) If the relationship between any user and any third party employed to administer or manage any facility complies with the foregoing provisions of this section, then in such case nothing contained in this chapter shall be construed to prohibit the employment of such third party to administer or manage such facility or to mean that such user does not operate such facility for any purpose of this chapter.

(Acts 1979, No. 79-332, p. 506, §16.)