(a) Subject to § 4-31-405 and subject to any existing contractual obligations of the local government, the authority may enter into loan agreements with any local government unit and any local government unit may enter into loan agreements with the authority for loans for capital projects described in this part.

(b) Any loan agreement may include such provisions as may be agreed upon by the authority and the local government subject to § 4-31-405 and shall additionally include, in substance, the following:

(1) The amount of the loan, not to exceed the estimated reasonable cost of the project to be constructed, as determined by the authority;

(2) An agreement by the authority to pay part of the amount of the loan to the local government unit during the progress of the construction, or to pay the amount of the loan following completion of the construction, as may be agreed upon by the parties; and

(3) An agreement by the local government unit to:

(A) Proceed expeditiously with, and complete, the project in accordance with the plans approved pursuant to this part;

(B) Commence operation of the project on its completion, and not to discontinue operations or dispose of the project without the approval of the authority;

(C) Operate and maintain the project in accordance with applicable provisions of this part and in compliance with rules and regulations of the authority;

(D) Not contract with any corporation for profit, private person or firm for the operation of the same, notwithstanding any law authorizing such contracts, except upon approval by the authority of an application to the authority, which application shall include, but not be limited to, an opinion from a nationally recognized bond counsel that the contract will not affect the tax exempt status of the income of the authority's bonds or notes financing such facility under state or federal law;

(E) To pledge any available sources of revenue to make payment according to a schedule established by the authority, including state-shared taxes and to make such payments; and

(F) To establish and maintain adequate financial records for the project, and to cause to be made an annual audit of the financial records and transactions covering each fiscal year in accordance with generally accepted government auditing standards, and to furnish a copy of such audits to the comptroller of the treasury.

(c) Failure of a local government unit to file the audit required by subdivision (b)(3)(F) with the comptroller of the treasury each year until the loan, together with interest, is totally repaid constitutes a Class A misdemeanor and anyone violating this provision, upon conviction, shall be liable for a fine of not less than ten dollars ($10.00) nor more than one hundred dollars ($100) for each violation, within discretion of the court, and each day of continued violation constitutes a separate offense.

(d) The authority may promulgate any additional rules or regulations concerning the contract and change in operations of a capital project.