Municipal loans to nonpublic schools for construction or renovation

(a) Any municipality may, by vote of its legislative body, borrow funds on the faith and credit of such municipality for the purpose of lending such funds to any financially responsible nonpublic school located in such municipality for construction or renovation of physical facilities for educational purposes, provided the obligor in such loan is a person or persons, the board of trustees or similar body legally authorized to contract for such obligations on behalf of such school. No municipality shall, as a result of such borrowing, incur indebtedness for this purpose in excess of ten per cent of its annual receipts from taxation. No such loan shall exceed thirty per cent of the appraised fair market value of the buildings and real property of such school or forty per cent of the assessed value of the capital assets of such school, whichever is less. (b) Any such loan shall be used exclusively for purposes of construction or renovation of physical facilities of such school for educational purposes. Such loan shall be secured by a first mortgage on school real estate owned by said obligor and further secured by security interest or lien with respect to (1) all capital assets of said obligor held for school purposes, (2) current income on such school's endowment funds to the extent that such interest or lien may be exercised with respect to such income, (3) the proceeds of any fund raising efforts on behalf of such school by such person or persons, board of trustees or similar body. The interest rate on any such loan shall be one per cent in excess of the current borrowing rate paid by such municipality. Such loan shall be amortized in equal semiannual installments of interest and principal over not more than thirty years. (c) In the event of default on any installment for a period of ninety days, the entire outstanding principal balance with interest and all costs of collection including a reasonable attorney's fee shall become due and payable. In such event, such municipality shall commence and continue legal proceedings to collect the amount due such municipality.