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H.B. No. 2701
AN ACT
relating to higher education authorities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 53, Education Code, as amended by
Chapters 1266 and 1310, Acts of the 78th Legislature, Regular
Session, 2003, is reenacted and amended to read as follows:
CHAPTER 53. HIGHER EDUCATION FACILITY AUTHORITIES FOR PUBLIC
SCHOOLS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 53.01. SHORT TITLE. This chapter may be cited as the
Higher Education Facility Authority for Public Schools Act.
Sec. 53.02. DEFINITIONS. In this chapter:
(1) "City" means an incorporated city or town in this
state.
(2) "Governing body" means the council, commission, or
other governing body of a city.
(3) "Authority" means a higher education facility
authority created under this chapter.
(4) "Board" means the board of directors of an
authority.
(5) "Institution of higher education" means [(i)] any
institution of higher education as defined by Subdivision (8) of
Section 61.003 [of this code, or (ii) a degree-granting college or
university corporation accredited by the Texas Education Agency or
by a recognized accrediting agency, as defined by Subdivision (13)
of Section 61.003 of this code, or (iii) a postsecondary career
school or college accredited by the Association of Independent
Colleges and Schools, the National Association of Trade and
Technical Schools, or the National Accrediting Commission of
Cosmetology Arts and Sciences].
(6) "Educational facility" means a classroom
building, laboratory, science building, faculty or administrative
office building, or other facility used exclusively for the conduct
of the educational and administrative functions of an institution
of higher education.
(7) "Housing facility" means a single- or multi-family
residence used exclusively for housing or boarding, or housing and
boarding students, faculty, or staff members of an institution of
higher learning. The term includes infirmary and student union
building, but does not include a housing or boarding facility for
the use of a fraternity, sorority, or private club.
(8) "Bond resolution" means the resolution
authorizing the issuance of revenue bonds.
(9) "Trust indenture" means the mortgage, deed of
trust, or other instrument pledging revenue or [of] property, or
creating a mortgage lien on property, or both, to secure the revenue
bonds issued by the authority.
(10) ["Trustee" means the trustee under the trust
indenture.
[(11) "Repurchase agreement" means a simultaneous
agreement between a higher education authority and another entity
in which one of the parties has agreed to purchase investment
securities on a specified date and the other party has agreed to
repurchase the investment securities at the same price plus accrued
interest on a later date, in which the market value of the
investment securities purchased is in excess of the amount of the
repurchase agreement, and in which the investment securities are so
purchased and held separately from all other investment securities,
in trust, in order to complete the contractual commitment.
[(12) "Accredited primary or secondary school" means a
primary or secondary school, including a preschool, that is
accredited by an accreditation body that is a member of the Texas
Private School Accreditation Commission.
[(13)] "Authorized charter school" means an
open-enrollment charter school that holds a charter granted under
Subchapter D, Chapter 12.
(11) [(14)] "Borrower" means any of the following
entities that is the recipient of a loan made under Section 53.34:
(A) an institution of higher education;
(B) a nonprofit corporation:
(i) incorporated by and under the exclusive
control of an institution of higher education; or
(ii) incorporated and operating for the
exclusive benefit of an institution of higher education and
authorized by the governing board of the institution to enter into a
transaction as a borrower under this chapter; or
(C) [an accredited primary or secondary school;
or
[(D)] an accredited or authorized charter
school.
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Sec. 53.11. CREATION OF AUTHORITY. When the governing body
of a city finds that it is to the best interest of the city and its
inhabitants to create a higher education facility authority, it
shall pass an ordinance creating the authority and designating the
name by which it shall be known. If the governing bodies of two or
more cities find that it is to the best interest of the cities to
create an authority to include those cities, each governing body
shall pass an ordinance creating the authority and designating the
name by which it shall be known.
Sec. 53.12. TERRITORY. The authority comprises only the
territory included within the boundaries of the city or cities
creating it.
Sec. 53.13. CORPORATE POWERS. An authority is a body
politic and corporate having the power of perpetual succession. It
shall have a seal; it may sue and be sued; and it may make, amend,
and repeal its bylaws.
Sec. 53.131. AUTHORITY'S EARNINGS. A private person may
not share in any of an authority's earnings.
Sec. 53.14. BOARD OF DIRECTORS. (a) The authority shall be
governed by a board of directors consisting of not less than 7 nor
more than 11 members to be determined at the time of creating the
authority. The directors shall be appointed by the governing body
of the city or by the governing bodies of the cities, and they shall
serve until their successors are appointed as provided by this
section. If the authority includes more than one city, each
governing body shall appoint an equal number of directors unless
otherwise agreed by the cities.
(b) The members of the board serve for two-year terms.
(c) No officer or employee of any such city is eligible for
appointment as a director. Directors are not entitled to
compensation for services but are entitled to reimbursement for
expenses incurred in performing such service.
Sec. 53.15. ORGANIZATION OF BOARD; QUORUM; EMPLOYEES;
COUNSEL. (a) The board shall elect from among its members a
president and vice president, and shall elect a secretary and a
treasurer who may or may not be directors, and may elect other
officers as authorized by the authority's bylaws. The offices of
secretary and treasurer may be combined.
(b) The president has the same right to vote on all matters
as other members of the board.
(c) A majority constitutes a quorum, and when a quorum is
present action may be taken by a majority vote of directors present.
(d) The board may employ a manager or executive director of
the facilities and other employees, experts, and agents as it sees
fit. It may delegate to the manager the power to employ and
discharge employees.
(e) The board may employ legal counsel.
SUBCHAPTER C. POWERS AND DUTIES
Sec. 53.31. NO TAXING POWER. An authority has no power to
tax.
Sec. 53.32. NO POWER OF EMINENT DOMAIN. The authority does
not have the power of eminent domain.
Sec. 53.33. LIMITED POWER TO ACQUIRE, OWN, AND OPERATE
EDUCATIONAL AND HOUSING FACILITIES. (a) An authority or a
nonprofit instrumentality created under Section 53.35(b) may
acquire, own, hold title to, lease, or operate an educational
facility or housing facility or any facility incidental,
subordinate, or related to or appropriate in connection with an
educational facility or housing facility, but only if:
(1) the facility is or will be located within the
corporate limits of the city that created the authority or
nonprofit instrumentality;
(2) the governing body of an institution of higher
education officially requests the authority or nonprofit
instrumentality to acquire and own the facility for the benefit of
the institution of higher education;
(3) the institution of higher education officially
agrees to accept, and has authority to receive legal title to, the
facility not later than the date on which any bonds or other
obligations issued to acquire the facility are paid in full; and
(4) the ownership of the facility by the authority or
the nonprofit instrumentality is approved by official action of the
governing body of:
(A) the city that created the authority or
nonprofit instrumentality;
(B) the school district in which the facility is
or will be located; and
(C) the county in which the facility is or will be
located.
(b) An authority or instrumentality that exercises the
powers granted by Subsection (a) may contract for the operation of
the facility by public or private entities or persons on the terms
and conditions set forth in a contract relating to the operation of
the facility.
(c) The changes in law made by the amendment of this section
by the 78th Legislature, Regular Session, 2003, do not affect the
acquisition, ownership, construction, or improvement of a
facility, or the acquisition and ownership of land that were
approved by official action of the authority or nonprofit corporate
instrumentality before March 15, 2003, and the law in effect
immediately before the effective date of the amendment of this
section by the 78th Legislature, Regular Session, 2003, is
continued in effect for that purpose.
Sec. 53.331. REFINANCING FACILITIES. The authority may
refinance any educational or housing facility acquired,
constructed, or improved.
Sec. 53.34. REVENUE BONDS. (a) An authority or a nonprofit
instrumentality created under Section 53.35(b), including an
authority or nonprofit instrumentality authorized to own
facilities under Section 53.33(a), may issue and execute revenue
bonds or other obligations to loan or otherwise provide funds to a
borrower if:
(1) the governing body of the borrower by official
action requests the issuer of the bonds or other obligations to loan
the proceeds under this subsection;
(2) the purpose of the loan is to enable the borrower
to acquire, construct, enlarge, extend, repair, renovate, or
otherwise improve an educational facility or housing facility or
any facility incidental, subordinate, or related to or appropriate
in connection with an educational facility or housing facility, or
for acquiring land to be used for those purposes, or to create
operating and debt service reserves for and to pay issuance costs
related to the bonds or other obligations; and
(3) under the terms of the loan, and unless a mortgage
lien granted to secure the loan is in default, the ownership of the
facility is required to be at all times under the exclusive control,
and held for the exclusive benefit, of the borrower.
(b) In issuing revenue bonds or other obligations under this
chapter, the issuer of the bonds or other obligations is considered
to be acting on behalf of the city by which it was created.
(c) Bonds or other obligations issued under Subsection (a)
shall be payable from and secured by a pledge of the revenues,
income, or assets pledged for the purpose by the borrower. The
bonds or other obligations may be additionally secured by a
mortgage, deed of trust, or chattel mortgage on real or personal
property, or on both real and personal property, if granted by the
borrower.
(d) A facility financed with the proceeds of a loan or loans
made to a borrower under Subsection (a) is not required to be
located within the corporate limits of the city that created the
issuer of the bonds or other obligations.
(e) An authority or a nonprofit instrumentality that is
authorized to acquire and own educational facilities and housing
facilities under Section 53.33(a) may issue and execute revenue
bonds and other obligations for the purpose of acquiring, owning,
and operating the educational and housing facilities, to create
operating reserves for the facilities, and to create debt service
reserves for and to pay issuance costs related to the bonds or other
obligations.
(f) Bonds or other obligations issued under Subsection (e)
shall be payable from and secured by a pledge of all or any part of
the gross or net revenues to be derived from the operation of the
educational facilities and housing facilities being acquired and
any other revenues, income, or assets, including the revenues and
income of the educational facilities or housing facilities
previously acquired or subsequently to be acquired. The bonds or
other obligations may be additionally secured by a mortgage, deed
of trust, or chattel mortgage on real or personal property, or on
both real and personal property, if granted by the authority or
nonprofit instrumentality issuing the bonds or other obligations.
(g) The changes in law made by the amendment of this section
by the 78th Legislature, Regular Session, 2003, affect and apply
only to transactions involving bonds or other obligations that are
issued or executed under this chapter on or after March 15, 2003.
Bonds or other obligations that are issued or executed under this
chapter before March 15, 2003, are governed by the law in effect
immediately before the amendment of this section by the 78th
Legislature, Regular Session, 2003, and that former law is
continued in effect for that purpose.
Sec. 53.35. ISSUANCE OF BONDS; PROCEDURE; ETC. (a) The
bonds shall be authorized by resolution adopted by a majority vote
of a quorum of the board. Bonds authorized under this section shall
be issued in accordance with Chapter 1201, Government Code. The
bonds shall mature serially or otherwise in not to exceed 50 years.
The rate of interest to be borne by the bonds shall not exceed the
maximum rate prescribed by Chapter 1204, Government Code.
(b) In addition to or in lieu of establishing an authority
under the provisions of this chapter, the governing body of a city
or cities may request or order created one or more nonprofit
corporations to act on its behalf and as its duly constituted
authority and instrumentality to exercise the powers granted to an
authority under the provisions of Sections 53.33 and 53.34. If a
nonprofit corporation is created for such purposes or agrees to
such request, the directors thereof shall thereafter be appointed
and be subject to removal by the governing body of the city or
cities. In addition to the powers granted under, and subject to the
limitations provided by, Sections 53.33 and 53.34, the corporation
shall have all powers granted under the Texas Non-Profit
Corporation Act for the purpose of aiding institutions of higher
education in providing educational facilities and housing
facilities and facilities incidental, subordinate, or related
thereto or appropriate in connection therewith. In addition to
Sections 53.33 and 53.34 and the Texas Non-Profit Corporation Act,
as amended (Article 1396-1.01 et seq., Vernon's Texas Civil
Statutes), Sections 53.131, 53.14, 53.15, 53.31, 53.32, 53.331,
53.34, 53.35, 53.38, and 53.41 of this code apply to and govern such
corporation and its procedures, bonds, and other obligations.
Sec. 53.351. BONDS FOR OPEN-ENROLLMENT CHARTER SCHOOL
FACILITIES. (a) The Texas Public Finance Authority shall
establish a nonprofit corporation to issue revenue bonds on behalf
of authorized open-enrollment charter schools for the acquisition,
construction, repair, or renovation of educational facilities of
those schools.
(b) The Texas Public Finance Authority shall appoint the
directors of the corporation in consultation with the commissioner
of education. Directors serve without compensation but are
entitled to reimbursement for travel expenses incurred in attending
board meetings. The board shall meet at least once a year.
(c) The corporation has all powers granted under the Texas
Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
Texas Civil Statutes) for the purpose of aiding authorized
open-enrollment charter schools in providing educational
facilities. In addition, Sections 53.131, 53.15, 53.31, 53.32,
53.331, 53.34, 53.35, 53.36(a), and 53.37-53.42 apply to and govern
the corporation and its procedures and bonds.
(d) The corporation shall adopt rules governing the
issuance of bonds on behalf of an authorized open-enrollment
charter school.
(e) The comptroller shall establish a fund dedicated to the
credit enhancement of bonds issued under this section. The fund may
receive donations. The obligation of the fund is limited to an
amount equal to the balance of the fund.
(f) A revenue bond issued under this section is not a debt of
the state or any state agency, political corporation, or political
subdivision of the state and is not a pledge of the faith and credit
of any of these entities. A revenue bond is payable solely from the
revenue of the authorized open-enrollment charter school on whose
behalf the bond is issued. A revenue bond issued under this section
must contain on its face a statement to the effect that:
(1) neither the state nor a state agency, political
corporation, or political subdivision of the state is obligated to
pay the principal of or interest on the bond; and
(2) neither the faith and credit nor the taxing power
of the state or any state agency, political corporation, or
political subdivision of the state is pledged to the payment of the
principal of or interest on the bond.
(g) An educational facility financed in whole or in part
under this section is exempt from taxation if the facility:
(1) is owned by an authorized open-enrollment charter
school;
(2) is held for the exclusive benefit of the school;
and
(3) is held for the exclusive use of the students,
faculty, and staff members of the school.
Sec. 53.36. BOND RESOLUTION; NOTICE; ELECTION. (a) Before
authorizing the issuance of bonds, other than refunding bonds, the
board shall cause a notice to be issued stating that it intends to
adopt a resolution authorizing the issuance of the bonds, the
maximum amount thereof, and the maximum maturity thereof. The
notice shall be published once each week for two consecutive weeks
in a newspaper or newspapers having general circulation in the
authority. The first publication shall be at least 14 days prior to
the day set for adopting the bond resolution.
(b) If, prior to the day set for the adoption of the bond
resolution, there is presented to the secretary or president of the
board a petition signed by not less than 10 percent of the qualified
voters residing in the city or cities comprising the authority, who
own taxable property in the authority and who have duly rendered it
for taxation to the city in which such property is located or
situated, requesting an election on the proposition for the
issuance of the bonds, the bonds shall not be issued unless an
election is held and a majority vote is in favor of the bonds. The
election shall be called and held in accordance with the procedure
prescribed in Chapter 1251, Government Code, with the board and the
president and secretary performing the functions there assigned to
the governing body of the city, the mayor and city secretary,
respectively. If no such petition is filed, the bonds may be issued
without an election. However, the board may call an election on its
own motion without the filing of the petition.
Sec. 53.37. JUNIOR LIEN BONDS; PARITY BONDS. Bonds
constituting a junior lien on the net revenue or properties may be
issued unless prohibited by the bond resolution or trust indenture.
Parity bonds may be issued under conditions specified in the bond
resolution or trust indenture.
Sec. 53.38. RESERVES FOR OPERATING AND OTHER EXPENSES.
Money for the payment of not more than two years' interest on the
bonds and an amount estimated by the board to be required for
operating expenses during the first year of operation may be set
aside for those purposes out of the proceeds from the sale of the
bonds.
Sec. 53.39. REFUNDING BONDS. Bonds may be issued for the
purpose of refunding outstanding bonds in the manner provided in
this chapter for other bonds, and may be exchanged by the
comptroller or sold and the proceeds applied in accordance with the
procedure prescribed by Subchapter B or C, Chapter 1207, Government
Code.
Sec. 53.40. APPROVAL OF BONDS; REGISTRATION;
NEGOTIABILITY. Bonds issued under this chapter and the record
relating to their issuance shall be submitted to the attorney
general, and if he finds that they have been issued in accordance
with this chapter and constitute valid and binding obligations of
the authority and are secured as recited therein he shall approve
them, and they shall be registered by comptroller of public
accounts who shall certify the registration thereon. Thereafter
they are incontestable. The bonds shall be negotiable and shall
contain the following provision: "The holder hereof shall never
have the right to demand payment thereof out of money raised or to
be raised by taxation."
Sec. 53.41. AUTHORIZED INVESTMENTS. All bonds issued under
this chapter are legal and authorized investments for all banks,
savings banks, trust companies, building and loan associations,
savings and loan associations, and insurance companies of all kinds
and types, and for the interest and sinking funds and other public
funds of any issuer. The bonds are also eligible and lawful
security for all deposits of public funds of the State of Texas and
of any issuer, to the extent of the value of the bonds, when
accompanied by any unmatured interest coupons appurtenant to them.
Sec. 53.42. INVESTMENT OF FUNDS; SECURITY. To the extent it
is applicable, the law as to the security for and the investment of
funds, applicable to cities, controls the investment of funds
belonging to authority. The bond resolution or the indenture or
both may further restrict the making of investments. The authority
may invest the proceeds of its bonds, until the money is needed, in
the direct obligations of or obligations unconditionally
guaranteed by the United States, to the extent authorized in the
bond resolution or indenture or in both.
Sec. 53.43. DEPOSITORIES. The authority may select a
depository or depositories according to the procedures provided by
law for the selection of city depositories, or it may award its
depository contract to the same depository or depositories selected
by the city or cities and on the same terms.
Sec. 53.44. OPERATION OF FACILITIES; RATES CHARGED; RESERVE
FUNDS. (a) The facilities may be operated by the authority without
the intervention of private profit for the use and benefit of the
public, or may be leased to an institution of higher education, or
may be operated by the institution under a contract with the
authority, the lease or contract to be in effect until any revenue
bonds issued in connection with it have been finally retired.
(b) The board shall charge rates for the use of the
facilities, or for their lease or operation, that are fully
sufficient to pay all expenses in connection with the ownership,
operation, and upkeep of the facilities, to pay the interest on the
bonds as it becomes due, to create a sinking fund to pay the bonds as
they become due, and to create and maintain a bond reserve fund and
other funds and reserves that may be provided in the bond resolution
or trust indenture. The bond resolution or trust indenture may
prescribe systems, methods, routines, and procedures under which
the facilities shall be operated.
Sec. 53.45. TRANSACTIONS WITH OTHER AGENCIES AND PERSONS.
The authority may borrow money and accept grants from, and enter
into contracts, leases, or other transactions with the United
States, the State of Texas, any municipal corporation in the state,
and any public or private person or corporation resident or
authorized to do business in the state.
Sec. 53.46. AUTHORITY EXEMPT FROM TAXATION. Because the
property owned by authority will be held for educational purposes
only and will be devoted exclusively to the use and benefit of the
students, faculty, and staff members of an accredited institution
of higher education, it is exempt from taxation of every character.
[Sec. 53.47. GUARANTEED STUDENT LOANS AND ALTERNATE
EDUCATION LOANS; BONDS FOR THE PURCHASE OF EDUCATION LOAN NOTES.
(a) In this section:
[(1) "Accredited institution" means an institution
that has either been recognized by a recognized accrediting agency,
as defined by Section 61.003, or accredited by the Accrediting
Commission for Independent Colleges and Schools, the Accrediting
Commission for Career Schools and Colleges of Technology, or the
National Accrediting Commission of Cosmetology Arts and Sciences.
[(2) "Alternative education loan" means a loan other
than a guaranteed student loan that is made to or for the benefit of
a student for the purpose of financing all or part of the student's
cost of attendance at an accredited institution.
[(3) "Cost of attendance" means all costs of a student
incurred in connection with a program of study at an accredited
institution, as determined by the institution, including tuition
and instructional fees, the cost of room and board, books,
computers, and supplies, and other related fees, charges, and
expenses.
[(4) "Guaranteed student loan" means a loan made by an
eligible lender under the Higher Education Act of 1965 (Pub. L. No.
89-329), as amended.
[(5) "Qualified alternative education loan lender"
means a nonprofit corporation incorporated under the laws of this
state that:
[(A) is a qualified nonprofit corporation;
[(B) has serviced education loans made under the
Higher Education Act of 1965, as amended, for a qualified nonprofit
corporation for a period of not less than 10 years; or
[(C) is a charitable organization qualified
under Section 509(a)(2), Internal Revenue Code of 1986, as amended,
that provides services to a qualified nonprofit corporation.
[(6) "Qualified nonprofit corporation" means a
nonprofit corporation:
[(A) that issued bonds on or after January 1,
1990, and before January 1, 2001, that qualified as qualified
student loan bonds under Section 144(b), Internal Revenue Code of
1986, as amended; or
[(B) that the office of the governor, in
consultation with the state student loan guaranty agency or any
other public or private entity the office of the governor considers
appropriate, has determined meets a need for student loan financing
that existing qualified nonprofit corporations cannot meet, which
determination may include information provided by the nonprofit
corporation's plan for doing business that should include
documented limitations in:
[(i) the geographic coverage of existing
qualified nonprofit corporations in the nonprofit corporation's
proposed area of service;
[(ii) the willingness of existing qualified
nonprofit corporations to serve the eligible lenders in the
proposed area of service; and
[(iii) the ability of existing qualified
nonprofit corporations to serve the eligible lenders in the
proposed area of service.
[(b) An authority may, upon approval of the city or cities
which created the same, issue revenue bonds or otherwise borrow
money to obtain funds to purchase or to make guaranteed student
loans. Revenue bonds issued for such purpose shall be issued in
accordance with and with the effect provided in this chapter,
except Section 53.36 shall not apply, as this chapter has been
modified by Chapter 1204, Government Code, and Subchapters A and D,
Chapter 1207, Government Code. Such bonds shall be payable from and
secured by a pledge of revenues derived from or by reason of the
ownership of guaranteed student loans and investment income after
deduction of such expenses of operating the loan program as may be
specified by the bond resolution or trust indenture.
[(c) An authority may cause money to be expended to make or
purchase for its account guaranteed student loans that are
guaranteed by the Texas Guaranteed Student Loan Corporation or that
are executed by or on behalf of students who (1) are residents of
this state or (2) have been admitted to attend an accredited
institution within this state.
[(d) The authority shall contract with a nonprofit
corporation, organized under the laws of this state, whereby such
corporation will provide the reports and other information required
for continued participation in the federally guaranteed loan
program provided by the Higher Education Act of 1965, as amended.
[(e) The authority, as a municipal corporation of the state,
is charged with a portion of the responsibility of the state to
provide educational opportunities in keeping with all applicable
state and federal laws. Nothing in this section shall be construed
as a prohibition against establishing policies to limit the
purchase of guaranteed student loans to guaranteed student loans
executed by students attending school in a certain geographical
area or by students who are residents of the area.
[(f) In addition to establishing an authority under the
provisions of this chapter, the governing body of a city or cities
may request a qualified nonprofit corporation to exercise the
powers enumerated and provided in this section for and on its
behalf. If the qualified nonprofit corporation agrees to exercise
such powers, the directors of such corporation shall thereafter be
appointed by and be subject to removal by the governing body of the
city or cities, and except as provided in this section, Sections
53.14, 53.15, 53.31, 53.32, 53.38, and 53.41 through 53.43 apply to
and govern such corporation, its procedures, and bonds.
Notwithstanding the provisions of Section 53.42, a qualified
nonprofit corporation which has been requested to exercise the
powers enumerated and requested in this section may invest or cause
a trustee or custodian on behalf of such qualified nonprofit
corporation to invest its funds, including the proceeds of any
bonds, notes, or other obligations issued by such qualified
nonprofit corporation and any monies which are pledged to the
payment thereof, in:
[(1) certificates of deposit or other time or demand
accounts of banks and savings and loan associations which are
insured by the Federal Deposit Insurance Corporation, provided the
amount of any certificate of deposit in excess of that covered by
such insurance must be secured by a first and prior pledge of
government obligations having a market value of not less than 100
percent of the excess unless a nationally recognized rating agency
has given the senior securities of the bank issuing the certificate
of deposit the highest or next to the highest investment rating
available;
[(2) repurchase agreements;
[(3) guaranteed student loans and alternative
education loans; or
[(4) a security issued by another nonprofit
corporation acting under this section.
[(g) A nonprofit corporation, whether acting at the request
of a city or cities under Subsection (f) or acting as a servicer or
administrator for another corporation that purchases guaranteed
student loans, or that on its own behalf issues securities or
otherwise obtains funds to purchase or make guaranteed student
loans or alternative education loans, may:
[(1) exercise the powers granted by the Texas
Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
Texas Civil Statutes);
[(2) service loans purchased or made from its funds or
contract with another person to service the loans;
[(3) grant a security interest in a trust estate
securing its securities; and
[(4) make investments as authorized by Subsection (f).
[(h) A security interest in a trust estate granted under
Subsection (g)(3) is attached and perfected at the time the
security interest is executed and delivered by the nonprofit
corporation. The security interest grants to the secured party a
first prior perfected security interest in the trust estate for the
benefit of the secured party without regard to the location of the
assets that constitute the trust estate.
[(i) An alternative education loan may be made under this
section only by a qualified alternative education loan lender. An
alternative education loan may not be in an amount in excess of the
difference between the cost of attendance and the amount of other
student assistance to the student, other than loans under Section
428B(a)(1), Higher Education Act of 1965 (20 U.S.C. Section 1078-2)
(relating to parent loans), for which the student borrower may be
eligible. An alternative education loan covered by this subsection
is subject to Chapter 342, Finance Code, as applicable, except
that:
[(1) the maximum interest rate on the loan may not
exceed the rate permitted under Subchapter A, Chapter 303, Finance
Code; and
[(2) application and origination fees may be agreed to
by the parties and assessed at the inception of the loan, provided
that if any such fees constitute additional interest under
applicable law, the effective rate of interest agreed to over the
stated term of the loan may not exceed the rate allowed by
Subchapter A, Chapter 303, Finance Code, and accrued unpaid
interest may be added to unpaid principal at the beginning of the
agreed repayment period at the borrower's option and in accordance
with the terms of the agreement for purposes of determining the
total principal amount due at the inception of the repayment
period.
[(j) An authority or nonprofit corporation making education
loans under this section is exempt from the licensing requirements
of Chapter 342, Finance Code.]
Sec. 53.48. BONDS FOR AUTHORIZED CHARTER [ACCREDITED
PRIMARY OR SECONDARY] SCHOOLS. In the same manner that a
corporation may issue and execute bonds or other obligations under
this chapter for an institution of higher education, a corporation
created under Section 53.35(b) may issue and execute bonds or other
obligations to finance or refinance educational facilities [or
housing facilities] to be used by [an accredited primary or
secondary school or by] an authorized charter school.
[Sec. 53.49. BONDS FOR CERTAIN SCHOOLS OWNED AND OPERATED
BY NONPROFIT CORPORATIONS. (a) In the same manner that a
corporation may issue bonds under this chapter for an institution
of higher education, a corporation created under Section 53.35(b)
may issue bonds to finance or refinance educational facilities to
be used by a school that:
[(1) is located in a county with a population of more
than 1,800,000;
[(2) is located within three miles of an area
designated as an enterprise zone under Chapter 2303, Government
Code;
[(3) provides primary and secondary education to at
least 1,000 students;
[(4) is accredited by an organization approved by the
Texas Education Agency for private school accreditation; and
[(5) is owned and operated by a corporation created
under the Texas Non-Profit Corporation Act (Article 1396-1.01 et
seq., Vernon's Texas Civil Statutes).
[(b) Notwithstanding Section 53.34(b), bonds issued under
this section may be payable from and secured by a pledge of any
revenue or assets pledged for that purpose.]
SECTION 2. Subtitle A, Title 3, Education Code, is amended
by adding Chapters 53A and 53B to read as follows:
CHAPTER 53A. HIGHER EDUCATION FACILITY AUTHORITIES FOR PRIVATE
SCHOOLS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 53A.01. SHORT TITLE. This chapter may be cited as the
Higher Education Facility Authority for Private Schools Act.
Sec. 53A.02. DEFINITIONS. In this chapter:
(1) "City" means an incorporated city or town in this
state.
(2) "Governing body" means the council, commission, or
other governing body of a city.
(3) "Authority" means a higher education facility
authority created under this chapter.
(4) "Board" means the board of directors of an
authority.
(5) "Institution of higher education" means (i) a
degree-granting college or university corporation accredited by
the Texas Education Agency or by a recognized accrediting agency,
as defined by Section 61.003(13), or (ii) a postsecondary career
school or college accredited by the Association of Independent
Colleges and Schools, the National Association of Trade and
Technical Schools, or the National Accrediting Commission of
Cosmetology Arts and Sciences.
(6) "Educational facility" means a classroom
building, laboratory, science building, faculty or administrative
office building, or other facility used exclusively for the conduct
of the educational and administrative functions of an institution
of higher education.
(7) "Housing facility" means a single- or multi-family
residence used exclusively for housing or boarding, or housing and
boarding students, faculty, or staff members of an institution of
higher learning. The term includes infirmary and student union
building, but does not include a housing or boarding facility for
the use of a fraternity, sorority, or private club.
(8) "Bond resolution" means the resolution
authorizing the issuance of revenue bonds.
(9) "Trust indenture" means the mortgage, deed of
trust, or other instrument pledging revenue or property, or
creating a mortgage lien on property, or both, to secure the revenue
bonds issued by the authority.
(10) "Accredited primary or secondary school" means a
primary or secondary school, including a preschool, that is
accredited by an accreditation body that is a member of the Texas
Private School Accreditation Commission.
(11) "Borrower" means any of the following entities
that is the recipient of a loan made under Section 53A.34:
(A) an institution of higher education;
(B) a nonprofit corporation:
(i) incorporated by and under the exclusive
control of an institution of higher education; or
(ii) incorporated and operating for the
exclusive benefit of an institution of higher education and
authorized by the governing board of the institution to enter into a
transaction as a borrower under this chapter; or
(C) an accredited primary or secondary school.
[Sections 53A.03-53A.10 reserved for expansion]
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Sec. 53A.11. CREATION OF AUTHORITY. When the governing
body of a city finds that it is to the best interest of the city and
its inhabitants to create a higher education facility authority, it
shall pass an ordinance creating the authority and designating the
name by which it shall be known. If the governing bodies of two or
more cities find that it is to the best interest of the cities to
create an authority to include those cities, each governing body
shall pass an ordinance creating the authority and designating the
name by which it shall be known.
Sec. 53A.12. TERRITORY. The authority comprises only the
territory included within the boundaries of the city or cities
creating it.
Sec. 53A.13. CORPORATE POWERS. An authority is a body
politic and corporate having the power of perpetual succession. It
shall have a seal; it may sue and be sued; and it may make, amend,
and repeal its bylaws.
Sec. 53A.131. AUTHORITY'S EARNINGS. A private person may
not share in any of an authority's earnings.
Sec. 53A.14. BOARD OF DIRECTORS. (a) The authority shall
be governed by a board of directors consisting of not less than 7
nor more than 11 members to be determined at the time of creating
the authority. The directors shall be appointed by the governing
body of the city or by the governing bodies of the cities, and they
shall serve until their successors are appointed as provided by
this section. If the authority includes more than one city, each
governing body shall appoint an equal number of directors unless
otherwise agreed by the cities.
(b) The members of the board serve for two-year terms.
(c) No officer or employee of any such city is eligible for
appointment as a director. Directors are not entitled to
compensation for services but are entitled to reimbursement for
expenses incurred in performing such service.
Sec. 53A.15. ORGANIZATION OF BOARD; QUORUM; EMPLOYEES;
COUNSEL. (a) The board shall elect from among its members a
president and vice president, and shall elect a secretary and a
treasurer who may or may not be directors, and may elect other
officers as authorized by the authority's bylaws. The offices of
secretary and treasurer may be combined.
(b) The president has the same right to vote on all matters
as other members of the board.
(c) A majority constitutes a quorum, and when a quorum is
present action may be taken by a majority vote of directors present.
(d) The board may employ a manager or executive director of
the facilities and other employees, experts, and agents as it sees
fit. It may delegate to the manager the power to employ and
discharge employees.
(e) The board may employ legal counsel.
[Sections 53A.16-53A.30 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES
Sec. 53A.31. NO TAXING POWER. An authority has no power to
tax.
Sec. 53A.32. NO POWER OF EMINENT DOMAIN. The authority does
not have the power of eminent domain.
Sec. 53A.33. LIMITED POWER TO ACQUIRE, OWN, AND OPERATE
EDUCATIONAL AND HOUSING FACILITIES. (a) An authority or a
nonprofit instrumentality created under Section 53A.35(b) may
acquire, own, hold title to, lease, or operate an educational
facility or housing facility or any facility incidental,
subordinate, or related to or appropriate in connection with an
educational facility or housing facility, but only if:
(1) the facility is or will be located within the
corporate limits of the city that created the authority or
nonprofit instrumentality;
(2) the governing body of an institution of higher
education officially requests the authority or nonprofit
instrumentality to acquire and own the facility for the benefit of
the institution of higher education;
(3) the institution of higher education officially
agrees to accept, and has authority to receive legal title to, the
facility not later than the date on which any bonds or other
obligations issued to acquire the facility are paid in full; and
(4) the ownership of the facility by the authority or
the nonprofit instrumentality is approved by official action of the
governing body of:
(A) the city that created the authority or
nonprofit instrumentality;
(B) the school district in which the facility is
or will be located; and
(C) the county in which the facility is or will be
located.
(b) An authority or instrumentality that exercises the
powers granted by Subsection (a) may contract for the operation of
the facility by public or private entities or persons on the terms
and conditions set forth in a contract relating to the operation of
the facility.
(c) The changes in law made by the amendment of this section
by the 78th Legislature, Regular Session, 2003, do not affect the
acquisition, ownership, construction, or improvement of a
facility, or the acquisition and ownership of land that were
approved by official action of the authority or nonprofit corporate
instrumentality before March 15, 2003, and the law in effect
immediately before the effective date of the amendment of this
section by the 78th Legislature, Regular Session, 2003, is
continued in effect for that purpose.
Sec. 53A.331. REFINANCING FACILITIES. The authority may
refinance any educational or housing facility acquired,
constructed, or improved.
Sec. 53A.34. REVENUE BONDS. (a) An authority or a
nonprofit instrumentality created under Section 53A.35(b),
including an authority or nonprofit instrumentality authorized to
own facilities under Section 53A.33(a), may issue and execute
revenue bonds or other obligations to loan or otherwise provide
funds to a borrower if:
(1) the governing body of the borrower by official
action requests the issuer of the bonds or other obligations to loan
the proceeds under this subsection;
(2) the purpose of the loan is to enable the borrower
to acquire, construct, enlarge, extend, repair, renovate, or
otherwise improve an educational facility or housing facility or
any facility incidental, subordinate, or related to or appropriate
in connection with an educational facility or housing facility, or
for acquiring land to be used for those purposes, or to create
operating and debt service reserves for and to pay issuance costs
related to the bonds or other obligations; and
(3) under the terms of the loan, and unless a mortgage
lien granted to secure the loan is in default, the ownership of the
facility is required to be at all times under the exclusive control,
and held for the exclusive benefit, of the borrower.
(b) In issuing revenue bonds or other obligations under this
chapter, the issuer of the bonds or other obligations is considered
to be acting on behalf of the city by which it was created.
(c) Bonds or other obligations issued under Subsection (a)
shall be payable from and secured by a pledge of the revenues,
income, or assets pledged for the purpose by the borrower. The
bonds or other obligations may be additionally secured by a
mortgage, deed of trust, or chattel mortgage on real or personal
property, or on both real and personal property, if granted by the
borrower.
(d) A facility financed with the proceeds of a loan or loans
made to a borrower under Subsection (a) is not required to be
located within the corporate limits of the city that created the
issuer of the bonds or other obligations.
(e) An authority or a nonprofit instrumentality that is
authorized to acquire and own educational facilities and housing
facilities under Section 53A.33(a) may issue and execute revenue
bonds and other obligations for the purpose of acquiring, owning,
and operating the educational and housing facilities, to create
operating reserves for the facilities, and to create debt service
reserves for and to pay issuance costs related to the bonds or other
obligations.
(f) Bonds or other obligations issued under Subsection (e)
shall be payable from and secured by a pledge of all or any part of
the gross or net revenues to be derived from the operation of the
educational facilities and housing facilities being acquired and
any other revenues, income, or assets, including the revenues and
income of the educational facilities or housing facilities
previously acquired or subsequently to be acquired. The bonds or
other obligations may be additionally secured by a mortgage, deed
of trust, or chattel mortgage on real or personal property, or on
both real and personal property, if granted by the authority or
nonprofit instrumentality issuing the bonds or other obligations.
(g) The changes in law made by the amendment of this section
by the 78th Legislature, Regular Session, 2003, affect and apply
only to transactions involving bonds or other obligations that are
issued or executed under this chapter on or after March 15, 2003.
Bonds or other obligations that are issued or executed under this
chapter before March 15, 2003, are governed by the law in effect
immediately before the amendment of this section by the 78th
Legislature, Regular Session, 2003, and that former law is
continued in effect for that purpose.
Sec. 53A.35. ISSUANCE OF BONDS; PROCEDURE; ETC. (a) The
bonds shall be authorized by resolution adopted by a majority vote
of a quorum of the board. Bonds authorized under this section shall
be issued in accordance with Chapter 1201, Government Code. The
bonds shall mature serially or otherwise in not to exceed 50 years.
The rate of interest to be borne by the bonds shall not exceed the
maximum rate prescribed by Chapter 1204, Government Code.
(b) In addition to or in lieu of establishing an authority
under the provisions of this chapter, the governing body of a city
or cities may request or order created one or more nonprofit
corporations to act on its behalf and as its duly constituted
authority and instrumentality to exercise the powers granted to an
authority under the provisions of Sections 53A.33 and 53A.34. If a
nonprofit corporation is created for such purposes or agrees to
such request, the directors thereof shall thereafter be appointed
and be subject to removal by the governing body of the city or
cities. In addition to the powers granted under, and subject to the
limitations provided by Sections 53A.33 and 53A.34, the corporation
shall have all powers granted under the Texas Non-Profit
Corporation Act for the purpose of aiding institutions of higher
education in providing educational facilities and housing
facilities and facilities incidental, subordinate, or related
thereto or appropriate in connection therewith. In addition to
Sections 53A.33 and 53A.34 and the Texas Non-Profit Corporation
Act, as amended (Article 1396-1.01 et seq., Vernon's Texas Civil
Statutes), Sections 53A.131, 53A.14, 53A.15, 53A.31, 53A.32,
53A.331, 53A.34, 53A.35, 53A.38, and 53A.41 apply to and govern
such corporation and its procedures, bonds, and other obligations.
Sec. 53A.36. BOND RESOLUTION; NOTICE; ELECTION. (a)
Before authorizing the issuance of bonds, other than refunding
bonds, the board shall cause a notice to be issued stating that it
intends to adopt a resolution authorizing the issuance of the
bonds, the maximum amount thereof, and the maximum maturity
thereof. The notice shall be published once each week for two
consecutive weeks in a newspaper or newspapers having general
circulation in the authority. The first publication shall be at
least 14 days prior to the day set for adopting the bond resolution.
(b) If, prior to the day set for the adoption of the bond
resolution, there is presented to the secretary or president of the
board a petition signed by not less than 10 percent of the qualified
voters residing in the city or cities comprising the authority, who
own taxable property in the authority and who have duly rendered it
for taxation to the city in which such property is located or
situated, requesting an election on the proposition for the
issuance of the bonds, the bonds shall not be issued unless an
election is held and a majority vote is in favor of the bonds. The
election shall be called and held in accordance with the procedure
prescribed in Chapter 1251, Government Code, with the board and the
president and secretary performing the functions there assigned to
the governing body of the city, the mayor and city secretary,
respectively. If no such petition is filed, the bonds may be issued
without an election. However, the board may call an election on its
own motion without the filing of the petition.
Sec. 53A.37. JUNIOR LIEN BONDS; PARITY BONDS. Bonds
constituting a junior lien on the net revenue or properties may be
issued unless prohibited by the bond resolution or trust indenture.
Parity bonds may be issued under conditions specified in the bond
resolution or trust indenture.
Sec. 53A.38. RESERVES FOR OPERATING AND OTHER EXPENSES.
Money for the payment of not more than two years' interest on the
bonds and an amount estimated by the board to be required for
operating expenses during the first year of operation may be set
aside for those purposes out of the proceeds from the sale of the
bonds.
Sec. 53A.39. REFUNDING BONDS. Bonds may be issued for the
purpose of refunding outstanding bonds in the manner provided in
this chapter for other bonds, and may be exchanged by the
comptroller or sold and the proceeds applied in accordance with the
procedure prescribed by Subchapter B or C, Chapter 1207, Government
Code.
Sec. 53A.40. APPROVAL OF BONDS; REGISTRATION;
NEGOTIABILITY. Bonds issued under this chapter and the record
relating to their issuance shall be submitted to the attorney
general, and if he finds that they have been issued in accordance
with this chapter and constitute valid and binding obligations of
the authority and are secured as recited therein he shall approve
them, and they shall be registered by comptroller of public
accounts who shall certify the registration thereon. Thereafter,
they are incontestable. The bonds shall be negotiable and shall
contain the following provision: "The holder hereof shall never
have the right to demand payment thereof out of money raised or to
be raised by taxation."
Sec. 53A.41. AUTHORIZED INVESTMENTS. All bonds issued
under this chapter are legal and authorized investments for all
banks, savings banks, trust companies, building and loan
associations, savings and loan associations, and insurance
companies of all kinds and types, and for the interest and sinking
funds and other public funds of any issuer. The bonds are also
eligible and lawful security for all deposits of public funds of the
State of Texas and of any issuer, to the extent of the value of the
bonds, when accompanied by any unmatured interest coupons
appurtenant to them.
Sec. 53A.42. INVESTMENT OF FUNDS; SECURITY. To the extent
it is applicable, the law as to the security for and the investment
of funds, applicable to cities, controls the investment of funds
belonging to authority. The bond resolution or the indenture or
both may further restrict the making of investments. The authority
may invest the proceeds of its bonds, until the money is needed, in
the direct obligations of or obligations unconditionally
guaranteed by the United States, to the extent authorized in the
bond resolution or indenture or in both.
Sec. 53A.43. DEPOSITORIES. The authority may select a
depository or depositories according to the procedures provided by
law for the selection of city depositories, or it may award its
depository contract to the same depository or depositories selected
by the city or cities and on the same terms.
Sec. 53A.44. OPERATION OF FACILITIES; RATES CHARGED;
RESERVE FUNDS. (a) The facilities may be operated by the authority
without the intervention of private profit for the use and benefit
of the public, or may be leased to an institution of higher
education, or may be operated by the institution under a contract
with the authority, the lease or contract to be in effect until any
revenue bonds issued in connection with it have been finally
retired.
(b) The board shall charge rates for the use of the
facilities, or for their lease or operation, that are fully
sufficient to pay all expenses in connection with the ownership,
operation, and upkeep of the facilities, to pay the interest on the
bonds as it becomes due, to create a sinking fund to pay the bonds as
they become due, and to create and maintain a bond reserve fund and
other funds and reserves that may be provided in the bond resolution
or trust indenture. The bond resolution or trust indenture may
prescribe systems, methods, routines, and procedures under which
the facilities shall be operated.
Sec. 53A.45. TRANSACTIONS WITH OTHER AGENCIES AND PERSONS.
The authority may borrow money and accept grants from, and enter
into contracts, leases, or other transactions with the United
States, the State of Texas, any municipal corporation in the state,
and any public or private person or corporation resident or
authorized to do business in the state.
Sec. 53A.46. AUTHORITY EXEMPT FROM TAXATION. Because the
property owned by authority will be held for educational purposes
only and will be devoted exclusively to the use and benefit of the
students, faculty, and staff members of an accredited institution
of higher education, it is exempt from taxation of every character.
[Sec. 53A.47 reserved]
Sec. 53A.48. BONDS FOR ACCREDITED PRIMARY OR SECONDARY
SCHOOLS. In the same manner that a corporation may issue and
execute bonds or other obligations under this chapter for an
institution of higher education, a corporation created under
Section 53A.35(b) may issue and execute bonds or other obligations
to finance or refinance educational facilities or housing
facilities to be used by an accredited primary or secondary school.
Sec. 53A.49. BONDS FOR CERTAIN SCHOOLS OWNED AND OPERATED
BY NONPROFIT CORPORATIONS. (a) In the same manner that a
corporation may issue bonds under this chapter for an institution
of higher education, a corporation created under Section 53A.35(b)
may issue bonds to finance or refinance educational facilities to
be used by a school that:
(1) is located in a county with a population of more
than 1,800,000;
(2) is located within three miles of an area
designated as an enterprise zone under Chapter 2303, Government
Code;
(3) provides primary and secondary education to at
least 1,000 students;
(4) is accredited by an organization approved by the
Texas Education Agency for private school accreditation; and
(5) is owned and operated by a corporation created
under the Texas Non-Profit Corporation Act (Article 1396-1.01 et
seq., Vernon's Texas Civil Statutes).
(b) Notwithstanding Section 53A.34(b), bonds issued under
this section may be payable from and secured by a pledge of any
revenue or assets pledged for that purpose.
CHAPTER 53B. HIGHER EDUCATION LOAN AUTHORITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 53B.01. SHORT TITLE. This chapter may be cited as the
Higher Education Loan Authority Act.
Sec. 53B.02. DEFINITIONS. In this chapter:
(1) "Accredited institution" means an institution
that has either been recognized by a recognized accrediting agency,
as defined by Section 61.003, or accredited by the Accrediting
Commission for Independent Colleges and Schools, the Accrediting
Commission for Career Schools and Colleges of Technology, or the
National Accrediting Commission of Cosmetology Arts and Sciences.
(2) "Alternative education loan" means a loan other
than a guaranteed student loan that is made to or for the benefit of
a student for the purpose of financing all or part of the student's
cost of attendance at an accredited institution.
(3) "Authority" means a higher education loan
authority created under this chapter.
(4) "Board" means the board of directors of an
authority.
(5) "Bond resolution" means the resolution
authorizing the issuance of revenue bonds.
(6) "City" means an incorporated city or town in this
state.
(7) "Cost of attendance" means all costs of a student
incurred in connection with a program of study at an accredited
institution, as determined by the institution, including tuition
and instructional fees, the cost of room and board, books,
computers, and supplies, and other related fees, charges, and
expenses.
(8) "Governing body" means the council, commission, or
other governing body of a city.
(9) "Guaranteed student loan" means a loan made by an
eligible lender under the Higher Education Act of 1965 (Pub. L. No.
89-329), as amended.
(10) "Qualified alternative education loan lender"
means a nonprofit corporation incorporated under the laws of this
state that:
(A) is a qualified nonprofit corporation;
(B) has serviced education loans made under the
Higher Education Act of 1965, as amended, for a qualified nonprofit
corporation for a period of not less than 10 years; or
(C) is a charitable organization qualified under
Section 509(a)(2), Internal Revenue Code of 1986, as amended, that
provides services to a qualified nonprofit corporation.
(11) "Qualified nonprofit corporation" means a
nonprofit corporation:
(A) that issued bonds on or after January 1,
1990, and before January 1, 2001, that qualified as qualified
student loan bonds under Section 144(b), Internal Revenue Code of
1986, as amended; or
(B) that the office of the governor, in
consultation with the state student loan guaranty agency or any
other public or private entity the office of the governor considers
appropriate, has determined meets a need for student loan financing
that existing qualified nonprofit corporations cannot meet, which
determination may include information provided by the nonprofit
corporation's plan for doing business that should include
documented limitations in:
(i) the geographic coverage of existing
qualified nonprofit corporations in the nonprofit corporation's
proposed area of service;
(ii) the willingness of existing qualified
nonprofit corporations to serve the eligible lenders in the
proposed area of service; and
(iii) the ability of existing qualified
nonprofit corporations to serve the eligible lenders in the
proposed area of service.
(12) "Repurchase agreement" means a simultaneous
agreement between a higher education loan authority and another
entity in which one of the parties has agreed to purchase investment
securities on a specified date and the other party has agreed to
repurchase the investment securities at the same price plus accrued
interest on a later date, in which the market value of the
investment securities purchased is in excess of the amount of the
repurchase agreement, and in which the investment securities are so
purchased and held separately from all other investment securities,
in trust, in order to complete the contractual commitment.
(13) "Trust indenture" means the mortgage, deed of
trust, or other instrument pledging revenue or property, or
creating a mortgage lien on property, or both, to secure the revenue
bonds issued by the authority.
(14) "Trustee" means the trustee under the trust
indenture.
[Sections 53B.03-53B.10 reserved for expansion]
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Sec. 53B.11. CREATION OF AUTHORITY. When the governing
body of a city finds that it is to the best interest of the city and
its inhabitants to create a higher education loan authority, it
shall pass an ordinance creating the authority and designating the
name by which it shall be known. If the governing bodies of two or
more cities find that it is to the best interest of the cities to
create an authority to include those cities, each governing body
shall pass an ordinance creating the authority and designating the
name by which it shall be known.
Sec. 53B.12. TERRITORY. The authority comprises only the
territory included within the boundaries of the city or cities
creating it.
Sec. 53B.13. CORPORATE POWERS. An authority is a body
politic and corporate having the power of perpetual succession. It
shall have a seal; it may sue and be sued; and it may make, amend,
and repeal its bylaws.
Sec. 53B.131. AUTHORITY'S EARNINGS. A private person may
not share in any of an authority's earnings.
Sec. 53B.14. BOARD OF DIRECTORS. (a) The authority shall
be governed by a board of directors consisting of not less than 7
nor more than 11 members to be determined at the time of creating
the authority. The directors shall be appointed by the governing
body of the city or by the governing bodies of the cities, and they
shall serve until their successors are appointed as provided by
this section. If the authority includes more than one city, each
governing body shall appoint an equal number of directors unless
otherwise agreed by the cities.
(b) The members of the board serve for two-year terms.
(c) No officer or employee of any such city is eligible for
appointment as a director. Directors are not entitled to
compensation for services but are entitled to reimbursement for
expenses incurred in performing such service.
Sec. 53B.15. ORGANIZATION OF BOARD; QUORUM; EMPLOYEES;
COUNSEL. (a) The board shall elect from among its members a
president and vice president, and shall elect a secretary and a
treasurer who may or may not be directors, and may elect other
officers as authorized by the authority's bylaws. The offices of
secretary and treasurer may be combined.
(b) The president has the same right to vote on all matters
as other members of the board.
(c) A majority constitutes a quorum, and when a quorum is
present action may be taken by a majority vote of directors present.
(d) The board may employ employees, experts, and agents as
it sees fit. It may delegate to the manager the power to employ and
discharge employees.
(e) The board may employ legal counsel.
[Sections 53B.16-53B.30 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES
Sec. 53B.31. NO TAXING POWER. An authority has no power to
tax.
Sec. 53B.32. NO POWER OF EMINENT DOMAIN. The authority does
not have the power of eminent domain.
[Secs. 53B.33 and 53B.34 reserved]
Sec. 53B.35. ISSUANCE OF BONDS; PROCEDURE; ETC. The bonds
shall be authorized by resolution adopted by a majority vote of a
quorum of the board. Bonds authorized under this section shall be
issued in accordance with Chapter 1201, Government Code. The bonds
shall mature serially or otherwise in not to exceed 50 years. The
rate of interest to be borne by the bonds shall not exceed the
maximum rate prescribed by Chapter 1204, Government Code.
[Sec. 53B.36 reserved]
Sec. 53B.37. JUNIOR LIEN BONDS; PARITY BONDS. Bonds
constituting a junior lien on the net revenue or properties may be
issued unless prohibited by the bond resolution or trust indenture.
Parity bonds may be issued under conditions specified in the bond
resolution or trust indenture.
Sec. 53B.38. RESERVES FOR OPERATING AND OTHER EXPENSES.
Money for the payment of not more than two years' interest on the
bonds and an amount estimated by the board to be required for
operating expenses during the first year of operation may be set
aside for those purposes out of the proceeds from the sale of the
bonds.
Sec. 53B.39. REFUNDING BONDS. Bonds may be issued for the
purpose of refunding outstanding bonds in the manner provided in
this chapter for other bonds, and may be exchanged by the
comptroller or sold and the proceeds applied in accordance with the
procedure prescribed by Subchapter B or C, Chapter 1207, Government
Code.
Sec. 53B.40. APPROVAL OF BONDS; REGISTRATION;
NEGOTIABILITY. Bonds issued under this chapter and the record
relating to their issuance shall be submitted to the attorney
general, and if he finds that they have been issued in accordance
with this chapter and constitute valid and binding obligations of
the authority and are secured as recited therein he shall approve
them, and they shall be registered by comptroller of public
accounts who shall certify the registration thereon. Thereafter,
they are incontestable. The bonds shall be negotiable and shall
contain the following provision: "The holder hereof shall never
have the right to demand payment thereof out of money raised or to
be raised by taxation."
Sec. 53B.41. AUTHORIZED INVESTMENTS. All bonds issued
under this chapter are legal and authorized investments for all
banks, savings banks, trust companies, building and loan
associations, savings and loan associations, and insurance
companies of all kinds and types, and for the interest and sinking
funds and other public funds of any issuer. The bonds are also
eligible and lawful security for all deposits of public funds of the
State of Texas and of any issuer, to the extent of the value of the
bonds, when accompanied by any unmatured interest coupons
appurtenant to them.
Sec. 53B.42. INVESTMENT OF FUNDS; SECURITY. To the extent
it is applicable, the law as to the security for and the investment
of funds, applicable to cities, controls the investment of funds
belonging to authority. The bond resolution or the indenture or
both may further restrict the making of investments. The authority
may invest the proceeds of its bonds, until the money is needed, in
the direct obligations of or obligations unconditionally
guaranteed by the United States, to the extent authorized in the
bond resolution or indenture or in both.
Sec. 53B.43. DEPOSITORIES. The authority may select a
depository or depositories according to the procedures provided by
law for the selection of city depositories, or it may award its
depository contract to the same depository or depositories selected
by the city or cities and on the same terms.
[Sec. 53B.44 reserved]
Sec. 53B.45. TRANSACTIONS WITH OTHER AGENCIES AND PERSONS.
The authority may borrow money and accept grants from, and enter
into contracts, leases, or other transactions with the United
States, the State of Texas, any municipal corporation in the state,
and any public or private person or corporation resident or
authorized to do business in the state.
[Sec. 53B.46 reserved]
Sec. 53B.47. GUARANTEED STUDENT LOANS AND ALTERNATE
EDUCATION LOANS; BONDS FOR THE PURCHASE OF EDUCATION LOAN NOTES.
(a) An authority may, upon approval of the city or cities which
created the same, issue revenue bonds or otherwise borrow money to
obtain funds to purchase or to make guaranteed student loans.
Revenue bonds issued for such purpose shall be issued in accordance
with and with the effect provided in this chapter. Such bonds shall
be payable from and secured by a pledge of revenues derived from or
by reason of the ownership of guaranteed student loans and
investment income after deduction of such expenses of operating the
loan program as may be specified by the bond resolution or trust
indenture.
(b) An authority may cause money to be expended to make or
purchase for its account guaranteed student loans that are
guaranteed by the Texas Guaranteed Student Loan Corporation or that
are executed by or on behalf of students who:
(1) are residents of this state; or
(2) have been admitted to attend an accredited
institution within this state.
(c) The authority shall contract with a nonprofit
corporation, organized under the laws of this state, whereby such
corporation will provide the reports and other information required
for continued participation in the federally guaranteed loan
program provided by the Higher Education Act of 1965, as amended.
(d) The authority, as a municipal corporation of the state,
is charged with a portion of the responsibility of the state to
provide educational opportunities in keeping with all applicable
state and federal laws. Nothing in this section shall be construed
as a prohibition against establishing policies to limit the
purchase of guaranteed student loans to guaranteed student loans
executed by students attending school in a certain geographical
area or by students who are residents of the area.
(e) In addition to establishing an authority under the
provisions of this chapter, the governing body of a city or cities
may request a qualified nonprofit corporation to exercise the
powers enumerated and provided in this section for and on its
behalf. If the qualified nonprofit corporation agrees to exercise
such powers, the directors of such corporation shall thereafter be
appointed by and be subject to removal by the governing body of the
city or cities, and except as provided in this section, Sections
53B.14, 53B.15, 53B.31, 53B.32, 53B.38, and 53B.41 through 53B.43
apply to and govern such corporation, its procedures, and bonds.
Notwithstanding the provisions of Section 53B.42, a qualified
nonprofit corporation which has been requested to exercise the
powers enumerated and requested in this section may invest or cause
a trustee or custodian on behalf of such qualified nonprofit
corporation to invest its funds, including the proceeds of any
bonds, notes, or other obligations issued by such qualified
nonprofit corporation and any monies which are pledged to the
payment thereof, in:
(1) certificates of deposit or other time or demand
accounts of banks and savings and loan associations which are
insured by the Federal Deposit Insurance Corporation, provided the
amount of any certificate of deposit in excess of that covered by
such insurance must be secured by a first and prior pledge of
government obligations having a market value of not less than 100
percent of the excess unless a nationally recognized rating agency
has given the senior securities of the bank issuing the certificate
of deposit the highest or next to the highest investment rating
available;
(2) repurchase agreements;
(3) guaranteed student loans and alternative
education loans; or
(4) a security issued by another nonprofit corporation
acting under this section.
(f) A nonprofit corporation, whether acting at the request
of a city or cities under Subsection (e) or acting as a servicer or
administrator for another corporation that purchases guaranteed
student loans, or that on its own behalf issues securities or
otherwise obtains funds to purchase or make guaranteed student
loans or alternative education loans, may:
(1) exercise the powers granted by the Texas
Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
Texas Civil Statutes);
(2) service loans purchased or made from its funds or
contract with another person to service the loans;
(3) grant a security interest in a trust estate
securing its securities; and
(4) make investments as authorized by Subsection (e).
(g) A security interest in a trust estate granted under
Subsection (f)(3) is attached and perfected at the time the
security interest is executed and delivered by the nonprofit
corporation. The security interest grants to the secured party a
first prior perfected security interest in the trust estate for the
benefit of the secured party without regard to the location of the
assets that constitute the trust estate.
(h) An alternative education loan may be made under this
section only by a qualified alternative education loan lender. An
alternative education loan may not be in an amount in excess of the
difference between the cost of attendance and the amount of other
student assistance to the student, other than loans under Section
428B(a)(1), Higher Education Act of 1965 (20 U.S.C. Section 1078-2)
(relating to parent loans), for which the student borrower may be
eligible. An alternative education loan covered by this subsection
is subject to Chapter 342, Finance Code, as applicable, except
that:
(1) the maximum interest rate on the loan may not
exceed the rate permitted under Subchapter A, Chapter 303, Finance
Code; and
(2) application and origination fees may be agreed to
by the parties and assessed at the inception of the loan, provided
that if any such fees constitute additional interest under
applicable law, the effective rate of interest agreed to over the
stated term of the loan may not exceed the rate allowed by
Subchapter A, Chapter 303, Finance Code, and accrued unpaid
interest may be added to unpaid principal at the beginning of the
agreed repayment period at the borrower's option and in accordance
with the terms of the agreement for purposes of determining the
total principal amount due at the inception of the repayment
period.
(i) An authority or nonprofit corporation making education
loans under this section is exempt from the licensing requirements
of Chapter 342, Finance Code.
SECTION 3. Section 61.0816(a), Education Code, as added by
Chapter 820, Acts of the 78th Legislature, Regular Session, 2003,
is amended to read as follows:
(a) The board shall collect and make available to the public
on request information regarding higher education authorities
operating under Chapters [Chapter] 53, 53A, and 53B and nonprofit
corporations carrying out the functions of higher education
authorities under those chapters [Chapter 53]. For each authority
or corporation, the information must include:
(1) the total amount and type of outstanding bonds
issued by the authority or corporation;
(2) a description of the programs and activities
administered by the authority or corporation; and
(3) with respect to any real property owned by the
authority or corporation:
(A) the location and description of the property;
(B) the current or proposed use of the property,
including whether the property is under construction or renovation;
(C) the method by which the authority or
corporation financed the acquisition, construction, or renovation
of the property;
(D) the school, public or private institution of
higher education, or other educational institution for which the
property is being used or proposed to be used;
(E) whether the property is exempt from ad
valorem taxes; and
(F) the appraised value of the property.
SECTION 4. Section 1371.001(4), Government Code, is amended
to read as follows:
(4) "Issuer" means:
(A) a home-rule municipality that:
(i) adopted its charter under Section 5,
Article XI, Texas Constitution;
(ii) has a population of 50,000 or more; and
(iii) has outstanding long-term
indebtedness that is rated by a nationally recognized rating agency
for municipal securities in one of the four highest rating
categories for a long-term obligation;
(B) a conservation and reclamation district
created and organized as a river authority under Section 52,
Article III, or Section 59, Article XVI, Texas Constitution;
(C) a joint powers agency organized and operating
under Chapter 163, Utilities Code;
(D) a metropolitan rapid transit authority or
regional transportation authority created, organized, and
operating under Chapter 451 or 452, Transportation Code;
(E) a conservation and reclamation district
organized or operating as a navigation district under Section 52,
Article III, or Section 59, Article XVI, Texas Constitution;
(F) a district organized or operating under
Section 59, Article XVI, Texas Constitution, that has all or part of
two or more municipalities within its boundaries;
(G) a state agency, including a state institution
of higher education;
(H) a hospital authority created or operating
under Chapter 262 or 264, Health and Safety Code, in a county that:
(i) has a population of more than 3.3
million; or
(ii) is included, in whole or in part, in a
standard metropolitan statistical area of this state that includes
a county with a population of more than 2.2 million;
(I) a hospital district in a county that has a
population of more than two million;
(J) a nonprofit corporation organized to
exercise the powers of a higher education loan authority under
Section 53B.47(e) [53.47(e)], Education Code;
(K) a county with a population of 3.3 million or
more;
(L) an independent school district that has an
average daily attendance of 50,000 or more as determined under
Section 42.005, Education Code;
(M) a municipality or county operating under
Chapter 334, Local Government Code; or
(N) a district created under Chapter 335, Local
Government Code.
SECTION 5. The purpose of this Act is to reorganize statutes
related to higher education authorities without causing a
substantive change in the law.
SECTION 6. This Act takes effect September 1, 2005.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2701 was passed by the House on May
13, 2005, by a non-record vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2701 was passed by the Senate on May
24, 2005, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor