Construction Of Facilities - California Educational Facilities Authority Act - CA Education

Section § 94190

This law gives an authority the power to help colleges and universities by building or providing projects for them. Colleges or universities must approve the project details. Once the project is done and debts are paid, the property is transferred to the college, unless the college stops offering education, then it goes to the state.

This law also allows for these projects to be leased, and sets rules for financial details like pledging revenues and setting rates. Leases are a responsibility of the lessee and may include important financial conditions to protect everyone's interests, such as creating reserves, managing funds, and handling defaults.

(a) In addition to the foregoing powers, the authority shall have power to accomplish both of the following:

(1) Upon application of the participating college, participating nonprofit entity, or university applicant, to construct, acquire, or otherwise provide projects for the use and benefit of the participating private college, public college, or public university and the students, faculty, and staff of that participating institution. The participating college, participating nonprofit entity, or university applicant for which a project is undertaken by the authority shall approve the plans, specifications, and location of that project.

(2) To lease any project provided pursuant to this section to the participating private college, participating nonprofit entity, or university applicant for which that project is provided. When the liabilities of the authority incurred for a project have been met and the bonds of the authority issued therefor have been paid, or those liabilities and bonds have otherwise been discharged, the authority shall transfer title to all the real and personal property of that project vested in the authority, to the participating college, participating nonprofit entity, or university applicant in connection with which that project is then leased. However, if at any time prior thereto a participating private college ceases to offer educational facilities, then the title shall vest in the State of California.

(b) Any lease of a project authorized by this section shall be a general obligation of the lessee and may contain provisions, which shall be a part of the contract with the holders of the bonds of the authority issued for the project, as to all of the following:

(1) Pledging all or any part of the moneys, earnings, income, and revenues derived by the lessee from the project or any part or parts thereof, or other personal property of the lessee, to secure payments required under the terms of that lease.

(2) The rates, rentals, fees, and other charges to be fixed and collected by the lessee, the amounts to be raised in each year thereby, and the use and disposition of that income and those moneys, earnings, and revenues.

(3) The setting aside of reserves and the creation of special funds and the regulation and disposition thereof.

(4) The procedure, if any, by which the terms of the lease may be amended, the amount of bonds the holders of which must consent thereto, and the manner in which that consent may be given.

(5) Vesting in a trustee or trustees the specified properties, rights, powers, and duties as shall be deemed necessary or desirable for the security of the holders of the bonds of the authority issued for those projects.

(6) The obligations of the lessee with respect to the replacement, reconstruction, maintenance, operation, repairs, and insurance of that project.

(7) Defining the acts or omissions to act that constitute a default in the obligations and duties of the lessee, and providing for the rights and remedies of the authority and of its bondholders in the event of default.

(8) Any other matters, of like or different character, that may be deemed necessary or desirable for the security or protection of the authority or the holders of its bonds.

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(Amended by Stats. 2022, Ch. 572, Sec. 25. (AB 190) Effective September 27, 2022.)

Section § 94191

This section explains that the authority can give loans to private colleges, nonprofit organizations, or universities for different purposes. It can provide loans for building projects, equipment purchase, and other related costs, but the loan amount cannot exceed the project's total cost. There's a requirement to have a loan agreement covering payment terms, security, interest, and so on.

The authority can also provide loans to refinance existing debts that were previously taken out for the same purposes. Furthermore, private colleges can receive loans for daily operational expenses, again through a set agreement on various terms. Lastly, colleges can get loans to refinance existing operational debts.

The authority also shall have power:

(a) To make loans to any participating private college, participating nonprofit entity, or university applicant for the acquisition or construction of projects in accordance with a loan agreement and in accordance with plans and specifications that shall be subject to approval by the authority. No loan shall exceed the total cost of the project and the equipment therefor as determined by the authority. Each loan shall be premised upon an agreement between the authority and the participating private college, participating nonprofit entity, or university applicant as to payment, security, maturity, redemption, interest, and other appropriate matters.

(b) To make loans to any participating private college, participating nonprofit entity, or university applicant to refund existing bonds, mortgages, or advances or other obligations incurred, given, or made by the private college, participating nonprofit entity, or university applicant for the acquisition or construction of any projects.

(c) To make loans to any participating private college for working capital in accordance with a loan agreement. Each loan shall be premised upon an agreement between the authority and the participating private college as to payment, security, maturity, redemption, interest, and other appropriate matters.

(d) To make loans to any participating private college to refund existing bonds, mortgages, or advances or other obligations incurred, given, or made by the participating private college for working capital.

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(Amended (as amended by Stats. 2022, Ch. 123, Sec. 6) by Stats. 2022, Ch. 572, Sec. 26. (AB 190) Effective September 27, 2022.)

Section § 94192

This law allows private colleges, nonprofit entities, and universities to use their property or income as collateral when securing loans. They can mortgage their property and pledge their income to ensure they can repay loans from the authority or cover the costs associated with bonds or other types of debt. However, they cannot take any action that conflicts with existing legislation, agreements, or specific conditions related to certain properties or funds.

For the purpose of obtaining and securing loans under Section 94191, every participating private college, participating nonprofit entity, or university applicant shall, notwithstanding any other law, have power to mortgage and pledge any of its real or personal property, and to pledge any of its income from whatever source to repay the principal of and interest on any loan made to it by the authority or to pay the interest on and principal and redemption premium, if any, of any note, bond, or other evidence of indebtedness evidencing the debt created by that loan; provided that the foregoing shall not be construed to authorize actions in conflict with specific legislation, trusts, endowment, or other agreements relating to specific properties or funds.

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(Amended by Stats. 2022, Ch. 572, Sec. 27. (AB 190) Effective September 27, 2022.)

Section § 94193

Any money the authority receives from private colleges, nonprofit entities, or universities as payments for loans or debts must be deposited into a special account just for these funds. This account is separate from other authority funds and is handled only by authorized individuals who can sign checks on behalf of the authority.

Moneys of the authority received from any participating private college, participating nonprofit entity, or university applicant in payment of any sum due to the authority pursuant to the terms of any loan or other agreement or any bond, note, or other evidence of indebtedness, shall be deposited in an account in which only moneys received from participating private colleges, participating nonprofit entities, or university applicants shall be deposited, and shall be kept separate and apart from and not commingled with any other moneys of the authority. Moneys deposited in that account shall be paid out on checks signed by the chairperson of the authority or by a person or persons authorized by the authority.

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(Amended by Stats. 2022, Ch. 572, Sec. 28. (AB 190) Effective September 27, 2022.)

Section § 94194

This law explains the responsibilities of private colleges or universities regarding projects funded by authority under Sections 94190 and 94191. If a college or university leases a project, they must cover the costs for operation, maintenance, supervision, and administration, ensuring the project is integrated into their educational programs. Likewise, if the authority loans money for a project, the college or university must manage costs and integration, similar to leasing terms.

(a) Whenever the authority under Section 94190 undertakes to construct, acquire, or otherwise provide a project and to lease the same to a private college or university applicant the lessee shall be responsible for the direct operation and maintenance costs of such project and, in addition, shall be responsible for the overall supervision of each project, for the overhead and general administrative costs of the lessee which are incurred because of such project and for the integration of each project operation into the lessee’s educational program.

(b) Whenever the authority under Section 94191 makes loans for the construction of a project, the private college or university applicant at which such project is located shall be responsible for the direct operation and maintenance costs of such project and, in addition, shall be responsible for the overall supervision of each project, for the overhead and general administrative costs of the private college or university applicant which are incurred because of such project and for the integration of each project operation into the institution’s educational program.

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(Amended by Stats. 2022, Ch. 572, Sec. 29. (AB 190) Effective September 27, 2022.)

Section § 94195

This section states that if a private college, nonprofit entity, or university pledges its money, income, or revenue, that pledge is effective immediately. Once pledged, the money is automatically bound by the pledge's lien, and this holds true even if no physical handover or further action occurs. The lien is strong enough to be enforceable against all other claims, regardless of whether others know about the pledge. There's no need to file or record the pledge for it to be valid.

Any pledge of moneys, earnings, income, or revenues authorized with respect to participating private colleges, participating nonprofit entities, or university applicants, pursuant to this chapter, shall be valid and binding from the time when the pledge is made. The moneys, earnings, income, or revenues so pledged and thereafter received by the pledgor shall immediately be subject to the lien of that pledge without any physical delivery thereof or further act. The lien of that pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the pledgor irrespective of whether the parties have notice thereof. No instrument by which a pledge is created need be filed or recorded in any manner.

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(Amended by Stats. 2022, Ch. 572, Sec. 30. (AB 190) Effective September 27, 2022.)