BILL NUMBER: AB 1611 CHAPTERED 10/07/01 CHAPTER 569 FILED WITH SECRETARY OF STATE OCTOBER 7, 2001 APPROVED BY GOVERNOR OCTOBER 5, 2001 PASSED THE SENATE SEPTEMBER 12, 2001 PASSED THE ASSEMBLY SEPTEMBER 12, 2001 AMENDED IN SENATE SEPTEMBER 7, 2001 AMENDED IN SENATE AUGUST 31, 2001 AMENDED IN SENATE AUGUST 28, 2001 AMENDED IN SENATE AUGUST 20, 2001 AMENDED IN SENATE JULY 10, 2001 AMENDED IN ASSEMBLY MAY 22, 2001 AMENDED IN ASSEMBLY APRIL 26, 2001 AMENDED IN ASSEMBLY APRIL 16, 2001 INTRODUCED BY Assembly Member Keeley FEBRUARY 23, 2001 An act to amend Sections 94100, 94110, 94123, 94140, 94144, 94146, 94147, 94154, 94190, 94191, 94192, 94193, and 94195 of the Education Code, relating to higher education housing, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 1611, Keeley. Higher education housing: California Educational Facilities Authority. Existing law establishes the California Educational Facilities Authority Act, the purpose of which is to provide private institutions of higher education within the state an additional means by which to expand, enlarge, and establish dormitory, academic, and related facilities, finance those facilities, refinance existing facilities, and to provide private and public institutions of higher education within the state an additional means to assist students in financing their costs of attendance. Existing law establishes the various segments of the public higher education system in the state. These segments include the University of California, which is administered by the Regents of the University of California, the California State University, which is administered by the Trustees of the California State University, and the California Community Colleges, which is administered by the Board of Governors of the California Community Colleges. This bill would authorize the authority to enter into agreements with nonprofit entities, as defined, to finance the cost of constructing student, faculty, and staff housing, as defined, near the campuses of the University of California, the Hastings College of the Law, the California State University, the California Community Colleges, or a participating private college, as defined. Because this bill would authorize the authority to expend funds for new purposes, it would make an appropriation. The bill would incorporate amendments to several provisions of the bill proposed by this bill and SB 1209. These amendments would become operative if both bills are enacted and become effective on or before January 1, 2002, each bill amends these provisions, and this bill is enacted after SB 1209. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 94100 of the Education Code is amended to read: 94100. It is the purpose of this chapter to accomplish all of the following: (a) To give this and future generations of youth the fullest opportunity to learn and develop their intellectual and mental capacities by providing private institutions of higher education within the state with an additional means by which to expand, enlarge, and establish dormitory, academic, and related facilities, to finance those facilities, and to refinance existing facilities. (b) To provide private and public institutions of higher education within the state with an additional means to assist students in financing their costs of attendance. (c) To develop student, faculty, and staff housing on or near public and participating private institutions of higher education through the use of agreements with participating nonprofit entities. SEC. 1.5. Section 94100 of the Education Code is amended to read: 94100. It is the purpose of this chapter to accomplish all of the following: (a) To give this and future generations of youth the fullest opportunity to learn and develop their intellectual and mental capacities by providing private institutions of higher education within the state with an additional means by which to expand, enlarge, and establish dormitory, academic, and related facilities, to finance those facilities, and to refinance existing facilities. (b) To provide private and public institutions of higher education within the state with an additional means to assist students in financing their costs of attendance. (c) To develop student, faculty, and staff housing on or near public and participating private institutions of higher education through the use of agreements with participating nonprofit entities. (d) To make grants to private institutions of higher education to assist students in preparing for higher education and college entrance, pursuant to Article 9 (commencing with Section 94215). SEC. 2. Section 94110 of the Education Code is amended to read: 94110. As used in this chapter, the following words and terms have the following meanings, unless the context indicates or requires another or different meaning or intent: (a) "Authority" means the California Educational Facilities Authority created by this chapter or any board, body, commission, department, or officer succeeding to the principal functions thereof or to whom the power conferred upon the authority by this chapter is given by law. (b) "Bond" means bonds, notes, debentures, or other securities of the authority issued pursuant to this chapter. (c) "Cost," as applied to a project or portion thereof financed under this chapter, embraces all or any part of the cost of construction and acquisition of all lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and interests acquired or used for a project, the cost of demolishing or removing any buildings or structures on land so acquired, including the cost of acquiring any lands to which the buildings or structures may be moved, the cost of all machinery and equipment, financing charges, interest prior to, during, and for a period after completion of, the construction as determined by the authority, provisions for working capital, reserves for principal and interest and for extension, enlargements, additions, replacements, renovations and improvements, the cost of engineering, financial and legal services, plans, specifications, studies, surveys, estimates, administrative expenses, and other expenses necessary or incident to determining the feasibility of constructing any project or incident to the construction or acquisition or financing thereof. (d) "Dormitory" means a housing unit with necessary and usual attendant and related facilities and equipment. (e) "Educational facility" means a structure suitable for use as a dormitory, dining hall, student union, administration building, academic building, library, laboratory, research facility, classroom, health care facility (including for an institution of higher education that maintains and operates a school of medicine, structures or facilities providing or designed to provide services as a hospital or clinic, whether the hospital or clinic is operated directly by the institution of higher education or by a separate nonprofit corporation, the member or members of which consist of the educational institution or the members of its governing body), and parking, maintenance, storage, or utility facilities and other structures or facilities related thereto or required or useful for the instruction of students or the conducting of research or the operation of an institution for higher education, and the necessary and usual attendant and related facilities and equipment, but shall not include any facility used or to be used for sectarian instruction or as a place for religious worship or any facility used or to be used primarily in connection with any part of the program of a school or department of divinity. (f) "Faculty and staff housing" means a residential unit owned by a participating nonprofit entity for use by an individual holding a faculty appointment or a staff position at a public university, public college, or participating private college. (g) "Participating nonprofit entity" means an entity within the meaning of paragraph (3) of subsection (c) of Section 501 of Title 26 of the United States Code that, pursuant to this chapter for the purpose of owning student, faculty, or staff housing, as approved by, and for participation with, the authority, undertakes the financing and construction or acquisition of student, faculty, or staff housing, on real property owned or leased by the entity, for the benefit of a public college, public university, or participating private college. The authority may determine any additional qualifications of a participating nonprofit entity through regulations or guidelines. (b) "Participating private college" or "participating college" means a private college that neither restricts entry on racial or religious grounds nor requires all students gaining admission to receive instruction in the tenets of a particular faith, and that, pursuant to this chapter, participates with the authority in undertaking the financing and construction or acquisition of a project. (i) "Private college" means an institution for higher education other than a public college, situated within the state and that, by virtue of law or charter, is a nonprofit private or independent degree-granting educational institution that is regionally accredited. (j) "Project," for purposes relating to a participating private college, means a dormitory or an educational facility, or any combination thereof, or any function concerning student loans, or interests therein, as determined by the authority. For a participating nonprofit entity, "project" means the construction or acquisition of student housing or faculty and staff housing. The authority, in consultation with the top administrative officials and the participating nonprofit entity, shall develop and adopt regulations to ensure, to the greatest extent practicable, that each project involving a participating nonprofit entity is used to house students, faculty, or staff of the participating private college, public college, or public university. The student, faculty, or staff housing shall meet all of the following criteria: (1) Upon completion or acquisition of the project, the project will be owned by a participating nonprofit entity and located on real property owned, or leased by, that entity. (2) The top administrative official of the public university, public college, or participating private college that the project is intended to benefit, verifies the need for housing and financing assistance in a specific area pursuant to paragraph (4). (3) The project is monitored on an annual basis by the authority to ensure that it meets the requirements of paragraph (5) and all other regulatory agreements entered into by the authority. (4) The project is located within a five-mile radius of the boundary of a campus or satellite center of the public college, public university, or participating private college that the project is intended to benefit. The participating nonprofit entity may request approval from the top official of the institution for a project that is located outside the five-mile radius, provided that all of the following criteria are met: (A) There are no available and feasible sites within the five-mile radius. (B) The project is near a mass transit destination. (C) The time required to commute from campus to the mass transit destination, as estimated by the top administrative official, typically does not exceed 30 minutes. (5) (A) The project includes and maintains for 40 years a restriction to the grant deed on the real property on which the student or faculty and staff housing is to be located. The grant deed shall accomplish all of the following: (i) Give the public college, public university, or participating private college that the project is intended to benefit the right, but not the obligation, to purchase the property at fair market value. (ii) Ensure that students, faculty, or staff of the affected campus will have first right of refusal to all available units. (iii) Require that, to the greatest extent feasible, at least 50 percent of student residents will meet the criteria for need-based financial assistance, as determined by the top administrative official of the affected campus. (iv) Require that all contracts for construction and renovation of the proposed project shall be subject to, and comply with the provisions referenced in, Section 10128 of the Public Contract Code. (B) For the purposes of this paragraph, the authority shall, through regulation or rule, define "student" and "faculty," taking into consideration enrollment status requirements and employment status requirements. The definitions of "student" and "faculty" may be different for each participating campus. (k) "Public college" means a community college. (l) "Public university" means any campus of the University of California or the California State University, or the Hastings College of the Law. (m) "Student housing" means a residential unit owned by a participating nonprofit entity, and located on real property owned by that entity, for use by an individual enrolled at a public college, public university, or participating private college. (n) "Student loan" means any loan having terms and conditions acceptable to the authority that is made to finance or refinance the costs of attendance at any private college or a public college and that is approved by the authority, if the loan is originated pursuant to a program that is approved by the authority. (o) "Top administrative official" means the chancellor in the case of a campus of the University of California, the dean in the case of the Hastings College of the Law, the trustees in the case of a campus of the California State University, the president in the case of a campus of the California Community Colleges, or the president or highest-ranking official in the case of a participating private college. SEC. 2.5. Section 94110 of the Education Code is amended to read: 94110. As used in this chapter, the following words and terms have the following meanings, unless the context indicates or requires another or different meaning or intent: (a) "Authority" means the California Educational Facilities Authority created by this chapter or any board, body, commission, department or officer succeeding to the principal functions thereof or to whom the power conferred upon the authority by this chapter is given by law. (b) "Bond" means bonds, notes, debentures, or other securities of the authority issued pursuant to this chapter. (c) "Cost," as applied to a project or portion thereof financed under this chapter, embraces all or any part of the cost of construction and acquisition of all lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and interests acquired or used for a project, the cost of demolishing or removing any buildings or structures on land so acquired, including the cost of acquiring any lands to which the buildings or structures may be moved, the cost of all machinery and equipment, financing charges, interest prior to, during, and for a period after completion of, the construction as determined by the authority, provisions for working capital, reserves for principal and interest and for extension, enlargements, additions, replacements, renovations and improvements, the cost of engineering, financial and legal services, plans, specifications, studies, surveys, estimates, administrative expenses and other expenses necessary or incident to determining the feasibility of constructing any project or incident to the construction or acquisition or financing thereof. (d) "Dormitory" means a housing unit with necessary and usual attendant and related facilities and equipment. (e) "Educational facility" means a structure suitable for use as a dormitory, dining hall, student union, administration building, academic building, library, laboratory, research facility, classroom, health care facility (including for an institution of higher education that maintains and operates a school of medicine, structures or facilities providing or designed to provide services as a hospital or clinic, whether the hospital or clinic is operated directly by the institution of higher education or by a separate nonprofit corporation, the member or members of which consist of the educational institution or the members of its governing body), faculty and staff housing, and parking, maintenance, storage or utility facilities and other structures or facilities related thereto or required or useful for the instruction of students or the conducting of research or the operation of an institution for higher education, and the necessary and usual attendant and related facilities and equipment, but does not include any facility used or to be used for sectarian instruction or as a place for religious worship or any facility used or to be used primarily in connection with any part of the program of a school or department of divinity. (f) "Faculty and staff housing" means a residential unit owned by a participating college or participating nonprofit entity for use by an individual holding a faculty appointment or a staff position at a public university, public college, or participating college. (g) "Participating nonprofit entity" means an entity within the meaning of paragraph (3) of subsection (c) of Section 501 of Title 26 of the United States Code that, pursuant to this chapter for the purpose of owning student, faculty, or staff housing, as approved by, and for participation with, the authority, undertakes the financing and construction or acquisition of student, faculty, or staff housing, on real property owned or leased by the entity, for the benefit of a public college, public university, or participating private college. The authority may determine any additional qualifications of a participating nonprofit entity through regulations or guidelines. (h) "Participating private college" or "participating college" means a private college that neither restricts entry on racial or religious grounds nor requires all students gaining admission to receive instruction in the tenets of a particular faith, and that, pursuant to this chapter, participates with the authority in undertaking the financing and construction or acquisition of a project. (i) "Private college" means an institution for higher education other than a public college, situated within the state and that, by virtue of law or charter, is a nonprofit educational institution that is regionally accredited and empowered to provide a program of education beyond the high school level. (j) (1) "Project" means a dormitory or an educational facility, faculty and staff housing, or any combination thereof, or any function concerning student loans, or interests therein, as determined by the authority. (2) For a participating nonprofit entity, "project" means the construction or acquisition of student housing or faculty and staff housing. The authority, in consultation with the top administrative officials and the participating nonprofit entity, shall develop and adopt regulations to ensure, to the greatest extent practicable, that each project involving a participating nonprofit entity is used to house students, faculty, or staff of the participating private college, public college, or public university. The student, faculty, or staff housing shall meet all of the following criteria: (A) Upon completion or acquisition of the project, the project will be owned by a participating nonprofit entity and located on real property owned, or leased by, that entity. (B) The top administrative official of the public university, public college, or participating private college that the project is intended to benefit, verifies the need for housing and financing assistance in a specific area pursuant to subparagraph (D). (C) The project is monitored on an annual basis by the authority to ensure that it meets the requirements of subparagraph (E) and all other regulatory agreements entered into by the authority. (D) The project is located within a five-mile radius of the boundary of a campus or satellite center of the public college, public university, or participating private college that the project is intended to benefit. The participating nonprofit entity may request approval from the top official of the institution for a project that is located outside the five-mile radius, provided that all of the following criteria are met: (i) There are no available and feasible sites within the five-mile radius. (ii) The project is near a mass transit destination. (iii) The time required to commute from campus to the mass transit destination, as estimated by the top administrative official, typically does not exceed 30 minutes. (E) (i) The project includes and maintains for 40 years a restriction to the grant deed on the real property on which the student or faculty and staff housing is to be located. The grant deed shall accomplish all of the following: (I) Give the public college, public university, or participating private college that the project is intended to benefit the right, but not the obligation, to purchase the property at fair market value. (II) Ensure that students, faculty, or staff of the affected campus will have first right of refusal to all available units. (III) Require that, to the greatest extent feasible, at least 50 percent of student residents will meet the criteria for need-based financial assistance, as determined by the top administrative official of the affected campus. (IV) Require that all contracts for construction and renovation of the proposed project shall be subject to, and comply with the provisions referenced in, Section 10128 of the Public Contract Code. (ii) For the purposes of this subparagraph, the authority shall, through regulation or rule, define "student" and "faculty," taking into consideration enrollment status requirements and employment status requirements. The definitions of "student" and "faculty" may be different for each participating campus. (k) "Public college" means a community college. (l) "Public university" means any campus of the University of California or the California State University, or the Hastings College of the Law. (m) "Student housing" means a residential unit owned by a participating nonprofit entity, and located on real property owned by that entity, for use by an individual enrolled at a public college, public university, or participating private college. (n) "Student loan" means any loan having terms and conditions acceptable to the authority that is made to finance or refinance the costs of attendance at any private college or public college and that is approved by the authority, if the loan is originated pursuant to a program that is approved by the authority. (o) "Top administrative official" means the chancellor in the case of a campus of the University of California, the dean in the case of the Hastings College of the Law, the trustees in the case of a campus of the California State University, the president in the case of a campus of the California Community Colleges, or the president or highest-ranking official in the case of a participating private college. SEC. 3. Section 94123 of the Education Code is amended to read: 94123. Notwithstanding any other provision of law neither of the following is a conflict of interest: (a) Service by a trustee, director, officer, or employee of a participating private college, public college, or public university as a member of the authority, provided that the trustee, director, officer, or employee abstains from discussion, deliberation, action, and vote by the authority under this chapter with respect to the participating private college, public college, or public university for which that member is a trustee, director, officer, or employee. (b) Affiliation of a member of the authority with a bank that serves the authority as bond trustee, depository of funds, or in any other financial, advisory, or fiduciary capacity. SEC. 4. Section 94140 of the Education Code is amended to read: 94140. The authority shall have power to do all of the following: (a) To adopt bylaws for the regulation of its affairs and the conduct of its business. (b) To adopt and have an official common seal and alter it at pleasure. (c) To sue and be sued in its own name, and plead and be impleaded. (d) To borrow money and to issue bonds and notes and other obligations of the authority and to provide for the rights of the holders thereof as provided in this chapter. (e) To acquire, lease as lessee, hold, and dispose of real and personal property or any interest therein, in the exercise of its powers and the performance of its duties under this chapter. (f) To acquire in the name of the authority by purchase or otherwise, on the terms and conditions and in the manner as it deems proper, any land or interest therein and other property that it determines is reasonably necessary for any project, including any lands held by any county, municipality, or other governmental subdivision of the state; and to hold and use the same and to sell, convey, lease, or otherwise dispose of property so acquired, no longer necessary for the authority's purposes. (g) To receive and accept, from any federal or other public agency or governmental entity, grants or loans for or in aid of the acquisition or construction of any project, and to receive and accept aid or contributions from any other source, of either money, property, labor, or other things of value, to be held, used, and applied only for the purposes for which the grants, loans, and contributions may be made. (h) To prepare or cause to be prepared plans, specifications, designs, and estimates of costs for the construction and equipment of projects for participating colleges and participating nonprofit entities under this chapter, and from time to time to modify those plans, specifications, designs, or estimates. (i) By contract or contracts or by its own employees to construct, acquire, reconstruct, rehabilitate and improve, and furnish and equip, projects for participating colleges and participating nonprofit entities. (j) To employ consulting engineers, architects, accountants, construction and financial experts, superintendents, and other employees and agents that may be necessary in its judgment and to fix their compensation. (k) To determine the location and character of any project to be undertaken pursuant to this chapter, and to construct, reconstruct, repair, lease, as lessee or lessor, the same; to enter into contracts for any or all of those purposes; and to designate a participating private college or participating nonprofit entity as its agent to determine the location and character of a project undertaken by the participating private college or participating nonprofit entity under this chapter and, as the agent of the authority, to construct, reconstruct, maintain, repair, operate, lease, as lessee or lessor, and regulate the same, and, as agent of the authority, to enter into contracts for any and all of those purposes including contracts for the management and operation of the project. (l) To establish rules and regulations for the use of a project or any portion thereof and to designate a participating private college or participating nonprofit entity as its agent to establish rules and regulations for the use of a project undertaken by the participating private college or participating nonprofit entity. (m) Generally to fix and revise from time to time and to charge and collect rates, rents, fees, and other charges for the use of and for the services furnished or to be furnished by a project or any portion thereof and to contract with holders of its bonds and with any other person, party, association, corporation, or other body, public or private, in respect thereof. (n) To enter into any and all agreements or contracts, execute any and all instruments, and do and perform any and all acts or things necessary, convenient, or desirable for the purposes of the authority or to carry out any power expressly given in this chapter. (o) To invest any moneys held in reserve or sinking funds, or any moneys not required for immediate use or disbursement, at the discretion of the authority, in obligations that are authorized by law for the investment of trust funds in the custody of the Treasurer. (p) To charge, and equitably apportion among participating private colleges and participating nonprofit entities, its administrative costs and expenses incurred in the exercise of the powers and duties conferred by this chapter. (q) To finance, directly or through an intermediary, or purchase or take assignments of, or make commitments to finance, directly or through an intermediary, or purchase or to take assignments of, student loans, to contract in advance for those student loans, and to contract in advance for that financing, purchase, or assignment, and to pay any amounts payable in respect thereto. A student loan shall be eligible for financing or purchase by the authority or for assignment hereunder regardless of the repayment status of the loan. Any pledge made to secure authority financing for student loan project purposes shall be valid and binding from the time the pledge is made. The revenues and receipts of property or interest in the property pledged and thereafter received by the authority, a participating college or public institution of higher education, a servicer, a trustee, or a custodian shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of any pledge shall be valid and binding against all parties having claims of any kind in tort, contract, or otherwise against the authority, participating college or public institution of higher education, servicer, trustee, or custodian irrespective of whether the parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be recorded. (r) To hold or invest in student loans and to create pools of student loans and sell bonds bearing interest on a taxable or tax-exempt basis or other interests backed by the pools of student loans. (s) To contract or otherwise provide for the distribution, processing, origination, purchase, sale, servicing, securing, and collection of student loans, the payment of fees, charges, and administrative expenses in connection therewith, and the funding of reserves required or provided for in any resolution authorizing, or trust agreement securing, authority financing for student loan purposes. (t) Assist in providing support to participating colleges or participating nonprofit entities to enhance the market acceptance of potential bond issues by the authority, including securing probable or actual credit ratings from nationally recognized bond rating agencies, providing or obtaining liquidity or credit enhancement, providing or securing bond reserve funds, performing any other action deemed necessary by the authority, and incurring necessary expenses, payable from available authority funds, for any of these purposes. SEC. 4.5. Section 94140 of the Education Code is amended to read: 94140. The authority shall have power to do all of the following: (a) Adopt bylaws for the regulation of its affairs and the conduct of its business. (b) Adopt and have an official common seal and alter it at pleasure. (c) Sue and be sued in its own name, and plead and be impleaded. (d) Borrow money and issue bonds and notes and other obligations of the authority and to provide for the rights of the holders thereof as provided in this chapter. (e) Acquire, lease as lessee, hold, and dispose of real and personal property or any interest therein, in the exercise of its powers and the performance of its duties under this chapter. (f) Acquire, in the name of the authority by purchase or otherwise, on the terms and conditions and in the manner as it deems proper any land or interest therein and other property that it determines is reasonably necessary for any project, including any lands held by any county, municipality or other governmental subdivision of the state; and to hold and use the same and to sell, convey, lease or otherwise dispose of property so acquired, no longer necessary for the authority's purposes. (g) Receive and accept, from any federal or other public agency or governmental entity, grants or loans for or in aid of the acquisition or construction of any project, and to receive and accept aid or contributions from any other source, of either money, property, labor or other things of value, to be held, used and applied only for the purposes for which the grants, loans and contributions may be made. (h) Prepare or cause to be prepared plans, specifications, designs and estimates of costs for the construction and equipment of projects for participating colleges and participating nonprofit entities under this chapter, and from time to time to modify those plans, specifications, designs or estimates. (i) By contract or contracts, or by its own employees, construct, acquire, reconstruct, rehabilitate and improve, and furnish and equip, projects for participating colleges and participating nonprofit entities. (j) Employ consulting engineers, architects, accountants, construction and financial experts, superintendents, and other employees and agents that may be necessary in its judgment and to fix their compensation. (k) Determine the location and character of any project to be undertaken pursuant to this chapter, and construct, reconstruct, repair, lease, as lessee or lessor, the same; enter into contracts for any or all of those purposes; and designate a participating college or participating nonprofit entity as its agent to determine the location and character of a project undertaken by the participating private college or participating nonprofit entity under this chapter and, as the agent of the authority, construct, reconstruct, maintain, repair, operate, lease, as lessee or lessor, and regulate the same, and, as agent of the authority, enter into contracts for any and all of those purposes including contracts for the management and operation of the project. (l) Establish rules and regulations for the use of a project or any portion thereof and to designate a participating private college or participating nonprofit entity as its agent to establish rules and regulations for the use of a project undertaken by the participating private college or participating nonprofit entity. (m) Generally establish, revise from time to time, and charge and collect rates, rents, fees and other charges for the use of and for the services furnished or to be furnished by a project or any portion thereof and contract with holders of its bonds and with any other person, party, association, corporation or other body, public or private, in respect thereof. (n) Enter into any and all agreements or contracts, execute any and all instruments, and do and perform any and all acts or things necessary, convenient or desirable for the purposes of the authority or to carry out any power expressly given in this chapter. (o) Invest any moneys held in reserve or sinking funds, or any moneys not required for immediate use or disbursement, at the discretion of the authority, in obligations that are authorized by law for the investment of trust funds in the custody of the Treasurer. (p) Charge, and equitably apportion among participating private colleges and participating nonprofit entities, its administrative costs and expenses incurred in the exercise of the powers and duties conferred by this chapter. (q) Finance, directly or through an intermediary, or purchase or take assignments of, or make commitments to finance, directly or through an intermediary, or purchase or take assignments of, student loans, contract in advance for those student loans, and contract in advance for that financing, purchase, or assignment, and pay any amounts payable in respect thereto. A student loan shall be eligible for financing or purchase by the authority or for assignment hereunder regardless of the repayment status of the loan. Any pledge made to secure authority financing for student loan project purposes shall be valid and binding from the time the pledge is made. The revenues and receipts of property or interest in the property pledged and thereafter received by the authority, a participating college or public institution of higher education, a servicer, a trustee, or a custodian shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of any pledge shall be valid and binding against all parties having claims of any kind in tort, contract, or otherwise against the authority, participating college or public institution of higher education, servicer, trustee, or custodian irrespective of whether the parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be recorded. (r) Hold or invest in student loans and to create pools of student loans and sell bonds bearing interest on a taxable or tax-exempt basis or other interests backed by the pools of student loans. (s) Contract or otherwise provide for the distribution, processing, origination, purchase, sale, servicing, securing, and collection of student loans, the payment of fees, charges, and administrative expenses in connection therewith, and the funding of reserves required or provided for in any resolution authorizing, or trust agreement securing, authority financing for student loan purposes. (t) Assist in providing support to participating colleges or participating nonprofit entities to enhance the market acceptance of potential bond issues by the authority, including securing probable or actual credit ratings from nationally recognized bond rating agencies, providing or obtaining liquidity or credit enhancement, providing or securing bond reserve funds, performing any other action deemed necessary by the authority, and incurring necessary expenses, payable from available authority funds, for any of these purposes. SEC. 5. Section 94144 of the Education Code is amended to read: 94144. (a) The authority is authorized from time to time to issue its negotiable bonds for any corporate purpose. In anticipation of the sale of those bonds, the authority may issue negotiable bond anticipation notes and may renew the same from time to time. The notes shall be paid from any revenues of the authority or other moneys available therefor and not otherwise pledged, or from the proceeds of sale of the bonds of the authority in anticipation of which they were issued. The notes shall be issued in the same manner as the bonds. The notes and the resolution or resolutions authorizing the same may contain any provisions, conditions, or limitations which a bond resolution of the authority may contain. (b) Except as may otherwise be expressly provided by the authority, every issue of its bonds or notes shall be general obligations of the authority payable from any revenues or moneys of the authority available therefor and not otherwise pledged, subject only to any agreements with the holders of particular bonds or notes pledging any particular revenues or moneys and subject to any agreements with any participating institution. Notwithstanding that those bonds or notes may be payable from a special fund, they shall be and be deemed to be for all purposes negotiable instruments, subject only to the provisions of those bonds or notes for registration. (c) (1) The bonds may be issued as serial bonds or as term bonds, or the authority, in its discretion, may issue bonds of both types. The bonds shall be authorized by resolution of the authority, and shall bear the date or dates, mature at a time or times, not exceeding 50 years from their respective dates, bear interest at the rate or rates, be payable at the time or times, be in denominations, be in a form, either coupon or registered, carry registration privileges, be executed in a manner, be payable in lawful money of the United States of America at a place or places, and be subject to the terms of redemption that the resolution or resolutions may provide. The bonds or notes may be sold by the State Treasurer at public sale, or the authority, after giving due consideration to the recommendations of the participating institution or participating nonprofit entity, may direct the State Treasurer to sell the bonds or notes at private sale. (2) In the case of public sale, both of the following shall occur: (A) The bonds specified in the resolution shall be sold by the State Treasurer, at a time fixed by him or her, and upon notice that he or she may deem advisable, or at the time to which the sale shall have been continued, at public sale, upon sealed bids, to the bidder whose bid will result in the lowest net interest cost on account of the bonds. (B) If no bids are received, or if the State Treasurer determines that the bids are not satisfactory, the State Treasurer may reject all bids received, if any, and either readvertise or sell the bonds at private sale. (3) Pending preparation of the definitive bonds, the authority may issue interim receipts or certificates that shall be exchanged for the definitive bonds. (d) Any resolution or resolutions authorizing any bonds or any issue of bonds may contain provisions, which shall be a part of the contract with the holders of the bonds to be authorized, as to all of the following: (1) Pledging the full faith and credit of the authority or pledging all or any part of the revenues of a project or any revenue-producing contract or contracts made by the authority with any individual, partnership, corporation, or association or other body, public or private, to secure the payment of the bonds or of any particular issue of bonds, subject to those agreements with bondholders that may then exist. (2) The rentals, fees, and other charges to be charged, and the amounts to be raised in each year thereby, and the use and disposition of the revenues. (3) The setting aside of reserves or sinking funds, and the regulation and disposition thereof. (4) Limitations on the right of the authority or its agent to restrict and regulate the use of the project. (5) Limitations on the purpose to which the proceeds of sale of any issue of bonds then or thereafter to be issued may be applied and pledging those proceeds to secure the payment of the bonds or any issue of the bonds. (6) Limitations on the issuance of additional bonds, the terms upon which additional bonds may be issued and secured, and the refunding of outstanding bonds. (7) The procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent thereto, and the manner in which that consent may be given. (8) Limitations on the amount of moneys derived from the project to be expended for operating, administrative, or other expenses of the authority. (9) Defining the acts or omissions to act that constitute a default in the duties of the authority to holders of its obligations, and providing the rights and remedies of the holders in the event of a default. (10) The mortgaging of a project and the site thereof for the purpose of securing the bondholders. (e) Neither the members of the authority, nor any person executing the bonds or notes, shall be liable personally on the bonds or notes or be subject to any personal liability or accountability by reason of the issuance thereof. (f) The authority shall have power out of any funds available therefor to purchase its bonds or notes. The authority may hold, pledge, cancel, or resell the bonds, subject to and in accordance with agreements with bondholders. SEC. 6. Section 94146 of the Education Code is amended to read: 94146. (a) Bonds issued under the provisions of this chapter shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof or a pledge of the faith and credit of the state or of any political subdivision other than the authority, but shall be payable solely from the funds herein provided. All bonds shall contain on the face thereof a statement to the effect that neither the State of California nor the authority shall be obligated to pay the same or the interest thereon except from revenues of the project or the portion thereof for which they are issued and that neither the faith and credit nor the taxing power of the State of California or of any political subdivision thereof is pledged to the payment of the principal of or the interest on the bonds. (b) The issuance of bonds under the provisions of this chapter shall not directly or indirectly or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment. No provision of this section shall prevent or be construed to prevent the authority from pledging its full faith and credit or the full faith and credit of a participating private college or participating nonprofit entity to the payment of bonds or issue of bonds authorized pursuant to this chapter. SEC. 7. Section 94147 of the Education Code is amended to read: 94147. (a) The authority may fix, revise, charge, and collect rates, rents, fees, and charges for the use of and for the services furnished or to be furnished by each project, and may contract with any person, partnership, association or corporation, or other body, public or private, in respect thereof. These rates, rents, fees, and charges shall be fixed and adjusted in respect of the aggregate of rents, rates, fees, and charges from the project so as to provide funds sufficient with other revenues or moneys, if any, to accomplish all of the following: (1) Pay the cost of maintaining, repairing and operating the project and each and every portion thereof, to the extent that the payment of that cost has not otherwise been adequately provided for. (2) Pay the principal of, and the interest on, outstanding bonds of the authority issued in respect of that project as the same shall become due and payable. (3) Create and maintain reserves required or provided for in any resolution authorizing, or trust agreement securing, bonds of the authority. (b) (1) The rates, rents, fees, and charges referenced in subdivision (a) are not subject to supervision or regulation by any department, commission, board, body, bureau, or agency of this state other than the authority. A sufficient amount of the revenues derived in respect of a project, except a part of those revenues that is necessary to pay the cost of maintenance, repair, and operation and to provide reserves for renewals, replacements, extensions, enlargements, and improvements as may be provided for in the resolution authorizing the issuance of any bonds of the authority or in the trust agreement securing the same, shall be set aside at regular intervals provided in the resolution or trust agreement in a sinking or other similar fund. (2) The fund established pursuant to paragraph (1) is pledged to, and charged with, the payment of the principal of and the interest on, the bonds as the same shall become due, and the redemption price or the purchase price of bonds retired by call or purchase as therein provided. (3) The pledge required by paragraph (2) shall be valid and binding from the time when the pledge is made. The rates, rents, fees and charges and other revenues or other moneys so pledged and thereafter received by the authority shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and 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 authority, irrespective of whether the parties have notice thereof. Neither the resolution nor any trust agreement by which a pledge is created need be filed or recorded except in the records of the authority. (4) The use and disposition of moneys to the credit of the sinking or other similar fund shall be subject to the provisions of the resolution authorizing the issuance of those bonds or of that trust agreement. Except as may otherwise be provided in that resolution or that trust agreement, the sinking or other similar fund shall be a fund for all of those bonds issued to finance projects at a participating college, or bonds issued to finance a project of a participating nonprofit entity, without distinction or priority of one over another. (5) The authority, in the resolution or trust agreement, may provide that the sinking or other similar fund shall be either of the following: (A) The fund for a particular project at a participating college and for the bonds issued to finance a particular project and may, additionally, permit and provide for the issuance of bonds having a subordinate lien in respect of the security herein authorized to other bonds of the authority and, in this case, the authority may create separate sinking or other similar funds in respect of those subordinate lien bonds. (B) The fund for a particular project of a participating nonprofit entity. SEC. 7.5. Section 94147 of the Education Code is amended to read: 94147. (a) The authority may fix, revise, charge, and collect rates, rents, fees, and charges for the use of and for the services furnished or to be furnished by each project, and may contract with any person, partnership, association or corporation, or other body, public or private, in respect thereof. These rates, rents, fees, and charges shall be fixed and adjusted in respect of the aggregate of rents, rates, fees, and charges from the project so as to provide funds sufficient with other revenues or moneys, if any, to accomplish all of the following: (1) Pay the cost of maintaining, repairing and operating the project and each and every portion thereof, to the extent that the payment of that cost has not otherwise been adequately provided for. (2) Pay the principal of, and the interest on outstanding bonds of the authority issued in respect of that project as the same shall become due and payable. (3) Create and maintain reserves required or provided for in any resolution authorizing, or trust agreement securing, bonds of the authority. (b) (1) The rates, rents, fees and charges referenced in subdivision (a) are not subject to supervision or regulation by any department, commission, board, body, bureau, or agency of this state other than the authority. A sufficient amount of the revenues derived in respect of a project, except a part of those revenues that is necessary to pay the cost of maintenance, repair, and operation and to provide reserves for renewals, replacements, extensions, enlargements, and improvements as may be provided for in the resolution authorizing the issuance of any bonds of the authority or in the trust agreement securing the same, shall be set aside at regular intervals provided in the resolution or trust agreement in a sinking or other similar fund. (2) The fund established pursuant to paragraph (1) is pledged to, and charged with, the payment of the principal of and the interest on, the bonds as the same shall become due, and the redemption price or the purchase price of bonds retired by call or purchase as therein provided. (3) The pledge required by paragraph (2) shall be valid and binding from the time when the pledge is made. The rates, rents, fees and charges and other revenues or other moneys so pledged and thereafter received by the authority shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and 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 authority, irrespective of whether the parties have notice thereof. Neither the resolution nor any trust agreement by which a pledge is created need be filed or recorded except in the records of the authority. (4) The use and disposition of moneys to the credit of the sinking or other similar fund shall be subject to the provisions of the resolution authorizing the issuance of those bonds or of that trust agreement. Except as may otherwise be provided in that resolution or that trust agreement, the sinking or other similar fund shall be a fund for all of those bonds issued to finance projects at a participating college, or bonds issued to finance a project of a participating nonprofit entity, without distinction or priority of one over another. (5) The authority, in the resolution or trust agreement, may provide that the sinking or other similar fund shall be either of the following: (A) The fund for a particular project at a participating college and for the bonds issued to finance a particular project and may, additionally, permit and provide for the issuance of bonds having a subordinate lien in respect of the security herein authorized to other bonds of the authority and, in this case, the authority may create separate sinking or other similar funds in respect of those subordinate lien bonds. (b) The fund for a particular project of a participating nonprofit entity. SEC. 8. Section 94154 of the Education Code is amended to read: 94154. The State of California pledges and agrees with the holders of the bonds, notes, and other obligations issued pursuant to authority contained in this chapter, and with those parties who may enter into contracts with the authority pursuant to the provisions of this chapter, that the state will not limit, alter, or restrict the rights hereby vested in the authority and the participating private colleges and participating nonprofit entities to maintain, construct, reconstruct, and operate any project as defined in this chapter or to establish and collect the rents, fees, receipts, or other charges as may be convenient or necessary to produce sufficient revenues to meet the expenses of maintenance and operation thereof and to fulfill the terms of any agreements made with the holders of bonds authorized by this chapter, and with the parties who may enter into contracts with the authority pursuant this chapter, or in any way impair the rights or remedies of the holders of those bonds or those parties until the bonds, together with interest thereon, are fully paid and discharged and the contracts are fully performed on the part of the authority. The authority as a public body corporate and politic may include the pledge herein made in its bonds and contracts. SEC. 8.5. Section 94154 of the Education Code is amended to read: 94154. The State of California pledges and agrees with the holders of the bonds, notes, and other obligations issued pursuant to authority contained in this chapter, and with those parties who may enter into contracts with the authority pursuant to the provisions of this chapter, that the state will not limit, alter, or restrict the rights hereby vested in the authority and the participating private colleges and participating nonprofit entities to maintain, construct, reconstruct, and operate any project as defined in this chapter or to establish and collect the rents, fees, receipts, or other charges as may be convenient or necessary to produce sufficient revenues to meet the expenses of maintenance and operation thereof and to fulfill the terms of any agreements made with the holders of bonds authorized by this chapter, and with the parties who may enter into contracts with the authority pursuant this chapter, or in any way impair the rights or remedies of the holders of those bonds or those parties until the bonds, together with interest thereon, are fully paid and discharged and the contracts are fully performed on the part of the authority. The authority as a public body corporate and politic may include the pledge herein made in its bonds and contracts. SEC. 9. Section 94190 of the Education Code is amended to read: 94190. (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 or participating nonprofit entity, 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 or participating nonprofit entity 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 or participating nonprofit entity 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 or participating nonprofit entity 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. SEC. 10. Section 94191 of the Education Code is amended to read: 94191. The authority also shall have power: (a) To make loans to any participating private college or participating nonprofit entity 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 or participating nonprofit entity as to payment, security, maturity, redemption, interest, and other appropriate matters. (b) To make loans to any participating private college or participating nonprofit entity to refund existing bonds, mortgages, or advances or other obligations incurred, given, or made by the private college or participating nonprofit entity for the acquisition or construction of any projects. SEC. 11. Section 94192 of the Education Code is amended to read: 94192. For the purpose of obtaining and securing loans under Section 94191, every participating private college or participating nonprofit entity shall, notwithstanding the provisions of 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. SEC. 12. Section 94193 of the Education Code is amended to read: 94193. Moneys of the authority received from any participating private college or participating nonprofit entity 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 or participating nonprofit entities 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. SEC. 13. Section 94195 of the Education Code is amended to read: 94195. Any pledge of moneys, earnings, income, or revenues authorized with respect to participating private colleges or participating nonprofit entities, 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. SEC. 14. Section 1.5 of this bill incorporates amendments to Section 94100 of the Education Code proposed by both this bill and SB 1209. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2002, (2) each bill amends Section 94100 of the Education Code, and (3) this bill is enacted after SB 1209, in which case Section 1 of this bill shall not become operative. SEC. 15. Section 2.5 of this bill incorporates amendments to Section 94110 of the Education Code proposed by both this bill and SB 1209. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2002, (2) each bill amends Section 94110 of the Education Code, and (3) this bill is enacted after SB 1209, in which case Section 2 of this bill shall not become operative. SEC. 16. Section 4.5 of this bill incorporates amendments to Section 94140 of the Education Code proposed by both this bill and SB 1209. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2002, (2) each bill amends Section 94140 of the Education Code, and (3) this bill is enacted after SB 1209, in which case Section 4 of this bill shall not become operative. SEC. 17. Section 7.5 of this bill incorporates amendments to Section 94147 of the Education Code proposed by both this bill and SB 1209. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2002, (2) each bill amends Section 94147 of the Education Code, and (3) this bill is enacted after SB 1209, in which case Section 7 of this bill shall not become operative. SEC. 18. Section 8.5 of this bill incorporates amendments to Section 94154 of the Education Code proposed by both this bill and SB 1209. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2002, (2) each bill amends Section 94154 of the Education Code, and (3) this bill is enacted after SB 1209, in which case Section 8 of this bill shall not become operative.