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General Assembly Raised Bill No. 305
February Session, 2020
LCO No. 2244
Referred to Committee on HIGHER EDUCATION AND
EMPLOYMENT ADVANCEMENT
Introduced by:
(HED)
AN ACT CONCERNING TH E CONNECTICUT HEALTH AND
EDUCATIONAL FACILITIES AUTHORITY AND THE CONNECTICUT
HIGHER EDUCATION SUP PLEMENTAL LOAN AUTHO RITY.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Subsection (g) of section 10a-178 of the general statutes is 1
repealed and the following is substituted in lieu thereof (Effective October 2
1, 2020): 3
(g) "Health care institution" means (1) any nonprofit, state-aided 4
hospital or other health care institution, including The University of 5
Connecticut Health Center, which is entitled, under the laws of the state, 6
to receive assistance from the state by means of a grant made pursuant 7
to a budgetary appropriation made by the General Assembly, (2) any 8
other hospital or other health care institution which is licensed, or any 9
nonprofit, nonstock corporation which shall receive financing or shall 10
undertake to construct or acquire a project which is or will be eligible to 11
be licensed, as an institution under the provisions of sections 19a-490 to 12
19a-503, inclusive, [or] (3) any nonprofit, nonstock, nonsectarian facility 13
which is exempt from taxation under the provisions of section 12-81 or 14 Raised Bill No. 305
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38a-188 and which is a health care center under the provisions of 15
sections 38a-175 to 38a-194, inclusive, [or (3)] (4) any nonprofit 16
corporation that is (A) wholly owned by two or more hospitals or other 17
health care institutions which operates for and on behalf of such 18
hospitals or other health care institutions a project, as defined in 19
subsection (b) of this section, or [is] (B) a nursing home, or (5) any 20
affiliated health care institution, as defined in subsection (r) of this 21
section; 22
Sec. 2. Section 10a-178 of the general statutes is amended by adding 23
subsection (r) as follows (Effective October 1, 2020): 24
(NEW) (r) "Affiliated health care institution" means a (1) hospital, 25
health care institution or institution, as defined in subsection (a) of 26
section 19a-490, (2) nonprofit, nonstock corporation that undertakes to 27
construct or acquire a project that would qualify as a hospital, health 28
care institution or institution, as defined in subsection (a) of section 19a-29
490, or (3) nonprofit, nonstock, nonsectarian health care center that 30
conducts activities and carries out purposes as described in subsection 31
(b) of section 38a-176, which entity, as described in subdivisions (1) to 32
(3), inclusive, of this subsection, (A) (i) is (I) a subsidiary wholly or 33
partially owned or controlled by an in-state health care institution, as 34
defined in subdivision (2) or (3) of subsection (g) of this section, and (II) 35
located in another state, or (ii) is (I) wholly under common ownership 36
or control as an in-state health care institution, as defined in subdivision 37
(2) or (3) of subsection (g) of this section, and (II) located in the state of 38
New York or Rhode Island or the commonwealth of Massachusetts, and 39
(B) for the purpose of financing a project, is jointly obligated with such 40
in-state health care institution on any bonds issued by the authority 41
pursuant to this chapter. 42
Sec. 3. Subdivision (1) of subsection (k) of section 10a-179 of the 2020 43
supplement to the general statutes is repealed and the following is 44
substituted in lieu thereof (Effective October 1, 2020): 45
(k) (1) The authority may form one or more subsidiaries to carry out 46 Raised Bill No. 305
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the public purposes of the authority and may transfer to any such 47
subsidiary, including to any subsidiary established by the General 48
Assembly through public or special act, any moneys and real or 49
personal property of any kind or nature. Any such subsidiary may be 50
organized as a stock or nonstock corporation or a limited liability 51
company. Each such subsidiary shall have and may exercise such 52
powers of the authority as are set forth in the resolution of the authority 53
or in a public or special act of the General Assembly prescribing the 54
purposes for which such subsidiary is formed and such other powers 55
provided to it by law. Each such subsidiary shall be deemed a quasi-56
public agency for purposes of chapter 12 and shall have all the 57
privileges, immunities, tax exemptions and other exemptions of the 58
authority, including the privileges, immunities, tax exemptions and 59
other exemptions provided under the general statutes for special capital 60
reserve funds. Each such subsidiary shall be subject to suit provided its 61
liability shall be limited solely to the assets, revenues and resources of 62
the subsidiary and without recourse to the general funds, revenues, 63
resources or any other assets of the authority. Each such subsidiary is 64
authorized to assume or take title to property subject to any existing lien, 65
encumbrance or mortgage and to mortgage, convey or dispose of its 66
assets and pledge its revenues in order to secure any borrowing, for the 67
purpose of refinancing, rehabilitating or improving its assets, provided 68
each such borrowing or mortgage shall be a special obligation of the 69
subsidiary, which obligation may be in the form of bonds, bond 70
anticipation notes and other obligations to the extent permitted under 71
this chapter to fund and refund the same and provide for the rights of 72
the holders thereof, and to secure the same by pledge of revenues, notes 73
and other assets and which shall be payable solely from the assets, 74
revenues and other resources of the subsidiary. The authority shall have 75
the power to assign to a subsidiary any rights, moneys or other assets it 76
has under any governmental program including the nursing home loan 77
program. 78
Sec. 4. Subdivision (18) of section 10a-223 of the general statutes is 79
repealed and the following is substituted in lieu thereof (Effective October 80 Raised Bill No. 305
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1, 2020): 81
(18) "Education assistance program" means a program to assist in 82
financing the costs of education through education loans, [or] education 83
grants [, or both] or any other financial assistance made or awarded by 84
the authority to an individual who attends an institution of higher 85
education in the state or currently resides in the state; 86
Sec. 5. Subdivision (7) of subsection (a) of section 10a-225 of the 87
general statutes is repealed and the following is substituted in lieu 88
thereof (Effective October 1, 2020): 89
(7) To establish guidelines, criteria and procedures not in conflict 90
with existing statutes with respect to authority loans, education [grants, 91
education loans] assistance programs and education loan series 92
portfolios. Such guidelines, criteria and procedures shall not be 93
construed as regulations within the scope of chapter 54. 94
Sec. 6. Section 10a-230 of the general statutes is amended by adding 95
subsection (i) as follows (Effective October 1, 2020): 96
(NEW) (i) The state of Connecticut does hereby pledge to and agree 97
with the holders of any bonds and notes issued under this chapter and 98
with those parties who may enter into contracts with the authority or its 99
successor agency pursuant to the provisions of this chapter that the state 100
will not limit or alter the rights hereby vested in the authority until such 101
obligations, together with the interest thereon, are fully met and 102
discharged and such contracts are fully performed on the part of the 103
authority, provided nothing contained herein shall preclude such 104
limitation or alteration if and when adequate provision shall be made 105
by law for the protection of the holders of such bonds and notes of the 106
authority or those entering into such contracts with the authority. The 107
authority is authorized to include this pledge and undertaking for the 108
state in such bonds and notes or contracts. 109
Sec. 7. Subsection (b) of section 10a-232 of the general statutes is 110
repealed and the following is substituted in lieu thereof (Effective October 111 Raised Bill No. 305
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1, 2020): 112
(b) Notwithstanding the foregoing, (1) the constituent units of the 113
state system of higher education may participate in one or more 114
education loan programs with the authority and may incur 115
indebtedness pursuant to authority loans, and (2) the authority may 116
create and establish one or more reserve funds to be known as special 117
capital reserve funds and may pay into such special capital reserve 118
funds (A) any moneys appropriated and made available by the state for 119
the purposes of such funds, (B) any proceeds of sale of notes or bonds, 120
to the extent provided in the resolution of the authority authorizing the 121
issuance thereof, [and] (C) any other moneys which may be made 122
available to the authority for the purpose of such funds from any other 123
source or sources, and (D) any surety policy or other similar instrument 124
issued by a financial institution that is rated "AA" or better by at least 125
one nationally recognized statistical rating organization and approved 126
by the State Treasurer, which surety policy or instrument shall be in a 127
form prescribed by the State Treasurer and valued at par and payable 128
or available to be drawn upon on or before any date by which debt 129
service on the bonds secured thereby is required to be paid. The moneys, 130
surety policy or similar instrument held in or credited to any special 131
capital reserve fund established under this section, except as hereinafter 132
provided, shall be used solely for the payment of the principal of bonds 133
of the authority secured by such capital reserve fund as the same 134
become due, the purchase of such bonds of the authority, the payment 135
of interest on such bonds of the authority or the payment of any 136
redemption premium required to be paid when such bonds are 137
redeemed prior to maturity; provided, the authority shall have power 138
to provide that moneys in any such fund shall not be withdrawn 139
therefrom at any time in such amount as would reduce the amount of 140
such funds to less than the maximum amount of principal and interest 141
becoming due by reason of maturity or a required sinking fund 142
installment in any succeeding calendar year on the bonds of the 143
authority then outstanding and secured by such special capital reserve 144
fund, or such lesser amount specified by the authority in its resolution 145 Raised Bill No. 305
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authorizing the issuance of any such bonds, such amount being herein 146
referred to as the "required minimum capital reserve", except for the 147
purpose of paying such principal of, redemption premium and interest 148
on such bonds of the authority secured by such special capital reserve 149
becoming due and for the payment of which other moneys of the 150
authority are not available. The authority may provide that it shall not 151
issue bonds at any time if the required minimum capital reserve on 152
outstanding bonds secured by a special capital reserve fund and the 153
bonds then to be issued and secured by a special capital reserve fund 154
will exceed the amount of such special capital reserve fund at the time 155
of issuance, unless the authority, at the time of the issuance of such 156
bonds, shall deposit in such special capital reserve fund from the 157
proceeds of the bonds so to be issued, or otherwise, an amount which, 158
together with the amount then in such special capital reserve fund, will 159
be not less than the required minimum capital reserve. The authority 160
may, as part of the contract of the authority with the owners of such 161
bonds, provide that on or before December first, annually, there is 162
deemed to be appropriated from the state General Fund such sums, if 163
any, as shall be certified by the chairman of the authority to the Secretary 164
of the Office of Policy and Management and the Treasurer of the state, 165
as necessary to restore each such special capital reserve fund to the 166
amount equal to the required minimum capital reserve of such fund, 167
and such amounts shall be allotted and paid to the authority. For the 168
purpose of evaluation of any such special capital reserve fund, 169
obligations acquired as an investment for any such fund shall be valued 170
at amortized cost. Nothing contained in this section shall preclude the 171
authority from establishing and creating other debt service reserve 172
funds in connection with the issuance of bonds or notes of the authority. 173
Subject to any agreement or agreements with owners of outstanding 174
notes and bonds of the authority, any amount or amounts allotted and 175
paid to the authority pursuant to this section shall be repaid to the state 176
from moneys of the authority at such time as such moneys are not 177
required for any other of its corporate purposes and in any event shall 178
be repaid to the state on the date one year after all bonds and notes of 179
the authority theretofore issued on the date or dates such amount or 180 Raised Bill No. 305
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amounts are allotted and paid to the authority or thereafter issued, 181
together with interest on such bonds and notes, with interest on any 182
unpaid installments of interest and all costs and expenses in connection 183
with any action or proceeding by or on behalf of the owners thereof, are 184
fully met and discharged. 185
(c) Notwithstanding any other provisions contained in this chapter, 186
the aggregate amount of bonds outstanding at any time secured by such 187
special capital reserve funds authorized to be created and established by 188
this section shall not exceed [three] five hundred million dollars and no 189
such bonds shall be issued to pay program costs unless the authority is 190
of the opinion and determines that the revenues to be derived from the 191
program shall be sufficient (1) to pay the principal of and interest on the 192
bonds issued to finance the program, (2) to establish, increase and 193
maintain any reserves deemed by the authority to be advisable to secure 194
the payment of the principal of and interest on such bonds, (3) to pay 195
the cost of maintaining and servicing the program and keeping it 196
properly insured, and (4) to pay such other costs of the program as may 197
be required. 198
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2020 10a-178(g)
Sec. 2 October 1, 2020 10a-178
Sec. 3 October 1, 2020 10a-179(k)(1)
Sec. 4 October 1, 2020 10a-223(18)
Sec. 5 October 1, 2020 10a-225(a)(7)
Sec. 6 October 1, 2020 10a-230
Sec. 7 October 1, 2020 10a-232(b)
Statement of Purpose:
To (1) allow the Connecticut Health and Educational Facilities Authority
to (A) finance the capital projects of out-of-state health care institutions,
and (B) make loans and transfer funds to its subsidiaries, and (2) allow
the Connecticut Higher Education Supplemental Loan Authority to (A)
fund the Special Capital Reserve Fund with a bank letter of credit, (B)
increase its Special Capital Reserve Fund backed bond limit to five
hundred million dollars, (C) allow it to provide educational financial Raised Bill No. 305
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assistance other than loans and grants, and (D) add the state pledge for
its bond holders.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]