CHAPTER 53A. HIGHER EDUCATION FACILITY AUTHORITIES FOR PRIVATE SCHOOLS
EDUCATION CODE
TITLE 3. HIGHER EDUCATION
SUBTITLE A. HIGHER EDUCATION IN GENERAL
CHAPTER 53A. HIGHER EDUCATION FACILITY AUTHORITIES FOR PRIVATE
SCHOOLS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 53A.01. SHORT TITLE. This chapter may be cited as the
Higher Education Facility Authority for Private Schools Act.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.02. DEFINITIONS. In this chapter:
(1) "City" means an incorporated city or town in this state.
(2) "Governing body" means the council, commission, or other
governing body of a city.
(3) "Authority" means a higher education facility authority
created under this chapter.
(4) "Board" means the board of directors of an authority.
(5) "Institution of higher education" means (i) a
degree-granting college or university corporation accredited by
the Texas Education Agency or by a recognized accrediting agency,
as defined by Section 61.003(13), or (ii) a postsecondary career
school or college accredited by the Association of Independent
Colleges and Schools, the National Association of Trade and
Technical Schools, or the National Accrediting Commission of
Cosmetology Arts and Sciences.
(6) "Educational facility" means a classroom building,
laboratory, science building, faculty or administrative office
building, or other facility used for the conduct of the
educational and administrative functions of an institution of
higher education.
(7) "Housing facility" means a single- or multi-family residence
used exclusively for housing or boarding, or housing and boarding
students, faculty, or staff members of an institution of higher
learning. The term includes infirmary and student union
building, but does not include a housing or boarding facility for
the use of a fraternity, sorority, or private club.
(8) "Bond resolution" means the resolution authorizing the
issuance of revenue bonds.
(9) "Trust indenture" means the mortgage, deed of trust, or
other instrument pledging revenue or property, or creating a
mortgage lien on property, or both, to secure the revenue bonds
issued by the authority.
(10) "Accredited primary or secondary school" means a primary or
secondary school, including a preschool, that is accredited by an
accreditation body that is a member of the Texas Private School
Accreditation Commission.
(11) "Borrower" means any of the following entities that is the
recipient of a loan made under Section 53A.34:
(A) an institution of higher education;
(B) a nonprofit corporation:
(i) incorporated by and under the exclusive control of an
institution of higher education; or
(ii) incorporated and operating for the exclusive benefit of an
institution of higher education and authorized by the governing
board of the institution to enter into a transaction as a
borrower under this chapter; or
(C) an accredited primary or secondary school.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
849, Sec. 3, eff. June 19, 2009.
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Sec. 53A.11. CREATION OF AUTHORITY. When the governing body of
a city finds that it is to the best interest of the city and its
inhabitants to create a higher education facility authority, it
shall pass an ordinance creating the authority and designating
the name by which it shall be known. If the governing bodies of
two or more cities find that it is to the best interest of the
cities to create an authority to include those cities, each
governing body shall pass an ordinance creating the authority and
designating the name by which it shall be known.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.12. TERRITORY. The authority comprises only the
territory included within the boundaries of the city or cities
creating it.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.13. CORPORATE POWERS. An authority is a body politic
and corporate having the power of perpetual succession. It shall
have a seal; it may sue and be sued; and it may make, amend, and
repeal its bylaws.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.131. AUTHORITY'S EARNINGS. A private person may not
share in any of an authority's earnings.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.14. BOARD OF DIRECTORS. (a) The authority shall be
governed by a board of directors consisting of not less than 7
nor more than 11 members to be determined at the time of creating
the authority. The directors shall be appointed by the governing
body of the city or by the governing bodies of the cities, and
they shall serve until their successors are appointed as provided
by this section. If the authority includes more than one city,
each governing body shall appoint an equal number of directors
unless otherwise agreed by the cities.
(b) The members of the board serve for two-year terms.
(c) Directors are not entitled to compensation for services but
are entitled to reimbursement for expenses incurred in performing
such service.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
849, Sec. 4, eff. June 19, 2009.
Sec. 53A.15. ORGANIZATION OF BOARD; QUORUM; EMPLOYEES; COUNSEL.
(a) The board shall elect from among its members a president and
vice president, and shall elect a secretary and a treasurer who
may or may not be directors, and may elect other officers as
authorized by the authority's bylaws. The offices of secretary
and treasurer may be combined.
(b) The president has the same right to vote on all matters as
other members of the board.
(c) A majority constitutes a quorum, and when a quorum is
present action may be taken by a majority vote of directors
present.
(d) The board may employ a manager or executive director of the
facilities and other employees, experts, and agents as it sees
fit. It may delegate to the manager the power to employ and
discharge employees.
(e) The board may employ legal counsel.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
SUBCHAPTER C. POWERS AND DUTIES
Sec. 53A.31. NO TAXING POWER. An authority has no power to tax.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.32. NO POWER OF EMINENT DOMAIN. The authority does not
have the power of eminent domain.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.33. LIMITED POWER TO ACQUIRE, OWN, AND OPERATE
EDUCATIONAL AND HOUSING FACILITIES. (a) An authority or a
nonprofit instrumentality created under Section 53A.35(b) may
acquire, own, hold title to, lease, or operate an educational
facility or housing facility or any facility incidental,
subordinate, or related to or appropriate in connection with an
educational facility or housing facility, but only if:
(1) the facility is or will be located within the corporate
limits of the city that created the authority or nonprofit
instrumentality;
(2) the governing body of an institution of higher education
officially requests the authority or nonprofit instrumentality to
acquire and own the facility for the benefit of the institution
of higher education;
(3) the institution of higher education officially agrees to
accept, and has authority to receive legal title to, the facility
not later than the date on which any bonds or other obligations
issued to acquire the facility are paid in full; and
(4) the ownership of the facility by the authority or the
nonprofit instrumentality is approved by official action of the
governing body of:
(A) the city that created the authority or nonprofit
instrumentality;
(B) the school district in which the facility is or will be
located; and
(C) the county in which the facility is or will be located.
(b) An authority or instrumentality that exercises the powers
granted by Subsection (a) may contract for the operation of the
facility by public or private entities or persons on the terms
and conditions set forth in a contract relating to the operation
of the facility.
(c) The changes in law made by the amendment of this section by
the 78th Legislature, Regular Session, 2003, do not affect the
acquisition, ownership, construction, or improvement of a
facility, or the acquisition and ownership of land that were
approved by official action of the authority or nonprofit
corporate instrumentality before March 15, 2003, and the law in
effect immediately before the effective date of the amendment of
this section by the 78th Legislature, Regular Session, 2003, is
continued in effect for that purpose.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.331. REFINANCING FACILITIES. The authority may
refinance any educational or housing facility acquired,
constructed, or improved.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.34. REVENUE BONDS. (a) An authority or a nonprofit
instrumentality created under Section 53A.35(b), including an
authority or nonprofit instrumentality authorized to own
facilities under Section 53A.33(a), may issue and execute revenue
bonds or other obligations to loan or otherwise provide funds to
a borrower if:
(1) the governing body of the borrower by official action
requests the issuer of the bonds or other obligations to loan the
proceeds under this subsection;
(2) the purpose of the loan is to enable the borrower to
acquire, construct, enlarge, extend, repair, renovate, or
otherwise improve an educational facility or housing facility or
any facility incidental, subordinate, or related to or
appropriate in connection with an educational facility or housing
facility, or for acquiring land to be used for those purposes, or
to create operating and debt service reserves for and to pay
issuance costs related to the bonds or other obligations; and
(3) under the terms of the loan, and unless a mortgage lien
granted to secure the loan is in default, the ownership of the
facility is required to be at all times under the exclusive
control, and held for the exclusive benefit, of the borrower.
(b) In issuing revenue bonds or other obligations under this
chapter, the issuer of the bonds or other obligations is
considered to be acting on behalf of the city by which it was
created.
(c) Bonds or other obligations issued under Subsection (a) shall
be payable from and secured by a pledge of the revenues, income,
or assets pledged for the purpose by the borrower. The bonds or
other obligations may be additionally secured by a mortgage, deed
of trust, or chattel mortgage on real or personal property, or on
both real and personal property, if granted by the borrower.
(d) A facility financed with the proceeds of a loan or loans
made to a borrower under Subsection (a) is not required to be
located within the corporate limits of the city that created the
issuer of the bonds or other obligations.
(e) An authority or a nonprofit instrumentality that is
authorized to acquire and own educational facilities and housing
facilities under Section 53A.33(a) may issue and execute revenue
bonds and other obligations for the purpose of acquiring, owning,
and operating the educational and housing facilities, to create
operating reserves for the facilities, and to create debt service
reserves for and to pay issuance costs related to the bonds or
other obligations.
(f) Bonds or other obligations issued under Subsection (e) shall
be payable from and secured by a pledge of all or any part of the
gross or net revenues to be derived from the operation of the
educational facilities and housing facilities being acquired and
any other revenues, income, or assets, including the revenues and
income of the educational facilities or housing facilities
previously acquired or subsequently to be acquired. The bonds or
other obligations may be additionally secured by a mortgage, deed
of trust, or chattel mortgage on real or personal property, or on
both real and personal property, if granted by the authority or
nonprofit instrumentality issuing the bonds or other obligations.
(g) The changes in law made by the amendment of this section by
the 78th Legislature, Regular Session, 2003, affect and apply
only to transactions involving bonds or other obligations that
are issued or executed under this chapter on or after March 15,
2003. Bonds or other obligations that are issued or executed
under this chapter before March 15, 2003, are governed by the law
in effect immediately before the amendment of this section by the
78th Legislature, Regular Session, 2003, and that former law is
continued in effect for that purpose.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.35. ISSUANCE OF BONDS; PROCEDURE; ETC. (a) The bonds
shall be authorized by resolution adopted by a majority vote of a
quorum of the board. Bonds authorized under this section shall
be issued in accordance with Chapter 1201, Government Code. The
bonds shall mature serially or otherwise in not to exceed 50
years. The rate of interest to be borne by the bonds shall not
exceed the maximum rate prescribed by Chapter 1204, Government
Code.
(b) In addition to or in lieu of establishing an authority under
the provisions of this chapter, the governing body of a city or
cities may request or order created one or more nonprofit
corporations to act on its behalf and as its duly constituted
authority and instrumentality to exercise the powers granted to
an authority under the provisions of Sections 53A.33 and 53A.34.
If a nonprofit corporation is created for such purposes or agrees
to such request, the directors thereof shall thereafter be
appointed and be subject to removal by the governing body of the
city or cities. In addition to the powers granted under, and
subject to the limitations provided by Sections 53A.33 and
53A.34, the corporation shall have all powers granted under the
Texas Non-Profit Corporation Act for the purpose of aiding
institutions of higher education in providing educational
facilities and housing facilities and facilities incidental,
subordinate, or related thereto or appropriate in connection
therewith. In addition to Sections 53A.33 and 53A.34 and the
Texas Non-Profit Corporation Act, as amended (Article 1396-1.01
et seq., Vernon's Texas Civil Statutes), Sections 53A.131,
53A.14, 53A.15, 53A.31, 53A.32, 53A.331, 53A.34, 53A.35, 53A.38,
and 53A.41 apply to and govern such corporation and its
procedures, bonds, and other obligations.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.36. BOND RESOLUTION; NOTICE; ELECTION. (a) Before
authorizing the issuance of bonds, other than refunding bonds,
the board shall cause a notice to be issued stating that it
intends to adopt a resolution authorizing the issuance of the
bonds, the maximum amount thereof, and the maximum maturity
thereof. The notice shall be published once each week for two
consecutive weeks in a newspaper or newspapers having general
circulation in the authority. The first publication shall be at
least 14 days prior to the day set for adopting the bond
resolution.
(b) If, prior to the day set for the adoption of the bond
resolution, there is presented to the secretary or president of
the board a petition signed by not less than 10 percent of the
qualified voters residing in the city or cities comprising the
authority, who own taxable property in the authority and who have
duly rendered it for taxation to the city in which such property
is located or situated, requesting an election on the proposition
for the issuance of the bonds, the bonds shall not be issued
unless an election is held and a majority vote is in favor of the
bonds. The election shall be called and held in accordance with
the procedure prescribed in Chapter 1251, Government Code, with
the board and the president and secretary performing the
functions there assigned to the governing body of the city, the
mayor and city secretary, respectively. If no such petition is
filed, the bonds may be issued without an election. However, the
board may call an election on its own motion without the filing
of the petition.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.37. JUNIOR LIEN BONDS; PARITY BONDS. Bonds
constituting a junior lien on the net revenue or properties may
be issued unless prohibited by the bond resolution or trust
indenture. Parity bonds may be issued under conditions specified
in the bond resolution or trust indenture.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.38. RESERVES FOR OPERATING AND OTHER EXPENSES. Money
for the payment of not more than two years' interest on the bonds
and an amount estimated by the board to be required for operating
expenses during the first year of operation may be set aside for
those purposes out of the proceeds from the sale of the bonds.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.39. REFUNDING BONDS. Bonds may be issued for the
purpose of refunding outstanding bonds in the manner provided in
this chapter for other bonds, and may be exchanged by the
comptroller or sold and the proceeds applied in accordance with
the procedure prescribed by Subchapter B or C, Chapter 1207,
Government Code.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.40. APPROVAL OF BONDS; REGISTRATION; NEGOTIABILITY.
Bonds issued under this chapter and the record relating to their
issuance shall be submitted to the attorney general, and if he
finds that they have been issued in accordance with this chapter
and constitute valid and binding obligations of the authority and
are secured as recited therein he shall approve them, and they
shall be registered by comptroller of public accounts who shall
certify the registration thereon. Thereafter, they are
incontestable. The bonds shall be negotiable and shall contain
the following provision: "The holder hereof shall never have the
right to demand payment thereof out of money raised or to be
raised by taxation."
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.41. AUTHORIZED INVESTMENTS. All bonds issued under
this chapter are legal and authorized investments for all banks,
savings banks, trust companies, building and loan associations,
savings and loan associations, and insurance companies of all
kinds and types, and for the interest and sinking funds and other
public funds of any issuer. The bonds are also eligible and
lawful security for all deposits of public funds of the State of
Texas and of any issuer, to the extent of the value of the bonds,
when accompanied by any unmatured interest coupons appurtenant to
them.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.42. INVESTMENT OF FUNDS; SECURITY. To the extent it is
applicable, the law as to the security for and the investment of
funds, applicable to cities, controls the investment of funds
belonging to authority. The bond resolution or the indenture or
both may further restrict the making of investments. The
authority may invest the proceeds of its bonds, until the money
is needed, in the direct obligations of or obligations
unconditionally guaranteed by the United States, to the extent
authorized in the bond resolution or indenture or in both.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.43. DEPOSITORIES. The authority may select a
depository or depositories according to the procedures provided
by law for the selection of city depositories, or it may award
its depository contract to the same depository or depositories
selected by the city or cities and on the same terms.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.44. OPERATION OF FACILITIES; RATES CHARGED; RESERVE
FUNDS. (a) The facilities may be operated by the authority
without the intervention of private profit for the use and
benefit of the public, or may be leased to an institution of
higher education, or may be operated by the institution under a
contract with the authority, the lease or contract to be in
effect until any revenue bonds issued in connection with it have
been finally retired.
(b) The board shall charge rates for the use of the facilities,
or for their lease or operation, that are fully sufficient to pay
all expenses in connection with the ownership, operation, and
upkeep of the facilities, to pay the interest on the bonds as it
becomes due, to create a sinking fund to pay the bonds as they
become due, and to create and maintain a bond reserve fund and
other funds and reserves that may be provided in the bond
resolution or trust indenture. The bond resolution or trust
indenture may prescribe systems, methods, routines, and
procedures under which the facilities shall be operated.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.45. TRANSACTIONS WITH OTHER AGENCIES AND PERSONS. The
authority may borrow money and accept grants from, and enter into
contracts, leases, or other transactions with the United States,
the State of Texas, any municipal corporation in the state, and
any public or private person or corporation resident or
authorized to do business in the state.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.46. AUTHORITY EXEMPT FROM TAXATION. Because the
property owned by authority will be held for educational purposes
only and will be devoted exclusively to the use and benefit of
the students, faculty, and staff members of an accredited
institution of higher education, it is exempt from taxation of
every character.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.48. BONDS FOR ACCREDITED PRIMARY OR SECONDARY SCHOOLS.
In the same manner that a corporation may issue and execute bonds
or other obligations under this chapter for an institution of
higher education, a corporation created under Section 53A.35(b)
may issue and execute bonds or other obligations to finance or
refinance educational facilities or housing facilities to be used
by an accredited primary or secondary school.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.
Sec. 53A.49. BONDS FOR CERTAIN SCHOOLS OWNED AND OPERATED BY
NONPROFIT CORPORATIONS. (a) In the same manner that a
corporation may issue bonds under this chapter for an institution
of higher education, a corporation created under Section
53A.35(b) may issue bonds to finance or refinance educational
facilities to be used by a school that:
(1) is located in a county with a population of more than
1,800,000;
(2) is located within three miles of an area designated as an
enterprise zone under Chapter 2303, Government Code;
(3) provides primary and secondary education to at least 1,000
students;
(4) is accredited by an organization approved by the Texas
Education Agency for private school accreditation; and
(5) is owned and operated by a corporation created under the
Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
Vernon's Texas Civil Statutes).
(b) Notwithstanding Section 53A.34(b), bonds issued under this
section may be payable from and secured by a pledge of any
revenue or assets pledged for that purpose.
Added by Acts 2005, 79th Leg., Ch.
641, Sec. 2, eff. September 1, 2005.