Collapse to view only § 1066b. Federal insurance for bonds
- § 1066. Findings
- § 1066a. Definitions
- § 1066b. Federal insurance for bonds
- § 1066c. Limitations on Federal insurance for bonds issued by designated bonding authority
- § 1066d. Authority of Secretary
- § 1066e. Repealed.
- § 1066f. HBCU Capital Financing Advisory Board
- § 1066g. Minority business enterprise utilization
§ 1066. Findings
The Congress finds that—
(1) a significant part of the Federal mission in education has been to attain equal opportunity in higher education for low-income, educationally disadvantaged Americans and African Americans;
(2) the Nation’s historically Black colleges and universities have played a prominent role in American history and have an unparalleled record of fostering the development of African American youth by recognizing their potential, enhancing their academic and technical skills, and honing their social and political skills through higher education;
(3) the academic and residential facilities on the campuses of all historically Black colleges and universities have suffered from neglect, deferred maintenance and are in need of capital improvements in order to provide appropriate settings for learning and social development through higher education;
(4) due to their small enrollments, limited endowments and other financial factors normally considered by lenders in construction financing, historically Black colleges and universities often lack access to the sources of funding necessary to undertake the necessary capital improvements through borrowing and bond financing;
(5) despite their track record of long-standing and remarkable institutional longevity and viability, historically Black colleges and universities often lack the financial resources necessary to gain access to traditional sources of capital financing such as bank loans and bond financing; and
(6) Federal assistance to facilitate low-cost capital basis for historically Black colleges and universities will enable such colleges and universities to continue and expand their educational mission and enhance their significant role in American higher education.
(Pub. L. 89–329, title III, § 341, formerly title VII, § 721, as added Pub. L. 102–325, title VII, § 704, July 23, 1992, 106 Stat. 741; renumbered title III, § 341, Pub. L. 105–244, title III, § 301(a)(3), (4), Oct. 7, 1998, 112 Stat. 1636
§ 1066a. DefinitionsFor the purposes of this part:
(1) The term “eligible institution” means a “part B institution” as that term is defined in section 1061(2) of this title.
(2) The term “loan” means a loan made to an eligible institution under the provisions of this part and pursuant to an agreement with the Secretary.
(3) The term “qualified bond” means any obligation issued by the designated bonding authority at the direction of the Secretary, the net proceeds of which are loaned to an eligible institution for the purposes described in section 1066b(b) of this title.
(4) The term “funding” means any payment under this part from the Secretary to the eligible institution or its assignee in fulfillment of the insurance obligations of the Secretary pursuant to an agreement under section 1066b of this title.
(5) The term “capital project” means, subject to section 1066c(b) of this title, the repair, renovation, or, in exceptional circumstances, the construction or acquisition, of—
(A) any classroom facility, library, laboratory facility, dormitory (including dining facilities) or other facility customarily used by colleges and universities for instructional or research purposes or for housing students, faculty, and staff;
(B) a facility for the administration of an educational program, or a student center or student union, except that not more than 5 percent of the loan proceeds provided under this part may be used for the facility, center or union if the facility, center or union is owned, leased, managed, or operated by a private business, that, in return for such use, makes a payment to the eligible institution;
(C) instructional equipment, technology, research instrumentation, and any capital equipment or fixture related to facilities described in subparagraph (A);
(D) a maintenance, storage, or utility facility that is essential to the operation of a facility, a library, a dormitory, equipment, instrumentation, a fixture, real property or an interest therein, described in this paragraph;
(E) a facility designed to provide primarily outpatient health care for students or faculty;
(F) physical infrastructure essential to support the projects authorized under this paragraph, including roads, sewer and drainage systems, and water, power, lighting, telecommunications, and other utilities;
(G) any other facility, equipment or fixture which is essential to the maintaining of accreditation of the member institution by an accrediting agency or association recognized by the Secretary under subpart 2 of part H of subchapter IV; and
(H) any real property or interest therein underlying facilities described in subparagraph (A) or (G).
(6) The term “interest” includes accredited value or any other payment constituting interest on an obligation.
(7) The term “outstanding”, when used with respect to bonds, shall not include bonds the payment of which shall have been provided for by the irrevocable deposit in trust of obligations maturing as to principal and interest in such amounts and at such times as will ensure the availability of sufficient moneys to make payments on such bonds.
(8) The term “designated bonding authority” means the private, for-profit corporation selected by the Secretary pursuant to section 1066d(1) of this title for the purpose of issuing taxable capital project construction bonds in furtherance of the purposes of this part.
(9) The term “Advisory Board” means the Advisory Board established by section 1066f of this title.
(Pub. L. 89–329, title III, § 342, formerly title VII, § 722, as added Pub. L. 102–325, title VII, § 704, July 23, 1992, 106 Stat. 742; renumbered title III, § 342, and amended Pub. L. 105–244, title III, §§ 301(a)(3), (4), (c)(4), 306(a), Oct. 7, 1998, 112 Stat. 1636, 1637, 1646; Pub. L. 110–315, title III, §§ 314(a), 320(1), Aug. 14, 2008, 122 Stat. 3180, 3187.)
§ 1066b. Federal insurance for bonds
(a) General rule
(b) Responsibilities of designated bonding authorityThe Secretary may not enter into an insurance agreement described in subsection (a) unless the Secretary designates a qualified bonding authority in accordance with sections 1066d(1) and 1066e 1
1 See References in Text note below.
of this title and the designated bonding authority agrees in such agreement to—(1) use the proceeds of the qualified bonds, less costs of issuance not to exceed 2 percent of the principal amount thereof, to make loans to eligible institutions or for deposit into an escrow account for repayment of the bonds;
(2) provide in each loan agreement with respect to a loan that not less than 95 percent of the proceeds of the loan will be used—
(A) to finance the repair, renovation, and, in exceptional cases, construction or acquisition, of a capital project; or
(B) to refinance an obligation the proceeds of which were used to finance the repair, renovation, and, in exceptional cases, construction or acquisition, of a capital project;
(3)
(A) charge such interest on loans, and provide for such a schedule of repayments of loans, as will, upon the timely repayment of the loans, provide adequate and timely funds for the payment of principal and interest on the bonds; and
(B) require that any payment on a loan expected to be necessary to make a payment of principal and interest on the bonds be due not less than 60 days prior to the date of the payment on the bonds for which such loan payment is expected to be needed;
(4) prior to the making of any loan, provide for a credit review of the institution receiving the loan and assure the Secretary that, on the basis of such credit review, it is reasonable to anticipate that the institution receiving the loan will be able to repay the loan in a timely manner pursuant to the terms thereof;
(5) provide in each loan agreement with respect to a loan that, if a delinquency on such loan results in a funding under the insurance agreement, the institution obligated on such loan shall repay the Secretary, upon terms to be determined by the Secretary, for such funding;
(6) assign any loans to the Secretary, upon the demand of the Secretary, if a delinquency on such loan has required a funding under the insurance agreement;
(7) in the event of a delinquency on a loan, engage in such collection efforts as the Secretary shall require for a period of not less than 45 days prior to requesting a funding under the insurance agreement;
(8) establish an escrow account—
(A) into which each eligible institution shall deposit 5 percent of the proceeds of any loan made under this part, with each eligible institution required to maintain in the escrow account an amount equal to 5 percent of the outstanding principal of all loans made to such institution under this part; and
(B) the balance of which—
(i) shall be available to the Secretary to pay principal and interest on the bonds in the event of delinquency in loan repayment; and
(ii) shall be used to return to an eligible institution an amount equal to any remaining portion of such institution’s 5 percent deposit of loan proceeds within 120 days following scheduled repayment of such institution’s loan;
(9) provide in each loan agreement with respect to a loan that, if a delinquency on such loan results in amounts being withdrawn from the escrow account to pay principal and interest on bonds, subsequent payments on such loan shall be available to replenish such escrow account;
(10) comply with the limitations set forth in section 1066c of this title;
(11) make loans only to eligible institutions under this part in accordance with conditions prescribed by the Secretary to ensure that loans are fairly allocated among as many eligible institutions as possible, consistent with making loans of amounts that will permit capital projects of sufficient size and scope to significantly contribute to the educational program of the eligible institutions; and
(12) limit loan collateralization, with respect to any loan made under this part, to 100 percent of the loan amount, except as otherwise required by the Secretary.
(c) Additional agreement provisionsAny insurance agreement described in subsection (a) of this section shall provide as follows:
(1) The payment of principal and interest on bonds shall be insured by the Secretary until such time as such bonds have been retired or canceled.
(2) The Federal liability for delinquencies and default for bonds guaranteed under this part shall only become effective upon the exhaustion of all the funds held in the escrow account described in subsection (b)(8).
(3) The Secretary shall create a letter of credit authorizing the Department of the Treasury to disburse funds to the designated bonding authority or its assignee.
(4) The letter of credit shall be drawn upon in the amount determined by paragraph (5) of this subsection upon the certification of the designated bonding authority to the Secretary or the Secretary’s designee that there is a delinquency on 1 or more loans and there are insufficient funds available from loan repayments and the escrow account to make a scheduled payment of principal and interest on the bonds.
(5) Upon receipt by the Secretary or the Secretary’s designee of the certification described in paragraph (4) of this subsection, the designated bonding authority may draw a funding under the letter of credit in an amount equal to—
(A) the amount required to make the next scheduled payment of principal and interest on the bonds, less
(B) the amount available to the designated bonding authority from loan repayments and the escrow account.
(6) All funds provided under the letter of credit shall be paid to the designated bonding authority within 2 business days following receipt of the certification described in paragraph (4).
(d) Full faith and credit provisions
(e) Sale of qualified bonds
(Pub. L. 89–329, title III, § 343, formerly title VII, § 723, as added Pub. L. 102–325, title VII, § 704, July 23, 1992, 106 Stat. 743; amended Pub. L. 103–382, title III, § 360C, Oct. 20, 1994, 108 Stat. 3972; renumbered title III, § 343, and amended Pub. L. 105–244, title III, §§ 301(a)(3), (4), (c)(5), 306(b), Oct. 7, 1998, 112 Stat. 1636, 1637, 1646; Pub. L. 110–315, title III, §§ 314(b), 320(2), Aug. 14, 2008, 122 Stat. 3181, 3187.)
§ 1066c. Limitations on Federal insurance for bonds issued by designated bonding authority
(a) Limit on amount
At no time shall the aggregate principal amount of outstanding bonds insured under this part together with any accrued unpaid interest thereon exceed $1,100,000,000, of which—
(1) not more than $733,333,333 shall be used for loans to eligible institutions that are private historically Black colleges and universities; and
(2) not more than $366,666,667 shall be used for loans to eligible institutions which are historically Black public colleges and universities.
For purposes of paragraphs (1) and (2), Lincoln University of Pennsylvania is an historically Black public institution. No institution of higher education that has received assistance under section 123 of this title shall be eligible to receive assistance under this part.
(b) Limitation on credit authority
(c) Religious activity prohibition
(d) Discrimination prohibition
(Pub. L. 89–329, title III, § 344, formerly title VII, § 724, as added Pub. L. 102–325, title VII, § 704, July 23, 1992, 106 Stat. 745; renumbered title III, § 344, Pub. L. 105–244, title III, § 301(a)(3), (4), Oct. 7, 1998, 112 Stat. 1636; Pub. L. 110–315, title III, § 314(c), Aug. 14, 2008, 122 Stat. 3181.)
§ 1066d. Authority of SecretaryIn the performance of, and with respect to, the functions vested in the Secretary by this part, the Secretary—
(1) shall, within 120 days of August 14, 2008, publish in the Federal Register a notice and request for proposals for any private for-profit organization or entity wishing to serve as the designated bonding authority under this part, which notice shall—
(A) specify the time and manner for submission of proposals; and
(B) specify any information, qualifications, criteria, or standards the Secretary determines to be necessary to evaluate the financial capacity and administrative capability of any applicant to carry out the responsibilities of the designated bonding authority under this part;
(2) shall ensure that—
(A) the selection process for the designated bonding authority is conducted on a competitive basis; and
(B) the evaluation and selection process is transparent;
(3) shall—
(A) review the performance of the designated bonding authority after the third year of the insurance agreement; and
(B) following the review described in subparagraph (A), implement a revised competitive selection process, if determined necessary by the Secretary in consultation with the Advisory Board established pursuant to section 1066f of this title;
(4) shall require that the first loans for capital projects authorized under section 1066b of this title be made no later than March 31, 1994;
(5) may sue and be sued in any court of record of a State having general jurisdiction or in any district court of the United States, and such district courts shall have jurisdiction of civil actions arising under this part without regard to the amount in controversy, and any action instituted under this part without regard to the amount in controversy, and any action instituted under this section by or against the Secretary shall survive notwithstanding any change in the person occupying the office of the Secretary or any vacancy in such office;
(6)
(A) may foreclose on any property and bid for and purchase at any foreclosure, or any other sale, any property in connection with which the Secretary has been assigned a loan pursuant to this part; and
(B) in the event of such an acquisition, notwithstanding any other provisions of law relating to the acquisition, handling, or disposal of real property by the United States, complete, administer, remodel and convert, dispose of, lease, and otherwise deal with, such property, except that—
(i) such action shall not preclude any other action by the Secretary to recover any deficiency in the amount of a loan assigned to the Secretary; and
(ii) any such acquisition of real property shall not deprive any State or political subdivision thereof of its civil or criminal jurisdiction in and over such property or impair the civil rights under the State or local laws of the inhabitants on such property;
(7) may sell, exchange, or lease real or personal property and securities or obligations;
(8) may include in any contract such other covenants, conditions, or provisions necessary to ensure that the purposes of this part will be achieved;
(9) may, directly or by grant or contract, provide technical assistance to eligible institutions to prepare the institutions to qualify, apply for, and maintain a capital improvement loan, including a loan under this part; and
(10) not later than 120 days after August 14, 2008, shall submit to the authorizing committees a report on the progress of the Department in implementing the recommendations made by the Government Accountability Office in October 2006 for improving the Historically Black College and Universities Capital Financing Program.
(Pub. L. 89–329, title III, § 345, formerly title VII, § 725, as added Pub. L. 102–325, title VII, § 704, July 23, 1992, 106 Stat. 745; amended Pub. L. 103–208, § 2(j)(16), Dec. 20, 1993, 107 Stat. 2481; renumbered title III, § 345, and amended Pub. L. 105–244, title III, §§ 301(a)(3), (4), (c)(6), 306(c), Oct. 7, 1998, 112 Stat. 1636, 1637, 1647; Pub. L. 110–315, title III, § 314(d), Aug. 14, 2008, 122 Stat. 3181.)
§ 1066e. Repealed. Pub. L. 105–244, title III, § 306(d), Oct. 7, 1998, 112 Stat. 1647
§ 1066f. HBCU Capital Financing Advisory Board
(a) Establishment and purpose
(b) Board membership
(1) CompositionThe Advisory Board shall be appointed by the Secretary and shall be composed of 11 members as follows:
(A) The Secretary or the Secretary’s designee.
(B) Three members who are presidents of private historically Black colleges or universities.
(C) Three members who are presidents of public historically Black colleges or universities.
(D) The president of the United Negro College Fund, Inc., or the president’s designee.
(E) The president of the National Association for Equal Opportunity in Higher Education, or the designee of the Association.
(F) The executive director of the White House Initiative on historically Black colleges and universities.
(G) The president of the Thurgood Marshall College Fund, or the designee of the president.
(2) TermsThe term of office of each member appointed under paragraphs (1)(B) and (1)(C) shall be 3 years, except that—
(A) of the members first appointed pursuant to paragraphs (1)(B) and (1)(C), 2 shall be appointed for terms of 1 year, and 3 shall be appointed for terms of 2 years;
(B) members appointed to fill a vacancy occurring before the expiration of a term of a member shall be appointed to serve the remainder of that term; and
(C) a member may continue to serve after the expiration of a term until a successor is appointed.
(c) Additional recommendations from Advisory Board
(1) In general
(A) the fiscal status and strategic financial condition of not less than ten historically Black colleges and universities that have—
(i) obtained construction financing through the program under this part and seek additional financing or refinancing under such program; or
(ii) applied for construction financing through the program under this part but have not received financing under such program; and
(B) the feasibility of reducing borrowing costs associated with the program under this part, including reducing interest rates.
(2) Report
(Pub. L. 89–329, title III, § 347, formerly title VII, § 727, as added Pub. L. 102–325, title VII, § 704, July 23, 1992, 106 Stat. 746; renumbered title III, § 347, and amended Pub. L. 105–244, title III, §§ 301(a)(3), (4), 306(e), Oct. 7, 1998, 112 Stat. 1636, 1647; Pub. L. 110–315, title III, § 314(e), Aug. 14, 2008, 122 Stat. 3182.)
§ 1066g. Minority business enterprise utilization
In the performance of and with respect to the Secretary’s effectuation of his responsibilities under section 1066d(1) of this title and to the maximum extent feasible in the implementation of the purposes of this part, minority business persons, including bond underwriters and credit enhancers, bond counsel, marketers, accountants, advisors, construction contractors, and managers should be utilized.
(Pub. L. 89–329, title III, § 348, formerly title VII, § 728, as added Pub. L. 102–325, title VII, § 704, July 23, 1992, 106 Stat. 747; renumbered title III, § 348, and amended Pub. L. 105–244, title III, § 301(a)(3), (4), (c)(7), Oct. 7, 1998, 112 Stat. 1636, 1637.)