SB 498: Georgia Charter School Facilities Authority; establish

The House Committee on Appropriations offers the following substitute to SB 498:

A BILL TO BE ENTITLED

AN ACT

To amend Article 31B of Chapter 2 of Title 20 of the Official Code of Georgia Annotated, relating to charter school capital finance, so as to establish the Georgia Charter School Facilities Authority for the purpose of enabling charter schools to obtain revolving loan funds and other public financing assistance for purposes of constructing, renovating, and rehabilitating educational facilities for such schools; to provide for definitions; to provide for the composition, duties, and powers of such authority; to assign such authority to the Georgia State Financing and Investment Commission for administrative purposes; to amend Article 2 of Chapter 17 of Title 50 of the Official Code of Georgia Annotated, the "Georgia State Financing and Investment Commission Act," so as to provide for responsibilities of the Georgia State Financing and Investment Commission; to provide for definitions; to provide for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Article 31B of Chapter 2 of Title 20 of the Official Code of Georgia Annotated, relating to charter school capital finance, is amended by designating Code Sections 20-2-2095 through 20-2-2095.5 as Part 1, by replacing the term "article" with the term "part" wherever the former term appears in any of such Code sections, and by adding a new part to read as follows:

"Part 2

20-2-2095.20.

As used in this part, the term:

(1) 'Authority' means the Georgia Charter School Facilities Authority created in this part.

(2) 'Charter school' shall have the same meaning as set forth in Code Section

20-2-2095.1.

(3) 'Cost of project' or 'cost of any project' means:

(A) All costs of acquisition, by purchase or otherwise, construction, assembly, installation, modification, renovation, extension, or rehabilitation incurred in connection with any project or any part of any project;

(B) All costs of real property, fixtures, or personal property used in or in connection with or necessary for any project or for any facilities related thereto, including, but not limited to, the costs of all land, interests in land, estates for years, easements, rights, improvements, water rights, and connections for utility services; the costs of fees, franchises, permits, approvals, licenses, and certificates; the costs of securing any such franchises, permits, approvals, licenses, or certificates; the costs of preparation of any application therefor; and the costs of all fixtures, machinery, equipment, furniture, and other property used in or in connection with or necessary for any project;

(C) All financing charges and loan or loan guarantee fees and all interest on notes of the authority which accrue or are paid prior to and during the period of construction of a project and during such additional period as the authority may reasonably determine to be necessary to place such project in operation;

(D) All costs of engineering, surveying, planning, environmental assessments, financial analyses, and architectural, legal, and accounting services and all expenses incurred by engineers, surveyors, planners, environmental scientists, fiscal analysts, architects, attorneys, accountants, and any other necessary technical personnel in connection with any project;

(E) All expenses for inspection of any project;

(F) All fees and all other costs and expenses incurred relative to the issuance of any notes for any project;

(G) All fees of any type charged by the authority in connection with any project;

(H) All expenses of or incidental to determining the feasibility or practicability of any project;

(I) All costs of plans and specifications for any project;

(J) All costs of title insurance and examinations of title with respect to any project;

(K) Repayment of any loans for the advance payment of any part of any of the foregoing costs, including interest thereon and any other expenses of such loans;

(L) Administrative expenses of the authority, including, but not limited to, personnel and operational costs, and such other expenses as may be necessary or incidental to any project or the financing thereof or the placing of any project in operation; and

(M) The establishment of a fund or funds as the authority may approve with respect to the financing and operation of any project and as may be authorized by any instrument or agreement pursuant to the provisions of which the issuance of any notes of the authority may be authorized.

Any cost, obligation, or expense incurred for any of the purposes specified in this paragraph shall be a part of the cost of the project and may be paid or reimbursed as such out of the proceeds of notes issued by the authority.

(4) 'Educational facilities' shall include buildings, fixtures, and equipment necessary for the effective and efficient operation of charter schools, which, without limiting the generality of the foregoing, shall include: classrooms; libraries; rooms and space for physical education; space for fine arts; restrooms; specialized laboratories; cafeterias; media centers; building equipment; building fixtures; furnishings; career, technical, and agricultural education labs and facilities to support industry credentialing; related exterior facilities; landscaping and paving; and similar items which the State Board of Education may determine necessary. The following facilities are specifically excluded: swimming pools, tracks, stadiums, and other facilities or portions of facilities used primarily for athletic competition.

(5) 'Project' means the acquisition, construction, installation, modification, renovation, repair, extension, renewal, replacement, or rehabilitation of land, interest in land, buildings, structures, facilities, or other improvements and the acquisition, installation, modification, renovation, repair, extension, renewal, replacement, rehabilitation, or furnishing of fixtures, machinery, equipment, furniture, or other property of any nature whatsoever used on, in, or in connection with any such land, interest in land, building, structure, facility, or other improvement, all for the essential public purpose of providing educational facilities.

(6) 'Qualified charter school organization' shall have the same meaning as set forth in Code Section 20-2-2095.1.

(7) 'Renovation' or 'modernization' or both refers to construction projects which consist of the installation or replacement of major building components including lighting, heating, air-conditioning, plumbing, roofing, electrical, electronic, or flooring systems; millwork; cabinet work and fixed equipment; energy retrofit packages; or room-size modifications within an existing facility, but excluding routine maintenance and repair items or operations.

20-2-2095.21.

(a) There is created a body corporate and politic to be known as the Georgia Charter School Facilities Authority which shall be deemed an instrumentality of the state and a public corporation; and by that name, style, and title such body may contract and be contracted with and bring and defend actions in all courts of this state. The authority shall consist of 15 members: the State School Superintendent, ex officio; the chairperson of the State Board of Education, ex officio; the state property officer, ex officio; the state auditor, ex officio; the executive director of the State Charter Schools Commission, ex officio; the director of the Office of Charter School Compliance, ex officio; three members to be appointed by the Governor; three members to be appointed by the President of the Senate; and three members to be appointed by the Speaker of the House of Representatives. The Governor, the President of the Senate, and the Speaker of the House of Representatives shall each appoint one member to serve until July 1, 2028, and two members to serve until July 1, 2030. Upon the expiration of each such initial terms, the terms of all succeeding members shall be for four years.

(b) A majority of the members of the authority shall constitute a quorum. No vacancy on the authority shall impair the right of a majority of the appointed members from exercising all rights and performing all duties of the authority.

(c) The members of the authority shall be accountable in all respects as trustees. The authority shall keep suitable books and records of all actions and transactions and shall submit such books together with a statement of the authority's financial position to an independent auditing firm selected by the authority on or about the close of the state's fiscal year for the purpose of obtaining a certified audit of the authority's finances.

(d) The authority shall make rules and regulations for its own government. The authority shall have perpetual existence. Any change in the name or composition of the authority shall in no way affect the vested rights of any person under this part or impair the obligations of any contracts existing under this part.

(e) The Attorney General shall provide legal services for the authority and in connection therewith Code Sections 45-15-13 through 45-15-16 shall be fully applicable.

(f) The members of the commission shall not be compensated for their services on the commission but may be reimbursed for per diem and travel expenses in the same manner as provided for in Code Section 45-7-21.

(g) Until such time as proceeds generated from the issuance of notes are adequate to cover the personnel and operational costs of the authority, the authority may withhold up to 5 percent of the authority's total appropriation to cover personnel and operational costs.

(h) The authority is assigned to the Georgia State Financing and Investment Commission for administrative purposes, which shall include providing .the authority with facilities, office space, telephones, furniture, office equipment, supplies, and such personnel as may be considered necessary to the proper functioning of the authority.

20-2-2095.22.

(a) The corporate purpose and the general nature of the business of the authority shall be assistance in constructing, extending, rehabilitating, repairing, replacing, and renewing educational facilities necessary for educational purposes or necessary or incidental to such purposes by providing loans and other forms of financial and technical assistance to qualified charter school organizations to finance any project or pay the cost of any project.

(b) The authority shall have power:

(1) To have a seal and alter the same at its pleasure;

(2) To adopt bylaws governing the conduct of business by the authority, the election and duties of officers of the authority, and other matters which the authority determines to deal with in its bylaws;

(3) To designate three or more of its number to constitute an executive committee who, to the extent provided in such resolution or in the bylaws of the authority, shall have and may exercise the powers of the authority in the management of the affairs and property of the authority and the exercise of its powers;

(4) To make and execute contracts, lease agreements, and all other instruments necessary or convenient to exercise the powers of the authority or to further the public purpose for which the authority is created, such contracts, leases, or instruments to include contracts for construction, operation, management, or maintenance of projects and facilities owned by a charter school organization, a local government, the authority, or by the state or any state authority; and any and all local governments, departments, institutions, authorities, or agencies of the state are authorized to enter into contracts, leases, agreements, or other instruments with the authority upon such terms and to transfer real and personal property to the authority for such consideration and for such purposes as the authority deems advisable;

(5) To acquire by purchase, lease, or otherwise and to hold, lease, and dispose of real or personal property of every kind and character, or any interest therein, in furtherance of the public purpose of the authority;

(6) To make loans to qualified charter school organizations to finance projects and to pay the cost of any project by qualified charter school organizations and to adopt rules, regulations, and procedures for making such loans, including to fund a revolving loan fund;

(7) To make loans to any qualified charter school organization for the cost or expense of any project or any part of the cost or expense of any project, which loans may be evidenced or secured by trust indentures, loan agreements, notes, mortgages, deeds to secure debt, trust deeds, security agreements, or assignments, on such terms and conditions as the authority shall determine to be reasonable in connection with such loans, including provision for the establishment and maintenance of reserve funds; and, in the exercise of powers granted by this part in connection with any project, the authority shall have the right and power to require the inclusion in any such trust indentures, loan agreement, note, mortgage, deed to secure debt, trust deed, security agreement, assignment, or other instrument such provisions or requirements for guaranty of any obligations, insurance, construction, use, operation, maintenance, and financing of a project and such other terms and conditions as the authority may deem necessary or desirable;

(8) To finance projects by loan, loan guarantee, lease, or otherwise, and to pay the cost of any project from any funds of the authority or from any contributions or loans by persons, corporations, partnerships, whether limited or general, or other entities, all of which the authority is authorized to receive, accept, and use;

(9) To collect fees and charges in connection with its loans, loan guarantees, commitments, management services, and servicing including, but not limited to, reimbursements of costs of financing, as the authority shall determine to be reasonable and as shall be approved by the authority;

(10) To lease to qualified charter school organizations any authority owned facilities or property or any state owned facilities or property which the authority is managing under contract with the state;

(11) To acquire or contract to acquire from any person, firm, corporation, local government, federal or state agency, or corporation by grant, purchase, or otherwise, leaseholds, real or personal property, or any interest therein; and to sell, assign, exchange, transfer, convey, lease, mortgage, or otherwise dispose of or encumber the same; and qualified charter school organization is authorized to grant, sell, or otherwise alienate leaseholds, real and personal property, or any interest therein to the authority;

(12) To apply for and to accept any gifts or grants or loan guarantees or loans of funds or property or financial or other aid in any form from the federal government or any agency or instrumentality thereof, or from the state or any agency or instrumentality thereof, or from any other source for any or all of the purposes specified in this part and to comply, subject to the provisions of this part, with the terms and conditions thereof;

(13) To contract with state agencies or any qualified charter school organization for the use by the authority of any property or facilities or services of the state or any such state qualified charter school organization or for the use by any state agency or qualified charter school organization of any facilities or services of the authority and such state agencies and qualified charter school organizations are authorized to enter into such contracts;

(14) As security for repayment of any obligations of the authority, to pledge, lease, mortgage, convey, assign, hypothecate, or otherwise encumber any property of the authority including, but not limited to, real property, fixtures, personal property, and other funds and to execute any lease, trust indenture, trust agreement, agreement for the sale of the authority's obligations, loan agreement, mortgage, deed to secure debt, trust deed, security agreement, assignment, or other agreement or instrument as may be necessary or desirable, in the judgment of the authority, to secure any such obligations, which instruments or agreements may provide for foreclosure or forced sale of any property of the authority upon default in any obligation of the authority, either in payment of principal, premium, if any, or interest or in the performance of any term or condition contained in any such agreement or instrument;

(15) To use income earned on any investment for such corporate purposes of the authority as the authority in its discretion shall determine;

(16) To incorporate one or more nonprofit corporations as subsidiary corporations of the authority for the purpose of carrying out any of the powers of the authority and to accomplish any of the purposes of the authority. Any such subsidiary corporation shall be a nonprofit corporation, a public body corporate and politic, a political subdivision of the state, and an instrumentality of the state and shall exercise essential governmental functions. Any subsidiary corporations created pursuant to this power shall be created pursuant to Chapter 3 of Title 14, the 'Georgia Nonprofit Corporation Code,' and the Secretary of State shall be authorized to accept such filings. Upon dissolution of any subsidiary corporation of the authority, any assets shall revert to the authority or to any successor to the authority or, failing such succession, to the State of Georgia. The authority shall not be liable for the debts or obligations of any subsidiary corporation or for the actions or omissions to act of any subsidiary corporation unless the authority expressly so consents;

(17) To cooperate and act in conjunction with educational organizations; with agencies of the federal government and this state and local government; with other states and their political subdivisions; and with joint agencies thereof, and such state agencies, local government, and joint agencies are authorized and empowered to cooperate and act in conjunction and to enter into contracts or agreements with the authority and qualified charter school organizations to achieve or further the policies of the state declared in this part;

(18) To procure insurance against any loss in connection with its property and other assets or obligations or to establish cash reserves to enable it to act as self-insurer against any and all such losses;

(19) To lend any of the securities of the type described in this subsection;

(20) To transfer to the state any funds of the authority determined by the authority to be in excess of those needed for its corporate purposes;

(21) To make loan commitments and loans to qualified charter school organizations for educational facilities projects;

(22) To exercise any power granted by the laws of this state to public or private corporations which is not in conflict with the public purpose of the authority;

(23) To do all things necessary or convenient to carry out the powers conferred by this part; and

(24) To promulgate and adopt rules and regulations to carry out the purposes of this part.

(c) The authority shall not have the power of eminent domain.

20-2-2095.23.

(a) The authority may make loans to a qualified charter school organization to pay all or any part of the cost of:

(1) A project, up to a maximum of the lesser of 20 percent of the project total or $2 million, except as provided for in paragraph (2) of this subsection; and

(2) A renovation or modernization project, up to a maximum of $200,000.00.

(b) The authority shall not enter into any loan or loan commitment with a qualified charter school organization for a term that exceeds the earlier of the expiration date of such qualified charter school organization's current charter agreement with the State Board of Education or five years.

(c) The authority and a qualified charter school organization may enter into such loan or other loan commitments as may be determined appropriate by the authority.

(d) The authority may require as a condition of any loan to a qualified charter school organization that such qualified charter school organization shall perform any or all of the following:

(1) Create and maintain a special fund or funds as additional security for the payment of any amounts becoming due under any agreement as shall be sufficient to make such payment as the same shall become due and payable;

(2) Create and maintain such other special funds as may be required by the authority; and

(3) Such other acts, including the conveyance of real and personal property together with all right, title, or interest therein to the authority, as may be deemed necessary or desirable by the authority to secure the payment of the principal of and interest on notes or obligations and to provide for the remedies of the authority in the event of any default by such qualified charter school organization in such payment.

(e) All qualified charter school organizations are authorized to perform such acts, take such action, adopt such proceedings, and make and carry out such contracts with the authority as may be contemplated by this part.

(f) In connection with the making of any loan authorized by this part, the authority may fix and collect such fees and charges, including, but not limited to, the reimbursement of all costs of financing by the authority, as the authority shall determine to be reasonable.

20-2-2095.24.

(a) For the purposes of this Code section, the term 'lease agreement' means and includes a lease, operating lease rental agreement, usufruct, sale and lease back, or any other lease agreement having a term of not more than 50 years and concerning real, personal, or mixed property, any right, title, or interest therein by and between the state, the authority, a qualified charter school organization, or any combination thereof.

(b) A qualified charter school organization may enter into a lease agreement for the provision of educational facilities owned by the authority upon such terms and conditions as the authority shall determine to be reasonable including, but not limited to, the reimbursement of all costs of construction and financing and claims arising therefrom.

(c) No lease agreement shall be deemed to be a contract subject to any law requiring that a contract shall be let only after receipt of competitive bids.

(d) Any lease agreement may provide for the construction of an educational facility by the qualified charter school organization as agent for the authority. In such event, all contracts for such construction shall be let by such qualified charter school organization in accordance with the provisions of law otherwise applicable to the letting of such contracts by such qualified charter school organization and with the provisions of state law pertaining to prevailing wages, labor standards, and working hours. Any such lease agreement may contain provisions by which such qualified charter school organization shall indemnify the authority against any and all damages resulting from acts or omissions to act on the part of such qualified charter school organization or its officers, agents, or employees in constructing such facility or facilities, in letting any contracts in connection therewith, or in operating and maintaining the same.

(e) Any lease agreement directly between the state or authority and a qualified charter school organization may contain provisions requiring the qualified charter school organization to perform any or all of the following:

(1) Create and maintain a special fund or funds as additional security for the payment of any amounts becoming due under any agreement as shall be sufficient to make such payment as the same shall become due and payable;

(2) Create and maintain such other special funds as may be required by the authority; and

(3) Such other acts and take such other action as may be deemed necessary and desirable by the authority to secure the complete and punctual performance by such qualified charter school organization of such lease agreements and to provide for the remedies of the authority in the event of a default by such qualified charter school organization in such payment.

20-2-2095.25.

Neither the members of the authority nor any officer or employee of the authority acting on behalf thereof, while acting within the scope of his or her authority, shall be subject to any liability resulting from:

(1) The construction, ownership, maintenance, or operation of any project financed with the assistance of the authority; or

(2) Carrying out any of the powers expressly given in this part.

20-2-2095.26.

No notice, proceeding, or publication except those required in this part shall be necessary to the performance of any act authorized in this part; nor shall any such act be subject to referendum.

20-2-2095.27.

No obligations of and no indebtedness incurred by the authority shall constitute an indebtedness or obligation or a pledge of the faith and credit of the State of Georgia or of its agencies; nor shall any act of the authority in any manner constitute or result in the creation of an indebtedness of the state or its agencies or a cause of action against the state or its agencies.

20-2-2095.28.

It is found, determined, and declared that the creation of this authority and the carrying out of its corporate purposes is in all respects for the benefit of the people of the state and that the authority is an institution of purely public charity and will be performing an essential governmental function in the exercise of the power conferred upon it by this part. For such reasons, the state covenants with the holders from time to time of obligations issued under this part that the authority shall not be required to pay any taxes or assessments imposed by the state or any of its counties, municipal corporations, political subdivisions, or taxing districts upon any property acquired by the authority or under its jurisdiction, control, possession, or supervision or leased by it to others, or upon its activities in the operation or maintenance of any such property or on any income derived by the authority in the form of fees, recording fees, rentals, charges, purchase price, installments, or otherwise, and that the notes of the authority, their transfer, and the income therefrom shall at all times be exempt from taxation within the state. The tax exemption provided in this part shall not include any exemption from sales and use tax on property purchased by the authority or for use by the authority.

20-2-2095.29.

The authority shall have all rights afforded the state by virtue of the Constitution of the United States, and nothing in this part shall be construed to remove any such rights.

20-2-2095.30.

This part, being for the welfare of this state and its inhabitants, shall be liberally construed to effect the purposes specified in this part.

20-2-2095.31.

(a) In the event of a failure of any qualified charter school organization to collect and remit in full all amounts due to the authority and all amounts due to others which involve the authority, on the date such amounts are due under the terms of any note of the qualified charter school organization, it shall be the duty of the authority to notify the state treasurer who shall withhold all funds of the state and all funds administered by the state and its agencies, boards, and instrumentalities allotted to such qualified charter school organization until such qualified charter school organization has collected and remitted in full all sums due and cured or remedied all defaults on any such note.

(b) Nothing contained in this Code section shall mandate the withholding of funds allocated to a qualified charter school organization which would violate contracts to which the state is a party, the requirements of federal law imposed on the state, or judgments of any court binding the state."

SECTION 2.

Article 2 of Chapter 17 of Title 50 of the Official Code of Georgia Annotated, the "Georgia State Financing and Investment Commission Act," is amended in Code Section 50-17-22, relating to the State Financing and Investment Commission, by revising subsection (a) as follows:

"(a) Responsibilities. Subject to the limitations contained in this article, the commission shall be responsible for the issuance of all public debt incurred hereunder, for the proper application of the proceeds of such debt to the purposes for which it is incurred, for the proper application of an appropriation to the commission for capital outlay to the purpose for which it is appropriated, and for the application and administration of this article; provided, however, that the proceeds of guaranteed revenue obligations shall be paid to the issuer thereof, and such proceeds and the application thereof shall be the responsibility of the issuer. The commission shall also be responsible for the proper disbursement of an appropriation to it for public school capital outlay, including charter school capital outlay, and the commission and the State Board of Education will be concurrently responsible for its proper application. The commission shall be responsible for the issuance of guaranteed revenue debt, except that bonds themselves evidencing such debt shall be in the name of the instrumentality of this state issuing the same and shall be issued and executed in accordance with the laws relative to such instrumentality and the applicable provisions of this article."

SECTION 3.

All laws and parts of laws in conflict with this Act are repealed.