PA 95-230-sHB 6785
Education Committee
Government Administration and Elections Committee
Finance, Revenue and Bonding Committee
Appropriations Committee
AN ACT TO ENHANCE THE INFRASTRUCTURE OF THE UNIVERSITY OF
CONNECTICUT
SUMMARY: This act authorizes up to $980 million in bonding and up to $20 million in matching
grants for the University of Connecticut.
It authorizes the UConn board of trustees to issue up to $980 million in state bonds over a
10-year period beginning with FY 1995-96 for specified renovation and construction projects (UConn
2000 projects) to be undertaken in two phases.
Under the act:
1. the State Bond Commission must approve the form of the master resolution for issuing the
securities;
2. UConn is limited to specified caps in the amount it can issue in any one year;
3. the authorized amount is subject to the state's annual bond cap;
4. the governor has 30 days after the board of trustees submits each resolution for the
issuance of securities to disapprove it;
5. UConn, instead of the Department of Public Works (DPW), is authorized to supervise its
construction projects and hire design and construction firms; and
6. UConn is required to make semi-annual reports on the progress of the UConn 2000 projects
and a comprehensive performance review after four years.
The act creates a permanent endowment fund to encourage private donations to UConn for
endowed professorships, scholarships, and program enhancements. It requires state matching grants
for these private donations of up to $20 million over a three-year period. The act also establishes a
special external gift fund to encourage private donations for the infrastructure improvement
program and authorizes any other necessary funds.
The act exempts UConn from specified state and local requirements for property development
and makes other conforming and technical changes in the statutes.
EFFECTIVE DATE: Upon passage
FURTHER EXPLANATION
Expanded Powers
Issuing Securities. The act expands the university's powers to allow it to issue securities and
construct the specified projects by giving it, among other powers, perpetual succession as a body
politic and authority to (1) borrow money and issue securities up to $980 million to finance its
UConn 2000 projects; (2) enter contracts for professional services of architects, engineers, attorneys,
and accountants; (3) design, construct, maintain, sell, or demolish university projects; (4) acquire,
sell, or lease real and personal property; (5) receive grants, loans, and gifts; (6) set and collect
tuition and fees and charges for the use of its facilities without restriction; and (7) establish funds
and accounts.
Trustees' Delegation of Authority. The university may exercise its authority by a majority vote of
the board of trustees. The board can delegate its responsibility, with certain exceptions, to its
finance committee, its officers or trustees, or any other authorized university officer or employee.
UConn 2000 Projects
List of Projects and Costs. The act enumerates the approved projects constituting the two phases
of UConn 2000 and their estimated costs for a total of $1.25 billion, the first phase of which
amounts to a total of $382 million over the first four-year period (FYs 1995-96 to 1998-99). The
second phase amounts to $868 million in FYs 1999-2000 to 2004-2005. These include deferred
maintenance, renovations and adaptations, new buildings, equipment replacement and upgrades,
library equipment and collections, transportation and parking, roads and walks, residence halls, and
a student union addition.
Funding Plan. The funding plan for UConn 2000 must include the proceeds of previously
authorized general obligation bonds, securities up to the $980 million cap, and the special external
gift fund.
Debt Service Commitment. The amount of the annual state debt service commitment must be
paid by the state treasurer when due to meet the act's commitments. UConn must commit to a rate
covenant and agreements with the state and with those who hold its securities to levy charges that,
together with the assured revenue, are sufficient to pay the debt service requirements and operate
the physical plant in sound condition.
Revisions, Additions, or Deletions. The act authorizes UConn to revise projects by a vote of the
trustees, if the revisions are consistent with the projects' intent, but requires legislation to add or
delete a project. Additions or deletions do not reduce the amount of the state debt service
commitment. UConn may determine the timing of projects and reallocate costs. It must report
reallocations to the General Assembly.
Bonding Authority
Authorized Purposes for Borrowing. UConn is authorized to borrow money on behalf of the state
and issue securities by a majority vote of the board to finance UConn 2000 or any of its projects,
finance temporary cash flow or operating deficits, refund securities, or refund "refunding
borrowings" (that would refund securities issued to refund other securities).
Gubernatorial Approval. The board of trustees must submit resolutions for the issuance of these
securities to the governor with a summary of the cost of projects that will not be completed under
each particular issuance. The governor has 30 days to disapprove the resolution and give his
reasons. Inaction is deemed approval.
Procedures
Limits on Delegation of Authority. The board of trustees may delegate to its finance committee
matters other than the amount of the securities to be issued, the nature of the obligation, and the
projects for which the proceeds are to be used.
Annual Limits on Securities. The act imposes a cap on the amount of securities that the board
can issue each year from 1996 to 2005. For the first four years (Phase I), those amounts total $382
million. Any difference between the amount actually issued and the cap can be carried forward to
any succeeding fiscal year. Financing transaction costs can be added to the cap.
Limits on Securities Issued. The amount of securities authorized is deemed an allotment by the
governor of capital outlays and UConn can award contracts or incur obligations within that amount.
It may issue securities only as needed to pay for the next year's costs under the contracts and
obligations, and up to 20% in excess of those expected costs. The amount needed to fund any special
capital reserve fund may be added to those limits.
Validity of Securities. The act prohibits anyone from questioning the validity of the securities
issued by UConn, which are deemed to have been issued under the laws of the state.
Method of Issuance. UConn may issue the securities under an indenture of trust (in which
property can be pledged as security) or a bond resolution and requires the securities to be general
obligations of UConn, backed by its full faith and credit, unless the indenture or resolution specifies
that they are special obligations payable from specified revenues.
Taxation Status. The act exempts UConn's securities, their sale, and income from both state and
local taxation, other than estate and gift taxes, but requires that interest on the securities be
included when computing franchise and excise taxes; allows financing documents to include
provisions required to make the interest on the securities free from federal income taxes; and allows
proceeds from securities to be invested pending their use in the same ways as state general
obligation bonds, unless the terms of the financing documents make particular provisions otherwise.
Standing as State Securities. The act makes UConn securities legal investments for anyone who
is authorized to invest in state securities and permits them to be deposited with any public body for
any purpose for which the deposit of state securities is authorized.
Immunity and Indemnification. The act specifies that state employees or officials carrying out
their duties with respect to the UConn 2000 program are, as all state employees and officers are, (1)
immune from personal liability and (2) indemnified against any expense arising out of a suit
alleging negligence, deprivation of civil rights, or damage or injury, if their acts are not wanton,
reckless, or malicious.
Validity of Securities. The act makes securities binding even after the person who signs their
authorization ceases to hold the office. Proceedings to acquire any project financed with the
securities do not affect their validity.
Rights of Securities Holders. The state is prohibited from limiting the rights of the security
owners or UConn's obligations to fulfill the terms of their issuance until the securities are
discharged and UConn may include that promise in any financing agreement. The state can change
the law only if it makes adequate provision to protect the holders of the securities.
UConn's Obligations. The state may not terminate UConn's existence by law as long as securities
and contracts are outstanding, unless it makes provision for UConn's obligations.
Bond Commission Approval. Before the first issue of securities, the State Bond Commission must
approve the form of the master resolution or indenture for securities that are to be secured by the
state debt service commitment. When UConn submits the master resolution, it must also file the list
of projects to be financed by the securities issued by Phase II. The commission must approve any
substantive amendment to the master resolution or indenture.
Limits on Debt Terms. An indenture or resolution must include the dates of the securities and
their maturities, which are up to 30 years (or up to five years for those funding equipment and
collections); special debt service requirements; rates of interest; cash flow requirements; and
agreements considered necessary for the issuance of the securities.
Sale by Treasurer. The state treasurer must sell securities issued by UConn, subject to cash flow
requirements necessary to fund UConn 2000, and certify the sale to UConn and the secretary of the
State Bond Commission upon completion. The costs of the issuance are to be paid from the proceeds
and accrued interest, unless UConn decides otherwise. The treasurer must set the terms and
conditions of securities' sales in conjunction with UConn.
Conditions on Issuance. The proceeds from securities may be used only for authorized purposes.
A resolution or indenture can limit the issuance of additional securities. But it cannot commit the
university to issuing additional securities secured by the state's debt service commitment. Securities
issued by UConn require no consents or proceedings (such as authorization by the State Bond
Commission) except those specified in this act (such as the governor's approval).
Financing Through Other Agencies. UConn cannot use another state agency to lease or finance
property outside the Storrs campus that requires an expenditure of more than $50,000 per year
during the UConn 2000 project.
Bond Cap. Any money borrowed or securities issued must state on their face that they do not
constitute a debt or liability of the state, only the university, and that they are not backed by the
full faith and credit of the state. The securities once issued are considered part of the aggregate
indebtedness of the state and subject to the bond cap, except for those secured by anticipated
revenues (for example, if UConn issues revenue bonds). For calculating the cap in years in which
revenue estimates are unknown, Consumer Price Index (CPI) growth must be applied.
Special Capital Reserve Funds. The act authorizes UConn to create special capital reserve funds
for state appropriations, securities proceeds, and other funds, which are to be used solely for
payments of the principal on securities, for purchasing them, or for paying interest or redemption
premiums. UConn must maintain the required minimum capital reserve and may not issue
securities if doing so would reduce the fund to less than the amount required to pay the principal
and interest becoming due.
Amounts necessary to maintain the required minimum capital reserve of each fund are to be
considered appropriated from the General Fund, by December 1 annually, upon certification by the
chairman of the board of trustees to the Office of Policy and Management (OPM) and the treasurer.
UConn must repay these amounts when they are not needed, but at least by one year after all
expenses in connection with the general obligation securities are fully met and discharged.
UConn cannot create reserve funds unless its board determines the funds' self-sufficiency, which
determination must be confirmed as not unreasonable or arbitrary by the treasurer, and unless the
fund's use improves or is essential to the rating or provides interest savings. The provisions
regarding reserve funds do not apply to general obligation securities issued by UConn.
Legal Status of Securities
The act makes any pledge regarding UConn's issuance of securities a statutory lien that is valid
and binding regardless of whether notice is given, gives it priority over all other liens and claims
arising as a result of a personal injury or contractual dispute, and does not require the pledge to be
recorded. It requires expenses involved in issuing securities to be part of UConn's operating
expenses, if they are not paid as part of special debt service requirements, and makes these
securities lawful negotiable instruments, subject only to their own provisions.
Special External Gift Fund
The act creates a special external gift fund to encourage private donations in furtherance of
UConn 2000. Private gifts and interest on the fund's investments are deposited in it. The board
must administer the fund and adopt solicitation guidelines.
Endowment Fund
The act creates a permanent endowment fund to encourage private donations for endowed
professorships, scholarships, and program enhancements. The fund must be administered by the
board of trustees or a nonprofit entity, preferably created to ensure that interest on the bond
proceeds deposited in the fund is exempt from federal tax. The fund must be held apart from all
other state and UConn money and can contain endowment fund eligible gifts, matching state
grants, or interest income on investments.
Limits on State Match. The act requires state matching grants for FYs 1997-98, 1998-99, and
1999-00, up to $10 million annually and up to an aggregate amount of $20 million. If the state
budget for those years does not include an appropriation for matching funds, the bond commission is
authorized to issue state bonds to fund the appropriated amounts. No state bonds may be
authorized unless the bond commission finds that the OPM secretary has requested their
authorization. The request must state the aggregate amount of the endowment fund donations
UConn has received and that no current appropriation has been provided. If eligible gifts received
in one year exceed $10 million, the excess can be carried forward to the next fiscal year and
matched up to the limit.
The act requires that the bonds mature in less than 20 years and makes these bonds general
obligations of the state, backed by its full faith and credit.
Use of Funds. Money in the fund may be used for any UConn 2000 project costs and any excess
may be used for debt service requirements. It may be invested in obligations eligible for pension
fund investment. The investments must not be co-mingled with any other state or UConn fund.
Guidelines for Solicitation. The board of trustees must adopt guidelines, not regulations, for
soliciting these special eligible gifts.
Investment Authority
UConn may enter into investments or contracts, such as interest rate or currency swap
agreements, under a policy its board adopts to moderate interest rate fluctuations. But no such
investment agreement is effective unless the treasurer or his deputy has approved it, based on
documentation that UConn has sufficient revenue to meet its obligations.
Application of Proceeds and Interest
The funds that UConn receives under the act upon the treasurer's approval are state funds or
trust funds to be applied solely to the specified purposes. Trustees of the funds must hold and apply
them for those purposes. Accrued interest on securities secured by the state debt service
commitment must be credited to the General Fund.
Securities Trustees
Holders and trustees of the securities may enforce all rights under the laws and compel the
performance of duties regarding them, and any suit must be on behalf of all holders of the
securities.
Refunding Securities
The act allows UConn to enter into financing documents and issue securities for the purpose of
refinancing outstanding securities and, if authorized by law, to refund the general obligation debt of
the state. If UConn issues securities to refund the general obligation debt, the treasurer can release
UConn from its obligation to reimburse the state for debt service on the equivalent amount of the
debt being refunded. Equivalency is determined on the basis of the discounted present value of all
obligations. The treasurer must certify that any refunding of securities is expected to achieve debt
service savings.
Design and Construction Authority
Overall Control. The act gives the university authority to plan, design, acquire, remodel, alter,
or demolish any real asset or other project at the University of Connecticut which is authorized and
underway as of June 7, 1995. UConn must file its request to assume such responsibility with the
DPW commissioner and thereafter will exercise its authority. Under prior law, the university's
authority was limited to projects estimated to cost less than $2 million, with the DPW
commissioner's approval; projects costing $2 million and over were supervised by DPW.
Contracting Authority. The act permits the university to contract with a design professional, a
general contractor, and one or more prime trade contractors for the construction of any project.
UConn must prepare proposed construction standards for all projects and prepare detailed plans
and specifications (which may be modified) for each project. The project's design professional,
another architect or engineer, or a construction manager can be hired to supervise construction.
Bidding Procedures. The act creates bidding and contract award procedures that UConn must
follow which differ somewhat from those that applied to the DPW commissioner when supervising a
university construction project costing over $2 million. Under the law that still applies to state
projects other than those for UConn, the commissioner selects a design firm for a construction
project from a list of three firms submitted after advertising, review, and interviews done by a DPW
selection panel. Under a separate fast track building process for "priority higher education
facilities," the commissioner can bypass the normal process for advertising for and selecting design
professionals, select and interview at least three, and negotiate a contract.
The act supersedes both of these DPW processes for UConn. It establishes a prequalification
process to identify potentially responsible qualified bidders for a particular contract. UConn must
develop the list, send a notice of the construction contract to those on the list, and invite them to
prequalify. It must evaluate the potential bidders who are able to post the required security bonds
based on written criteria, their ability and integrity, and their experience with similar projects. It
must notify those that are prequalified when the request for bids is made public. As is the case for
DPW contract awards, UConn can award a construction contract only to the responsible qualified
bidder submitting the lowest bid that complies with the bid requirements. It can waive a minor
irregularity in a bid or reject all bids. UConn has the option to negotiate a contract that is fair and
reasonable to the university and not use these bidding procedures but only after first interviewing
three responsible qualified bidders.
UConn can include any terms, conditions, and penalty provisions in its contracts for construction.
It must withhold payments until it certifies that bills or estimates are correct; limit payments to the
amount provided in its contracts; and require deposits, bonds, and security for contracts awarded.
Any contract awarded by the university is deemed to be a contract with the state.
Labor Laws. The act makes all UConn projects subject to the laws on preferences for state
residents, wages and hours, occupational safety and health, and contractor disqualification.
Licenses and Permits. UConn must make application for construction or building licenses,
permits, approvals, or administrative hearings to the commissioners having jurisdiction to grant
them.
No other agency, commission, council, or body (1) has jurisdiction over these licenses, permits,
approvals, or administrative actions; (2) must be notified of a commissioner's determination; or (3)
may require notice. Projects are exempt from any ordinance, law, or regulation of a municipality or
other political subdivision. The State Properties Review Board has the same jurisdiction as it has for
a priority higher education facility project, that is, the board can approve or disapprove contracts
but must do so within 15, instead of its usual 30, days or the contract is considered approved.
The act specifies that these applications, supporting documentation, and any proceeding records
are subject to disclosure under the Freedom of Information Act. It requires a commissioner with
jurisdiction over UConn's licenses, permits, approval, or administrative actions to adopt any feasible
master process for addressing multiple applications. The commissioner must act on any application
or administrative action within 10 business days after the submission date. The application or
action is considered approved within 10 business days after submission or hearing unless it is
denied or conditionally issued within this time period. The act requires notice of any hearing
regarding a project to be published in a newspaper that is circulated in the municipality where the
project is located not more than 10 nor fewer than five days before the hearing.
A commissioner must weigh all of the evidence from UConn and the public before making his
decision, issuing written findings and determinations on which it is based, including any major
adverse health or environmental effect of the project. He can reverse or modify any order on his own
motion, but the act specifies no criteria and no time frame within which the reversal or modification
can be made, as it does for court appeals of a commissioner's decision. The procedure for reversal or
modification is the same as for the original proceeding.
The act allows any party aggrieved by a commissioner's decision to appeal to the Hartford-New
Britain Superior Court within 10 days of the date the order or decision is mailed. The appellant
must serve a copy of the appeal to all parties at the address shown in the decision. But the court
retains jurisdiction over the appeal even if all parties, except the commissioner, are not served
within the 10-day time period. The commissioner must transcribe the record of the hearing within
10 days after the appeal is served. He must have the original record or a certified copy sent to the
court. These appeals are privileged matters and as such must be heard as soon after the return
date as practicable. The court must render its decision within 21 days after the record of the
administrative hearing is filed. An appeal does not stop the development of any project.
The act requires the court to uphold the commissioner's decision unless it finds that the
applicant's rights were materially prejudiced because the commissioner's findings, inferences,
conclusions, or decisions: (1) violate existing law, (2) exceed his statutory authority, (3) were made
upon unlawful procedure, (4) were made due to legal error, (5) were erroneous given the evidence, or
(6) were arbitrary or capricious. The court cannot substitute its judgment for the commissioner's as
to the weight of evidence on question of fact. If the court finds material prejudice, it may sustain an
appeal and may modify the commissioner's decision or order him to take particular action. The act
allows an applicant, following court action, to file an amended application.
The act allows UConn to be represented by any attorney, instead of just the attorney general, in
connection with the construction, operation, and maintenance of any project. UConn's board of
trustees must decide on representation after taking into account such things as the capacity and
cost of private counsel compared to the attorney general, and how effective private counsel would be
at accomplishing the construction, operation, and maintenance of all projects.
State Property
Under this act, UConn can acquire property by purchase, lease, contract or gift; hold and
supervise the maintenance of its buildings and grounds; and sell, lease, rent, or dispose of real or
personal property that it owns or controls.
Leasing
The act expands UConn's power over leasing by granting it broad authority to lease any of its
property. Under prior law, UConn could lease land only to private developers for rental housing,
commercial establishments, and dormitory construction. But the act retains the requirement that
the governor and the OPM secretary approve the leases to developers for dormitories and extends
this approval requirement to all UConn leases.
The act removes requirements for DPW supervision of leases and eliminates the board's
procedures for leasing land to the Connecticut Health and Educational Facilities Authority for
dormitories and other student housing.
Conveyances
By allowing the university to transfer or convey state-owned property, the act exempts it from
the procedures other agencies and officials must follow when conveying state land. These procedures
include notification of DPW and other departments and the town where the property is located.
All transactions are handled by the treasurer and are subject to the approval of the OPM
secretary, the State Properties Review Board, and the Finance, Revenue and Bonding and
Government Administration and Elections committees of the legislature.
Court Jurisdiction
The act gives the Hartford-New Britain Superior Court jurisdiction over any action brought
against UConn regarding financing contracts issued pursuant to it. It also requires that such cases
be given priority over other cases and tried without a jury. UConn can use all legal defenses, except
governmental immunity.
Statutory Construction
The act's provisions must be liberally construed. It specifies that its provisions do not limit the
state's authority to borrow money for the university.
Proposed Relocation of West Hartford Branch and Other Branch Projects
The act prohibits the board of trustees from undertaking a UConn 2000 project to relocate the
West Hartford branch unless it authorizes the relocation by a separate resolution adopted by a
majority vote. But the board may spend funds on a Hartford relocation feasibility study prior to
approving the resolution. If the board authorizes the relocation, UConn must consult state and West
Hartford officials and make recommendations to OPM for the alternative use of the West Hartford
facilities. (PA 95-270 imposes additional constraints on any proposed relocation.)
Before undertaking any UConn 2000 project at the branches, the board must determine that
UConn has considered opportunities for coordinating and sharing programs and facilities with other
colleges in the state. These findings must be included in the semi-annual and four-year UConn 2000
reports.
Semi-Annual Reports
UConn must submit semi-annual reports beginning October 1, 1995, to the governor and the
Education; Finance, Revenue and Bonding; and Appropriations committees on the progress of
UConn 2000 on specified topics. The report must include (1) costs, timeliness of completion, and
any problems; (2) revenue available for the remaining projects and expected receipts for the next
year; (3) information about the amount of money UConn has raised from private sources; (4)
UConn's progress in implementing its fund-raising program; and (5) any cooperative activities with
other colleges in the state.
Performance Review
UConn must report to the governor and Education and Finance, Revenue and Bonding
committees on January 15, 1999, regarding a four-year UConn 2000 performance review. The report
must identify, for each UConn 2000 project, its progress and actual expenditures compared to
original estimates and a summary of any cooperative activities with other colleges in the state. The
committees have 60 days to consider the report and determine whether there has been insufficient
progress or significant cost increases. If so, the committees are authorized to make recommendations
to UConn and the legislature for appropriate action.
Tuition Increases
UConn's board of trustees may increase tuition and fees beyond what is included in the single
public higher education budget request submitted by the Board of Governors, if the General
Assembly does not appropriate the amount UConn requests.
Zoning Regulations
The act prohibits local zoning regulations from barring a UConn construction project in an area
zoned for commercial buildings.
State Plan of Conservation and Development
The act makes UConn construction projects part of the state plan of conservation and
development approved by the General Assembly, effectively exempting them from having to be
consistent with the plan as all other state projects must be.
Building Conversion-Environmental Reviews
The act exempts UConn projects that involve converting (1) an existing building to educational
rather than commercial uses from environmental impact evaluations, (2) an office or commercial
structure to an educational structure from review and comment by the Council on Environmental
Quality, and (3) an office or commercial structure to an educational structure from the Department
of Environmental Protection commissioner's authority to regulate state agency actions affecting flood
plains.
BACKGROUND
Related Act
PA 95-270 requires the feasibility study of moving the UConn West Hartford branch to Hartford
to include consideration, with West Hartford town officials, of other uses for the branch's land and
facilities. It prohibits the West Hartford campus from being turned into a correctional, juvenile
detention, or any other kind of residential facility. It also requires that West Hartford officials agree
to, rather than just be consulted on, any proposed alternative use if the UConn board authorizes
relocation, and extends the agreement requirement to cover other uses for UConn's land as well as
its building in West Hartford.