HF1165

Purpose

• The bill would rename the Minnesota Higher Education Facilities Authority to the Minnesota Health and Education Facilities Authority and expand its role to finance and construct health care facilities in addition to facilities for higher education.
• It aims to provide new or expanded financing tools to help health care organizations and higher education institutions build, refinance, and expand facilities, potentially reducing costs for health care and tuition over time.

What the bill would do

• Rename and broaden the authority to include health care facilities alongside higher education facilities.
• Allow the authority to issue revenue bonds, notes, and other financing instruments to fund health care facilities and education facilities, including refinancing existing debt.
• Increase the overall bonding capacity and set separate limits for education facilities and health care facilities.
• Create specific definitions for what counts as a project, a health care facility, and an education facility to guide financing.
• Permit certain projects to bypass some public bidding or contracting rules, while still following other state requirements.
• Require certain city or town approvals (consent by resolution) before issuing revenue bonds for health care projects, with exceptions for primarily higher education institutions.
• Add advisory nonvoting members connected to private colleges and nonprofit health care associations.
• Require health care organizations to sign certifications confirming that bond proceeds are not used to benefit private equity-funded or private parties.
• Establish rules about affiliate status to determine which entities can be treated as affiliates for financing purposes.

Main provisions and mechanisms

• Governance: The authority would have eight to nine members (appointed by the governor with Senate advice and consent), including a representative from the Office of Higher Education; advisory nonvoting members may include the president of the Minnesota Private College Council or their designee and the CEO or designee of a Minnesota nonprofit health care association.
• Projects: The bill defines a broad set of potential projects, including dormitories, dining halls, student unions, academic buildings, libraries, laboratories, athletic facilities, health care facilities, child care facilities, and related site, furniture, equipment, and support needs.
• Health care and education facilities: Distinct definitions for both types of facilities guide what can be financed (e.g., hospitals, clinics, nursing homes, residential care, outpatient centers, and related health care services; and dormitories, libraries, classrooms, and other academic/research spaces for higher education).
• Bonding authority: The combined bonding cap is proposed at up to 5 billion dollars, with up to 2.25 billion for education facilities and up to 2.75 billion for health care facilities at any given time.
• Financing tools: Revenue bonds, bond anticipation notes, and revenue refunding bonds could be used to acquire, construct, refinance, or improve projects; the authority may also lend to participating institutions to support projects.
• Tax and contract considerations: Projects financed by the authority could be exempt from some traditional public contract and competitive bidding requirements, though health care projects must still comply with applicable health and safety and related state laws; flexibility is given to use trust agreements and other instruments to secure bonds.
• Revenue and uses: The authority can pledge project revenues or contract proceeds, set reserves, and structure payments to bondholders; it can also determine how revenues are used and allocate costs among participating institutions.
• Health care certification: Health care organizations must provide a signed certificate indicating bond proceeds are not used to benefit private parties or private equity-funded entities while financing remains outstanding.
• Affiliate status: The authority can determine whether an entity is an affiliate under the relevant definition, and such determinations would be final for the purposes of the financing provisions.
• Oversight and governance of projects: The authority can designate a participating institution of higher education as its agent to manage project location and character, and to oversee construction and operation; it may also appoint or authorize other institutions to act as agent.
• Financial safeguards: The bill specifies bondholder protections, default remedies, and the ability to secure bonds with mortgage or other security; it also requires certain fidelity or surety bonds for officers or members handling authority funds.

Significant changes to existing law

• Renaming the Minnesota Higher Education Facilities Authority to Minnesota Health and Education Facilities Authority and expanding its mission to include health care facilities financing.
• Expanding the scope of eligible projects to include a wide range of health care facilities in addition to higher education facilities.
• Increasing the total bonding capacity and splitting it between education and health care facilities, with explicit annual limits.
• Introducing health care certifications and affiliate determinations as formal parts of the financing framework.
• Allowing health care projects to be financed with fewer public bidding constraints, subject to other legal requirements.
• Adding advisory nonvoting members from private colleges and health care associations to the authority.

Definitions (key terms carried into the bill)

• Project: A structure or structures for student housing, dining, administration, academic and research facilities, athletic facilities, health care facilities, child care facilities, parking, landscaping, and related machinery, equipment, and site improvements necessary for operation.
• Health care facility: A broad set of facilities used to deliver health care services (hospitals, clinics, nursing homes, dialysis centers, laboratories, pharmacies, etc.), including related administrative and support structures.
• Education facility: Facilities related to higher education needs, such as dormitories, dining halls, libraries, laboratories, classrooms, student health facilities, and related spaces.
• Health care organization: A nonprofit organization authorized to operate a health care facility within Minnesota (and certain contiguous states as affiliates).
• Participating institution of higher education: A health care organization or higher education institution that finances and builds projects or refinances existing debt under the authority.
• Affiliate: An entity that directly or indirectly controls or is under common control with another entity.

Relevant terms: Minnesota Health and Education Facilities Authority, health care facility, education facility, project, health care organization, participating institution of higher education, affiliate, revenue bonds, bond anticipation notes, trust agreement, health care certification, consent by resolution, advisory member.

Relevant Terms - Minnesota Health and Education Facilities Authority - health care facility - education facility - project - health care organization - participating institution of higher education - affiliate - revenue bonds - bond anticipation notes - trust agreement - health care certification - consent by resolution - advisory nonvoting member