79R8310 ESH-F
By: Morrison H.B. No. 2803
A BILL TO BE ENTITLED
AN ACT
relating to the sale of facilities of public institutions of higher
education to real estate investment trusts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 55, Education Code, is amended by adding
Subchapter D to read as follows:
SUBCHAPTER D. SALE OF INSTITUTION OR JUNIOR COLLEGE FACILITIES TO
REAL ESTATE INVESTMENT TRUST
Sec. 55.101. SALE OF INSTITUTION OR JUNIOR COLLEGE
FACILITIES TO REAL ESTATE INVESTMENT TRUST AUTHORIZED. An
institution of higher education or public junior college may sell
an institution or junior college facility to a real estate
investment trust as provided by this subchapter.
Sec. 55.102. CONCURRENT AGREEMENTS. (a) Concurrent with
the sale of a facility under this subchapter, an institution of
higher education or public junior college must enter into:
(1) a lease with the real estate investment trust
purchasing the facility under which the institution or junior
college may use the facility as provided by Subsection (c); and
(2) a contract with the investment trust or another
entity for the trust or other entity to manage, maintain, and, as
necessary, improve the facility.
(b) A lease under Subsection (a)(1) must be for a term of at
least 20 years. A contract under Subsection (a)(2) for a facility
must be for the same term as the lease relating to that facility.
(c) A lease under Subsection (a)(1) must provide that, for
the duration of the lease:
(1) during hours when the institution of higher
education or public junior college offers classes, the facility
must be used for educational purposes; and
(2) at times other than during class hours, the
facility may be used for other purposes as determined by the trust
managers of the real estate investment trust.
Sec. 55.103. NOTICE OF PROPOSED SALE; PROPOSAL. (a) Except
as provided by Section 55.104, before selling a facility to a real
estate investment trust under this subchapter or executing a lease
or contract in connection with the sale, the governing board of an
institution of higher education or public junior college shall:
(1) determine which facility is proposed to be sold;
(2) determine the terms on which the board will
consider selling the facility;
(3) publish a notice to prospective purchasers
requesting sealed written proposals from prospective purchasers to
purchase the facility; and
(4) make a formal determination as to which sealed
written proposal is most advantageous to the institution or junior
college and accept that proposal or reject all proposals if
considered advisable.
(b) A notice under Subsection (a)(3) must be published at
least two weeks before the date set for receiving proposals in a
real estate journal and in at least two newspapers of general
circulation in the county in which the institution of higher
education is located or in the junior college district, as
applicable. The notice must include:
(1) the terms of sale and the matters to be addressed
by concurrent agreements required under Section 55.102 that will be
considered; and
(2) the time and date by which, and place where, the
proposals must be received.
(c) A proposal submitted by a real estate investment trust
under this section must include proposals relating to the terms of
each concurrent agreement required by Section 55.102.
Sec. 55.104. UNSOLICITED PROPOSALS BY REAL ESTATE
INVESTMENT TRUSTS. (a) A real estate investment trust may make an
unsolicited proposal to an institution of higher education or
public junior college to purchase an institution or junior college
facility under this subchapter. A proposal submitted by a real
estate investment trust under this subsection must include
proposals relating to the terms of each concurrent agreement
required by Section 55.102.
(b) Before an institution of higher education or junior
college may accept a proposal received under Subsection (a), the
institution or junior college must:
(1) publish a notice of the proposed sale and a request
for competing sealed written proposals;
(2) evaluate any competing proposals submitted; and
(3) make a formal determination as to whether a
competing proposal is more advantageous to the institution or
junior college than the unsolicited proposal.
(c) A notice under Subsection (b) must include:
(1) the terms of sale and the matters to be addressed
by concurrent agreements required under Section 55.102 that are
contained in the unsolicited proposal; and
(2) the time and date by which, and place where, the
competing proposals must be received.
(d) A notice under Subsection (b) must be published in the
manner required by Section 55.103(b) for a notice under Section
55.103(a)(3).
Sec. 55.105. PURCHASE BY REAL ESTATE INVESTMENT TRUST OF
FACILITIES OF MORE THAN ONE INSTITUTION OR JUNIOR COLLEGE. A real
estate investment trust may purchase facilities from any
combination of institutions of higher education and public junior
colleges.
Sec. 55.106. MANAGEMENT OF TRUST. (a) Notwithstanding
Chapter 200, Business Organizations Code, or the Texas Real Estate
Investment Trust Act (Article 6138A, Vernon's Texas Civil
Statutes):
(1) if a real estate investment trust is established
to purchase a facility of an institution of higher education or
public junior college under this subchapter, the certificate of
formation of the real estate investment trust must provide that:
(A) the governing board of each institution of
higher education or public junior college participating in the sale
is entitled to appoint two members of the board to act as trust
managers of the real estate investment trust for the duration of the
lease required by Section 55.102(a)(1); and
(B) the requirement of Paragraph (A) may not be
altered by amending the certificate of formation or bylaws; and
(2) if an existing real estate investment trust seeks
to purchase a facility of an institution of higher education or
public junior college under Section 55.104, the certificate of
formation or bylaws of the real estate investment trust must be
amended to provide that if the purchase is completed, the governing
board of each institution of higher education or public junior
college participating in the sale is entitled to appoint two
members of the board to act as trust managers of the real estate
investment trust for the duration of the lease required by Section
55.102(a)(1).
(b) Any compensation paid by a real estate investment trust
to a member of a governing board of an institution of higher
education or public junior college for service as a trust manager is
the property of the institution or junior college, as applicable.
SECTION 2. This Act takes effect September 1, 2005.