§1155 Connie Lee Privatization

Summary

Turns the College Construction Loan Insurance Association into a private, for-profit corporation. It must not be treated as a federal agency or government-owned company, and people cannot sue the United States under the Tucker Act for the Corporation’s actions. The Corporation must follow this law and, where it does not conflict, state corporate law. It can enter contracts, take on debts, provide products and services, and do what businesses normally do. "Corporation" here means the College Construction Loan Insurance Association as it existed the day before September 30, 1996, and any successor. The Student Loan Marketing Association may not own more than 42 percent of the Corporation’s stock as of September 30, 1996, and may not control its operations, though it can vote as a shareholder and keep certain director appointment rights while an older law remains in effect. Until the Treasury sells the Education Secretary’s shares under the law, the Student Loan Marketing Association may not give the Corporation financial support or guarantees. After that sale, it may provide support only on terms no better than what it gives others. No debt or insurance the Corporation backs is to be treated as guaranteed by the United States or by the Student Loan Marketing Association (this does not change tax rules). For six years after September 30, 1996, and for five years after the stock sale the Corporation must put clear notices in its contracts and securities saying the obligations are not U.S. government obligations and the Corporation is not a U.S. instrumentality; after the sale it must also say the United States is not an investor. The Corporation must change its charter and articles and cannot use the name "College Construction Loan Insurance Association" or anything very similar. The Treasury must sell, and the Corporation buy, the Education Secretary’s stock within 90 days after September 30, 1996 (extendable by agreement to 150 days), at a price set by a binding independent appraisal; sale costs are paid from the sale proceeds, with half the appraisal cost paid by the Corporation, and the Treasury must report to Congress within six months. The District of Columbia Financial Authority must create an account for money from specified sales and trademark rights. Most of these funds must pay for public and public charter elementary and secondary school construction and repair in Washington, D.C., and to carry out the District of Columbia School Reform Act of 1995. From the Corporation sale proceeds, $5,000,000 must go to a credit enhancement revolving fund for D.C. public charter schools. That fund is split so half supports eligible nonprofit groups that help charter schools get financing and half funds grants directly to entities (including charter schools) for financing, construction, renovation, loans or lease guarantees. Nonprofits must be authorized by two or more D.C. public charter schools to act for them. Grants cannot be used to make direct loans or grants to the schools. From fiscal year 2003 on, the Office of Public Charter School Financing and Support handles applications and payments, but grants still need committee approval.