18.04 Schools--Higher Education Facilities Act

18.04.1

In General

The Higher Education Facilities Act of 1965 (a continuation of The Higher Education Facilities Act of 1963), as amended (collectively, the "Act"), provides generally for federal grants to institutions of higher education (generally, public or nonprofit colleges, universities and technical schools) to aid in the construction, reconstruction and renovation of academic facilities.

18.04.2

Right of Recovery

Pursuant to the Act, the first twenty (20) years following completion of construction of an academic facility (with a grant under the Act) is the period of "Federal interest" in the facility. The Act, grants to the United States has a right to recover from the academic institution, or its successor in title or possession, if there is a cessation of public benefit within the twenty (20) year period following completion of construction.

If a facility is used as an academic facility for twenty (20) years following completion of construction, the public benefit accruing to the United States is deemed equal in value to the amount of the grant. 20 U.S.C. ( 1011k (a).

The United States is entitled to recover a proportionate share of the current value of the facility grant (based upon the same ratio that the Federal grant bore to the cost of the facility), if:

A. the facility was constructed in part with the aid of a grant under:

1.Part A of Title VII of the Higher Education Act of 1965, as amended (former 20 USC §§ 1132b et seq.), as such Part A was in effect prior to the date of enactment of the Higher Education Amendments of 1998 (enacted October 7, 1998); or

2.Part B of Title VII of the Higher Education Act of 1965, as amended (former 20 U.S.C. §§ 1132c et seq.), as such Part B was in effect prior to the date of enactment of the Higher Education Amendments of 1992 (enacted July 23, 1992);

and if:

B. at any time within twenty (20) years after completion of construction of the facility:

1. the institution failed or ceased to be a public or nonprofit institution, or

2. the facility ceased to be used as an "academic facility" as previously defined in the Higher Education Act of 1965, as amended,. unless the Secretary of Education determines that there is good cause for releasing an institution from its obligation.

20 USC § 1011k (b).

The value of the facility is determined by agreement of the parties or by an action brought by the United States district court. 20 USC § 1011k (b). The Act does limit the time period for the United States to bring the action.

18.04.3

Definition of "Academic Facility"

Although the term "academic facility" appears in the current version of the Act, the definition of "academic facility" was deleted pursuant to revisions made by the Higher Education Amendments Act of 1998. Nevertheless, the current statute refers to the prior definition: "the term ?academic facility' (as such term was defined under title VII, as so in effect) ...." The definition of "academic facility" can be found in prior versions of the Higher Education Act (last appearing in the Higher Education Amendments of 1986, Public Law 99-498, as amended by Higher Education Amendments of 1992, Public Law 102-325). The statutory definition should be consulted in the event there is a conveyance by an institution of higher education. For example, the definition includes certain maintenance, storage or utility facilities but excludes some functions usually perceived as "academic," e.g., gymnasiums, and medical and dental schools.

In addition to the specific definition of "academic facility," the Act specifically prohibits the use of the facility for religious worship, sectarian activity or school or department of divinity. 20 U.S.C. § 1011k (c).

18.04.4

Exception to Commitment and Policy

It is important to note that the right of recovery may be asserted against a "successor in title or possession" as well as the original educational institution.

Accordingly, where the property is improved (i.e., not vacant land) and the examination of title discloseds that a college, university or other institution of higher education is now in title, or has been in title since the effective date of the Act (December 16, 1963), a special exception should be included in the title commitment and policy. See "Standard Exceptions, School Funding (SCH)." Based upon local practices, it may be acceptable to include the special exception as an "Informational Note."

The exception is not required if the property to be transferred is vacant land. You may be able to omit this exception if the institution of higher education is able to give a satisfactory affidavit confirming that no applicable funds were used in the construction of the facility and/or that the facility was used as an "academic facility" (as defined in the Act) for the required period of time. See "STG Affidavit Relating to Academic Facility 1."

18.04.5

Appropriations and potential "sunset" of the Act

The 1992 amendment to the Act contained appropriations for fiscal years 1993 through 1997. The 1998 amendment to the Act did not contain any provision for appropriation of funds. Therefore, it is reasonable to assume that at some point in time, all academic facilities receiving grants under the Act will have been completed, and no new academic facilities will be built with such grants.

However, it is difficult to ascertain that exact date, because funds appropriated in any particular year may not be expended immediately, and the 20 year "period of Federal interest" runs from the completion of construction, which may be several years after the appropriation of the funds. Therefore, examiners should assume, unless demonstrated otherwise, that academic facilities completed before 2005 received a grant under the Act.

18.04.6

Statutory References and History

Higher Education Facilities Act of 1963
December 16, 1963
Public Law 88-204
formerly 20 USC §§ 701 et seq.

Higher Education Act of 1965
November 8, 1965
Public Law 89-329, Title VII

Education Amendments of 1980
October 3, 1980
Public Law 96-374
Title VII:Construction, Reconstruction and Renovation of Academic Facilities

Appropriations Authorized: Section 702; 20 USC § 1132a-1.
Part A:Grants for the Construction, Reconstruction, and Renovation of Undergraduate Academic Facilities: Sections 711 - 713; 20 USC § 1132b - 1132b-2.
Part B:Grants for the Construction, Reconstruction, and Renovation of Graduate Academic Facilities: Section 721; 20 USC § 1132c.
Part D (previously Part F):General
Recovery of Payments: Section 741; 20 USC § 1132e.
Definitions: Section 742; 20 USC § 1132e-1.

Higher Education Amendments of 1986
October 17, 1986
Public Law 99-498
Title VII:Construction, Reconstruction and Renovation of Academic Facilities

Appropriations Authorized: Section 702; 20 USC § 1132a-1.
Part A:Grants for the Construction, Reconstruction, and Renovation of Undergraduate Academic Facilities: Sections 711 ? 713; 20 USC § 1132b-b2.
Part B:Grants for the Construction, Reconstruction, and Renovation of Graduate Academic Facilities: Section 721; 20 USC § 1132c.
Part H (previously Part D):General
Recovery of Payments: Section 781; 20 USC § 1132I.
Definitions: Section 782; 20 USC § 1132i-1.

Higher Education Amendments of 1992 also known as Higher Education Facilities Act of 1992
July 23, 1992, effective October 1, 1992
Public Law 102-325
Title VII:Construction, Reconstruction and Renovation of Academic Facilities

Prior Rights and Obligations: Section 702; 20 USC § 1132a-1
Part A:Improvement of Academic and Library Facilities: Sections 711 - 716; 20 USC §§ 1132b - 1132b-4.
(pursuant to Section 716, $350,000,000 is authorized for each fiscal year: 1993 - 1997).
Part B:now titled: Historically Black College and University Capital Financing (Sections 721 - 728; 20 USC §§ 1132c - 1132c-7 (right of recovery not included in this Part)
Part E (previously Part H):General
Recovery of Payments: Section 781; 20 U.S.C. ( 1132i.
Definitions: Section 782; 20 U.S.C. § 1132i-1.

Higher Education Amendments of 1998
October 7, 1998, effective October 1, 1998
Public Law 105-244
Title I:General Provisions

Prior Rights and Obligations: Section 121; 20 USC § 1011j.
Recovery of Payments: Section 122; 20 USC § 1011k.
(no appropriations authorized)

Title VII:now titled: Graduate and Postsecondary Improvement Programs (right of recovery not included in this Title).