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2012 Connecticut Attorney General Reports and Opinions 1 (2012)

handle is hein.sag/sagct0066 and id is 1 raw text is: GBORGR C. JFXSM 55 Elm Street ATIORNYGMWA I0. Box 120 lartford, (T 06141-0120 Office of The Attorney General State of Connecticut September 11, 2012 Susan Herbst President University of Connecticut Gulley Hall 352 Mansfield Road, Unit 2048 Storrs, CT 06269-2048 Dear President Herbst: You have asked for this Office's opinion concerning the State of Connecticut's responsibility for lease payments by the University of Connecticut Health Center (the Health Center) under a proposed lease (the Lease) between the Health Center as tenant and a special purpose entity, as landlord, for an Ambulatory Care Center, as contemplated by Conn. Gen. Stat. §1Oa-109e(f), as amended by section 4 of Public Act No. 11-75 (the ACC). The special purpose entity (SPE) will be a subsidiary corporation established by the University of Connecticut Health Center Finance Corporation pursuant to Conn. Gen. Stat. § 1Oa-254(13). You subsequently advised that this SPE's limited role, following construction of the ACC, will be to serve as owner of the ACC's physical plant and collect and remit the Health Center's Lease payments to the lender (the Lender) financing the ACC's $203M construction cost (the Loan). As security for the Loan, the SPE will pledge and assign the Health Center's required Lease payments to the Lender, until the Loan is satisfied. Specifically, you have asked this Office to confirm that: (i) the financial obligations of the Health Center under the Lease are not subject to appropriation risk; and (ii) in the extraordinary unlikely event that the Health Center were to default on its Lease obligations, these obligations would become general, unrestricted legal obligations of the State of Connecticut and unrelated to any appropriation to the Health Center. Your July 25, 2012 request further states: While potential lenders generally understand that the Health Center is an agency of the state of Connecticut, they want some form of written assurance that their loan of $203 million is secure. As more particularly described below, we conclude that (1) although in the normal course required payments under the Lease will be made from available Health Center funds, the Lease payment obligations of the Health Center create legal obligations to the State of Connecticut; and (2) as a legal obligation of the State of Connecticut, required payments under the Lease are not subject to the risk of legislative non-appropriation for the Lease payments.. Rather, like any claim against the State, a claim against the Health Center could proceed as provided by law.