(a) There is created a body politic and corporate to be known as the “State of Connecticut Health and Educational Facilities Authority”. Said authority is constituted a public instrumentality and political subdivision of the state and the exercise by the authority of the powers conferred by this chapter shall be deemed and held to be the performance of an essential public and governmental function. Notwithstanding the provisions of the general statutes or any public or special act, the board of directors of said authority shall consist of ten members, two of whom shall be the Secretary of the Office of Policy and Management and the State Treasurer, ex officio, and eight of whom shall be residents of the state appointed by the Governor, not more than four of such appointed members to be members of the same political party. Three of the appointed members shall be current or retired trustees, directors, officers or employees of institutions for higher education, two of the appointed members shall be current or retired trustees, directors, officers or employees of health care institutions and one of such appointed members shall be a person having a favorable reputation for skill, knowledge and experience in state and municipal finance, either as a member of the financial business industry or as an officer or employee of an insurance company or bank whose duties relate to the purchase of state and municipal securities as an investment and to the management and control of a state and municipal securities portfolio. On or before the first day of July, annually, the Governor shall appoint a member or members to succeed those whose terms expire, each for a term of five years and until a successor is appointed and has qualified. The Governor shall fill any vacancy for the unexpired term. A member of the board shall be eligible for reappointment. Any member of the board may be removed by the Governor for misfeasance, malfeasance or wilful neglect of duty. Each member of the board shall take and subscribe the oath or affirmation required by article XI, section 1, of the State Constitution prior to assuming such office. A record of each such oath shall be filed in the office of the Secretary of the State. Each ex-officio member may designate a deputy or any member of such member’s staff to represent him or her as a member at meetings of the board with full power to act and vote in his or her behalf.

(b) The chairperson of the board shall be appointed by the Governor, with the advice and consent of both houses of the General Assembly. The board shall annually elect one of its members as vice chairman, and shall also appoint an executive director who shall not be a member of the board and who shall serve at the pleasure of the board and receive such compensation as shall be fixed by the board.

(c) The executive director shall supervise the administrative affairs and technical activities of the authority in accordance with the directives of the board. The executive director shall keep a record of the proceedings of the authority and shall be custodian of all books, documents and papers filed with the authority and of the minute book or journal of the authority and of its official seal. He may cause copies to be made of all minutes and other records and documents of the authority and may give certificates under the official seal of the authority to the effect that such copies are true copies, and all persons dealing with the authority may rely upon such certificates.

(d) (1) The powers of the authority shall be vested in and exercised by a board of directors. Five members of the board shall constitute a quorum at any meeting of the board. No vacancy in the membership of the board shall impair the right of such members to exercise all the rights and perform all the duties of the board. Any action taken by the board under the provisions of this chapter may be authorized by resolution approved by a majority of the members present at any regular or special meeting, which resolution shall take effect immediately or by a resolution circularized or sent to each member of the board, which shall take effect at such time as a majority of the members shall have signed an assent to such resolution. Resolutions of the board need not be published or posted. (2) The board may delegate by resolution to three or more of its members such powers and duties as it may deem proper. At least one of such members shall not be a state employee.

(e) (1) Each member of the board shall execute a surety bond in the penal sum of fifty thousand dollars and the executive director and the other officers of the authority shall execute a surety bond in the penal sum of one hundred thousand dollars, or, in lieu thereof, the chairman of the board shall execute a blanket position bond covering each member, the executive director and the employees of the authority, each surety bond to be conditioned upon the faithful performance of the duties of the office or offices covered, to be executed by a surety company authorized to transact business in this state as surety and to be approved by the Attorney General and filed in the office of the Secretary of the State. The authority shall pay the cost of each such bond.

(2) In lieu of a bond, the authority may obtain from an insurance company an insurance policy or policies, in the penal sum of not less than one hundred thousand dollars per each occurrence, covering the authority if the executive director or other officer or employee of the authority or any member of the board performing specific directorial acts on behalf of the authority fails to faithfully perform the duties of such person’s position with the authority. The authority shall determine any applicable deductible or self-insured retention and pay the cost of the coverage for such policy.

(f) The members of the board shall receive no compensation for the performance of their duties hereunder but each such member shall be paid his necessary expenses incurred while engaged in the performance of such duties.

(g) Notwithstanding any other law to the contrary, it shall not be or constitute a conflict of interest for a trustee, director, officer or employee of an institution for higher education or a health care institution, or for any person having a financial interest in such an institution, to serve as a member of the board of directors of the authority; provided such trustee, director, officer, employee or person shall abstain from deliberation, action and vote by the board under this chapter in specific respect to the institution for higher education or the health care institution of which such member is a trustee, director, officer or employee or in which such member has a financial interest.

(h) The board of directors of the authority shall adopt written procedures, in accordance with the provisions of § 1-121, for: (1) Adopting an annual budget and plan of operations, including a requirement of board approval before the budget or plan may take effect; (2) hiring, dismissing, promoting and compensating employees of the authority, including an affirmative action policy and a requirement of board approval before a position may be created or a vacancy filled; (3) acquiring real and personal property and personal services, including a requirement of board approval for any nonbudgeted expenditure in excess of five thousand dollars; (4) contracting for financial, legal, bond underwriting and other professional services, including a requirement that the authority solicit proposals at least once every three years for each such service which it uses; (5) issuing and retiring bonds, bond anticipation notes and other obligations of the authority; (6) awarding loans, grants and other financial assistance, including eligibility criteria, the application process and the role played by the authority’s staff and board of directors; and (7) the use of surplus funds to the extent authorized under this chapter or other provisions of the general statutes.

(i) The authority shall not be construed to be a department, institution, or agency of the state.

(j) The authority shall continue as long as it shall have bonds or other obligations outstanding and until its existence is terminated by law. Upon termination of the existence of the authority, all its rights and properties shall pass to and be vested in the state of Connecticut.

(k) (1) The authority may form one or more subsidiaries to carry out the public purposes of the authority and may transfer to any such subsidiary or to any subsidiary established by the General Assembly through public or special act any moneys and real or personal property of any kind or nature. Any such subsidiary may be organized as a stock or nonstock corporation or a limited liability company. Each such subsidiary shall have and may exercise such powers of the authority as are set forth in the resolution of the authority prescribing the purposes for which such subsidiary is formed and such other powers provided to it by law. Each such subsidiary shall be deemed a quasi-public agency for purposes of chapter 12 and shall have all the privileges, immunities, tax exemptions and other exemptions of the authority, including the privileges, immunities, tax exemptions and other exemptions provided under the general statutes for special capital reserve funds. Each such subsidiary shall be subject to suit provided its liability shall be limited solely to the assets, revenues and resources of the subsidiary and without recourse to the general funds, revenues, resources or any other assets of the authority. Each such subsidiary is authorized to assume or take title to property subject to any existing lien, encumbrance or mortgage and to mortgage, convey or dispose of its assets and pledge its revenues in order to secure any borrowing, for the purpose of refinancing, rehabilitating or improving its assets, provided each such borrowing or mortgage shall be a special obligation of the subsidiary, which obligation may be in the form of bonds, bond anticipation notes and other obligations to the extent permitted under this chapter to fund and refund the same and provide for the rights of the holders thereof, and to secure the same by pledge of revenues, notes and other assets and which shall be payable solely from the assets, revenues and other resources of the subsidiary. The authority shall have the power to assign to a subsidiary any rights, moneys or other assets it has under any governmental program including the nursing home loan program.

(2) Each such subsidiary shall act through its board of directors at least one-half of which shall be members of the board of directors of the authority, or their designees or officers or employees of the authority. A resolution of the authority shall prescribe the purposes for which each such subsidiary is formed.

(3) The provisions of § 1-125, subsection (e) of § 10a-185 and this subsection shall apply to any officer, director, designee or employee appointed as a member, director or officer of any such subsidiary. Any such persons so appointed shall not be personally liable for the debts, obligations or liabilities of any such subsidiary as provided in said § 1-125. The subsidiary shall and the authority may provide for the indemnification to protect, save harmless and indemnify such officer, director, designee or employee as provided by said § 1-125.

(4) The authority or such subsidiary may take such actions as are necessary to comply with the provisions of the Internal Revenue Code of 1986 or any subsequent corresponding internal revenue code of the United States, as from time to time amended, to qualify and maintain any such subsidiary as a corporation exempt from taxation under said internal revenue code.

(5) The authority may make loans to each such subsidiary or to any subsidiary established by the General Assembly through public or special act, following standard authority procedures, from its assets and the proceeds of its bonds, notes and other obligations, provided the source and security for the repayment of such loans is derived from the assets, revenues and resources of the subsidiary.