Ed. Code, § 94874.1

(a) The bureau shall not verify the exemption from this chapter of, or contract for the complaint handling for, a nonprofit institution that operated as a for-profit institution during any period on or after January 1, 2010, unless the Attorney General verifies all of the following:

(1) The nonprofit institution acquired the for-profit institution’s assets for no more than the fair value of the assets.

(2) The nonprofit institution has not executed agreements for goods or services exceeding the fair value of the goods or services.

(3) All core functions of the nonprofit institution are conducted by, or under the direction of, the nonprofit institution.

(4) The nonprofit institution has not entered into any contracts, loans, or leases with a term of longer than three years with the former for-profit institution’s owners and managers. This paragraph does not apply to a nonprofit institution that previously operated as a for-profit institution that is owned by or controlled by a public institution of higher learning.

(b) An action under subdivision (a) may be appealed to the superior court.

(c) “Fair value” shall be demonstrated through one of the following:

(1) A third-party appraisal based on comparable assets acquired by, or goods or services procured by, nonprofit corporations in similar market conditions.

(2) Independent financing of the acquisition or procurement based upon the asset acquired or goods or services procured.

(3) Full and open competition in the acquisition of the assets or procurement of the goods or services.

(d) Within 90 days of the receipt of all information the Attorney General has determined is necessary for its verification pursuant to subdivision (a), the Attorney General shall notify the institution and the bureau in writing of the Attorney General’s verification pursuant to subdivision (a).

(e) This section shall become operative on January 1, 2022.