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A09021 Summary:

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A09021 Floor Votes:

A09021 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         9021--D
 
                   IN ASSEMBLY
 
                                      March 7, 2014
                                       ___________
 
        Introduced  by  M.  of  A. DAVILA, CAMARA, COLTON, BROOK-KRASNY, MOSLEY,
          ORTIZ, PICHARDO, SCARBOROUGH, PERRY, CRESPO -- Multi-Sponsored  by  --
          M.  of  A.  ARROYO,  BRENNAN,  HIKIND, LENTOL, PEOPLES-STOKES, RIVERA,
          ROBERTS -- read once and  referred  to  the  Committee  on  Health  --
          committee  discharged,  bill amended, ordered reprinted as amended and

          recommitted to said committee -- again reported  from  said  committee
          with  amendments, ordered reprinted as amended and recommitted to said
          committee -- reported and referred to the Committee on Ways and  Means
          --  committee  discharged,  bill amended, ordered reprinted as amended
          and recommitted to said committee -- again reported from said  commit-
          tee  with  amendments, ordered reprinted as amended and recommitted to
          said committee
 
        AN ACT to amend the public health law and the  New  York  state  medical
          care  facilities  finance agency act, in relation to providing for the
          refinancing of  outstanding  indebtedness  of  certain  not-for-profit
          hospitals;  to  amend  chapter  934  of the laws of 1985, amending the
          public health law and the  New  York  state  medical  care  facilities
          finance  agency act relating to authorizing issuance of special hospi-

          tal project bonds on behalf of certain secured hospital  borrowers  to
          assist  in  providing  adequate  health care to low income persons, in
          relation to extending the provisions of such  chapter;  and  providing
          for the repeal of certain provisions upon expiration thereof
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 2872 of the public health law is amended by  adding
     2  a new subdivision 3-b to read as follows:
     3    3-b.  "Eligible secured hospital borrower".  A not-for-profit hospital
     4  corporation organized under the laws of this state, which  has  financed
     5  or  refinanced  a  project  or  projects  pursuant to section seven-a of
     6  section one of chapter three hundred ninety-two of the laws of  nineteen

     7  hundred  seventy-three, and for which special hospital project bonds, as
     8  defined in paragraph (d)  of  subdivision  three  of  section  three  of
     9  section  one of chapter three hundred ninety-two of the laws of nineteen
    10  hundred seventy-three, remain outstanding.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14319-15-4
        A. 9021--D                          2
 
     1    § 2. The public health law is amended by adding a new  section  2874-b
     2  to read as follows:
     3    §  2874-b.  Refinancing  mortgage  loans  to eligible secured hospital
     4  borrowers. 1. Eligible secured hospital borrowers, as defined in  subdi-

     5  vision three-b of section twenty-eight hundred seventy-two of this arti-
     6  cle,  shall  be  authorized to refinance any mortgage loan financed with
     7  the  proceeds  of  special  hospital  project  bonds,  which  loans  are
     8  outstanding  as  of the effective date of this section.  A mortgage loan
     9  to an eligible secured hospital  borrower,  as  defined  in  subdivision
    10  three-b  of  section  twenty-eight  hundred seventy-two of this article,
    11  made by the medical care facilities finance agency,  and  any  successor
    12  thereto,  may be refinanced for a term not longer than the term approved
    13  by the commissioner pursuant to this section or if the bonds  issued  to
    14  finance  such mortgage loan are issued as tax-exempt bonds, such shorter

    15  term as is necessary to assure that the  interest  on  bonds  issued  to
    16  refinance  the mortgage loan will be excludable from the gross income of
    17  the holders thereof for federal tax purposes, provided that in no  event
    18  shall the term of such refinancing loan exceed the remaining term of the
    19  bonds  being  refunded  and  shall include all costs associated with the
    20  refinancing of indebtedness. All refinancing  applications  by  eligible
    21  secured  hospital  borrowers  shall  be approved by the eligible secured
    22  hospital borrower's board and the commissioner.  Such refinancing appli-
    23  cations shall include analytical evidence sufficient to demonstrate that
    24  the proposed refinancing is being  undertaken  for  the  furtherance  of

    25  sustaining,  maintaining  and  improving  the financial condition of the
    26  hospital. Such evidence shall include but is not limited to:   financial
    27  pro  formas that project the borrower's revenues, expenses and financial
    28  position for life of the bonds; the maximum maturity  of  the  refunding
    29  bonds  do not exceed the maturity of the bonds to be refunded; net pres-
    30  ent value savings of at least two percent  of  the  par  amount  of  the
    31  refunded  bonds  and net present value savings of at least two times the
    32  refunding bonds total cost of issuance, including underwriter's discount
    33  and credit enhancement; or any other analysis or information the commis-
    34  sioner deems necessary to evaluate the application.  As a  condition  of

    35  such prior approval, the commissioner shall approve the principal amount
    36  of  the  refinancing,  and  shall  require the eligible secured hospital
    37  borrower to give the department a written undertaking, acceptable to the
    38  commissioner, that it will not claim additional reimbursement under  the
    39  medical  assistance program as established under title eleven of article
    40  five of the social services law due to interest payments on  refinancing
    41  indebtedness.  Any  such  additional  interest  payments  on  refinanced
    42  indebtedness covered by such written undertaking shall not be considered
    43  as allowable costs under the medical assistance program and shall not be
    44  included in reimbursement rates of payment under article twenty-eight of

    45  this chapter. Such refinancing shall be subject to section fifty-one  of
    46  the public authorities law.
    47    2.  The use of all savings resulting from the refinancing of an eligi-
    48  ble secured hospital borrower's mortgage loan by the issuance of refund-
    49  ing bonds, including original issue premium, shall  be  subject  to  the
    50  prior approval of the commissioner.
    51    §  3.  Subdivision  3  of section 3 of section 1 of chapter 392 of the
    52  laws of 1973, constituting the New York state  medical  care  facilities
    53  finance  agency  act, is amended by adding a new paragraph (d-1) to read
    54  as follows:
    55    (d-1) "Special hospital project bonds" shall mean bonds issued  pursu-
    56  ant  to  section  seven-c  of  this  act  for the purpose of refinancing

        A. 9021--D                          3
 
     1  outstanding mortgage loans of eligible secured  hospital  borrowers,  as
     2  defined in subdivision six-c of this section, pursuant to this act.
     3    §  4.  Section  3  of  section  1  of chapter 392 of the laws of 1973,
     4  constituting the New York state medical care facilities  finance  agency
     5  act, is amended by adding a new subdivision 6-c to read as follows:
     6    6-c.  "Eligible secured hospital borrower" shall mean a not-for-profit
     7  hospital corporation organized under the laws of this state,  which  has
     8  financed or refinanced a project or projects pursuant to section seven-a
     9  of this act, and for which special hospital project bonds, as defined in
    10  paragraph (d) of subdivision three of this section, remain outstanding.

    11    §  5.  Subdivision  10 of section 3 of section 1 of chapter 392 of the
    12  laws of 1973, constituting the New York state  medical  care  facilities
    13  finance  agency  act,  as amended by chapter 803 of the laws of 1984, is
    14  amended to read as follows:
    15    10. "Hospital project" shall mean a specific work  or  improvement  or
    16  the  refinancing  of  existing  indebtedness which constitutes a lien or
    17  encumbrance upon the real property or assets of the  eligible  borrower,
    18  or  the  refinancing  of  existing  indebtedness  of an eligible secured
    19  hospital borrower, as defined in subdivision six-c of this section,  for
    20  which  special  hospital  project  bonds, as defined in paragraph (d) of
    21  subdivision three of this section, remain  outstanding  whether  or  not

    22  such refinancing is related to the construction, acquisition or rehabil-
    23  itation  of  a  specified work or improvement undertaken by a non-profit
    24  hospital corporation or a non-profit medical  corporation,  constituting
    25  an  eligible borrower in accordance with the provisions of article twen-
    26  ty-eight-B of the public health law.
    27    § 6. Subdivision 11 of section 3 of section 1 of chapter  392  of  the
    28  laws  of  1973,  constituting the New York state medical care facilities
    29  finance agency act, is amended to read as follows:
    30    11. "Hospital project cost" shall mean the  sum  total  of  all  costs
    31  incurred  by  a  non-profit hospital corporation or a non-profit medical
    32  corporation, constituting an eligible borrower undertaking a project  as
    33  approved  by the commissioner in accordance with the provisions of arti-

    34  cle [twenty-eight-B] 28-B of the public health law, or, in  case  of  an
    35  eligible  secured  hospital  borrower,  all costs incurred in connection
    36  with the refinancing of existing indebtedness approved  by  the  commis-
    37  sioner pursuant to section 2874-b of the public health law.
    38    §  7.  Subdivision  12 of section 3 of section 1 of chapter 392 of the
    39  laws of 1973, constituting the New York state  medical  care  facilities
    40  finance  agency  act,  as amended by chapter 156 of the laws of 1974, is
    41  amended to read as follows:
    42    12. "Mortgage loan" shall mean a loan made by the agency to an  eligi-
    43  ble  borrower in an amount not to exceed the total hospital project cost
    44  and secured by a first mortgage lien on the real property of  which  the

    45  hospital  project consists and the personal property attached to or used
    46  in connection with the construction, acquisition, reconstruction,  reha-
    47  bilitation,  improvement or operation of the hospital project. Such loan
    48  may be further secured by such a lien upon other real property owned  by
    49  the  eligible borrower. Notwithstanding the foregoing provisions of this
    50  subdivision or any other provisions of this act  to  the  contrary,  any
    51  personal property may be excluded from the lien of the mortgage provided
    52  (a)  the commissioner [of health] finds that such property is not essen-
    53  tial for the rendition of required hospital services  as  such  term  is
    54  defined  in  article  twenty-eight of the public health law, and (b) the
    55  agency consents to such exclusion.
        A. 9021--D                          4
 

     1    The term "mortgage loan" shall also mean and include a  loan  made  by
     2  the  agency to a limited-profit nursing home company in an amount not to
     3  exceed ninety-five [percentum] per centum of the  nursing  home  project
     4  cost, or to a non-profit nursing home company in an amount not to exceed
     5  the  total  nursing  home  project cost, and secured by a first mortgage
     6  lien on the real property of which the nursing home project consists and
     7  the personal property  attached  to  or  used  in  connection  with  the
     8  construction,  acquisition,  reconstruction, rehabilitation, improvement
     9  or operation of the nursing home project. Notwithstanding the  foregoing
    10  provisions of this subdivision or any other provision of this article to
    11  the contrary, any personal property may be excluded from the lien of the
    12  mortgage  provided  (a) the commissioner finds that such property is not

    13  essential for the nursing home project as such term is defined in  arti-
    14  cle twenty-eight-A of the public health law, and (b) the agency consents
    15  to such exclusion.
    16    The term "mortgage loan" shall also mean and include a loan made to an
    17  eligible  secured  hospital borrower, as defined in subdivision six-c of
    18  this section, to refinance outstanding  indebtedness  pursuant  to  this
    19  act.
    20    §  8.  Section  5  of  section  1  of chapter 392 of the laws of 1973,
    21  constituting the New York state medical care facilities  finance  agency
    22  act, is amended by adding a new subdivision 10-d to read as follows:
    23    10-d.  To make mortgage loans and project loans to non-profit hospital
    24  corporations and non-profit medical corporations  constituting  eligible

    25  secured  hospital  borrowers, as defined in subdivision six-c of section
    26  three of this act, and to undertake commitments to make any  such  mort-
    27  gage loans and project loans;
    28    §  9.  Section  1 of chapter 392 of the laws of 1973, constituting the
    29  New York state medical care facilities finance agency act, is amended by
    30  adding a new section 7-c to read as follows:
    31    § 7-c. Secured hospital projects reserve funds and appropriations.  1.
    32  Special  hospital project bonds, as defined in paragraph (d-1) of subdi-
    33  vision three of section three of  this  act,  issued  to  refinance  the
    34  projects  of eligible secured hospital borrowers, as defined in subdivi-
    35  sion six-c of section three of this act, shall be secured by (a) a mort-

    36  gage lien, (b) funds and accounts established under the bond resolution,
    37  (c) the secured hospital special debt service reserve fund or funds, (d)
    38  the secured hospital capital reserve fund or funds, and (e) such service
    39  contract or contracts entered into in accordance with the provisions  of
    40  subdivision four of this section.
    41    2.  (a)  The  agency  shall  establish a secured hospital special debt
    42  service reserve fund or funds and pay into such  fund  or  funds  moneys
    43  from  the  secured hospital fund up to an amount not to exceed an amount
    44  necessary to ensure the repayment of principal and interest due  on  any
    45  outstanding  indebtedness on special hospital projects bonds, as defined

    46  in paragraph (d-1) of subdivision three of section three of this act.
    47    Funds deposited in such secured hospital special debt service  reserve
    48  fund or funds shall be used in the event that an eligible secured hospi-
    49  tal  borrower,  as defined in subdivision six-c of section three of this
    50  act, fails to make payments in an amount sufficient to pay the  required
    51  debt  service  payments on special hospital project bonds, as defined in
    52  paragraph (d-1) of subdivision three of section three of this act.
    53    (b) The agency shall, for the purposes of paragraph (a) of this subdi-
    54  vision and for the support of eligible secured hospital  borrowers,  pay
    55  into  the  secured hospital fund currently established and maintained by

    56  the agency: (i) all funds required to be paid  in  accordance  with  the
        A. 9021--D                          5
 
     1  provisions  of  article  twenty-eight of the public health law and regu-
     2  lations promulgated in such article; (ii) any mortgage insurance premium
     3  assessed in an amount fixed at the discretion of the  agency,  upon  the
     4  issuance  of  special  hospital  project  bonds, as defined in paragraph
     5  (d-1) of subdivision three of section  three  of  this  act;  (iii)  any
     6  income or interest earned on other reserve funds which the agency elects
     7  to  transfer  to  the  secured  hospital fund; and (iv) any other moneys
     8  which may be made available to the  agency  from  any  other  source  or

     9  sources.  Moneys  paid  into  the  secured  hospital  fund shall, in the
    10  discretion of the agency, but subject to agreements with bondholders, be
    11  used to fund the special debt service reserve fund or funds at  a  level
    12  or levels which minimize the need for use of the capital reserve fund or
    13  funds  in  the  event  of  the  failure  of an eligible secured hospital
    14  borrower, as defined in subdivision six-c of section three of this  act,
    15  to  make  the required debt service payments on special hospital project
    16  bonds, as defined in paragraph (d-1) of  subdivision  three  of  section
    17  three of this act.
    18    (c)  Notwithstanding  the provisions of paragraphs (a) and (b) of this
    19  subdivision, the state hereby expressly reserves the right to modify  or

    20  repeal the provisions of article twenty-eight of the public health law.
    21    3.  The agency shall establish a secured hospital capital reserve fund
    22  or funds which shall be funded at an amount  or  amounts  equal  to  the
    23  lesser  of  either:  (a)  the  maximum amount of principal, sinking fund
    24  payments and interest due in any succeeding year on outstanding  special
    25  hospital  project  bonds,  as  defined in paragraph (d-1) of subdivision
    26  three of section three of this act, or (b) the maximum amount to  ensure
    27  that  such bonds will not be considered arbitrage bonds under the Inter-
    28  nal Revenue Code of 1986, as amended. The capital reserve fund shall  be
    29  funded  by  the  sale  of  special hospital project bonds, as defined in

    30  paragraph (d-1) of subdivision three of section three of  this  act,  or
    31  from  such  other funds as may be legally available for such purpose, as
    32  provided for in the bond resolution or resolutions authorizing the issu-
    33  ance of such bonds.
    34    4. (a) Notwithstanding the provisions of any general or special law to
    35  the contrary, and subject to the making of annual appropriations  there-
    36  for  by the legislature in order to refinance mortgage loans to eligible
    37  secured hospital borrowers, as defined in subdivision six-c  of  section
    38  three of this act, the director of the budget is authorized in any state
    39  fiscal  year  to enter into one or more service contracts, which service
    40  contracts shall not exceed the term  of  the  special  hospital  project

    41  bonds, issued for the benefit of the eligible secured hospital borrower,
    42  upon  such  terms as the director of the budget and the agency agree, so
    43  as to provide annually to the agency in the aggregate such sum, if  any,
    44  as  necessary  to  meet  the  debt  service  payments due on outstanding
    45  special hospital project bonds, as defined in paragraph (d-1) of  subdi-
    46  vision  three  of  section  three  of this act, in any year if the funds
    47  provided for in this section are inadequate.
    48    (b) Any service contract entered into pursuant  to  paragraph  (a)  of
    49  this  subdivision  shall provide (i) that the obligation of the director
    50  of the budget or of the state to fund or  to  pay  the  amounts  therein

    51  provided for shall not constitute a debt of the state within the meaning
    52  of  any constitutional or statutory provision and shall be deemed execu-
    53  tory only to the extent of moneys available and that no liability  shall
    54  be  incurred  by the state beyond the moneys available for such purpose,
    55  and that such obligation is  subject  to  annual  appropriation  by  the
    56  legislature;  and  (ii)  that the amounts paid to the agency pursuant to
        A. 9021--D                          6
 
     1  any such contract may be used by it  solely  to  pay  or  to  assist  in
     2  financing  costs  of mortgage loans to eligible secured hospital borrow-
     3  ers, as defined in subdivision six-c of section three of this act.

     4    5.  The  agency  shall  not  issue  special hospital project bonds, as
     5  defined in paragraph (d-1) of subdivision three of section three of this
     6  act, except to refinance mortgage loans for  eligible  secured  hospital
     7  borrowers as provided in section three of this act.
     8    §  10. Notwithstanding any other provision of this act: (i) reimburse-
     9  ment for interest on any  indebtedness  hereunder  to  be  paid  by  the
    10  medical  assistance  program  established under title 11 of article 5 of
    11  the social services law shall be subject to the availability of  federal
    12  financial  participation;  and  (ii)  the refinancing of a mortgage loan
    13  pursuant to this act shall not alter, affect or change the component  of
    14  medical  assistance  reimbursement applicable to the depreciation of any
    15  asset or assets.

    16    § 11. The expiration and repeal of sections one through nine  of  this
    17  act  shall  not  affect or impair any bonds or notes issued, or any loan
    18  made to any borrower, pursuant to the provisions of this  act  prior  to
    19  the expiration of these sections.
    20    §  12.  Section  12  of  chapter 934 of the laws of 1985, amending the
    21  public health law and the New York state medical care facilities finance
    22  agency act relating to authorizing issuance of special hospital  project
    23  bonds  on  behalf  of  certain  secured  hospital borrowers to assist in
    24  providing adequate health care to low  income  persons,  as  amended  by
    25  chapter 639 of the laws of 1996, is amended to read as follows:
    26    §  12.  This  act  shall  take  effect immediately and shall expire on
    27  [March 1, 1998] December 31, 2015; provided, however, that  the  expira-

    28  tion of the provisions of law as amended and added, respectively, by the
    29  provisions  of  this  act  shall  not affect or impair in any manner any
    30  bonds issued, or any mortgage loan made to any eligible borrower, or any
    31  service contract entered into pursuant to the  provisions  of  this  act
    32  prior  to  its  expiration;  and  provided  further,  however,  that the
    33  provisions of this act on and after [September  1,  1997]  December  31,
    34  2015 shall apply only to hospitals that have received from the dormitory
    35  authority  of  the  state  of  New York by [such date] September 1, 1997
    36  acknowledgement and acceptance of an application for financing  pursuant
    37  to this act and have obtained by such date all approvals required pursu-
    38  ant to the public health law for submitting such application.

    39    §  13.  This act shall take effect immediately; provided that sections
    40  one through nine of this act shall expire and be deemed repealed  Decem-
    41  ber  31,  2015;  provided further, that the secured hospital fund estab-
    42  lished by paragraph (b) of subdivision 2 of section 7-b of the New  York
    43  state  medical  care facilities finance agency act shall not be affected
    44  by such repeal and shall continue in existence.