senate Bill S7387A

Relates to the refinancing of outstanding indebtedness of certain not-for-profit hospitals

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 14 / May / 2014
    • REFERRED TO HEALTH
  • 20 / May / 2014
    • REPORTED AND COMMITTED TO FINANCE
  • 16 / Jun / 2014
    • AMEND AND RECOMMIT TO FINANCE
  • 16 / Jun / 2014
    • PRINT NUMBER 7387A
  • 20 / Jun / 2014
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 20 / Jun / 2014
    • ORDERED TO THIRD READING CAL.1675
  • 20 / Jun / 2014
    • SUBSTITUTED BY A9021D

Summary

Relates to the refinancing of outstanding indebtedness of certain not-for-profit hospitals.

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Bill Details

See Assembly Version of this Bill:
A9021D
Versions:
S7387
S7387A
Legislative Cycle:
2013-2014
Law Section:
Public Health Law
Laws Affected:
Amd §2872, add §2874-b, Pub Health L; amd §§3 & 5, add §7-c, NYS Med Care Fac Fin Ag Act; amd §12, Chap 934 of 1985

Sponsor Memo

BILL NUMBER:S7387A

TITLE OF BILL: 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 hospital 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

PURPOSE OR GENERAL IDEA OF BILL: To permit financially distressed
hospitals, which have existing capital indebtedness under the former
"Secured Hospital Loan Program" to realize annual cash flow savings
through the refinancing of such existing debt at lower rates without
increasing the amount of debt or the final maturity of such debt.

SUMMARY OF SPECIFIC PROVISIONS: Sections 1 through 11 amend various
provisions of the Public Health Law and Chapter 392 of the Laws of
1973, constituting the NYS Medical Care Facilities Finance Agency Act,
to authorize the refinancing of existing debt which is secured under
the former "secured hospital loan program" for financially distressed
hospitals. These sections provide that refinanced debt for such
hospitals will be secured in the same manner as original debt financed
under the program and also provides that hospitals shall not claim
additional Medicaid reimbursement due to interest payments on
refinanced debt.

Section 12 provides that Medicaid reimbursement for interest on debt
refinancing shall be subject to availability of federal financial
participation and that the refinancing of a mortgage loan shall not
alter, affect or change the component of Medicaid rates applicable to
the depreciation of any asset or assets.

Section 13 provides that the expiration and repeal of this act shall
not affect or impair bonds or notes issued, or any loan made to a
borrower made prior to the expiration of the provisions herein.

Section 14 provides for an immediate effective date with, an
expiration and repeal on December 31, 2015.

JUSTIFICATION: The bill is intended to permit certain not-for-profit
hospitals, previously designated as "financially distressed," to
refinance secured hospital debt upon demonstrating to the Commissioner
of Health that the refinancing is undertaken in furtherance of
sustaining, maintaining, and improving the financial condition of the
hospital. As a practical mater, this measure applies only to Wyckoff
Heights Medical Center. Other hospitals are either ineligible or
cannot take advantage of the new provisions. The bonds are already
secured by the State through a service contract, and the refinancing
will have the salutary effect of reducing the State's annual exposure,
as it will reduce ongoing debt service. The result of the refinancing
will be funds available in an escrow for use by the hospital top
improve infrastructure and equipment, with the approval of the
Commissioner of Health.


PRIOR LEGISLATIVE HISTORY: New Bill

FISCAL IMPLICATIONS: As a result of the "Medicaid hold harmless"
provision in the bill there is no fiscal impact to State or local
governments

EFFECTIVE DATE: Immediate with a sunset on December 31, 2015.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7387--A

                            I N  S E N A T E

                              May 14, 2014
                               ___________

Introduced by Sens. GOLDEN, DILAN -- read twice and ordered printed, and
  when  printed  to  be committed to the Committee on Health -- reported
  favorably from said  committee  and  committed  to  the  Committee  on
  Finance  --  committee  discharged, bill amended, 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:

  Section 1. Section 2872 of the public health law is amended by  adding
a new subdivision 3-b to read as follows:
  3-B.  "ELIGIBLE SECURED HOSPITAL BORROWER".  A NOT-FOR-PROFIT HOSPITAL
CORPORATION ORGANIZED UNDER THE LAWS OF THIS STATE, WHICH  HAS  FINANCED
OR  REFINANCED  A  PROJECT  OR  PROJECTS  PURSUANT TO SECTION SEVEN-A OF
SECTION ONE OF CHAPTER THREE HUNDRED NINETY-TWO OF THE LAWS OF  NINETEEN
HUNDRED  SEVENTY-THREE, AND FOR WHICH SPECIAL HOSPITAL PROJECT BONDS, AS
DEFINED IN PARAGRAPH (D)  OF  SUBDIVISION  THREE  OF  SECTION  THREE  OF
SECTION  ONE OF CHAPTER THREE HUNDRED NINETY-TWO OF THE LAWS OF NINETEEN
HUNDRED SEVENTY-THREE, REMAIN OUTSTANDING.
  S 2. The public health law is amended by adding a new  section  2874-b
to read as follows:
  S  2874-B.  REFINANCING  MORTGAGE  LOANS  TO ELIGIBLE SECURED HOSPITAL
BORROWERS. 1. ELIGIBLE SECURED HOSPITAL BORROWERS, AS DEFINED IN  SUBDI-
VISION THREE-B OF SECTION TWENTY-EIGHT HUNDRED SEVENTY-TWO OF THIS ARTI-
CLE,  SHALL  BE  AUTHORIZED TO REFINANCE ANY MORTGAGE LOAN FINANCED WITH
THE  PROCEEDS  OF  SPECIAL  HOSPITAL  PROJECT  BONDS,  WHICH  LOANS  ARE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14319-16-4

S. 7387--A                          2

OUTSTANDING  AS  OF THE EFFECTIVE DATE OF THIS SECTION.  A MORTGAGE LOAN
TO AN ELIGIBLE SECURED HOSPITAL  BORROWER,  AS  DEFINED  IN  SUBDIVISION
THREE-B  OF  SECTION  TWENTY-EIGHT  HUNDRED SEVENTY-TWO OF THIS ARTICLE,
MADE  BY  THE  MEDICAL CARE FACILITIES FINANCE AGENCY, AND ANY SUCCESSOR
THERETO, MAY BE REFINANCED FOR A TERM NOT LONGER THAN THE TERM  APPROVED
BY  THE  COMMISSIONER PURSUANT TO THIS SECTION OR IF THE BONDS ISSUED TO
FINANCE SUCH MORTGAGE LOAN ARE ISSUED AS TAX-EXEMPT BONDS, SUCH  SHORTER
TERM  AS  IS  NECESSARY  TO  ASSURE THAT THE INTEREST ON BONDS ISSUED TO
REFINANCE THE MORTGAGE LOAN WILL BE EXCLUDABLE FROM THE GROSS INCOME  OF
THE  HOLDERS THEREOF FOR FEDERAL TAX PURPOSES, PROVIDED THAT IN NO EVENT
SHALL THE TERM OF SUCH REFINANCING LOAN EXCEED THE REMAINING TERM OF THE
BONDS BEING REFUNDED AND SHALL INCLUDE ALL  COSTS  ASSOCIATED  WITH  THE
REFINANCING  OF  INDEBTEDNESS.  ALL REFINANCING APPLICATIONS BY ELIGIBLE
SECURED HOSPITAL BORROWERS SHALL BE APPROVED  BY  THE  ELIGIBLE  SECURED
HOSPITAL BORROWER'S BOARD AND THE COMMISSIONER.  SUCH REFINANCING APPLI-
CATIONS SHALL INCLUDE ANALYTICAL EVIDENCE SUFFICIENT TO DEMONSTRATE THAT
THE  PROPOSED  REFINANCING  IS  BEING  UNDERTAKEN FOR THE FURTHERANCE OF
SUSTAINING, MAINTAINING AND IMPROVING THE  FINANCIAL  CONDITION  OF  THE
HOSPITAL.  SUCH EVIDENCE SHALL INCLUDE BUT IS NOT LIMITED TO:  FINANCIAL
PRO FORMAS THAT PROJECT THE BORROWER'S REVENUES, EXPENSES AND  FINANCIAL
POSITION  FOR  LIFE  OF THE BONDS; THE MAXIMUM MATURITY OF THE REFUNDING
BONDS DO NOT EXCEED THE MATURITY OF THE BONDS TO BE REFUNDED; NET  PRES-
ENT  VALUE  SAVINGS  OF  AT  LEAST  TWO PERCENT OF THE PAR AMOUNT OF THE
REFUNDED BONDS AND NET PRESENT VALUE SAVINGS OF AT LEAST TWO  TIMES  THE
REFUNDING BONDS TOTAL COST OF ISSUANCE, INCLUDING UNDERWRITER'S DISCOUNT
AND CREDIT ENHANCEMENT; OR ANY OTHER ANALYSIS OR INFORMATION THE COMMIS-
SIONER  DEEMS  NECESSARY TO EVALUATE THE APPLICATION.  AS A CONDITION OF
SUCH PRIOR APPROVAL, THE COMMISSIONER SHALL APPROVE THE PRINCIPAL AMOUNT
OF THE REFINANCING, AND SHALL  REQUIRE  THE  ELIGIBLE  SECURED  HOSPITAL
BORROWER TO GIVE THE DEPARTMENT A WRITTEN UNDERTAKING, ACCEPTABLE TO THE
COMMISSIONER,  THAT IT WILL NOT CLAIM ADDITIONAL REIMBURSEMENT UNDER THE
MEDICAL ASSISTANCE PROGRAM AS ESTABLISHED UNDER TITLE ELEVEN OF  ARTICLE
FIVE  OF THE SOCIAL SERVICES LAW DUE TO INTEREST PAYMENTS ON REFINANCING
INDEBTEDNESS.  ANY  SUCH  ADDITIONAL  INTEREST  PAYMENTS  ON  REFINANCED
INDEBTEDNESS COVERED BY SUCH WRITTEN UNDERTAKING SHALL NOT BE CONSIDERED
AS ALLOWABLE COSTS UNDER THE MEDICAL ASSISTANCE PROGRAM AND SHALL NOT BE
INCLUDED IN REIMBURSEMENT RATES OF PAYMENT UNDER ARTICLE TWENTY-EIGHT OF
THIS  CHAPTER. SUCH REFINANCING SHALL BE SUBJECT TO SECTION FIFTY-ONE OF
THE PUBLIC AUTHORITIES LAW.
  2. THE USE OF ALL SAVINGS RESULTING FROM THE REFINANCING OF AN  ELIGI-
BLE SECURED HOSPITAL BORROWER'S MORTGAGE LOAN BY THE ISSUANCE OF REFUND-
ING  BONDS,  INCLUDING  ORIGINAL  ISSUE PREMIUM, SHALL BE SUBJECT TO THE
PRIOR APPROVAL OF THE COMMISSIONER.
  S 3. Subdivision 3 of section 3 of section 1 of  chapter  392  of  the
laws  of  1973,  constituting the New York state medical care facilities
finance agency act, is amended by adding a new paragraph (d-1)  to  read
as follows:
  (D-1)  "SPECIAL HOSPITAL PROJECT BONDS" SHALL MEAN BONDS ISSUED PURSU-
ANT TO SECTION SEVEN-C OF  THIS  ACT  FOR  THE  PURPOSE  OF  REFINANCING
OUTSTANDING  MORTGAGE  LOANS  OF ELIGIBLE SECURED HOSPITAL BORROWERS, AS
DEFINED IN SUBDIVISION SIX-C OF THIS SECTION, PURSUANT TO THIS ACT.
  S 4. Section 3 of section 1 of  chapter  392  of  the  laws  of  1973,
constituting  the  New York state medical care facilities finance agency
act, is amended by adding a new subdivision 6-c to read as follows:
  6-C. "ELIGIBLE SECURED HOSPITAL BORROWER" SHALL MEAN A  NOT-FOR-PROFIT
HOSPITAL  CORPORATION  ORGANIZED UNDER THE LAWS OF THIS STATE, WHICH HAS

S. 7387--A                          3

FINANCED OR REFINANCED A PROJECT OR PROJECTS PURSUANT TO SECTION SEVEN-A
OF THIS ACT, AND FOR WHICH SPECIAL HOSPITAL PROJECT BONDS, AS DEFINED IN
PARAGRAPH (D) OF SUBDIVISION THREE OF THIS SECTION, REMAIN OUTSTANDING.
  S  5.  Subdivision  10 of section 3 of section 1 of chapter 392 of the
laws of 1973, constituting the New York state  medical  care  facilities
finance  agency  act,  as amended by chapter 803 of the laws of 1984, is
amended to read as follows:
  10. "Hospital project" shall mean a specific work  or  improvement  or
the  refinancing  of  existing  indebtedness which constitutes a lien or
encumbrance upon the real property or assets of the  eligible  borrower,
OR  THE  REFINANCING  OF  EXISTING  INDEBTEDNESS  OF AN ELIGIBLE SECURED
HOSPITAL BORROWER, AS DEFINED IN SUBDIVISION SIX-C OF THIS SECTION,  FOR
WHICH  SPECIAL  HOSPITAL  PROJECT  BONDS, AS DEFINED IN PARAGRAPH (D) OF
SUBDIVISION THREE OF THIS SECTION, REMAIN  OUTSTANDING  whether  or  not
such refinancing is related to the construction, acquisition or rehabil-
itation  of  a  specified work or improvement undertaken by a non-profit
hospital corporation or a non-profit medical  corporation,  constituting
an  eligible borrower in accordance with the provisions of article twen-
ty-eight-B of the public health law.
  S 6. Subdivision 11 of section 3 of section 1 of chapter  392  of  the
laws  of  1973,  constituting the New York state medical care facilities
finance agency act, is amended to read as follows:
  11. "Hospital project cost" shall mean the  sum  total  of  all  costs
incurred  by  a  non-profit hospital corporation or a non-profit medical
corporation, constituting an eligible borrower undertaking a project  as
approved  by the commissioner in accordance with the provisions of arti-
cle [twenty-eight-B] 28-B of the public health law, OR, IN  CASE  OF  AN
ELIGIBLE  SECURED  HOSPITAL  BORROWER,  ALL COSTS INCURRED IN CONNECTION
WITH THE REFINANCING OF EXISTING INDEBTEDNESS APPROVED  BY  THE  COMMIS-
SIONER PURSUANT TO SECTION 2874-B OF THE PUBLIC HEALTH LAW.
  S  7.  Subdivision  12 of section 3 of section 1 of chapter 392 of the
laws of 1973, constituting the New York state  medical  care  facilities
finance  agency  act,  as amended by chapter 156 of the laws of 1974, is
amended to read as follows:
  12. "Mortgage loan" shall mean a loan made by the agency to an  eligi-
ble  borrower in an amount not to exceed the total hospital project cost
and secured by a first mortgage lien on the real property of  which  the
hospital  project consists and the personal property attached to or used
in connection with the construction, acquisition, reconstruction,  reha-
bilitation,  improvement or operation of the hospital project. Such loan
may be further secured by such a lien upon other real property owned  by
the  eligible borrower. Notwithstanding the foregoing provisions of this
subdivision or any other provisions of this act  to  the  contrary,  any
personal property may be excluded from the lien of the mortgage provided
(a)  the commissioner [of health] finds that such property is not essen-
tial for the rendition of required hospital services  as  such  term  is
defined  in  article  twenty-eight of the public health law, and (b) the
agency consents to such exclusion.
  The term "mortgage loan" shall also mean and include a  loan  made  by
the  agency to a limited-profit nursing home company in an amount not to
exceed ninety-five [percentum] PER CENTUM of the  nursing  home  project
cost, or to a non-profit nursing home company in an amount not to exceed
the  total  nursing  home  project cost, and secured by a first mortgage
lien on the real property of which the nursing home project consists and
the personal property  attached  to  or  used  in  connection  with  the
construction,  acquisition,  reconstruction, rehabilitation, improvement

S. 7387--A                          4

or operation of the nursing home project. Notwithstanding the  foregoing
provisions of this subdivision or any other provision of this article to
the contrary, any personal property may be excluded from the lien of the
mortgage  provided  (a) the commissioner finds that such property is not
essential for the nursing home project as such term is defined in  arti-
cle twenty-eight-A of the public health law, and (b) the agency consents
to such exclusion.
  THE TERM "MORTGAGE LOAN" SHALL ALSO MEAN AND INCLUDE A LOAN MADE TO AN
ELIGIBLE  SECURED  HOSPITAL BORROWER, AS DEFINED IN SUBDIVISION SIX-C OF
THIS SECTION, TO REFINANCE OUTSTANDING  INDEBTEDNESS  PURSUANT  TO  THIS
ACT.
  S  8.  Section  5  of  section  1  of chapter 392 of the laws of 1973,
constituting the New York state medical care facilities  finance  agency
act, is amended by adding a new subdivision 10-d to read as follows:
  10-D.  TO MAKE MORTGAGE LOANS AND PROJECT LOANS TO NON-PROFIT HOSPITAL
CORPORATIONS AND NON-PROFIT MEDICAL CORPORATIONS  CONSTITUTING  ELIGIBLE
SECURED  HOSPITAL  BORROWERS, AS DEFINED IN SUBDIVISION SIX-C OF SECTION
THREE OF THIS ACT, AND TO UNDERTAKE COMMITMENTS TO MAKE ANY  SUCH  MORT-
GAGE LOANS AND PROJECT LOANS;
  S  9.  Section  1 of chapter 392 of the laws of 1973, constituting the
New York state medical care facilities finance agency act, is amended by
adding a new section 7-c to read as follows:
  S 7-C. SECURED HOSPITAL PROJECTS RESERVE FUNDS AND APPROPRIATIONS.  1.
SPECIAL  HOSPITAL PROJECT BONDS, AS DEFINED IN PARAGRAPH (D-1) OF SUBDI-
VISION THREE OF SECTION THREE OF  THIS  ACT,  ISSUED  TO  REFINANCE  THE
PROJECTS  OF ELIGIBLE SECURED HOSPITAL BORROWERS, AS DEFINED IN SUBDIVI-
SION SIX-C OF SECTION THREE OF THIS ACT, SHALL BE SECURED BY (A) A MORT-
GAGE LIEN, (B) FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION,
(C) THE SECURED HOSPITAL SPECIAL DEBT SERVICE RESERVE FUND OR FUNDS, (D)
THE SECURED HOSPITAL CAPITAL RESERVE FUND OR FUNDS, AND (E) SUCH SERVICE
CONTRACT OR CONTRACTS ENTERED INTO IN ACCORDANCE WITH THE PROVISIONS  OF
SUBDIVISION FOUR OF THIS SECTION.
  2.  (A)  THE  AGENCY  SHALL  ESTABLISH A SECURED HOSPITAL SPECIAL DEBT
SERVICE RESERVE FUND OR FUNDS AND PAY INTO SUCH  FUND  OR  FUNDS  MONEYS
FROM  THE  SECURED HOSPITAL FUND UP TO AN AMOUNT NOT TO EXCEED AN AMOUNT
NECESSARY TO ENSURE THE REPAYMENT OF PRINCIPAL AND INTEREST DUE  ON  ANY
OUTSTANDING  INDEBTEDNESS ON SPECIAL HOSPITAL PROJECTS BONDS, AS DEFINED
IN PARAGRAPH (D-1) OF SUBDIVISION THREE OF SECTION THREE OF THIS ACT.
  FUNDS DEPOSITED IN SUCH SECURED HOSPITAL SPECIAL DEBT SERVICE  RESERVE
FUND OR FUNDS SHALL BE USED IN THE EVENT THAT AN ELIGIBLE SECURED HOSPI-
TAL  BORROWER,  AS DEFINED IN SUBDIVISION SIX-C OF SECTION THREE OF THIS
ACT, FAILS TO MAKE PAYMENTS IN AN AMOUNT SUFFICIENT TO PAY THE  REQUIRED
DEBT  SERVICE  PAYMENTS ON SPECIAL HOSPITAL PROJECT BONDS, AS DEFINED IN
PARAGRAPH (D-1) OF SUBDIVISION THREE OF SECTION THREE OF THIS ACT.
  (B) THE AGENCY SHALL, FOR THE PURPOSES OF PARAGRAPH (A) OF THIS SUBDI-
VISION AND FOR THE SUPPORT OF ELIGIBLE SECURED HOSPITAL  BORROWERS,  PAY
INTO  THE  SECURED HOSPITAL FUND CURRENTLY ESTABLISHED AND MAINTAINED BY
THE AGENCY: (I) ALL FUNDS REQUIRED TO BE PAID  IN  ACCORDANCE  WITH  THE
PROVISIONS  OF  ARTICLE  TWENTY-EIGHT OF THE PUBLIC HEALTH LAW AND REGU-
LATIONS PROMULGATED IN SUCH ARTICLE; (II) ANY MORTGAGE INSURANCE PREMIUM
ASSESSED IN AN AMOUNT FIXED AT THE DISCRETION OF THE  AGENCY,  UPON  THE
ISSUANCE  OF  SPECIAL  HOSPITAL  PROJECT  BONDS, AS DEFINED IN PARAGRAPH
(D-1) OF SUBDIVISION THREE OF SECTION  THREE  OF  THIS  ACT;  (III)  ANY
INCOME OR INTEREST EARNED ON OTHER RESERVE FUNDS WHICH THE AGENCY ELECTS
TO  TRANSFER  TO  THE  SECURED  HOSPITAL FUND; AND (IV) ANY OTHER MONEYS
WHICH MAY BE MADE AVAILABLE TO THE  AGENCY  FROM  ANY  OTHER  SOURCE  OR

S. 7387--A                          5

SOURCES.  MONEYS  PAID  INTO  THE  SECURED  HOSPITAL  FUND SHALL, IN THE
DISCRETION OF THE AGENCY, BUT SUBJECT TO AGREEMENTS WITH BONDHOLDERS, BE
USED TO FUND THE SPECIAL DEBT SERVICE RESERVE FUND OR FUNDS AT  A  LEVEL
OR LEVELS WHICH MINIMIZE THE NEED FOR USE OF THE CAPITAL RESERVE FUND OR
FUNDS  IN  THE  EVENT  OF  THE  FAILURE  OF AN ELIGIBLE SECURED HOSPITAL
BORROWER, AS DEFINED IN SUBDIVISION SIX-C OF SECTION THREE OF THIS  ACT,
TO  MAKE  THE REQUIRED DEBT SERVICE PAYMENTS ON SPECIAL HOSPITAL PROJECT
BONDS, AS DEFINED IN PARAGRAPH (D-1) OF  SUBDIVISION  THREE  OF  SECTION
THREE OF THIS ACT.
  (C)  NOTWITHSTANDING  THE PROVISIONS OF PARAGRAPHS (A) AND (B) OF THIS
SUBDIVISION, THE STATE HEREBY EXPRESSLY RESERVES THE RIGHT TO MODIFY  OR
REPEAL THE PROVISIONS OF ARTICLE TWENTY-EIGHT OF THE PUBLIC HEALTH LAW.
  3.  THE AGENCY SHALL ESTABLISH A SECURED HOSPITAL CAPITAL RESERVE FUND
OR FUNDS WHICH SHALL BE FUNDED AT AN AMOUNT  OR  AMOUNTS  EQUAL  TO  THE
LESSER  OF  EITHER:  (A)  THE  MAXIMUM AMOUNT OF PRINCIPAL, SINKING FUND
PAYMENTS AND INTEREST DUE IN ANY SUCCEEDING YEAR ON OUTSTANDING  SPECIAL
HOSPITAL  PROJECT  BONDS,  AS  DEFINED IN PARAGRAPH (D-1) OF SUBDIVISION
THREE OF SECTION THREE OF THIS ACT, OR (B) THE MAXIMUM AMOUNT TO  ENSURE
THAT  SUCH BONDS WILL NOT BE CONSIDERED ARBITRAGE BONDS UNDER THE INTER-
NAL REVENUE CODE OF 1986, AS AMENDED. THE CAPITAL RESERVE FUND SHALL  BE
FUNDED  BY  THE  SALE  OF  SPECIAL HOSPITAL PROJECT BONDS, AS DEFINED IN
PARAGRAPH (D-1) OF SUBDIVISION THREE OF SECTION THREE OF  THIS  ACT,  OR
FROM  SUCH  OTHER FUNDS AS MAY BE LEGALLY AVAILABLE FOR SUCH PURPOSE, AS
PROVIDED FOR IN THE BOND RESOLUTION OR RESOLUTIONS AUTHORIZING THE ISSU-
ANCE OF SUCH BONDS.
  4. (A) NOTWITHSTANDING THE PROVISIONS OF ANY GENERAL OR SPECIAL LAW TO
THE CONTRARY, AND SUBJECT TO THE MAKING OF ANNUAL APPROPRIATIONS  THERE-
FOR  BY THE LEGISLATURE IN ORDER TO REFINANCE MORTGAGE LOANS TO ELIGIBLE
SECURED HOSPITAL BORROWERS, AS DEFINED IN SUBDIVISION SIX-C  OF  SECTION
THREE OF THIS ACT, THE DIRECTOR OF THE BUDGET IS AUTHORIZED IN ANY STATE
FISCAL  YEAR  TO ENTER INTO ONE OR MORE SERVICE CONTRACTS, WHICH SERVICE
CONTRACTS SHALL NOT EXCEED THE TERM  OF  THE  SPECIAL  HOSPITAL  PROJECT
BONDS, ISSUED FOR THE BENEFIT OF THE ELIGIBLE SECURED HOSPITAL BORROWER,
UPON  SUCH  TERMS AS THE DIRECTOR OF THE BUDGET AND THE AGENCY AGREE, SO
AS TO PROVIDE ANNUALLY TO THE AGENCY IN THE AGGREGATE SUCH SUM, IF  ANY,
AS  NECESSARY  TO  MEET  THE  DEBT  SERVICE  PAYMENTS DUE ON OUTSTANDING
SPECIAL HOSPITAL PROJECT BONDS, AS DEFINED IN PARAGRAPH (D-1) OF  SUBDI-
VISION  THREE  OF  SECTION  THREE  OF THIS ACT, IN ANY YEAR IF THE FUNDS
PROVIDED FOR IN THIS SECTION ARE INADEQUATE.
  (B) ANY SERVICE CONTRACT ENTERED INTO PURSUANT  TO  PARAGRAPH  (A)  OF
THIS  SUBDIVISION  SHALL PROVIDE (I) THAT THE OBLIGATION OF THE DIRECTOR
OF THE BUDGET OR OF THE STATE TO FUND OR  TO  PAY  THE  AMOUNTS  THEREIN
PROVIDED FOR SHALL NOT CONSTITUTE A DEBT OF THE STATE WITHIN THE MEANING
OF  ANY CONSTITUTIONAL OR STATUTORY PROVISION AND SHALL BE DEEMED EXECU-
TORY ONLY TO THE EXTENT OF MONEYS AVAILABLE AND THAT NO LIABILITY  SHALL
BE  INCURRED  BY THE STATE BEYOND THE MONEYS AVAILABLE FOR SUCH PURPOSE,
AND THAT SUCH OBLIGATION IS  SUBJECT  TO  ANNUAL  APPROPRIATION  BY  THE
LEGISLATURE;  AND  (II)  THAT THE AMOUNTS PAID TO THE AGENCY PURSUANT TO
ANY SUCH CONTRACT MAY BE USED BY IT  SOLELY  TO  PAY  OR  TO  ASSIST  IN
FINANCING  COSTS  OF MORTGAGE LOANS TO ELIGIBLE SECURED HOSPITAL BORROW-
ERS, AS DEFINED IN SUBDIVISION SIX-C OF SECTION THREE OF THIS ACT.
  5. THE AGENCY SHALL NOT  ISSUE  SPECIAL  HOSPITAL  PROJECT  BONDS,  AS
DEFINED IN PARAGRAPH (D-1) OF SUBDIVISION THREE OF SECTION THREE OF THIS
ACT,  EXCEPT  TO  REFINANCE MORTGAGE LOANS FOR ELIGIBLE SECURED HOSPITAL
BORROWERS AS PROVIDED IN SECTION THREE OF THIS ACT.

S. 7387--A                          6

  S 10. Notwithstanding any other provision of this act: (i)  reimburse-
ment  for  interest  on  any  indebtedness  hereunder  to be paid by the
medical assistance program established under title 11 of  article  5  of
the  social services law shall be subject to the availability of federal
financial  participation;  and  (ii)  the refinancing of a mortgage loan
pursuant to this act shall not alter, affect or change the component  of
medical  assistance  reimbursement applicable to the depreciation of any
asset or assets.
  S 11. The expiration and repeal of sections one through nine  of  this
act  shall  not  affect or impair any bonds or notes issued, or any loan
made to any borrower, pursuant to the provisions of this  act  prior  to
the expiration of these sections.
  S  12.  Section  12  of  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 hospital  project
bonds  on  behalf  of  certain  secured  hospital borrowers to assist in
providing adequate health care to low  income  persons,  as  amended  by
chapter 639 of the laws of 1996, is amended to read as follows:
  S  12.  This  act  shall  take  effect immediately and shall expire on
[March 1, 1998] DECEMBER 31, 2015; provided, however, that  the  expira-
tion of the provisions of law as amended and added, respectively, by the
provisions  of  this  act  shall  not affect or impair in any manner any
bonds issued, or any mortgage loan made to any eligible borrower, or any
service contract entered into pursuant to the  provisions  of  this  act
prior  to  its  expiration;  and  provided  further,  however,  that the
provisions of this act on and after [September  1,  1997]  DECEMBER  31,
2015 shall apply only to hospitals that have received from the dormitory
authority  of  the  state  of  New York by [such date] SEPTEMBER 1, 1997
acknowledgement and acceptance of an application for financing  pursuant
to this act and have obtained by such date all approvals required pursu-
ant to the public health law for submitting such application.
  S  13.  This act shall take effect immediately; provided that sections
one through nine of this act shall expire and be deemed repealed  Decem-
ber  31,  2015;  provided further, that the secured hospital fund estab-
lished by paragraph (b) of subdivision 2 of section 7-b of the New  York
state  medical  care facilities finance agency act shall not be affected
by such repeal and shall continue in existence.

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