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.
