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This entry was published on 2017-01-13
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SECTION 7-A
Secured hospital projects reserve funds and appropriations
Medical Care Facilities Finance Agency 392/73 (MCF) CHAPTER 392
* § 7-a. Secured hospital projects reserve funds and appropriations.
1. Special hospital project bonds issued to finance the projects of
eligible secured hospital borrowers shall be secured by (i) a first
mortgage lien on such property as specified in accordance with
subdivision twelve of section three of this act, (ii) funds and accounts
established under the bond resolution, (iii) the secured hospital
special debt service reserve fund or funds, (iv) the secured hospital
capital reserve fund or funds, and (v) 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. Funds
deposited in such special debt service reserve fund or funds shall be
used in the event that an eligible secured hospital borrower fails to
make the required debt service payments on special hospital projects
bonds, including, if necessary, payments due as a result of the failure
to make principal and interest payments associated with the refinancing
of indebtedness attributable to unmet bad debt and charity care losses.

(b) The agency shall establish a secured hospital fund for the
purposes of paragraph (a) of this subdivision and for the support of
eligible borrowers, and shall pay into such fund: (i) all funds required
to be paid in accordance with the provisions of article twenty-eight of
the public health law and regulations promulgated thereunder; (ii) any
mortgage insurance premium assessed in an amount fixed at the discretion
of the agency, upon the issuance of special hospital project bonds;
(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 for the purposes
of such fund from any other source or 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 to make the required
debt service payments on special hospital project bonds.

(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: (i) the maximum amount of principal, sinking fund
payments and interest due in any succeeding year on outstanding special
hospital project bonds or (ii) the maximum amount to insure that such
bonds will not be considered arbitrage bonds under the Internal Revenue
Code of 1986, as amended. The capital reserve fund shall be funded by
the sale of special hospital project bonds or from such other funds as
may be legally available for such purpose, as provided for in the bond
resolution or resolutions authorizing the issuance 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
therefor by the legislature, in order to provide adequate health care to
persons of low income who otherwise would be unable to secure the same
and to assist the agency in the undertaking and financing of mortgage
loans to eligible secured hospital borrowers as defined in subdivision
six-b of section three of this act and in consideration of the
undertaking thereof and the benefits to be derived therefrom by the
people of the state, the director of the budget is authorized in any
state fiscal year to enter into one or more service contracts, none of
which shall exceed thirty years in duration, with the agency, 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 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
executory only to the extent of moneys available and that no liability
shall be incurred by the state beyond the moneys available for the
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 borrowers
as defined in subdivision six-b of section three of this act.

5. The agency shall not issue special hospital project bonds in an
aggregate principal amount exceeding one billion nine hundred
seventy-four million two hundred fifty thousand dollars, excluding
special hospital project bonds issued to refund outstanding special
hospital project bonds issued for such purposes; provided, however, that
upon any such refunding or repayment the total aggregate principal
amount of outstanding bonds, notes or other obligations may be greater
than one billion nine hundred seventy-four million two hundred fifty
thousand dollars only if the present value of the aggregate debt service
of the refunding or repayment bonds, notes or other obligations to be
issued shall not exceed the present value of the aggregate debt service
of the bonds, notes or other obligations so to be refunded or repaid.
For purposes hereof, the present values of the aggregate debt service of
the refunding or repayment bonds, notes or other obligations and of the
aggregate debt service of the bonds, notes or other obligations so
refunded or repaid, shall be calculated by utilizing the effective
interest rate of the refunding or repayment bonds, notes or other
obligations, which shall be that rate arrived at by doubling the
semi-annual interest rate (compounded semi-annually) necessary to
discount the debt service payments on the refunding or repayment bonds,
notes or other obligations from the payment dates thereof to the date of
issue of the refunding or repayment bonds, notes or other obligations
and to the price bid including estimated accrued interest or proceeds
received by the agency including estimated accrued interest from the
sale thereof.

* NB Expired December 31, 2015