1. The Laws of New York
  2. Unconsolidated Laws
  3. Medical Care Facilities Finance Agency 392/73


Section 7-A Secured hospital projects reserve funds and appropriations

Medical Care Facilities Finance Agency 392/73 (MCF)

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