Legislation

§ 4604-a. Commissioner approval required for industrial development
agency financing in connection with continuing care retirement
communities. 1. No person seeking financing in connection with a
continuing care retirement community through an industrial development
agency shall undertake such financing without the prior approval of the
commissioner. Upon approving a proposed financing pursuant to this
section, the commissioner shall issue a certificate of authorization to
the applicant.

2. Prior to approving such financing, the commissioner shall find
that:

a. The operator has (i) executed contracts for at least seventy
percent of all living units and has on deposit at least ten percent of
the entrance fees or purchase price for such units; or (ii) executed
contracts for at least sixty percent of all living units and has on
deposit at least twenty-five percent of the entrance fees or purchase
price for such units.

b. The operator has demonstrated capability to comply fully with the
requirements for a certificate of authority and has obtained a
contingent certificate of authority pursuant to section forty-six
hundred four of this article and the operator has agreed to meet the
requirements of article eighteen-A of the general municipal law.

c. The applicant is a not-for-profit corporation as defined in section
one hundred two of the not-for-profit corporation law that is (i)
eligible for tax-exempt financing under this section and (ii) is exempt
from taxation pursuant to section 501(c)(3) of the federal internal
revenue code, and either has (i) an equity position in the community
equivalent to no less than fifteen percent of the amount to be financed
in the aggregate; or (ii) covenants (A) to meet a ratio of cash and
investments to outstanding debt (reserve ratio) of no less than
twenty-five percent commencing at the end of the first quarter after
twenty-four months from the receipt of a certificate of occupancy for
the facility, and (B) to maintain that reserve ratio, as tested
quarterly based upon the facility's interim financial statements and
annually based upon audited financial statements, until debt reduction
equal to twenty-five percent of total indebtedness is accomplished; and
(c) to reduce total debt by twenty-five percent of the total
indebtedness at the time the certificate of occupancy is received by no
later than five years after the receipt of the certificate of occupancy.

d. The operator has submitted in connection with the proposed
financing a financial feasibility study, including a financial forecast
and market study prepared by an independent firm nationally recognized
for continuing care retirement community feasibility studies,
demonstrating to the satisfaction of the commissioner the financial
soundness of the financing. In addition, the operator has submitted an
analysis of economic costs and benefits, including job creation and
retention, the estimated value of tax exemptions provided, the project's
impact on local businesses and the availability and comparative cost of
alternative financing sources. Such analysis shall be prepared by an
independent entity.

e. The operator will establish and maintain a fully funded debt
service reserve equal to the sum of maximum annual debt service
(interest plus annual scheduled principal payments, not including
balloon maturities, if any) on bonds authorized thereby having a
maturity of ten years or less, plus the maximum annual debt service on
bonds authorized thereby having a maturity of greater than ten years,
provided, however, that in the case of tax-exempt bond issues, such debt
service reserve shall not exceed the maximum amount permitted by federal
tax law.

f. The operator will provide for such remedies or limitations of
remedies of bondholders as may be required by or consistent with the
provisions of this article and any regulations in existence at the time
of the issuance promulgated thereunder.

g. Unless all residents or continuing care at home contract holders
have life care contracts, the operator has adequately made the
assurances required by subdivision two of section forty-six hundred
twenty-four of this article and has agreed to fund the liability in the
event that such resident's or contract holder's assets are insufficient
to pay for nursing facility services for a one year period.

3. In addition, an operator which is subject to the provisions of this
section shall:

a. provide the commissioner with notice of any monetary default or
covenant default in connection with such financing and shall further
notify the commissioner of any withdrawal from the debt service reserve
fund established in connection with such financing;

b. respond in writing to the operational recommendations of the
commissioner with respect to protecting the interests of continuing care
retirement community residents in the event of any monetary default or
covenant default provided for in connection with such financing;

c. provide adequate security for the repayment of the bonds issued,
including the granting of liens on real and personal property and the
pledge of project revenues; the maintenance of minimum debt service
coverage and other financial ratios as shall be required in regulations
in existence at the time of issuance by the commissioner; and
restrictions on other debt and expenditures; and

d. undertake to maintain the financial feasibility of the facility,
including the retention of an independent consultant to recommend and
help implement remedial action.

4. The commissioner may request, and shall receive, the technical
assistance of any state agency or state public authority in performing
its functions under this article.