NY-MCF — Medical Care Facilities Finance Agency 392/73 Law

§ 1 — Short title

Section 1. Short title. This act may be cited as the "New York state

medical care facilities finance agency act."

§ 2 — Declaration of policy and statement of purposes

Declaration of policy and statement of purposes. The protection

and promotion of the health of the inhabitants of the state are matters

of public concern. In furtherance of this purpose, it is the policy of

the state to encourage the prompt and efficient provision of health and

health-related services at a reasonable cost by the private and public

sectors in modern, well-equipped health facilities accessible to the

communities to be served.

The leglislature has heretofore found that a serious shortage of safe

and sanitary nursing home accommodations exists in many communities

throughout the state; that many hospitals and other health facilities

throughout the state are no longer adequate to meet the needs of modern

medicine; that such inadequate and outmoded facilities deny to the

people of the state the benefits of health care of the highest quality

and that their replacement and modernization is essential to protect and

prolong the lives of the state's population. The legislature has

heretofore found and declared that the accomplishment of these purposes

cannot be readily achieved by the ordinary unaided operation of private

enterprise and to this end has constituted and empowered the New York

state housing finance agency, a multi-purpose corporate governmental

agency of the state, to obtain funds through the issuance of its notes

and bonds to finance the construction, acquisition, reconstruction,

rehabilitation and improvement of a broad array of health facilities in

addition to issuing its notes and bonds to carry out other program

responsibilities which touch on the quality of life for the vast

majority of the state's residents, including the providing of housing

for persons of low income, higher educational facilities for the state

university of New York, mental health facilities, child care facilities

and facilities for the care of senior citizens.

The public purposes heretofore enumerated have not yet been fully

accomplished despite the significant investment of funds through the New

York state housing finance agency in the construction of hospitals,

nursing homes and health-related facilities.

In order to permit an acceleration in the implementation of these

programs in areas where the public need remains urgent, without

jeopardizing the orderly marketing by the New York state housing finance

agency of its notes and bonds for other program purposes, it is hereby

found and declared that a separate corporate governmental agency, to be

known as the "New York state medical care facilities finance agency,"

should be created as a single purpose agency to act in concert with the

New York state housing finance agency and to devote its entire energy

and resources to the provision of additional funds for the construction

of health and health-related facilities by nursing home companies

created pursuant to the provisions of article twenty-eight-A of the

public health law, by hospitals and non-profit medical corporations

constituting eligible borrowers pursuant to the provisions of article

twenty-eight-B of the public health law and by municipalities

constituting social services districts pursuant to the provisions of the

health and mental hygiene facilities improvement act. In this manner,

the broadest possible base of investment by the greatest number of the

general public may be had and the initiative and strength of our private

enterprise economy may most readily be harnessed for the benefit of the

people of the state.

Prompt provision of well-equipped, modern hospitals, schools and other

facilities related to the care, maintenance and treatment of mentally

ill and developmentally disabled persons is also needed in the state. In

order to encourage the investment of private capital in such hospitals,

schools and other mental health services facilities and to assure their

timely construction, acquisition, reconstruction, rehabilitation and

improvement, or the refinancing thereof, the New York state medical care

facilities finance agency should be empowered, through the issuance of

its bonds, notes or other obligations to the private investing public,

to obtain all or a portion of the funds necessary to finance the same

and to meet the needs of patients and staff at such facilities.

It is frequently appropriate to combine and coordinate the

development, rehabilitation and provision of housing with the

development, rehabilitation and provision of health and health related

facilities such as intermediate care, skilled nursing, aged treatment,

and hospice facilities for which there is also a need. In order to

encourage the investment of private capital in non-profit housing and

health facilities, and to assure the expeditious completion of such

facilities, the New York state medical care facilities finance agency

should be empowered, through the issuance of its bonds, notes or other

obligations to the private investing public, to obtain funds necessary

to finance loans, for the construction, acquisition, reconstruction,

rehabilitation or improvement of such facilities.

§ 3 — Definitions

Definitions. As used in this article, unless a different meaning

clearly appears from the context:

1. "Agency" shall mean the corporate governmental agency created by

section four of this act.

2. "Amortized value" means, when used with respect to securities

purchased at a premium above or a discount below par, the value as of

any given date obtained by dividing the total amount of the premium or

discount at which such securities were purchased by the number of days

remaining to maturity on such securities at the time of such purchase

and by multiplying the amount so calculated by the number of days having

passed since the date of such purchase; and (a) in the case of

securities purchased at a premium, by deducting the product thus

obtained from the purchase price, and (b) in the case of securities

purchased at a discount, by adding the product thus obtained to the

purchase price.

3. "Bonds" and "notes" shall mean bonds and notes, respectively,

issued by the agency pursuant to this act.

(a) "Hospital and nursing home project bonds" and "hospital and

nursing home project notes" shall mean bonds and notes, respectively,

issued by the agency for the purpose of making loans to hospital

corporations and non-profit medical corporations constituting eligible

borrowers or nursing home companies.

(b) "Health facilities bonds" and "health facilities notes" shall mean

bonds and notes, respectively, issued by the agency for the purpose of

financing the construction, acquisition, reconstruction, rehabilitation

or improvement of health facilities for municipalities pursuant to this

act and the health and mental hygiene facilities improvement act.

"municipal hospital and municipal nursing home project notes" shall mean

bonds and notes, respectively, issued by the agency for the purpose of

making mortgage loans to municipal hospitals or municipal nursing homes.

* (d) "Special hospital project bonds" shall mean bonds issued

pursuant to section seven-a of this act for the purpose of making

mortgage loans to eligible secured hospital borrowers.

* NB Expired December 31, 2015

4. "Commissioner" shall mean the New York state commissioner of

health.

5. "Department" shall mean the New York state department of health.

6. "Eligible borrower" shall mean a non-profit hospital corporation

organized under the laws of this state, or a non-profit medical

corporation organized under and governed by article forty-four of the

public health law, which has entered into a regulatory agreement in

accordance with the provisions of section twenty-eight hundred

seventy-three of the public health law.

6-a. "Federally-aided mortgage loan" means a loan secured by a

mortgage lien on the real property of a project or on a leasehold on

such real property, provided that the term of such leasehold is not less

than twenty-five percent longer than the term of the mortgage, and the

personal property attached to or used in connection with the

construction, acquisition, reconstruction, refinancing, rehabilitation,

improvement, management or operation of the project, made by the agency

to a municipal hospital, municipal nursing home, not-for-profit hospital

corporation, not-for-profit corporation providing a residential health

care facility or not-for-profit medical corporation organized pursuant

to article 44 of the public health law, which loan is insured by the

federal government. This subdivision does not limit the agency from

consenting to the modification of any instrument executed in connection

with a federally-aided mortgage loan, provided that the modification

does not materially reduce the value of the security for the

federally-aided mortgage loan. A leasehold under this subdivision shall

conform to standards adopted by the agency, with the approval of the

division of the budget, that adequately protect the interests of the

agency, the state, and creditors.

* (6-b) "Eligible secured hospital borrower" shall mean a

not-for-profit hospital corporation organized under the laws of this

state, which has been designated by the commissioner of health and the

New York state public health council as a needed facility eligible to

receive distributions from the reimbursement pools established pursuant

to paragraph (c) of subdivision nine of section twenty-eight hundred

seven-a of the public health law, or any successor pool or pools

established to serve a substantially similar purpose to such pools.

* NB Expired December 31, 2015

7. "Facilities development corporation" shall mean the corporation

created pursuant to the facilities development corporation act.

8. "Health facility" shall mean a building, a unit within a building,

a laboratory, a classroom, a housing unit, a dining hall, an activities

center, a library, or any structure on or improvement to real property

of any kind or description, including fixtures and equipment which are

an integral part of any such building, unit, structure or improvement, a

walkway, a roadway or a parking lot, and improvements and connections,

for water, sewer, gas, electrical, telephone, heating, air conditioning

and other utility services, or a combination of any of the foregoing,

whether for patient care and treatment of staff, staff family or service

use, located at or related to or constituting a hospital, as defined in

section 2801 of the public health law.

9. "Health facilities improvement program" shall mean a program

undertaken by the agency and, if the agency elects, with the facilities

development corporation acting as its agent, for the purpose of

constructing, acquiring, reconstructing, rehabilitating or improving

health facilities or causing such facilities to be constructed,

acquired, reconstructed, rehabilitated or improved pursuant to the

facilities development improvement act, if applicable, and this act.

* 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

eligible secured hospital borrower whether or not such refinancing is

related to the construction, acquisition or rehabilitation of a

specified work or improvement undertaken by a non-profit hospital

corporation or a non-profit medical corporation, constituting an

eligible borrower or eligible secured hospital borrower in accordance

with the provisions of article twenty-eight-B of the public health law.

The term "hospital project" as used in this subdivision shall also mean

a separate work or improvement owned and operated by an eligible

borrower to provide such services, functions, capabilities and

facilities as may be convenient or desirable for the operation of

hospital or other such facility.

* NB Expired December 31, 2015

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

whether or not such refinancing is related to the construction,

acquisition or rehabilitation 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 twenty-eight-B of the public health law.

* 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 or eligible secured

hospital borrower undertaking a project as approved by the commissioner

in accordance with the provisions of article twenty-eight-B of the

public health law. In the case of eligible secured hospital borrowers,

hospital project costs shall include all costs relating to the

refinancing of existing indebtedness attributable to unmet bad debt and

charity losses.

* NB Expired December 31, 2015

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

article twenty-eight-B of the public health law.

* 12. "Mortgage loan" shall mean a loan made by the agency to an

eligible borrower or eligible secured hospital borrower in an amount not

to exceed the total hospital project costs and secured by a first

mortgage lien on the real property of which the hospital project

consists or on a leasehold on such real property, provided that the term

of such leasehold is not less than twenty-five percent longer than the

term of the mortgage, and the personal property attached to or used in

connection with the construction, acquisition, reconstruction,

rehabilitation, improvement or operation of the hospital project. Such

loan may be further secured by such a lien upon other real property

owned by or on a leasehold on real property of the eligible borrower or

eligible secured hospital 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 essential 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 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 or on a

leasehold on such real property provided that the term of such leasehold

is not less than twenty-five percent longer than the term of the

mortgage, and the personal property attached to or used in connection

with the construction, acquisition, reconstruction, rehabilitation,

improvement 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 article twenty-eight-A of the public health law, and (b) the

agency consents to such exclusion. A leasehold under this subdivision

shall conform to standards adopted by the agency, with the approval of

the division of the budget, that adequately protect the interests of the

agency, the state and creditors.

* NB Expired December 31, 2015

12. "Mortgage loan" shall mean a loan made by the agency to an

eligible 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,

rehabilitation, 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

essential 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 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

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

article twenty-eight-A of the public health law, and (b) the agency

consents to such exclusion.

13. "Nursing home company" shall mean a nursing home company as

defined in article twenty-eight-A of the public health law.

(a) A "limited-profit nursing home company" shall mean a company

incorporated pursuant to the provisions of article twenty-eight-A of the

public health law and business corporation law.

(b) A "non-profit nursing home company" shall mean a company

incorporated pursuant to the provisions of article twenty-eight-A of the

public health law and the not-for-profit corporation law.

14. "Nursing home project" shall mean a specific work or improvement

undertaken by a nursing home company in accordance with the provisions

of article twenty-eight-A of the public health law.

15. "Nursing home project cost" shall mean the sum total of all costs

incurred by a nursing home company undertaking a project as approved by

the commissioner in accordance with the provisions of article

twenty-eight-A of the public health law.

16. "Municipality" for the purposes of the health facilities

improvement program and federally-aided mortgage loans to municipal

hospitals and municipal nursing homes means a county, city or town

constituting a social services district as defined in sections two,

sixty-one, seventy-five and seventy-five-a of the social services law,

or any two or more of the foregoing which are acting jointly to provide

a health facility or health facilities, municipal hospitals or municipal

nursing homes.

17. "Bond reserve insurance fund" shall mean the fund created by

section nineteen of this act.

* 18. "Equipment loan" shall mean a loan made by the agency to a

non-profit hospital corporation, a county hospital, a municipal

hospital, a New York state department of health facility, a state

university of New York health care facility or a non-profit corporation

providing a residential health care facility, for the purpose of

financing or refinancing the acquisition through purchase or lease of

equipment, including construction and rehabilitation related to the

installation of such equipment, and shall also include intellectual

property or other intangible property, including information technology

and software, that is eligible for tax-exempt financing under the United

States internal revenue code.

The term "equipment loan" shall also mean the financing of equipment

acquisitions by the purchase, lease or sublease of equipment by the

agency and the lease or sublease of such equipment to a non-profit

hospital corporation, a county hospital, a municipal hospital, a

hospital under the jurisdiction of the state university of New York, or

a non-profit corporation providing a residential health care facility

for the purpose of providing for the acquisition of such equipment and

for the construction and rehabilitation related to the installation

thereof and shall also include intellectual property or other intangible

property, including information technology and software, that is

eligible for tax-exempt financing under the United States internal

revenue code.

* NB There are 3 sub 18's

* 18. "Municipal hospital" or "municipal nursing home" shall mean a

hospital or nursing home of, and located in, a municipality.

* There are 3 sub 18's

* 18. "Hmo investment loan" shall mean a loan made by the agency to a

lending institution for the purpose of financing a loan by the lending

institution to the owner of an Hmo project. Such investment loan shall

be evidenced by a note or other evidence of indebtedness constituting a

general obligation of the lending institution and shall be secured to

the satisfaction of the agency. Such investment loan shall not exceed

one hundred percent of the cost of development of the Hmo project

approved by the agency.

* There are 3 sub 18's

19. "Lending institution" shall mean any bank, trust company, national

bank, state or federal mutual savings bank, state or federal savings and

loan association, or state or federal credit union, insurance company,

pension fund or retirement system of any corporation or association, or

any other entity which is owned or controlled by any one or more of the

above, provided the same is supervised by or responsible to any agency

of the federal government, the state or any department thereof.

20. "Hmo project" shall mean a specific work or improvement, whether

or not to effectuate all or any part of a plan, and includes lands,

buildings, improvements, fixtures and personal property constructed,

acquired or reconstructed, refinanced, rehabilitated, improved, managed,

owned or operated by a non-profit corporation for the purpose of

conducting the activities of a health maintenance organization. "Hmo

project" shall also mean the refinancing of existing indebtedness which

constitutes a lien or other encumbrance upon the real property or assets

of the non-profit corporation conducting the activities of a health

maintenance organization, whether or not such refinancing is related to

the construction, acquisition or rehabilitation of a specified work or

improvement. "Hmo project" shall also mean the financing or refinancing

through purchase or lease of equipment, including construction and

rehabilitation related to the installation of such equipment, whether or

not the financing or refinancing of said equipment is related to the

construction, acquisition or rehabilitation of a specified work or im-

provement. An Hmo project may be undertaken by:

(a) A health maintenance organization holding a valid certificate of

authority issued pursuant to article forty-four of the public health

law;

(b) A health maintenance organization operating under the provisions

of article IX-C of the insurance law; and

possesses a valid operating certificate under article twenty-eight of

the public health law and which has entered into a contract with a

health maintenance organization operating under the provisions of

article forty-four of the public health law or article IX-C of the

insurance law to provide health care services to persons enrolled in the

health maintenance organization, provided the commissioner has

determined that the facility will be used principally as the medical

group facility component of a group model health maintenance

organization and the commissioner has approved the construction of the

facility pursuant to section twenty-eight hundred two of the public

health law.

21. "Non-profit housing and health facility" shall mean a specific

work or improvement, whether or not to effectuate all or any part of a

plan acquired, owned, constructed, rehabilitated, improved, managed or

operated by a non-profit company and consisting of five or more

residential units, and at the election of the agency such additional

health or health related facilities as the agency may approve; and

including the lands, buildings and improvements acquired, owned,

constructed, managed or operated to provide such units, and health or

health related facilities and such incidental and appurtenant

commercial, recreation, cultural, communal, dining, parking, day care or

residential child care, senior citizen and community facilities as may

be approved by the agency. As used in connection with the term

non-profit housing and health facility, the term residential unit shall

refer to units suitable for residential use or accommodations included

within the term housing as defined in subdivision nine of section twelve

of the private housing finance law, and the term non-profit company

shall mean a company incorporated pursuant to the provisions of the

not-for-profit corporation law for the purpose of providing housing for

staff members, employees, students or users of a hospital, health, or

health related facility and their immediate families or for the purpose

of providing a hospital, health, or health related facility.

23. "Loan" when made to either an eligible borrower or nursing home

company, shall mean either a mortgage loan or a project loan, each as

defined in this act.

24. "Project loan" shall mean a loan made by the agency to an eligible

borrower or nursing home company in an amount not to exceed the total

hospital project cost or total nursing home project cost, respectively.

Such loans shall be secured in a manner acceptable to the agency and

such security may consist of a mortgage on real property and

improvements or other security acceptable to the agency; provided

however, that a project loan shall not include any loan made by the

agency to an eligible borrower or nursing home company that constitutes

a mortgage loan as defined in this act. Project loans shall only be made

in accordance with guidelines adopted by the board of the dormitory

authority, as successor to the agency.

§ 4 — New York state medical care facilities finance agency

New York state medical care facilities finance agency. There is

hereby created the New York state medical care facilities finance

agency. The agency shall be a corporate governmental agency constituting

a public benefit corporation. From and after the effective date of the

health care financing consolidation act, as provided in subdivision 1 of

section 1699-f of the public authorities law, the agency shall continue

its corporate existence in and through the dormitory authority, and the

dormitory authority shall succeed to the powers, duties and functions of

the agency.

§ 5 — Powers of the agency

Powers of the agency. Except as otherwise limited by this act,

the agency shall have power:

1. To sue and be sued;

2. To have a seal and alter the same at pleasure;

3. To make and execute contracts and all other instruments necessary

or convenient for the exercise of its powers and functions under this

act;

4. To make and alter by-laws for its organization and internal

management;

5. To acquire, hold and dispose of personal property for its corporate

purposes;

6. To appoint officers, agents and employees, prescribe their duties

and qualifications and fix their compensation;

7. To borrow money and issue negotiable notes, bonds or other

obligations and to provide for the rights of the holders thereof;

8. To invest any funds held in reserve or sinking funds, or any monies

not required for immediate use or disbursement, at the discretion of the

agency, in obligations of the state or the United States government or

obligations the principal and interest of which are guaranteed by the

state or the United States government, or in any other obligations in

which the comptroller of the state of New York is authorized to invest

pursuant to section ninety-eight of the state finance law;

9. Subject to the approval of the commissioner of health pursuant to

the provisions of article twenty-eight-A of the public health law, to

make mortgage and project loans to nursing home companies and to

undertake commitments to make any such mortgage and project loans;

* 10. Subject to the approval of the commissioner of health pursuant

to the provisions of article twenty-eight-B of the public health law, to

make mortgage and project loans to non-profit hospital corporations and

non-profit medical corporations constituting eligible borrowers and

eligible secured hospital borrowers and to undertake commitments to make

any such mortgage and project loans;

* NB Expired December 31, 2015

10. Subject to the approval of the commissioner of health pursuant to

the provisions of article 28-B of the public health law, to make

mortgage loans and project loans to non-profit hospital corporations and

non-profit medical corporations constituting eligible borrowers and to

undertake commitments to make any such mortgage loans and project loans;

10-a. To make federally-aided mortgage loans pursuant to section

five-a of this act and, in connection with such federally-aided mortgage

loans, to exercise the powers and undertake the responsibilities as

required by any law, regulation or other requirement of the federal

government.

10-b. To make equipment loans pursuant to section five-b of this act

and, in connection with such equipment loans, to enter into agreements

with respect to the repayment of such loans.

10-c. Subject to any agreement with bondholders and noteholders as may

then exist, to permit eligible borrowers and nursing home companies to

incur, assume or guarantee indebtedness from a lender other than the

agency or from the agency under a separate bond resolution, as provided

for in agreements with bondholders and noteholders and section five-c of

this act.

11. Subject to the approval of the commissioner of health, to sell, at

public or private sale, any mortgage or other obligation securing a

mortgage loan made by the agency;

12. In connection with the making of mortgage or project loans and

commitments therefor to non-profit hospital corporations and non-profit

medical corporations constituting eligible borrowers or nursing home

companies, to make and collect from such corporations and companies such

fees and charges, including but not limited to reimbursement of all

costs of financing by the agency, service charges and insurance

premiums, as the agency shall determine to be reasonable;

12-a. In connection with the financing or refinancing of a mental

health services facility pursuant to lease, sublease, loan or other

financing agreements for the purpose of providing financing or

refinancing for or for the purpose of constructing, rehabilitating or

improving mental health services facilities, to make and collect such

fees and charges, including but not limited to reimbursement of all

costs of financing by the agency, service charges, insurance premiums,

letter of credit fees or the costs of any other financial mechanisms

which may be used to reduce the debt service that would be payable by

the agency on its mental health services facilities improvement bonds

and notes, as the agency shall determine to be reasonable.

13. In connection with any property on which it has made a mortgage

loan or a project loan, to foreclose on any such property secured by a

mortgage or commence any action to protect or enforce any right

conferred upon it by any law, mortgage, contract or other agreement, and

to bid for and purchase such property at any foreclosure or at any other

sale, or acquire or take possession of any such property; and in such

event the agency may complete, administer, pay the principal of and

interest on any obligations incurred in connection with such property,

dispose of, and otherwise deal with, such property, in such manner as

may be necessary or desirable to protect the interests of the agency

therein;

14. To lease or purchase one or more existing health facilities from a

municipality and cause such health facilities to be reconstructed,

rehabilitated or improved, or to lease or purchase real property from a

municipality and cause one or more health facilities to be constructed,

reconstructed, rehabilitated or improved thereon, or to lease or

purchase one or more existing health facilities from a municipality

which has already been constructed, reconstructed, rehabilitated or

improved provided, however, that no such health facility shall be

eligible for such lease or purchase unless it has been constructed,

reconstructed, rehabilitated or improved within eighteen months of the

date of the bond issue and the amount of the bond issue used to finance

such lease or purchase shall not exceed the total project cost to the

municipality of such construction, reconstruction, rehabilitation or

improvement. At the election of the agency, any construction,

reconstruction, rehabilitation or improvement pursuant to this

subdivision may be performed by the facilities development corporation,

acting as the agent of the agency;

15. To lease or purchase from any person, firm or corporation one or

more existing health facilities and cause such health facilities to be

reconstructed, rehabilitated or improved or to lease or purchase real

property from any person, firm or corporation and cause one or more

health facilities to be constructed, reconstructed, rehabilitated or

improved thereon, or to lease or purchase one or more existing health

facilities from a person, firm or corporation which has already been

constructed, reconstructed, rehabilitated or improved provided, however,

that no such health facility shall be eligible for such lease or

purchase unless it has been constructed, reconstructed, rehabilitated or

improved within eighteen months of the date of the bond issue and the

amount of the bond issue used to finance such lease or purchase shall

not exceed the total project cost to the municipality of such

construction, reconstruction, rehabilitation or improvement. At the

election of the agency, any construction, reconstruction, rehabilitation

or improvement pursuant to this subdivision may be performed by the

facilities development corporation, acting as the agent of the agency;

* 15-a. Notwithstanding the provisions of subdivision fifteen of this

section, to lease or purchase from any person, firm or corporation one

or more health facilities the construction, reconstruction,

rehabilitation or improvement of which has been financed, in whole or in

part, through loans furnished, secured or arranged by a local

development corporation incorporated and existing pursuant to section

1411 of the not-for-profit corporation law, provided, however, that such

local development corporation was in existence and engaged in promoting

the development of health facilities on January 1, 1999, and provided,

further, that the proceeds of the bond issue allocable to each such

health facility shall not exceed seven million five hundred thousand

dollars.

* NB Repealed June 30, 2027

16. To lease or sublease to a municipality health facilities which

have been constructed, acquired, reconstructed, rehabilitated or

improved by the agency pursuant to this act and the facilities

development improvement act, if applicable;

17. To exercise all or any combination of the powers set forth in

subdivisions fourteen, fifteen and sixteen of this section;

18. To procure insurance against any loss in connection with its

property and other assets (including mortgages and mortgage loans) in

such amounts, and from such insurers, as it deems desirable;

19. To accept any gifts or grants or loans of funds or property or

financial or other aid in any form from the federal government or any

agency or instrumentality thereof or from the state or from any other

source and to comply, subject to the provisions of this act, with the

terms and conditions thereof;

20. To engage the services of private consultants on a contract basis

for rendering professional and technical assistance and advice;

21. To enter into a contract with the New York state housing finance

agency to market and service any agency bonds and notes approved by the

agency and to contract with the New York state housing finance agency to

render such other services as the agency may request, including but not

limited to the use of the premises, personnel and personal property of

the New York state housing finance agency, and to provide for

reimbursement to the New York state housing finance agency from the

agency for any expenses necessarily incurred by the New York state

housing finance agency in carrying out the terms of any such contract.

Any such contract shall be subject to the separate approval of the

director of the budget;

22. Subject to the approval of the commissioner of health, to acquire

by purchase from the New York state housing finance agency any mortgage

or other obligation securing a loan made by the New York state housing

finance agency to a hospital corporation or to a nursing home company,

and to sell same at public or private sale;

23. To acquire by purchase from the New York state housing finance

agency its right, title and interest in real property, leaseholds and

subleaseholds relating to the municipal health facilities improvement

program;

24. To do any and all things necessary or convenient to carry out its

purposes and exercise the powers expressly given and granted in this

act.

§ 5-a — Federally-aided mortgage loans

Federally-aided mortgage loans. In addition to the powers of

the agency to make mortgage loans pursuant to other provisions of this

act, the agency has the following powers:

1. The agency may make federally-aided mortgage loans to a municipal

hospital, municipal nursing home, non-profit hospital corporation,

non-profit corporation providing a residential health care facility or

non-profit medical corporation organized pursuant to article forty-four

of the public health law upon terms and conditions not inconsistent with

article twenty-eight of the public health law or article sixteen or

thirty-one of the mental hygiene law as the case may be and this

section. The proceeds of such loan are to be used substantially to

finance the construction, acquisition, reconstruction, refinancing,

rehabilitation, improvement, management or operation of the project.

2. A federally-aided mortgage loan made by the agency shall not exceed

an amount equal to the lesser of (i) the maximum mortgage loan

authorized or approved by the federal government or (ii) one hundred

percent of the cost of development of the project approved by the

agency.

3. With respect to a non-profit hospital corporation, non-profit

corporation providing a residential health care facility or non-profit

medical corporation, the agency shall not make a federally-aided

mortgage loan unless (a) the commissioner has approved the project,

recommended the project based on public need and the financial resources

available to it, and finds that the non-profit hospital corporation,

non-profit corporation providing a residential health care facility, or

non-profit medical corporation has complied with the provisions of

article twenty-eight of the public health law or article sixteen or

thirty-one of the mental hygiene law as the case may be, and that the

non-profit medical corporation also has complied with the provisions of

article forty-four of the public health law, and (b) the agency finds

that (i) the estimated revenues of the project will be sufficient to

cover all probable costs of operations and maintenance, all installments

of principal and interest on the indebtedness relating to the project,

taxes, and such other expenses, including the maintenance of reserves,

as may be projected or required by the agency or the federal government,

and (ii) with respect to a nursing home project, the project is to be

available for persons of low income as defined by paragraph two of

section twenty-eight hundred sixty of the public health law.

4. As used in this section or in connection with a federally-aided

mortgage loan, the term "project" means a specific work or improvement,

whether or not to effectuate all or any part of a plan, and includes

lands, buildings, improvements, fixtures and personal property

constructed, acquired, reconstructed, refinanced, rehabilitated,

improved, managed, owned or operated by a non-profit corporation

pursuant to this section, to provide hospital, residential health care,

residential facilities for developmentally disabled persons or mentally

disabled persons or for the care, treatment, training and education of

developmentally disabled persons or mentally disabled persons or

comprehensive health services facilities and such related incidental and

appurtenant facilities as the agency may approve. The term "project"

shall also mean a separate work or improvement, including lands,

buildings, fixtures and personal property related thereto, managed,

owned or operated by a non-profit corporation pursuant to this section

to provide such services, functions, capabilities and facilities as may

be convenient or desirable for the operation of a hospital, a

residential health care or comprehensive health services facility.

5. Notwithstanding any other provisions of law, general, special or

local, or any provision of any charter or ordinance, including local

finance law section twenty, a municipality is hereby authorized to

borrow for or give a mortgage on its municipal hospitals or nursing

homes for the purpose of constructing, reconstructing, rehabilitating or

improving one or more such hospitals or nursing homes pursuant to this

act in accordance with the terms of any agreement entered into pursuant

to this act.

6. As used in this section or in connection with federally-aided

mortgage loan regarding residential facilities for developmentally

disabled persons or mentally disabled persons or for the care,

treatment, training and education of developmentally disabled persons or

mentally disabled persons the term "commissioner" shall also mean the

commissioner of mental health or the commissioner of the office for

people with developmental disabilities.

7. (a) In connection with the making of federally-aided mortgage

loans, the commissioner of health shall charge to such non-profit

hospital corporation, non-profit corporation providing a residential

health care facility or non-profit medical corporation, for mortgage

closings on or after April first, nineteen hundred eighty-nine, a fee of

nine-tenths of one percent of the mortgage loan, payable on requisition

on or after the mortgage closing to the state department of health by

the mortgagor for deposit into the state general fund.

(b) In connection with the refinancing or refunding of federally-aided

mortgage loans or loans made pursuant to articles twenty-eight-A and

twenty-eight-B of the public health law, the commissioner of health

shall charge to such non-profit hospital corporation, non-profit

corporation providing a residential health care facility or non-profit

medical corporation, for mortgage closings on or after April first,

nineteen hundred eighty-nine, a fee of five-tenths of one percent of the

new mortgage loan, payable on requisition on or after the mortgage

closing to the state department of health by the mortgagor for deposit

into the state general fund.

non-profit corporation providing a residential health care facility or

non-profit medical corporation pursuant to this subdivision shall be

deemed allowable capital costs in the determination of reimbursement

rates established pursuant to article twenty-eight of the public health

law. The cost of such fees and charges shall not be subject to

reimbursement ceiling or other penalties used by the commissioner for

the purpose of establishing reimbursement rates pursuant to article

twenty-eight of the public health law.

§ 5-b — Equipment loans

* § 5-b. Equipment loans. 1. The agency may make an equipment loan to

a non-profit hospital corporation, a county hospital, a municipal

hospital, a New York state department of health facility, a state

university of New York health care facility or a non-profit corporation

providing a residential health care facility, upon terms and conditions

not inconsistent with article twenty-eight of the public health law and

this section. The proceeds of such loan are to be used substantially to

finance the acquisition through purchase or lease of equipment including

construction and rehabilitation related to the installation of such

equipment or the acquisition of intellectual property or other

intangible property, including information technology and software, that

is eligible for tax-exempt financing under the United States internal

revenue code.

2. The agency shall not make an equipment loan unless the agency finds

that the non-profit hospital corporation, municipal hospital, county

hospital, New York state department of health facility, a state

university of New York health care facility or non-profit corporation

providing a residential health care facility, has complied with the

provisions of article twenty-eight of the public health law in

connection with the proposed equipment loan and that the commissioner

has approved the equipment acquisition or lease pursuant to section

twenty-eight hundred two of the public health law in any case where the

acquisition or lease is subject to the provisions of such section, or

has approved such acquisition or lease according to guidelines

prescribed by the commissioner in any other case.

3. The agency may make an equipment loan by the purchase, lease or

sublease of equipment by the agency and the lease or sublease of such

equipment to a non-profit hospital corporation, a county hospital, a

municipal hospital, a hospital under the jurisdiction of the state

university of New York health care facility, or a non-profit corporation

providing a residential health care facility for the purpose of

providing for the acquisition of such equipment and for the construction

and rehabilitation related to the installation thereof. Notwithstanding

the above, the agency shall not make an equipment loan pursuant to this

section unless or until the borrower or lessee, vendee, licensee or

other ultimate beneficiary of such equipment loan has obtained the

approval of the commissioner pursuant to section twenty-eight hundred

two of the public health law or such other guidelines prescribed by the

commissioner in any case where the acquisition or lease is or would

otherwise have been subject to such provisions, had the borrower,

lessee, vendee, licensee or ultimate beneficiary of such equipment loan

obtained financing from a source other than the agency.

* NB There are 2 § 5-b's

§ 5-c — Terms and conditions regarding alternative indebtedness

Terms and conditions regarding alternative indebtedness. The

agency may require such terms and conditions regarding indebtedness

incurred or assumed from a lender other than the agency or guaranteed by

an eligible borrower or nursing home company as it deems appropriate

including qualifications and approval of the lender, approval of the

purpose of the indebtedness, time or rate of amortization of principal,

and time or rate of payment of interest; provided, however, that the

interest of the lender created as a result of such indebtedness as to

priority of lien with respect to a mortgage loan may only be on a parity

with or subordinate to that of the agency in proportion to the amount of

the loan secured. Such a borrower may so incur, assume or guarantee

indebtedness from a lender other than the agency, or incur, assume or

guarantee indebtedness from the agency under a separate bond resolution

upon such terms and conditions provided for in the applicable agreement

with bondholders and noteholders and with the consent of the agency

where such lender is other than the agency. This section applies only

where the agency has issued its bonds to make a mortgage loan or a

project loan to a hospital to which the agency is authorized to make a

loan pursuant to this act and the bonds and notes are not secured

pursuant to paragraph (a) of subdivision one of section seven of this

act.

§ 5-d — Financing non-profit housing and health facilities

Financing non-profit housing and health facilities. 1. Subject

to the provisions of any contract with noteholders and bondholders (a)

to make and contract for the making of loans for the acquisition,

refinancing, construction or rehabilitation of non-profit housing and

health facilities and (b) to make and to contract for the making of

loans to or to purchase loans from lending institutions for the purposes

of financing loans for such acquisition, construction or rehabilitation.

2. The powers granted by this section may be exercised only if: (a)

the commissioner has approved any health, or health related facilities

which are in addition to the residential unit and housing portion of the

facility, pursuant to section twenty-eight hundred two of the public

health law in any case where the facility is subject to the provisions

of such section or has approved the facility according to the guidelines

prescribed in any other case; and (b) (i) obligations of the agency have

been issued to fund the loan made or purchased by the agency and such

obligations have received an investment grade rating from a recognized

rating agency, or (ii) the loan made or purchased by the agency is fully

secured as to principal and interest by insurance or a commitment to

insure issued by the state of New York mortgage agency or by the general

credit of the bank, national bank, trust company, savings bank, savings

and loan association, insurance company, the college construction loan

insurance association, the student loan marketing association, or a

governmental agency of the United States.

§ 6 — Bonds and notes of the agency

Bonds and notes of the agency. 1. (a) The agency shall have power

and is hereby authorized from time to time to issue its negotiable bonds

and notes in conformity with applicable provisions of the uniform

commercial code in such principal amount as, in the opinion of the

agency, shall be necessary to provide sufficient funds for achieving its

corporate purposes, including the making of mortgage loans, project

loans, or equipment loans, or loans to owners of Hmo projects or Hmo

investment loans and the construction, acquisition, reconstruction,

rehabilitation or improvement of health facilities, the payment of

interest on bonds and notes of the agency, establishment of reserves to

secure such bonds and notes, and all other expenditures of the agency

incident to and necessary or convenient to carry out its corporate

purposes and powers;

(b) The agency shall have power, from time to time, to issue renewal

notes, to issue bonds to pay notes and whenever it deem refunding

expedient, to refund any bonds by the issuance of new bonds, whether the

bonds to be refunded have or have not matured, and to issue bonds partly

to refund bonds then outstanding and partly for any other purpose. The

refunding bonds shall be sold and the proceeds applied to the purchase,

redemption or payment of the bonds to be refunded;

issue if its notes or bonds shall be general obligations of the agency

payable out of any revenues or monies of the agency, subject only to any

agreements with the holders of particular notes or bonds pledging any

particular receipts or revenues.

2. The notes and bonds shall be authorized by resolution of the

members, shall bear such date or dates, and shall mature at such time or

times, in the case of any such note, or any renewals thereof, issued for

achieving its corporate purposes other than the making of mortgage

loans, not exceeding five years, from the date of issue of such original

note, and in the case of any such note, or any renewals thereof, issued

for the purpose of making mortgage loans, not exceeding seven years,

from the date of issue of such original note, and in the case of any

such bond not exceeding fifty years from the date of issue, as such

resolution or resolutions may provide. The notes and bonds shall bear

interest at such rate or rates, be in such denominations, be in such

form, either coupon or registered, carry such registration privileges,

be executed in such manner, be payable in such medium of payment, at

such place or places and be subject to such terms of redemption as such

resolution or resolutions may provide. The notes and bonds of the agency

may be sold by the agency, at public or private sale, at such price or

prices as the agency shall determine. No notes or bonds of the agency

may be sold by the agency at private sale, however, unless such sale and

the terms thereof have been approved in writing by (a) the comptroller,

where such sale is not to the comptroller or, (b) the director of the

budget, where such sale is to the comptroller.

3. Any resolution or resolutions authorizing any notes or bonds or any

issue thereof may contain provisions, which shall be a part of the

contract with the holders thereof, as to:

(a) pledging all or any part of the fees and charges made or received

by the agency, and all or any part of the monies received in payment of

mortgage or project loans and interest thereon, and other monies

received or to be received, to secure the payment of the hospital and

nursing home project bonds or hospital nursing home project notes or of

any issue thereof, subject to such agreement with bondholders or

noteholders as may then exist;

(b) pledging all or any part of the assets of the agency, including

mortgages and obligations securing the same, to secure the payment of

the hospital and nursing home project bonds or hospital and nursing home

project notes, subject to such agreements with bondholders or

noteholders as may then exist, provided that no resolution or

resolutions of the agency authorizing hospital and nursing home project

bonds and hospital and nursing home project notes shall (i) pledge all

or any portion of the rentals paid to the agency with respect to health

facilities financed with the proceeds of health facilities bonds or

health facilities notes, or (ii) pledge any other assets, monies or

accounts pledged to the agency as security for the payment of rentals

with respect to health facilities financed with the proceeds of health

facilities bonds or health facilities notes;

by the agency and payment of principal of mortgages owned by the agency;

(d) pledging all or any part of the rentals paid to the agency with

respect to health facilities financed with the proceeds of health

facilities bonds or health facilities notes or any other assets, monies

or accounts pledged or assigned to the agency as security for the

payment of such rentals, all subject to any agreement with noteholders

or bondholders as may then exist and provided that no resolution or

resolutions authorizing health facilities bonds and health facilities

notes shall (i) pledge all or any part of the fees and charges made or

received by the agency pursuant to subdivision twelve of section five in

connection with the making of mortgage loans or commitments therefor, or

all or any part of the monies received in payment of such mortgage loans

and interest thereon, or (ii) pledge all or any part of the mortgages of

the agency or obligations securing the same, or (iii) provide as to the

use and disposition of the gross income from mortgages owned by the

agency or as to the payment of principal of mortgages owned by the

agency;

(e) the setting aside of reserves or sinking funds and the regulation

and disposition thereof;

(f) limitations on the purpose to which the proceeds of sale of notes

or bonds may be applied and pledging such proceeds to secure the payment

of the notes or bonds or of any issue thereof;

(g) limitations on the issuance of additional notes or bonds; the

terms upon which additional notes or bonds may be issued and secured;

the refunding of outstanding or other notes or bonds;

(h) the procedure, if any, by which the terms of any contract with

noteholders or bondholders may be amended or abrogated, the amount of

notes or bonds the holders of which must consent thereto, and the manner

in which such consent may be given;

(i) limitations on the amount of monies to be expended by the agency

for operating, administrative or other expenses of the agency;

(j) vesting in a trustee or trustees such property, rights, powers and

duties in trust as the agency may determine, which may include any or

all of the rights, powers and duties of the trustee appointed by the

bondholders pursuant to this act, and limiting or abrogating the right

of the bondholders to appoint a trustee under this act or limiting the

right, powers and duties of such trustee;

(k) any other matters, of like or different character, which in any

way affect the security or protection of the notes or bonds.

(l) pledging all or any part of the fees and charges made or received

by the agency, and all or any part of the monies received pursuant to a

lease, sublease, loan or other financing agreements entered into

pursuant to section nine-a of this act and interest thereon, and other

monies received or to be received, to secure the payment of mental

health services facilities improvement notes or bonds or of any issue

thereof, subject to such agreements with bondholders or noteholders as

may then exist;

(m) pledging all or any part of the assets of the agency, including

lease, sublease, loan or other financing agreements entered into

pursuant to section nine-a of this act, and obligations securing the

same, to secure the payment of mental health services improvement

facilities notes or bonds or of any issue of notes or bonds, subject to

such agreements with noteholders or bondholders as may then exist;

(n) the use and disposition of the gross income from lease, sublease,

loan or other financing agreements entered into pursuant to section

nine-a of this act and payment of principal of lease, sublease, loan or

other financing agreements entered into pursuant to section nine-a of

this act;

(o) pledging or depositing all or any part of the assets of the

agency, including moneys paid to the agency by the comptroller and the

commissioner of taxation and finance of the state of New York pursuant

to the provisions of section ninety-seven-f of the state finance law, to

pay or provide for the refunding of mental hygiene improvement bonds

issued pursuant to section forty-seven-b of the private housing finance

law.

4. It is the intention hereof that any pledge made by the agency shall

be valid and binding from the time when the pledge is made; that the

monies or property so pledged and thereafter received by the agency

shall immediately be subject to the lien of such pledge without any

physical delivery thereof or further act; and that the lien of any such

pledge shall be valid and binding as against all parties having claims

of any kind in tort, contract or otherwise against the agency,

irrespective of whether such parties have notice thereof. Neither the

resolution nor any other instrument by which a pledge is created need be

recorded.

5. Neither the members of the agency nor any person executing the

notes or bonds shall be liable personally on the notes or bonds or be

subject to any personal liability or accountability by reason of the

issuance thereof.

6. The agency, subject to such agreements with noteholders or

bondholders as may then exist, shall have power out of any funds

available therefor to purchase notes or bonds of the agency, which shall

thereupon be cancelled, at a price not exceeding (a) if the notes or

bonds are then redeemable, the redemption price then applicable plus

accrued interest to the next interest payment date thereon, or (b) if

the notes or bonds are not then redeemable, the redemption price

applicable on the first date after such purchase upon which the notes or

bonds become subject to redemption plus accrued interest to such date.

7. The state shall not be liable on notes or bonds of the agency and

such notes and bonds shall not be a debt of the state, and such notes

and bonds shall contain on the face thereof a statement to such effect.

§ 7 — Hospital and nursing home projects reserve funds and appropriations

Hospital and nursing home projects reserve funds and

appropriations. 1. (a) For the purposes of the issuance by the agency of

hospital and nursing home project bonds, the term "hospital and nursing

home capital reserve fund requirement" shall mean, as of any particular

date of computation, an amount of money equal to the greatest of the

respective amounts, for the then current or any succeeding calendar

year, of annual debt service payments of the agency, such annual debt

service payments for any calendar year being an amount of money equal to

the aggregate of (i) all interest payable during such calendar year on

all hospital and nursing home project bonds of the agency then

outstanding on said date of computation, plus (ii) the principal amount

of all hospital and nursing home project bonds of the agency then

outstanding on said date of computation which mature during such

calendar year, plus (iii) the amount of all sinking fund payments

payable during such calendar year with respect to all hospital and

nursing home project bonds of the agency outstanding on said date of

computation; and the term "sinking fund payment" shall mean the amount

of money specified in the resolution authorizing term bonds as payable

into a sinking fund for the amortization of such term bonds. The agency

shall create and establish a special fund to be known as the hospital

and nursing home capital reserve fund and may pay into such reserve fund

(1) any monies appropriated and made available by the state for the

purposes of such fund, (2) any proceeds of sale of hospital and nursing

home project notes or hospital and nursing home project bonds, to the

extent provided in the resolution of the agency authorizing the issuance

thereof, and (3) any other monies which may be made available to the

agency for the purposes of such fund from any other source or sources.

The monies held in or credited to the hospital and nursing home capital

reserve fund established under this subdivision, except as hereinafter

provided, shall be used solely for the payment of the principal of

hospital and nursing home project bonds of the agency secured by such

reserve fund, as the same mature, sinking fund payments, the purchase of

such hospital and nursing home project bonds of the agency, the payment

of interest on such hospital and nursing home projects bonds of the

agency, or the payment of any redemption premium required to be paid

when such bonds are redeemed prior to maturity; provided, however, that

monies in such fund shall not be withdrawn therefrom at any time in such

amount as would reduce the amount of such fund to less than the hospital

and nursing home capital reserve fund requirement, except for the

purpose of paying principal and interest on the hospital and nursing

home project bonds of the agency secured by such reserve fund maturing

and becoming due and any sinking fund payments and for the payment of

which other monies of the agency are not available. Any income or

interest earned by, or increment to, the hospital and nursing home

capital reserve fund due to the investment thereof may be transferred to

any other fund or account of the agency to the extent it does not reduce

the amount of the hospital and nursing home capital reserve fund below

the hospital and nursing home capital reserve fund requirement.

(b) The agency shall not issue hospital and nursing home project bonds

and hospital and nursing home project notes in an aggregate principal

amount exceeding twenty-one billion eight hundred million dollars,

excluding hospital and nursing home project bonds and hospital and

nursing home project notes issued to refund outstanding hospital and

nursing home projects bonds and hospital and nursing home project notes;

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 twenty-one billion eight hundred million

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. The agency shall not issue hospital and nursing home

project bonds at any time secured by the hospital and nursing home

capital reserve fund if upon issuance, the amount in the hospital and

nursing home capital reserve fund will be less than the hospital and

nursing home capital reserve fund requirement, unless the agency, at the

time of issuance of such bonds, shall deposit in such reserve fund from

the proceeds of the bonds so to be issued, or otherwise, an amount which

together with the amount then in such reserve fund, will be not less

than the hospital and nursing home capital reserve fund requirement.

the carrying out of the public purposes of this act, provision is made

in paragraph (a) of this subdivision for the accumulation in the

hospital and nursing home capital reserve fund of an amount equal to the

hospital and nursing home capital reserve fund requirement. In order

further to assure the maintenance of the hospital and nursing home

capital reserve fund, there shall be annually apportioned and paid to

the agency for deposit in the hospital and nursing home capital reserve

fund such sum, if any, as shall be certified by the chairman of the

agency to the governor and director of the budget as necessary to

restore such reserve fund to an amount equal to the hospital and nursing

home capital reserve fund requirement. The chairman of the agency shall

annually, on or before December first, make and deliver to the governor

and director of the budget his certificate stating the sums, if any,

required to restore the hospital and nursing home capital reserve fund

to the amount aforesaid and the sums so certified, if any, shall be

apportioned and paid to the agency during the then current state fiscal

year. The principal amount of bonds secured by the hospital and nursing

home capital reserve fund to which state funds are apportionable

pursuant to this paragraph shall be limited to the total amount of bonds

and notes outstanding on the effective date of this act, plus the total

amount of bonds and notes contracted after the effective date of this

act to finance projects in progress on the effective date of this act as

determined by the New York state public authorities control board

created pursuant to section fifty of the public authorities law whose

affirmative determination shall be conclusive as to all matters of law

and fact solely for the purposes of the limitations contained in this

paragraph, but in no event shall the total amount of bonds so secured by

such a capital reserve fund or funds exceed two hundred forty million

dollars, excluding bonds issued to refund such outstanding bonds until

the date of redemption of such outstanding bonds. As outstanding bonds

so secured are paid, the amount so secured shall be reduced accordingly

but the redemption of such outstanding bonds from the proceeds of

refunding bonds shall not reduce the amount so secured.

(d) In computing the hospital and nursing home capital reserve fund

for the purposes of this section, securities in which all or a portion

of such reserve fund shall be invested shall be valued at par if

purchased at par, or if purchased at other than par, at amortized value.

2. The agency shall create and establish one or more special funds

(herein referred to as hospital and nursing home general reserve funds)

and shall, to the extent provided in the applicable bond resolution of

the agency authorizing the issuance of hospital and nursing home project

bonds, pay into any such fund the fees and charges collected by the

agency pursuant to subdivision twelve of section five of this act and

any monies which the agency shall transfer from the hospital and nursing

home capital reserve fund pursuant to the provisions of paragraph (a) of

subdivision one of this section. Such monies and any other monies paid

into a hospital and nursing home general reserve fund may, in the

discretion of the agency, but subject to agreements with bondholders and

noteholders, be used by the agency (a) for the repayment of advances

from the state in accordance with the provisions of repayment agreements

between the agency and the director of the budget, (b) to reimburse the

department of health the reasonable costs of the services performed by

the commissioner of health and the department of health pursuant to

subdivision two of section seventeen of this act, (c) to pay all costs,

expenses and charges of financing, including fees and expenses of

trustees and paying agents, (d) for transfers to the hospital and

nursing home capital reserve fund, (e) for the payment of principal and

interest on hospital and nursing home project bonds and hospital and

nursing home project notes issued by the agency when the same shall

become due whether at maturity or on call for redemption and for the

payment of any redemption premium required to be paid where such

hospital and nursing home project bonds and hospital and nursing home

project notes are redeemed prior to their stated maturities and any

sinking fund payments, and to purchase hospital and nursing home project

bonds or hospital and nursing home project notes issued by the agency,

or (f) for such other corporate purposes of the agency as the agency in

its discretion shall determine and provide.

§ 7-a — Secured hospital projects reserve funds and appropriations

* § 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.

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