N.Y. Medical Care Facilities Finance Agency 392/73 § 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.

(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