Senate Bill No. 1463

Introduced by Committee on Governance and Finance (Senators Wolk (Chair), Beall, DeSaulnier, Hernandez, Knight, Liu, and Vidak)

March 13, 2014

An act to amend Sections 15432, 15441, 15443, 15445, and 15455 of, and to add Section 15442.1 to, the Government Code, relating to health facilities, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 1463, as introduced, Committee on Governance and Finance. California Health Facilities Financing Authority.

The California Health Facilities Financing Authority Act authorizes the California Health Facilities Financing Authority to, among other things, make loans from the continuously appropriated California Health Facilities Financing Authority Fund to participating health institutions for financing or refinancing the acquisition, construction, or remodeling of health facilities. The act authorizes the authority to issue its negotiable revenue bonds in order to provide funds for achieving any of its purposes under the act. The act provides that these revenue bonds shall be deemed negotiable instruments notwithstanding that they may be payable from a special fund and requires that those bonds contain on their face a statement to the effect that neither the state nor the authority are obligated to pay the principal of, or interest on, the bond, except from revenues from the authority.

This bill would instead authorize the authority to issue its revenue bonds, regardless of whether they are negotiable, in order to provide funds for achieving any of its purposes under the act, and would provide that negotiable bonds shall be deemed to be negotiable instruments for all purposes notwithstanding that they may be payable from a special fund. The bill would also eliminate the requirement that the statement regarding the obligation of the state or the authority to pay the principal of, or interest on, the revenue bond appear on the face of the bond. To the extent the bill would increase deposits and expenditures of moneys in a continuously appropriated fund, the bill would make an appropriation.

Existing law authorizes revenue bonds issued pursuant to the act to be secured by a specified trust agreement or indenture. The act authorizes indentures, trust agreements, or resolutions for issuance of these bonds to contain provisions for protecting and enforcing the rights and remedies of the bondholders, as specified.

This bill would authorize any provision that the authority may include in a trust agreement or resolution to alternatively be included in a bond with the same effect.

The act defines a revenue bond to include a bond, warrant, note, lease, or installment sale obligation that is evidenced by a certificate of participation or other evidence of indebtedness issued by the authority. The act specifies that all moneys received pursuant to the act, whether as proceeds from the sale of revenue bonds or as revenues, shall be deemed to be trust funds held and applied solely as provided in the act.

This bill would specify that those moneys also include moneys received as proceeds from incurring revenue bonds pursuant to the act.

The bill would make other technical changes to the provisions governing the authority.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 15432 of the Government Code is
amended to read:

15432.  

As used in this part, the following words and terms
shall have the following meanings, unless the context clearly
indicates or requires another or different meaning or intent:

(a) “Act” means the California Health Facilities Financing
Authority Act.

(b) “Authority” means the California Health Facilities Financing
Authority created by this part or any board, body, commission,
department, or officer succeeding to the principal functions thereof
or to which the powers conferred upon the authority by this part
shall be given by law.

(c) “Cost,” as applied to a project or portion of a project financed
under this part, means and includes all or any part of the cost of
construction and acquisition of all lands, structures, real or personal
property, rights, rights-of-way, franchises, easements, and interests
acquired or used for a project, the cost of demolishing or removing
any buildings or structures on land so acquired, including the cost
of acquiring any lands to which those buildings or structures may
be moved, the cost of all machinery and equipment, financing
charges, interest prior to, during, and for a period not to exceed
the later of one year or one year following completion of
construction, as determined by the authority, the cost of insurance
during construction, the cost of funding or financing noncapital
expenses, reserves for principal and interest and for extensions,
enlargements, additions, replacements, renovations and
improvements, the cost of engineering, service contracts,
reasonable financial and legal services, plans, specifications,
studies, surveys, estimates, administrative expenses, and other
expenses of funding or financing, that are necessary or incident to
determining the feasibility of constructing any project, or that are
incident to the construction, acquisition, or financing of any project.

(d) “Health facility” means begin delete any end delete begin insert a end insert facility, place, or building that
is licensed, accredited, or certified and organized, maintained, and
operated for the diagnosis, care, prevention, and treatment of
human illness, or physical, mental, or developmental disability,
including convalescence and rehabilitation and including care
during and after pregnancy, or for any one or more of these
purposes, for one or more persons, and includes, but is not limited
to, all of the following types:

(1) A general acute care hospital that is a health facility having
a duly constituted governing body with overall administrative and
professional responsibility and an organized medical staff that
provides 24-hour inpatient care, including the following basic
services: medical, nursing, surgical, anesthesia, laboratory,
radiology, pharmacy, and dietary services.

(2) An acute psychiatric hospital that is a health facility having
a duly constituted governing body with overall administrative and
professional responsibility and an organized medical staff that
provides 24-hour inpatient care for mentally disordered,
incompetent, or other patients referred to in Division 5
(commencing with Section 5000) or Division 6 (commencing with
Section 6000) of the Welfare and Institutions Code, including the
following basic services: medical, nursing, rehabilitative,
pharmacy, and dietary services.

(3) A skilled nursing facility that is a health facility that provides
the following basic services: skilled nursing care and supportive
care to patients whose primary need is for availability or skilled
nursing care on an extended basis.

(4) An intermediate care facility that is a health facility that
provides the following basic services: inpatient care to ambulatory
or semiambulatory patients who have recurring need for skilled
nursing supervision and need supportive care, but who do not
require availability or continuous skilled nursing care.

(5) A special health care facility that is a health facility having
a duly constituted governing body with overall administrative and
professional responsibility and an organized medical or dental staff
that provides inpatient or outpatient, acute or nonacute care,
including, but not limited to, medical, nursing, rehabilitation,
dental, or maternity.

(6) A clinic that is operated by a tax-exempt nonprofit
corporation that is licensed pursuant to Section 1204 or 1204.1 of
the Health and Safety Code or a clinic exempt from licensure
pursuant to subdivision (b) or (c) of Section 1206 of the Health
and Safety Code.

(7) An adult day health center that is a facility, as defined under
subdivision (b) of Section 1570.7 of the Health and Safety Code,
that provides adult day health care, as defined under subdivision
(a) of Section 1570.7 of the Health and Safety Code.

(8)  begin delete Any end delete begin insert A end insert facility owned or operated by a local jurisdiction for
the provision of county health services.

(9) A multilevel facility is an institutional arrangement where
a residential facility for the elderly is operated as a part of, or in
conjunction with, an intermediate care facility, a skilled nursing
facility, or a general acute care hospital. “Elderly,” for the purposes
of this paragraph, means a person 62 years of age or older.

(10) A child day care facility operated in conjunction with a
health facility. A child day care facility is a facility, as defined in
Section 1596.750 of the Health and Safety Code. For purposes of
this paragraph, “child” means a minor from birth to 18 years of
age.

(11) An intermediate care facility/developmentally disabled
habilitative that is a health facility, as defined under subdivision
(e) of Section 1250 of the Health and Safety Code.

(12) An intermediate care facility/developmentally
disabled-nursing that is a health facility, as defined under
subdivision (h) of Section 1250 of the Health and Safety Code.

(13) A community care facility that is a facility, as defined under
subdivision (a) of Section 1502 of the Health and Safety Code,
that provides care, habilitation, rehabilitation, or treatment services
to developmentally disabled or mentally impaired persons.

(14) A nonprofit community care facility, as defined in
subdivision (a) of Section 1502 of the Health and Safety Code,
other than a facility that, as defined in that subdivision, is a
residential facility for the elderly, a foster family agency, a foster
family home, a full service adoption agency, or a noncustodial
adoption agency.

(15) A nonprofit accredited community work activity program,
as specified in subdivision (e) of Section 4851 and Section 4856
of the Welfare and Institutions Code.

(16) A community mental health center, as defined in paragraph
(3) of subdivision (b) of Section 5667 of the Welfare and
Institutions Code.

(17) A nonprofit speech and hearing center, as defined in Section
1201.5 of the Health and Safety Code.

(18) A blood bank, as defined in Section 1600.2 of the Health
and Safety Code, licensed pursuant to Section 1602.5 of the Health
and Safety Code, and exempt from federal income taxation
pursuant to Section 501(c)(3) of the Internal Revenue Code.

(19) A residential facility for persons with developmental
disabilities, as defined in Sections 4688.5 and 4688.6 of the
Welfare and Institutions Code, which includes, but is not limited
to, a community care facility licensed pursuant to Section 1502 of
the Health and Safety Code and a family teaching home as defined
in Section 4689.1 of the Welfare and Institutions Code.

(20) A nonpublic school that provides educational services in
conjunction with a health facility, as defined in paragraphs (1) to
(19), inclusive, that otherwise qualifies for financing pursuant to
this part, if the nonpublic school is certified pursuant to Sections
56366 and 56366.1 of the Education Code as meeting standards
relating to the required special education and specified related
services and facilities for individuals with physical, mental, or
developmental disabilities.

“Health facility” includes a clinic that is described in subdivision
(l) of Section 1206 of the Health and Safety Code.

“Health facility” includes information systems equipment and
the following facilities, if the equipment and facility is operated
in conjunction with or to support the services provided in one or
more of the facilities specified in paragraphs (1) to (20), inclusive,
of this subdivision: a laboratory, laundry, a nurses or interns
residence, housing for staff or employees and their families or
patients or relatives of patients, a physicians’ facility, an
administration building, a research facility, a maintenance, storage,
or utility facility, an information systems facility, all structures or
facilities related to any of the foregoing facilities or required or
useful for the operation of a health facility and the necessary and
usual attendant and related facilities and equipment, and parking
and supportive service facilities or structures required or useful
for the orderly conduct of the health facility.

“Health facility” does not include any institution, place, or
building used or to be used primarily for sectarian instruction or
study or as a place for devotional activities or religious worship.

(e) “Participating health institution” means a city, city and
county, or county, a district hospital, or a private nonprofit
corporation or association, or a limited liability company whose
sole member is a nonprofit corporation or association authorized
by the laws of this state to provide or operate a health facility or
a nonprofit corporation that controls or manages, is controlled or
managed by, is under common control or management with, or is
affiliated with any of the foregoing, and that, pursuant to this part,
undertakes the financing or refinancing of the construction or
acquisition of a project or of working capital as provided in this
part. “Participating health institution” also includes, for purposes
of the California Health Facilities Revenue Bonds (UCSF-Stanford
Health Care) 1998 Series A, the Regents of the University of
California.

(f) “Project” means construction, expansion, remodeling,
renovation, furnishing, or equipping, or funding, financing, or
refinancing of a health facility or acquisition of a health facility
to be financed or refinanced with funds provided in whole or in
part pursuant to this part. “Project” may include reimbursement
for the costs of construction, expansion, remodeling, renovation,
furnishing, or equipping, or funding, financing, or refinancing of
a health facility or acquisition of a health facility. “Project” may
include any combination of one or more of the foregoing
undertaken jointly by any participating health institution with one
or more other participating health institutions.

(g) “Revenue bond” begin insert or “bond” end insert means begin delete any end delete begin insert a end insert bond, warrant,
note, lease, or installment sale obligation that is evidenced by a
certificate of participation or other evidence of indebtedness issued
by the authority.

(h) “Working capital” means moneys to be used by, or on behalf
of, a participating health institution to pay or prepay maintenance
or operation expenses or any other costs that would be treated as
an expense item, under generally accepted accounting principles,
in connection with the ownership or operation of a health facility,
including, but not limited to, reserves for maintenance or operation
expenses, interest for not to exceed one year on any loan for
working capital made pursuant to this part, and reserves for debt
service with respect to, and any costs necessary or incidental to,
that financing.

SEC. 2.  

Section 15441 of the Government Code is amended
to read:

15441.  

(a) The authority is authorized, from time to time, to
issue its begin delete negotiable end delete revenue bonds in order to provide funds for
achieving any of its purposes under this part.

(b) Except as may otherwise be expressly provided by the
authority, each of its revenue bonds shall be payable from any
revenues or moneys of the authority available therefor and not
otherwise pledged, subject only to any agreements with the holders
of particular bonds or notes pledging any particular revenues or
moneys. begin delete Notwithstanding that these revenue bonds may be payable
from a special fund, they end delete begin insert Negotiable bonds end insert shall be and be deemed
to be for all purposes negotiable instruments, begin insert notwithstanding that
these bonds may be payable from a special fund, end insert subject only to
the provisions of these bonds for registration.

(c) The authority’s revenue bonds may be issued as serial bonds
or as term bonds, or the authority, in its discretion, may issue bonds
of both types. The issuance of all revenue bonds shall be authorized
by resolution of the authority and shall bear such date or dates,
mature at such time or times, not exceeding 40 years from their
respective dates, bear interest at such rate or rates, be payable at
such time or times, be in such denominations, be in such form,
either coupon or registered, carry such registration privileges, be
executed in such manner, be payable in lawful money of the United
States of America at such place or places, and be subject to such
terms of redemption, as the indenture, trust agreement, or resolution
relating to these revenue bonds may provide. The authority’s
revenue bonds or notes may be sold by the Treasurer at public or
private sale, after giving due consideration to the recommendation
of the participating health institution, for the price or prices and
upon the terms and conditions as the authority shall determine.
The Treasurer may sell these revenue bonds at a price below the
par value thereof. However, the discount on any bonds so sold
shall not exceed 6 percent of the par value thereof, except in the
case of any bonds payable in whole or in part from moneys held
under one or more outstanding resolutions or indentures. Pending
preparation of the definitive bonds, the authority may issue interim
receipts or certificates or temporary bonds which shall be
exchanged for such definitive bonds.

(d)  begin delete Any end delete begin insert A end insert resolution or resolutions authorizing the issuance of
any revenue bonds or any issue of revenue bonds may contain
provisions, which shall be a part of the contract with the holders
of the bonds to be authorized, as to pledging all or any part of the
revenues of a project or any revenue-producing contract or
contracts made by the authority with begin delete any end delete begin insert an end insert individual, partnership,
corporation or association or other body, public or private, to secure
the payment of the bonds or of begin delete any end delete begin insert a end insert particular issue of bonds.

(e) Neither the members of the authority nor any person
executing the revenue bonds shall be liable personally on the bonds
or be subject to any personal liability or accountability by reason
of the issuance thereof.

(f) begin insert   end insert The authority may purchase its bonds with any moneys
available to the authority for this purpose. The authority may
exchange bonds for its bonds. The authority may hold, pledge,
exchange, cancel, or resell these bonds, subject to and in
accordance with its agreements with bondholders.

SEC. 3.  

Section 15442.1 is added to the Government Code, to
read:

15442.1.  

Any provision that the authority may include in a
trust agreement, indenture, or resolution pursuant to this part may
alternatively be included in a bond with the same effect.

SEC. 4.  

Section 15443 of the Government Code is amended
to read:

15443.  

Revenue bonds issued under the provisions of this part
shall not be deemed to constitute a debt or liability of the state or
of begin delete any end delete begin insert a end insert political subdivision thereof or a pledge of the faith and
credit of the state or of begin delete any such end delete begin insert that end insert political subdivision, other
than the authority, but shall be payable solely from the funds herein
provided. begin delete All such end delete begin insert These end insert bonds shall contain begin delete on the face thereof end delete
a statement to the effect that neither the State of California nor the
authority shall be obligated to pay the principal of, or the interest
thereon, except from revenues of the authority, and that neither
the faith and credit nor the taxing power of the State of California
or of begin delete any end delete begin insert a end insert political subdivision thereof is pledged to the payment
of the principal of or the interest on begin delete such end delete begin insert these end insert bonds. The issuance
of revenue bonds under the provisions of this part shall not directly
or indirectly or contingently obligate the state or begin delete any end delete begin insert a end insert political
subdivision thereof to levy or to pledge begin delete any end delete begin insert a end insert form of taxation
whatever therefor or to make begin delete any end delete begin insert an end insert appropriation for their
payment.

SEC. 5.  

Section 15445 of the Government Code is amended
to read:

15445.  

All moneys received pursuant to this part, whether as
proceeds from begin delete the sale of end delete begin insert selling or incurring end insert revenue bonds or as
revenues, shall be deemed to be trust funds to be held and applied
solely as provided in this part. Until the funds are applied as
provided in this part, and notwithstanding any other provision of
law, the moneys may be invested in any obligations or securities
authorized by resolutions of the authority authorizing the issuance
of the bonds. Any officer with whom, or any bank or trust company
with which, the moneys are deposited shall act as trustee of the
moneys and shall hold and apply the moneys for the purposes
hereof, subject to any regulations adopted pursuant to this part and
the resolution authorizing the issuance of the bonds or the indenture
or trust agreement securing the bonds.

SEC. 6.  

Section 15455 of the Government Code is amended
to read:

15455.  

(a) This part shall be deemed to provide a complete,
additional, and alternative method for doing the things authorized
by this part, and shall be regarded as supplemental and additional
to powers conferred by other laws. The issuance of bonds and
refunding bonds under this begin delete chapter end delete begin insert part end insert need not comply with any
other law applicable to the issuance of bonds, including, but not
limited to, Division 13 (commencing with Section 21000) of the
Public Resources Code.

(b) Except as provided in subdivision (a), the financing of a
project pursuant to this part shall not exempt a project from any
requirement of law that is otherwise applicable to the project, and
the applicant shall provide documentation, before the authority
approves the issuance of bonds for the project, that the project has
complied with Division 13 (commencing with Section 21000) of
the Public Resources Code, or is not a project under that division.