BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1463
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          Date of Hearing:   June 23, 2014

                      ASSEMBLY COMMITTEE ON BANKING AND FINANCE
                                Roger Dickinson, Chair
           SB 1463 (Senate Governance & Finance Committee) - As Introduced:  
                                    March 13, 2014

           SENATE VOTE  :   35-0
           
          SUBJECT  :   California Health Facilities Financing Authority.

           SUMMARY  :   Makes several clarifying changes to the California  
          Health Facilities Financing Authority Act (CHFFA).  Specifically,  
           this bill  :   

          1)Clarifies references to "bonds" apply to both "bonds" and  
            "revenue bonds." 

          2)Distinguishes between negotiable and revenue bonds.

          3)Makes other technical and conforming changes.

           EXISTING LAW  



          CHFFA was established in 1979 and operates pursuant to the CHFFA  
          in the California Government Code Sections 15430-15462.5.

          CHFFA was created to be the State's vehicle for providing  
          financial assistance to public and non-profit health care  
          providers in our State through loans funded by the issuance of  
          tax-exempt bonds. The diverse nature of the facilities funded by  
          CHFFA reflects the changing health care needs of the State. From  
          rural community-based organizations to large multi-hospital  
          systems, CHFFA has financed a wide range of providers and  
          programs throughout California.


           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

          CHFFA has served as the issuer for $30.7 billion in conduit  
          revenue bonds, including $1.5 billion in 2013.  Sutter Health,  








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          Kaiser Permanente, and Catholic Healthcare West are the largest  
          users of the program.  CHFFA's Board includes:

           State Treasurer, who serves as chair, 

           The State Controller,

           The Director of Finance, 

           Two members appointed by the Senate Rules Committee, one member  
            of which must be a licensed physician and surgeon, and the  
            other must serve or have served in an executive capacity to a  
            health facility,

           Two members appointed by the Speaker of the Assembly, one  
            member must be a person qualified by training and experience in  
            the field of investment or finance, and the other  
            representative of the general public; and,

           Two members appointed by the Governor subject to confirmation  
            by the Senate, to represent the general public. 

          In order to meet the requirements for CHFFA financing, an  
          institution must be a public hospital, a private non-profit  
          corporation, or an association authorized by the laws of  
          California to provide or operate a health facility and undertake  
          the financing or refinancing of a project. Generally, non-profit,  
          licensed health facilities in the State of California including  
          adult day health centers, community clinics, developmentally  
          disabled centers, drug and alcohol rehabilitation centers are  
          eligible for financing.


          Proceeds from CHFFA financing may be used for the following  
          project related costs:


           §  Construction


           §  Remodeling and renovation


           §  Land Acquisition (as part of the proposed project)









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           §  Acquisition of existing health facilities


           §  Purchase or lease of equipment


           §  Refinancing or refunding of prior debt


           §  Working capital for start-up facilities


           §  Costs of bond issuance, feasibility studies & reimbursement  
             of prior expenses


          The State Treasurer, the sponsor of SB 1463 writes,

               Currently, the California Health Facilities Financing  
               Authority Act authorizes CHFFA to receive  loans from any  
               source under Government Code section 15438(h) and to issue  
               loans under Government Code sections 15438(i) and G) to  
               participating health institutions to finance projects or  
               refinance debt, also called private placement loans/bonds.  
               However, the California Attorney General's Office has  
               advised that the Act, as currently written, requires several  
               minor changes in order to convey to CHFFA the unambiguous  
               legal authority necessary to provide private placement  
               financing. SB 1463 makes technical changes that would  
               clarify that CHFFA has the authority to provide this type of  
               financing.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California State Treasurer (Sponsor)
           
            Opposition 
           
          None on file.

           Analysis Prepared by  :    Mark Farouk / B. & F. / (916) 319-3081 









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