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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