BILL NUMBER: AB 282 CHAPTERED 10/10/99 CHAPTER 848 FILED WITH SECRETARY OF STATE OCTOBER 10, 1999 APPROVED BY GOVERNOR OCTOBER 8, 1999 PASSED THE ASSEMBLY SEPTEMBER 8, 1999 PASSED THE SENATE SEPTEMBER 3, 1999 AMENDED IN SENATE AUGUST 31, 1999 AMENDED IN SENATE AUGUST 17, 1999 AMENDED IN SENATE JUNE 24, 1999 AMENDED IN ASSEMBLY APRIL 27, 1999 AMENDED IN ASSEMBLY APRIL 15, 1999 INTRODUCED BY Assembly Member Torlakson FEBRUARY 4, 1999 An act to amend Sections 129010, 129020, 129035, 129040, 129050, 129055, 129065, 129080, 129090, 129100, 129105, 129173, 129174, 129200, and 129210 of, to add Sections 129045, 129051, 129087, 129092, and 129152 to, to add Article 5.5 (commencing with Section 129220) to Chapter 1 of Part 6 of Division 107 of, to repeal Section 129025 of, and to repeal and add Section 129075 of, the Health and Safety Code, relating to health facilities. LEGISLATIVE COUNSEL'S DIGEST AB 282, Torlakson. Health facility construction loan insurance. The existing California Health Facility Construction Loan Insurance Law provides, without cost to the state, an insurance program for health facility construction, improvement, and expansion loans in order to stimulate the flow of private capital into health facilities construction, improvement, and expansion, and in order to meet the need for new, expanded, and modernized public and nonprofit health facilities. Under existing law, the Office of Statewide Health Planning and Development has various responsibilities in connection with this program. This bill would revise existing law relating to the provision of health facility construction loan insurance, including declaring legislative intent to apply specified existing provisions retroactively, and requiring the office to develop a state plan and to outline any changes the plan makes to the health care industry including statements of the plan's guiding principles. This bill would also make certain conditions applicable only to borrowers that are general acute care hospitals or acute psychiatric hospitals. This bill would include the conditions under which a loan is eligible for insurance, and would require the office to develop and implement a system for assessing an applicant's relative financial risk, and to establish a maximum level of insurance risk for the projects it insures. This bill would require the office to annually report to the Legislature the financial status of the program and to develop and maintain a formal system of monitoring borrowers, to assist the office in determining when borrowers are experiencing financial difficulties. It would also revise existing borrower reporting requirements, and sanctions applicable to borrowers that are out of compliance with the existing requirement that the borrower make reasonable assurances regarding the availability of the facility. This bill would require the office to perform a feasibility study upon the application of a borrower for insurance. The bill would require the office, in cooperation with the Attorney General, to develop and maintain a list of receivers, which may be appointed as a result of a borrower's financial difficulties, and would further require the office to establish reporting requirements for the receivers. This bill would increase the office's authorization to insure health facility construction, improvement, and expansion loans to $3 billion, except as specified. This bill would set forth the steps to be taken in the event of specified types of borrower default. The bill would also require the office to establish an Advisory Loan Insurance Committee, and would outline the duties of that committee. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 129010 of the Health and Safety Code is amended to read: 129010. Unless the context otherwise requires, the definitions in this section govern the construction of this chapter and of Section 32127.2. (a) "Bondholder" means the legal owner of a bond or other evidence of indebtedness issued by a political subdivision or a nonprofit corporation. (b) "Borrower" means a political subdivision or nonprofit corporation that has secured or intends to secure a loan for the construction of a health facility. (c) "Construction, improvement, or expansion" or "construction, improvement, and expansion" includes construction of new buildings, expansion, modernization, renovation, remodeling and alteration of existing buildings, acquisition of existing buildings or health facilities, and initial or additional equipping of any of these buildings. In connection therewith, "construction, improvement, or expansion" or "construction, improvement, and expansion" includes the cost of construction or acquisition of all structures, including parking facilities, real or personal property, rights, rights-of-way, the cost of demolishing or removing any buildings or structures on land so acquired, including the cost of acquiring any land where the buildings or structures may be moved, the cost of all machinery and equipment, financing charges, interest (prior to, during and for a period after completion of the construction), provisions for working capital, reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations and improvements, cost of engineering, financial and legal services, plans, specifications, studies, surveys, estimates of cost and of revenues, administrative expenses, expenses necessary or incident to determining the feasibility or practicability of constructing or incident to the construction; or the financing of the construction or acquisition. (d) "Commission" means the California Health Policy and Data Advisory Commission. (e) "Committee" means the Advisory Loan Insurance Committee. (f) "Debenture" means any form of written evidence of indebtedness issued by the State Treasurer pursuant to this chapter, as authorized by Section 4 of Article XVI of the California Constitution. (g) "Fund" means the Health Facility Construction Loan Insurance Fund. (h) "Health facility" means any facility providing or designed to provide services for the acute, convalescent, and chronically ill and impaired, including, but not limited to, public health centers, community mental health centers, facilities for the developmentally disabled, nonprofit community care facilities that provide care, habilitation, rehabilitation or treatment to developmentally disabled persons, facilities for the treatment of chemical dependency, including a community care facility, licensed pursuant to Chapter 3 (commencing with Section 1500) of Division 2, a clinic, as defined pursuant to Chapter 1 (commencing with Section 1200) of Division 2, an alcoholism recovery facility, defined pursuant to former Section 11834.11, and a structure located adjacent or attached to another type of health facility and that is used for storage of materials used in the treatment of chemical dependency, and general tuberculosis, mental, and other types of hospitals and related facilities, such as laboratories, outpatient departments, extended care, nurses' home and training facilities, offices and central service facilities operated in connection with hospitals, diagnostic or treatment centers, extended care facilities, nursing homes, and rehabilitation facilities. "Health facility" also means an adult day health center and a multilevel facility. Except for facilities for the developmentally disabled, facilities for the treatment of chemical dependency, or a multilevel facility, or as otherwise provided in this subdivision, "health facility" does not include any institution furnishing primarily domiciliary care. "Health facility" also means accredited nonprofit work activity programs as defined in subdivision (e) of Section 19352 and Section 19355 of the Welfare and Institutions Code, and nonprofit community care facilities as defined in Section 1502, excluding foster family homes, foster family agencies, adoption agencies, and residential care facilities for the elderly. Unless the context dictates otherwise, "health facility" includes a political subdivision of the state or nonprofit corporation that operates a facility included within the definition set forth in this subdivision. (i) "Office" means the Office of Statewide Health Planning and Development. (j) "Lender" means the provider of a loan and its successors and assigns. (k) "Loan" means money or credit advanced for the costs of construction or expansion of the health facility, and includes both initial loans and loans secured upon refinancing and may include both interim, or short-term loans, and long-term loans. A duly authorized bond or bond issue, or an installment sale agreement, may constitute a "loan." (l) "Maturity date" means the date that the loan indebtedness would be extinguished if paid in accordance with periodic payments provided for by the terms of the loan. (m) "Mortgage" means a first mortgage on real estate. "Mortgage" includes a first deed of trust. (n) "Mortgagee" includes a lender whose loan is secured by a mortgage. "Mortgagee" includes a beneficiary of a deed of trust. (o) "Mortgagor" includes a borrower, a loan to whom is secured by a mortgage, and the trustor of a deed of trust. (p) "Nonprofit corporation" means any corporation formed under or subject to the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code) that is organized for the purpose of owning and operating a health facility and that also meets the requirements of Section 501(c)(3) of the Internal Revenue Code. (q) "Political subdivision" means any city, county, joint powers entity, local hospital district, or the California Health Facilities Authority. (r) "Project property" means the real property where the health facility is, or is to be, constructed, improved, or expanded, and also means the health facility and the initial equipment in that health facility. (s) "Public health facility" means any health facility that is or will be constructed for and operated and maintained by any city, county, or local hospital district. (t) "Adult day health center" means a facility defined under subdivision (b) of Section 1570.7, that provides adult day health care, as defined under subdivision (a) of Section 1570.7. (u) "Multilevel facility" means 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 subdivision, means a person 60 years of age or older. (v) "State plan" means the plan described in Section 129020. SEC. 2. Section 129020 of the Health and Safety Code is amended to read: 129020. The office shall implement the loan insurance program for the construction, improvement, and expansion of public and nonprofit corporation health facilities so that, in conjunction with all other existing facilities, the necessary physical facilities for furnishing adequate health facility services will be available to all the people of the state. Every odd-numbered year the office shall develop a state plan for use under this chapter. The plan shall include an overview of the changes in the health care industry, an overview of the financial status of the fund and the loan insurance program implemented by the office, a statement of the guiding principles of the loan insurance program, an evaluation of the program's success in meeting its mission as outlined in Section 129005, a discussion of administrative, procedural, or statutory changes that may be needed to improve management of program risks or to ensure the program effectively addresses the health needs of Californians, and the priority needs to be addressed by the loan insurance program. The health facility construction loan insurance program shall provide for health facility distribution throughout the state in a manner that will make all types of health facility services reasonably accessible to all persons in the state according to the state plan. SEC. 3. Section 129025 of the Health and Safety Code is repealed. SEC. 4. Section 129035 of the Health and Safety Code is amended to read: 129035. From time to time the office or its designated agent shall inspect each project for which loan insurance was approved, as needed, and if the inspection so warrants, the office or agent shall certify that the work has been performed upon the project, or purchases have been made, in accordance with the approved plans and specifications, and that payment of an installment of the loan proceeds is due to the borrower. The office shall charge the borrower a fee for these inspections and certifications, that in no instance shall exceed four dollars ($4) for each one thousand dollars ($1,000) of the borrower's loan that is insured. These fees shall be deposited in the fund. SEC. 5. Section 129040 of the Health and Safety Code is amended to read: 129040. The office shall establish a premium charge for the insurance of loans under this chapter, and this charge shall be deposited in the fund. A one-time nonrefundable premium charge shall be paid at the time the loan is insured. The premium rate may vary based upon the assessed level of relative financial risk determined pursuant to Section 129051, but shall in no event be greater than 3 percent. The amount of premium shall be computed on the basis of the application of the rate to the total amount of principal and interest payable over the term of the loan. Amendments made to this section by this bill shall take effect on January 1, 2001. SEC. 6. Section 129045 is added to the Health and Safety Code, to read: 129045. The office shall annually report to the Legislature the financial status of the program and its insured portfolio, including the status of all borrowers in each stage of default and the office's efforts to collect from borrowers that have defaulted on their debt service payments. SEC. 7. Section 129050 of the Health and Safety Code is amended to read: 129050. A loan shall be eligible for insurance under this chapter if all of the following conditions are met: (a) The loan shall be secured by a first mortgage, first deed of trust, or other first priority lien on a fee interest of the borrower and any other security agreement that the office may require subject only to those conditions, covenants and restrictions, easements, taxes, and assessments of record approved by the office, and other liens securing debt insured under this chapter. (b) The borrower obtains an American Land Title Association title insurance policy with the office designated as beneficiary, with liability equal to the amount of the loan insured under this chapter, and with additional endorsements that the office may reasonably require. (c) The proceeds of the loan shall be used exclusively for the construction, improvement, or expansion of the health facility, as approved by the office under Section 129020. However, loans insured pursuant to this chapter may include loans to refinance another prior loan, whether or not state insured and without regard to the date of the prior loan, if the office determines that the prior loan would have been eligible for insurance under this chapter at the time it was made. The office may not insure a loan for a health facility that the office determines is not needed pursuant to subdivision (k). (d) The loan shall have a maturity date not exceeding 30 years from the date of the beginning of amortization of the loan, except as authorized by subdivision (e), or 75 percent of the office's estimate of the economic life of the health facility, whichever is the lesser. (e) The loan shall contain complete amortization provisions requiring periodic payments by the borrower not in excess of its reasonable ability to pay as determined by the office. The office shall permit a reasonable period of time during which the first payment to amortization may be waived on agreement by the lender and borrower. The office may, however, waive the amortization requirements of this subdivision and of subdivision (g) of this section when a term loan would be in the borrower's best interest. (f) The loan shall bear interest on the amount of the principal obligation outstanding at any time at a rate, as negotiated by the borrower and lender, as the office finds necessary to meet the loan money market. As used in this chapter, "interest" does not include premium charges for insurance and service charges if any. Where a loan is evidenced by a bond issue of a political subdivision, the interest thereon may be at any rate the bonds may legally bear. (g) The loan shall provide for the application of the borrower's periodic payments to amortization of the principal of the loan. (h) The loan shall contain those terms and provisions with respect to insurance, repairs, alterations, payment of taxes and assessments, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters the office may in its discretion prescribe. (i) The loan shall have a principal obligation not in excess of an amount equal to 90 percent of the total construction cost. (j) The borrower shall offer reasonable assurance that the services of the health facility will be made available to all persons residing or employed in the area served by the facility. (k) The office has determined that the facility is needed by the community to provide the specified services. In making this determination, the office shall do all of the following: (1) Require the applicant to describe the community needs the facility will meet and provide data and information to substantiate the stated needs. (2) Require the applicant, if appropriate, to demonstrate participation in the community needs assessment required by Section 127350 of the Health and Safety Code. (3) Survey appropriate local officials and organizations to measure perceived needs and verify the applicant's needs assessment. (4) Use any additional available data relating to existing facilities in the community and their capacity. (5) Contact other state and federal departments that provide funding for the programs proposed by the applicant to obtain those departments' perspectives regarding the need for the facility. Additionally, the office shall evaluate the potential effect of proposed health care reimbursement changes on the facility's financial feasibility. (6) Consider the facility's consistency with the Cal-Mortgage state plan. (l) In the case of acquisitions, a project loan shall be guaranteed only for transactions not in excess of the fair market value of the acquisition. Fair market value shall be determined, for purposes of this subdivision, pursuant to the following procedure, that shall be utilized during the office's review of a loan guarantee application: (1) Completion of a property appraisal by an appraisal firm qualified to make appraisals, as determined by the office, before closing a loan on the project. (2) Evaluation of the appraisal in conjunction with the book value of the acquisition by the office. When acquisitions involve additional construction, the office shall evaluate the proposed construction to determine that the costs are reasonable for the type of construction proposed. In those cases where this procedure reveals that the cost of acquisition exceeds the current value of a facility, including improvements, then the acquisition cost shall be deemed in excess of fair market value. (m) Notwithstanding subdivision (i), any loan in the amount of five million dollars ($5,000,000) or less may be insured up to 95 percent of the total construction cost. In determining financial feasibility of projects of counties pursuant to this section, the office shall take into consideration any assistance for the project to be provided under Sections 14085.5 and 16715 of the Welfare and Institutions Code or from other sources. It is the intent of the Legislature that the office endeavor to assist counties in whatever ways are possible to arrange loans that will meet the requirements for insurance prescribed by this section. (n) The project's level of financial risk meets the criteria in Section 129051. SEC. 8. Section 129051 is added to the Health and Safety Code, to read: 129051. (a) The office shall develop and implement a system for assessing the relative financial risk of the applicant. The system shall include, but is not limited to, an assessment of the applicant' s financial strength, credit history, security for the loan, cash-flow, and ability to repay the debt. (b) The office shall establish a maximum acceptable level of financial risk for the projects it insures. The office may only approve a project if its risk level is below the established maximum, except as provided in subdivision (c). (c) The office may approve a project with a level of insurance risk that exceeds the established maximum if the office determines that the project meets a significant community need or will be a sole community provider. SEC. 9. Section 129055 of the Health and Safety Code is amended to read: 129055. In order to comply with subdivision (j) of Section 129050, any borrower that is certified for reimbursement for cost of care under Chapter 7 (commencing with Section 14000) of Part 3 of Division 9 of the Welfare and Institutions Code shall demonstrate that its facility is used by persons for whom the cost of care is reimbursed under that chapter, in a proportion that is reasonable based upon the proportion of Medi-Cal patients in the community served by the borrower and by persons for whom the costs of care is reimbursed under Title XVIII of the federal Social Security Act in a proportion that is reasonable based upon the proportion of Medicare patients in the community served by the borrower. For the purposes of this chapter, the community means the service areas or patient populations for which the health facility provides health care services, unless the office determines that, or the borrower demonstrates to the satisfaction of the office that, a different definition is more appropriate for the borrower's facility. SEC. 10. Section 129065 of the Health and Safety Code is amended to read: 129065. As part of its assurance under subdivision (j) of Section 129050, any borrower that is a general acute care hospital or acute psychiatric hospital shall agree to the following actions: (a) To advise each person seeking services at the borrower's facility as to the person's potential eligibility for Medi-Cal and Medicare benefits or benefits from other governmental third party payers. (b) To make available to the office and to any interested person a list of physicians with staff privileges at the borrower's facility, that includes: (1) Name. (2) Speciality. (3) Language spoken. (4) Whether takes Medi-Cal and Medicare patients. (5) Business address and phone number. (c) To inform in writing on a periodic basis all practitioners of the healing arts having staff privileges in the borrower's facility as to the existence of the facility's community service obligation. The required notice to practitioners shall contain a statement, as follows: "This hospital has agreed to provide a community service and to accept Medi-Cal and Medicare patients. The administration and enforcement of this agreement is the responsibility of the Office of Statewide Health Planning and Development and this facility." (d) To post notices in the following form, that shall be multilingual where the borrower serves a multilingual community, in appropriate areas within the facility, including but not limited to, admissions offices, emergency rooms, and business offices: NOTICE OF COMMUNITY SERVICE OBLIGATION "This facility has agreed to make its services available to all persons residing or employed in this area. This facility is prohibited by law from discriminating against Medi-Cal and Medicare patients. Should you believe you may be eligible for Medi-Cal or Medicare, you should contact our business office (or designated person or office) for assistance in applying. You should also contact our business office (or designated person or office) if you are in need of a physician to provide you with services at this facility. If you believe that you have been refused services at this facility in violation of the community service obligation you should inform (designated person or office) and the Office of Statewide Health Planning and Development." The borrower shall provide copies of this notice for posting to all welfare offices in the county where the borrower's facility is located. SEC. 11. Section 129075 of the Health and Safety Code is repealed. SEC. 12. Section 129075 is added to the Health and Safety Code, to read: 129075. (a) Each borrower shall provide any reports as may be required of it by Part 5 (commencing with Section 127675), from which the office shall determine the borrower's compliance with subdivision (j) of Section 129050. (b) If a report indicates noncompliance with subdivision (j) of Section 129050, Section 129055, or Section 129065, the office shall require the borrower to submit a plan detailing the steps and timetables the borrower will take to bring the facility into compliance. (c) The office shall annually report to the Legislature the extent of the borrowers' compliance with their community service obligations pursuant to subdivision (j) of Section 129050, Section 129055, and Section 129065. SEC. 13. Section 129080 of the Health and Safety Code is amended to read: 129080. The office may impose additional appropriate remedies and sanctions against a borrower when any of the following occurs: (a) The office determines that the annual compliance report required in Section 129075 indicates that the borrower is out of compliance with subdivision (j) of Section 129050. (b) A facility fails to carry out the actions agreed to in a plan approved by the office pursuant to Section 129070. (c) The facility fails to submit compliance reports as required by Section 129075. The additional remedies include referring the violation to the office of Attorney General of California for legal action authorized under existing law or other remedy at law or equity. However, the remedies obtainable by legal action shall not include withdrawal or cancellation of the loan insurance provided under this chapter. SEC. 14. Section 129087 is added to the Health and Safety Code, to read: 129087. The office shall develop and maintain a formal system of monitoring borrowers, in order to assist the office in detecting at the earliest possible date those borrowers who are experiencing financial difficulties. This system shall include, but shall not be limited to, all of the following: (a) A method of tracking the receipt of information that borrowers are required by law and regulatory agreement to submit to the office. (b) A process for thoroughly reviewing borrowers' financial statements, budgets, auditor's management letters, and health facility utilization trends. (c) Timely and structured site visits to insured facilities. SEC. 15. Section 129090 of the Health and Safety Code is amended to read: 129090. Pursuant to this chapter, political subdivisions and nonprofit corporations may apply for state insurance of needed construction, improvement, or expansion loans for construction, remodeling, or acquisition of health facilities to be or already owned, established, and operated by them as provided in this chapter. Applications shall be submitted to the office by the nonprofit corporation or political subdivision authorized to construct and operate a health facility. Each application shall conform to the requirements of the office, shall be submitted in the manner and form prescribed by the office, and shall be accompanied by an application fee of one-half of 1 percent of the amount of the loan applied for, but in no case shall the application fee exceed five hundred dollars ($500). The fees shall be deposited by the office in the fund and used to defray the office's expenditures in the administration of this chapter. SEC. 16. Section 129092 is added to the Health and Safety Code, to read: 129092. Notwithstanding any other provision of law, upon the application of a borrower for insurance, the office shall perform a feasibility study relating to the proposed project, the cost of which shall be paid by the applicant. The office may retain independent consultants and require a deposit from the applicant for such services, upon submission of the application. This section shall take effect on January 1, 2001. SEC. 17. Section 129100 of the Health and Safety Code is amended to read: 129100. Every applicant for insurance shall be afforded an opportunity for a fair hearing before the commission upon 10 days' written notice to the applicant. If the office, after affording reasonable opportunity for development and presentation of the application and after receiving the advice of the commission, finds that an application complies with the requirements of this article and of Section 129020 and is otherwise in conformity with the state plan, it may approve the application for insurance. The office shall consider and approve applications in the order of relative need set forth in the state plan in accordance with Section 129020. Judicial review of a final decision made under this section may be had by filing a petition for writ of mandate. Any petition shall be filed within 30 days after the date of the final decision of the office. SEC. 18. Section 129105 of the Health and Safety Code is amended to read: 129105. The office may upon application of the borrower insure any loan that is eligible for insurance under this chapter, and upon the terms prescribed by the office, may make commitments for the insuring of the loans prior to their date of execution or disbursement thereon. The decision to grant loan insurance upon an application of the borrower is within the discretion of the director of the office. Showing need for the project or meeting the eligibility requirements for loan insurance and establishing financial feasibility of the project or recommendation for approval from the committee does not create any entitlement to loan insurance. SEC. 19. Section 129152 is added to the Health and Safety Code, to read: 129152. If a borrower fails to submit a required report, or upon any other default of any regulatory or contractual term or covenant, whether or not a default has been declared, the office first shall informally communicate with the borrower. If the borrower fails to submit the required report or otherwise cure the default, the office shall issue a formal demand in writing stating the nature of the default and requiring the borrower to submit a detailed plan of correction that is acceptable to the office. If the borrower fails to either submit a plan, or timely cure the default, the office shall perform an onsite visit. If the office determines the borrower is not making sufficient progress in submitting any required reports or otherwise curing any default, the office may require the borrower, at the borrower's expense, to employ an independent consultant or professional, acceptable to the office, to conduct a program audit. If the borrower fails to adopt the recommendations of the independent consultant or professional made in the program audit, or if the borrower fails to otherwise timely cure the default, the office shall have all the remedies set forth in the Section 129173. SEC. 20. Section 129173 of the Health and Safety Code is amended to read: 129173. (a) In fulfilling the purposes of this article, as set forth in Section 129005, and upon making a determination that the financial status of a borrower may jeopardize a borrower's ability to fulfill its obligations under any insured loan transaction so as to threaten the economic interest of the office in the borrower or to jeopardize the borrower's ability to continue to provide needed health care services in its community, including, but not limited to, a declaration of default under any contract related to the transaction, the borrower missing any payment to its lender, or the borrower's accounts payable exceeding three months, the office may assume or direct managerial or financial control of the borrower in any or all of the following ways: (1) The office may supervise and prescribe the activities of the borrower in the manner and under the terms and conditions as the office may stipulate in any contract with the borrower. (2) Notwithstanding the provisions of the articles of incorporation or other documents of organization of a nonprofit corporation borrower, this control may be exercised through the removal and appointment by the office of members of the governing body of the borrower sufficient so that the new members constitute a voting majority of the governing body. (3) In the event the borrower is a nonprofit corporation or a political subdivision, the office may request the Secretary of the California Health and Human Services Agency to appoint a trustee. The trustee shall have full and complete authority of the borrower over the insured project, including all property on which the office holds a security interest. No trustee shall be appointed unless approved by the office. A trustee appointed by the secretary pursuant to this subdivision may exercise all the powers of the officers and directors of the borrower, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the office or a trustee by reason of their exercising the powers of the officers and directors of a borrower pursuant to the direction of, or with the approval of, the secretary. (4) The office may institute any action or proceeding, or the office may request the Attorney General to institute any action or proceeding against any borrower, to obtain injunctive or other equitable relief, including the appointment of a receiver for the borrower or the borrower's assets, in the superior court in and for the county in which the assets or a substantial portion of the assets are located. The proceeding under this section for injunctive relief shall conform with the requirements of Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of the Code of Civil Procedure, except that the office shall not be required to allege facts necessary to show lack of adequate remedy at law, or to show irreparable loss or damage. Injunctive relief may compel the borrower, its officers, agents, or employees to perform each and every provision contained in any regulatory agreement, contract of insurance, or any other loan closing document to which the borrower is a party, or any obligation imposed on the borrower by law, and require the carrying out of any and all covenants and agreements and the fulfillment of all duties imposed on the borrower by law or those documents. A receiver may be appointed pursuant to Chapter 5 (commencing with Section 564) of Title 7 of Part 2 of the Code of Civil Procedure. In cooperation with the Attorney General, the office shall develop and maintain a list of receivers who have demonstrated experience both in the health care field and as a receiver. Upon a proper showing, the court shall grant the relief provided by law and requested by the office or the Attorney General. No receiver shall be appointed unless approved by the office. The office shall establish reporting requirements for receivers to ensure that the office is fully apprised of all costs incurred and progress made by the receiver. A receiver appointed by the superior court pursuant to this subdivision and Section 564 of the Code of Civil Procedure may, with the approval of the court, exercise all of the powers of the officers and directors of the borrower, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the office, the Attorney General, or a receiver by reason of their exercising the powers of the officers and directors of a borrower pursuant to the order of, or with the approval of, the superior court. (5) The borrower shall inform the office in advance of all meetings of its governing body. The borrower shall not exclude the office from attending any meeting of the borrower's governing body. (b) Other than the loan insured under this chapter, the office shall not be liable for any debt of a borrower, or to a borrower, as a result of the office asserting its legal remedies against a borrower insured under this chapter. (c) It is the intent of the Legislature that this section is remedial in nature, and is applicable retroactively to any health facility construction loans in existence at the time of its enactment, to the extent that the application of this section does not unlawfully impair existing contract rights. SEC. 21. Section 129174 of the Health and Safety Code is amended to read: 129174. (a) In the event a borrower has defaulted in making its payments on the loan insured by the office to the borrower's bond trustee, at any time thereafter, the office may do both of the following: (1) Defease a portion or all of the bonds or may purchase a portion or all of the bonds at a private or public sale or on the open market. For this purpose, the office may use any funds available, including, but not limited to, funds in the Health Facility Construction Loan Insurance Fund, funds that the office may receive either from settlement or recoveries from lawsuits, funds from the sale of assets of the borrower, or funds held by the borrower's bond trustee. If requested by the office, the Treasurer shall purchase the bonds on behalf of the office. Upon the purchase of any bonds under this section, the office shall direct the borrower' s bond trustee to cancel the bonds purchased. (2) Issue bonds used for the sole purpose of refunding any part or all of the defaulted bonds, provided that, in the opinion of the office, there are adequate present value savings to refund all or part of the defaulted bonds. If requested by the office, the Treasurer shall act as the issuer for this purpose. (b) For the purposes of this section, "bonds" mean bonds, certificate of participation, notes, or other evidence of indebtedness of a loan insured by the office. SEC. 22. Section 129200 of the Health and Safety Code is amended to read: 129200. There is hereby established a Health Facility Construction Loan Insurance Fund, that shall be used by the office as a revolving fund for carrying out the provisions and administrative costs of this chapter. Notwithstanding Section 13340 of the Government Code, the money in the fund is hereby continuously appropriated to the office without regard to fiscal years for the purposes of this chapter. SEC. 23. Section 129210 of the Health and Safety Code is amended to read: 129210. (a) The office's authorization to insure health facility construction, improvement, and expansion loans under this chapter shall be limited to a total of not more than three billion dollars ($3,000,000,000). (b) Notwithstanding the limitation in subdivision (a), the office may exceed the specific dollar limitation in either of the following instances: (1) Refinancing a preexisting loan, if the refinancing results in savings to the health facility and increases the probability that a loan can be repaid. (2) The need for financing results from earthquakes or other natural disasters. SEC. 24. Article 5.5 (commencing with Section 129220) is added to Chapter 1 of Part 6 of Division 107 of the Health and Safety Code, to read: Article 5.5. Advisory Loan Insurance Committee 129220. The office shall establish an Advisory Loan Insurance Committee which shall be comprised of nine members, eight of whom shall be appointed by the director of the office. Of the nine members, seven shall be appointed from outside state government and two shall be appointed from inside state government. The Director of Finance shall appoint one of the members chosen from inside state government. The members of the committee shall be qualified in the field of financial analysis, management, operations, or construction, improvement, or expansion of health facilities. Those members appointed from outside state government shall be reimbursed one hundred dollars ($100) for each day spent in the performance of official duties. All members shall be reimbursed for reasonable and necessary expenses. 129221. The duties of the committee shall include, but not be limited to, the following: (a) The committee shall assist the director of the office in formulating policy concerning financial analysis, management, operation, or construction, improvement, or expansion of health facilities, and shall, at the request of the director of the office, provide overall policy advice, guidance, and recommendations. The committee shall also provide the office with advice and comment on the state plan prepared pursuant to Section 129020. (b) The committee shall also review and analyze the feasibility, level of financial risk, and community benefit assessments made by the office on applications submitted for approval. The committee shall recommend to the director whether an application should be approved and whether any conditions should be attached to that approval. Loans that are currently insured by the office and subsequently are refinanced to obtain a lower interest rate or emergency working capital loans insured pursuant to Section 129091 shall not require the review of the committee.