BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2731|
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CONSENT
Bill No: AB 2731
Author: Arambula (D)
Amended: 4/8/10 in Assembly
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 3-0, 6/9/10
AYES: Kehoe, DeSaulnier, Price
NO VOTE RECORDED: Cox, Aanestad
ASSEMBLY FLOOR : 76-0, 5/13/10 (Consent) - See last page
for vote
SUBJECT : Health care districts: federal loans or grants
SOURCE : Author
DIGEST : This bill revises current law to allow a health
care district to secure federal mortgage insurance, federal
loans, grants, or federally insured loans issued by the
United States Department of Agriculture pursuant to the
federal Consolidated Farm and Rural Development Act through
specified financing mechanisms.
ANALYSIS : California's 80 local health care districts
are governed by directly elected boards of directors. As
hospitals, they face market pressures to compete with other
health care providers. As local governments, they must
follow the Brown Act, the Public Records Act, the Political
Reform Act, the public contracting laws, and other
statutory restrictions.
CONTINUED
AB 2731
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Health care districts can borrow money, issue debt, and use
their assets as collateral for federal mortgage insurance
loans, federal loans, or federally insured loans issued
under the National Housing Act for construction,
reconstruction, or the initial equipping of facilities.
Districts cannot use their tax revenues to pay for the
principal, interest, insurance premiums, inspection fees,
and other financing costs.
The United States Department of Agriculture (USDA) offers
financial help for rural health care facilities and
essential equipment through the Community Facilities
program authorized by the federal Consolidated Farm and
Rural Development Act, commonly known as the Con Act. The
USDA's Community Facilities program offers financing as
loans, both direct and guaranteed, and grants to eligible
participants in rural areas.
To secure federal loans or grants or guaranteed loans
issued under the federal Consolidated Farm and Rural
Development Act for financing or refinancing the
construction of new health facilities, the expansion,
modernization, renovation, remodeling, or alteration of
existing health facilities, and the initial equipping of
those health facilities, this bill authorizes a health care
district's board of directors to either:
Borrow money or issue bonds, in addition to other
financing methods, or
Execute, in favor of the United States, appropriate
federal agency, or federally designated mortgagor, first
mortgages, first deeds of trust, or other necessary
security interests as the federal government may
reasonably require with respect to a health facility
project property as security for that insurance.
Comment
Health care districts provide vital health services to
residents in many rural communities. Faced with a rapidly
changing and competitive marketplace, state budget cuts,
and the recent recession, health care districts confront
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severe fiscal challenges. As a result, districts need a
variety of financing tools to remain solvent. By
authorizing health care districts to use federal financing
available through the USDA's Community Facilities program,
this bill helps rural health care districts maintain
financial sustainability, thereby ensuring that residents
in rural communities retain access to much-needed medical
care.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/10/10)
Association of California Healthcare Districts
California Hospital Association
California State Rural Health Association
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Tom Berryhill, Blakeslee, Block,
Blumenfield, Bradford, Brownley, Buchanan, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De
La Torre, De Leon, DeVore, Emmerson, Eng, Evans, Feuer,
Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,
Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey,
Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries,
Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma,
Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Silva, Smyth, Solorio, Audra Strickland,
Swanson, Torlakson, Torres, Torrico, Tran, Villines,
Yamada, John A. Perez
NO VOTE RECORDED: Caballero, Norby, Skinner, Vacancy
AGB:mw 6/10/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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