BILL ANALYSIS �
SB 804
Page 1
SENATE THIRD READING
SB 804 (Corbett)
As Amended June 6, 2012
Majority vote
SENATE VOTE :22-13
HEALTH 14-4 LOCAL GOVERNMENT 6-3
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|Ayes:|Monning, Ammiano, Atkins, |Ayes:|Alejo, Bradford, Campos, |
| |Bonilla, Eng, Gordon, | |Davis, Gordon, Hueso |
| |Hayashi, | | |
| |Roger Hern�ndez, Bonnie | | |
| |Lowenthal, Mitchell, | | |
| |Nestande, Pan, | | |
| |V. Manuel P�rez, Williams | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Mansoor, Silva, |Nays:|Smyth, Knight, Norby |
| |Smyth | | |
| | | | |
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SUMMARY : Requires health care districts to include, in an
agreement transferring more than 50% of the health care
district's assets, the appraised fair market value of any asset
transferred to a nonprofit corporation, as defined. Further
requires the appraisal of the fair market value to be performed
within the six months preceding the date on which the district
approves the transfer agreement. Specifically, this bill :
1)Requires health care districts to include, in an agreement
transferring more than 50% of the health care district's
assets, the appraised fair market value of any asset
transferred to a nonprofit corporation.
2)Requires the fair market value to be appraised by an
independent consultant with expertise in methods of appraisal
and valuation and in accordance with applicable governmental
and industry standards for appraisal and valuation of any
asset transfer.
3)Requires that the appraisal be performed within the six months
preceding the date on which the district approves the transfer
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agreement.
4)Requires the public to be provided with the following
information when the public is asked to approve the transfer
by vote:
a) Assets proposed to be transferred;
b) The appraised fair market value; and,
c) The full consideration that the district is to receive
in exchange for the transfer.
EXISTING LAW :
1)Establishes the Local Health Care District Law which
authorizes communities to form special districts to construct
and operate hospitals and other health care facilities to meet
local needs.
2)Authorizes a health care district to transfer, for the benefit
of the communities served by the district, any part of its
assets of the district to one or more nonprofit corporations
to operate and maintain the assets. Prior to the district
transfer, requires the district board to submit a measure to
the voters of the district proposing the transfer.
3)Authorizes a district to transfer, at less than fair market
value, any part of the assets of the district to one or more
nonprofit corporations to operate and maintain the assets, if
the transfer benefits the communities served by the district.
Requires that for a transfer of 50% or more of a district's
assets to be deemed to benefit a district's communities, a
district must:
a) Fully discuss the transfer agreement in at least five
properly noticed public meetings before the district
board's decision to transfer the assets;
b) Provide in the transfer agreement that the district must
approve all initial board members of the nonprofit
corporation and any subsequent board members as may be
specified in the transfer agreement;
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c) Provide in the transfer agreement that specified assets
are to be transferred back to the district upon termination
of the transfer agreement;
d) Commit the nonprofit corporation, in the transfer
agreement, to operate and maintain the district's health
care facilities and its assets for the benefit of the
communities served by the district; and,
e) Require, in the transfer agreement, that any funds a
corporation receives from the district be used only for
specified activities that would further a valid public
purpose if undertaken directly by the district.
4)Requires the district to report to the California Attorney
General (AG), within 30 days of any lease of district assets
to one or more corporations, the type of transaction and the
entity to whom the assets were leased.
FISCAL EFFECT : None
COMMENTS : According to the author, this bill is intended to
provide the public with more information about the value of
district assets that are proposed to be sold or transferred to
one or more corporations for less than fair market value. The
author argues that unfortunately, in too many cases, these
transfer agreements end with assets being transferred out of the
district to the benefit of the contracting private corporation
and to the detriment of the local community. The author
maintains that of the 85 districts that have formed since 1945,
almost a third have closed, leased, or sold their hospitals.
Some, according to the author, have declared bankruptcy and many
have changed or expanded their historic role as providers of
acute care. This bill, the author asserts, addresses the
growing concern that some districts are entering into contracts
that reduce the district's assets and financial security.
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097
FN: 0004310
SB 804
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