SECTIONS 129000-129045 - California Statutes

HEALTH AND SAFETY CODE

SECTION 129000-129045

129000. This chapter may be cited as the "California Health
Facility Construction Loan Insurance Law."

129005. The purpose of this chapter is to provide, 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 rationally meet the need for new, expanded
and modernized public and nonprofit health facilities necessary to
protect the health of all the people of this state. The provisions of
this chapter are to be liberally construed to achieve this purpose.

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.

129015. The office shall administer this chapter and shall make all
regulations necessary to implement the provisions and achieve the
purposes stated herein. The commission, as authorized by this chapter
and by Section 129460, shall advise and consult with the office in
carrying out the administration of this chapter.

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.

129022. Applications submitted to the office shall be signed under
penalty of perjury by the applicant.

129030. The proceeds of all loans insured pursuant to this chapter
shall be disbursed only upon order of the office or its designated
agent. The office shall make regulations to insure the security of
these proceeds.

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.

129040. (a) 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.
(b) The office may annually charge a portion of the premium in
advance commencing at the time of issuing or extending the commitment
until the date the loan is insured or the commitment expires. The
amount of the advance premium shall not exceed six dollars ($6) per
year for each one thousand dollars ($1,000) of principal of the
proposed loan. The total dollar amount of the premium advanced shall
be nonrefundable and shall be credited against the amount of the
premium charged pursuant to this section, or if the commitment
expires and the loan is not insured, the advance shall be retained by
the office to offset costs and expenses of the office related to
preliminary work, underwriting the loan commitment, and monitoring
construction.

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.