Sec. 10a-186b. Nursing home debt service assistance program established. Definitions. Powers of State Treasurer and authority. - Connecticut Statutes

      Sec. 10a-186b. Nursing home debt service assistance program established. Definitions. Powers of State Treasurer and authority. (a) As used in this section, section 10a-186c and subsection (k) of section 10a-179, the following words and terms shall have the following meanings unless the context indicates another or different meaning or intent:

      (1) "Amount available for debt service" means, for any accounting period, the net revenues available for debt service for such period reduced by the qualified expenditures for such period;

      (2) "Authority" means the State of Connecticut Health and Educational Facilities Authority as defined in section 10a-178;

      (3) "Bonds" means revenue bonds of the authority issued to finance a project at a participating nursing home, as defined in section 10a-178 which are secured by a special capital reserve fund;

      (4) "Bond documents" means all documents related to an issue of bonds including, but not limited to, the trust indenture, the loan agreement, the bonds, the mortgage and any other documents included in the closing transcript;

      (5) "Deficiency" as used in connection with any bonds, means the total of the following: (A) For any completed accounting period, the difference between the amount available for debt service for such period and the payment required to be made to the subject special capital reserve fund during such period so that the subject special capital reserve fund is in compliance with the applicable bond documents; (B) the projected amount necessary, after taking into account the estimated amount available for debt service, to avoid a draw on the special capital reserve funds or such higher amount as provided in the bond documents for the period selected by the authority so that the state has no obligation to make payments to such special capital reserve fund; and (C) such additional amounts as the authority may deem advisable to prevent the state from being obligated to make any payment to the applicable special capital reserve fund;

      (6) "Deficiency loan" means a loan made by the authority to a qualified nursing home to fund all or a portion of the deficiency. The principal amount of the deficiency loan shall not exceed the deficiency for the qualified nursing home receiving the deficiency loan. All other terms and conditions of the deficiency loan including the rate of interest, if any, shall be set by the authority as it deems appropriate;

      (7) "Net revenues available for debt service" means, for any accounting period, the excess of operating and nonoperating revenues of the qualified nursing home, including the proceeds of business interruption insurance over the operating and nonoperating expenses of the qualified nursing home for such period. For the purposes of this subdivision such revenues and expenses shall exclude any depreciation, amortization and current interest expense, as determined in accordance with generally accepted accounting principles, using either accrual or cash basis accounting, subject, to such adjustment for extraordinary, nonrecurrent, capital and other expenditures as the authority deems appropriate to determine actual funds available for debt service;

      (8) "Qualified expenditures" means all expenditures of any kind and type of a qualified nursing home, including capital expenditures and repayment of debt, which are necessary or advisable for the continued operation of a qualified nursing home in compliance with all applicable laws;

      (9) "Qualified nursing home" means a nursing home financed by bonds issued by the authority and secured by a special capital reserve fund pursuant to applicable bond documents;

      (10) "Special capital reserve funds" means the funds authorized under section 10a-186a and as incorporated in the bond documents;

      (11) "Subject special capital reserve fund" means the special capital reserve fund to which a specific qualified nursing home is required to make payments under applicable bond documents.

      (b) There is established, within the office of the State Treasurer, a program to be known as the "nursing home debt service assistance program". The State Treasurer may, upon request of the Connecticut Health and Educational Facilities Authority advance funds to the authority from amounts appropriated from the General Fund for debt service or appropriated for said program, for a deficiency loan or payment of debt service on nursing home bonds issued by the authority and secured by a special capital reserve fund. The State Treasurer shall not advance funds unless there has been delivered to the State Treasurer in connection with such advance, a certificate of the executive director of the authority or any officer of the authority certifying: (1) That the board of directors of the authority has authorized the deficiency loan to be funded and made all findings required by public act 97-11 of the June 18 special session*; (2) the principal amount of the deficiency loan; (3) the requested amount of the advance from the nursing home debt service assistance program; and (4) the amount of all previous advances made in respect of such deficiency loan. Upon receipt of such certificate, to the extent funds are available, the State Treasurer is authorized to make the appropriate payment to the authority for the purpose of funding the deficiency loan.

      (c) The authority is authorized from time to time to extend deficiency loans to qualified nursing homes. Deficiency loans may be advanced in one or more installments and multiple deficiency loans may be extended to the same qualified nursing home. The terms and conditions of each deficiency loan shall be set forth in the authorizing resolution of the board of directors of the authority provided the board may delegate the power to set such terms and conditions to the executive director and any managing director of the authority. Prior to approving a deficiency loan, the board of directors of the authority shall reasonably determine, based upon the projections and other information presented to it that (1) there is a deficiency, and (2) any principal amount of the deficiency loan does not exceed the amount of the deficiency. All proceeds of a deficiency loan shall be made by the authority directly to the trustee of the bonds.

      (d) The authority shall have all powers, right and authority granted to it by this chapter or otherwise to administer and enforce any deficiency loan including the right to waive defaults and payments, extend maturities and release collateral. Subject to the approval of the State Treasurer, the authority is specifically empowered in its discretion, to forgive up to one-half of the principal amount of a deficiency loan if it finds that the financial condition of the qualified nursing home has substantially improved and the risk that the state will be required to make payments to restore the subject special capital reserve fund has been substantially reduced. All repayments made on deficiency loans shall be paid by the authority to the State Treasurer for deposit in the General Fund.

      (June 18 Sp. Sess. P.A. 97-11, S. 39-41, 65; P.A. 98-167, S. 2, 3, 6.)

      *Public act 97-11 of the June 18 special session is entitled "An Act Concerning Computerized Information Sharing, the Mashantucket Pequot and Mohegan Fund, Early Retirement, School Construction, State Buildings, Nursing Homes, Executive and Legislative Councils, Commissions and Task Forces, Appropriations for the Fiscal Years Ending June 30, 1997, 1998 and 1999, Spring and Well Water Collection, Project Concern, Notice Requirements for Psychiatric Admissions, the Tax on Net Direct Subscriber Charges of Health Care Centers, Elimination of Certain Wage Inequities, Sheriffs' Fees and Expenses of the Connecticut Siting Council". (See Reference Table captioned "Public Acts of June 18, 1997" in Volume 16 which lists the sections amended, created or repealed by the act.)

      History: June 18 Sp. Sess. P.A. 97-11 effective July 1, 1997; P.A. 98-167 amended Subsec. (a)(8) to delete requirement that a qualified nursing home must be outside of bankruptcy, amended Subsec. (a)(9) to provide that a qualified nursing home means a nursing home financed by bonds issued by the authority and secured by a special capital reserve fund, rather than a nursing home required to make payments to a special capital reserve fund, and amended Subsec. (b) to change name of program from "nursing home loan program" to "nursing home debt service assistance program" to expand funds available for advancement by the State Treasurer to include amounts appropriated from the General Fund for debt service, to expand use of funds to include payment of debt service on nursing home bonds issued by the authority and secured by a special capital reserve fund and to authorize State Treasurer to advance funds upon delivery of a certificate of the executive director or any officer of the authority, rather than a certificate of the executive director and any officer of the authority, effective June 4, 1998 (Revisor's note: In Subsec. (a) the Revisors changed the punctuation by inserting a colon before the first definition and semicolons following definitions (1) to (10), inclusive).