Substitute House Bill No. 5640
Substitute House Bill No. 5640
PUBLIC ACT NO. 98-167
AN ACT CONCERNING NURSING HOMES FINANCED WITH A
SPECIAL CAPITAL RESERVE FUND GUARANTEE.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. Section 7 of public act 97-11 of
the June 18 special session is repealed and the
following is substituted in lieu thereof:
The sum of $4,000,000 is appropriated to the
STATE Treasurer, from the General Fund, for the
fiscal year ending June 30, 1997, for advances
pursuant to section 40 of [this act] PUBLIC ACT
97-11 OF THE JUNE 18 SPECIAL SESSION AND SECTION 4
OF THIS ACT, for payment of principal and interest
on nursing home bonds issued by the Connecticut
Health and Educational Facilities Authority and
secured by a special capital reserve fund. Such
funds shall not lapse on June 30, 1997, and shall
continue to be available for expenditure for such
purpose during the fiscal years ending June 30,
1998, and June 30, 1999.
Sec. 2. Section 39 of public act 97-11 of the
June 18 special session is repealed and the
following is substituted in lieu thereof:
As used in sections 39 to 42, inclusive, of
[this act] PUBLIC ACT 97-11 OF THE JUNE 18 SPECIAL
SESSION AND SECTION 4 OF THIS ACT, 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 of the
general statutes.
(3) "Bonds" means revenue bonds of the
authority issued to finance a project at a
participating nursing home, as defined in section
10a-178 of the general statutes 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 [outside of bankruptcy and]
in compliance with all applicable laws.
(9) "Qualified nursing home" means a nursing
home [required to make payments to] 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 of the
general statutes 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.
Sec. 3. Section 40 of public act 97-11 of the
June 18 special session is repealed and the
following is substituted in lieu thereof:
There is established, within the office of
the State Treasurer, a program to be known as the
["Nursing Home Loan Program"] "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
[such] SAID program, [to the authority from said
program to the extent funds are available to fund
deficiency loans] 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 [and] 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 this act; (2) the principal amount of
the deficiency loan; (3) the requested amount of
the advance from the Nursing Home [Loan] 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.
Sec. 4. (NEW) In the event that a qualified
nursing home, as defined in section 39 of public
act 97-11 of the June 18 special session, as
amended by section 2 of this act, is disposed of
as the result of a receivership, bankruptcy or
insolvency, or upon determination by the State
Treasurer that the state's liability for debt
service has been reduced through sale of a
qualified nursing home, or in order to otherwise
avoid a draw on the special capital reserve fund
for any bonds issued by the authority for such
qualified nursing home, the State Treasurer may
advance funds to the authority from amounts
appropriated for the Nursing Home Debt Service
Assistance Program, or from other General Fund
debt service appropriations, for any principal and
interest payments on bonds not retired from the
proceeds of the sale of the home or which remain
outstanding for any other reason. 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 determined that a
draw on the special capital reserve fund would
occur in the absence of the advance; (2) the
requested amount of the advance required; and (3)
the amount of all previous advances made relative
to the bond issue.
Sec. 5. Section 10a-186a of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) In connection with the issuance of bonds
to finance a project at a participating nursing
home OR TO REFUND BONDS PREVIOUSLY ISSUED BY THE
AUTHORITY TO FINANCE A PROJECT AT A PARTICIPATING
NURSING HOME, or to finance dormitories,
residential facilities, student centers, food
service facilities and other auxiliary service
facilities and related buildings and improvements
at a public institution of higher education, the
authority may create and establish one or more
reserve funds to be known as special capital
reserve funds and may pay into such special
capital reserve funds (1) any moneys appropriated
and made available by the state for the purposes
of such funds, (2) any proceeds of sale of notes
or bonds for a project, to the extent provided in
the resolution of the authority authorizing the
issuance thereof, and (3) any other moneys which
may be made available to the authority for the
purpose of such funds from any other source or
sources. The moneys held in or credited to any
special capital reserve fund established under
this section, except as hereinafter provided,
shall be used solely for the payment of the
principal of and interest, when due, whether at
maturity or by mandatory sinking fund instalments,
on bonds of the authority secured by such capital
reserve fund as the same become due, the purchase
of such bonds of the authority, the payment of any
redemption premium required to be paid when such
bonds are redeemed prior to maturity; provided the
authority shall have power to provide that moneys
in any such fund shall not be withdrawn therefrom
at any time in such amount as would reduce the
amount of such funds to less than the maximum
amount of principal and interest becoming due by
reasons of maturity or a required sinking fund
instalment in the then current or any succeeding
calendar year on the bonds of the authority then
outstanding or the maximum amount permitted to be
deposited in such fund by the Internal Revenue
Code of 1986, or any subsequent corresponding
internal revenue code of the United States, as
from time to time amended, to permit the interest
on said bonds to be excluded from gross income for
federal tax purposes and secured by such special
capital reserve fund, such amount being herein
referred to as the "required minimum capital
reserve", except for the purpose of paying such
principal of, redemption premium and interest on
such bonds of the authority secured by such
special capital reserve becoming due and for the
payment of which other moneys of the authority are
not available. The authority may provide that it
shall not issue bonds secured by a special capital
reserve fund at any time if the required minimum
capital reserve on the bonds outstanding and the
bonds then to be issued and secured by the same
special capital reserve fund at the time of
issuance, unless the authority, at the time of the
issuance of such bonds, shall deposit in such
special capital reserve fund from the proceeds of
the bonds so to be issued, or otherwise, an amount
which, together with the amount then in such
special capital reserve fund, will be not less
than the required minimum capital reserve. On or
before December first, annually, there is deemed
to be appropriated from the state General Fund
such sums, if any, as shall be certified by the
chairman or vice-chairman of the authority to the
Secretary of the Office of Policy and Management
and the Treasurer of the state, as necessary to
restore each such special capital reserve fund to
the amount equal to the required minimum capital
reserve of such fund, and such amounts shall be
allotted and paid to the authority. For the
purpose of evaluation of any such special capital
reserve fund, obligations acquired as an
investment for any such fund shall be valued at
market. Nothing contained in this section shall
preclude the authority from establishing and
creating other debt service reserve funds in
connection with the issuance of bonds or notes of
the authority which are not special capital
reserve funds. Subject to any agreement or
agreements with holders of outstanding notes and
bonds of the authority, any amount or amounts
allotted and paid to the authority pursuant to
this section shall be repaid to the state from
moneys of the authority at such time as such
moneys are not required for any other of its
corporate purposes and in any event shall be
repaid to the state on the date one year after all
bonds and notes of the authority theretofore
issued on the date or dates such amount or amounts
are allotted and paid to the authority or
thereafter issued, together with interest on such
bonds and notes, with interest on any unpaid
instalments of interest and all costs and expenses
in connection with any action or proceeding by or
on behalf of the holders thereof, are fully met
and discharged. No bonds secured by a special
capital reserve fund shall be issued to pay
project costs unless the authority is of the
opinion and determines that the revenues from the
project shall be sufficient (A) to pay the
principal of and interest on the bonds issued to
finance the project, (B) to establish, increase
and maintain any reserves deemed by the authority
to be advisable to secure the payment of the
principal of and interest on such bonds, (C) to
pay the cost of maintaining the project in good
repair and keeping it properly insured and (D) to
pay such other costs of the project as may be
required.
(b) NOTWITHSTANDING THE PROVISIONS OF
SUBSECTION (a) OF THIS SECTION, AFTER THE
EFFECTIVE DATE OF THIS ACT NO BONDS SECURED BY
SUCH A SPECIAL CAPITAL RESERVE FUND SHALL BE
ISSUED BY THE AUTHORITY TO FINANCE A PROJECT AT A
QUALIFIED NURSING HOME, OR TO REFUND BONDS ISSUED
TO FINANCE A PROJECT AT A QUALIFIED NURSING HOME,
EXCEPT FOR REFUNDING BONDS THAT MEET THE FOLLOWING
REQUIREMENTS: (1) THE REFUNDING BONDS MUST REFUND
BONDS WHICH ARE ALREADY SECURED BY A SPECIAL
CAPITAL RESERVE FUND PURSUANT TO THIS SECTION; (2)
THE STATE MUST BE RELEASED FROM ANY OBLIGATION TO
RESTORE THE SPECIAL CAPITAL RESERVE FUND FOR THE
REFUNDED BONDS; AND (3) THE AUTHORITY AND THE
STATE TREASURER MUST APPROVE THE REFUNDING BONDS
AND MUST DETERMINE THAT THE AGGREGATE DEBT SERVICE
ON THE REFUNDING BONDS WILL BE LESS THAN THE
AGGREGATE DEBT SERVICE ON THE REFUNDED BONDS AND
THAT THE ECONOMIC BENEFIT DERIVED FROM THE
REFUNDING WILL INURE TO THE STATE. IN THE EVENT OF
A REFUNDING UNDERTAKEN IN THE CONTEXT OF A
RECEIVERSHIP, BANKRUPTCY OR INSOLVENCY, ANY
APPROVAL AND DETERMINATION BY THE AUTHORITY AND
THE STATE TREASURER UNDER SUBDIVISION (3) OF THIS
SUBSECTION SHALL BE IN LIEU OF (A) THE OTHERWISE
REQUIRED OPINION OF SUFFICIENCY BY THE AUTHORITY
SET FORTH IN SUBSECTION (a) OF THIS SECTION, AND
(B) THE APPROVAL OF THE STATE TREASURER AND THE
DOCUMENTATION OF THE AUTHORITY OTHERWISE REQUIRED
UNDER SUBSECTION (a) OF SECTION 1-124. ANY OTHER
REFUNDING OF OUTSTANDING BONDS SHALL REQUIRE SUCH
OPINION, APPROVAL AND DOCUMENTATION.
Sec. 6. This act shall take effect from its
passage.
Approved June 4, 1998