NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10673
SPONSOR: Paulin TITLE OF BILL:
An act to amend the New York state medical care facilities finance agen-
cy act, in relation to the ability to issue certain bonds and notes
1.
PURPOSE OF THE BILL:
This bill would increase the authorization of the Dormitory Authority of
the State of New York ("DASNY"), as successor to the New York State
Medical Care Facilities Finance Agency ("MCFFA") pursuant to the Health
Care Financing Consolidation Act of 1995, to issue hospital and nursing
home project bonds and notes from $15.8 billion to $16.6 billion.
2.
SUMMARY OF PROVISIONS:
Section one of this bill would amend the MCFFA Act to increase DASNY's
authorization to issue hospital and nursing home project bonds and notes
from $15.8 billion to $16.6 billion.
Section two of the bill would make it effective immediately.
3.
JUSTIFICATION:
DASNY issues bonds for purposes including funding mortgage loans or
project loans to not-for-profit hospital and nursing home corporations.
Some of the bonds issued for DASNY's hospital and nursing home clients
are issued under the MCFFA Act. Bonds issued pursuant to the MCFFA Act
are subject to the current hospital and nursing home project bond
authorization cap in the MCFFA Act of $15.8 billion. This authorization
was most recently increased by $800,000,000 in 2011. It was also
increased by $800,000,000 in 2009.
As of December 21, 2017, DASNY has sold and closed bond transactions
pursuant to this authorization in the amount of $14,833,767,602. Thus,
$966,232,398 of capacity under the existing statutory limitation is
available for other transactions. The federal tax reform legislature
caused increased activity in the bond market and as a result there are
currently several hospital financings in DASNY's "pipeline" totaling
approximately $840 million. This bill is necessary to ensure that DASNY
has sufficient capacity to support additional healthcare projects as
they seek financing.
Although DASNY cannot predict the timing of the proposed financings,
DASNY is seeking additional bond authorization at this time to ensure
that it will be able to meet the needs of additional private not-for-
profit health-care clients on a timely basis.
4.
PRIOR LEGISLATIVE HISTORY:
The MCFFA bond cap was increased from $15 billion to $15.8 billion in
2011 (Chapter 516 of the laws of 2011). In 2009, the MCFFA bond cap was
increased from $14.2 billion to $15 billion (Chapter 238 of the laws of
2009).
5.
FISCAL IMPLICATIONS:
The bill has no implications for the state budget.
6.
EFFECTIVE DATE:
The bill shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
10673
IN ASSEMBLY
May 10, 2018
___________
Introduced by M. of A. PAULIN -- (at request of the Dormitory Authority)
-- read once and referred to the Committee on Corporations, Authori-
ties and Commissions
AN ACT to amend the New York state medical care facilities finance agen-
cy act, in relation to the ability to issue certain bonds and notes
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph (b) of subdivision 1 of section 7 of section 1 of
2 chapter 392 of the laws of 1973, constituting the New York state medical
3 facilities finance agency act, as amended by chapter 516 of the laws of
4 2011, is amended to read as follows:
5 (b) The agency shall not issue hospital and nursing home project bonds
6 and hospital and nursing home project notes in an aggregate principal
7 amount exceeding [fifteen] sixteen billion [eight] six hundred million
8 dollars, excluding hospital and nursing home project bonds and hospital
9 and nursing home project notes issued to refund outstanding hospital and
10 nursing home projects bonds and hospital and nursing home project notes;
11 provided, however, that upon any such refunding or repayment the total
12 aggregate principal amount of outstanding bonds, notes or other obli-
13 gations may be greater than [fifteen] sixteen billion [eight] six
14 hundred million dollars only if the present value of the aggregate debt
15 service of the refunding or repayment bonds, notes or other obligations
16 to be issued shall not exceed the present value of the aggregate debt
17 service of the bonds, notes or other obligations so to be refunded or
18 repaid. For purposes hereof, the present values of the aggregate debt
19 service of the refunding or repayment bonds, notes or other obligations
20 and of the aggregate debt service of the bonds, notes or other obli-
21 gations so refunded or repaid, shall be calculated by utilizing the
22 effective interest rate of the refunding or repayment bonds, notes or
23 other obligations, which shall be that rate arrived at by doubling the
24 semi-annual interest rate (compounded semi-annually) necessary to
25 discount the debt service payments on the refunding or repayment bonds,
26 notes or other obligations from the payment dates thereof to the date of
27 issue of the refunding or repayment bonds, notes or other obligations
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14331-01-8
A. 10673 2
1 and to the price bid including estimated accrued interest or proceeds
2 received by the agency including estimated accrued interest from the
3 sale thereof. The agency shall not issue hospital and nursing home
4 project bonds at any time secured by the hospital and nursing home capi-
5 tal reserve fund if upon issuance, the amount in the hospital and nurs-
6 ing home capital reserve fund will be less than the hospital and nursing
7 home capital reserve fund requirement, unless the agency, at the time of
8 issuance of such bonds, shall deposit in such reserve fund from the
9 proceeds of the bonds so to be issued, or otherwise, an amount which
10 together with the amount then in such reserve fund, will be not less
11 than the hospital and nursing home capital reserve fund requirement.
12 § 2. This act shall take effect immediately.
