California Health Facilities Financing Authority Act.

Plain English Breakdown

The bill text does not explicitly state the prohibition on loans for financially distressed institutions, only that such institutions are prohibited from being deemed financially eligible.

California Health Facilities Financing Authority Act

This act allows health facilities in California to get loans from a special fund for building, buying, or fixing up their buildings and changes the rules about working capital loans.

What This Bill Does

• Allows the California Health Facilities Financing Authority to give loans from a continuously appropriated fund to help health institutions build, buy, or fix up their facilities.
• Changes how 'working capital' is defined by removing limits on interest rates for working capital loans and no longer requiring repayment within two years.
• Requires the authority to set rules about who can get these loans based on financial information like creditworthiness and ability to pay back debts.

Who It Names or Affects

• Health facilities in California
• Private nonprofit corporations or associations involved with health care

Terms To Know

Working Capital

Money used by a health institution to cover day-to-day expenses and operations.

Financial Eligibility Standards

Rules set by the authority to decide which institutions can get loans based on their financial situation.

Limits and Unknowns

• The bill does not specify how much money will be available in the fund.
• It is unclear what specific changes this act will bring to health facilities' operations beyond loan availability and terms.

Official Summary Text

AB 627, Stefani.
California Health Facilities Financing Authority Act.
The California Health Facilities Financing Authority Act authorizes the California Health Facilities Financing Authority to, among other things, make loans from the continuously appropriated California Health Facilities Financing Authority Fund to participating health institutions for financing or refinancing the acquisition, construction, or remodeling of health facilities. Under existing law, participating health institutions are specified entities authorized by state law to provide or operate a health facility and undertake the financing or refinancing of the construction or acquisition of a project or of working capital, as defined. Existing law defines “working capital” as moneys to be used by, or on behalf of, a participating health institution for specified expenses in connection with the ownership or operation of a health facility, including interest not to exceed 2 years on
any loan for working capital made pursuant to these provisions. Existing law requires a participating health institution that is a private nonprofit corporation or association and that borrows money to finance working capital to repay and discharge the loan within 24 months of the loan date.
This bill would change the definition of “working capital” to remove the 2-year cap on interest on any loan for working capital. The bill would delete the provision requiring a participating health institution that is a private nonprofit corporation or association to repay and discharge a loan for working capital within 24 months.
Existing law requires the authority to establish financial eligibility standards by studying the creditworthiness and earning capacity of each project, together with the amount of pledged revenues, debt service coverage, and basic security.
The bill would also
require the authority to establish financial eligibility standards for working capital loans by studying the creditworthiness of a participating health institution, along with the amount of pledged venues, debt service coverage, and basic security. The bill would prohibit a participating health institution that is determined to be in financial distress from being deemed financially eligible.
By expanding the purpose for which the above-described continuously appropriated fund may be used, the bill would make an appropriation from that fund. The bill would make legislative findings relating to the purpose of the bill.

Current Bill Text

Download Bill PDF