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.