Chapter 8
HEALTH FACILITY FINANCING
Sections:
Article 1. General Provisions and Definitions
Article 2. Financing Health Facilities
3-8.201 Loans for health facilities.
3-8.202 Refinancing loans for health facilities.
3-8.203 Acquisition, construction, leasing, and selling of health facilities.
3-8.208 Professional services.
Article 3. Bonds
3-8.301 Issuance of bonds: Bonds not debts of the City.
3-8.303 Resolutions: Bond form.
3-8.305 Pledges of revenues, money, or property: Liens.
3-8.306 No personal liability.
3-8.308 Actions by bondholders.
Article 4. Supplemental Provisions
3-8.402 Omissions not to affect validity of bonds.
3-8.405 Chapter provisions controlling.
Article 1. General Provisions and Definitions
3-8.101 Title.
This chapter may be cited as the “City of Watsonville Health Facility Financing Law”.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.102 Purpose.
The Council hereby finds and declares that is necessary, essential, a public purpose, and a municipal affair for the City to be authorized to provide financing to health institutions serving the City, which institutions provide essential services to residents of the City, in order to aid such health institutions in containing costs and thereby to enable such health institutions to establish lower rates and charges than would otherwise prevail and to provide better services at such rates and charges. Unless the City intervenes to provide such financing, such rates and charges may increase at an ever accelerated pace because such health institutions cannot obtain financing at an equivalent cost from private sources.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.103 Definitions.
For the purposes of this chapter, unless otherwise apparent from the context, certain words and phrases used in this chapter are defined as follows:
(a) “Bond” shall mean any bond, note, certificate, debenture, or other obligation issued by the City pursuant to this chapter and payable exclusively from revenues as in this chapter defined and from any other funds specified in this chapter upon which such obligations may be made a charge and from which they are payable.
(b) “Cost” shall mean the total of all costs incurred by or on behalf of a participating health institution as is approved by the City as reasonable and necessary for carrying out all works and undertakings necessary or incident to the acquisition, construction, rehabilitation, or improvement of a health facility or the refunding or refinancing of obligations incurred to finance such acquisition, construction, rehabilitation, or improvement. “Costs” shall include all such costs which, under generally accepted accounting principles, are not properly chargeable as an expense of operation and maintenance, including, without limitation, the cost of all lands, structures, real or personal property, franchises, rights, and interests acquired or used in connection with a health facility, the cost of demolishing or removing any structures (including the cost of acquiring any lands to which such structures may be moved), the cost of engineering, architectural, financial, and legal services, plans, specifications, studies, surveys, estimates, administration expenses, or other expenses necessary or incident to determining the feasibility of or for acquiring, constructing, rehabilitating, improving, or financing a health facility, including all costs of the issuance of bonds for such purposes, reserves for debt service and for repairs, replacements, additions, and improvements, and capitalized bond interest for such period as the City may determine.
(c) “Health facility” shall mean any facility, place, or building serving the City, licensed by the State, and maintained and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence, rehabilitation, and care during and after pregnancy or for any one or more of such services, and which provides and will continue providing to residents of the City essential health care services designated as such in any agreement between the City and the participating health institution providing or operating such facility, place, or building.
“Health facility” shall include a portion of one of the types of facilities set forth in this subsection and shall include the following facilities if operated in conjunction with one of said types of facilities: a laboratory, a laundry, a nurses’ or interns’ residence, a housing facility for patients, staff, or employees and the families of any of them, an administration building, a research, maintenance, storage, utility, or parking facility, and all structures, facilities, equipment, and furnishings related to any of the foregoing or required or useful for the operation of a health facility.
“Health facility” shall not include any facility, place, or building used or to be used primarily for sectarian instruction or study or as a place for devotional activities or religious worship.
(d) “Participating health institution” shall mean a private nonprofit corporation or association licensed by the laws of the State to provide or operate a health facility as defined in this chapter and which, pursuant to the provisions of this chapter, undertakes the financing of the acquisition, construction, rehabilitation, or improvement of a health facility or undertakes the refunding or refinancing of obligation incurred to finance such acquisition, construction, rehabilitation, or improvement.
(e) “Revenue” shall mean amounts received by the City as repayment of the principal, interest, and all other charges with respect to a loan under this chapter, any proceeds received by the City from mortgage, hazard, or other insurance on or with respect to such a loan (or any property securing such loan), all other rents, charges, fees, income, and receipts derived by the City from the financing of a health facility under this chapter (whether by loan, lease, installment sale, or any other method authorized by this chapter), any amount received by the City as investment earnings on moneys deposited in any fund or account securing bonds, and such other moneys as the Council, in its discretion, may lawfully designate as revenue.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
Article 2. Financing Health Facilities
3-8.201 Loans for health facilities.
The City may make, purchase, or otherwise contract for the making of a mortgage or other secured or unsecured loan, upon such terms and conditions as the City shall deem proper, to any participating health institution for the cost of acquiring, constructing, rehabilitating, or improving a health facility; provided, however, no such loan shall exceed the total cost of such health facility as determined by the participating health institution and approved by the City.
(§ l, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.202 Refinancing loans for health facilities.
The City may make, purchase, or otherwise contract for the making of a mortgage or other secured or unsecured loan, upon such terms and conditions as the City shall deem proper, to any participating health institution to refund or refinance the outstanding obligations of such participating health institution incurred to finance the cost of acquiring or constructing a health facility, whether such obligations were incurred prior to or after the enactment of this chapter, if the City finds that such refunding or refinancing is in the public interest and either alleviates a financial on operating hardship of such participating health institution, or is necessary and appropriate in connection with other financing by the City for such participating health institution, or may be expected to result in lower costs of health care than would otherwise prevail and a saving to third parties, including government, and to others who must pay for care, or any combination thereof.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.203 Acquisition, construction, leasing, and selling of health facilities.
The City may acquire, construct, enlarge, remodel, renovate, alter, improve, furnish, equip, own, and lease as lessee a health facility for the purpose of selling or leasing such health facility to a participating health institution and may designate such participating health institution as its agent to undertake to construct, enlarge, remodel, renovate, alter, improve, furnish, and equip such health facility.
The City may sell or lease, upon such terms and conditions as the City shall deem proper, to a participating health institution any health facility owned by the City under this chapter, including a health facility conveyed to the City in connection with a financing under this chapter but not being financed or refinanced under this chapter.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.204 Fees.
The City may charge participating health institutions application, commitment, financing, and other fees in order to recover all administrative and other costs and expenses incurred in the exercise of the powers and duties conferred by this chapter.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.205 Insurance.
The City may obtain, or aid in obtaining, from any department or agency of the United States or of the State or of any private company, any insurance or guarantee as to, or of, or for the payment or repayment of interest or principal, or both, or any part thereof, on any loan, lease, or sale obligation, or any instrument evidencing or securing the same, made or entered into pursuant to the provisions of this chapter, and may accept payment in such manner and form as provided therein in the event of default by a participating health institution, and may assign any such insurance or guarantee as security for bonds.
(§ 1, Ord. 5 10-80 C-M, eff. September 25, 1980)
3-8.206 Rents and charges.
The City may fix rents, payments, fees, charges, and interest rates for financing under this chapter and may agree to revise from time to time such rents, payments, fees, charges, and interest rates to reflect changes in interest rates on bonds, losses due to defaults, or changes in other expenses related to this chapter, including City administrative expenses.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.207 Security for loans.
The City may hold deeds of trust or mortgages as security for loans under this chapter and may pledge or assign the same as security for the repayment of bonds. Such deeds of trust or mortgages may be assigned to, and held on behalf of the City by, any bank or trust company appointed to act as trustee by the City in any resolution or indenture providing for the issuance of bonds.
(§ l, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.208 Professional services.
The City may employ such engineering, architectural, financial, accounting, legal, or other services as may be necessary in the judgment of the City for the purposes of this chapter.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.209 Additional powers.
In addition to all other powers specifically granted in this chapter, the City may do all things necessary or convenient to carry out the purposes of this chapter.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
Article 3. Bonds
3-8.301 Issuance of bonds: Bonds not debts of the City.
(a) The City, from time to time, may issue bonds for any of the purposes specified in Sections 3-8.201 through 3-8.203 of Article 2 of this chapter. Such bonds shall be negotiable instruments for all purposes, subject only to the provisions of such bonds for registration.
(b) Every issue of bonds shall be a limited obligation of the City, payable from all or any specified part of the revenues and the moneys and assets authorized in this chapter to be pledged or assigned to secure the payment of bonds. Such revenues, moneys, or assets shall be the sole source of the repayment of such issue of bonds. Bonds issued under the provisions of this chapter shall not be deemed to constitute a debt or liability of the City or a pledge of the faith and credit of the City but shall be payable solely from specified revenues, moneys, and assets. The issuance of bonds shall not directly, indirectly, or contingently obligate the City to levy or pledge any form of taxation or to make any appropriation for their payment.
All bonds shall contain on the face thereof a statement to the following effect:
Neither the faith and credit nor the taxing power of the City is pledged to the payment of the principal of, or premium or interest on, this bond.
(§ l, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.302 Costs of issuance.
In determining the amount of bonds to be issued, the City may include all costs for the issuance of such bonds, reserve funds, and capitalized bond interest.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.303 Resolutions: Bond form.
Bonds may be issued as serial bonds, term bonds, installment bonds, or pass-through certificates, or any combination thereof. Bonds shall be authorized by resolution of the Council and shall bear such date or dates, mature at such time or times, bear interest at such fixed or variable rate or rates, be payable at such time or times, be in such denominations, be in such form, either coupon or registered, carry out registration privileges, be executed in such manner, be payable in lawful money of the United States of America at such place or places, be subject to such terms of redemption, and have such other terms and conditions as such resolution or any indenture authorized by such resolution to be entered into by the City may provide. Bonds may be sold at either a public or private sale and for such prices as the City shall determine.
Pending the preparation of definitive bonds, the City may issue temporary bonds which shall be exchanged for such definitive bonds when prepared.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.304 Bond provisions.
Any resolution authorizing any bonds or any issue of bonds, or any indenture authorized by such resolution to be entered into by the City, may contain provisions respecting any of the following terms and conditions which shall be part of the contract with the holders of such bonds:
(a) The terms, conditions, and form of such bonds and the interest and principal to be paid thereon;
(b) Limitations on the uses and purposes to which the proceeds of the sale of such bonds may be applied and the pledge or assignment of such proceeds to secure the payment of such bonds;
(c) Limitations on the issuance of additional parity bonds, the terms upon which additional parity bonds may be issued and secured, and the refunding of outstanding bonds;
(d) The setting aside of reserves and sinking funds and the regulation and disposition thereof;
(e) The pledge or assignment of all on any part of the revenues and the use and disposition thereof, subject to such agreements with the holders of bonds as may then be outstanding;
(f) Limitations on the use of revenues for expenditures for operating, administration, on other expenses of the City;
(g) The specification of the acts or omissions to act which shall constitute a default in the duties of the City to holders of such bonds and providing the rights and remedies of such holders in the event of default, including any limitations on the right of action of individual bondholders;
(h) The appointment of a corporate trustee to act on behalf of the City and the holders of its bonds, the pledge or assignment of loans, deeds of trust, mortgages, and any other contracts to such trustee, and the rights of such trustee;
(i) The procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of such bonds the holders of which must consent thereto, and the manner in which such consent may be given; and
(j) Any other provisions which the Council may deem reasonable and proper for the purposes of this chapter and the security of the bondholders.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.305 Pledges of revenues, money, or property: Liens.
Any pledge of revenues or other moneys or assets pursuant to the provisions of this chapter shall be valid and binding from the time such pledge is made. Revenues, moneys, and assets so pledged and thereafter received by the City shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the City, irrespective of whether such panties have notice thereof. Neither the resolution nor any indenture by which a pledge is created need be filed or recorded, except in the records of the City.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.306 No personal liability.
Neither the members of the Council, the officers or employees of the City, nor any person executing any bond shall be liable personally on the bonds or be subject to any personal liability or accountability by reason of the issuance thereof.
(§ l, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.307 Purchases of bonds.
The City shall have the power out of the funds available therefor to purchase its bonds. The City may hold, pledge, cancel, or resell such bonds, subject to and in accordance with agreements with the bondholders.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.308 Actions by bondholders.
Any holder of bonds issued under the provisions of this chapter or any of the coupons appertaining thereto, and any trustee appointed pursuant to any resolution authorizing the issuance of bonds, except to the extent the rights thereof may be restricted by such resolution or any indenture authorized thereby to be entered into by the City, may, either at law or in equity, by suit, action, mandamus, or other proceedings, protect or enforce any and all rights specified in law or in such resolution or indenture, and may enforce and compel the performance of all duties required by this chapter or by such resolution or indenture to be performed by the City or by any officer, employee, or agent thereof, including the fixing, charging, and collection of rates, fees, interest, and charges authorized and required by the provisions of such resolution or indenture to be fixed, charged, and collected.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.309 Refunding bonds.
(a) The City may issue bonds for the purpose of refunding any bonds then outstanding, including the payment of any redemption premiums thereof and any interest accrued or to accrue to the earliest or any subsequent date or dates of the redemption, purchase, or maturity of such bonds.
(b) The proceeds of bonds issued for the purpose of refunding any outstanding bonds, in the discretion of the City, may be applied to the purchase or retirement at maturity or redemption of such outstanding bonds, either at their earliest or any subsequent redemption date or dates or upon the purchase or retirement at the maturity thereof, and, pending such application, may be placed in escrow to be applied to such purchase or retirement at maturity or redemption on such date or dates as may be determined by the City.
(c) Pending use for the purchase, retirement at maturity, or the redemption of outstanding bonds, any proceeds held in escrow pursuant to subsection (b) of this section may be invested and reinvested as provided in the resolution or indenture. Any interest or other increment earned or realized on any such investment may be applied to the payment of the outstanding bonds to be refunded or to the payment of interest on the refunding bonds. After the terms of the escrow have been fully satisfied and carried out, any balance of such proceeds and any interest or increment earned or realized from the investment thereof may be returned to the City to be used by it for any lawful purpose.
(d) All bonds issued pursuant to this section shall be subject to the provisions of this chapter in the same manner and to the same extent as other bonds issued pursuant to this chapter.
(§ l, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.310 Validity of bonds.
The validity of the authorization and issuance of any bonds shall not be dependent on and shall not be affected in any way by any proceedings taken by the City for the making of any loan or the entering into of any agreement, or by the failure to make any loan or enter into any agreement, for which bonds are authorized to be issued under this chapter.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
Article 4. Supplemental Provisions
3-8.401 Liberal construction.
This chapter, being necessary for the welfare of the City and its inhabitants, shall be liberally construed to effect its purposes.
(§ l, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.402 Omissions not to affect validity of bonds.
If the jurisdiction of the Council to order the proposed act is not affected, any omission of any officer or the City in proceedings under this chapter or any other defect in the proceedings shall not invalidate such proceedings or the bonds issued pursuant to this chapter.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.403 Full authority.
This chapter shall be full authority for the issuance of bonds by the City for the purposes specified in this chapter.
(§ l, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.404 Additional authority.
This chapter shall be deemed to provide a complete, additional, and alternative method for doing the things authorized thereby and shall be regarded as supplemental and additional to the powers conferred by other laws. The issuance of bonds under the provisions of this chapter need not comply with the requirements of any other law applicable to the issuance of bonds. The purposes authorized by this chapter may be effectuated and bonds may be issued for any such purposes under this chapter notwithstanding that any other law may provide for such purposes or for the issuance of bonds for like purposes and without regard to the requirements, restrictions, limitations, or other provisions contained in any other law.
(§ 1, Ord. 510-80 C-M, eff. September 25, 1980)
3-8.405 Chapter provisions controlling.
To the extent that the provisions of this chapter are inconsistent with the provisions of any general statute or special act, or parts thereof, the provisions of this chapter shall be deemed controlling.
(§ l, Ord. 510-80 C-M, eff. September 25, 1980)