§ 2873 — Regulation of eligible borrowers

§ 2873. Regulation of eligible borrowers. 1. Every eligible borrower,\nas a condition precedent to borrowing funds from the agency, shall enter\ninto a regulatory agreement with the commissioner which shall provide:\n (a) that the real property or other assets mortgaged or otherwise\npledged to the agency shall not be sold, leased, transferred, encumbered\nor assigned without the prior consent of the commissioner until the\neligible borrower shall have repaid in full all obligations due to the\nagency and has paid such other obligations as may be required by the\ncommissioner provided, however, the provisions of this paragraph shall\nnot apply to any actions taken pursuant to section twenty-eight hundred\nseventy-nine of this article;\n (b) that the eligible borrower will maintain books and records and a\nsystem of accounts satisfactory to the commissioner and the agency\nincluding but not limited to separate books, records and accounts for\n(i) all monies advanced to the eligible borrower by the agency or from\nany other source or sources, public or private, for the construction,\nreconstruction, rehabilitation, improvement or equipment of the project\nand (ii) all monies repaid in satisfaction of any indebtedness to the\nagency or other indebtedness as required by the commissioner; and the\neligible borrower agrees that all of its books, records and accounts\nshall be open to examination by the commissioner and the agency at any\ntime;\n (c) that the eligible borrower shall file with the commissioner and\nthe agency such financial statements including an annual report setting\nforth such information as the commissioner may require;\n (d) that the eligible borrower shall not acquire any real property or\ninterest therein for the purpose of constructing, reconstructing,\nrehabilitating or improving a hospital project without first having\nobtained from the commissioner a certificate that such acquisition is\nconsistent with the purposes of this article;\n (e) that the eligible borrower shall not issue notes, bonds,\ndebentures or other obligations other than for money or property\nactually received for the use and lawful purposes of the eligible\nborrower and no such note, bond, debenture or other obligation shall\nconstitute a lien or encumbrance against the project, or any real\nproperty or other asset mortgaged or otherwise pledged to the agency,\nprovided, however, that a hospital constituting an eligible borrower may\nincur, assume or guarantee indebtedness from a lender other than the New\nYork state medical care facilities finance agency or incur or assume\nindebtedness from the New York state medical care facilities finance\nagency under a separate bond resolution pursuant to the provisions of\nsection five-c of the New York state medical care facilities finance\nagency act;\n (f) that the eligible borrower shall not without first having obtained\nthe written consent of the commissioner:\n (i) construct, reconstruct, rehabilitate, improve, alter or repair the\nproject or enter into a contract therefor;\n (ii) enter into contracts relating to the management or operation of\nthe project;\n (iii) make a guaranty of payment out of monies pledged to the agency\nor pledge any or all of its assets, income or revenue pledged to the\nagency to secure payment of its obligations;\n (iv) voluntarily dissolve;\n (g) that no member, officer or employee of the corporation which is an\neligible borrower shall acquire any interest, direct or indirect, in any\nproperty then or thereafter included or planned to be included in a\nproject, nor retain any interest direct or indirect in any property\nacquired subsequent to his appointment or employment which is later\nincluded or planned to be included in a project. If any member, officer\nor employee of a corporation which is an eligible borrower owns or\ncontrols an interest, direct or indirect, in any property included in a\nproject which was acquired prior to his appointment or employment, he\nshall disclose such interest and the date of acquisition to the\ncorporation and such disclosure shall be entered upon the minutes of\nsuch corporation and a copy of such minutes shall be forwarded to the\ncommissioner;\n (h) that all income and earnings of the eligible borrower shall be\nused exclusively for its corporate purposes;\n (i) that no part of the net income or earnings of the corporation\nshall inure to the benefit or profit of any private individual, firm or\ncorporation;\n (j) such other matters as the commissioner or the agency may require.\n 2. This regulatory agreement shall terminate at any time after the\nexpiration of twenty years after the occupancy date, or such earlier\ndate as the bonds issued by the agency with respect to the hospital\nproject are subject to redemption, upon the consent of the commissioner\nand upon the repayment in full of all obligations due to the agency and\nof such other obligations as the commissioner may require.\n