§ 4604-A — Commissioner approval required for industrial development agency financing in connection with continuing care retirement communities

§ 4604-a. Commissioner approval required for industrial development\nagency financing in connection with continuing care retirement\ncommunities. 1. No person seeking financing in connection with a\ncontinuing care retirement community through an industrial development\nagency shall undertake such financing without the prior approval of the\ncommissioner. Upon approving a proposed financing pursuant to this\nsection, the commissioner shall issue a certificate of authorization to\nthe applicant.\n 2. Prior to approving such financing, the commissioner shall find\nthat:\n a. The operator has (i) executed contracts for at least seventy\npercent of all living units and has on deposit at least ten percent of\nthe entrance fees or purchase price for such units; or (ii) executed\ncontracts for at least sixty percent of all living units and has on\ndeposit at least twenty-five percent of the entrance fees or purchase\nprice for such units.\n b. The operator has demonstrated capability to comply fully with the\nrequirements for a certificate of authority and has obtained a\ncontingent certificate of authority pursuant to section forty-six\nhundred four of this article and the operator has agreed to meet the\nrequirements of article eighteen-A of the general municipal law.\n c. The applicant is a not-for-profit corporation as defined in section\none hundred two of the not-for-profit corporation law that is (i)\neligible for tax-exempt financing under this section and (ii) is exempt\nfrom taxation pursuant to section 501(c)(3) of the federal internal\nrevenue code, and either has (i) an equity position in the community\nequivalent to no less than fifteen percent of the amount to be financed\nin the aggregate; or (ii) covenants (A) to meet a ratio of cash and\ninvestments to outstanding debt (reserve ratio) of no less than\ntwenty-five percent commencing at the end of the first quarter after\ntwenty-four months from the receipt of a certificate of occupancy for\nthe facility, and (B) to maintain that reserve ratio, as tested\nquarterly based upon the facility's interim financial statements and\nannually based upon audited financial statements, until debt reduction\nequal to twenty-five percent of total indebtedness is accomplished; and\n(c) to reduce total debt by twenty-five percent of the total\nindebtedness at the time the certificate of occupancy is received by no\nlater than five years after the receipt of the certificate of occupancy.\n d. The operator has submitted in connection with the proposed\nfinancing a financial feasibility study, including a financial forecast\nand market study prepared by an independent firm nationally recognized\nfor continuing care retirement community feasibility studies,\ndemonstrating to the satisfaction of the commissioner the financial\nsoundness of the financing. In addition, the operator has submitted an\nanalysis of economic costs and benefits, including job creation and\nretention, the estimated value of tax exemptions provided, the project's\nimpact on local businesses and the availability and comparative cost of\nalternative financing sources. Such analysis shall be prepared by an\nindependent entity.\n e. The operator will establish and maintain a fully funded debt\nservice reserve equal to the sum of maximum annual debt service\n(interest plus annual scheduled principal payments, not including\nballoon maturities, if any) on bonds authorized thereby having a\nmaturity of ten years or less, plus the maximum annual debt service on\nbonds authorized thereby having a maturity of greater than ten years,\nprovided, however, that in the case of tax-exempt bond issues, such debt\nservice reserve shall not exceed the maximum amount permitted by federal\ntax law.\n f. The operator will provide for such remedies or limitations of\nremedies of bondholders as may be required by or consistent with the\nprovisions of this article and any regulations in existence at the time\nof the issuance promulgated thereunder.\n g. Unless all residents or continuing care at home contract holders\nhave life care contracts, the operator has adequately made the\nassurances required by subdivision two of section forty-six hundred\ntwenty-four of this article and has agreed to fund the liability in the\nevent that such resident's or contract holder's assets are insufficient\nto pay for nursing facility services for a one year period.\n 3. In addition, an operator which is subject to the provisions of this\nsection shall:\n a. provide the commissioner with notice of any monetary default or\ncovenant default in connection with such financing and shall further\nnotify the commissioner of any withdrawal from the debt service reserve\nfund established in connection with such financing;\n b. respond in writing to the operational recommendations of the\ncommissioner with respect to protecting the interests of continuing care\nretirement community residents in the event of any monetary default or\ncovenant default provided for in connection with such financing;\n c. provide adequate security for the repayment of the bonds issued,\nincluding the granting of liens on real and personal property and the\npledge of project revenues; the maintenance of minimum debt service\ncoverage and other financial ratios as shall be required in regulations\nin existence at the time of issuance by the commissioner; and\nrestrictions on other debt and expenditures; and\n d. undertake to maintain the financial feasibility of the facility,\nincluding the retention of an independent consultant to recommend and\nhelp implement remedial action.\n 4. The commissioner may request, and shall receive, the technical\nassistance of any state agency or state public authority in performing\nits functions under this article.\n