Delaware General Assembly





BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-quarters of all members elected to each House thereof concurring therein):

Section 1. Amend Chapter 90, Part VIII, Title 16 of the Delaware Code, as amended, by repealing said Chapter in its entirety and substituting in lieu thereof the following new Chapter:


§9001. Purpose.

There is hereby created a special fund of the State designated the 'Health Facilities Subsidy Fund.' The Fund is created to provide a source of financial assistance to health facilities corporations in connection with loans obtained with the assistance of the Delaware Health Facilities Authority for eligible projects.

§9002. Definitions.

As used in this Chapter, the following terms shall have the following meanings:

'board' shall mean the State Board of Health and any successor to the board exercising the powers granted the board by this Act.

'eligible project' shall mean any health facility which has been approved by the board pursuant to this Chapter.

'health facility' shall mean a facility, located in the State, owned and operated by a health facilities corporation, providing general medical, surgical, and emergency treatment to the public.

'health facilities corporation' shall mean a nonprofit corporation organized and existing under the laws of the State for the purpose of owning and operating one or more health facilities.

'subsidy contract' shall mean a contract by the State, approved by the issuing officers, providing a subsidy to a health facilities corporation.

'issuing officers' shall mean the Governor, the Secretary of State, and the State Treasurer as defined In Section 7401 of Title 29 of the Delaware Code.

§9003. Applications for Assistance.

A written application by a health facilities corporation for a subsidy contract shall be submitted to the board. The board or, in the discretion of the board, the Health Facilities Planning Council, Inc. shall review the application and make a recommendation to the issuing officers to approve or disapprove a subsidy contract. No subsidy contract shall be approved by the issuing officers without the favorable recommendation of the board.

§9004. Findings of the Board.

The board shall consider each application for a subsidy contract. The board shall either recommend or disapprove each such application and advise the issuing officers of its decision. No favorable recommendation shall be made by the board unless the board shall find and determine that:

(1) The applicant is a health facilities corporation;

There exists a need for the health facility for which the subsidy contract is sought, taking into account the existing and planned health facilities in the State; and

The health facilities corporation has a managerial, administrative, and medical staff that has conformed, or, in the case of a health facilities corporation that has not commenced operation of a health facility, is reasonably expected to conform to standards of professional integrity and ability that may reasonably be required by the State.

The board may obtain assistance from other State agencies, from the federal government, and from private sources in making the foregoing determinations. The board may also employ experts to assist it.

§9005. Authorization of Subsidy Contracts.

The issuing officers, upon receipt of a written favorable recommendation from the board, shall determine the amount, terms, form, and content of the subsidy contract. in making their determination, the issuing officers shall not approve a subsidy contract unless the reasonably expected cost of the eligible project, as determined by the board, does not exceed the sum of five million dollars, provided, however, that if the cost of such eligible project does exceed this amount, the issuing officers shall approve a subsidy contract for the first five million dollars of cost of the eligible project.

The subsidy contract shall provide for payments on an annual basis in an amount not to exceed the difference between the yield on the loan obtained through the Delaware Health Facilities Authority and twenty-five basis points above the yield on the immediately preceding issue of State general obligation bonds. The issuing officers may, however, take into account in determining the yield, the amount of loan closing costs, if any, incurred by the health facilities corporation that could have been avoided if the loan were being made by the State. The determinations of yield by the issuing officers shall be conclusive.

§9006. Pledge of Support.

A subsidy contract shall be entered into by the issuing officers on behalf of the State. The subsidy contract shall contain a pledge by the State to make payments, in the amount provided by the subsidy contract, from the Health Facilities Subsidy Fund, to the health facilities corporation from money on deposit in such Fund. No subsidy contract shall be entered into by the issuing officers unless they reasonably determine that the amounts from interest earned or profit realized in the Fund will be available to meet annual payments under the subsidy contract as they become due and payable. The Issuing officers shall maintain records of all payments made and all payments owing under subsidy contracts. The issuing officers shall have the power to grant releases or satisfactions of mortgages granted to secure loans made from the Health Facility Construction Fund provided that the Governor shall execute such release or satisfaction.

§9007. Repayment of Outstanding Loans.

Repayment of all outstanding loans made from the 'Health Facility Construction Fund' (established pursuant to the provisions of Volume 59, Chapter 455 of the Laws of Delaware), or predecessor funds, shall continue to be made to the board. The board shall inform the issuing officers of all payments received and shall provide the issuing officers with other information required to carry out the purposes of this Chapter. Repayments of interest on such loans shall be immediately transferred to the General Fund of the State. Principal repayments of such loans shall be immediately transferred to the Bond Reversion Account of the State.

§9008. Management of Health Facilities Subsidy Fund.

The Health Facilities Subsidy Fund shall be managed by the State Treasurer in conformance with policies promulgated by the Cash Management Policy Board (established pursuant to Section 2716 of Title 29 of the Delaware Code), Interest earned or profit realized from investment of money on deposit in the Health Facilities Subsidy Fund shall be retained in such Fund."

Section 2. Subsection (a) of Section 9718 of Title 16 of the Delaware Code is hereby deleted in its entirety and the following is substituted in lieu thereof:

"(a) The Authority Is hereby authorized to provide for the issuance of bonds or notes of the Authority for the purpose of refunding any outstanding bonds, notes, or other obligations of the Authority, or of a participating facility, including the payment of any redemption premium thereon and any interest accrued or to accrue to the earliest or any subsequent date of redemption, purchase, prepayment, or maturity of such bonds, notes, or other obligations and, if deemed advisable by the Authority, for the additional purpose of paying all or any part of the cost of constructing and acquiring additions, improvements, extensions, or enlargements of a project or any portion thereof."

Section 3. Subsection (5) of Section 9703 of Title 16 of the Delaware Code is hereby deleted in its entirety and the following is substituted in lieu thereof:

"(5) 'Facility', any health care facility located in the State which provides general medical, surgical, and emergency treatment to the public."

Section 4. In connection with the issuance by the Delaware Health Facilities Authority of its revenue bonds under Chapter 97 of Title 16 of the Delaware Code to assist in (i) financing a capital project for Kent General Hospital, Inc. and (ii] prepaying all outstanding loans to Kent General Hospital (Incorporated) (the "Hospital") from the State of Delaware pursuant to Chapter 90 of Title 16 of the Delaware Code (the "State Loans"), the State is hereby authorized to accept as a prepayment in full of the State Loans an amount equal to:

The present value of the future principal payments due from the Hospital to the State, using a discount rate of approximately 11.25 percent, plus

The amount of accrued interest payable to the State on the prepayment date, representing the accumulated excess of the interest expensed to operations by the Hospital over the interest actually paid to the State as such amount shall be determined by the issuing officers (as defined in Section 7401 of Title 29 of the Delaware Code). Upon direction from the issuing officers acting pursuant to the authority granted herein, the State Board of Health and the Governor shall accept such prepayment as full satisfaction of the Hospital's obligations under the State Loans and shall give a full release in connection therewith.

Notwithstanding the provisions of any other law to the contrary, the principal repayments and accrued interest identified in Subsections (1) and (2) above, together with all funds currently on deposit in the Hospital Construction Account (35-05-002-42-00) of the Capital Improvements Funds of the State, shall be transferred, as available, to the State Treasurer's Bond Reversion Account (12-05-003-40-00), for future appropriation by the General Assembly.

Section 5. There is hereby appropriated from the State Treasurer's Bond Reversion Account (12-05-003-40-00), as available, to a new special fund of the State the sum of Two Million Dollars ($2,000,000.00). The fund shall be entitled the "Health Facilities Subsidy Fund" and shall be maintained by the State Treasurer for the purposes described in, and pursuant to the provisions of new Chapter 90, Title 16 of the Delaware Code as amended. The State Treasurer shall make the necessary transfers to capitalize this new fund at the time the State receives prepayment of the loans and accrued interest as provided for in Section 4 of this Act.

Section 6. if any section, part, phrase, or provision of this Act or the application thereof be held invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the section, part, phrase, provision, or application directly involved in the controversy in which such judgment shall have been rendered and shall not affect or impair the validity of the remainder of this Act or the application thereof.

Section 7. This Act shall take effect pursuant to the provisions of State law.

Approved August 13, 1984.