Chico Municipal Code Ch. 3.76 Health Facilities Financing

The council hereby finds and declares that it is necessary, essential, a public purpose and a municipal affair for the city to be authorized to provide financing to health institutions that 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 service 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 equivalent cost from private sources.

(Ord. 1584 §1 (part))

Unless the context otherwise requires, the terms defined in this chapter shall have the following meanings:

A. “Bonds” means any bonds, notes, certificates, debentures or other obligations issued by the city pursuant to this chapter.

B. “Cost” means the total of all costs incurred by or on behalf of a participating health institution necessary or incident to 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. “Cost” shall include working capital and all such costs which under generally accepted accounting principles are properly chargeable to a capital account (whether or not actually so charged), 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 to acquiring, constructing, rehabilitating, improving or financing a health facility, including all costs of 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” means any facility, place or building which is 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 these services, and which provides and will continue providing to residents of the city essential health care services designated as such in an agreement between the city and the participating health institution providing or operating such facility, place or building.

Health facility includes a portion of one of the above types of facilities and includes the following facilities if operated in conjunction with one of the above 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, an office building, a research, maintenance, storage, utility or parking facility and all real and personal property, land, buildings, structures, facilities, equipment, fixtures 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” means a private corporation or association authorized 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 obligations incurred to finance such acquisition, construction, rehabilitation or improvement.

E. “Revenues” means amounts received by the city as repayment of principal, interest, and all other charges with respect to a loan, lease, sublease or sale agreement under this chapter, any proceeds received by the city from mortgage, hazard or other insurance on or with respect to rents, charges, fees, income and receipts derived by the city from the financing of a health facility under this chapter, any amounts received by the city as investment earnings on moneys deposited in any fund or account securing bonds, and such other moneys as the council may, in its discretion, lawfully designate as revenues.

(Ord. 1584 §1 (part))

The city may make, purchase, or otherwise contract for the making of a mortgage or other loan, upon such terms and conditions as the city shall deem proper, to any participating health institution for the cost of a health facility.

(Ord. 1584 §1 (part))

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 outstanding obligations of such participating health institution incurred to finance the cost of a health facility, including expenses incident to paying or otherwise discharging the obligations to be refunded or refinanced, 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 or operating hardship of such participating health institution. or is 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.

(Ord. 1584 §1 (part))

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 contract with such participating health institution to undertake on behalf of the city 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 hereunder.

(Ord. 1584 §1 (part))

The city may charge participating health institutions application, commitment, financing and other fees as may be established by resolution of the city council.

(Ord. 1584 §1 (part))

Participating health institutions may apply for financing pursuant to this chapter by contacting the city manager or other officer or employee of the city designated by the city manager. Each applicant shall supply to the satisfaction of the city manager or such officer or employee all information required to evaluate the financial reliability and stability of the participating health institution and the feasibility of the proposed project, including an estimate of the maximum amount of financing to be required, a description or itemization of the costs of the proposed project, and a written agreement to pay all administrative expenses for the proposed project.

(Ord. 1584 §1 (part))

Upon receipt of an application containing all required information, agreements and undertakings, the city council shall at such time as is deemed convenient by it review such application and any staff recommendations with respect thereto. If the city council chooses to approve any application for financing under this chapter, it shall adopt a resolution accepting and approving such application and the participation of the city in the financing of such project, subject to the provisions of this chapter and the conclusion of all proceedings undertaken to consummate such financing to the satisfaction of the city.

(Ord. 1584 §1 (part))

The city may obtain, or aid in obtaining from any department or agency of the United States or of the state of California or of any private company, any insurance or guarantee as to, or of, or for the payment or repayment of, interest, principal, rents, fees or other charges or any part thereof on any loan, lease or sale agreement 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.

(Ord. 1584 §l (part))

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.

(Ord. 1584 §1 ( part) )

The city may hold deeds of trust, mortgages or security interests as security for loans and other obligations under this chapter and may pledge or assign the same as security for repayment of bonds. Such deeds of trust, mortgages or security interests 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 issuance of bonds.

(Ord. 1584 §1 (part))

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.

(Ord. 1584 §l (part))

In addition to all other powers specifically granted by this chapter, the city may do all things necessary or convenient to carry out the purposes of this chapter.

(Ord. 1584 §l (part))

A. The city may, from time to time, issue bonds for any of the purposes specified in Sections 3.76.030, 3.76.040, and 3.76.050. 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 payment of bonds. Such revenues, moneys or assets shall be the sole source of 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. if any or interest on this bond.

(Ord. 1584 §1 (part))

In determining the amount of bonds to be issued, the city may include all costs of the issuance of such bonds (including insurance premiums), reserve funds, and capitalized bond interest.

(Ord. 1584 §1 (part))

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 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.

(Ord. 1584 §1 (part))

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 a 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 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 bonds, the terms upon which additional bonds may be issued and secured, and the refunding of outstanding bonds;

D. The setting aside of reserves and sinking funds and such other funds as are necessary or appropriate and the regulation and disposition thereof;

E. The pledge or assignment of all or any part of the revenues and of any other moneys or assets legally available therefor (including loans, deeds of trust, mortgages, leases, subleases, sales agreements and other contracts and security interests) and the use and disposition thereof, subject to such agreements with the holders of bonds as may then be outstanding;

F. Limitation on the use of revenues for expenditures for operating administration or other expenses of the city;

G. 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 by 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, leases, subleases, sales agreements, and any other contracts or security interests 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.

(Ord. 1584 §1 (part))

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 parties 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.

(Ord. 1584 §1 (part))

Neither the members of the council, the officers or employees of the city, nor any person executing any bonds shall be liable personally on the bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

(Ord. 1584 §1 (part))

The city shall have the power out of any 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.

(Ord. 1584 §1 (part))

Any holder of bonds issued under the provisions of this chapter, 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 collecting of rates, fees, interest, and charges authorized and required by the provisions of such resolution or indenture to be fixed, charged, and collected.

(Ord. 1584 §1 (part))