* § 7-c. Secured hospital projects reserve funds and appropriations.
1. Special hospital project bonds, as defined in paragraph (d-1) of
subdivision three of section three of this act, issued to refinance the
projects of eligible secured hospital borrowers, as defined in
subdivision six-c of section three of this act, shall be secured by (a)
a mortgage lien, (b) funds and accounts established under the bond
resolution, (c) the secured hospital special debt service reserve fund
or funds, (d) the secured hospital capital reserve fund or funds, and
(e) such service contract or contracts entered into in accordance with
the provisions of subdivision four of this section.

2. (a) The agency shall establish a secured hospital special debt
service reserve fund or funds and pay into such fund or funds moneys
from the secured hospital fund up to an amount not to exceed an amount
necessary to ensure the repayment of principal and interest due on any
outstanding indebtedness on special hospital projects bonds, as defined
in paragraph (d-1) of subdivision three of section three of this act.

Funds deposited in such secured hospital special debt service reserve
fund or funds shall be used in the event that an eligible secured
hospital borrower, as defined in subdivision six-c of section three of
this act, fails to make payments in an amount sufficient to pay the
required debt service payments on special hospital project bonds, as
defined in paragraph (d-1) of subdivision three of section three of this
act.

(b) The agency shall, for the purposes of paragraph (a) of this
subdivision and for the support of eligible secured hospital borrowers,
pay into the secured hospital fund currently established and maintained
by the agency: (i) all funds required to be paid in accordance with the
provisions of article twenty-eight of the public health law and
regulations promulgated in such article; (ii) any mortgage insurance
premium assessed in an amount fixed at the discretion of the agency,
upon the issuance of special hospital project bonds, as defined in
paragraph (d-1) of subdivision three of section three of this act; (iii)
any income or interest earned on other reserve funds which the agency
elects to transfer to the secured hospital fund; and (iv) any other
moneys which may be made available to the agency from any other source
or sources. Moneys paid into the secured hospital fund shall, in the
discretion of the agency, but subject to agreements with bondholders, be
used to fund the special debt service reserve fund or funds at a level
or levels which minimize the need for use of the capital reserve fund or
funds in the event of the failure of an eligible secured hospital
borrower, as defined in subdivision six-c of section three of this act,
to make the required debt service payments on special hospital project
bonds, as defined in paragraph (d-1) of subdivision three of section
three of this act.

(c) Notwithstanding the provisions of paragraphs (a) and (b) of this
subdivision, the state hereby expressly reserves the right to modify or
repeal the provisions of article twenty-eight of the public health law.

3. The agency shall establish a secured hospital capital reserve fund
or funds which shall be funded at an amount or amounts equal to the
lesser of either: (a) the maximum amount of principal, sinking fund
payments and interest due in any succeeding year on outstanding special
hospital project bonds, as defined in paragraph (d-1) of subdivision
three of section three of this act, or (b) the maximum amount to ensure
that such bonds will not be considered arbitrage bonds under the
Internal Revenue Code of 1986, as amended. The capital reserve fund
shall be funded by the sale of special hospital project bonds, as
defined in paragraph (d-1) of subdivision three of section three of this
act, or from such other funds as may be legally available for such
purpose, as provided for in the bond resolution or resolutions
authorizing the issuance of such bonds.

4. (a) Notwithstanding the provisions of any general or special law to
the contrary, and subject to the making of annual appropriations
therefor by the legislature in order to refinance mortgage loans to
eligible secured hospital borrowers, as defined in subdivision six-c of
section three of this act, the director of the budget is authorized in
any state fiscal year to enter into one or more service contracts, which
service contracts shall not exceed the term of the special hospital
project bonds, issued for the benefit of the eligible secured hospital
borrower, upon such terms as the director of the budget and the agency
agree, so as to provide annually to the agency in the aggregate such
sum, if any, as necessary to meet the debt service payments due on
outstanding special hospital project bonds, as defined in paragraph
(d-1) of subdivision three of section three of this act, in any year if
the funds provided for in this section are inadequate.

(b) Any service contract entered into pursuant to paragraph (a) of
this subdivision shall provide (i) that the obligation of the director
of the budget or of the state to fund or to pay the amounts therein
provided for shall not constitute a debt of the state within the meaning
of any constitutional or statutory provision and shall be deemed
executory only to the extent of moneys available and that no liability
shall be incurred by the state beyond the moneys available for such
purpose, and that such obligation is subject to annual appropriation by
the legislature; and (ii) that the amounts paid to the agency pursuant
to any such contract may be used by it solely to pay or to assist in
financing costs of mortgage loans to eligible secured hospital
borrowers, as defined in subdivision six-c of section three of this act.

5. The agency shall not issue special hospital project bonds, as
defined in paragraph (d-1) of subdivision three of section three of this
act, except to refinance mortgage loans for eligible secured hospital
borrowers as provided in section three of this act.

* NB Repealed December 31, 2015