I

106TH CONGRESS

2D SESSION H. R. 5255

To amend the National Housing Act to authorize the Secretary of Housing

and Urban Development to make grants to hospitals with mortgages

insured under such Act for conversion and re-utilization of excess capacity.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 21, 2000

Mr. LAFALCE introduced the following bill; which was referred to the

Committee on Banking and Financial Services

A BILL

To amend the National Housing Act to authorize the Secretary of Housing and Urban Development to make

grants to hospitals with mortgages insured under such

Act for conversion and re-utilization of excess capacity.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘FHA-Insured Hospital

5 Conversion and Re-Utilization Act’’.
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1 SEC. 2. GRANTS FOR FHA-INSURED HOSPITALS.

2 Section 242 of the National Housing Act (12 U.S.C.

3 1715z–7) is amended by adding at the end the following

4 new subsections:

5 ‘‘(i) GRANTS FOR HOSPITAL CONVERSION AND RE6 UTILIZATION.—

7 ‘‘(1) IN GENERAL.—To the extent amounts are

8 made available for grants under this subsection, the

9 Secretary may make grants in accordance with this

10 subsection to owners of eligible hospitals under para11 graph (3) for use only for carrying out activities de12 signed to convert hospitals (or portions thereof) to

13 facilities described in paragraph (4).

14 ‘‘(2) FORM AND USE OF GRANTS.—Grants

15 under this subsection may be made only in the fol16 lowing forms for the following uses:

17 ‘‘(A) CAPITAL GRANTS.—In the form of a

18 capital grant for use only for the capital costs

19 of conversion activities.

20 ‘‘(B) INTEREST SUBSIDIES.—In the form

21 of periodic payments of interest subsidies in

22 connection with any loan made to finance such

23 conversion activities.

24 ‘‘(3) ELIGIBLE HOSPITALS.—An eligible hos25 pital under this paragraph is a hospital that—
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1 ‘‘(A) is subject to a mortgage that is in2 sured under this section;

3 ‘‘(B)(i) is located in an area that the Sec4 retary determines has excess hospital capacity;

5 or

6 ‘‘(ii) would, in the determination of the

7 Secretary, improve its financial soundness as a

8 result of the proposed conversion and re-utiliza9 tion activities; and

10 ‘‘(C) has submitted an application to the

11 Secretary for a grant under this subsection,

12 which has been approved by the Secretary.

13 ‘‘(4) ELIGIBLE HEALTH CARE FACILITIES.—

14 The Secretary shall determine, for purposes of this

15 subsection, the types of facilities providing health

16 care and supportive housing for elderly persons and

17 families to which hospitals (or portions thereof) may

18 be converted using grant amounts under this sub19 section. Such facilities shall include assisted living

20 facilities, nursing homes, supportive housing for the

21 elderly, and any other facilities that the Secretary

22 considers appropriate.

23 ‘‘(5) APPLICATIONS.—The Secretary shall pro24 vide for owners of eligible hospitals under paragraph

25 (3) to submit to the Secretary applications for
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1 grants under this subsection in such form and in ac2 cordance with such procedures as the Secretary shall

3 provide. An application shall contain—

4 ‘‘(A) a description of the proposed conver5 sion activities for which a grant under this sub6 section is requested and the type of facility to

7 be established by such activities;

8 ‘‘(B) a statement of the amount of the

9 grant requested for such conversion activities;

10 ‘‘(C) a description of the resources that are

11 expected to be made available, if any, in con12 junction with the grant under this subsection;

13 and

14 ‘‘(D) such other information or certifi15 cations that the Secretary determines to be nec16 essary or appropriate.

17 ‘‘(6) SELECTION CRITERIA.—The Secretary

18 shall select applications for grants under this sub19 section based upon selection criteria, which shall be

20 established by the Secretary and shall include—

21 ‘‘(A) the extent to which the conversion is

22 likely to meet health care and supportive hous23 ing needs in the local community in which the

24 hospital (or portion thereof) to be converted is

25 located;
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1 ‘‘(B) the inability of the applicant to fund

2 the conversion activities from existing financial

3 resources, as evidenced by the applicant’s finan4 cial records;

5 ‘‘(C) the extent to which the applicant has

6 evidenced community support for the conver7 sion, by such indicators as letters of support

8 from the local community for the conversion

9 and financial contributions from public and pri10 vate sources;

11 ‘‘(D) the capability of the applicant of pro12 viding for the sound operation of the proposed

13 facility; and

14 ‘‘(E) such other criteria as the Secretary

15 determines to be appropriate to ensure that

16 amounts made available for grants under this

17 subsection are used effectively.

18 ‘‘(7) TREATMENT OF MORTGAGE INSURANCE.—

19 Notwithstanding any provision of this section or of

20 any contract for mortgage insurance provided pursu21 ant to this section, an eligible hospital (or a portion

22 thereof) under paragraph (3) that is subject to a

23 mortgage insured pursuant to this section may be

24 converted using grant amounts under this sub25 section. The Secretary shall provide for the uninter-
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1 rupted continuation of the mortgage insurance cov2 erage for the hospital that is subject to the conver3 sion activities for the duration of the original term

4 of the mortgage insurance contract.

5 ‘‘(8) DEFINITIONS.—For the purposes of this

6 subsection:

7 ‘‘(A) ASSISTED LIVING FACILITY; NURSING

8 HOME.—The terms ‘assisted living facility’ and

9 ‘nursing home’ have the meanings given such

10 terms in section 232(b) (12 U.S.C. 1715w(b)).

11 ‘‘(B) OTHERS.—The definitions in section

12 202(k) of the Housing Act of 1959 (12 U.S.C.

13 1701q(k)) shall apply.

14 ‘‘(9) FUNDING.—Amounts shall be available for

15 grants under this subsection as provided in sections

16 519(g) and 205(i).

17 ‘‘(j) GRANTS FOR HOSPITAL DEBT SERVICE ASSIST18 ANCE.—

19 ‘‘(1) IN GENERAL.—To the extent amounts are

20 made available for grants under this subsection, the

21 Secretary may make grants in accordance with this

22 subsection to owners of eligible hospitals under para23 graph (2) for use only to assist in paying debt serv24 ice on debt insured under this section. Grants under
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1 this section shall be made only in the form of peri2 odic payments of interest subsidies.

3 ‘‘(2) ELIGIBLE HOSPITALS.—An eligible hos4 pital under this paragraph is a hospital that—

5 ‘‘(A) is subject to a mortgage that is in6 sured under this section;

7 ‘‘(B) in the determination of the Secretary,

8 is in a distressed financial condition; and

9 ‘‘(C) has submitted an application to the

10 Secretary for a grant under this subsection, as

11 the Secretary shall require, which has been ap12 proved by the Secretary.

13 ‘‘(3) FUNDING.—Amounts shall be available for

14 grants under this subsection as provided in sections

15 519(g) and 205(i).’’.

16 SEC. 3. FUNDING OF GRANTS FROM GENERAL INSURANCE

17 FUND SURPLUS.

18 Section 519 of the National Housing Act (12 U.S.C.

19 1735c) is amended by adding at the end the following new

20 subsection:

21 ‘‘(g) AVAILABILITY OF AMOUNTS FOR HOSPITAL

22 CONVERSION GRANTS.—

23 ‘‘(1) IN GENERAL.—The amount of any nega24 tive credit subsidy that is determined for any fiscal

25 year, for purposes of title V of the Congressional
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1 Budget Act of 1974 (2 U.S.C. 661 et seq.), and is

2 attributable to the programs referred to in para3 graph (2) shall be considered to be new budget au4 thority and shall be available, without fiscal year

5 limitation, for grants under subsections (i) and (j) of

6 section 242.

7 ‘‘(2) COVERED PROGRAMS.—The programs re8 ferred to in this paragraph are the programs under

9 this Act for insurance of mortgages and loans that,

10 on page 515 of the Appendix to the Budget of the

11 United States Government, Fiscal Year 2001 (H.

12 Doc. 106–162, Vol. II), in the table entitled ‘Sum13 mary of Loan Levels, Subsidy Budget Authority and

14 Outlays by Program’, are classified under budget ac15 count number 86–0200–0–1–371 and are referred to

16 as ‘FHA Full Insurance for Health Care Facilities

17 (plus 241/232)’, ‘Health Care Refinances’, and ‘Hos18 pitals’.’’.

19 SEC. 4. FUNDING OF GRANTS FROM MUTUAL MORTGAGE

20 INSURANCE FUND SURPLUS.

21 Section 205 of the National Housing Act (12 U.S.C.

22 1711) is amended—

23 (1) in subsection (e), by inserting ‘‘or for use

24 for grants pursuant to subsection (i)’’ before the

25 comma;
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1 (2) in subsection (h)(1), by inserting ‘‘may not

2 make grants pursuant to subsection (i),’’ after the

3 4th comma; and

4 (2) by adding at the end the following new sub5 section:

6 ‘‘(i) AVAILABILITY OF SURPLUS AMOUNTS FOR HOS7 PITAL CONVERSION GRANTS.—Any amounts in the Mu8 tual Mortgage Insurance Fund that are determined by the

9 Secretary to be surplus to the amount required to meet

10 the operational goals under subsection (h)(2) shall be

11 available, without fiscal year limitation, for grants under

12 subsections (i) and (j) section 242.’’.

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