2023 New York Laws › PBH - Public Health › Article 28-B - Hospital Mortgage Loan Construction › 2873 - Regulation of Eligible Borrowers.

§  2873. Regulation of eligible borrowers. 1. Every eligible borrower,
as a condition precedent to borrowing funds from the agency, shall enter
into a regulatory agreement with the commissioner which shall provide:
(a) that the real property or  other  assets  mortgaged  or  otherwise
pledged to the agency shall not be sold, leased, transferred, encumbered
or  assigned  without  the  prior  consent of the commissioner until the
eligible borrower shall have repaid in full all obligations due  to  the
agency  and  has  paid  such other obligations as may be required by the
commissioner provided, however, the provisions of this  paragraph  shall
not  apply to any actions taken pursuant to section twenty-eight hundred
seventy-nine of this article;
(b) that the eligible borrower will maintain books and records  and  a
system  of  accounts  satisfactory  to  the  commissioner and the agency
including but not limited to separate books, records  and  accounts  for
(i)  all  monies advanced to the eligible borrower by the agency or from
any other source or sources, public or private,  for  the  construction,
reconstruction,  rehabilitation, improvement or equipment of the project
and (ii) all monies repaid in satisfaction of any  indebtedness  to  the
agency  or  other  indebtedness as required by the commissioner; and the
eligible borrower agrees that all of its  books,  records  and  accounts
shall  be  open to examination by the commissioner and the agency at any
time;
(c) that the eligible borrower shall file with  the  commissioner  and
the  agency such financial statements including an annual report setting
forth such information as the commissioner may require;
(d) that the eligible borrower shall not acquire any real property  or
interest  therein  for  the  purpose  of  constructing,  reconstructing,
rehabilitating or improving a  hospital  project  without  first  having
obtained  from  the  commissioner a certificate that such acquisition is
consistent with the purposes of this article;
(e)  that  the  eligible  borrower  shall  not  issue  notes,   bonds,
debentures  or  other  obligations  other  than  for  money  or property
actually received for the  use  and  lawful  purposes  of  the  eligible
borrower  and  no  such  note, bond, debenture or other obligation shall
constitute a lien or  encumbrance  against  the  project,  or  any  real
property  or  other  asset mortgaged or otherwise pledged to the agency,
provided, however, that a hospital constituting an eligible borrower may
incur, assume or guarantee indebtedness from a lender other than the New
York state medical care facilities finance agency  or  incur  or  assume
indebtedness  from  the  New  York state medical care facilities finance
agency under a separate bond resolution pursuant to  the  provisions  of
section  five-c  of  the  New York state medical care facilities finance
agency act;
(f) that the eligible borrower shall not without first having obtained
the written consent of the commissioner:
(i) construct, reconstruct, rehabilitate, improve, alter or repair the
project or enter into a contract therefor;
(ii) enter into contracts relating to the management or  operation  of
the project;
(iii)  make  a guaranty of payment out of monies pledged to the agency
or pledge any or all of its assets, income or  revenue  pledged  to  the
agency to secure payment of its obligations;
(iv) voluntarily dissolve;
(g) that no member, officer or employee of the corporation which is an
eligible borrower shall acquire any interest, direct or indirect, in any
property  then  or  thereafter  included  or planned to be included in a
project, nor retain any interest direct  or  indirect  in  any  property
acquired  subsequent  to  his  appointment  or employment which is later

included or planned to be included in a project. If any member,  officer
or  employee  of  a  corporation  which  is an eligible borrower owns or
controls an interest, direct or indirect, in any property included in  a
project  which  was  acquired prior to his appointment or employment, he
shall disclose  such  interest  and  the  date  of  acquisition  to  the
corporation  and  such  disclosure  shall be entered upon the minutes of
such corporation and a copy of such minutes shall be  forwarded  to  the
commissioner;
(h)  that  all  income  and earnings of the eligible borrower shall be
used exclusively for its corporate purposes;
(i) that no part of the net income  or  earnings  of  the  corporation
shall  inure to the benefit or profit of any private individual, firm or
corporation;
(j) such other matters as the commissioner or the agency may require.
2. This regulatory agreement shall terminate at  any  time  after  the
expiration  of  twenty  years  after the occupancy date, or such earlier
date as the bonds issued by the agency  with  respect  to  the  hospital
project  are subject to redemption, upon the consent of the commissioner
and upon the repayment in full of all obligations due to the agency  and
of such other obligations as the commissioner may require.