ARIZONA STATE SENATE
Phoenix, Arizona
CORRECTED
REVISED
health facilities;
bonding authority
Since 1974, the Authority has served as a resource to health care organizations by issuing negotiable tax-exempt bonds to finance health facilities or any health facilities related projects with the intent of reducing the cost of health care services. In order for the Authority to obtain lower market interest rates on bonds compared to the interest rates offered by commercial banks or other financial institutions, any interest on the Authority’s bonds are tax-exempt. The Authority’s bonds are payable solely from payments made by the benefited health care provider and are not liabilities for either the Authority or the State.
Currently, the Authority is authorized to use tax-exempt bonds and other obligations on behalf of nonprofit organizations but cannot issue bonds on behalf of for-profit entities. Due to an increase in the number of for-profit health care facilities, the Authority is seeking the ability to finance projects for these entities. S.B. 1087 allows the Authority to finance for-profit health care providers with multi-jurisdiction as long as the entity is headquartered in Arizona.
In addition, the Authority does not have the ability to accept grants from governmental entities other then federal agencies. It is anticipated that the Authority will use the additional capital to fund small health care projects in rural or medically underserved areas. This legislation attempts to expand available resources for these facilities by allowing the Authority to accept grants from state, county and municipal agencies.
Joint Legislative Budget Committee (JLBC) staff states there will be a cost associated with this legislation due to reduced income tax collections since the bonds issued are tax exempt. However, JLBC is unable to determine the level of potentially increased bond activity and, therefore, any lost revenue.
1. Allows the Authority to accept grants from state, county and municipal agencies.
2. Allows the Authority to finance projects of health care providers who are headquartered in this State.
3. Expands the definition of “participating facilities” to include for-profit health care providers.
4. Makes technical changes.
5. Provides for a general effective date.
Amendment Adopted by Finance Committee
· Eliminates the authority of the Board of Directors to issue bonds to out-of-state health care entities that only have a project located in Arizona.
Senate Action
HEA 1/29/02 DP 8-0-0-0
FIN 3/18/02 DPA 5-0-3-0
Prepared by Senate Staff
March 26, 2002