90TH CONGRESS 1ST SESSION

S. 2228

IN THE SENATE OF THE UNITED STATES

AUGUST 3, 1967

Mr. WILLIAMS of New Jersey introduced the following bill; which was read twice and referred to the Committee on Banking and Currency

A BILL

To amend title II of the National Housing Act to make available, through a new program of mortgage insurance, additional financing for the construction of needed nonprofit hospital facilities.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That title II of the National Housing Act is amended by 4 adding at the end thereof the following new section:

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"MORTGAGE INSURANCE FOR NONPROFIT HOSPITALS "SEC. 235. (a) The purpose of this section is to assist 7 the provision of urgently needed hospitals for the care and 8 treatment of persons who are acutely ill or who otherwise

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1 require medical care and related services of the kind cus

2 tomarily furnished only (or most effectively) by hospitals.

"(1) the term 'hospital' means a facility—

"(A) which provides community service for inpatient medical care of the sick or injured (including obstetrical care);

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"(b) For the purposes of this section—

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"(B) not more than 50 per centum of the total patient days of which during any year are customarily assignable to the categories of chronic convalescent and rest, drug and alcoholic, epileptic, mentally

deficient, mental, nervous and mental, and tuberculosis; and

"(C) which is owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully

inure, to the benefit of any private shareholder or individual; and

"(2) the terms 'mortgage' and 'mortgagor' shall have the meanings respectively set forth in section 207 (a) of this Act.

"(c) The Secretary is authorized to insure any mortgage

(including advances on such mortgage during construction) 24 in accordance with the provisions of this section upon such

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terms and conditions as he may prescribe and to make con

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1 mitments for insurance of such mortgage prior to the date of 2 its execution or disbursement thereon.

3 "(d) In order to carry out the purpose of this section,

4 the Secretary is authorized to insure any mortgage which

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covers a new or rehabilitated hospital, subject to the fol6 lowing conditions:

“(1) The mortgage shall be executed by a mortgagor approved by the Secretary. The Secretary may in his discretion require any such mortgagor to be reg

ulated or restricted as to charges and methods of financ

ing, and, in addition thereto, if the mortgagor is a cor

porate entity, as to capital structure and rate of return.

As an aid to the regulation or restriction of any mortgagor with respect to any of the foregoing matters, the Secretary may make such contracts with and acquire for not to exceed $100 such stock or interest in such mortgagor as he may deem necessary. Any stock or interest so purchased shall be paid for out of the General Insurance Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.

"(2) The mortgage shall involve a principal obligation in an amount not to exceed $25,000,000, and not

to exceed 90 per centum of the estimated value of the

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property or project when proposed improvements are

completed.

"(3) The mortgage shall

"(A) provide for complete amortization by periodic payments within such terms as the Secretary shall prescribe, and

"(B) bear interest (exclusive of premium charges for insurance) at not to exceed 5 per centum per annum of the amount of the principal obligation outstanding at any time, or not to exceed such per centum per annum not in excess of 6 per centum as the Secretary finds necessary to meet the mortgage market.

"(4) The Secretary shall not insure any mortgage under this section unless he has received, from the State agency designated in accordance with section 604

(a) (1) of the Public Health Service Act for the State

in which is located the hospital covered by the mortgage, a certification that (1) there is a need for such hos

pital, and (2) there are in force in such State or other

21 political subdivision of the State in which the proposed

of licensure and methods of operation for hospitals. No

such mortgage shall be insured under this section unless

the Secretary has received such assurance as he may

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1 deem satisfactory from the State agency that such stand

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ards will be applied and enforced with respect to any

3 hospital located in the State for which mortgage insur

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ance is provided under this section.

"(e) The Secretary may consent to the release of a

6 part or parts of the mortgaged property or project from the 7 lien of any mortgage insured under this section upon such

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terms and conditions as he may prescribe.

9 "(f) The provisions of subsections (d), (e), (g), (h), 10 (i), (j), (k), (l), and (n) of section 207 shall apply to 11 mortgages insured under this section and all references 12 therein to section 207 shall refer to this section.

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"(g) Notwithstanding any of the provisions of this 14 title, the Secretary may insure under this section a mortgage 15 which provides permanent financing and a refinancing of 16 existing mortgage indebtedness for a hospital, where perma17 nent financing is presently lacking, the construction of which 18 has been completed between June 1, 1966, and June 1, 1967. 19 This provision shall apply only to hospitals which have 20 been constructed using Hill-Burton funds."

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SEC. 2. (a) The fourth sentence of section 212 (a) of 22 the National Housing Act is amended by striking out "or

23 232" and inserting in lieu thereof ", 232, or 235,".

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(b) Section 223 (a) of such Act is amended by striking 25 out "or 233" cach place it appears in the matter preceding