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1 ration or association, for the accommodation of persons who 2 require minimum but continuous care but are not in need 3 of continuous medical or nursing services.

4 (4) The term "group practice facility" means a fa5 cility of a private nonprofit corporation or association for 6 the provision of preventive, diagnostic, and treatment serv7 ices to ambulatory patients in which patient care is under 8 the professional supervision of persons licensed to practice 9 medicine, optometry, dentistry, podiatry, or osteopathy in 10 the State.

11 (5) The term "replacement cost" means the Secre12 tary's estimate of the value of the land, the cost of the 13 proposed physical improvements, major equipment to be 14 installed and used in the operation of the health facility, 15 utilities within the boundaries of the property, architect's 16 and builder's fees, taxes and interest during construction, and 17 other miscellaneous charges incident to construction and the 18 initial operation of the project which are approved by the 19 Secretary.

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(b) (1) The Secretary is authorized to insure a mort21 gage (including advances) which covers a new or rehabili22 tated project designed for use as a hospital, nursing home, 23 intermediate care facility, or group practice facility (or any 24 combination of the foregoing). The mortgage shall be ex25 ecuted by a mortgagor approved by the Secretary. The Secre

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1 tary may require any such mortgagor to be regulated or

2 restricted as to capital structure, rate of return, and methods

3 of operation.

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(2) The mortgage shall involve a principal obligation in an amount not to exceed, in the case of new construction, 6 90 per centum of the estimated replacement cost of the 7 property or project when the proposed improvements are 8 completed and the equipment installed; or, in the case of 9 rehabilitation, 90 per centum of the sum of the estimated 10 cost of rehabilitation (including the cost of any equipment to be installed or rehabilitated) and the Secretary's estimate 12 of the value of the property before rehabilitation.

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(3) The mortgage shall provide for complete amortiza14 tion within such term as the Secretary shall prescribe.

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(c) The Secretary shall not insure a mortgage under 16 this section unless

(1) with respect to a hospital (A) the hospital shall be planned and operated so that not more than 50 per centum of the total patient days during any year

shall customarily be assigned to the categories of chronic convalescent and rest, drug and alcoholic, epileptic, mentally deficient, mental, nervous and mental, and tuberculosis; and (B) the Secretary shall have received from

the State agency designated in accordance with section

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

State in which the hospital would be located (i) a cer

tification that there is a need for such hospital, and there

are in force in such State or the political subdivision of the State in which the hospital would be located reason

able minimum standards of licensing and for methods of

operation for hospitals and (ii) such assurance as he

may deem satisfactory from the State agency that such

standards will be applied and enforced with respect to

any hospital located in the State for which mortgage insurance is provided under this section; and

(2) with respect to a nursing home or intermediate care facility (A) the Secretary shall have received from the State agency designated in accordance with section

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

State in which the nursing home or intermediate care

facility would be located, a certification that there is a

need for such nursing home, or facility, and there are

in force in such State or the political subdivision of the

State in which the nursing home or intermediate care

facility would be located reasonable minimum standards

for licensing and for methods of operation for nursing or intermediate care facilities; and (B) the Secretary has

received such assurance as he may deem satisfactory

from the State agency that such standards will be ap

410-74 - pt. 1 - 9

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plied and enforced with respect to any nursing home or

intermediate care facility located in the State for which mortgage insurance is provided under this section.

(d) The Secretary shall prescribe such regulations as 5 may be necessary to carry out this section, after consulting 6 with the Secretary of Health, Education, and Welfare with 7 respect to any health or medical aspects of the program 8 under this section which may be involved in such regula9 tions.

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(e) The activities and functions provided for in this 11 section with respect to the insurance of mortgages covering 12 hospitals shall be carried out by the agencies involved so 13 as to encourage programs that undertake responsibility to 14 provide comprehensive health care, including outpatient and 15 preventive care, as well as hospitalization, to a defined 16 population.

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SUPPLEMENTAL PROJECT LOANS

SEC. 504. (a) The Secretary is authorized to insure a 19 supplemental project loan (including advances) with respect 20 to a multifamily project or health facility covered by a 21 mortgage insured under this title or under the National 22 Housing Act, or covered by a mortgage held by the Sec23 retary, or with respect to a cooperative housing project 24 purchased from the Federal Government by a nonprofit cor25 poration or trust if the property is covered by an uninsured

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1 mortgage representing a part of the purchase price. Such 2 loan may be made

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(1) to cover operating losses, where the Secretary determines that the taxes, interest on the original mort

gage debt covering the project, mortgage insurance premiums, hazard insurance premiums, and the expense of maintenance and operation of the project during the first two years following completion of the project exceed the income of such project;

(2) to finance repairs, improvements, or additions to such project and, where a health facility is involved, to finance the purchase, installation, or repair of major equipment to be used in the operation of the facility; and

(3) to finance purchases and resales of cooperative memberships, but such loan shall be made on the condition and agreement of the mortgagor of the cooperative housing project that on resales of membership, the downpayments by the new members shall not be proportionately less than those made on the original sales of such memberships.

(b) A loan covering operating losses shall

(1) be limited to a term not exceeding the unex

pired term of the original mortgage; and

(2) be in an amount not exceeding the operating

loss, as determined by the Secretary.