In this subtitle the following words have the meanings indicated. “Authority” means the Maryland Health and Higher Educational Facilities Authority. “Bond” means a bond issued by the Authority under this subtitle. “Bond” includes a revenue bond, a revenue refunding bond, a note, and any other obligations. “Cost”, with respect to a project financed under this subtitle, includes: the purchase price of a project; the cost to acquire any right, title, or interest in a project; the cost of any improvement; the cost of any property, right, easement, and franchise; the cost of demolition, removal, or relocation of structures; the cost of acquiring land to which the structures may be moved; the cost of equipment; financing charges; interest before and during construction and, if the Authority determines, for a limited period after the completion of construction; reserves for principal and interest and for improvements; the cost of revenue and cost estimates, architectural, engineering, financial, and legal services, plans, specifications, studies, surveys, and other expenses necessary or incident to determining the feasibility of improving a project; and other expenses as necessary or incident to: financing a project; acquiring and improving a project; and placing a project in operation. “Educational institution” means an institution of higher education or a noncollegiate educational institution. “Finance” includes refinance. “Health care institution” means an institution in the State that is operated by a person, a local government, or, subject to paragraph (3) of this subsection, the State, is available to the public, and is: a nonprofit hospital as defined under § 19–301 of the Health – General Article that: is licensed as a hospital by the Secretary of Health under § 19–318 of the Health – General Article; or has obtained a certificate of need issued by the Maryland Health Care Commission under § 19–120 of the Health – General Article, but is not licensed as a hospital by the Secretary of Health under § 19–318 of the Health – General Article; a nonprofit related institution as defined under § 19–301 of the Health – General Article that is licensed as a related institution by the Secretary of Health under § 19–318 of the Health – General Article; a combination of institutions listed in items (i) and (ii) of this paragraph; except as provided in paragraph (3) of this subsection: a nonprofit comprehensive health center that provides outpatient primary health services available to the general public; or a nonprofit life care or continuing care community that provides self–contained residence facilities for the retired or elderly; any combination of health care entities listed in item (iv) of this paragraph; an entity affiliated or associated with an institution listed in items (i) through (v) of this paragraph, if the Authority determines by resolution that the financing of a project for the entity serves the public purpose of that institution; or a nonprofit health service plan that holds a certificate of authority and provides health insurance policies or contracts in the State in accordance with the Insurance Article. “Health care institution” includes a nonprofit corporation organized to construct or acquire an institution under paragraph (1) of this subsection. “Health care institution” does not include a facility described in paragraph (1)(iv) of this subsection that is owned and operated by the State, except for the following facilities if approved by the Board of Public Works and the Joint Audit and Evaluation Committee: a nonprofit comprehensive health center that is a medical or health care facility of the University System of Maryland; or a nonprofit life care or continuing care community that provides self–contained residence facilities for the retired or elderly. For purposes of this subsection the facilities of the University of Maryland Medical System Corporation are not considered to be owned and operated by the State. “Improve” means to add, alter, construct, equip, expand, extend, improve, install, reconstruct, rehabilitate, remodel, or repair. “Improvement” means addition, alteration, construction, equipping, expansion, extension, improvement, installation, reconstruction, rehabilitation, remodeling, or repair. “Institution of higher education” means an educational institution in the State that: by law or charter: is a public or nonprofit educational institution; and is authorized to provide: a program of education beyond the high school level and award a bachelor’s or advanced degree; or a program of 2 or more years’ duration that is accepted for full credit toward a bachelor’s degree; and meets the standards and regulations that the Maryland Higher Education Commission prescribes, and is authorized to issue a certificate, diploma, or degree under Title 12 of the Education Article. “Institution of higher education” includes: a community college for which a board of community college trustees is established under § 16–101 of the Education Article; a regional community college established under § 16–202 of the Education Article; the Baltimore City Community College established under § 16–501 of the Education Article; and the College of Southern Maryland established under § 16–603 of the Education Article. “Institution of higher education” does not include an institution owned and operated by the State other than an institution listed in paragraph (2) of this subsection. “Noncollegiate educational institution” means a noncollegiate educational institution as defined in § 2–206 of the Education Article that: has received a certificate of approval from the State Board of Education; or is an institution operated by a bona fide church organization. “Participating institution” means a participating educational institution or a participating health care institution that receives assistance under this subtitle. With respect to an educational institution: “project” means a structure or facility that is required or useful for an educational institution; “project” includes: a structure suitable for use as a dormitory or other housing facility, dining hall, student union, administration building, academic building, library, laboratory, research facility, classroom, athletic facility, health care facility, maintenance facility, storage facility, utility facility, or parking facility; and equipment and other similar items; and “project” does not include books, fuel, supplies, or other items that customarily result in a current operating charge. With respect to a health care institution: “project” means a structure or facility that is required or useful for the effective operation of a health care institution; “project” includes: a structure suitable for use as a hospital, clinic, or other health care facility, laboratory, training facility for nursing or another health program, laundry, a residence for nurses or interns, or a parking facility; and equipment and other similar items; and “project” does not include fuel, supplies, or other items that customarily result in a current operating charge. “Sinking fund” means a fund established under § 10–328 of this subtitle. “Trust agreement” means an agreement entered into by the Authority to secure a bond. “Trust agreement” may include a bond contract, bond resolution, or other contract with or for the benefit of a bondholder.

This subtitle is necessary for the welfare of the State and its residents and shall be construed liberally to accomplish its purposes. This subtitle: is supplemental authorization and is in addition to the powers conferred by other laws; and does not derogate any powers.

The General Assembly finds that, for the benefit of the people of the State, the increase of their commerce, welfare, and prosperity, and the improvement of their health and living conditions: it is essential that: people have the fullest opportunity to learn and to develop intellectual capacities; educational institutions in the State have the appropriate means to assist people in achieving required levels of learning and development of intellectual capacities; health care institutions in the State have appropriate means to expand and establish hospitals and other related health care facilities; and educational institutions and health care institutions in the State are able to finance projects at the least cost to their users; existing facilities for education and health care and existing financing vehicles available to these institutions are insufficient to meet these needs; and these institutions are not able with present means to improve and adequately finance sufficient facilities, in order to provide the facilities at the least cost to their users. The purposes of the Authority are to: assist educational institutions and health care institutions in the acquisition, improvement, and financing of projects; and provide assistance that enables educational institutions and health care institutions to finance, at the least cost to their users, the facilities and structures that are needed to accomplish the purposes of this subtitle.

There is a Maryland Health and Higher Educational Facilities Authority. The Authority is a body politic and corporate and is an instrumentality of the State. The exercise of a power under this subtitle is the performance of an essential governmental function. The exercise of a power under this article is: for the benefit of the people of the State; to increase their commerce, welfare, and prosperity; and to improve their health, education, and living conditions.

The Authority consists of the following nine members: eight residents of the State appointed by the Governor; and the Treasurer or a deputy treasurer designated by the Treasurer. Each year the Governor shall designate one member as chair and one as vice chair. Before taking office, each member shall take an oath to administer the duties of the office faithfully and impartially. The term of an appointed member is 5 years and begins on July 1. The terms of members are staggered as required by the terms in effect for members of the Authority on October 1, 2008. At the end of a term, a member continues to serve until a successor is appointed and qualifies. The Governor shall fill any vacancy for the unexpired term. The Governor may remove an appointed member at any time.

Five members of the Authority are a quorum. The affirmative vote of a majority of members present at a meeting having a quorum is required for the Authority to take any action. The Authority may take action under this subtitle by passing a resolution at a regular or special meeting. A resolution shall take effect immediately and without being published or posted. A member of the Authority: may not receive compensation as a member of the Authority; but is entitled to reimbursement for expenses under the Standard State Travel Regulations.

Subject to the approval of the Governor, the Authority shall appoint an Executive Director. The Executive Director serves at the pleasure of the Authority. The Authority shall determine the compensation of the Executive Director. The Executive Director may not be a member of the Authority. Subject to the supervision of the Authority, the Executive Director is the chief administrative officer of the Authority. The Executive Director: shall keep a record of the proceedings of the Authority; and is the custodian of all books and documents filed with the Authority, the records of the Authority, and the seal of the Authority.

Subject to the approval of the Governor, the Authority may appoint a full-time or part-time General Counsel. The General Counsel serves at the pleasure of the Authority. The Authority shall determine the compensation of the General Counsel. The General Counsel may not be a member of the Authority. The General Counsel, if appointed, is the legal advisor to the Authority and, at the direction of the Authority, shall represent the Authority in judicial or other proceedings.

The Authority may determine the duties of all its officers. The Authority may appoint additional officers. Additional officers serve at the pleasure of the Authority. The Authority shall determine the compensation of the additional officers.

The Authority may employ professional and other staff and retain engineers, architects, accountants, construction and financial experts, managers, and other professionals that it considers necessary and set their compensation.

The Authority shall follow State procedures to obtain, for internal administrative functions, office space, supplies, facilities, materials, equipment, and professional services. Each member, the Executive Director, each other officer, and each employee of the Authority shall be covered by a surety bond or an insurance policy of the type and in the amount of coverage determined by the State Treasurer under § 5–108 of the State Government Article.

The Authority may: adopt bylaws for the conduct of its business; sue and be sued; adopt a seal; maintain an office at a place it designates; issue bonds in accordance with this subtitle; accept a grant, loan, or other assistance in any form from any public or private source, subject to the provisions of this subtitle; charge to and equitably allocate among participating institutions the administrative costs and expenses of carrying out this subtitle; and do all things necessary or convenient to carry out the powers expressly granted by this subtitle. A health care institution may not use any money received from a bond issued by the Authority to match any State loan or grant that is available for improvement of a health care institution. The Authority shall comply with the terms and conditions of assistance received in accordance with subsection (a)(6) of this section. The Authority may delegate to a member or officer a power granted to the Authority by this subtitle, including the power to execute a bond, certificate, deed, lease, mortgage, agreement, or other document or instrument.

The Authority may: acquire, directly or through a participating institution acting as its agent, by purchase, gift, or devise, any property, franchises, and other interests in land, including submerged land and riparian rights, located in or outside the State, as necessary or convenient to construct, acquire, or operate a project, on terms and at prices the Authority considers reasonable; and take title to the property in the name of the Authority or the participating institution as its designated agent; determine the location and character of a project to be financed under this subtitle, or designate a participating institution as its agent to do so; directly, or through a participating institution acting as its designated agent, acquire, improve, maintain, operate, lease as lessee or lessor, and regulate a project, and enter into contracts for any of these purposes and for the management of a project; fix and collect rates, rentals, fees, and charges for services and facilities that a project provides or makes available; directly, or through a participating institution acting as its designated agent, establish rules and regulations for the use of a project; mortgage, pledge, or otherwise encumber a project and its site or hold a mortgage or other encumbrance on a project and its site for the benefit of the holders of bonds issued to finance the project; and make a loan to a participating institution to: improve or acquire a project in accordance with an agreement between the Authority and the participating institution; refinance any part of a project; and refund or repay bonds, mortgages, advances, loans, or other obligations of the participating institution to the Authority, any person, or any unit of federal, State, or local government incurred to finance any part of a project. The Authority may undertake a joint project for two or more participating institutions. A loan from the Authority to a participating institution under subsection (a)(7)(i) of this section may not exceed the total cost of the project as determined by the participating institution and approved by the Authority.

Expenses incurred under this subtitle are payable only from money obtained under this subtitle. The Authority may not incur a liability in excess of money obtained under this subtitle.

The Executive Director and each other officer authorized by the Authority may: allow copies to be made of the minutes and records of the Authority; and certify records under seal showing that the copies are true copies. A person may rely on the certified record. The records of the Authority are public records subject to reasonable inspection.

At least once each year the Authority shall have its books audited by a certified public accountant. The Authority shall pay for the cost of the audit from money available to it under this subtitle.

On or before October 1 of each year, the Authority shall report to the Governor on its activities for the preceding fiscal year. The report shall include a complete operating and financial statement covering the operations of the Authority during the preceding fiscal year.

A law to terminate the Authority may not take effect until adequate provision is made to pay each outstanding bond and other obligation of the Authority. On termination of the Authority, its rights and property pass to the State.

The Authority may periodically: issue bonds for any corporate purpose, including operating expenses; refund those bonds; purchase its bonds with any funds available; and hold, pledge, cancel, or resell bonds. By resolution, the Authority may authorize the chair, vice chair, one of its members, or a committee of its members to determine, provide for, or approve any matters relating to bonds that the Authority considers appropriate including: specifying, determining, prescribing, and approving matters, documents, and procedures that relate to the authorization, sale, security, issuance, delivery, and payment of and for the bonds; creating security for the bonds; providing for the administration of bond issues; and taking other actions it considers appropriate concerning the bonds. The power granted in paragraph (2) of this subsection is in addition to powers conferred on the Authority by this subtitle and does not limit any power of the Authority under this subtitle. Subject to subparagraph (ii) of this paragraph, the Authority may authorize the Executive Director to take any of the actions described in paragraph (2) of this subsection. If the Authority authorizes the Executive Director to take any of the actions described in paragraph (2) of this subsection, the Authority shall prescribe limits within which the Executive Director may exercise discretion. Except as otherwise provided by the Authority, each issue of its bonds is a general obligation of the Authority payable from any revenues or money of the Authority that are available and not otherwise pledged. The provisions of paragraph (1) of this subsection are subject to any agreements with: holders of particular bonds pledging any particular revenues or money; and any participating institution. For each issue of its bonds, the Authority shall pass a resolution that: specifies and describes the project for which the proceeds of the bond issuance are intended; generally describes the public purpose and the financing transaction to be accomplished; specifies the maximum principal amount of the bonds that may be issued by the Authority; and imposes any terms or conditions on the issuance and sale of the bonds that the Authority considers appropriate. Subject to any provision for their registration, bonds are negotiable instruments for all purposes regardless of whether they are payable from a special fund. The bonds may be: serial bonds; term bonds; or both in the discretion of the Authority. Subject to any delegation under subsection (a)(2) of this section, the resolution authorizing bonds may provide: the dates of the bonds; the maturity dates of the bonds; the interest rates on the bonds; the time at which the bonds will be payable; the denominations of the bonds; whether the bonds will be in a coupon or registered form; any registration privileges of the bonds; the manner of execution of the bonds; the place at which the bonds will be payable; and any terms of redemption of the bonds. The bonds shall mature within a period not to exceed 50 years after their date. The bonds shall be payable in United States currency. The bonds may be sold by competitive or negotiated sale at a price determined by the Authority. Pending preparation of the definitive bonds, the Authority may issue interim receipts or certificates that will be exchanged for definitive bonds. A trust agreement authorizing bonds may contain provisions that are part of the contract with the bondholders. The provisions may include: pledging the following to secure payment of bonds, subject to any existing agreements with bondholders: the full faith and credit of the Authority; the full faith and credit of a participating institution; revenues of a project; a revenue–producing contract the Authority has made with a person or public entity; or the proceeds of the sale of bonds; the rentals, fees, and other charges, the amounts to be raised in each year, and the use and disposition of the revenues; setting aside of reserves and sinking funds and their disposition; limits on the right of the Authority or its agents to restrict and regulate the use of a project; limits on the purpose to which the proceeds of sale of bonds may be applied; limits on issuing additional bonds, the terms under which additional bonds may be issued and secured, and refunding outstanding bonds; the procedure to amend or abrogate the terms of a contract with bondholders and the requirements for consent; limits on the amount of project revenues to be expended for operating, administrative, or other expenses of the Authority; the acts or omissions that constitute default by the Authority and the rights and remedies of the bondholders in the event of a default; the conveyance or mortgaging of a project and its site to secure the bondholders; and creation and disposition of a collateral fund, instead of conveyance or mortgage, for the purpose of securing the bondholders. The members of the Authority and a person executing the bonds may not be held liable personally on the bonds.

The Authority may secure bonds by a trust agreement. The corporate trustee under a trust agreement may be a trust company or a bank that has the powers of a trust company in or outside the State. In addition to the provisions described in § 10–323(h) of this subtitle, the trust agreement may contain: either: a provision conveying or mortgaging all or a portion of the project; or a provision creating a collateral account; other provisions that the Authority considers reasonable and proper for the security of bondholders; and a provision that restricts the individual right of action by bondholders. An expense incurred in carrying out the trust agreement or a resolution may be treated as part of the cost of the operation of a project.

Bonds are securities: in which any of the following persons may legally and properly invest money, including capital that the person owns or controls: an officer or unit of the State or a political subdivision; a bank, trust company, savings and loan association, investment company, or other person conducting a banking business; an insurance company, insurance association, or other person conducting an insurance business; a personal representative, guardian, trustee, or other fiduciary; and any other person; and that may be deposited with and received by a unit of the State or a political subdivision for any purpose for which the deposit of bonds or obligations of the State is authorized by law.

A bond: is not a debt, liability, or a pledge of the faith and credit of the State or a political subdivision of the State; and is payable solely from money available in accordance with this subtitle. Each bond shall state on its face that: the State and its political subdivisions are not obliged to pay the bond or the interest on the bond except from revenues of the project or the portion of the project for which the bond is issued; and the faith, credit, and taxing power of the State and its political subdivisions are not pledged to pay the principal of or the interest on the bond. The issuance of bonds does not directly, indirectly, or contingently obligate the State or its political subdivisions: to levy or pledge a tax to pay the bonds; or to make an appropriation to pay the bonds. This section does not prevent the Authority or a participating institution from pledging its full faith and credit to pay bonds.

The Authority may: fix and collect rates, rents, fees, and charges for the use of a project and for the services furnished or to be furnished by a project; and contract with a person or governmental entity to exercise its authority under this section. The rates, rents, fees, and charges established by the Authority under this section shall be fixed and adjusted so that the aggregate amount of the rates, rents, fees, and charges from the project, when added to other available money, is sufficient to: pay for maintaining, repairing, and operating the project; pay the principal of and the interest on the bonds that the Authority issued for the project as they become due and payable; and create and maintain reserves required or provided for in a trust agreement. The rates, rents, fees, and charges established by the Authority under this section are not subject to supervision or regulation by any unit of the State other than the Authority.

The Authority shall set aside a sufficient amount of the revenues derived from a project in a sinking fund or other similar fund at regular intervals to the extent required in the trust agreement. The sinking fund is pledged to pay: the principal of and the interest on the bonds as they become due; and the redemption or purchase price of bonds retired by call or purchase as specified in the trust agreement. To the extent provided in the trust agreement, the Authority may exclude from the amount to be deposited in the sinking fund the revenues that may be necessary: to pay for project maintenance, repair, and operation; for reserves; and for improvements to the project. The pledge of revenues under subsection (a) of this section is valid and binding from the time the pledge is made. The rates, rents, charges, fees, and other revenue or money that the Authority pledges and receives are subject immediately to the lien of the pledge. Neither physical delivery of the rates, rents, charges, fees, and other revenue or money nor any other act is required to validate the lien. The lien of the pledge is valid and binding against each party with a claim against the Authority in tort, contract, or otherwise, regardless of whether the party has notice of the lien. The trust agreement and any other agreement or lease creating a pledge under this section need not be filed or recorded, except in the records of the Authority.

A sinking fund: may be held: for all of the bonds issued to finance projects at a particular participating institution without distinction or priority of one bond over another bond; for a particular project and for the bonds issued for that project; and for bonds having a lien subordinate to the lien securing other bonds; and shall be subject to the trust agreement.

Proceeds from the sale of bonds and other revenues received under this subtitle are trust funds to be held and applied solely as provided in this subtitle. Each officer, bank, or trust company that receives money from the Authority under this subtitle shall act as trustee of the money and shall hold and apply the money for the purposes specified under this subtitle. The officer, bank, or trust company holding money is subject to: any regulation adopted under this subtitle; and the trust agreement securing the bonds.

The Authority may issue bonds to refund outstanding bonds of the Authority, including paying: any redemption premium; interest accrued or to accrue to the date of redemption, purchase, or maturity of the bonds; and if considered advisable by the Authority, any part of the cost of acquiring or improving a project. Refunding bonds may be issued for any corporate purpose, including: realizing savings in the effective costs of debt service, directly or through a debt restructuring; or alleviating a potential or actual default. A refunding bond that the Authority issues under this section shall be issued in the same manner and is subject to this subtitle to the same extent as any other bond. The Authority may issue refunding bonds in one or more series in an amount greater than the amount of the bonds to be refunded. In addition to other sources of payment that the Authority determines, refunding bonds may be payable from escrowed bond proceeds and earnings and profits on investments. Escrowed bond proceeds and earnings and profits on investments used under subparagraph (i) of this paragraph constitute revenues of a project under this subtitle.

The Authority may apply the proceeds of refunding bonds to the purchase, retirement at maturity, or redemption of outstanding bonds on the earliest or a subsequent redemption date for those bonds. The Authority may place proceeds of refunding bonds in escrow before applying the proceeds to refund bonds.

Pending their use in accordance with this subtitle, proceeds of bonds issued under § 10-331 of this subtitle may be invested in: obligations of or guaranteed by the United States; or certificates of deposit or time deposits secured by obligations of or guaranteed by the United States. Bond proceeds placed in escrow under subsection (a) of this section shall mature at such time or times as the Authority considers appropriate to assure the prompt payment of principal, interest, and redemption premium, if any, on the bonds that are to be refunded. The instruments in which the Authority invests proceeds of bonds issued for all or part of the cost of improvement or acquisition of a project shall mature soon enough to pay the cost of the improvement or acquisition. The Authority may apply the interest, income, and profit from the investments described in subsection (a) of this section: to pay the bonds that are to be refunded; or to pay the costs of acquiring or improving a project. After the terms of escrow are satisfied, the balance of the refunding bond proceeds, interest, income, and profit, if any, may be returned to the Authority for use by it in any lawful manner.

The Authority may issue negotiable bond anticipation notes in anticipation of the sale of bonds for any corporate purpose. Bond anticipation notes issued under this section shall be issued in the same manner as bonds. Bond anticipation notes issued under this section and the resolution authorizing them may contain any provisions, conditions, or limitations that may be included in a trust agreement. The Authority may issue bond anticipation notes to pay any other bond anticipation notes. Bond anticipation notes shall be paid from: revenues of the Authority; money available and not otherwise pledged; or the proceeds of the sale of the bonds in anticipation of which the notes were issued.

The Authority shall convey title to a project and release collateral in accordance with this section when the following conditions are met: the principal of and interest on bonds issued to finance the project, including any refunding bonds, have been fully paid and retired; or adequate provision has been made to fully pay and retire the bonds; all other conditions of the trust agreement have been satisfied; and the lien of the trust agreement has been released. On satisfaction of the conditions under subsection (a) of this section, the Authority promptly shall execute any deeds, conveyances, releases, and documents and take any other action necessary to convey title to the project to the participating institution and release collateral free of all liens and encumbrances created through the Authority.

A bondholder, a holder of any coupons attached to bonds, or a trustee under a trust agreement securing the bonds may sue to: protect and enforce rights under the laws of the State or a trust agreement; and enforce and compel the performance of duties by the Authority or its officer, employee, or agent that this subtitle or a trust agreement requires, including fixing and collecting rates, rents, fees, and charges that the trust agreement requires to be fixed and collected. The rights under this section are subject to any trust agreement.

The Authority, its agent, or its lessee is not required to pay a tax or assessment on: a project or property that it acquires or uses under this subtitle; or the income from that project or property. The principal of and interest on bonds, the transfer of bonds, and any income derived from the bonds, including profits made in their sale or transfer, are forever exempt from all State and local taxes.

In this part the following words have the meanings indicated. “Affiliate” means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person. “Closure cost” means costs incurred in connection with the closure or delicensing of a hospital. “Closure cost” includes expenses of operating a hospital, payments to employees, employee benefits, fees of consultants, insurance, security services, utilities, legal fees, capital costs, costs of terminating contracts with vendors, suppliers of goods and services and others, debt service, contingencies, and other necessary or appropriate costs and expenses. “Control” means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a person through equity interest, membership interest, or contract other than a commercial contract for goods or nonmanagement services, or otherwise, whether or not the power is exercised or sought to be exercised. “Hospital” means an institution defined as a hospital under § 19–301 of the Health – General Article and that is licensed as a hospital by the Secretary of Health under § 19–318 of the Health – General Article. “Program” means the Maryland Hospital Bond Program under this part. “Public obligation” means a bond, note, evidence of indebtedness, or other obligation, to repay borrowed money issued by the Authority, the State, a unit, instrumentality, or public corporation of the State, a governmental entity described in § 19–205(a) of the Local Government Article, a county, or a municipal corporation. “Public obligation” does not include an obligation, or portion of an obligation, if: the principal of and interest on the obligation or the portion of the obligation is: insured by an effective municipal bond insurance policy; and issued on behalf of a hospital that voluntarily closed in accordance with § 19–120(l) of the Health – General Article; and the proceeds of the obligation or the portion of the obligation are used to finance wholly or partly: a facility or part of a facility that is used primarily to provide outpatient services at a location other than the hospital; or a facility or part of a facility that is used primarily by physicians who are not employees of the hospital to provide services to nonhospital patients.

This part applies to: the closure of a hospital under § 19-120(l) of the Health - General Article; and the delicensure of a hospital under § 19-325 of the Health - General Article.

The General Assembly finds that the failure to provide for the payment of public obligations of a closed or delicensed hospital could seriously impair the ability of health care facilities and State and local governments to secure subsequent financing through the issuance of tax-exempt bonds. The purpose of this part is to preserve the access of health care facilities in the State to adequate financing through a program that facilitates the refinancing and payment of public obligations of a closed or delicensed hospital. It is the intent of this part that the Health Services Cost Review Commission, the Maryland Health Care Commission, and the Authority shall consult with and consider each others’ recommendations in making the determinations required under this part.

There is a Maryland Hospital Bond Program in the Authority. For public obligations issued on behalf of a hospital before October 1, 2008, the Program shall provide for the payment and refinancing of public obligations of a hospital, if: the closure of the hospital is in accordance with § 19–120(l) of the Health – General Article; or the delicensure of the hospital is in accordance with § 19–325 of the Health – General Article; a public obligation issued on behalf of the hospital is outstanding; and the hospital plan for closure or delicensure and the related financing plan is acceptable to: the Secretary of Health, in consultation with the Maryland Health Care Commission; and the Authority. For public obligations issued on behalf of a hospital on or after October 1, 2008, the Program shall provide for the payment and refinancing of public obligations of a hospital, if: the closure of the hospital is in accordance with § 19–120(l) of the Health – General Article; or the delicensure of the hospital is in accordance with § 19–325 of the Health – General Article; a public obligation issued on behalf of the hospital is outstanding; the hospital plan for closure or delicensure and the related financing plan is acceptable to: the Secretary of Health, in consultation with the Maryland Health Care Commission; and the Authority; and the Health Services Cost Review Commission determines that implementation of the Program is in the public interest, taking into account the amount of system–wide savings to the health care system in the State that might be expected as a result of the closure.

The Maryland Health Care Commission shall notify in writing: the Authority and the Health Services Cost Review Commission when a hospital files a written notice of intent to close under § 19–120(l) of the Health – General Article; and the Authority when a petition for delicensure of a hospital is filed with the Secretary of Health under § 19–325 of the Health – General Article. The Commission shall give the notice required by this subsection within 5 days after the date of the filing. The Secretary of Health shall notify the Authority and the Health Services Cost Review Commission in writing of each determination to delicense a hospital under § 19–325 of the Health – General Article at least 150 days before the scheduled date of delicensure. The notifications under this section shall include the name and location of the hospital and the scheduled date of its closure or delicensure.

As to each hospital that files a notice of intent to close under § 10-344(a)(1)(i) of this subtitle, the Maryland Health Care Commission shall provide to the Authority and the Health Services Cost Review Commission notice that includes: for a hospital that is located in a county with three or more hospitals, a statement that the hospital, in consultation with the Maryland Health Care Commission, held a public information hearing in the county where the hospital is located; for a hospital that is located in a county with fewer than three hospitals, notification of its finding on whether the proposed closing is: in the public interest; and not inconsistent with the State health plan or an institution-specific plan that the Maryland Health Care Commission developed; and the name and location of the hospital and the scheduled date of the closure. The Maryland Health Care Commission shall submit the notifications required under this section at least 150 days before the scheduled date of the closure.

A hospital that intends to close or is scheduled to be delicensed shall provide the Authority and the Health Services Cost Review Commission with a written statement of any outstanding public obligations issued on its behalf. The statement shall include: the name of each issuer of the public obligation; the outstanding principal amount of each public obligation; the due dates for payment or any mandatory redemption or purchase of each public obligation; the due dates for the payment of interest on each public obligation and the interest rates; and the documents and information about the public obligation that the Authority or the Health Services Cost Review Commission requests. A hospital with public obligations issued on or after October 1, 2008, that intends to close or is scheduled to be delicensed, shall provide to the Secretary of Health a closure plan that is acceptable to the Secretary, in consultation with the Maryland Health Care Commission. The closure plan required under this subsection shall include the plan of the hospital for the provision of care to its patients and to the population in its service area. The hospital shall file the items required under subsections (a) and (b) of this section: within 10 days after the date of filing the written notice of intent to close under § 19–120(l) of the Health – General Article with the Maryland Health Care Commission; or at least 150 days before the scheduled date of delicensure under § 19–325 of the Health – General Article.

The Health Services Cost Review Commission may determine to provide for the payment of all or part of the reasonable closure costs of a hospital having outstanding public obligations if the Health Services Cost Review Commission determines that the payment is necessary or appropriate to: encourage and assist the hospital to close; or implement the Program created by this part. In making the determinations under subsection (a) of this section, the Health Services Cost Review Commission shall consider: the system–wide savings to the State health care system expected to result from the closure or delicensure of the hospital during the longer of: the period when the fee will be assessed to provide for the payment of the closure costs or any bond issued to finance the closure costs; or 5 years after the date of closure or delicensure; and the recommendations of the Maryland Health Care Commission and the Authority. Within 60 days after receiving the notice of closure or delicensure required by § 10–344(a)(1)(i) or (b) of this subtitle, the Health Services Cost Review Commission shall: determine whether to provide for the payment of all or a part of the closure costs of the hospital in accordance with this section; and give written notification of its determination to the Maryland Health Care Commission and the Authority. This section does not require the Health Services Cost Review Commission to provide for the payment of any closure costs of a closed or delicensed hospital. In a proceeding involving the validity or enforceability of a bond issued to finance closure costs or any security for the bond, the determinations of the Health Services Cost Review Commission under this section are conclusive and binding.

Within 60 days after receiving the statement required by § 10-346 of this subtitle, the Authority shall prepare a schedule of payments necessary to meet the public obligations of the hospital. As soon as practicable after receiving a notice of closure or delicensure, required by § 10-344(a)(1)(i) or (b) of this subtitle, and after consulting with the issuer of each public obligation and the Health Services Cost Review Commission, the Authority shall prepare a proposed plan to finance or otherwise provide for the payment of public obligations. The proposed plan may include a tender, redemption, advance refunding, or other technique that the Authority considers appropriate. As soon as practicable after receiving notification that the Health Services Cost Review Commission has determined to provide for the payment of closure costs of a hospital under § 10-347 of this subtitle, the Authority shall prepare a proposed plan to finance or provide for the payment of closure costs stated in the notice. On request of the Health Services Cost Review Commission, the Authority may begin preparing the plan required by this section before the Authority receives notice under § 10-344(a)(1)(i) or (b) of this subtitle. The Authority shall promptly submit the schedule of payments and the proposed plan required by this section to the Health Services Cost Review Commission.

The Authority may issue bonds to finance or otherwise provide for the payment of public obligations or closure costs of a hospital in accordance with a plan developed under § 10-348 of this subtitle. The bonds issued under subsection (a) of this section shall: be payable from the fees provided under § 10-350 of this subtitle or from other sources provided in the plan; be authorized, sold, executed, and delivered in accordance with this subtitle; and have terms consistent with constitutional and other legal requirements. In connection with the issuance of any bond, the Authority may assign its rights under a loan, lease, or other financing agreement between the Authority or any other issuer of a public obligation and the closed or delicensed hospital to the State or a State unit in consideration for the payment of a public obligation as provided in this part.

On the date of closure or delicensure of a hospital for which a financing plan is developed under § 10–348 of this subtitle, the Health Services Cost Review Commission shall assess a fee on all hospitals, as provided in § 19–223 of the Health – General Article, sufficient to: pay the principal and interest on any bonds that the Authority issues under § 10–349 of this subtitle to finance public obligations; pay the closure costs or the principal and interest on bonds that the Authority issues under § 10–349 of this subtitle to finance any closure costs; maintain a reserve required by the trust agreement; pay any required financing fees or charges; and maintain reserves that the Authority considers appropriate to provide the amounts described in paragraphs (1) through (4) of this subsection if a hospital defaults in paying the fees. The fee assessed each hospital shall be: the product of the total fees required to be assessed multiplied by the ratio of the actual gross patient revenue of the hospital to the total gross patient revenue of all hospitals; and determined as of the date the Authority determines after consulting with the Health Services Cost Review Commission. As the Authority directs, each hospital shall pay the fee: directly to the Authority; directly to a trustee for the bondholders; or otherwise as the Authority directs. The fee shall be assessed at any time necessary to meet the payment requirements of this section. The fee assessed is not subject to supervision or regulation by a unit of the State. A pledge of the fee to a bond issued under this part or to any other public obligation immediately subjects the fee to the lien of the pledge without a physical delivery or further act. Whether or not the parties have notice, the lien of the pledge is valid and binding against all parties having claims in tort, contract, or otherwise against the Authority or a closed or delicensed hospital. If the Health Services Cost Review Commission terminates by law, the Secretary of Health shall impose the fee under this section.

Notwithstanding any other provision of this subtitle, the amount of a public obligation that may be paid under the Program shall be reduced by the sum of: any excess of the total fair market value of all property transferred by a closed or delicensed hospital to an affiliate or a person with an interest in the hospital after it is closed or delicensed over the total fair market value of the property transferred and services provided to the hospital by the affiliate or person; and the total fair market value of the property retained by the hospital or affiliate after the closure or delicensure minus the property that is applied to paying closure costs approved by the Health Services Cost Review Commission. By any method it considers appropriate, the Authority may determine the fair market value of any property or services, including by: the appraisal of an independent professional appraiser; or the report of an independent consultant. The closed or delicensed hospital shall pay the cost of the appraiser or consultant. The Authority may act under this subsection if the Authority determines that the action is: necessary to protect the interests of holders of public obligations; or consistent with the public purpose of encouraging and assisting the hospital to close or delicense. The Authority may proceed against: a closed or delicensed hospital; or a guaranty or collateral securing the payment of a public obligation of a closed or delicensed hospital if the guaranty or collateral was provided by an entity associated with the hospital. In making the determination required under subsection (c) of this section, the Authority shall consider: the circumstances under which the guaranty or other collateral was provided; and the recommendations of the Health Services Cost Review Commission and the Maryland Health Care Commission. Any money that the Authority or its assignee realizes from enforcing a claim against a closed or delicensed hospital, or a hospital with a plan under § 10-348 of this subtitle, shall be applied to offset the fee that the Health Services Cost Review Commission is required to assess under § 10-350 of this subtitle. The costs and expenses of enforcing the claim, including the costs for maintaining the property before disposition, shall be deducted from the money described in paragraph (1) of this subsection.

Notwithstanding any other provision of this part, in a proceeding involving the validity or enforceability of a bond or the security for a bond, the determination of the Authority under this part is conclusive and binding.

The Health Services Cost Review Commission, the Maryland Health Care Commission, or the Authority may waive any notice required to be given to it under this part.

This subtitle may be cited as the “Maryland Health and Higher Educational Facilities Authority Act”.