California Health Facilities Financing Authority Act.

Stefani, with coauthor Schiavo, advances a measure to broaden the California Health Facilities Financing Authority’s toolkit by enabling broader working capital financing for nonprofit health institutions, melding liquidity needs with the authority’s financing framework. The proposal frames the aim as furnishing creditworthy participating health institutions with cost-effective, future financing tools that can support ongoing operations and facility maintenance alongside traditional project financing.

Key changes redefine and expand working capital financing and the eligibility framework. The definition of working capital would include funds used for maintenance and operating expenses, reserves for such expenses, and reserves tied to debt service or other financing costs, in addition to interest on working capital loans. The bill also eliminates the prior cap on interest duration for working capital loans and repeals a 24-month repayment requirement for private nonprofit participating health institutions. In parallel, the Authority would be required to establish financial eligibility standards for both projects and working capital loans, evaluating creditworthiness, pledged revenues, debt service coverage, and basic security, with a prohibition on eligibility for health institutions found to be in financial distress. The proposal also expands the purposes of the continuously appropriated fund to cover working capital financing and would require an appropriation to support this expanded use, while repealing a current statutory provision.

Implementation and governance are positioned around enhanced oversight and criteria. The Authority would administer these provisions and articulate standards for evaluating both project-related and working capital financings, including a distress-based eligibility constraint. The bill embeds a funding and oversight dimension by tying the expanded financing scope to an appropriation, subject to legislative and fiscal committee review, and by altering the relationship between the fund and the authority’s lending activities. The health facility definitions continue to cover a broad array of facility types, and participation for the University of California system is explicitly recognized for related financing arrangements under the act.

Together, the changes create a more flexible framework for working capital support while introducing explicit risk controls. The bill seeks to enhance credit access for nonprofit health institutions by loosening certain loan-term constraints and linking eligibility to financial health indicators, all within a funded and legislatively overseen program. It also clarifies the authority’s role in formulating standards and ensures that distressed institutions are not deemed eligible for such financing under the new regime.