231.35 Rural hospital loan guarantee.

(1) In this section:

(a) “Guaranteed loan" means a loan that the authority guarantees under sub. (3).

(b) “Hospital services" means medical or social services provided by a hospital and includes day care, hospice care and outpatient treatment.

(c) “Participating lender" means any person, including the authority, who does all of the following:

1. Makes loans to rural hospitals.

2. Enters into a guarantee agreement with the authority under sub. (6).

(d) “Rural" means outside a metropolitan statistical area specified under 42 CFR 412.62 (f) (ii) (A) or in a city, village, or town with a population of not more than 14,000.

(e) “Rural hospital loan fund" means the fund established under s. 231.36.

(2) A person is eligible for a guarantee under this section if the person is one of the following:

(a) A nonprofit rural hospital with no more than 100 beds.

(b) A cooperative organized under ch. 185 or 193 that consists of one or more rural hospitals, each with no more than 100 beds.

(c) A nonprofit rural primary care provider.

(3) Subject to sub. (4), the authority may guarantee a loan under this section that is made on or before July 29, 1995, if all of the following apply:

(a) The borrower is eligible for a guarantee under sub. (2).

(b) The borrower will use the proceeds of the loan to finance the acquisition, construction, remodeling or conversion of space at a rural hospital, or the acquisition or construction of equipment for a rural hospital, to provide hospital services.

(c) Not more than 25 percent of the proceeds of the loan will be used to refinance a previous loan that financed the acquisition, construction, remodeling or conversion of space at a rural hospital to provide hospital services.

(d) The principal amount of the loan is at least $100,000, but not more than $1,500,000.

(e) The loan is made by a participating lender.

(f) The borrower pays to the authority, for deposit into the rural hospital loan fund, a service charge in an amount determined by the authority but not exceeding 0.5 percent of the total principal amount of the loan.

(g) The borrower provides proof of local community support for the acquisition, construction, remodeling or conversion to be financed by the loan proceeds by obtaining a loan guarantee of at least 20 percent of the loan principal from the community or another 3rd party that is acceptable to the participating lender and to the authority.

(h) The term of the loan is not longer than 10 years.

(i) The borrower establishes a reserve fund of not less than 10 percent of the loan principal.

(j) The total of the borrower's reserve fund under par. (i), the 3rd-party loan guarantee under par. (g) and the guarantee under sub. (4) (a) will not exceed 90 percent of the loan principal.

NOTE: The cross-reference to sub. (4) (a) was changed from sub. (4) (a) 1. by the legislative reference bureau under s. 13.92 (1) (bm) 2. to reflect the renumbering under s. 13.92 (1) (bm) 2. of sub. (4) (a) 1.

(4)

(a) The authority shall guarantee payment or collection of 20 percent of the principal of loans guaranteed under sub. (3).

NOTE: Par. (a) is shown as renumbered from par. (a) 1. by the legislative reference bureau under s. 13.92 (1) (bm) 2.

(b) The total principal amount of all loans that the authority may guarantee under sub. (3) may not exceed $5,000,000.

(5)

(a) A participating lender shall determine when a guaranteed loan is in default, except that a guaranteed loan that is not repaid in full at the end of the loan's term is in default.

(b) In the event of a default on a guaranteed loan, the authority shall pay to the participating lender, from the rural hospital loan fund and in accordance with the terms and conditions of the guarantee agreement entered into under sub. (6), 20 percent of the unpaid principal amount of the defaulted guaranteed loan.

(c) Payments under par. (b) may not include any interest, origination fees or other charges relating to the guaranteed loan or any collection costs incurred by the participating lender.

(6)

(a) The authority shall enter into a guarantee agreement with any person who makes loans described under sub. (3) (b) and who wishes to have those loans guaranteed under this section. The guarantee agreement shall comply with the rules promulgated by the department of administration under sub. (7) (b).

(b) The authority may use money from the rural hospital loan fund to guarantee loans made for the purposes described in sub. (3) (b), if the authority sets out the terms and conditions of the guarantee in a guarantee agreement that complies with the rules promulgated by the department of administration under sub. (7) (b).

(c) The authority may not use any moneys other than those in the rural hospital loan fund to guarantee a loan under this section.

(7) With the advice of the rural health development council, the department of administration shall promulgate rules specifying all of the following:

(b) With respect to a guarantee agreement entered into by the authority under sub. (6):

1. The form of the agreement.

2. Any conditions upon which the authority may refuse to enter into such an agreement.

3. The procedure for making a demand for payment under the guarantee agreement, or for payment by the authority under the guarantee agreement, in the event of a default of a guaranteed loan.

4. Criteria for determining whether the guarantee is a guarantee of collection or payment.

5. Any procedures that the authority may impose to carry out the agreement.

(9) Annually, the authority shall submit to the chief clerk of each house of the legislature for distribution under s. 13.172 (2) a report on the number of loans guaranteed under this section, the annual gross revenues of the borrowers who have received the guaranteed loans, the default rate on those loans and any other information on the program under this section which the authority determines is significant.

History: 1989 a. 317; 1991 a. 39; 1993 a. 16; 1995 a. 27 ss. 6299, 6300, 9116 (5); 2005 a. 441; 2011 a. 32, 258; s. 13.92 (1) (bm) 2.