Sec 11-256.03. Conveyance of property for health care institution to nonprofit corporation; powers and duties of county and nonprofit corporation; reports; definitions

A. The board of supervisors of any county that has a population greater than one million but less than two million persons and that owns and operates a health care institution may enter into an agreement to convey the real property and any improvements thereon and all other property, both tangible and intangible, of such institution to a nonprofit corporation established for the purposes of operating a health care institution that includes inpatient services. Any property and improvements conveyed pursuant to this section shall include the service capability as indicated in the license of the health care institution and all outpatient clinics administered by the health care institution at the time of the conveyance and shall be conveyed for at least their fair market value as determined at the time of the conveyance.

B. To satisfy the requirements of section 501 of the internal revenue code any nonprofit corporation to which property is conveyed pursuant to subsection A of this section is declared to be:

1. A validly organized and existing body politic and corporate exercising its powers for the benefit of the people, to improve their health and welfare and to increase their prosperity.

2. Engaged in a purpose essential to public health care.

3. Performing an essential governmental function.

C. Any nonprofit corporation to which property is conveyed pursuant to subsection A of this section is exempt from property taxation by this state or any agency or subdivision of this state and possesses and may exercise only those governmental powers of the board of supervisors that are delegated to the nonprofit corporation by the board of supervisors and that are necessary to satisfy the requirements of section 501 of the internal revenue code, as specified in the terms, conditions, restrictions and agreements to the conveyance agreement. These powers are in addition to those powers granted to a nonprofit corporation by title 10, chapters 24 through 40.

D. Any nonprofit corporation to which property is conveyed pursuant to subsection A of this section may issue bonds and incur obligations and pledge its revenues as security for the payment thereof for health care institutional purposes to the extent provided by the provisions of the conveyance agreement. Nothing in this section shall be construed to authorize the incurrence of a debt by the county within the meaning of any constitutional restriction on debt.

E. Except as provided in subsections F and G of this section, a nonprofit corporation to which property is conveyed pursuant to subsection A of this section may acquire by purchase, lease or otherwise, and may operate, other health care institutions and real and personal property for purposes of providing products and services related to the operation of health care institutions owned, leased or operated by it. Such acquisition or operation does not affect the powers, rights, privileges or immunities conferred on such nonprofit corporation by this section.

F. Any nonprofit corporation to which property is conveyed pursuant to subsection A of this section shall not own, lease or operate a health care institution outside the conveying county.

G. Until September 1, 1986 neither a board of supervisors nor a nonprofit corporation to which property is conveyed pursuant to subsection A of this section shall enter into any agreement with a nonprofit corporation that is a lessee as described in section 15-1637, subsection A, if the agreement provides for the conveyance of any ownership interest whatever in the nonprofit corporation to which property is conveyed pursuant to subsection A of this section or in the property described in subsection A of this section. After August 31, 1986, any such agreement must be approved by the Arizona board of regents and the state legislature. This subsection does not prevent the grant of an option to purchase such property, provided that the option may not be exercised before September 1, 1986 and the exercise of the option must be approved by the Arizona board of regents and the state legislature. Under no circumstances shall any state general fund monies be used to acquire any interest in such property.

H. Any nonprofit corporation to which property is conveyed pursuant to subsection A of this section shall make semiannual progress reports as to its financial status and deliver them on January 1 and July 1 of each year to the president of the senate, the speaker of the house of representatives and the governor. The nonprofit corporation shall present an independently audited financial statement to the auditor general within ninety days of the close of the previous fiscal year. The auditor general shall review such statements and transmit them together with a report to officers entitled to receive progress reports by this section.

I. For the purposes of this section:

1. "Health care institution" has the same meaning prescribed in section 36-401.

2. "Internal revenue code" has the same meaning prescribed in section 43-105.

3. "Nonprofit corporation" means a corporation as defined in section 10-3140.