Washington Administrative Code Title 247 - Health Care Facilities Authority
I. Overview of WAC Title 247
WAC Title 247 implements and interprets the Washington Health Care Facilities Authority Act (codified primarily in RCW 70.37).
The Authority is a public instrumentality of the State of Washington, created to help finance health care facilities through tax-exempt and taxable bond financing.
Key purpose:
To improve access to health care by allowing nonprofit and qualifying public health care providers to obtain lower-cost capital through state-issued conduit bonds.
The Authority does not operate hospitals and does not pledge state credit. It functions as a financing conduit.
II. Structure of Title 247 WAC
While section numbering may evolve, Title 247 is generally organized around these functional areas:
1. Authority Governance and Powers
These provisions explain:
Composition of the Authority
Appointment and role of members
Powers delegated by statute
Use of officers, staff, and advisers
Legal significance:
The Authority acts independently but strictly within the powers granted by statute. Actions outside those powers are ultra vires (legally invalid).
2. Definitions and Eligibility
Key definitions include:
“Health care facility”
“Participating borrower”
“Nonprofit corporation”
“Public hospital district”
“Project costs”
Eligibility rules generally require:
Nonprofit status under federal tax law or
Public or quasi-public health entities
Projects that serve a recognized health care purpose
Legal significance:
Eligibility determines whether bond interest qualifies for tax-exempt treatment and whether the Authority has jurisdiction.
3. Application and Approval Process
These rules govern:
Submission of financing applications
Required financial disclosures
Feasibility studies
Public notice and hearings
Authority resolutions approving financing
Key principles:
Transparency
Public accountability
Financial feasibility
Public benefit
Failure to follow these procedures can invalidate financing approvals.
4. Bond Issuance and Financing Mechanics
This is the core of Title 247.
Rules address:
Types of bonds (revenue bonds, refunding bonds)
Trust indentures
Loan agreements
Security for bonds
Use of bond proceeds
Critical rule:
Bonds issued by the Authority are not debts of the State of Washington.
Bondholders rely only on revenues pledged by the borrower.
5. Compliance, Reporting, and Ongoing Obligations
Participating borrowers must:
Maintain nonprofit or qualifying status
Use facilities for approved purposes
Provide financial reports
Comply with federal tax law requirements
Noncompliance can trigger:
Default remedies
Acceleration of debt
Loss of tax-exempt status
III. Legal Nature of the Authority
Under Washington law, the Health Care Facilities Authority is:
A public instrumentality
Separate from the state treasury
Not authorized to levy taxes
Not backed by the full faith and credit of the state
This classification is essential for constitutional compliance.
IV. Case Law Interpreting Health Care Facility Financing in Washington
1. Scarcity of Direct WAC Title 247 Litigation
There are very few reported Washington appellate cases directly interpreting WAC Title 247 itself.
This is common for conduit financing authorities, because:
Transactions are contractual
Disputes are often resolved privately
Bonds are structured to minimize litigation risk
However, Washington courts have repeatedly addressed the legal principles that Title 247 relies upon.
2. Public Instrumentality and State Debt Doctrine
Washington courts consistently hold that:
Bonds issued by an authority do not create state debt if:
They are payable solely from project revenues
The state does not guarantee repayment
This principle arises from cases interpreting Article VIII of the Washington Constitution (state debt limitations).
Key judicial theme:
A financing authority may issue revenue bonds without violating constitutional debt limits so long as the state’s credit is not pledged.
Title 247 rules are drafted to comply precisely with this doctrine.
3. Public Purpose Requirement
Washington courts require that:
Public financing mechanisms serve a legitimate public purpose
Health care access is repeatedly recognized as a valid public purpose
Courts have upheld financing arrangements for:
Hospitals
Long-term care facilities
Community health systems
Nonprofit medical centers
Even when facilities are operated by nonprofit corporations, courts recognize the public health benefit.
4. Delegation of Authority and Administrative Rules
Washington case law confirms that:
Agencies may adopt administrative rules only within statutory authority
WAC Title 247 is valid because it closely tracks RCW 70.37
Courts defer to agency interpretation when:
The statute is ambiguous
The agency has subject-matter expertise
The rule is consistent with legislative intent
5. Bondholder and Contractual Rights
Courts treat:
Bond resolutions
Trust indentures
Loan agreements
as binding contracts protected under:
State contract law
Federal constitutional contract protections
Once bonds are issued, later regulatory changes cannot impair bondholder rights.
V. Practical Legal Implications
For Health Care Providers
Access to lower interest rates
Long-term capital financing
Ongoing compliance obligations
For the State
No financial liability
No constitutional debt
Advancement of public health goals
For Courts
Minimal intervention
Strong enforcement of contracts
Deference to administrative expertise
VI. Summary
WAC Title 247:
Implements statutory authority for health care financing
Establishes clear procedures and safeguards
Aligns with Washington constitutional law
Operates in an area with limited litigation but strong judicial support
Washington courts have consistently upheld:
The legality of public financing authorities
The separation of state debt from authority bonds
The public purpose of health care facility financing
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