SECTION 1. The executive office of health and human services shall investigate and establish a zero interest loan trust fund for the purpose of establishing a program to convert entire or parts of licensed nursing facilities to community-based residences.  The community-based residences shall provide alternative services for underserved elderly and disabled persons and shall include, but not be limited to, affordable independent housing, assisted living residences, group homes for the developmentally disabled, and outpatient medical and dental services programs.  The office shall establish the criteria for nursing facilities to be eligible for conversions, the physical plant re-adaptation of nursing facilities, and the eligible enrollees in the conversion program.

SECTION 2: There shall be established and set up on the books of the commonwealth the Massachusetts Nursing Home Conversion Loan Fund, hereinafter referred to as the fund, the proceeds of which shall be used to provide zero-interest loans to  convert entire or parts of licensed nursing facilities to community-based residences.     There shall be credited to the fund any appropriations or other monies authorized by the general court and specifically designated to be credited to the fund; proceeds of any bonds or notes of the commonwealth issued for the purpose; any federal grants or loans; any private gifts, grants or donations made available; and any income derived from the investment of amounts credited to the fund. The secretary of the executive office of health and human services shall pursue and maximize all opportunities to qualify for federal financial participation.

SECTION 3.   An advisory committee shall oversee the development of the program.  Said committee shall be composed of the following members, or their designee:  the secretary health and human services, the secretary of elder affairs, the director of the office of Medicaid, the commissioner of public health, the chairs of the joint committee on health care financing, the chairs of the house and senate committees on ways and means, a representative from the Massachusetts Senior Care Association, a representative from Leading Age and two consumer representatives.