Current through Register Vol. 48, No. 12, March 22, 2024
a)
All applicants shall address the requirements listed in this Section, as
applicable. The applicant shall provide project cost information for each of
the following components as is applicable. When a project or any component of a
project is to be accomplished by lease, donation, gift or any other means, the
fair market value or dollar value that would have been required for purchase,
construction or acquisition shall be included in the estimated total project
cost.
1) Preplanning costs - includes costs
incurred prior to the submission of an application, such as development and
feasibility studies, market studies, legal fees, bid solicitation,
etc.;
2) Site survey and soil
investigation fees - includes costs for surrounding surveying of a proposed
project site and resulting soil investigation fees;
3) Site preparation - includes costs of
rental equipment for earthwork, concrete, lifting and hoisting, site drainage,
utilities, demolition of existing structures, clearing, grading and
earthwork;
4) Off-site work -
includes costs of drainage, pipes, utilities, sewage, roads and
walks;
5) Construction and
modernization contracts - includes expenses covered under the construction
contract, including major medical and other fixed equipment, contractor's
overhead and profit;
6)
Contingencies - means an allowance for unforeseeable events relating to
construction or modernization;
7)
Architectural & engineering fees - includes fees associated with the
development and implementation of drawings and design materials for a proposed
project;
8) Consulting and other
fees - includes charges for the services of various types of consulting and
professional expertise, including environmental impact, acoustical studies,
computer software fees, etc.;
9)
Movable capital equipment not in construction contracts - includes the cost of
all movable capital equipment, including any movable major medical equipment
and the cost of installation of the equipment, excluding any trade-in
allowances on existing equipment;
10) Bond issuance expense - includes all
costs associated with the issuance of bonds to finance a project, including
issuer's fees, bond counsel's fees, official statements (feasibility study),
official statement printing, printing of bonds, survey of the collateral site,
title insurance to property, auditor's fees, trustee fees, underwriters'
discount and government fees (if applicable);
11) Net interest expense during construction
- means the difference between interest earned on funds for construction and
interest expense on the amount of borrowed funds;
12) Other costs to be capitalized - includes
miscellaneous fees and working capital expenses related to the project;
and
13) Acquisition of buildings or
other property - includes the cost incurred (or the fair market value) for the
acquisition of buildings or property for the project. Any acquisition that has
occurred within two years from the date the application for permit is submitted
must be included as part of project costs.
b) Related Cost Data
1) Land Acquisition Cost - The applicant
shall provide the purchase price or fair market value, whichever is applicable,
for the acquisition of land that is required in order to undertake the project.
Acquisition of land is not a capital expenditure and is not included as part of
project costs.
2) Operating
Start-Up Cost - The applicant shall provide a schedule of estimated
non-capitalized operating start-up costs and an estimate of any initial
operating deficit.
HFSRB NOTE: Any capitalized costs that are related to the
start-up costs of a facility must be included in the total estimated project
cost.
3) Construction and
Modernization Costs and Schedule - The applicant shall provide a construction
or project completion schedule that details the anticipated dates and percent
of project construction or modernization completion at the
25th, 50th,
75th, 95th and
100th percentile of project funds
expended.
4) Debt Service Relief
Fund - Applicants shall provide the amount that will be placed in a debt
service reserve fund and shall also provide the terms and conditions of uses of
the fund.
c) Information
Requirements for Financial Feasibility
1) The
applicant shall provide (for the LTC facility or for the person who controls
the LTC facility) either documentation of a U.S. Department of Housing and
Urban Development (HUD) insured mortgage commitment, historical financial
statements, or evidence of financial resources to fund the project.
2) Historical Financial Statements - The
applicant shall provide (for the LTC facility or for the person who controls
the LTC facility) the most recent three years' financial statements (if
available) that include the following:
A)
Balance sheet;
B) Income
statement;
C) Changes in fund
balance; and
D) Change in financial
position.
3) Projected
Capital Costs - The applicant must provide the annual projected capital costs
(depreciation, amortization and interest expense) for:
A) The first full fiscal year after project
completion; or
B) The first full
fiscal year when the project achieves or exceeds the average occupancy rate in
the market area (or target occupancy), whichever is later.
4) Projected Operating Costs - The applicant
shall provide projected operating costs (excluding depreciation and stated in
current dollars based on the full-time equivalents (FTEs) and other resource
requirements) for the first full fiscal year after project completion or the
first full fiscal year when the project achieves or exceeds the average
occupancy rate in the market area (or target occupancy), whichever is later,
including:
A) Annual operating costs;
and
B) Annual operating costs
change (increase or decrease) attributable to the project.
5) Availability of Funds - The applicant
shall document that financial resources will be available and be equal to or
exceed the estimated total project cost and any related cost. An applicant that
has no documented HUD insured mortgage commitment shall document that the
project and related costs will be:
A) Funded
in total with cash and equivalents, including investment securities,
unrestricted funds, and funded depreciation as currently defined by the
Medicare statute (
42 USC
1395 et seq.); or
B) Funded in total or in part by borrowing
because:
i) a portion or all of the cash and
equivalents must be retained in the balance sheet asset accounts in order that
the current ratio does not fall below 2.0 times; or
ii) Borrowing is less costly than the
liquidation of existing investments.
6) Operating Start-up Costs - The applicant
shall document that financial resources will be available and be equal to or
exceed any start-up expenses and any initial operating deficit.
7) Financial Viability - The applicant shall
demonstrate the financial feasibility of the project based upon the projection
of reasonable Medicare, Medicaid and private pay charges, expenses of
operation, and staffing patterns relative to other facilities in the market
area in which the proposed project will be located.
8) Previous Certificate of Need Projects -
The applicant shall describe its previous record of implementing certificate of
need-approved LTC projects.
9)
Financial and Economic Review Standard Ratios for New Facilities - The proposed
project shall comply with the ratio standards cited in Appendix B. Applicants
not in compliance with any of the viability ratios shall document the reasons
for non-compliance.