# COMAR Title 10 — Maryland Department of Health

## Subtitle 08 — Health Facilities Grants

### Chapter 02 — Construction Funds for Public and Nonprofit Community Mental Health, Addiction, and Developmental Disabilities Facilities

**Authority:** Health-General Article, §§2-102, 24-601, et seq., Annotated Code of Maryland

**Administrative History:** Effective date: February 23, 1987 (14:4 Md. R. 417)

**Administrative History:** Regulations .01 and .03—.10 amended and Regulation .02 repealed effective December 5, 1994 (21:24 Md. R. 1988)

**Administrative History:** Regulation .03B amended effective March 14, 2016 (43:5 Md. R. 385); March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Regulation .05B amended effective March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Regulation .07D amended effective March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Regulation .07E amended effective March 9, 1998 (25:5 Md. R. 369)

**Administrative History:** Regulation .09B amended effective March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Annotation: The following chapters were originally adopted to govern the administration of construction funds for public and nonprofit community mental health center components, addiction facilities, and developmental disabilities facilities. These chapters were repealed effective February 23, 1987 (14:4 Md. R. 417) and replaced by the current COMAR 10.08.02:

**Administrative History:** 10.08.04 (1972) effective April 26, 1973; amended effective July 7, 1976 (3:14 Md. R. 746)

**Administrative History:** 10.08.05 (1973) effective April 30, 1975 (2:9 Md. R. 677); amended effective July 7, 1976 (3:14 Md. R. 746)

**Administrative History:** 10.08.06 (1974) effective September 17, 1975 (2:21 Md. R. 1340)

**Administrative History:** 10.08.07 (1975) effective July 7, 1976 (3:14 Md. R. 747)

**Administrative History:** 10.08.09 (1977) effective March 24, 1978 (5:6 Md. R. 466)

**Administrative History:** 10.08.10 (1978) effective May 4, 1979 (6:9 Md. R. 727)

**Administrative History:** 10.08.12 (1979) effective February 22, 1980 (7:4 Md. R. 347)

**Administrative History:** 10.08.14 (1980) effective April 17, 1981 (8:8 Md. R. 720)

**Administrative History:** 10.08.15 (1981) effective as an emergency provision July 15, 1981 (8:15 Md. R. 1296); effective permanently November 23, 1981 (8:23 Md. R. 1855)

**Administrative History:** 10.08.16 (1982) effective January 17, 1983 (10:1 Md. R. 29)

**Administrative History:** 10.08.17 (1983) effective as an emergency provision August 24, 1983 (10:19 Md. R. 1684); effective permanently March 12, 1984 (11:5 Md. R. 462)

**Administrative History:** 10.08.18 (1984) effective as an emergency provision August 15, 1984 (11:18 Md. R. 1578); effective permanently December 31, 1984 (11: 26 Md. R. 2278)

#### Regulation .01 Scope.

*COMAR 10.08.02.01*

A. These regulations govern the administration of State grant funds for public and  nonprofit community mental health, addiction, and developmental disabilities facilities made available by the:

  (1) Community Mental Health, Addiction, and Developmental Disabilities Facilities Loan Act of 1989, Chapter 126, Laws of Maryland 1989, and similar Acts;

  (2) Maryland Consolidated Capital Bond Loan Act of 1990, Chapter 421, Laws of Maryland 1990, and similar Acts;

  (3) Maryland Consolidated Capital Bond Loan Act of 1991, Chapter 471, Laws of Maryland 1991 and similar Acts; and

  (4) Maryland Consolidated Capital Bond Loan Act of 1992, Chapter 4 (special session), Laws of Maryland 1992, and similar Acts.

B. These regulations do not supersede, terminate, or abrogate the residual requirements of prior regulations adopted in accordance with the previous Acts which provided funds for these same purposes. The terms of the prior regulations, to the extent they conflict with these regulations, shall continue to govern the administration of funds for public and nonprofit facilities which receive, or have received, State grant funds authorized by Acts of years before 1992.

C. It is the intent of the Department that State grant funds be used:

  (1) To assist eligible applicants for the construction, acquisition, renovation, and equipping of facilities eligible under the Act in accordance with these regulations; and

  (2) After the applicant has secured all funds available from other sources.

#### Regulation .02 Repealed.

*COMAR 10.08.02.02*

#### Regulation .03 Definitions.

*COMAR 10.08.02.03*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Acquisition” means purchasing and obtaining ownership of all or part of an existing building for use as a community mental health, addiction, or developmental disabilities facility.

  (2) “Act” means Health-General Article, §24-601 et seq., Annotated Code of Maryland.

  (3) “Addiction” means a disease which is characterized by a pattern of pathological use of alcohol or a drug, or both, with repeated attempts to control the use and with significant negative consequences in at least one of the following areas of life:

    (a) Financial;

    (b) Legal;

    (c) Medical; or

    (d) Psychosocial.

  (4) “Addiction facility” means any facility which provides or proposes to provide treatment for an addiction.

  (5) “Applicant” means a county, a municipal corporation, or a nonprofit organization that seeks to obtain State grant funds under the Act.

  (6) “Appropriate administration” means the Behavioral Health, Developmental Disabilities, or Prevention and Health Promotion Administration.

  (7) “Community mental health facility” means a facility where one or more of the following mental health programs is provided, or is proposed to be provided:

    (a) Inpatient services;

    (b) Outpatient services;

    (c) Partial care services, including day care services and night care services;

    (d) 24-hour emergency services;

    (e) Aftercare services;

    (f) Consultation services;

    (g) Education services;

    (h) Community rehabilitation services.

  (8) Construction.

    (a) “Construction” means construction of new buildings or additions to existing buildings and initial capital equipment, including plans, specifications, site improvements, surveys, and applicable engineers' and architects' fees.

    (b) “Construction” does not include the cost of land acquisition and the cost of off-site improvements.

  (9) “Department” means the Maryland Department of Health.

  (10) Developmental Disabilities Facility.

    (a) “Developmental disabilities facility” means any facility which provides or proposes to provide services for individuals with disabilities, whether the facility is  hospital-based, a clinic, vocational, day, or a residential site.

    (b) For purposes of this definition, facility does not include a Veterans' Administration hospital.

  (11) “Facility” means a:

    (a) Public community mental health facility, addiction facility, or developmental disabilities facility that is wholly owned by, and operated under, the authority of a county or municipal corporation; or

    (b) Nonprofit community mental health facility, addiction facility, or developmental disabilities facility that is wholly owned by, and operated under, the authority of a nonprofit organization or corporation.

  (12) “Grantee” means a county, a municipal corporation, or a nonprofit organization or corporation for which State grant funds under the Act are approved by the Board of Public Works.

  (13) Initial Capital Equipment.

    (a) “Initial capital equipment” means items which:

      (i) Are necessary to furnish and initially operate a facility;

      (ii) With normal maintenance have a life expectancy of at least 15 years; and

      (iii) Are of durable construction.

    (b) “Initial capital equipment” does not mean items which:

      (i) Could be easily lost, damaged, or destroyed during normal usage;

      (ii) Could be easily stolen;

      (iii) Are likely to be technically obsolescent within 15 years; or

      (iv) Are intended to replace a similar item already on hand.

  (14) “Nonprofit facility” means a facility which is, or will be, wholly owned by and operated under the authority of a nonprofit organization.

  (15) “Nonprofit organization” means:

    (a) A bona fide religious organization, or a chartered nonprofit corporation which is classified under §501(c)3 of the Internal Revenue Code as a nonprofit organization; and

    (b) That no part of the organization's or corporation's earnings inures to the benefit of an individual or is used for any purpose other than the maintenance and operation of the facility, the purchase of equipment to be used in the facility, or the expansion of the facility.

  (16) “Office of Capital Planning, Budgeting, and Engineering Services” means the office within the Department designated by the Secretary to administer this chapter.

  (17) “Public facility” means a facility that is wholly owned by and operated under the authority of a county or a municipal corporation.

  (18) “Renovation” means the work required to restore or modernize, or both, most or all of a facility.

  (19) “Secretary” means the Secretary of Health, or a designated representative.

  (20) Wholly Owned.

    (a) “Wholly owned” includes leased property, if the lease agreement is with the State for a State-owned building or State-owned property.

    (b) “Wholly owned” includes leased property which is not State-owned, if the:

      (i) Lease agreement is for a minimum of 30 years following the project completion or extends the right of purchase to the lessee; and

      (ii) Lessor consents to the recording of a notice of the State's right of recovery, under Health-General Article, §24-606, Annotated Code of Maryland, in the land records of the county or Baltimore City in which the facility is located.

#### Regulation .04 Eligibility of Applicant for State Grant Funds.

*COMAR 10.08.02.04*

A. To be eligible for State grant funds under the Act, an applicant shall:

  (1) Be a county, a municipal corporation, or a nonprofit organization;

  (2) Be recommended by the appropriate administration as a result of a proposal for a project conforming to the plans or program for services by that administration;

  (3) Have proposed a project which is in accord with the priorities of the Secretary;

  (4) Be eligible for licensing or certification under existing federal or State regulations, or both, when licensing or certification is required in order to provide treatment or services in the facility;

  (5) Be eligible for certification, and agree to participate, in Title XVIII and Title XIX of the Social Security Act, if applicable;

  (6) Have proposed a project which meets the handicap-accessibility requirements of COMAR 05.02.02, promulgated pursuant to Article 83B, §6-102, Annotated Code of Maryland, if applicable, and 42 U.S.C. §12101 et seq.; and

  (7) Be approved by the Secretary to receive a grant award.

B. In determining the site or location of a facility, an applicant may not make a selection with the effect of excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any programs to which this chapter applies, on the grounds of race, color, religion, disability, or national origin, or with the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of the Act or this chapter.

#### Regulation .05 Application Procedure.

*COMAR 10.08.02.05*

A. An applicant shall apply for a grant to be used for construction, acquisition, renovation, and equipping of a facility by filing an application with the Department on a form provided by the Department.

B. An applicant shall direct an application for State grant funds to the Office of Capital Planning, Budgeting, and Engineering Services.

C. The Department shall provide notice and information to the State Clearinghouse for intergovernmental review in accordance with COMAR 14.24.04.

D. The applicant shall comply with the application procedures in effect at the time of application, as prescribed by applicable federal and State regulations.

E. At the time of filing the application, and before the authorization of an award of State grant funds, the applicant shall file a written statement with the Department containing the following materials:

  (1) Current or intended program of services;

  (2) The facility's admission policies, including:

    (a) Statements in which the applicant shall:

      (i) Agree to admit individuals on the basis of their need for services without regard to race, national origin, color, disability, religion, or ability to pay,

      (ii) According to law and these regulations, define clearly proposed limitations, if any, regarding age groups, illness, or disorder categories, and

      (iii) Give priority to individuals for admission to the facility who are certified by a local department of social services for assistance, and to individuals of low income;

    (b) For an applicant serving or intending to serve individuals in a developmental disabilities facility, an agreement to:

      (i) Serve only those clients for whom the Developmental Disabilities Administration has authorized services in accordance with COMAR 10.22.18 or Health-General Article, §7-403, Annotated Code of Maryland, or

      (ii) Obtain written permission from the Director, Developmental Disabilities Administration, before serving individuals not funded by the Developmental Disabilities Administration;

  (3) The number of personnel employed or to be employed at the facility, by occupation, and all perquisites, salaries, and other funds paid, or to be paid, to these personnel;

  (4) Expenses incurred, or to be incurred, in carrying out qualified facilities operations;

  (5) The schedule of rates charged, or to be charged, for services rendered;

  (6) If a facility is currently operating, a certified, audited profit-and-loss statement and balance sheet for the most current year; and

  (7) If the applicant is applying for poverty funding under Regulation .07E of this chapter, an agreement that the majority of the individuals served by the applicant shall be poverty-designated clients, as defined in Regulation .07E of this chapter, for each year for a period of 30 years following the completion or acquisition of the facility.

F. If the application meets all pertinent criteria, the Secretary, in the Secretary's discretion, may approve that application and, if approved, shall recommend the application to the Board of Public Works, together with a written report stating that:

  (1) Notice and information in the application have been provided to the State Clearinghouse;

  (2) The application has been approved by the Secretary, and when a federal grant is involved, the application has also been approved by the Secretary of Health and Human Services or other appropriate federal authority; and

  (3) The Secretary recommends that the Board of Public Works make available to the applicant State grant funds.

#### Regulation .06 Priority of Awards.

*COMAR 10.08.02.06*

The Department shall determine the priority of applicants for State grant funds after consideration of:

A. All eligible applications;

B. Each project, by the appropriate administration, for conformance with the program or plans for these services established by the respective administrations;

C. Priorities as established by the Department;

D. The reasonableness of the projected capital, and operating costs and revenues, for the facility;

E. The availability of State grant funds;

F. The total unallocated State grant funds available at the time the application is received; and

G. The readiness of the project to go before the Board of Public Works.

#### Regulation .07 Grant Limitations and Provisions.

*COMAR 10.08.02.07*

A. The provisions of these regulations apply to applicants for grants under the Act.

B. Use of Federal Grants. Federal grant funds available for a project shall be applied first to the cost of construction, acquisition, renovation, and initial capital equipment of the facility, before a State grant is expended.

C. Community Development Block Grants. Community development block grants are considered as local matching funds and are not considered as federal grant funds.

D. Limits on State Grant.

  (1) For a project without federal participation, a State grant may not be more than:

    (a) 50 percent of eligible costs, unless the project is approved for poverty funding; or

    (b) 75 percent of eligible costs, if a project is approved for poverty funding.

  (2) For a project with federal participation, a State grant may not be more than:

    (a) 50 percent of the eligible costs remaining after the federal grant has been applied, unless the project is approved for poverty funding; or

    (b) 75 percent of the eligible costs remaining after the federal grant has been applied, if a project is approved for poverty funding.

  (3) An applicant may not be eligible for retroactive participation in the:

    (a) Cost of:

      (i) Acquisition;

      (ii) Construction; and

      (iii) Renovation; or

    (b) Purchase of equipment.

  (4) The grant shall include only those expenditures incurred or contracted for after the grant award is approved by the Board of Public Works, except as provided in §F of this regulation.

E. Poverty Funding. An applicant is eligible for poverty funding for a facility, if the majority of individuals served by the facility:

  (1) Are certified by a local department of social services as eligible for Family Investment Program (FIP) or Medical Assistance;

  (2) Are eligible for Supplemental Security Income benefits; or

  (3) Have income levels which do not exceed 150 percent of the federal poverty level.

F. Application Costs.

  (1) An applicant shall pay the costs necessary to file the application, such as the costs for appraisals, architects' fees, surveys, and test borings.

  (2) If the project is recommended for funding by the Department, the Department shall review the costs expended under §F(1) of this regulation, and may recommend those costs to the Board of Public Works for inclusion in the grant award.

G. Matching Funds.

  (1) The applicant shall provide from other sources matching funds equal to the total eligible cost of the project less the State grant award.

  (2) An applicant may not expend matching funds before the State grant award, unless the Board of Public Works approves otherwise.

  (3) The Department may not consider real or personal property, in-kind contributions, or funds expended before the date a grant award is approved by the Board of Public Works, as matching funds.

H. Prohibition Against Use of Funds for Religious Purposes.

  (1) A grantee may not use any portion of the proceeds of a State grant:

    (a) For the furtherance of sectarian religious instruction; or

    (b) In connection with the design, acquisition, or construction of any building used, or to be used, as a place of sectarian religious worship or instruction, or in connection with any program or department of divinity for any religious denomination.

  (2) Upon the request of the Board of Public Works, the grantee shall submit evidence satisfactory to the Board that none of the proceeds of the grant has been, or is being, used for a purpose prohibited by the Act.

#### Regulation .08 Use of Funds for Site Acquisition and Renovation.

*COMAR 10.08.02.08*

A. If the applicant is using both State funds and federal grant funds for site acquisition and renovation, then at least two State-approved appraisers shall determine that portion of the total cost applicable to the land site alone. The Department shall exclude this cost from State participation.

B. If the applicant is acquiring a site with existing improvements and renovating the improvements for use as a community mental health, addiction, or developmental disabilities facility, and if the applicant will not be using a federal grant, then the total project costs, including costs applicable to the acquisition of this site and existing improvements, are eligible for State participation.

C. In the circumstances outlined in §B of this regulation, at least two State-approved appraisers shall make an estimate of the market value of the site and existing improvements. State participation shall be limited to the lesser of the value approved by the Department of General Services based upon the appraisals or actual acquisition cost.

D. If an applicant proposes to acquire a land site on which to construct a facility, the cost of the land is not eligible for State participation.

#### Regulation .09 Residual Requirements of the Grantee.

*COMAR 10.08.02.09*

A. Annual Requirements.

  (1) For a period of 30 years following the completion of construction or renovation, or the acquisition of a facility involving the State grant funds in this chapter, a grantee shall file a written statement annually with the Department containing the following material:

    (a) The number of personnel employed at the facility, by occupation, and all remunerations, retainers, perquisites, and expenses currently paid;

    (b) Fees or retainers paid directly or under contract to consultants and other persons rendering services at the facility;

    (c) A current, certified, audited profit-and-loss statement and balance sheet for the facility;

    (d) Rates and fees charged for services provided at the facility;

    (e) Gifts or endowments received during the current year;

    (f) Volume of service at the facility, such as the days of service rendered to inpatient clients, the number of day program clients and the number of days of service, or the number of outpatient clients and outpatient visits; and

    (g) Other supplemental information required by the Secretary.

  (2) For a period of 30 years following the completion of a project that receives poverty funding under Regulation .07E of this chapter, the grantee shall submit annually a quantitative statement of its performance in serving poverty-designated clients, as set forth in Regulation .07E of this chapter.

B. Insurance Requirements.

  (1) The grantee shall provide builders’ risk insurance during the entire period of project construction or renovation as follows:

    (a) The policy shall name the State as a loss payee;

    (b) The policy shall be endorsed to protect the State's interest in the building;

    (c) The coverage shall be for an amount at least equal to the replacement cost of the facility; and

    (d) The grantee shall submit evidence of this insurance to the Office of Capital Planning, Budgeting, and Engineering Services.

  (2) On acquisition of a building or part of a building, the grantee shall provide all-risk insurance coverage as follows:

    (a) The coverage shall be for an amount at least equal to the replacement cost of the facility;

    (b) The policy shall name the State as a loss payee;

    (c) The policy shall be endorsed to protect the State's interest in the project;

    (d) The policy shall be endorsed to notify the Office of Capital Planning, Budgeting, and Engineering Services, 201 West Preston Street, Baltimore, Maryland 21201 of any:

      (i) Notification of cancellation of the policy,

      (ii) Material loss covered by the policy, and

      (iii) Material changes in the policy; and

    (e) The grantee shall:

      (i) Maintain this insurance for a period of 30 years, and

      (ii) Submit evidence of this insurance annually to the Office of Capital Planning, Budgeting, and Engineering Services and to the State Treasurer’s Office, Insurance Division.

  (3) Upon completion of a project, the grantee shall maintain, for a period of 30 years, all-risk insurance coverage as follows:

    (a) The coverage shall be for an amount at least equal to the replacement cost of the facility;

    (b) The policy shall name the State as a loss payee;

    (c) The policy shall be endorsed to protect the State's interest in the project;

    (d) The policy shall be endorsed to notify the Office of Capital Planning, Budgeting, and Engineering Services, 201 West Preston Street, Baltimore, Maryland 21201 of any:

      (i) Notification of cancellation of the policy,

      (ii) Material loss covered by the policy, and

      (iii) Material changes in the policy; and

    (e) The grantee shall submit evidence of this insurance annually to the Office of Capital Planning, Budgeting, and Engineering Services and to the State Treasurer’s Office, Insurance Division.

C. During the entire period of work on the project and for a period of 30 years after the project has been completed or acquired, the grantee shall make available the business records of the facility for verification by representatives of the Department or its designated agent.

D. Extension of Time for Completion, and Other Changes.

  (1) The applicant shall promptly notify the Secretary if the applicant is unable to encumber funds:

    (a) In the manner approved by the Secretary; or

    (b) Within 2 years of the appropriation by the Maryland legislature.

  (2) The Secretary may grant a request by the applicant for a change in the manner or time for encumbrance of funds, including an extension of time, for good cause.

E. Expenditures. State funds may not be expended until the grantee is in compliance with §B(1) and (2)(a)—(d) of this regulation, and a notice of the right of recovery is recorded in the land records of the county or Baltimore City in which the property is located.

F. Penalties. If the grantee does not comply with §§A, B(2) and (3), and C of this regulation, the Secretary may:

  (1) Refuse to consider the grantee for any future funding under the Act; and

  (2) Require an audit of the grantee.

#### Regulation .10 Right of Recovery.

*COMAR 10.08.02.10*

In the event of default under the terms of the Act and this chapter, a facility financed pursuant to this chapter is subject to the State's right of recovery as set forth in the Act.