Chapter 03. Construction Funds for Public and Nonprofit Adult Day Care Centers
Regulation .01 Scope.LinkCopy Citation
A.
These regulations govern the administration of State grant funds to counties, municipal corporations, and nonprofit organizations for conversion, acquisition, renovation, equipping, and construction of adult day care centers under the Adult Day Care Centers Loan Act of 1987, Health-General Article, §§24-701—24-707, Annotated Code of Maryland.
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 1991.
C.
It is the intent of the Department that State grant funds be used:
(1)
To assist eligible applicants with the conversion, acquisition, renovation, equipping, and construction of adult day care center 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 Definitions.LinkCopy Citation
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 an adult day care center.
(2)
“Act” means Health-General Article, §§24-701—24-707, Annotated Code of Maryland, which authorizes the disbursement of State grant funds for the purposes of conversion, acquisition, renovation, equipping, and construction of an adult day care center.
(3)
“Adult day care center” means a nonresidential center that:
(a)
Serves the elderly, medically handicapped adults, or victims of Alzheimer's disease and related disorders;
(b)
Meets the definitions in Health-General Article, §14-201(b) or §14-301(b), Annotated Code of Maryland; and
(c)
Is licensed by the Department under COMAR 10.12.04.
(4)
“Applicant” means a county, municipal corporation, or nonprofit organization that seeks to obtain State grant funds under the Act.
(5)
“Board of Public Works” means the Board established by Article XII of the Constitution of Maryland, consisting of the Governor, the Treasurer, and the Comptroller of Maryland.
(6)
“Building” means:
(a)
All or part of an existing or potential adult day care center and its surrounding real property; or
(b)
A facility proposed to be constructed for use as an adult day care center, and its surrounding real property.
(7)
Construction.
(a)
“Construction” means constructing new buildings or additions to existing buildings and initial capital equipment, including architects' fees.
(b)
“Construction” does not include the cost of land acquisition and the cost of off-site improvements.
(8)
“Conversion” means the work required to transform a building or part of a building for effective use as an adult day care center.
(9)
“Department” means the Maryland Department of Health.
(10)
“Eligible work” means that work for which the use of State funds is authorized under Health-General Article, §§24-701—24-707, Annotated Code of Maryland.
(11)
“Facility” means an adult day care center that is wholly owned by and operated under the authority of a:
(a)
County or municipal corporation; or
(b)
Nonprofit organization.
(12)
“Grant” means a State grant provided under the adult day care center loan program, unless the context clearly implies otherwise.
(13)
“Grantee” means a county, municipal corporation, or nonprofit organization for which State grant funds under the Act are approved by the Board of Public Works.
(14)
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 include 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.
(15)
“Nonprofit adult day care center” means an adult day care center which is, or will be, wholly owned by and operated under the authority of a nonprofit organization.
(16)
“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 nonprofit; 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.
(17)
“Office of Capital Planning, Budgeting, and Engineering Services” means the office within the Department designated by the Secretary to administer this chapter.
(18)
“Operating costs” means costs associated with the operation of an adult day care center.
(19)
“Project” means an existing or proposed adult day care center which receives or has received a State grant for eligible work.
(20)
“Public facility” means a facility that is wholly owned by and operated under the authority of a county or municipal corporation.
(21)
“Renovation” means the work required to restore or modernize, or both, an existing or proposed adult day care center.
(22)
“Secretary” means the Secretary of Health, or a designated representative.
(23)
“Wholly owned” includes leased property, if the lease agreement:
(a)
Is for a minimum of 30 years following the project completion or extends the right of purchase to the lessee; and
(b)
Consents to the recording of a notice of the State's right of recovery, by the lessor, under Health-General Article, §24-706, Annotated Code of Maryland, in the land records of the county or Baltimore City in which the facility is located.
Regulation .03 Eligibility of Applicant for State Grant Funds.LinkCopy Citation
A.
To be eligible for State grant funds under the Act, an applicant shall:
(1)
Be a county, municipal corporation, or a nonprofit organization;
(2)
Be eligible for licensing under COMAR 10.12.04;
(3)
Have relevant experience providing related health or human services;
(4)
Be recommended by the Medical Care Policy Administration as a project conforming to the Administration's 5-year plan for these services;
(5)
Complete a feasibility study as specified and approved by the Medical Care Policy Administration;
(6)
Certify that the proposed facility will meet the handicap-accessibility requirements of COMAR 10.12.04 and 42 U.S.C. §12101 et seq.;
(7)
Be eligible for certification, and agree to participate in Title XVIII and Title XIX of the Social Security Act, if applicable; and
(8)
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 .04 Application Procedure.LinkCopy Citation
A.
An applicant shall apply for a grant to be used for conversion, acquisition, renovation, purchase of capital equipment, and construction by filing an application with the Department on a form provided by the Department.
B.
An applicant shall direct the 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, including COMAR 10.12.04.
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 material:
(1)
Current or intended program of services;
(2)
The number of personnel employed or to be employed at the facility, by occupation, and all perquisites, salaries, and any other funds paid, or to be paid, to these personnel;
(3)
Expenses incurred or to be incurred in carrying out qualified facility operations;
(4)
Schedule of rates charged or to be charged for services rendered at the facility;
(5)
Agreement to admit persons on the basis of their need for services without regard to race, national origin, color, disability, or religion, and to define clearly proposed limitations, if any, regarding age groups, level of functional impairment, or disability;
(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 .06F of this chapter, an agreement that the majority of the persons served by the applicant shall be poverty-designated clients, as defined in Regulation .06F 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 may approve that application and may 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 under provisions of federal regulations; and
(3)
The Secretary recommends that the Board of Public Works make available to the applicant State grant funds.
Regulation .05 Priority of Awards.LinkCopy Citation
The Department shall determine the priority of applicants to be awarded State grant funds after consideration of:
A.
All eligible applications;
B.
The 5-year plan of the Medical Assistance Policy Administration for these services;
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 of 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 .06 Grant Limitations and Provisions.LinkCopy Citation
A.
The provisions of these regulations apply to applicants for grants under the Act.
B.
Alternative Public Building. State funds may be used to acquire an existing building or part of a building for use as an adult day care center, or to plan, design, and construct an adult day care center, only if the local government and the Department certify to the Board of Public Works that a surplus school building or other public building appropriate for use as an adult day care center does not exist in the area where it is desired to locate a center.
C.
Use of Federal Grants. Any federal grants available for a project shall be applied first to the cost of the project, before a State grant is expended.
D.
Community Development Block Grants. Community development block grants are considered as local matching funds and are not considered as federal grant funds.
E.
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 eligible costs remaining after the federal grant has been applied, if a project is approved for poverty funding.
(3)
An applicant is not eligible for retroactive participation in the cost of acquisition, construction, renovation, or 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 §G of this regulation.
F.
Poverty Fundings. 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 General Public Assistance 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.
G.
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 §G(1) of this regulation and may recommend those costs to the Board of Public Works for inclusion in the grant award.
H.
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, unless approved by the Board of Public Works under §H(2) of this regulation, funds expended before the date a grant award is approved by the Board of Public Works as matching funds.
I.
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 .07 Use of Funds for Site Acquisition and Renovation.LinkCopy Citation
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 an adult day care center, 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 is 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 .08 Residual Requirements of the Grantee.LinkCopy Citation
A.
Annual Requirements.
(1)
For a period of 30 years following the completion of conversion, acquisition, renovation, capital equipping, or construction of an adult day care center 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 adult day care center, such as days of service rendered to clients; 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 .06F of this chapter, the grantee shall submit annually a quantitative statement of its performance in serving poverty-designated clients, as described in Regulation .06F 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)
Upon 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 business records of the adult day care center 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 .09 Right of Recovery.LinkCopy Citation
In the event of default under the terms of the Act and this chapter, an adult day care center financed pursuant to this chapter is subject to the State's right of recovery as set forth in the Act.
Chapter annotations
Authority: Health-General Article, §24-701 et seq., Annotated Code of Maryland
History: Effective date: December 28, 1987 (14:26 Md. R. 2746)
History: Regulations .01—.09 amended effective August 1, 1994 (21:15 Md. R. 1305)
History: Regulation .02B amended effective March 26, 2018 (45:6 Md. R. 319)
History: Regulation .04B amended effective March 26, 2018 (45:6 Md. R. 319)
History: Regulation .06E amended effective March 9, 1998 (25:5 Md. R. 369); March 26, 2018 (45:6 Md. R. 319)
History: Regulation .08B amended effective March 26, 2018 (45:6 Md. R. 319)