This chapter governs the administration of State grant funds to counties, municipal corporations, nonprofit corporations and other entities, hereinafter “entities”, that are authorized for funding under §330 of the Public Health Service Act (42 U.S.C. 254b) administered by the United States Department of Health and Human Services, Health Resources and Services Administration, Bureau of Primary Health Care. These grants are for the conversion, acquisition, renovation, equipping, and construction of federally qualified health centers under the Federally Qualified Health Centers Grant Program, Health-General Article, §§24-1301—24-1307, Annotated Code of Maryland. It is the intent of the Department that State grant funds be used: To assist eligible applicants with the conversion, acquisition, renovation, equipping, and construction of federally qualified health centers, eligible under the Act in accordance with this chapter; and After the applicant has secured all funds available from other sources. In this chapter, the following terms have the meanings indicated. Terms Defined. “Acquisition” means purchasing and obtaining ownership of all or part of an existing building for use as a federally qualified health center. “Act” means Health-General Article, §§24-1301—24-1307, Annotated Code of Maryland, which authorizes the disbursement of State grant funds for the purposes of conversion, acquisition, renovation, equipping, and construction of a federally qualified health center. “Admission criteria” means criteria established by a facility for admitting individuals including limitations, if any. “Applicant” means a qualified entity that has submitted an application. “Application” means the forms required and published by the Department, and submitted by the applicant to the Office of Capital Planning, Budgeting, and Engineering Services, to apply for a State grant for a project. “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. “Building” means: All or part of an existing federally qualified health center; All or part of an existing facility to be converted to a federally qualified health center; or A facility proposed to be constructed on a designated site for use as a federally qualified health center. “Capital equipment” means items that: With normal maintenance, have a life expectancy of at least 15 years; and Have durable construction. Construction. “Construction” means construction of new buildings or additions to existing buildings, including architects' fees and capital equipment. “Construction” does not include cost of: The demolition of improvements that return the land to unimproved condition; The acquisition of unimproved land, and The construction of off-site infrastructure improvements, such as roads, water, and sewer. “Conversion” means the work required to transform a building or part of a building for effective use as a federally qualified health center. “Default” means: Transfer of property that has ceased to be a federally qualified health center to any person, agency, or organization that would not qualify as an applicant, or that is not approved as a transferee by the Board of Public Works; Failure to complete a project and to obtain a required occupancy permit; Failure to commence operation of a facility within 1 year after obtaining an occupancy permit; or Failure to qualify as a facility, as defined in §B(15) of this regulation. “Department” means the Maryland Department of Health. “Eligible person” means an individual who meets facility admission criteria. “Eligible work” means work for which the use of State funds is authorized under the Act. “Facility” means a building that is wholly owned by and operated under the authority of a federally qualified health center. “Federally qualified health center” has the meaning stated in Health-General Article, §24-1301, Annotated Code of Maryland. “Grant” means any funds competitively awarded from any source to the applicant including a State grant. “Grantee” means a federally qualified health center that receives State grant funds under the Act, which are approved by the Board of Public Works. “Nonprofit organization” has the meaning stated in Health-General Article, §24-1301, Annotated Code of Maryland. “Office of Capital Planning, Budgeting, and Engineering Services” means the unit within the Department designated by the Secretary to administer this chapter. “Operating costs” means costs associated with the operation of a federally qualified health center. “Project” means a proposed scope of work for the conversion, acquisition, renovation, equipping or construction of a facility. “Qualified entity” means: An entity designated as a federally qualified health center; A nonprofit organization seeking a “new start” status; A federally qualified health center applying for a new site designation; or A federally qualified health center applying for a “change of scope” under the Federal Public Health Service Act, §330 (42 U.S.C. §254b) that: Has been invited by the Health Resources Services Administration to submit a full application for federally qualified health center designation; and Seeks to obtain State grant funds under the Act. “Renovation” means restoration or modernization, or both, to an existing or proposed Federally Qualified Health Center. “Retroactive expenditure” means any cost incurred or contracted for before the application for conversion, construction, acquisition, renovation, and equipment has been received and approved by the Secretary. “Secretary” means the Secretary of Health, or a designated representative. “State grant” means State funds awarded under the Federally Qualified Health Centers Grant Program, unless the context clearly implies otherwise. “Wholly owned” includes leased property, if the lease agreement: Is for a minimum of 15 years following the project completion or extends the right of purchase to the lessee; and Includes a consent to the recording of a notice of the State's right of recovery, by the lessor, under Health-General Article, §24-1306, Annotated Code of Maryland, in the land records of the county or Baltimore City in which the facility is located. State grant funds for federally qualified health centers shall be used solely for approved projects that involve: Conversion of public buildings or parts of buildings; Acquisition of existing buildings or parts of buildings; Renovation of a facility; Purchase of capital equipment; or Planning, design, and construction of a facility. To be eligible to apply for State grant funds under the Act, an applicant shall: Be a qualified entity; Sponsor a project involving work specified in Regulation .03 of this chapter; and Certify that the proposed facility will meet the handicap-accessibility requirements of 42 U.S.C. 12101 et seq., or provide a certified waiver from the Department of Housing and Community Development. An applicant shall apply for a State grant by completing an application with the Department on a form provided by the Department, and shall file the completed application for State grant funds with the Office of Capital Planning, Budgeting, and Engineering Services. The Department shall provide any notice and information to the State Clearinghouse for Intergovernmental Assistance that may be required under COMAR 14.24.04. The applicant shall comply with all applicable federal and State laws and regulations in effect at the time of application. At the time of filing the application, the applicant shall file a written statement with the Department containing the following information or material: Current or intended program of services; The number of personnel employed or to be employed at the facility, by occupation, and all perquisites, salaries, and any compensation paid, or to be paid, to the personnel; Expenses incurred, or to be incurred, in carrying out qualified facility operations; Schedule of rates charged, or to be charged, for services rendered at the facility; Agreement to admit eligible persons on the basis of their need for services without regard to race, religion, national origin, color, or disability; If an applicant is currently operating as a federally qualified health center, a certified, audited profit-and-loss statement and balance sheet for the most current year; If the applicant is applying for poverty funding under Regulation .08D of this chapter, an agreement that the majority of the individuals served by the applicant will be poverty-designated clients, as defined in Regulation .08D(2) of this chapter, for each year for a period of 30 years following the completion or acquisition of the facility; and Letter from Health Resources Services Administration (HRSA) granting federally qualified health center status to the nonprofit and designated site or a letter from HRSA stating that the “need” score in the applicant's letter of intent is competitive and invites the applicant to submit a full application for designation as a federally qualified health center. The Secretary shall approve applications that meet the requirements of this regulation and that set forth the priorities of the Department as stipulated in the annual application instructions. The Department shall determine the amount of the State grant, if any, for an applicant's approved project after consideration of the following: All approved applications; Priorities of need as established by the Department; The total unallocated State funds available in the Department's Administration-Sponsored Capital Programs for federally qualified health centers; The projected amount of anticipated appropriations as provided in the Governor's Five-Year Capital Improvement Program; The reasonableness of the total cost of the project; and Current operating costs or the reasonableness of a projected budget and revenues for the facility. The Department shall determine whether the application is to be recommended to the Board of Public Works for award of State grant funds after consideration of the following: The availability of State grant funds; The receipt of satisfactory evidence from the applicant of the following requirements: Sufficient total financial contribution to complete the project; Control of site, such as deed or lease; Compliance with applicable local zoning requirements; Certified bid tabulation, construction contract, contract of sale, or 30-year lease agreement with landlord, contingent upon Board of Public Works approval; and Compliance with all other applicable provisions of State or federal law. Upon satisfactory completion of §A of this regulation, the Secretary shall recommend to the Board of Public Works that a State grant be made to the approved applicant, together with a written report stating that: A notice, including information in the application, has been provided to the State Clearinghouse for Intergovernmental Assistance; The application has been approved by the Secretary; The amount of a federal grant, if any is involved, that has been awarded to the applicant; Use of Federal Grants. Any federal grant that is received for an eligible project shall be applied first to the cost of the project. Community Development Block Grants are considered as local matching funds and are not considered as federal grant funds. All other sources of funds shall be expended before any or all of the State grant is expended on an approved project. Limits of State Grant. Except as provided in §D of this regulation, a State grant may not exceed 50 percent of the cost of eligible work remaining unpaid after all federal grants have been applied. A State grant may not be used to fund participation in retroactive expenditures. A State grant may include only those costs incurred or obligations contracted for eligible work after the application has been approved by the Secretary. Costs necessary and appropriate for filing an application, such as appraisals, surveys, and test borings, shall be paid by the applicant. These costs may be approved for funding by the Board of Public Works, if the project is approved by the Board of Public Works. State grant funds may not be used to pay the following costs: Closing costs; Noncapital equipment; Consultant services; Land; Off-site improvements; and Amounts that exceed the appraised value of the real property. Exceptions on State Grant Limits. A project designated as eligible for poverty area funding under §D of this regulation may receive a State grant to cover up to 75 percent of the cost of eligible work remaining unpaid after all federal grants have been applied. Poverty Area Funding. An applicant is eligible for poverty area funding for a facility if: The project is designated as eligible for poverty area funding under applicable federal regulations and State plans or Departmental regulations; and The majority of individuals served by the facility: Are enrolled in the Maryland Medical Assistance Program; Are eligible for Supplemental Security Income benefits; or Have income levels which do not exceed 150 percent of the federal poverty level. Funding Contribution Requirements. The grantee shall provide, from other sources, funds equal to the total cost of the eligible project less the State grant award. The grantee shall assume the risk of all costs associated with the project that are incurred before the date of approval of a State grant award by the Board of Public Works. A grantee may not expend the State grant award before other sources of funds are expended. The Department may not consider as contributions: Real or personal property; In-kind contributions; or Funds expended before an application is approved by the Secretary. Prohibition Against Use of the Project for Purposes Other Than Federally Qualified Health Center. A grantee may not use a project funded by a State grant: For the furtherance of sectarian religious instruction or services; As a place of sectarian religious worship or instruction; In connection with any program or department of divinity for any religious denomination; or For any purpose other than a federally qualified health center. 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 have been used, or are being used, for a purpose prohibited by the Act. If the applicant is acquiring a site with existing improvements, and the existing improvements are to be renovated for or used for a federally qualified health center, the total project costs may be eligible for State participation. In the circumstances outlined in §A of this regulation, at least two State-approved appraisers shall provide appraisals of the site and existing improvements to be acquired. State participation shall be limited to the lesser of the appraised value approved by the Department of General Services based upon the appraisals or the actual acquisition cost. If an applicant proposes to acquire an unimproved land site on which to construct a facility, the cost of the land is not eligible for State participation. Annual Requirements. For 30 years following the completion of conversion, acquisition, renovation, capital equipping, or construction of a federally qualified health 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 recent certified, audited profit-and-loss statement and balance sheet for the facility; The volume of service at the federally qualified health center, such as days of service rendered to clients; and Other supplemental information required by the Secretary. For 30 years following the completion of a project that receives poverty funding under Regulation .08D of this chapter, the grantee shall submit annually a quantitative statement of its performance in serving designated poverty-area clients. Insurance Requirements. Upon acquisition of the project, the grantee shall provide an all-risk insurance policy that: Provides coverage for an amount at least equal to the replacement cost of the facility; Names the State as a loss payee; Protects the State's interest in the project; and Requires notification of the Office of Capital Planning, Budgeting, and Engineering Services, 201 West Preston Street, Baltimore, Maryland 21201 of any: Cancellation of policy; Material loss covered by the policy; or Material changes in the policy. The grantee shall provide builders’ risk insurance coverage during the entire period of project construction or renovation up to and including the owner’s acceptance of the building that: Names the State as a loss payee; Protects the State's interest in the building; Provides an amount at least equal to the replacement cost of the facility; and Requires evidence of the coverage be submitted to the Office of Capital Planning, Budgeting, and Engineering Services, 201 West Preston Street, Baltimore, Maryland 21201. Upon completion of a project, the grantee shall maintain, for 30 years, an all-risk insurance policy that: Provides coverage for an amount at least equal to the replacement cost of the facility; Names the State as a loss payee; Protects the State's interest in the project; Requires notification of the Office of Capital Planning, Budgeting, and Engineering Services, 201 West Preston Street, Baltimore, Maryland 21201 of any: Cancellation of policy; Material loss covered by the policy; or Material changes in the policy. The grantee shall maintain and submit evidence of this insurance annually, for a period of 30 years, to the Office of Capital Planning, Budgeting, and Engineering Services and to the State Treasurer’s Office, Insurance Division. 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 Department may audit the business records of the applicant and the applicant's agents, contractors, heirs, or assigns. Extension of Time for Completion, and Other Changes. The applicant shall notify the Secretary promptly and in any event, not later than 30 days after the applicant knew or should have reasonably have known that the applicant is unable to encumber funds: In the manner approved by the Secretary; or Within 2 years of the appropriation of the State Grant by the Maryland legislature. For good cause 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. Upon a demonstration of good cause for an extension of time, the Secretary may grant an extension of an additional 180 days to encumber funds. Expenditures. State funds may not be released until the applicant: Has recorded a notice of the State's Right of Recovery, as approved by the Secretary, in the land records of the county or Baltimore City in which the property is located; and Is in compliance with this chapter and all applicable federal and State laws. Penalties. If the grantee does not comply with this chapter and all other applicable State and federal laws, the Secretary may: Refuse to consider the grantee for any future funding under the Act; Require an audit of the grantee; Notify the Department's Office of Health Care Quality; and Take other action as appropriate. In the event of default under the terms of the Act and this chapter, a federally qualified health center financed pursuant to this chapter is subject to the State's right of recovery as set forth in the Act. Health-General Article, §§24-1301—24-1307, Annotated Code of Maryland Effective date: April 24, 2006 (33:8 Md. R. 732) Regulation .02B amended effective March 26, 2018 (45:6 Md. R. 319) Regulation .05A amended effective March 26, 2018 (45:6 Md. R. 319) Regulation .10B amended effective March 26, 2018 (45:6 Md. R. 319)