32.02.01.17

.17 Application for Expansion of Facility.

A. Statement of Intent.

(1) A provider that intends to undertake an expansion of its facility shall file a statement of intent with the Department at least 30 days before submission of an expansion approval request.

(2) If the expansion approval request is not filed by the provider within 60 days after the statement of intent is filed, a new statement of intent shall be filed with the Department at least 30 days before submission of the financial plan described in §B(3) of this regulation.

(3) A statement of intent shall describe at a minimum:

(a) The proposed expansion;

(b) The types of agreements proposed, such as extensive, modified, or fee-for-service, and whether entrance fees will be refundable or nonrefundable;

(c) The number of proposed additional units, if any, by unit type; and

(d) Any further information the Department requires.

B. Expansion Approval Request.

(1) An expansion approval request shall be prepared in a form satisfactory to the Department.

(2) A provider's expansion approval request shall include the following information:

(a) A statement of the purpose and need for the expansion;

(b) A demonstration that a market exists for any proposed additional independent living or assisted living units, which meets the requirements of §C of this regulation; and

(c) A financial plan that:

(i) Is prepared by an authority recognized by the Department,

(ii) Demonstrates to the satisfaction of the Department that the expansion will not have an unreasonably adverse effect on the financial ability of the provider to furnish continuing care in accordance with the provider's agreements and the Act at each facility of the provider in the State, and

(iii) Meets the requirements of §D of this regulation.

C. Demonstration of a Market.

(1) For expansions of ten or fewer units, a provider's expansion approval request shall include the following to demonstrate that a market exists for the proposed additional units:

(a) The existing wait lists and existing occupancy lists for the facility's independent living and assisted living units, by unit type; or

(b) Other documentation of market demand for the proposed additional units that is acceptable to the Department.

(2) For expansions of more than ten units, a provider's expansion approval request shall include the following to demonstrate that a market exists for the proposed additional units:

(a) A description of the primary and secondary market areas as defined by the provider;

(b) A table of population information, including the age, sex, number, income distribution, and trends of the total population and of the population of individuals 60 years old and older within the primary and secondary market areas;

(c) A calculation of the market penetration rate for the proposed additional units for both the primary and secondary markets;

(d) A table of home values in the primary and secondary market areas; and

(e) A statement of the minimum age, income, and net worth eligibility standards for a subscriber to the proposed additional living units.

D. Financial Plan. A financial plan required in §B(2)(c) of this regulation shall include:

(1) The anticipated costs of the proposed expansion, including all related costs such as:

(a) Financing costs,

(b) Marketing costs,

(c) Construction costs,

(d) Architect and engineering fees,

(e) Legal and administrative costs, and

(f) Any other costs;

(2) The anticipated sources and uses of funds to finance the proposed expansion and costs of financing;

(3) A description of any proposed financing, including anticipated terms;

(4) Projected 5-year balance sheets, income statements, cash flow statements, including key assumptions for each, prepared in accordance with generally accepted accounting principles;

(5) A schedule of anticipated periodic fees and entrance fees for any additional independent living and assisted living units;

(6) A schedule of monthly move-ins, by unit type, for any additional units; and

(7) Any further information the Department requires.

E. Filing Fee.

(1) A filing fee of $50 per additional unit shall accompany the expansion approval request.

(2) The Department may charge an additional fee, not to exceed the original fee, for resubmission of a financial plan to the Department due to:

(a) Significant changes in assumptions in the financial plan;

(b) Correction of significant errors in the plan; or

(c) An incomplete financial plan submission.