Senate Bill sb1246e1

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  1                      A bill to be entitled

  2         An act relating to continuing care retirement

  3         communities; amending s. 651.015, F.S.;

  4         authorizing the Department of Insurance to

  5         accept certain documents and information

  6         relating to continuing care contracts

  7         electronically or by facsimile; authorizing the

  8         department to adopt rules; amending s. 651.033,

  9         F.S.; correcting a cross reference; amending s.

10         651.035, F.S.; revising minimum liquid reserve

11         requirements for continuing care providers;

12         amending s. 651.118, F.S.; providing a funding

13         limitation on sheltered beds used to provide

14         extended congregate care in a continuing care

15         facility; authorizing certain sharing of

16         facilities and services between such sheltered

17         beds and nursing home beds in such facilities;

18         exempting continuing care facility residents

19         from certain calculations relating to

20         moratoriums on new nursing home admissions;

21         providing an effective date.

22

23  Be It Enacted by the Legislature of the State of Florida:

24

25         Section 1.  Subsection (1) of section 651.015, Florida

26  Statutes, is amended to read:

27         651.015  Administration; forms; fees; rules;

28  fines.--The administration of this chapter is vested in the

29  department, which shall:

30         (1)  Prepare and furnish all forms necessary under the

31  provisions of this chapter in relation to applications for


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    CS for SB 1246                                 First Engrossed



  1  provisional certificates of authority, certificates of

  2  authority or renewals thereof, statements, examinations, and

  3  other required reports. The department is authorized to accept

  4  any application statement, report, or information submitted

  5  electronically or by facsimile to comply with requirements in

  6  this chapter or rules adopted under this section. The

  7  department may adopt rules to implement the provisions of this

  8  subsection.

  9         Section 2.  Paragraph (d) of subsection (1) of section

10  651.033, Florida Statutes, is amended to read:

11         651.033  Escrow accounts.--

12         (1)  When funds are required to be deposited in an

13  escrow account pursuant to s. 651.022, s. 651.023, s. 651.035,

14  or s. 651.055:

15         (d)  All funds deposited in an escrow account, if

16  invested, shall be invested as set forth in part II of chapter

17  625; however, such investment shall not diminish the funds

18  held in escrow below the amount required by this chapter. All

19  funds deposited in an escrow account shall not be subject to

20  any charges by the escrow agent except escrow agent fees

21  associated with administering the accounts, or subject to any

22  liens, judgments, garnishments, creditor's claims, or other

23  encumbrances against the provider or facility except as

24  provided in s. 651.035(2)(1).

25         Section 3.  Subsections (1) and (2) of section 651.035,

26  Florida Statutes, are amended to read:

27         651.035  Minimum liquid reserve requirements.--

28         (1)  A provider shall maintain in escrow a minimum

29  liquid reserve consisting of the applicable reserves specified

30  in subsection (2).

31


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  1         (2)(1)(a)  A provider shall maintain in escrow as a

  2  debt service reserve and as a minimum liquid reserve an amount

  3  equal to the aggregate amount of all principal and interest

  4  payments due during the fiscal year on any mortgage loan or

  5  other long-term financing of the facility, including taxes and

  6  insurance as recorded in the audited financial statements

  7  required under s. 651.026.  The amount shall include any

  8  leasehold payments and all costs related to same.  If

  9  principal payments are not due during the fiscal year, the

10  provider shall maintain in escrow as a minimum liquid reserve

11  an amount equal to interest payments due during the next 12

12  months on any mortgage loan or other long-term financing of

13  the facility, including taxes and insurance. For the purpose

14  of this paragraph, the amount of property insurance premiums

15  used in calculating the debt service reserve shall not exceed

16  the amount paid in calendar year 1999. For providers initially

17  licensed during or after calendar year 1999, the amount of

18  property insurance premiums used in calculating the debt

19  service reserve shall not exceed the amount paid during the

20  first 12 months of facility operation. However, beginning

21  January 1, 2006, and each year thereafter, until the amount

22  maintained in escrow attributable to property insurance equals

23  100 percent of the premium, the provider shall increase the

24  amount maintained in escrow for property insurance by 10

25  percent of the premium paid that year.

26         (b)  A provider which has outstanding indebtedness

27  which requires what is normally referred to as a "debt service

28  reserve" to be held in escrow pursuant to a trust indenture or

29  mortgage lien on the facility and for which the debt service

30  reserve may only be used to pay principal and interest

31  payments on the debt which the debtor is obligated to pay, and


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  1  which may include taxes and insurance, may include such debt

  2  service reserve in its computation of its minimum liquid

  3  reserve to satisfy this subsection, provided that the provider

  4  furnishes to the Department of Insurance a copy of the

  5  agreement under which such debt service is held, together with

  6  a statement of the amount being held in escrow for the debt

  7  service reserve, certified by the lender or trustee and the

  8  provider to be correct.  The trustee shall provide the

  9  department with any information concerning the debt service

10  reserve account upon request of the provider or the

11  department.

12         (c)(2)(a)  Each provider shall maintain in escrow an

13  operating reserve in an amount equal to 30 percent of the

14  total operating expenses projected in the feasibility study

15  required by s. 651.023 for the first 12 months of operation.

16  Thereafter, each provider shall maintain in escrow an

17  operating reserve in an amount equal to 15 percent of the

18  total operating expenses in the annual report filed pursuant

19  to s. 651.026. Where a provider has been in operation for more

20  than 12 months, the total annual operating expenses shall be

21  determined by averaging the total annual operating expenses

22  reported to the department by the number of annual reports

23  filed with the department within the immediate preceding

24  3-year period subject to adjustment in the event there is a

25  change in the number of facilities owned. For purposes of this

26  subsection, total annual operating expenses shall include all

27  expenses of the facility except: depreciation and

28  amortization; interest, insurance and taxes included in

29  subsection (1); extraordinary expenses which are adequately

30  explained and documented in accordance with generally accepted

31  accounting principles; liability insurance premiums in excess


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  1  of those paid in calendar year 1999; and changes in the

  2  obligation to provide future services to current residents.

  3  For providers initially licensed during or after calendar year

  4  1999, liability insurance shall be included in the total

  5  operating expenses in an amount not to exceed the premium paid

  6  during the first 12 months of facility operation. Beginning

  7  January 1, 1993, the operating reserves required under this

  8  subsection shall be in an unencumbered account held in escrow

  9  for the benefit of the residents.  Such funds may not be

10  encumbered or subject to any liens or charges by the escrow

11  agent or judgments, garnishments, or creditors' claims against

12  the provider or facility.  However, if a facility had a lien,

13  mortgage, trust indenture, or similar debt instrument in place

14  prior to January 1, 1993, which encumbered all or any part of

15  the reserves required by this subsection and such funds were

16  used to meet the requirements of this subsection, then such

17  arrangement may be continued, unless a refinancing or

18  acquisition has occurred, and the provider shall be in

19  compliance with this subsection.

20         (d)(b)  Each provider shall maintain in escrow a

21  renewal and replacement reserve in an amount equal to 15

22  percent of the total accumulated depreciation based on the

23  audited financial statement required to be filed pursuant to

24  s. 651.026, not to exceed 15 percent of the facility's average

25  operating expenses for the past 3 fiscal years based on the

26  audited financial statements for each of such years.  For a

27  provider who is an operator of a facility but is not the owner

28  and depreciation is not included as part of the provider's

29  financial statement, the renewal and replacement reserve

30  required by this paragraph shall equal 15 percent of the total

31  operating expenses of the provider, as described in this


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  1  section.  Each provider licensed prior to October 1, 1983,

  2  shall be required to fully fund the renewal and replacement

  3  reserve by October 1, 2003, by multiplying the difference

  4  between the former escrow requirement and the present escrow

  5  requirement by the number of years the facility has been in

  6  operation after October 1, 1983.

  7         Section 4.  Subsection (8) of section 651.118, Florida

  8  Statutes, is amended, and subsection (13) is added to said

  9  section, to read:

10         651.118  Agency for Health Care Administration;

11  certificates of need; sheltered beds; community beds.--

12         (8)  A provider may petition the Agency for Health Care

13  Administration to use a designated number of sheltered nursing

14  home beds to provide extended congregate care as defined in s.

15  400.402 if the beds are in a distinct area of the nursing home

16  which can be adapted to meet the requirements for extended

17  congregate care. The provider may subsequently use such beds

18  as sheltered beds after notifying the agency of the intended

19  change. Any sheltered beds used to provide extended congregate

20  care pursuant to this subsection may not qualify for funding

21  under the Medicaid waiver. Any sheltered beds used to provide

22  extended congregate care pursuant to this subsection may share

23  common areas, services, and staff with beds designated for

24  nursing home care, provided that all of the beds are under

25  common ownership. For the purposes of this subsection, fire

26  and life safety codes applicable to nursing home facilities

27  shall apply.

28         (13)  Residents, as defined in this chapter, are not

29  considered new admissions for the purpose of s.

30  400.141(15)(d).

31         Section 5.  This act shall take effect July 1, 2002.


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