28 Tex. Admin. Code § 33.403 - Release of Funds from the Entrance Fee Escrow Account to Provider
(a) The escrow agent shall notify the
department of a request for release of funds from the entrance fee escrow
account for a facility to the provider in writing within three banking days of
receipt of the request. The notice shall be sent to the department on CCRC Form
#9 (Notice of Request to Release Entrance Fee Escrow Funds).
(b) The conditions listed in paragraphs (1) -
(5) of this subsection must be met before funds in the entrance fee escrow
account may be released to the provider.
(1)
At least 50% of the living units in the facility must be reserved for residents
or prospective residents. In support of this, the provider must have sufficient
binding continuing care contracts and at least 10% of the entrance fees
designated in the binding continuing care contracts on deposit in the entrance
fee escrow account. For phase-in facilities, in lieu of the 10% deposit, the
provider shall deposit in the entrance fee escrow account an amount equal to
10% of the amount of entrance fees required for the facility and provide
evidence that the resident has full occupancy of the living unit.
(2) The sum of the entrance fees received or
receivable by the provider under binding continuing care contracts; the
anticipated proceeds of any first mortgage loan or other long-term financing
commitment described under paragraph (3) of this subsection; and funds from
other sources in the provider's actual possession must be equal to or more than
the sum of at least 90% of the aggregate cost of constructing, purchasing, or
leasing, equipping, and furnishing the facility; at least 90% of the funds
estimated as necessary to cover initial losses of the facility as stated in the
current disclosure statement on file with the department; and at least 90% of
the amount of the loan reserve fund escrow account required under §
33.405 of this title (relating to
Loan Reserve Fund Escrow Accounts).
(3) The provider must have commitments for
all permanent mortgage loans, other long-term financing, and lease payments
described in the statement of anticipated source and application of funds
included in the current disclosure statement on file with the
department.
(4) Except for the
conditions regarding the completion of construction or closing on the purchase
of the facility, the commitment for disbursement of funds must be
unconditional.
(5) Either
subparagraph (A) or (B) of this paragraph must be satisfied.
(A) If construction of the facility is not
substantially completed:
(i) the appropriate
party must have obtained all necessary governmental permits or approvals;
and
(ii) the provider and the
general contractor responsible for construction of the facility must have
entered into a maximum price contract; and
(iii) a recognized surety authorized to do
business in Texas must have executed a construction bond in favor of the
provider covering the general contractor's faithful performance and payment of
all obligations arising under the construction contract; and
(iv) the provider must have entered into a
loan agreement for an interim construction loan in an amount which, when
combined with the amount in the entrance fee escrow account plus the amount of
funds from other sources in the provider's actual possession equals or exceeds
the estimated cost of constructing, equipping, and furnishing the facility;
and
(v) the lender must have
disbursed at least 10% of the amount of the construction loan for physical
construction or site preparation work; and
(vi) the provider must have placed orders at
firm prices for at least 50% of the items necessary to equip and furnish the
facility in accordance with the current disclosure statement on file with the
department, including installation charges if applicable.
(B) If construction or purchase of the
facility is substantially completed, both clauses (i) and (ii) must be
satisfied, if appropriate:
(i) the
appropriate local government must have issued an occupancy permit covering the
living unit; and
(ii) if the
entrance fee applies to a living unit which has been previously occupied, the
living unit must be available for occupancy by the new resident.
(c) The
provider shall deliver a completed CCRC #14 (Calculations Concerning Conditions
for Release of Entrance Fees to Provider) to the department for release of
entrance fees for a facility.
(d)
The funds in the entrance fees escrow account that may be released before the
facility is complete and before the loan reserve fund escrow is established
under §
33.405 of this title (relating to
Loan Reserve Fund Escrow Accounts), may not exceed the total of entrance fees
and reservation agreement deposits received or receivable by the provider under
binding continuing care contracts less the amount of funds required to be
deposited in the loan reserve fund escrow account.
(e) If the initial release of an entrance fee
by an escrow agent for a particular facility has met the criteria under
subsection (b) of this section, the department may authorize an escrow agent to
continue to release escrowed entrance fees for that facility to the provider
without further proof of satisfying the requirements specified in subsection
(b) of this section if the provider meets the following conditions:
(1) the provider provides a quarterly report
to the department reflecting an accounting of the activities of the entrance
fee escrow account for that particular facility;
(2) the accounting reflects a beginning
balance, dates of each withdrawal from escrow during the reporting period, and
an ending balance. This accounting must be verified, attested to in regards to
its accuracy, and signed by both the bank escrow agent and the facility's Chief
Financial Officer or person of likewise authority; and
(3) the provider immediately informs the
department of any problems, issues, and/or irregularities encountered in the
release of entrance fee escrow funds as set forth under this
subsection.
Notes
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