New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter XIII - Life Care Communities › Part 350 - Continuing Care Retirement Communities › Section 350.6 - Assets supporting reserve liabilities

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Once a
				continuing care retirement community has commenced operations and funds held in
				escrow are released pursuant to Public Health Law section
				4610, the continuing care retirement
				community shall maintain a debt reserve fund as described in paragraph (1) of
				this subdivision and an operating reserve fund as described in paragraph (2) of
				this subdivision.
(1) A continuing care
				retirement community shall maintain liquid assets in an amount greater than or
				equal to the aggregate of all interest and principal payments becoming due
				within the next 12 months under a mortgage loan, bond indenture or other long
				term financing of the community. Assets used to meet this requirement, which
				can include assets held in a debt service reserve fund established by or
				pursuant to a mortgage loan, bond indenture or other long term financing
				agreement, must be available to pay long term debt interest and principal
				payments should the operating revenues be insufficient for these purposes and
				must meet the eligibility requirements in paragraph (3) of this subdivision.
				Assets used to meet this requirement shall exclude assets used to meet the
				requirement in paragraph (2) of this subdivision.
(2)
(i) A
				continuing care retirement community shall maintain liquid assets in an amount
				greater than or equal to 35 percent of the sum of the following amounts:
(a) the projected operating expenses of the
				community during the next 12 months, which shall include such comparable
				expenses related to providing services to nonresidents of the community during
				the next 12 months;
(b) the
				projected aggregate of all taxes and insurance expenses that are related to the
				capital assets of the community and the responsibility of the community and due
				within the next 12 months;
(c) the
				projected debt interest payments of the community becoming due within the next
				12 months, excluding debt interest payments included in paragraph (1) of this
				subdivision;
(d) the projected or
				actual refund expenses of the community becoming due within the next 12 months,
				except where the refund is dependent on the resale of the unit; and
(e) effective December 31, 2018, the
				projected or actual refund expenses of the community becoming due within the
				next 12 months where the refund is dependent on the resale of the
				unit.
(ii) Assets used
				to meet the requirement in subparagraph (i) of this paragraph:
(a) shall exclude assets used to meet the
				requirement in paragraph (1) of this subdivision;
(b) can include assets, other than a debt
				service reserve fund, established by or pursuant to a mortgage loan, bond
				indenture or other long term financing agreement;
(c) must be available to pay operating
				expenses, refund expenses, and taxes and insurance expenses related to the
				capital assets of the community should the operating revenue be insufficient
				for these purposes; and
(d) shall
				meet the eligibility requirements in paragraph (3) of this
				subdivision.
(3) Subject to the requirements of
				subdivision (b) of this section and the limitations and restrictions of
				subdivision (d) of this section, only the following shall be considered
				eligible liquid assets:
(i) cash in United
				States dollars;
(ii) demand
				accounts in United States dollars at any solvent national or state chartered
				bank or savings and loan association that are valued at the outstanding
				balance;
(iii) publicly traded
				commercial paper valued at market value that at all times meet the requirements
				of paragraph (c)(4) of this section;
(iv) certificates of deposit and similar
				instruments that at the time of investment met the criteria of paragraph (c)(5)
				of this section, provided that the bank or savings and loan is currently
				solvent and the contract has either a remaining maturity of one year or less or
				the contract is redeemable at any time prior to the scheduled maturity date,
				and is valued at the principal deposit amount;
(v) publicly traded obligations meeting the
				requirements of paragraph (c)(6) of this section that are valued at market
				value;
(vi) publicly traded
				obligations meeting the requirements of paragraph (c)(7) of this section that
				are valued at market value;
(vii)
				publicly traded obligations valued at market value that meet the requirements
				of subparagraph (c)(8)(i) of this section, exclusive of any such securities
				issued by the continuing care retirement community or a parent corporation,
				subsidiary or affiliate of the continuing care retirement community;
				and
(viii) securities meeting the
				criteria of paragraph (c)(9) of this section that are valued at market
				value.
(4) A continuing
				care retirement community shall, within 30 days of the end of each fiscal
				quarter, test whether it meets the requirements of paragraphs (1) and (2) of
				this subdivision. Documentation of the testing and results shall be maintained
				with the community's business records. The continuing care retirement community
				shall immediately notify the superintendent if the requirements of paragraphs
				(1) and (2) of this subdivision are not met. Within 30 days following such
				notification, the continuing care retirement community shall submit to the
				superintendent a report setting forth in detail, the reasons for not meeting
				the requirements and the specific action steps to be adopted to achieve the
				requirements of paragraphs (1) and (2) of this subdivision.
(5) If a continuing care retirement community
				fails to meet the requirements of paragraph (1) of this subdivision because of
				a debt balloon payment maturing during the next 12 months, the calculation for
				paragraph (1) of this subdivision may be done excluding the debt balloon
				payment provided that a plan for refinancing the debt and/or repaying the debt
				with existing assets is submitted to the superintendent and is satisfactory to
				the superintendent.