Nursing Home Moratorium Application Materials - July 2018
The Commissioner of Health is accepting written proposals from nursing homes and certified boarding care homes requesting funding through the moratorium exception process, according to Minn. Stat. § 144A.073. The Commissioner of Health, in coordination with the Commissioner of Human Services, may approve such requests under conditions listed in the Minnesota statutes.
Proposals for Exceptions to the Nursing Home Moratorium
Questions about the Process
Applicants may submit questions to the Minnesota Department of Health, which will be answered here after October 19, 2018.
Here is data on county bed counts compiled by DHS in July 2018:
Interest Rate for Moratorium Exception Proposals
(to be announced by October 29, 2018 by DHS)
The Minnesota Department of Health announced in the July 23, 2018, State Register that it will be accepting proposals for the moratorium exception. The due date for the proposals is December 20, 2018. The law related to this process states a specific interest rate to be used when submitting an application. The below language is in Minn. Stat. § 144A.071, subd. 5a.
(b) The interest rate to be used for estimating the cost of each moratorium exception project proposal shall be the lesser of either the prime rate plus two percentage points, or the posted yield for standard conventional fixed rate mortgages of the Federal Home Loan Mortgage Corporation plus two percentage points as published in the Wall Street Journal and in effect 56 days prior to the application deadline. If the applicant's proposal uses this interest rate, the commissioner of human services, in determining the facility's actual property-related payment rate to be established upon completion of the project must use the actual interest rate obtained by the facility for the project's permanent financing up to the maximum permitted under Minnesota Rules, part 9549.0060, subpart 6.
The applicant may choose an alternate interest rate for estimating the project's cost. If the applicant makes this election, the commissioner of human services, in determining the facility's actual property-related payment rate to be established upon completion of the project, must use the lesser of the actual interest rate obtained for the project's permanent financing or the interest rate which was used to estimate the proposal's project cost. For succeeding rate years, the applicant is at risk for financing costs in excess of the interest rate selected.
The Federal Home Loan Mortgage Corporation (Freddie Mac) stopped publishing the rate referenced above. Without it, we are interpreting the statute to say the interest rate limit to use in the proposal is the prime rate plus two. If this interest rate is used and the proposal is chosen, the interest rate used in the calculations when the project is completed will be the actual interest rate for the allowable debt obtained by the facility. If a different interest rate is used, the rate for a completed project will be limited to the lesser of the rate used in the proposal or the actual rate obtained.
DHS will calculate the interest rate to be used in the application and will post it here by October 29, 2018.