Nursing Home Moratorium Application Materials - July 2014

Proposals for Exceptions to the Nursing Home Moratorium

Application Materials (PDF: 243KB/35 pages)
Please download pages 14-17 of the application and complete the forms by hand.

Schematic Drawings (PDF: 89KB/3 pages)

Questions about the Process

Appendices D, F and G in the application are related to questions and answers. Potential applicants are strongly encouraged to review these appendices in preparation for completing the application.

Q: As we are assembling data for the submittal for an exception to the moratorium, in the APPLICATION INSTRUCTIONS, ppg. 8-12, there are items I., II., and III., and after item III., Proposed Project is 'A.', Assessment of Continued/Continuing Need is 'B.', items a., b., c., and d., and following that is an unheadered a. through h., followed by 'D.', 'E.' and 'F.' Can we assume that the unheadered list can be 'C' for purposes of formatting our proposal? Can just a heading of 'Problem Description' be used to header that portion of the narrative?
A: You are correct when you state it is how the data drive/support the need for the proposed project. Basically what the state is looking for is the rationale used to support the need for the project. It could be any or all of the data items you listed. It is about making your case for a project that you think is needed and will be sustainable. What you have proposed will be fine. Please be sure to have the pages numbered, that is where the most problems occur, when there is a pagination issue.

Clarification about the Interest Rate

Per the MN Department of Human Services regarding the Interest Rate to be Used in Moratorium Proposals:

The Minnesota Department of Health recently announced that they will be accepting proposals for the moratorium exception. The due date for the proposals is December 10, 2014. The law related to this process states a specific interest rate to be used when submitting an application. The below language is in Minnesota Statutes 144A.071, subdivision 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.

The prime rate 56 days prior to the due date is 3.25% so the interest rate under MS 144A.071subdivision 5a. is 5.25%. If you need additional information, feel free to contact:

Marilyn Kaufenberg
Nursing Facility Rates & Policy
Marilyn.kaufenberg@state.mn.us
651-431-2270

Monday, October 20, 2014 at 10:29AM