16 Del. Admin. Code § 3325-5.0

Current through Register Vol. 28, No. 3, September 1, 2024

Section 3325-5.0 - Requirements for the Submission of Financial Documents Upon Application for New Facility /Change of Ownership

5.1 All applications for a license for a new facility or for a change of ownership for an existing facility shall include with the application a transmittal letter to include all the items listed in subsection 4.1, except 4.1.3 and:

5.2 Transaction Documents to include:

5.2.1 Sale/Purchase Agreement

5.2.2 Closing Statement

5.2.3 Notes (must include all terms and conditions, including but not limited to balance, payment amount, payment period, interest rate and mandated ratios)

5.2.4 Mortgages (see 5.2.3)

5.2.5 Leases (Complete)

5.2.6 The above listed items must include all attachments, addendums, revisions and reference items.

5.3 Financial Documents to include:

5.3.1 Projected statement of Revenue and Expenses for thirty-six (36) months;

5.3.2 Projected statement of Revenue and Expenses converted to cash flow (for 36 months);

5.3.3 Beginning Pro Forma Balance Sheet for the first three years of operation;

5.3.4 Ending Pro Forma Balance Sheets for the first three years of operation;

5.3.5 The documents shall be prepared in a month-by-month format for 36 months.

5.3.6 Any newly established Facility without a parent, or any new or newly owned facility with a newly established parent without a financial history of at least thirty-six (36) months must provide evidence of capital availability in the name of the facility equal to four (4) months of anticipated facility expenses as evidenced on the pro forma profit and loss statement.

5.3.6.1 The capital availability shall be in the form of Cash or Surety Bond.

5.3.6.1.1 All cash and surety bonds shall be in the name of the facility and the DHCQ.

5.3.6.1.2 Further, a Memorandum of Understanding will be executed by and between the principal and Chief Financial Officer of the facility and the Director of DHCQ agreeing and acknowledging any and all expenditures from this account will be at the call of and with the express written consent, direction and supervision of the DHCQ for the emergency health, housing and welfare of the residents.

5.3.6.1.3 Said capital availability shall be maintained at a local financial institution for the first twenty-four (24) months of operation of the facility, and the facility will provide a copy of a letter from it to the local financial institution instructing it to notify DHSS immediately if the agreed upon balance is not maintained.

5.3.7 Information on the controlling organization to include:

5.3.7.1 The most recent three (3) years of audited year-end financial statements for the controlling organization;

5.3.7.2 The most recent three (3) years of audited personal financial statements for the proprietors or partners if the Controlling Organization is a proprietorship or partnership;

5.3.7.3 The most recent three (3) years of audited personal financial statements for guarantors of a corporate transaction if the Controlling Organization is a proprietorship or partnership;

5.3.7.4 If the controlling organization is an affiliation of individuals each individual shall provide certified financial statements for the most recent three (3) years, or recent financial information acceptable to DHSS on which an analysis and judgement of financial strength and capability can be determined.

5.3.8 DHSS may accept draft transaction documents and unaudited financial statements pending the receipt of executed transaction documents and audited financial statements and reserves the right to require the submission of additional information upon initial review; and

5.3.9 Additional materials which will facilitate analysis are encouraged.

5.4 Effective upon the date of purchase or change of ownership the facility will provide monthly financial information to DHSS 30 days past the month reported. All in-house prepared financial information is to include the following certification signed by the Chief Financial Officer: "All financial information provided herewith is certified to be true and correct to the best of my knowledge and belief, under penalty of perjury." The information will include:

5.4.1 Balance sheet;

5.4.2 Profit/Loss statement;

5.4.3 Statement of cash flow; and

5.4.4 Current resident census.

5.5 Any material adverse change to the facility's cash flow or financial position must be reported to DHSS by the facility in writing within five (5) business days of its occurrence or discovery.

16 Del. Admin. Code § 3325-5.0

23 DE Reg. 45( 7/1/2019) (final)