Continuing care retirement communities.

(1) Existing law requires a continuing care retirement community, as defined, to possess a certificate of authority issued by the State Department of Social Services before it can enter into a continuing care contract, as defined. Existing law provides for different types of continuing care contracts, including, among the others, a repayable contract. A repayable contract is a continuing care contract that includes a promise to repay all or a portion of an entrance fee that is conditioned upon reoccupancy or resale of the unit previously occupied by the resident. This bill would expand the definition of a "repayable contract" to include a promise to repay all or a portion of an entrance fee that is based on the sequential order of termination of all repayable contracts at the facility previously occupied by the resident. (2) Existing law prohibits an applicant for a permit to accept deposits and a certificate of authority from beginning construction, as defined, on any phase of a continuing care retirement community without first obtaining a written acknowledgment from the department that specified prerequisites have been met. This bill would provide that, for the above-mentioned purposes, construction does not include construction of care facilities or buildings that provide community amenities and services or otherwise are not residential living units. (3) Existing law requires an applicant seeking a release of escrowed funds to petition in writing to the department and certify, among other things, that the construction of a proposed continuing care retirement community or phase is at least 50% completed. Existing law authorizes the department, when an application describes different phases of construction that will be completed and commence operating at different times, to apply the 50% construction completion requirement to the phase of construction if the applicant's projections are economically viable. This bill would require the department, when determining the economic viability of a phase, to consider the availability of financing to cover any projected shortfalls in revenues from resident fees. (4) Existing law requires a provider of continuing care to maintain, at all times, qualifying assets as a liquid reserve in an amount that equals or exceeds the sum of the amount the provider is required to hold as a debt service reserve and the amount the provider is required to hold as an operating expense reserve. Existing law requires the provider to satisfy this liquid reserve obligation with specified qualifying assets, including the available and unused portion of a qualifying line of credit or letter of credit. Existing law authorizes the department to condition, suspend, or revoke a provider's permit or certificate of authority if it finds that the provider failed to maintain this reserve requirement. This bill would add the available and unused portion of a surety bond to the list of qualifying assets a provider may use to satisfy its liquid reserve obligation.