An application must be filed with the Continuing Care Contracts Branch before any of the following activities (Health and Safety Code section 1779):
- Accepting any deposit, reservation fee, or any other payment that is related to a promise or proposal to promise to provide continuing care
- Entering into any reservation agreement, deposit agreement, or continuing care contract
- Expanding an existing continuing care retirement community
- Converting an existing structure to a continuing care retirement community
- Recommencing marketing on a planned continuing care retirement community when an applicant has previously forfeited a permit to accept deposits
- Executing new continuing care contracts after a provisional certificate of authority or a certificate of authority has been inactivated, revoked, surrendered or forfeited
- Altering a provider organization through change in entity type, separation from another entity, merger, affiliation, spin-off or saleIn addition, a Provisional Certificate of Authority or a Certificate or Authority to operate a continuing care retirement community will not be issued to an applicant until the appropriate licenses for the entire facility have been obtained. Those are: A Residential Care Facility for the Elderly (RCFE) license, for the residential and assisted living portions of the community (pursuant to Health and Safety Code Chapter 3.2 (commencing with section 1569). This license is obtained from the Department's Community Care Licensing Division, Senior Care Program.A skilled nursing facility license, if one is on the continuing care retirement community premises, to operate a skilled nursing facility (pursuant to Health and Safety Code Chapter 2 (commencing with section 1250). This license is obtained from the Department of Public Health. Applications for Permit to Accept Deposits/Certificates of Authority must be submitted to the Department in triplicate. A list of materials that comprise a complete application for new continuing care retirement communities, conversions or sale or transfer is outlined in Health and Safety Code 1779.4 and can be found in "Contents". For all other applicants, it is advisable to contact the Department in advance of filing an application. In certain instances, the Department may determine that some application requirements do not apply and some portions of the application may be eliminated.
Application fees are calculated as follows (Health and Safety Code section 1779.2):
- For new continuing care retirement communities (or for the sale or transfer of existing continuing care retirement communities) 1/10th of one percent of the estimated purchase price or construction costs, including purchase price of the land or prevent value of any long-term lease and including real property costs and the cost of acquiring or designing and constructing the continuing care retirement community, and all other similar costs that the provider expects to incur prior to the commencement of construction.
- For existing continuing care retirement communities proposing new phasing, remodeling or expansions, 1/10th of one percent of the cost of the addition, annexation or renovation, including the land and improvements and including real property costs and the cost of acquiring or designing and constructing the continuing care retirement community, and all other similar costs that the provider expects to incur prior to the commencement of construction.
- For existing facilities converting to continuing care retirement communities, 1/10th of one percent of the current appraised value of the facility, including the land, or present value of any long term lease.
- For organizational changes, the minimum application fee is $2,000 and will be determined by the Department.NOTE: The following must be included in calculating application fees:
- The purchase price of the land or present value of any long-term lease
- Real property costs
- Costs of acquiring or designing and constructing the facility
- All other similar costs expected to be incurred prior to the commencement of operation
- Financing expenses
- Legal expenses
- Occupancy development costs
- Marketing costs
- Furniture and equipment
Eighty percent of the application fee must be accompany the submission of the application. Checks should be made out to the "CONTINUING CARE PROVIDER FEE FUND". The Department will not begin processing an application unless the application fee is paid. The balance of the application fee must be paid before a provisional certificate of authority, certificate of authority or approval of a project is granted.
Application requirementsare those outlined in Health and Safety Code section 1779.4. All applicants submitting an application for anything other than a new continuing care retirement community are advised to contact the Department to determine whether any portions of the application may be eliminated.
- The application is submitted with 80% of the application fee.
- The Department acknowledges receiptof the application in writing, within seven days after receipt.
- The applicant may begin accepting reservation deposits after the Department has acknowledge receipt of the application and has approved the applicant's reservation agreement and escrow agreement. Reservation deposits must not exceed $1,000 or 1% of the average entrance fee and must be placed in escrow.
- The Department reviews the application for completenessand communicates the results of the review to the applicant within 30 days. If incomplete, the applicant is notified of deficiencies.
The Department reviews the application material for adequacy
within 120 days and notifies the applicant if there are deficiencies.
Permit to Accept Deposits
- The Department issues a Permit to Accept Deposits after it has determined that the application is complete, that the proposed financial and marketing studies are adequate, reviewed and approved the deposit agreement and deposit escrow account agreement.
- Within 15 days of the issuance of the Permit to Accept Deposits, all reservation deposits must be converted to deposits under a permit to Accept Deposits, all reservation deposits must be converted to deposits under a deposit agreement. The applicant may begin accepting deposits from other prospective residents pursuant to deposit agreements.
The escrow company must provide monthly reports of escrowed funds to the Department.
Commencement of Construction
The Department authorizes construction when deposits equal to at least 10% of each depositor's applicable entrance fee have been placed into escrow for at least 50 percent of the number of residential living units to be constructed. (Construction does not include site preparation, demolition, or the construction of model units.) The applicant must notify depositors in writing when the applicant commences construction.
Release of Escrow
Before the Department will authorize release of the escrowed deposits, the applicant must submit a written request certifying to each of the following:
- Construction of the proposed continuing care retirement community or phase is at least 50 percent completed.
- At least 10 percent of the total of each applicable entrance fee has been received and placed in escrow for at least 50 percent of the total number of residential living units.
- All deposits made with cash equivalents have been either converted into, or substituted with, cash or held for transfer to the provider.
- The applicant's average sales and revenue performance over any six-month period substantially equals or exceeds its financial and marketing projections approved by the Department for that period.
- The applicant has received a commitment for its permanent mortgage financing or other long-term financing.
- The applicant has complied with any additional reasonable requirements for release of funds placed in the escrow account.
When an application describes different phases of construction that will be completed and commence operating at different times, the Department may apply the 50 percent construction requirement to any one or group of phases requested by the applicant, provided the phase or group of phases is shown in the applicant's projections to be economically viable.
Provisional Certificate of Authority
The Department will issue a Provisional Certificate of Authority when an applicant has done all of the following:
- Complied with the approved marketing plans.
- Met and continues to meet the requirement imposed for release of escrowed funds.
- Completed construction of the continuing care retirement community or applicable phase.
- Obtained the required licenses.
- Paid the remainder of the application fee.
- Executed a permanent mortgage loan or other long-term financing.
- Provided the Department with a recorded copy of the Notice of Statutory Limitation on Transfer.
Met all other applicable provisions.
Certificate of Authority
The Department will issue a Certificate of Authority after determining:
- The applicant has met one of the following requirements:
- Continuing care contracts have been executed for 80 percent of the total number of residential living units in the continuing care retirement community, with entrance payments made in full, or
- Continuing care contracts have been executed for 70 percent of the total residential living units in the continuing care retirement community, with entrance payments made in full, and the provider has submitted an updated financial and marketing plan, satisfactory to the Department, demonstrating that the continuing care retirement community will be financially viable, or
- Continuing care contracts have been executed for 50 percent of the total residential living units in the continuing care retirement community, with entrance payments made in full, and the provider furnishes and maintains a letter of credit or other security, satisfactory to the Department, sufficient to bring the total amount of payments to a level equivalent to 80 percent of the total number of entrance fees for the entire continuing care retirement community.
- A minimum five-year financial plan of operation remains satisfactory to the Department.
- Adequate statutory reserves exist.
All other applicable provisions have been met.
The length of the application process will depend upon the complexity of the application, the size of the project and the completeness/adequacy of the information submitted in the application. Applications for new continuing care retirement communities can take several years due to marketing and construction. The charts below outline the application process.
Certificate Of Authority Process