2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 523D - RETIREMENT FACILITIES
523D.5 - NEW CONSTRUCTION.

        523D.5  NEW CONSTRUCTION.
         1.  Prerequisite information.  A provider shall not enter into
      a contract to provide continuing care or senior adult congregate
      living services that applies to a living unit that is part of a new
      facility or proposed expansion that is or will be located in this
      state unless the provider has prepared or acquired all of the
      following information:
         a.  A description of the new facility or the proposed
      expansion, including a description of the goods and services that
      will be offered to prospective residents.
         b.  A statement of the financial resources of the provider
      available for this project.
         c.  A statement of the capital expenditures necessary to
      accomplish this project.
         d.  A statement of financial feasibility for the new facility
      or proposed expansion which includes a statement of future funding
      sources and shall identify the qualifications of the person or
      persons preparing the study.
         e.  A statement of the market feasibility for the new facility
      or proposed expansion which identifies the qualifications of the
      person or persons preparing the study.
         f.  If the new facility or proposed expansion offers a promise
      to provide nursing or health care services to residents in the future
      pursuant to contracts effective for the life of the resident or a
      period in excess of one year in consideration for an entrance fee, an
      actuarial forecast which identifies the qualifications of the actuary
      or actuaries preparing the forecast.
         g.  Copies of the escrow agreements executed pursuant to this
      chapter or proof that an escrow is not required.
         2.  Determination of feasibility.
         a.  For an expansion of an existing facility, the
      determination of feasibility shall be based on consolidated
      information for the existing facility and the proposed expansion.
         b.  For a new facility, not part of an existing facility that
      will be constructed in more than one stage or phase, the initial
      stage or phase must evidence feasibility independent of any
      subsequent stage or phase and contain all of the facilities or
      components necessary to provide residents with all of the services
      and amenities promised by the provider.
         3.  Construction.  New construction shall not begin until at
      least fifty percent of the proposed number of independent living
      units in the initial stage or phase have been reserved pursuant to
      executed contracts and at least ten percent of the entrance fees
      required by those contracts are held in escrow pursuant to this
      chapter.  However, the requirements of this subsection may be waived
      by the commissioner by rule or order upon a showing of good cause.
         For purposes of this subsection, "good cause" includes, but is
      not limited to, evidence of the following:
         a.  Secured financing adequate in an amount and term to
      complete the project.
         b.  Cash reserves adequate in an amount to operate the
      facility for twenty-four months based upon reasonable projections of
      income and expenses.
         c.  Creation of an escrow account in which a resident's
      entrance fee or purchase price will be deposited, if the terms of the
      escrow agreement provide reasonable protection from loss until at
      least fifty percent of the proposed number of independent living
      units in the initial stage or phase have been reserved.
         4.  Escrow requirements.  Unless conditions for the release of
      escrowed funds set forth in this section have already been met, the
      provider shall establish an interest-bearing escrow account at a
      state or federally regulated financial institution located within
      this state to receive any deposits or entrance fees or portions of
      deposits or fees for a living unit which has not been previously
      occupied by a resident for which an entry fee arrangement is used.
      The escrow account agreement shall be entered into between the
      financial institution and the provider with the financial institution
      as the escrow agent and as a fiduciary for the resident or
      prospective resident.  The agreement shall state that the purpose of
      the escrow account is to protect the resident or prospective resident
      and that the funds deposited shall be kept and maintained in an
      account separate and apart from the provider's business accounts.
         5.  Release of escrowed funds.  Funds held in escrow shall be
      released only as follows:
         a.  If the provider fails to meet the requirements for release
      of funds held in escrow pursuant to this section within a time period
      specified in the escrow agreement, which shall not exceed thirty-six
      months, these funds shall be returned by the escrow agent to the
      persons who have made payment to the provider.
         b.  Upon notice from the provider that a resident is entitled
      to a refund, the escrow agent shall refund the amount directly to the
      resident.  The amount of the refund shall be included in the
      provider's notice to the escrow agent and shall be determined in
      compliance with this chapter and any applicable terms of the
      resident's contract.
         c.  Except as provided by paragraphs "a" and "b",
      amounts held in escrow shall not be released unless at least one of
      the following conditions has been satisfied:
         (1)  The facility has a minimum of fifty percent of the units
      reserved for which the provider is charging an entrance fee and the
      aggregate amount of the entrance fees received by or pledged to the
      provider, plus anticipated proceeds from any long-term financing
      commitment, plus funds from all other sources in the actual
      possession of the provider, equal not less than ninety percent of the
      aggregate cost of constructing or purchasing, equipping, and
      furnishing the facility.
         (2)  The resident has moved into the living unit, the cancellation
      period required by section 523D.6, subsection 2, has expired,
      construction of the facility or the portion of the facility under
      construction is complete, the facility has been adequately equipped
      and furnished, a certificate of occupancy or the equivalent has been
      issued by the appropriate local jurisdiction, and the provider has
      been issued all the appropriate licenses or permits needed to operate
      the facility and provide all of the promised services.
         d.  Upon receipt by the escrow agent of a request by the
      provider for the release of these escrowed funds, the escrow agent
      shall approve release of the funds within five working days unless
      the escrow agent finds that the requirements of this section have not
      been met and notifies the provider of the basis for this finding.
      The request for release of the escrowed funds shall be accompanied by
      any documentation the escrow agent requires.
         6.  Retention of records.  The provider shall maintain
      information required by this section for at least five years.  The
      information shall be made available for inspection during normal
      business hours.  

         89 Acts, ch 217, § 5; 91 Acts, ch 205, § 14; 92 Acts, ch 1078, §
      11; 93 Acts, ch 60, §12; 2004 Acts, ch 1104, §37--44