ROBERT L. EHRLICH, JR., Governor                               Ch. 84

accordance with the provider's continuing care agreements and this subtitle. A
provider may not begin construction of the expansion until the provider receives
written approval from the Department.

(1) It shall be the responsibility of the Department to make the information
required to be provided pursuant to this subtitle available to all interested persons.
The Department shall publicize the availability of this information.

11B.

(a)     In this section, "net operating expenses" means the provider's total
operating expenses [related to furnishing continuing care] at each facility of the
provider, less depreciation, amortization, unusual and infrequent expenses, and
changes in the obligation to provide future services. Interest expenses may be
excluded from calculation of net operating expenses, if the provider has funded a debt
service reserve or other interest reserve under requirements imposed by a financial
institution or under applicable financing documents, to the extent and in the amount
the fund includes amounts to cover interest for the year in question.

(b)     Except as otherwise provided in this section, the provider shall set aside
for each facility subject to this subtitle operating reserves that equal 15% of the
facility's net operating expenses for the most recent fiscal year for which a certified
financial statement is available. The reserves shall be maintained in reasonably
liquid form in the judgment of the provider.

(c)     The provider shall compute operating reserves for each facility as of the
end of the facility's most recent fiscal year and, simultaneously with submission of its
application for a renewal certificate, shall indicate compliance by setting forth in a
letter to the Department from a certified public accountant the amount actually set
aside or by disclosing the amount in a certified financial statement.

(d)     A provider may apply toward the reserve required by this section any
reserves, other than debt service reserves, maintained under applicable financing
document requirements if the reserves are available to the provider to meet the
facility's operating expenses.

(e)     For the purpose of calculating the provider's operating reserves,
investments held to the credit of the reserves shall be calculated at their market
value as of the end of the provider's most recent fiscal year for which a certified
financial statement is available.

(f)      The provider shall notify the Department in writing simultaneously with
drawing any amount from the funds available to satisfy the operating reserve that is
required by subsection (b) of this section. Within 30 days of such draw, the provider
shall submit to the Department a written plan for restoring the funds in the reserve
to the level required by subsection (b) of this section.

(g)     (1) A provider shall have up to 10 full fiscal years after the later of
October 1, 1996 or the date of its initial certificate to meet the requirement of
subsection (b) of this section.

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