8.16.3 NMAC

TITLE 8 SOCIAL SERVICES

CHAPTER 16 CHILD CARE LICENSING

PART 3 REQUIREMENTS GOVERNING THE CHILD CARE FACILITY LOAN ACT

8.16.3.1 ISSUING AGENCY: Children, Youth and Families Department (CYFD).

[8.16.3.1 NMAC - Rp, 8.16.3.1 NMAC, 09/14/07]

8.16.3.2 SCOPE: The Child Care Facility Loan Act fund program regulations shall apply to the use of funds by eligible applicants available pursuant to the Child Care Facility Loan Act, Section 24-24-1, et seq., NMSA 1978.

[8.16.3.2 NMAC - Rp, 8.16.3.2 NMAC, 09/14/07]

8.16.3.3 STATUTORY AUTHORITY: The regulations set forth herein, have been promulgated by the secretary of the New Mexico children, youth and families department, by authority of the Children, Youth and Families Department Act, Section 9-2A-7 NMSA 1978, and the Child Care Facility Loan Act, Section 24-24-1 et seq NMSA 1978, in conjunction with the New Mexico finance authority.

[8.16.3.3 NMAC - Rp, 8.16.3.3 NMAC, 09/14/07]

8.16.3.4 DURATION: Permanent.

[8.16.3.4 NMAC - Rp, 8.16.3.4 NMAC, 09/14/07]

8.16.3.5 EFFECTIVE DATE: September 14, 2007 unless a later date is cited at the end of a section.

[8.16.3.5 NMAC - Rp, 8.16.3.5 NMAC, 09/14/07]

8.16.3.6 OBJECTIVE: The objective of 8.16.3 NMAC is to establish standards and procedures for administering loans under the Child Care Facility Loan Act. The Child Care Facility Loan Act directs the children, youth and families department in conjunction with the New Mexico finance authority to adopt rules to administer and implement the Child Care Facility Loan Act. The child care facility revolving loan fund provides long term, low interest funding for purposes of physical improvement, repair, safety and maintenance of child care facilities that are licensed by the department.

[8.16.3.6 NMAC - Rp, 8.16.3.6 NMAC, 09/14/07]

8.16.3.7 DEFINITIONS:

A. "Act" means the Child Care Facilities Loan Act (Sections 24-24-1 to 24-24-4 NMSA 1978).

B. "Agreement" means the document or documents signed by the authority and the eligible applicant that specifies the terms and conditions of a loan provided under the program.

C. "Applicant" means a provider which has filed a request for a loan with the department and the authority.

D. "Application" means a written document filed with the department and the authority by an applicant for the purpose of obtaining a loan. An application may include a form prescribed by the department and the authority, written responses to requests for information by the department and the authority, or other format as determined by the department and the authority.

E. “Application committee” means a six-member body, three members appointed by the executive director of the authority from the authority staff and three members appointed by the secretary of the department.

F. "Authority" means the New Mexico finance authority and any third party contractually designated by the board to act on behalf of the New Mexico finance authority.

G. "Authorized representative" means one or more individuals authorized by the governing body of an applicant to act on behalf of the applicant in connection with its application. An authorized representative may act on behalf of the applicant to the extent provided by law.

H. "Board" means the New Mexico finance authority board as created by the act NMSA 6, Article 21 1978.

I. "Department" means the New Mexico children, youth and families department.

J. "Facility" means a child care facility operated by a provider, including both family home-based and center-based programs, licensed by the department to provide care to infants, toddlers, and children.

K. "Fund" means the child care facility revolving loan fund held by the authority pursuant to the act.

L. "Loan" means a loan from the fund.

M. "Project" means health and safety improvements to a child care facility, including space expansion, in order to maintain an adequate and appropriate environment for a provider's clients.

N. "Provider" means a person licensed by the department to provide child care to infants, toddlers and children pursuant to 8.16.2 NMAC.

[8.16.3.7 NMAC - Rp, 8.16.3.7 NMAC, 09/14/07]

8.16.3.8 ELIGIBILITY GUIDELINES FOR LOANS TO CHILD CARE FACILITIES:

A. Loans to child care facilities must be used for health and safety improvements to a child care facility, including space expansion, in order to maintain an adequate and appropriate environment for a provider’s clients.

B. An eligible applicant:

(1) has been licensed for three or more years;

(2) is not a head start grantee;

(3) has not received a loan in the last five years, unless the loan has been repaid;

(4) may be a private, for profit or non-profit provider;

(5) may be a family home that is a licensed facility;

(6) may be a provider moving to a new facility; and

(7) must comply with all applicable federal, state and local laws and regulations.

C. Priority for child care facility loans shall be given to eligible applicants that:

(1) have facilities serving a proportionately high number of state-subsidized clients and low-income families (by statute, this factor has priority over all others);

(2) intend to use the funds to increase the capacity of the facility;

(3) are non-profit organizations;

(4) intend to use the funds to serve children with special needs;

(5) intend to use the funds to reach levels 3, 4, and 5 of the department’s stars program (please refer to 8.16.2 NMAC for further details regarding the department’s stars program);

(6) intend to use the funds to increase their capacity to provide care during non-traditional hours;

(7) the department may consider other factors in determining the programmatic priorities of the project, including the proposed loan structure (percentage of equity contribution), programmatic need, loan size requested, and the length of time as a provider.

D. Loans may not be used for:

(1) day-to-day operating costs such as salaries, rent and food purchases;

(2) working capital to cover shortfalls or delays in payments to families, government agencies, or other funding sources;

(3) training expenses;

(4) purchase of televisions, videocassette recorders, DVD players, or related equipment;

(5) vehicle or transportation expenses; or

(6) repayment of loans or reimbursement of previously incurred expenses.

E. A provider that has received a loan from the fund in the immediately preceding five years shall not be given a loan.

[8.16.3.8 NMAC - Rp, 8.16.3.7 NMAC, 09/14/07]

8.16.3.9 LOAN APPLICATION PROCEDURES:

A. Contingent upon a sufficient balance in the fund, the department and the authority will accept applications and award loans on an on-going basis.

B. The department and the authority will provide forms for a loan application and applications must be submitted on that form. Application forms may be obtained from the department. The application shall be signed by the authorized representative and submitted to the department. Only applications that are complete will be considered for a loan. The application shall include the following:

(1) evidence of the eligibility of the applicant as a provider;

(2) a detailed description of the circumstances that demonstrate the need for the project, including:

(a) a description of how the project will benefit the health and safety of provider's clients; and

(b) number of state subsidized and low-income family clients and total number of clients;

(3) a detailed description of the project to be financed; including:

(a) a description of the scope of work of the project;

(b) the estimated cost of the project;

(d) the estimated useful life of the project and selected components, as detailed on the application form;

(e) proof of applicable licenses and certifications for the provider and the facility; and

(f) other data as requested by the department or the authority;

(4) if applicant is an entity, a copy of the applicant's formation and governance documents (e.g., articles of incorporation and bylaws) and if applicable a certificate of good standing from the public regulation commission;

(5) a letter certifying that the project was duly authorized and approved by the applicant's governing body;

(6) identification of the source funds to complete the project if the loan requested is not sufficient to cover the full cost of the project;

(7) identification of the source of funds for repayment of the loan and the source of funds to operate and maintain the project over its useful life;

(8) the applicant's financial reports for the most recent three years and/or federal and state tax returns and the applicant’s projected cash flows for 3 or 5 years, depending on the amount of the requested loan;

(9) the applicant’s business plan that details strategies for obtaining adequate funding and the handling of money is accompanied by a budget that balances income and expenses and demonstrates that the applicant is in compliance with all local, state and federal laws regarding the reporting of income and management of money, if the requested loan is for $20,000 or more;

(10) written assurance that the project is allowed by the owner of the facility, if the owner is not the applicant;

(11) the requested loan payback period;

(12) information on the current and proposed services of the applicant to state-subsidized clients and low-income families; and

(13) additional information as requested by the department or board.

[8.16.3.9 NMAC - Rp, 8.16.3.8 NMAC, 09/14/07]

8.16.3.10 EVALUATION OF APPLICANT AND PROJECT:

A. Evaluations and determinations by department.

(1) The department will determine whether an application is complete.

(2) Once the application is complete, the department will evaluate the applicant and the proposed project for eligibility and make a determination as to eligibility.

(3) If the department determines that an applicant is eligible, the department will determine the programmatic priority for each application.

(4) Upon completion of its evaluation of eligibility and determination of programmatic priority, the department will refer the applications that have been determined eligible and have been assigned a programmatic priority to the authority.

B. Financing approval by the authority.

(1) The authority will perform an independent analysis of the financial feasibility of each application for a loan. In evaluating an application the authority will consider:

(a) the ability of the eligible applicant to secure financing from other sources;

(b) the costs of the loan;

(d) the applicant’s ability and agreement to satisfy any other requirements for approval of the loan as the authority requires by policy or otherwise.

(2) The evaluation must include a finding that the useful life of the project will meet or exceed the final maturity of loans made or bonds purchased or issued by the board and must meet standards for reasonable costs set by the board.

(3) Restrictions on loans:

(a) An applicant shall not be given a loan if the applicant received a loan from the fund in the immediately preceding five years.

(b) An applicant shall not be given a loan if the applicant has not completed repayment of a previous loan from the fund.

(c) No more than twenty percent of the fund available for the funding cycle may be loaned to a single provider in a single loan.

(4) The authority will make a written recommendation to the application committee setting forth its recommendations for approval of specific applications.

C. Recommendations to board by application committee. Upon receipt of the authority’s recommendation the application committee shall review and evaluate the loan applications and make a recommendation to the board. The application committee will review and evaluate the applications for eligibility, programmatic priority, feasibility and readiness to proceed. The application committee may confer with outside parties as necessary to obtain more information. The application committee will make a written recommendation to the board of the applications that are eligible, feasible and ready to proceed. The recommendation will include the estimated costs of the projects and may include recommendations for loan covenants necessary to ensure programmatic integrity and adjustments to the department’s programmatic prioritization of applications.

D. Approval by board. Upon receipt of the application committee’s recommendation the board will act on the recommended applications and any associated loan documents or agreements no later than the next regular board meeting at which such item may be properly considered. The board may approve all or part of any application recommended or may disapprove the application and deny funding. Board approval may specify, at the board’s discretion, terms and conditions of the loan as necessary to ensure repayment, including but not limited to maximum loan term and maximum annual payments. The authority will notify the applicant of the approval or disapproval of its application by telephone and will mail written notification by mail within seven (7) working days of board action.

E. Communications regarding applications. All communications regarding an applicant’s original application shall be directed to the department.

F. Project feasibility. Although the department, the authority and the application committee will analyze each project to determine whether the project is feasible, a loan by the authority does not constitute a warranty or other guarantee as to the feasibility of the project and the authority shall not have any responsibility or liability with respect to any project.

[8.16.3.10 NMAC - Rp, 8.16.3.9 NMAC, 09/14/07]

8.16.3.11 RECONSIDERATION OF DECISIONS BY DEPARTMENT AND BOARD:

A. Decision by department as to eligibility. An applicant may request reconsideration of a contrary decision by the department as to whether it is an eligible applicant under these regulations. Notice must be given to the department in writing within ten (10) working days of receipt of the department's decision as to eligibility. A request for reconsideration not timely or properly made will be barred. The department’s secretary will promptly review each timely request for reconsideration. The decision of the department secretary as to eligibility is final.

B. Decision by board as to funding. An applicant may request reconsideration of a decision by the board denying funding to an applicant by notifying the executive director of the authority in writing within forty-five (45) days of the date on which notice of an adverse decision is given by the authority to an applicant. Notice of an adverse decision is deemed to be given on the fifth business day following the date on which written notice of the adverse decision is mailed to the applicant by the authority by United States mail. A request for reconsideration is deemed to be given on the fifth business day following the date on which the request is mailed to the authority. A request for reconsideration not timely or properly made will be barred. The authority's executive director will promptly review each timely request for reconsideration and will recommend, at the next regular meeting of the board, action to be taken by the board. The board will review and take action on the request for reconsideration and will notify the applicant of the board's decision, in writing, within five (5) working days of the board's decision. The decision of the board is final.

[8.16.3.11 NMAC - Rp, 8.16.3.10 NMAC, 09/14/07]

8.16.3.12 LOAN TERMS, DOCUMENTS AND ENFORCEMENT:

A. The authority and the eligible applicant will enter into an agreement and any other applicable documentation to establish the terms and conditions of the loan from the authority. The agreement will include the terms of repayment and sanctions available to the authority in the event of a default.

B. The board will establish the interest rate for loans. The authority will set the rate at the lowest legally permissible interest rate. The interest rate shall not change during the term of the loan unless refinanced.

C. The agreement will contain provisions that require loan recipients to comply with all applicable federal, state and local laws and regulations.

D. The agreement will contain a provision that the eligible applicant agrees that any contract or subcontract executed for the completion of any project shall contain a provision that there shall be no discrimination against any employee or applicant for employment because of race, color, creed, sex, religion, sexual preference, ancestry or national origin. The authority shall not be responsible for monitoring the contracts or subcontracts for inclusion of that provision or compliance with it.

E. In order to receive a loan greater than $20,000.00 the applicant shall require any contractor of a project to post a performance and payment bond in accordance with the requirements of Section 13-4-18 NMSA 1978 and its subsequent amendments and successor provisions.

F. The authority will monitor the terms and conditions of the agreement in conjunction with the department and will enforce all terms and conditions thereof, including prompt notice and collection. The authority will take actions as necessary to ensure loan repayment and the integrity of the fund.

G. If any repayment of a loan is 30 days past due the authority and the department will report to each other and to the application committee as to the borrower’s then current status as it relates to the loan, including licensure status and any reported or known violations of applicable laws or rules to which the facility is subject and any known change in financial status. If any repayment of a loan is 60 days past due the application committee shall develop a workout plan taking into account all actions, remedies and sanctions available to the department and the authority and will make recommendations to the department and the authority as needed to implement the workout plan. Any such workout plan and its implementation is in addition to and not instead of the courses of actions, remedies and sanctions available separately to the department or the authority under the act, these rules or the agreement or in any other manner available by law.

H. The department will monitor the performance of an eligible applicant under department licensure requirements and for programmatic requirements and will make the necessary site visits. The authority will not monitor the performance of an eligible applicant under department licensure requirements nor for programmatic requirements and will not make site visits. The authority will not be responsible for any act or omission of the applicant upon which any claim, by or on behalf of any person, firm, corporation or other legal entity, may be made, arising from the loan or any establishment or modification of the project or otherwise.

I. In the event the loan recipient defaults, the authority may enforce its rights by suit or mandamus and may utilize all other available remedies under state and federal law.

J. If an eligible applicant that has received a loan ceases to maintain its provider status or ceases to provide child care to infants, toddlers and children, the state shall have the following remedies available to it:

(1) the acceleration of the loan requiring the immediate repayment of all amounts due, including all accrued and unpaid interest;

(2) any other remedies available at law or in equity.

[8.16.3.12 NMAC - Rp, 8.16.3.11 NMAC, 09/14/07]

8.16.3.13 ADMINISTRATION OF THE CHILD CARE FACILITY REVOLVING LOAN:

A. The fund shall be administered by the authority as a separate account, but may consist of such sub-accounts as the authority deems necessary to carry out the purposes of the fund.

B. Money from repayments of loans or payments on securities held by the authority for projects authorized specifically by law shall be deposited in the fund. The fund shall also consist of any other money appropriated, distributed or otherwise allocated to the fund for the purpose of financing projects authorized specifically by law.

C. The authority shall adopt a uniform accounting system for the fund and related accounts and sub-accounts established by the authority, based on generally accepted accounting principles.

[8.16.3.13 NMAC - Rp, 8.16.3.12 NMAC, 09/14/07]

HISTORY OF 8.16.3 NMAC:

History of Repealed Material:

8.16.3 NMAC, Requirements Governing the Child Care Facility Loan Act, filed 2/15/2005 - Repealed effective 10/17/2005.

8.16.3 NMAC, Requirements Governing the Child Care Facility Loan Act, filed 10/3/2005 - Repealed effective 9/14/2007.