§ 58-64-33. Operating reserves. - North Carolina Statutes

§ 58‑64‑33. Operating reserves.

(a)        A provider shallmaintain after the opening of a facility: an operating reserve equal to fiftypercent (50%) of the total operating costs of the facility forecasted for the12‑month period following the period covered by the most recentdisclosure statement filed with the Department. The forecast statements asrequired by G.S. 58‑64‑20(a)(12) shall serve as the basis forcomputing the operating reserve. In addition to total operating expenses, totaloperating costs will include debt service, consisting of principal and interestpayments along with taxes and insurance on any mortgage loan or other long‑termfinancing, but will exclude depreciation, amortized expenses, and extraordinaryitems as approved by the Commissioner. If the debt service portion is accountedfor by way of another reserve account, the debt service portion may beexcluded. If a facility maintains an occupancy level in excess of ninetypercent (90%), a provider shall only be required to maintain a twenty‑fivepercent (25%) operating reserve upon approval of the Commissioner, unlessotherwise instructed by the Commissioner. The operating reserve may be fundedby cash, by invested cash, or by investment grade securities, including bonds,stocks, U.S. Treasury obligations, or obligations of U.S. government agencies.

(b)        A provider that hasbegun construction or has permanent financing in place or is in operation onthe effective date of this section has up to five years to meet the operatingreserve requirements.

(c)        An operatingreserve shall only be released upon the submittal of a detailed request fromthe provider or facility and must be approved by the Commissioner. Suchrequests must be submitted in writing for the Commissioner to review at least10 business days prior to the date of withdrawal. (1991, c. 196, s. 5; c. 720,s. 89; 1993, c. 452, s. 64; 1993 (Reg. Sess., 1994), c. 678, s. 29; 1995, c.193, s. 52; 2003‑193, s. 8; 2004‑203, s. 36.)