1. (1) Cities, counties and voluntary agencies as applicants for projects estimated to exceed $100,000.00 must apply for a State aid grant or a LOUI with the intent to refinance the state aid grant or private financing by means of a DASNY loan at the conclusion of the project.
2. (2) Applicants with an office approved LOUI authorizing private financing of a project approved by the Division of Budget may apply for a DASNY loan for purposes of refinancing at the conclusion of the project. Use of construction management or design/build contracts must receive the prior written approval of the office and shall contain such terms and conditions as the commissioner shall deem reasonable and necessary.

3. (3) Upon receipt of an approved project proposal cost (proposed project approval, PPA) by the Division of Budget, project approval by applicant’s board of directors or authorized principal, approval of the State Attorney General and State Comptroller, an OASAS capital contract shall be executed including provisions for long term use of the facility and participation in the DASNY financing program for mental hygiene facilities.

   (b) Application.

   In addition to requirements for a State aid grant pursuant to section 813.5 of this Part, applicants for a DASNY loan shall provide the following:

4. (1) applicant must be able to demonstrate that at the time of receiving a DASNY loan, it will possess a fee interest or such other estate or interest in the property sufficient to assure undisturbed use of the property for a minimum of 30 years or the term of the DASNY loan, whichever is greater;
5. (2) the applicant may not transfer, sell, assign, lease or encumber, in whole or in part, real property acquired through a State aid grant, or transfer, sell or assign in whole or in part, the shares of stock of the cooperative corporation, the proprietary lease, leasehold or contractual agreement acquired with a State aid grant without the prior written approval of the office;

6. (3) the applicant shall obtain a resolution of its board of directors authorizing the corporation to enter into such agreements as shall be required by DASNY and the office pursuant to Mental Hygiene Law and the Facilities Development Corporation Act.

   (c) Recertification.

   Applicants should initiate a certification process pursuant to Part 810 of this Title if the program is a new facility, is relocating to a new site, or is changing capacity consistent with the approved project plan.

   (d) Accountability.

7. (1) Review and written approval of plans, specifications and cost estimates by the office is required at each phase of design. Final working drawings and specifications shall conform with all applicable laws, codes, rules and regulations.
8. (2) Written approval of the office is required before the recipient of financial support enters into a contract with an architect, engineer, design consultant or any other provider of services related to the capital project as may be required by the office.
9. (3) Bid documents must be reviewed by the office and approved in writing prior to solicitation of bids. Construction contracts shall be bid competitively upon solicitation of no less than three potential bidders. Contracts shall be awarded to the lowest responsible bidder, upon review and approval by the office.

10. (4) The recipient of financial support must provide supervision and inspection at the construction site adequate to ensure that the work is completed on time and in accordance with office approved plans and specifications. Changes to approved plans or documents shall require the office's written approval.

    (e) Allowable costs.

11. (1) Project costs expended prior to execution of a capital contract or LOUI are not eligible for reimbursement from proceeds of a DASNY loan.

12. (2) Consistent with an approved capital contract or LOUI, a State aid grant or private financing to be refinanced with a DASNY loan may be used for the following costs:

    1. (i) design, construction, acquisition, reconstruction, rehabilitation or improvement of developed or undeveloped real property for use as an addiction services treatment facility;
    2. (ii) feasibility studies, designs, surveys, plans and specifications;
    3. (iii) engineering and architectural services;
    4. (iv) insurance premiums;
    5. (v) original equipment and furnishings required for the operation of the facility;
    6. (vi) costs and expenses in connection with the issuance of the bonds and notes by DASNY to finance the facility, including interest from the date of such issuance to the loan termination;
    7. (vii) refinancing of the outstanding balance of a taxable interest rate loan, the proceeds of which were used for the purposes described in this paragraph;
    8. (viii) legal fees related to the project and capped at a regional rate determined by the commissioner, excluding fees incurred by the applicant related to litigation between applicant and any service provider, contractor or subcontractor hired by applicant during the course of the project;

    9. (ix) such other costs as the commissioner may determine to be reasonable and necessary.

       (f) Agreements.

13. (1) Upon completion of the project, the facility shall be operated for the purposes for which it was acquired, constructed or improved, for a term of 30 years secured by a State aid grant lien or other agreement between the office and the recipient of financial support.
14. (2) The recipient must enter into a mortgage, loan, security and other such agreement and provide such legal opinions and assurances as required by the commissioner and DASNY with respect to the financing and securing of the property.
15. (3) The recipient must execute an agreement with the office whereby the office will recover on a periodic basis a portion of the provider’s annual OASAS reimbursement, which may include interest, fees, costs and charges, until the loan is satisfied.
16. (4) Recipients may pre-pay loans pursuant to terms of the DASNY loan agreement.

(a) Eligibility.