(b) Grants shall be made for the purpose of defraying reasonable and necessary start-up expenses and reducing initial operating deficits incurred in the first 12 months of a program's operations resulting from initial low occupancy rates.

1. (1) Use of such grant funds may include, but shall not be limited to:

   1. (i) administrative expenses, including staff salaries, office overhead and equipment;
   2. (ii) rent prior to occupancy;
   3. (iii) security deposits;
   4. (iv) minor renovations of existing structures;
   5. (v) furnishings and household equipment;
   6. (vi) moving expenses of residents; and
   7. (vii) reasonable anticipated operating deficits resulting from low initial occupancy rates.

2. (2) Awards for start-up expenses and initial operating deficits will be based upon:

   1. (i) the quality of the proposed program;
   2. (ii) demonstrated financial need;
   3. (iii) geographic distribution of enriched housing programs; and
   4. (iv) the availability of and demand for long-term care services in the geographic area to be served by the proposed program.

(c) Grants may be awarded for the purpose of moderate renovations or modifications of existing structures when determined to be necessary by the commissioner. Awards made for moderate renovation or modification will be based on:

1. (1) finding that, without such renovation or modifications, a geographic area may be underserved because of the lack of available or suitable existing structures;
2. (2) demonstrated financial need;
3. (3) confirmation that, when renovations or modifications are completed, the building will meet all applicable building and fire safety codes and enriched housing program site requirements; and
4. (4) documentation of a legally binding agreement for the use of the building by enriched housing programs for a minimum of seven years.