Illinois § 7

§ 7.

As a condition for the issuance of a permit pursuant to this Act, the provider shall establish and maintain on a current basis, a letter of credit or an escrow account with a bank, trust company, or other financial institution located in the State of Illinois. The letter of credit shall be in an amount and form acceptable to the Department, but in no event shall the amount exceed that applicable to the corresponding escrow agreement alternative, as described below. The terms of the escrow agreement shall meet the following provisions: (a) Requirements for new facilities. (1) If the entrance fee applies to a living unit which has not previously been occupied by any resident, all entrance fee payments representing either all or any smaller portion of the total entrance fee shall be paid to the escrow agent by the resident. (2) When the provider has sold at least 1/2 of its living units, obtained a mortgage commitment, if needed, and obtained all necessary zoning permits and Certificates of Need, if required, the escrow agent may release a sum representing 1/5 of the resident's total entrance fee to the provider. Upon completion of the foundation of the living unit an additional 1/5 of the resident's total entrance fee may be released to the provider. When the living unit is under roof a further and additional 1/5 of the resident's total entrance fee may be released to the provider. All remaining monies, if any, shall remain in escrow until the resident's living unit is substantially completed and ready for occupancy by the resident. When the living unit is ready for occupancy the escrow agent may release the remaining escrow amount to the provider and further entrance fee payments, if any, may be paid by the resident to the provider directly. All monies released from escrow shall be used for the facility and for no other purpose. (b) General requirements for all facilities, including new and existing facilities. (1) At the time of resident occupancy and at all times thereafter, the escrow amount shall be in an amount which equals or exceeds the aggregate principal and interest payments due during the next 6 months on account of any first mortgage or other long-term financing of the facility. Existing facilities shall have 2 years from the date of this Act becoming law to comply with this subsection. Upon application from a facility showing good cause, the Director may extend compliance with this subsection one additional year. (2) Notwithstanding paragraph (1) of this subsection, the escrow monies required under paragraph (1) of this subsection may be released to the provider upon approval by the Director. The Director may attach such conditions on the release of monies as he deems fit including, but not limited to, the performance of an audit which satisfies the Director that the facility is solvent, a plan from the facility to bring the facility back in compliance with paragraph (1) of this subsection, and a repayment schedule. (3) The principal of the escrow account may be invested with the earnings thereon payable to the provider as it accrues. (4) If the facility ceases to operate all monies in the escrow account except the amount representing principal and interest shall be repaid by the escrow agent to the resident. (5) Balloon payments due at conclusion of the mortgage shall not be subject to the escrow requirements of paragraph (1) this subsection. (Source: P.A. 85-1349.)