Requirements Governing Financial Support of Provider Capital Projects

Date Issued: December 6, 2022

RECIPIENTS

• All Providers of Funded Chemical Dependence Services
• Local Governmental Units (LGUs)

PURPOSE

The purpose of this Guidance Document is to describe the statutory and operational requirements for addiction services providers seeking OASAS' assistance in financing and managing capital expenditures associated with minor and major maintenance, rehabilitation, and construction of facilities used for the provision of addiction services.

This Guidance Document incorporates the content of and supersedes Local Services Bulletins 2019-08 and 2014-20.

APPLICABILITY

The processes described in this Guidance Document pertain to any construction activity, funded by OASAS, which meets the legal definition of capital expenditures as stated below.

To be eligible for OASAS funding for major or minor capital projects, a program must be operated by a local governmental unit or a voluntary agency and must be funded operationally by OASAS to provide addiction services.  In addition, in order to be funded for major capital projects, a program must hold an OASAS-issued operating certificate.

In addition, these processes apply to the following, if the service provider is requesting OASAS funding for that activity:

• any proposed construction, reconstruction, rehabilitation, improvement, or repair of any physical facility, if the proposed action will extend the useful life of the affected asset for at least one (1) year AND has a cost exceeding $500; or
   
• the repair, maintenance and replacement of furnishings and fixed immovable equipment which have a useful life of at least one (1) year or is expected to add to the useful life of the asset AND has a cost exceeding $500.
   

These processes do NOT apply, however, to any expense that is determined by OASAS to be an operating expense to be paid from a maintenance item in an operational budget previously approved by OASAS.

DEFINITIONS

Definitions of Provider Eligibility

• OASAS-Certified: Pursuant to Article 32 of the New York State Mental Hygiene Law, possession of operating certificate(s) issued by the OASAS Commissioner to engage in the provision of addiction services.
• Local Governmental Unit: As defined in New York State Mental Hygiene Law, section 41.03(5), local governmental unit “means the unit of local government given authority in accordance with this chapter by local government to provide local services.”
• Voluntary Agencies: As defined in New York State Mental Hygiene Law, section 25.01(8), a voluntary agency means “a corporation organized or existing pursuant to the not-for-profit corporation law for the purpose of providing substance use disorder, treatment, compulsive gambling, prevention or other authorized services.”
• OASAS-Funded: Providers which receive ongoing State Aid funds from OASAS in support of addiction services as reflected on the annual State Aid Funding Authorization and/or contract budget document. 
   

Definitions of Capital Cost

A capital cost is defined in Mental Hygiene Law as follows:

Section 25.01(4) states that the term “capital costs” means “the costs of a program operated by a local governmental unit or a voluntary agency with respect to the acquisition of real property estates, interests, and cooperative interests in realty, their design, construction, reconstruction, rehabilitation and improvement, original furnishings and equipment, site development, and appurtenances of a facility.”

Section 41.03(8) states that the term “capital costs” means “the costs of a local government, a voluntary agency, or the facilities development corporation with respect to the acquisition of real property estates, interests and cooperative interests in realty, their design, construction, reconstruction, rehabilitation and improvement, original furnishings and equipment, site development, and appurtenances of a local facility. Capital costs do not include any of the foregoing costs paid under provisions of law other than this chapter."

Classification of Projects
 

Capital projects are classified into two major categories:

• Minor Maintenance Projects are those capital projects that restore to all appropriate standards the fixed equipment and/or physical plant of facilities where services are provided, through actions of a non-recurring nature beyond ordinary repairs, the estimated cost of which is $150,000 or less.
• Major Capital Projects are non-minor maintenance projects to preserve or increase existing space, or to create, preserve, or obtain and improve facilities. 

Any capital project exceeding $150,000 requires that the provider submit a Schedule C and a State Aid Grant lien for an appropriate period on the improved property.

Capital Project Management Services

OASAS provides the following assistance (either directly or through consultants contracted via DASNY) in the management of approved service provider capital projects.

• Feasibility studies involve the inspection and assessment of the condition of real property in the context of service needs and capacity, the development of the scope of work to be done, the development of cost estimates for requests to the State Division of the Budget (DOB), assistance to service provider management in providing practical alternatives and in arranging the layout of space, as applicable, and the completion of environmental assessments, as needed.
   
• Technical services involve the preparation and/or review of architectural and construction activity and documents, in support of OASAS' direct project management activity including, but not limited to: 
   
  • design review - detailed review of the design plans (all phases), submitted by local service providers and their consultants, for conformity to OASAS regulations and with respect to building codes and budget constraints, including, especially, the review of construction documents prior to authorizing the service provider to direct the architect to solicit bids for the capital project.
  • bidding assistance - assistance to the service provider and the project architect in preparing bid packages, advertising for the soliciting of potential qualified bidders, soliciting bids, informing bidders regarding the project, reviewing bids, assisting in selecting the best bid proposal within budgetary limits, and assisting in the negotiation of the construction contract.
  • construction monitoring - frequent and regular observation and inspection of construction in progress by qualified persons, attendance at job meetings to advise whether construction is being completed in accordance with applicable building codes, OASAS regulations, budget constraints, agreed upon schedules, and approved plans and specifications; review and recommendations for action on proposed change orders; and reporting of findings to the provider and the OASAS project manager.
  • miscellaneous services - provision of other forms of specialized technical services, such as rent studies and appraisals, and studies of the compatibility of proposed capital expenditures with sanitary and building code requirements.

The term basic project management services means managing a capital project to successful and timely completion on behalf of the service provider and OASAS through design review services, bidding assistance, and construction monitoring, as defined in the preceding paragraph. Such services may also include rendering assistance to the provider in:

• selecting, directing, and supervising design consultants;
• dealing with construction contractors;
• using OASAS and/or DASNY forms and documentation standards throughout the project;
• determining the completion of construction and the acceptability of the completed construction;
• reporting progress on the project, on a regular and frequent basis, to the service provider and various OASAS units; and
• review of contractor requisitions and provider Claims for Payments for appropriateness of payment.

Generally, after DOB approval of the project has been obtained, OASAS will execute a capital contract with the service provider; in turn, the provider will execute a contract directly with an architect, other consultants, and the general contractor. If DASNY services are to be used, OASAS will engage with DASNY directly. These choices will be made by OASAS on a project-by-project basis.

MINOR MAINTENANCE PROJECT SELECTION AND MANAGEMENT PROCESS

Minor maintenance projects are overseen by the Capital Financial Management Bureau (CFMB) but implemented by the service provider. At OASAS’ discretion, DASNY services may be engaged to review, monitor, inspect, and approve scope(s) of work and payments.

Emergency Minor Maintenance

Providers must complete a Service Provider Minor Maintenance Funding Request (PAS-34) (Exhibit B), obtain bids in accordance with the Administrative and Fiscal Guidelines for OASAS-Funded Providers and submit it to the OASAS Regional Office. The Regional Office will review the request and forward as appropriate to the Statewide Director or his/her designee for approval.

• If operating funds are available and appropriate, the Regional Office will arrange to make these funds available via a budget modification so that the provider is able to complete the required work. Service providers receive payment and report expenditures in accordance with existing State Aid procedures.
   
• If operating funds are not available or appropriate, the Regional Office recommends use of capital funding from the minor maintenance allocation, contingent on sufficient availability. If the request is approved by the Statewide Director of Operations or his/her designee, the request is sent to the CFMB. CFMB will execute a capital contract with the provider to fund the work to be done. When OASAS sends the contract package to the provider, it will contain information and instructions on how to request payment for the work done.

Routine Minor Maintenance

Providers are advised to identify non-emergency minor maintenance projects continuously throughout the year and, if appropriate, complete and submit a PAS-34 funding request to the OASAS Regional Office. All requests for minor maintenance projects will require a minimum of three equivalents bids (in terms of the scope of work) for each contractor deemed necessary to complete the project in accordance with the Administrative and Fiscal Guidelines for OASAS-Funded Providers.

For each minor maintenance project recommended by the applicable OASAS Regional Office and approved by the Statewide Director of Operations or his/her designee, CFMB will review the minor maintenance project and make a recommendation to the OASAS contract unit to process and execute a capital contract with the provider to finance the work to be done. When OASAS sends the contract package to the provider, it will contain information and instructions on how to request payment for the work done. Service providers are to submit any expenditure reporting and Claim for Payments packages requesting payment for work done to the OASAS Capital Financial Management Bureau at [email protected] as a PDF attachment.

For both emergency and routine minor maintenance projects, the provider may request CFMB assistance in further defining the work to be done and selecting, following competitive bidding, a capable and cost-efficient contractor to complete the work.

MAJOR CAPITAL PROJECT SELECTION PROCESS

Preliminary Project Review and Approval

At least annually, each service provider assesses its capital facility needs in relation to its plan of services and the condition of its physical plant. Those needs, once identified, are proposed on Schedule Cs and submitted for approval to the LGU and the OASAS Regional Office.

OASAS Regional Offices review each provider's Schedule C. Upon approval of the submission by the Statewide Director, the request is sent to the CFMB. The CFMB then proceeds with the required project development activity preceding a request for DOB approval. At this time, if they have not yet done so, providers are also reminded of the necessity of submitting a certification application, if required. Service providers may request assistance in the completion of the certification application by contacting the appropriate OASAS Regional Office.

Project Development

CFMB will work with the provider in conducting any required feasibility studies, engineering studies, environmental studies, and appraisals of property for use in requesting approval from DOB.

MAJOR CAPITAL PROJECT APPROVAL PROCESS

Following preliminary completion of project development activities, the CFMB will submit a Prior Project Approval (PPA) to the DOB. Upon receipt of DOB approval, OASAS will execute a capital contract with the provider to finance the work to be completed.

NOTE: If the project requires the approval of a certification application, the CFMB will not process a capital contract until the certification application has been submitted to the OASAS Bureau of Certification.

When OASAS sends the contract package to the provider, it will contain information and instructions on how to process the contract and prepare for the contract closing with OASAS.

MAJOR CAPITAL PROJECT MANAGEMENT PROCESS

As the capital contract is being developed and executed, OASAS will assign a project manager to contact the provider and begin to render appropriate assistance in completing the project.

If DASNY provides capital project management services, DASNY will review contractor and architect payment requisitions, prior to approving payment to ensure they are consistent with the progress achieved on the project as observed by the DASNY project manager. Otherwise, the provider has responsibility for managing the project, subject to OASAS CFMB project management review, approval, and supervision.

For all projects, the provider submits to OASAS a State of New York Claim For Payment (AC3253-S) package (See Exhibit C) consisting of a  Claim for Payment  and/or Expenditure Report Transmittal Letter, a State of New York Claim For Payment (AC3253-S), and a Capital Project Expenditure Report (PAS 35)  Revised 12/18, accompanied by other supporting documentation (such as bank statements, invoices, and canceled checks). The contract executed with OASAS contains the procedure for submitting advance payment and reimbursement Claim for Payments and expenditure reporting. In all cases involving a DASNY project manager, he/she has the responsibility for reviewing and approving all expenditures for work completed. OASAS will not process Claim for Payment packages without DASNY project manager approval of back-up documentation.

SOURCE(S) OF FURTHER INFORMATION

If there are any questions regarding the content of this Guidance Document, please contact the OASAS Capital Financial Management Bureau at (518) 457-2545.