SECTION 550.108. Change of Ownership License Application Procedures and Issuance and Notice of Changes

(a) For purposes of this section, a temporary change of ownership license is a temporary license issued to an applicant who proposes to become the new operator of a center that exists on the date the application is submitted.

(b) A center license is not assignable or transferable. The applicant (new license holder) must obtain a temporary change of ownership license followed by an initial three-year license in accordance with this section. When the Texas Health and Human Services Commission (HHSC) approves the change of ownership by issuing a temporary change of ownership license to the new license holder, the current license holder's license becomes invalid as of the effective date of the change of ownership indicated in the application. Between the effective date of the change of ownership and the issuance of the temporary change of ownership license, the current license holder remains responsible under its license; however, the applicant may operate a center on behalf of the current license holder during such period of time.

(c) An applicant must submit to HHSC through the online portal:

(1) a complete application for a license in accordance with HHSC instructions and §550.101 of this subchapter (relating to Criteria and Eligibility for a License) or an incomplete application with a letter explaining the circumstances that prevented the inclusion of the missing information;

(2) the application fee, in accordance with §550.112 of this subchapter (relating to Licensing Fees);

(3) a letter of credit for $250,000 from a bank that is insured by the Federal Deposit Insurance Corporation, or other documentation acceptable to HHSC, to demonstrate the applicant's financial viability; and

(4) a signed and notarized Change of Ownership Transfer Affidavit HHSC Form 1092 from the applicant and the center's current license holder of intent to transfer operation of the center from the current license holder to the applicant, beginning on the change of ownership effective date specified on the change of ownership application.

(d) HHSC may deny issuance of a license if the applicant, a controlling person, or any person disclosed in the application fails to meet the criteria for a license established in §550.101 of this subchapter or for any reason specified in §550.115 of this subchapter (relating to Criteria for Denial of a License).

(e) To avoid a center operating without a license, an applicant must submit all items in subsection (c) of this section at least 30 days before the anticipated date of the change of ownership in accordance with HHSC instructions, unless the 30-day notice requirement is waived in accordance with subsection (f) of this section.

(f) HHSC may waive the 30-day notice required by subsection (e) of this section if:

(1) the applicant presents evidence to HHSC demonstrating that an eviction of the center or a foreclosure of the property from which the center operates is imminent and that circumstance prevented the timely submission of the items specified in subsection (c) of this section; or

(2) HHSC, in its sole discretion, determines that circumstances are present that threaten a minor's health, safety, or welfare and necessitate waiver of timely submission of the items specified in subsection (c) of this section.

(g) Upon HHSC approval of the items specified in subsection (c) of this section, HHSC issues a temporary change of ownership license to the applicant if HHSC finds that the applicant, all controlling persons, and all persons disclosed in the application satisfy the requirements in §§550.101(a) and (f) of this subchapter, 550.104 of this subchapter (relating to Applicant Disclosure Requirements), and 550.115 of this subchapter.

(1) The issuance of a temporary change of ownership license constitutes HHSC's official written notice to the facility of the approval of the application for a change of ownership.

(2) The effective date of the temporary change of ownership license is the date requested in the application and cannot precede the date the application is received by HHSC through the online portal.

(h) A temporary change of ownership license expires on the earlier of:

(1) 90 days after its effective date or the last day of any extension HHSC provides in accordance with subsection (i) of this section; or

(2) the date HHSC issues a three-year license in accordance with subsection (l) of this section.

(i) HHSC, in its sole discretion, may extend the term of a temporary change of ownership license by 90 days based upon extenuating circumstances.

(j) HHSC conducts an on-site health inspection to verify compliance with the licensure requirements after issuing a temporary change of ownership license. HHSC may conduct a desk review instead of an on-site health inspection after issuing a temporary change of ownership license if:

(1) less than 50 percent of the direct or indirect ownership interest in the former license holder changed, when compared to the new license holder; or

(2) every person with a disclosable interest in the new license holder had a disclosable interest in the former license holder.

(k) HHSC, in its sole discretion, may conduct an on-site Life Safety Code inspection after issuing a temporary change of ownership license.

(l) If an applicant and all other persons disclosed in the application satisfy the requirements of §§550.101(a) and (f), 550.104, and 550.115 of this subchapter for a license, and the center passes the change of ownership health inspection as described in subsection (j) of this section, HHSC issues a three-year license. The effective date of the three-year license is the same date as the effective date of the change of ownership and cannot precede the date the application was received through the online portal.

(m) If a license holder changes its name but does not undergo a change of ownership, the license holder must notify HHSC and submit documentation evidencing a legal name change by submitting an application through the online portal. On receipt of the notice and documentation, HHSC reissues the current license in the license holder's new name.

(n) If a license holder adds an owner with a disclosable interest, but the license holder does not undergo a change of ownership, the license holder must notify HHSC of the addition no later than 30 days after the addition of the owner by submitting an application through the online portal.

Source Note: The provisions of this §550.108 adopted to be effective September 1, 2014, 39 TexReg 6569; amended to be effective October 11, 2017, 42 TexReg 5492; amended to be effective October 29, 2018, 43 TexReg 7188; transferred effective May 1, 2019, as published in the Texas Register April 12, 2019, 44 TexReg 1875; amended to be effective October 11, 2022, 47 TexRg 6588