(a) The rules, regulations, and guidelines adopted by the Superintendent of Public Instruction pursuant to Sections 8261 and 8269 shall permit reimbursement for interest paid by contractors on private sector debt financing for the purchase, lease-purchase, repair, or renovation of child care and development facilities owned or leased by contractors providing center-based care.

(b) The Superintendent of Public Instruction shall adopt regulations requiring contractors to demonstrate that the amount of interest paid in a year on private sector debt financing for the purposes identified in subdivision (a) does not exceed the value obtained by the state in the use of the facilities during the year for the child care and development services program. The regulations shall include, but not be limited to, the following methods of making this demonstration:

(1) Amortization of a loan or lease-purchase contract on a straight-line basis for the purchase price of a portable building, including any transportation charges, installation charges, loan fees, taxes, points or other fees associated with the purchase, over a period of 15 years or more.

(2) Amortization of a loan or lease-purchase contract on a straight-line basis for the purchase price of a permanent building and real estate, including any loan fees, taxes, points or other fees associated with the purchase, over a period of 15 years or more.

(3) Evidence acceptable to the Superintendent of Public Instruction that loan payments for the purchase of a portable building or permanent building and real estate, including principal and interest, do not exceed the fair market rental cost that the contractor would have paid if the property was not purchased.

(c) Loans or lease-purchase agreements amortized over the number of years designated in subdivision (b), but due in a fewer number of years, shall not be disallowed because of the shorter due date.

(Added by Stats. 1997, Ch. 247, Sec. 2. Effective August 8, 1997.)