11462.06. (a) For purposes of the administration of this article, including the setting of AFDC-FC provider rates, the department shall deem the reasonable costs of leases for shelter care for foster children to be allowable costs. Reimbursement of shelter costs shall not exceed the fair market rental value, as determined in subdivision (b), of owned, leased, or rented buildings, including any structures, improvements, edifices, land, grounds, and other similar property that is owned, leased, or rented by the provider and that is used for the provider’s AFDC-FC programs and activities, exclusive of idle capacity and capacity used for nonresidential foster care programs and activities. Shelter costs shall be considered reasonable in relation to the fair market value limit as described in subdivision (b).
(b) (1) For purposes of this section, fair market rental value of leased property shall be determined by either of the following methods, as chosen by the provider:
(A) The fair market rental value determined by a comparative analysis prepared by an independent real estate broker. The comparative analysis shall be performed by a qualified, licensed professional who acts within the scope of the broker’s license, who, at a minimum, meets the standards for brokers, as specified in Chapter 6 (commencing with Section 2705) of Title 10 of the California Code of Regulations, and the comparatives shall be made in accordance with Section 200.465(a) of Title 2 of the Code of Federal Regulations.
(B) The fair market rental value determined by an independent appraisal. The appraisal shall be performed by a qualified, licensed professional appraiser who, at a minimum, meets standards for appraisers as specified in Chapter 6.5 (commencing with Section 3500) of Title 10 of the California Code of Regulations.
(2) The determinations made pursuant to this subdivision shall not be deemed independent if performed under a less-than-arm’s-length agreement, or if performed by a person or persons employed by, or under contract with, the program for purposes other than performing appraisals, or by a person having a material interest in any program that receives foster care payments. If the department believes an appraisal does not meet these standards, the department shall give its reasons in writing to the provider and provide an opportunity for appeal.
(c) Notwithstanding the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the department may implement applicable provisions of this section by all-county letters or similar instructions until regulations are adopted.
(d) (1) Commencing July 1, 2003, any group home or short-term residential therapeutic provider with a self-dealing lease transaction for shelter costs, as defined in Section 5233 of the Corporations Code, shall not be eligible for an AFDC-FC rate.
(2) Lease and rental transactions are subject to restrictions set forth in Section 200.465(c) of Title 2 of the Code of Federal Regulations.
(e) (1) Fair market rental value shall be determined at the execution of the lease and at renewal or extension of the lease, or for a month-to-month tenancy, at the commencement of the audit period.
(2) Lease and rental arrangements shall be reviewed periodically to determine if circumstances have changed and other options are available.
(Amended (as amended by Stats. 2016, Ch. 612, Sec. 96) by Stats. 2017, Ch. 732, Sec. 69. (AB 404) Effective January 1, 2018.)