Current through Register Vol. 46, No. 39, September 25, 2024
(a) The operational
plan for each shelter for families must include on forms and in the manner
prescribed by the office a financial statement for the facility's most recently
completed fiscal year, if any. In addition, the operational plan must contain a
proposed one-year budget, including estimated income and expenditures. Such
budget must set forth the costs reasonable and necessary to operate and
maintain the facility consistent with each of the requirements of the
operational plan and this Part. The reasonableness of any such costs must be
evaluated by the office. The budget must be based upon the estimated net actual
expenditures for the operation and maintenance of facilities and for the care
of the residents with respect to items approved under the operational plan. The
budget must be presented in sufficient detail to enable the office to identify
costs not subject to Federal financial participation. Budgets of facilities not
operated by social services districts must be agreed upon between the social
services district and the facility operator. All budgets must be formulated to
ensure that the costs of resident services that may be paid from other funding
sources, including but not limited to the MA program, are not included as costs
in the proposed shelter budgets.
(b) Costs reasonably necessary under any
operational plan shall be limited as follows:
(1)
(i)
Related party transactions. Actual costs for rental of land, building and
equipment and other personal property owned or controlled by organizations or
persons affiliated with an organization operating a facility, or owned or
controlled by members, directors, trustees, officers or other key personnel of
such operator or their families either directly or through corporations, trusts
or other similar arrangements in which they hold more than 10 percent interest
in such land, building and equipment or an interest valued at $1,000 or more,
whichever is less, are allowable only to the extent that such rentals do not
exceed the amount the operator would have received had legal title to the
rented items or facilities been vested in the operator.
(ii) Actual charges in the nature of rent
between or among organizations under common control are allowable to the extent
such charges do not exceed the normal costs of ownership, such as depreciation,
taxes, insurance and maintenance; provided that no part of such costs shall
duplicate any other allowed costs.
(iii) Nonrelated party transaction. Rental
costs of land, building and equipment and other personal property are allowable
if the rates are reasonable in light of such factors as rental costs of
comparable facilities and market conditions in the areas, the type, life
expectancy, condition and value of the facilities leased, options available and
other provisions of the rental agreement. Application of these factors, in
situations where rentals are extensively used, may involve, among other
considerations, comparison of rental costs with the amount which the operating
organization would have received had it owned the facilities.
(iv) Sales/leaseback transactions. Rental
costs specified in sale and leaseback agreements, incurred by persons or
organizations through selling facilities to investment organizations, such as
insurance companies, associate institutions or private investors, and
concurrently leasing back the same facilities, are allowable only to the extent
that such rentals do not exceed the amount which the organization would have
received had it retained legal title to the facilities.
(2) Capital costs and depreciation are
limited as follows:
(i) Capital costs are not
allowable, except as provided in section
600.3(b)(7)
of this Title.
(ii) Compensation
for the use of buildings, capital improvements and capital equipment may be
made through either depreciation or the allowance provided in section
609.5(f)(2)
of this Title with respect to office space. Capital equipment
is any equipment with an acquisition cost exceeding $1,500 and having a useful
life of more than two years. No depreciation allowance is permitted with
respect to the cost of land. Costs incurred for improvements which add to the
permanent value of buildings and equipment or which appreciably prolong their
intended life must be treated as capital expenditures. Costs incurred for
necessary maintenance, repair or upkeep of buildings or equipment which neither
add to nor appreciably prolong their useful life, but keep them in an efficient
operating condition must not be treated as capital costs.
(iii) Depreciation allowances must use the
straight-line method with a useful life reflecting the probable period of
useful service, which in the case of a building must not be less than 25 years;
provided, however, that the office may authorize a shorter period for
privately-owned shelters, but in no case less than 10 years and then only when
private financing cannot otherwise be obtained and a longer period would cause
undue financial hardship. When a depreciation period less than 25 years is
used, the aggregate amount by which the reimbursement paid exceeds the amount
which would otherwise be payable over the same period constitutes an advance of
reimbursement and the social services district must obtain and file a mortgage
agreement securing any such advances. Such debt becomes due and owing upon the
conversion of the facility to any use other than as a family shelter earlier
than 25 years. With respect to publicly-owned shelters, the office may permit a
depreciation period shorter than 25 years, but in no event less than the
applicable period of probable usefulness under section 11.00 of the Local Finance Law. Any
determination to use a period shorter than 25 years must be approved by the
Director of the Division of the Budget.
(iv) If less than a 25-year useful life is
approved, then in the case of privately owned shelters subject to a mortgage,
or similar financial arrangement, the amount allowed in any year for
depreciation and interest will in no event exceed the amount paid by the
facility for interest and principal on the mortgaged premises. With respect to
publicly-owned shelters, the amount allowed for the depreciation and interest
will in no event exceed the allocable amount paid by the social services
district for principal payments and costs for debt service with respect to the
premises.
(v) Interest costs may be
considered an allowable cost subject to the following:
(a) the capital indebtedness does not exceed
the current approved value of the property;
(b) the interest rate charged for the
borrowed funds is competitive with existing interest rates;
(c) the interest is necessary and proper for
the operation, maintenance or acquisition of the facility; and
(d) the interest must be supported by a
contractual agreement for the payment of interest and for the eventual
repayment of the loan for which the interest was incurred.
(vi) In the case of privately owned shelters,
depreciation shall be limited to the costs of acquisition, renovation and
rehabilitation of the facility. The costs of acquisition shall be the lesser of
the actual costs incurred by the provider to acquire the facility or the fair
market value of the facility. Shelter operators must provide an appraisal of
the property compiled by an independent appraiser with the financial material
submitted with the operational plan to the office.
(3) Costs of a shelter may include a
reasonable allowance for reserve beds or standby capacity based upon the
intended use of the facility, the family capacity of the facility and
foreseeable fluctuations in resident population.
(c) Revised budgets must be submitted and
approved prior to finalizing any purchase or rate agreement, and thereafter
annually with respect to any facility subject to this Part.
(d) The office must review the material
provided and the proposed budget. State reimbursement is available for costs
found by the office to be reasonable, subject to the approval of the Director
of the Division of the Budget.
(e)
The social services district may, within 30 days, request a review of the
office's determination of reimbursable costs by requesting consultation. The
consultation period begins when a letter requesting consultation is received by
the office and continues until agreement is reached or the office affirms or,
redetermines the costs allowable; provided, however, that if within 30 days of
a request for a review, no decision is reached, the office's determination will
be deemed affirmed unless the social services district requests, and the office
grants, an extension of time for a decision.
(f) A social services district may claim and
receive reimbursement from the office for costs approved under subdivisions (d)
and (e) of this section. Such reimbursement must be adjusted to reflect actual
allowable costs in any fiscal period covered by an operational plan. Requests
for adjustment for a fiscal period may be submitted during, but in no event
later than, 90 days after the end of such fiscal period. No requests for
adjustments will be approved if the actual occupancy rate of a facility falls
below the minimum occupancy set forth in the operational plan for the facility
approved by the office. Reimbursement for the costs of shelter for persons
receiving Emergency Assistance to Needy Families with Children, Family
Assistance, Safety Net Assistance, Veteran Assistance, Emergency Assistance for
Adults, SSI or additional State payments programs must be charged to the
applicable program. In addition, social services districts are subject to the
recordkeeping requirements contained in Part 600 of this Title with respect to
all shelter care for which reimbursement is claimed.
