BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 347 (Beall) - Youth shelters: funding.
Amended: April 1, 2013 Policy Vote: Public Safety 7-0
Urgency: No Mandate: No
Hearing Date: April 15, 2013
Consultant: Jolie Onodera
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 347 would allow a county to avoid repayment
provisions established under the Youth Center and Youth Shelter
Bond Act of 1988 for funds initially allocated for shelters for
abused and neglected children but were expended for shelters for
runaway or homeless youth, as specified.
Fiscal Impact:
Near-term loss of revenue of at least $1 million (General
Fund) from the recent sale proceeds of property in Santa
Clara County subject to repayment provisions under current
law. The actual repayment amount, which has yet to be
determined, would be the proportion of the current value of
the property equal to the proportional share of state funds
contributed to the original cost of the project.
Potential future loss of revenue of at least $1 million
(General Fund) for funds awarded to San Diego County should
the county violate its contract obligations prior to
September 2014.
Background: In 1988, the voters approved Proposition 86, the
County Correctional Facility Capital Expenditure and Youth
Facility Bond Act, which provided for the issuance of $500
million in state general obligation bonds for the purpose of
financing the construction, reconstruction, remodeling,
replacement, and deferred maintenance of county correctional
facilities and county juvenile facilities, and to provide funds
to youth centers and youth shelters, to be allocated as follows:
$410 million for county correctional facilities, $65 million for
county juvenile facilities, and $25 million for youth centers
and youth shelters.
Fifteen million of the $25 million allotment was to be available
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for youth centers, with the remaining $10 million to be
available for youth shelters. Funds were to be distributed by
the Division of Youth Authority (now the Division of Juvenile
Justice (DJJ)). According to the Board of State and Community
Corrections (BSCC), to whom authority was recently transferred
from the DJJ, the $25 million was awarded to 41 youth centers
and 28 youth shelters, and all funds have been awarded.
For purposes of administration and allocation of the bond
proceeds, funding for youth centers and youth shelters have been
treated separately, with at least 70 percent of youth shelter
funding awarded to shelters for runaway youth and no more than
30 percent to shelters for abused and neglected children.
Under existing law, the state is entitled to recapture a portion
of state funds from the recipient of a contract if, within 10
years after acquisition, 20 years after completion of
construction, or 3 to 10 years after renovation, as specified,
the recipient of a contract ceases to be a public or nonprofit
agency, or the facility is no longer used for youth center or
youth shelter activities.
Proposed Law: This bill would provide counties with the
following flexibilities regarding funds allocated pursuant to
the Youth Center and Youth Shelter Bond Act of 1988:
Allows a county to avoid repayment provisions under
existing law where funds initially allocated for shelters
for abused and neglected children were expended for shelters
for runaway or homeless youth, as specified.
Authorizes a county to use unexpended funds awarded to a
shelter for abused and neglected children for the purpose of
acquiring, renovating, constructing, or purchasing equipment
for a shelter for runaway or homeless youth. Requires the
revision of contracts as necessary to implement this
authority.
Authorizes a county to use funds received under a contract,
as specified, to provide grant awards to private nonprofit
entities for the acquisition, renovation, construction, or
purchase of equipment for a youth shelter.
Related Legislation: AB 2737 (Waters) Chapter 1535/1988 created
the Youth Center and Youth Shelter Bond Act of 1988,
establishing the authority and process for awarding the bond
proceeds for youth shelters and youth centers authorized under
Proposition 86.
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Staff Comments: In 1990, the County of Santa Clara applied for
and received $1 million in funding under the Act to help
construct a youth shelter for abused and neglected children.
Under existing law, the state is entitled to recapture funds
from the County if the facility is no longer used for its
originally intended purposes within 20 years after completion of
construction of the project. Because the County recently sold
the property before the 20-year period elapsed (May 2016), the
state is entitled to repayment of the funds under current law.
Under the provisions of this bill, the state would no longer be
entitled to repayment by the County of these funds. The County
would be allowed to retain and redirect these funds for the
purposes of acquiring, renovating, constructing, or purchasing
equipment for a shelter for runaway or homeless youth. As a
result, the fiscal impact to the state is estimated to be a loss
of revenue of at least $1 million (General Fund). The actual
repayment amount, which could be greater than the original state
award, is to be based on the current value of the property as
agreed upon between the County and the state, and would be the
proportion of the current value of the property equal to the
proportional share of state funds contributed to the original
cost of the project.
Based on the estimated cost of construction of the shelter of
$17.8 million, the state award of $1 million represents 5.6
percent of the initial cost. Applying this factor to the
"current value" of the property of $20.4 million ($25.5 million
contract sale price less $5.1 million in costs to clear title),
the value of the state repayment is estimated at $1.15 million.
The actual repayment obligation would be dependent on the
documented cost of the original construction and an agreed upon
"current value" between the County and the state.
According to information from the BSCC, apart from the Santa
Clara County project, only three youth shelter projects still
have time remaining on their contracts to fulfill the useful
life requirements under current law. Of those three projects,
only one is county-operated (the other two are private nonprofit
entities) and would be impacted under the proposed repayment
relief provisions of this bill. San Diego County and a private
child abuse agency (the Child Abuse Prevention Foundation)
submitted a joint proposal for funding and received $1 million
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in August 1990 from the state for construction of a facility for
abused children. Should San Diego County sell the property or
cease its use as a shelter prior to September 2014, no repayment
to the state would be required under the provisions of this
bill. The fiscal impact is estimated to be a loss of revenue of
at least $1 million (General Fund), but potentially greater, and
as noted above, would be dependent on the state's proportional
share of the initial cost of the project and the agreed upon
current value of the property.
Staff notes the use of any unexpended funds or derivative sale
proceeds towards shelters for runaway or homeless youth as
authorized under the provisions of this bill does not appear
inconsistent with the original intent of the initiative passed
by the voters in 1988.