BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1329 (Leno)
Hearing Date: 04/26/2010 Amended: 04/19/2010
Consultant: Jacqueline Wong-HernandezPolicy Vote: Human
Services 4-0
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BILL SUMMARY: SB 1329 requires licensees of residential care
facilities for the elderly (RCFE) to notify residents and the
Department of Social Services (DSS) within two business days
when a notice of foreclosure is issued on the property, an
unlawful detainer action is initiated against a licensee, or
when a licensee files for bankruptcy. This bill provides for
additional civil penalties related to notification.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13
Fund
Increased DSS response up to $40 up to $81
up to $81 General
to reporting
Notification to residents **No direct state costs;
possible cost avoidance Special*
from increased civil penalties**
*Technical Assistance Fund
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
This bill places new requirements on RCFEs and on DSS. RCFEs are
private entities, and the costs associated with the requirements
to notify residents and/or their legal representatives of
specified occurrences which might indicate the facility may be
in a precarious financial situation (and in danger of closing)
will not create new costs to the state. Any costs to the state
would be to help residents of an RCFE when they need to be
moved, if the RCFE is closing, and would not result from the
notification itself. This bill also increases the civil
penalties that DSS can assess against an RCFE for failing to
notify DSS or residents, as required.
This bill places new requirements on DSS that will likely result
in General Fund costs. This bill requires that an RCFE notify
DSS, when one of the following events occurs:
1) Failure to make one or more mortgage, lease, or rental
payments on the property within 30 days of the due date; 2)
Failure to make timely payment of any premiums required to
maintain mandated insurance policies or bonds in effect, or any
tax
lien levied by any government agency; 3) A utility company has
sent notice of intent to terminate a utility on the property; 4)
A judgment lien has been levied against the facility or any of
the assets of the facility or licensee; 5) A financial
institution refuses to honor a check or other instrument issued
by the licensee to its employees for a regular payroll due to
insufficient funds; 6) The financial resources of the licensee
fall below the amount needed to operate the facility for a
period of at least 45 days; 7) A notice of foreclosure is issued
on the property; 8) An unlawful detainer action is initiated
against the licensee; or 9) The licensee files for bankruptcy.
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SB 1329 (Leno)
This bill requires DSS, upon receiving notification of any of
the aforementioned events, to initiate a compliance plan,
noncompliance conference, or other administrative action. The
scope of events that require notification is more extensive in
this bill than under existing regulations. Existing regulations
require RCFEs to notify DSS if there are "activities related to
bankruptcy or foreclosure" affecting the RCFE, but does not
require notification of events enumerated previously that might
be early warning signs of foreclosure or bankruptcy. Existing
statute also does not require specific administrative action
upon receiving those notifications.
There are currently 7,813 RCFEs in California, licensed by DSS.
According to a recent New York Times article, nearly 100 RCFE's
have been in some stage of foreclosure in the Bay Area alone, in
the past 6 months. RCFEs in Bay Area counties account for
approximately one-third of the statewide total. This bill could
result in hundreds of notifications to DSS that would have to be
acted upon. The exact number is difficult to determine, because
some of the notifications should occur under current
regulations. This bill will result in DSS having to review more
notifications and reports, and to review them more carefully to
determine whether the department is required by this bill to
take immediate administrative action on the notification. This
bill will increase the department's workload at a time when DSS
has sustained substantial budget reductions, and could require
an additional Licensing Program Analyst.