You asked:

1. for a town-by-town list of all state agencies' group homes located in single family residences, the type of clients they serve, and their capacity and current census;

2. whether agencies' payments to private providers for group home services include mortgage debt service and, if so, what happens when a home is sold; and

3. to what type of group homes CGS § 19a-507b applies.

SUMMARY

The departments of Developmental Services (DDS, formerly the Department of Mental Retardation), Mental Health and Addiction Services (DMHAS), and Children and Families (DCF) and the Judicial Branch's Court Support Services Division (CSSD) operate or fund 882 group residences in single family homes and condominiums. These homes' total capacity is 4,200 (3,659 is for DDS clients); 4,011 slots were occupied at the time of our survey. DDS has the largest number of residences and in the most places—792 in 141 towns. DCF has 46 residences in 32 towns, DMHAS has 28 in 19 towns, and CSSD has 16 in nine towns. Attachments 1 to 4 list each agency's group homes.

All of the agencies permit group home providers to use state funds to pay mortgage debt service, but each structures its payments in different ways. In all cases, when the mortgage is paid off the providers own the homes.

The agencies also differ in how they deal with providers that intend to sell homes. DDS reviews and approves a provider's proposal to close a home and open a new one to accommodate its residents and conditions its payments on the provider using some or all of the home's sale proceeds toward the new home. DMHAS does not have a formal mechanism to recapture state funds that were applied to a mortgage, but if a provider wanted to sell a home and operate from another site, the sale could affect future operating grants from DMHAS.

CSSD is developing policies to deal with grantees that have paid off their mortgages. It is looking particularly at (1) the amount of rent it pays after a mortgage is paid off and (2) grantees that take out equity loans on mortgage-free properties and pass the loan costs to CSSD in the form of rent payments. DCF contractually limits to $ 42,000 annually the amount of state payments providers can apply toward their mortgages and allows them to use the money only for interest payments.

Some of the agencies lend state bonds funds to providers for capital improvements. They all report that they place a lien on any property that receives a loan, which is used to pay any outstanding balance if the property is sold. DCF, for example, places a lien for 10 years and decreases the lien amount by 10% per year.

CGS § 19a-507b applies only to “community residences” that house eight or fewer people with mental illness, plus their staff, and provide supervised, structured group living activities and psychosocial rehabilitation. It prohibits, after July 1, 1984, the establishment of a community residence within 1,000 feet of another such residence. And it prohibits the number of clients living in all community residences in a town from exceeding 0. 1% (1/10 of 1%) of the town's population.

GROUP HOMES

The attached spreadsheets list 882 group homes operated or funded by DDS, DMHAS, DCF, and CSSD. The homes' total capacity is 4,200 (3,659 of which are for DDS clients); at the time of our survey 4,011 slots (3,524 in DDS) were occupied. (The Department of Correction also funds residential facilities, but they are not included in these lists because its chief financial officer reports none is a single family residence. )

DDS has, by far, the largest number of residences—792 in 141 towns. The largest concentrations appear to be in suburban ring towns like Manchester, Windsor, and Hamden and small urbanized towns such as Meriden and Bristol. DMHAS funds 28 residences in 19 towns; 19 of these are in 10 cities and large towns. CSSD operates 16 (some funded by DMHAS) in nine towns, over half are in the state's five largest cities.

DCF funds 46 residences in 32 towns. Nearly half (20) are in small suburbs and rural towns. It funds three types of residences: (1) small homes that provide clinical services to children with some history of trauma (therapeutic group homes), (2) homes for older adolescents with mild to moderate emotional problems who are transitioning out of DCF custody into independent living (PASS homes), and (3) temporary shelters that include an intensive clinical component, mainly for children in protective services who are experiencing behavioral problems (STAR homes).

At your request, we tried to cull out residences located in apartment buildings. We were able to do this where agencies specifically identified a residence as an apartment, but we may have included apartments that were not identified. We include residences that are probably located in condominium complexes.

We have also included some larger group homes (10-15 people) that may not be located in a typical single family residence but may be located in a residential area. CSSD, for example, stated that some of its residences are located in what were once very large Victorian style homes that have “long since been converted into more of an apartment setting. ”

GROUP HOME MORTGAGE PAYMENTS

DDS

DDS is by far the state's largest purchaser of group home services. It licenses 829 community living arrangements (CLAs, which include both single family homes and other forms of supervised residence). The vast majority of these CLAs (731 as of June 2006) are operated by nonprofit agencies; DDS operates the rest.

Over 400 nonprofit CLAs are financed through the Corporation for Independent Living (CIL), a nonprofit housing development corporation established to create group homes. Other CLAs obtain financing from different private sources. The state pays providers the same way regardless of the financing source.

Payments for the CLAs come from DDS and the Department of Social Services (DSS). DDS pays for “support services,” which include staff salaries, wages, and benefits; payroll taxes; providers' administrative expenses; supplies; and transportation. DSS pays for “room and board,” which includes mortgage or rent costs, food, utilities, maintenance and upkeep, and related operating expenses.

The CLA development process requires DDS and DSS to negotiate and approve an agreement with the provider before development begins. The agreement identifies the home's cost and any needed fire, safety, or accessibility modifications. The costs must fall within DSS guidelines, which are based on the home's size and number of beds.

During the development process, DSS also establishes the amount of room and board residents are charged. This charge typically is paid from the clients' Social Security Disability Income and Supplemental Security Income (SSDI and SSI) and DSS' State Supplement Program. Clients who work may also be required to contribute toward the room and board cost. The CLA uses this revenue to pay its mortgage, which typically runs for 30 years.

When the mortgage is paid off, the provider organization owns the home; the state has no ownership or equity interest.   But DDS and DSS review and approve proposals to close homes and relocate residents, according to DSS' Gary Richter. This can occur when the house is no longer appropriate for residents or it is not cost-beneficial to renovate in order to add another resident or meet current residents' needs (for example, in a two-level or split-level home where residents no can longer can handle stairs). The agencies' cost and reimbursement approval for the new home, Richter reports, includes a condition that the organization use all or a portion of the old home's sale proceeds toward the new home so that future state costs are lower.  

CIL-Financed CLAs. Before 1995, CIL secured financing from private investors, including through bonds issued for it by the quasi-public Connecticut Development Authority. It developed homes under long-term lease arrangements in which it owned the homes and leased them to nonprofit providers. At the end of the lease term, CIL donates the property to the provider at no cost.

Starting in 1996, CIL began financing homes through the Connecticut Housing Finance Authority (CHFA). CIL secures acquisition and construction financing and a CHFA commitment for permanent financing. CIL's financing covers all development costs, including site acquisition, construction, legal, architectural, engineering, and fees. When the facility receives a certificate of occupancy and the provider secures a license from DDS, it enters a lease-purchase agreement with CIL. Within one to three years after licensure, as determined by CHFA, CIL transfers title to the provider through a permanent financing program with CHFA. The provider then owns the home pursuant to a 30-year mortgage agreement with CHFA, which DSS must approve.

DMHAS

DMHAS funds three types of residential facilities—mental health and acquired brain injury group homes, most of which house eight or fewer residents, and substance abuse treatment halfway houses, which typically house 10 or more people. The facilities are paid from three sources: DMHAS grants, State Administered General Assistance (SAGA), and DSS Medicaid payments (under the rehabilitation option). All three types of facilities get DMHAS grants. Mental health group homes also receive Medicaid funds, and substance abuse treatment homes receive SAGA funds. A facility can use funds from any of these sources to pay its mortgage, although the Medicaid funds can be used to pay only mortgage principal, not the interest.

The SAGA and Medicaid rates are based partly on housing cost factors; DMHAS grants are not. SAGA pays a fee-for-service rate for residential home services that was developed by combining treatment and housing costs. The Medicaid rehab option rate was set based on a study that determined how much time a client spent in rehabilitation activities (as opposed to residential services). It pays only that portion of a home's costs. The rate includes a factor for payment of a home's mortgage principal, but not the interest on it, which the DMHAS grant covers. DMHAS grants cover a home's operating costs (but not capitol costs), including debt service.

DMHAS officials report no homes have closed within the past 10 years. The agency does not have a formal mechanism to recapture state funds that were applied to a mortgage. The officials stated that if a provider wanted to sell a home and operate from another site, they would discuss with it how the sale would affect its future grants.

Judicial Branch—Court Support Services Division (CSSD)

CSSD pays for (1) rent and lease expenses of the sites in which its residential programs operate and (2) improvements or repairs to these sites. It obtains liens on properties when improvements or repairs cost $ 100,000 or more in a fiscal year. And, according to its grants and contracts manager, Stephen Beeman, it is developing policies to deal with grantees that have paid off their mortgages. Among other situations, it is looking at (1) the amount of rent CSSD pays after a mortgage is paid off and (2) grantees that take out equity loans on mortgage-free properties and pass the loan costs to CSSD in the form of rent payments. But Beeman states that CSSD views these “to a great degree” as legitimate agency expenses for services provided to the agency.

DCF

DCF limits to $ 42,000 a year the amount of state payments providers can apply toward their mortgages and capital improvements. Providers can use the state funds only for mortgage interest, not principal, payments. Since most of its group residences are relatively new, DCF has no experience with a home that want to sell a state-funded facility. But its legislative liaison, Josh Howroyd, believes that since providers have such difficulty obtaining local site approval they would be reluctant to give up a site once it was approved.

ATTACHMENT 1: Department Of Developmental Services

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