BILL ANALYSIS
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THIRD READING
Bill No: SB 586
Author: Dutton (R)
Amended: 4/24/07
Vote: 27 - Urgency
SENATE TRANSPORTATION & HOUSING COMMITTEE : 9-1, 4/17/07
AYES: Lowenthal, Ashburn, Cedillo, Corbett, Dutton,
Harman, Oropeza, Simitian, Torlakson
NOES: McClintock
NO VOTE RECORDED: Kehoe
SENATE APPROPRIATIONS COMMITTEE : 16-0, 5/31/07
AYES: Torlakson, Cox, Aanestad, Ashburn, Cedillo, Corbett,
Dutton, Florez, Kuehl, Oropeza, Ridley-Thomas, Runner,
Simitian, Steinberg, Wyland, Yee
NO VOTE RECORDED: Battin
SUBJECT : Proposition 1Cs Affordable Housing Innovation
Fund
SOURCE : Author
DIGEST : This bill programs the $100 million available
from the Proposition 1C Affordable Housing Innovation Fund
for four distinct purposes.
ANALYSIS : In November 2006, California voters approved
Proposition 1C, the $2.85 billion Housing and Emergency
Shelter Trust Fund Act of 2006. Included within the
housing bond act is a $100 million Affordable Housing
CONTINUED
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Innovation Fund to be "expended for competitive grants or
loans to sponsoring entities that develop, own, lend, or
invest in affordable housing and used to create pilot
programs to demonstrate innovative, cost-saving approaches
to creating or preserving affordable housing."
The bond act further provides that expenditure of these
funds is subject to specific criteria establishing
eligibility for and use of the funds to be approved by a
two-thirds vote of each house of the Legislature. In the
event that moneys within this fund are not encumbered
within 30 months of availability, they shall revert to the
CalHome Program which provides grants and loans to help
low-income households become or remain homeowners.
Under existing law, the Department of Housing and Community
Development (HCD) administers the Local Housing Trust Fund
Matching Grant (LHTF) program to match contributions to
local housing trust funds. To be eligible for matching
funding, a local housing trust fund must receive annual
contributions for at least five years from private or
governmental sources that are not otherwise restricted for
housing programs. The grantee must also have an
HCD-approved housing element, or if a non-profit, fund
projects located in communities with approved elements.
The grant from HCD matches the local contributions on a
dollar-for-dollar basis at a minimum of $1 million and up
to a maximum of $2 million. The local housing trusts may
in turn use program funds to support emergency shelters,
rental housing, and for-sale housing for households ranging
from extremely low-income to moderate-income.
HCD also administers the Mobilehome Park Resident Ownership
(MPROP) Program under current law. This program finances
the conversion of affordable mobilehome parks to ownership
or control by resident organizations, nonprofit housing
sponsors, or local public agencies. MPROP provides three
separate products: (1) short-term conversion loans to
resident organizations, non-profit corporations, or local
governments, (2) long-term blanket loans to resident
organizations or non-profit corporations that purchase
parks without subdividing them, and (3) individual loans to
eligible lower-income residents in parks that have received
an MPROP loan commitment. Both a local public entity and a
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qualified non-profit applicant must show that the park will
contain at least 30 percent low-income residents. Parks
owned by resident organizations must have, at a minimum,
one low-income resident.
This bill allocates the $100 million in the Affordable
Housing Innovation Fund as follows:
1. $50 million for the California Affordable Housing
Revolving Development and Acquisition Program to be
established by this bill.
2. $35 million for the existing LHTF Program subject to
preferences established by this bill.
3. $10 million for the existing MPROP.
4. $5 million for the Construction Liability Insurance
Reform Project to proposed in separate legislation [AB
792 (Garcia)], if that program is established.
This bill further establishes the California Affordable
Housing Revolving Development and Acquisition Program with
the HCD for the purpose of providing loans to purchase real
property for the development or preservation of housing
affordable to lower-income households. Through a
competitive process, HCD shall select a private program
manager to review and approve loan applications and
originate and service loans. Loan applicants shall
demonstrate sufficient organizational capacity to carry out
the proposed development project, demonstrate the support
of the relevant local government for the proposed project,
and match the loan with outside funding in a ratio of at
least three to one. Loans made under this program shall be
for a term of two to five years. This bill requires HCD to
adopt regulations establishing the minimum criteria
required of the fund manager and loan applicants,
describing the point system for ranking loan applications,
and describing procedures that will allow loans to close
within 30 days of application.
With respect to the existing LHTF Program, this bill
requires HCD to give preference declares to HCD an
intention to provide more than 65 percent of available
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funds for downpayment assistance to qualified first-time
homebuyers.
This bill further requires HCD, when making grants to newly
established trust funds, to set aside funding for 36 months
from the date funds are first made available for new
established trust funds in counties of less than 260,000
persons.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2007-08 2008-09
2009-10 Fund
HCD administration $870 $400
$400Bond*
* Affordable Housing Innovation Fund
JJA:mw 6/1/07 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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