BILL ANALYSIS AB 702 Page 1 Date of Hearing: April 15, 2009 ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT Norma Torres, Chair AB 702 (Salas) - As Introduced: February 26, 2009 SUBJECT : Veterans Housing and Assistance Program SUMMARY : Establishes the Veterans Housing and Assistance Program (VHA) program (Program) within the Department of Housing and Community Development (HCD) Specifically, this bill : 1)Describes the Legislature's intent to encourage the provision of shelter coupled with effective personal rehabilitation and self-sufficiency for homeless veterans. 2)Creates the Veterans Housing and Assistance Fund (Fund) in the State Treasury to be funded upon appropriation by the Legislature and used by HCD to operate the Program. 3)Requires HCD to adopt regulations to ensure the equitable distribution of funds and that the Program is administered in an effective and efficient way. 4)Requires that grants awarded by HCD be used for eligible activities as defined by HCD's regulations including but not limited to the following: a) operating facilities, including operations staff salaries, maintenance, repair, and utilities. b) providing for capital development programs such as acquisition, leasing, construction, and rehabilitation of sites for emergency shelter and transitional housing; c) administrative costs; d) operating expenses relating to supervising and counseling clients; e) providing residential rental assistance; and f) leasing or renting rooms for provision of temporary shelter. AB 702 Page 2 5)Allows nonurban counties to use up to 15% of allocated funds to pay the cost of leasing or renting individual units, hotel or motel rooms for use as emergency shelters. 6)Provides that funding for capital development programs be provided as grants in the form of forgivable deferred loans with the following terms: a) five years for rehabilitation; b) seven years for substantial rehabilitation; and c) ten years for acquisition and rehabilitation or new construction. 7)Requires deferred loans to be secured by a deed of trust and promissory note. 8)Provides that the loan will be forgiven at the end of the term unless the use of the property changes so that it is no longer being used as an emergency shelter or as transitional housing in which case the loan will be due in full. 9)Provides that repayment of the loan be deferred as long as the project is used as an emergency shelter or transitional housing. 10) Provides, to the extent possible, the VHA program will not conflict with the federal Susan B. McKinney Homeless Assistance Act. 11) Provides that any repayments, interest or new appropriations will be deposited in the Fund and may not be transferred to any other fund except to the Surplus Money Investment Fund. 12) HCD may require transfer of the moneys from the Program to the Surplus Money Investment Fund for investment. All interest, dividends and pecuniary gains from these investments shall accrue to the Fund. 13) Requires that the emergency shelter and services will be offered on a first come first service basis and no individual or household may be denied shelter or services because of an inability to pay. AB 702 Page 3 14) Provides that a provider of emergency shelter or transitional housing may restrict occupancy by sex or in the case of housing offered exclusively to veterans, to 24 years of age or younger on the basis of age. 15) Requires that not less than 20% of moneys in the Fund must be available to nonurban counties during any given year. 16) Requires that funds designated for facilities operation that are allocated to nonurban counties and are not awarded by the end of that fiscal year shall be allocated in the next fiscal year to urban counties. 17) Requires that funds for capital development that are set aside for nonurban counties that are not awarded to by the end of the second fiscal year shall be awarded to urban counties in the subsequent year. 18) Requires that funds allocated for non-rural counties be based on a formula that accords at least 20% weight to each of the following factors: a) the number of people below the poverty line in the region; and b) the number of persons unemployed within each region; 19) Requires HCD to disburse grant funds as quickly as possible. 20) Prohibits HCD from using more than 5% of the amount of funds available for administrative costs. 21) Requires HCD to issue a notice of funding availability (NOFA) which must include the maximum and minimum grant amounts and the criteria for evaluating the applications. 22) Requires HCD to issue a NOFA to potential applicants and designated local boards as soon as funding becomes available for the VHA program. 23) A local government must solicit, receive and select among applications for grants from eligible organizations in an open, fair and competitive process. AB 702 Page 4 24) Requires the applications to be ranked by a designated local board or by HCD in their absence. 25) Allows HCD to restrict a designated local board from selecting any application requiring a grant for capital developments if the amount requested by the application exceeds the limits determined by the department or the department determines that the designated local board is not qualified to evaluate the application. 26) Requires HCD to determine the requirements of the grant contract and contract directly with the grant recipient. 27) Requires the designated local board to regulate the performance of any grant contract within their region subject to HCD's oversight. 28) Prohibits HCD from performing a secondary rating or ranking review of those grant applications that have been selected by a designated local board according to a local ranking criteria that has been approved by HCD. 29) Requires each designated local board to submit a local emergency shelter strategy for its region to HCD for approval including but limited to the following: a) a statement of goals and how the goals will be achieved; b) a statement of priorities and how the priorities complement the local continuum of care planning process; c) a description of the application process and ranking criteria from the Program; d) copies of the application forms that the Program will used to evaluate request for grants; and e) a statement of how grant recipients will be encouraged to develop year-round emergency shelters and transitional housing to meet the needs of the homeless veterans population and a description of how the local plan serves the needs of veterans and their families at risk of homelessness 30) Requires HCD to establish a deadline by which date the AB 702 Page 5 designated local board must submit a strategy for review. 31) Requires the designated local legislative body to make the strategy available to shelter and service providers once it is approved by HCD. 32) Requires that funds allocated to a region must remain available for funding applications within the region for a time period or dollar limit to be specified by HCD's regulations. 33) Provides HCD may specify a time period or dollar limit for the distribution of capital development funds that is different than the time period or dollar limit for the distribution of noncapital funds. 34) Requires the funds to revert back to HCD when the designated local board cannot use the funds. 35) Requires the Director of HCD to establish a statewide advisory board on emergency and transitional housing. 36) Allows HCD to adopt emergency regulations to create the Program. 37) Includes the following definitions: a) "Department" means the Department of Housing and Community Development (HCD). b) "Designated local board" means a group including social service providers and a representative of local government who has met HCD's requirements for distribution of grants allocated by HCD. c) "Director" means the Director of HCD. d) "Eligible organization" means an agency of local government or a nonprofit corporation that provides or contracts with community organizations to provide emergency shelter or transitional housing for veterans or both. e) "Emergency shelter" means housing with minimal supportive services for homeless veterans that is limited to occupancy of six months or less. AB 702 Page 6 f) "Nonurban county" means any county with a population of less than 200,000 as determined by specified publications. g) "Region" means a county or a consortium of counties that voluntarily band together by action of a designated board. h) "Safe Haven" means supportive housing for seriously mentally ill homeless veterans, many of who have co-occurring substance abuse problems that have been unable or unwilling to participate in high-demand housing programs. i) "Transitional housing" means all of the following: i. housing with supportive services for up to 24 months that is exclusively designated and targeted for recently homeless veterans; ii. housing that includes self-sufficiency development services with the ultimate goal of moving recently homeless veterans to permanent housing as quickly as possible; iii. limiting rents and services and fees to an ability-to-pay formula reasonable consistent with US Department of Housing and Urban Development (HUD) requirements for subsidized housing for low-income people; and iv. rents and service fees paid for housing may be reserve in whole or in part to assist residents in moving to permanent housing. j) "Urban county" means any county that is not a nonurban county. aa) "Veteran" means a veteran as defined by the Military & Veterans Code Section 980. EXISTING LAW: 1)Establishes the Emergency Housing and Assistance Fund within the State Treasury (Health & Safety Code Section 50800.5). 2)Directs HCD to adopt regulations for the administration of the AB 702 Page 7 Emergency Housing and Assistance Program (EHAP) to ensure equitable distribution of funds and administration in an effective and efficient manner (Health & Safety Code Section 50801.5) FISCAL EFFECT : Unknown COMMENTS : The EHAP-CD and EHAP programs : The Department of Housing and Community Development (HCD) operates two programs that fund the construction and operating expenses of homeless shelters and transitional housing, the Emergency Housing and Assistance Program Capital Development (EHAP-CD) and the Emergency Housing and Assistance Program (EHAP). The EHAP-CD provides funding to acquire, build, and convert or rehabilitate emergency shelters, transitional housing and safe havens that provide shelter and supportive services for homeless families and individuals. The funds are made available as deferred payment loans at 3% simple interest for terms ranging from five to ten years based on the type of development activity. In 2002, the voters approved the Housing and Emergency Trust Act of 2002, which included $195 million for the EHAP-CD. In 2006, the voters approved the Emergency Housing Shelter Trust Fund Act of 2006, Proposition 1C, which authorized $2.85 billion in general obligation bonds to continue several existing bond-funded housing programs and to develop new infrastructure programs to support housing development. Among the existing programs, the EHAP-CD received $50 million in funding. The Emergency Housing and Assistance Program (EHAP) provide operational grants to emergency shelters, transitional housing projects, and supportive services for homeless individuals and families. This program has been funded by the General Fund in the past, however, the Governor vetoed the $4 million in funding for the program last year. EHAP is the only state-funded program that supports the operational costs of emergency shelters and transitional housing. Local jurisdictions can use the EHAP grants as a match to federal dollars availabe in the Federal Emergency Shelter Program (FESG). Housing California, which advocates for increasing the supply and variety of decent, AB 702 Page 8 safe and affordable housing for homeless and low-income people, surveyed emergency shelters around the state and found that the state stands to lose millions more in federal funding as a result of the veto of these funds. Housing California estimates that 20% of shelters will be forced to close a program and two shelters report they may have to close permanently. Veterans' specific shelters are eligible for funding from both the EHAP-CD and EHAP programs. Health and Safety Section 50801.5(b) permits emergency shelter and transitional housing providers to restrict occupancy exclusively to military veterans if the veterans served possess significant barriers to social reintegration and employment due to a physical or mental disability, substance abuse, or the effects of long-term homelessness that require specialized treatment and services. The provider of emergency shelter or transitional housing must also provide the specialized treatment and services. HCD provided a breakdown of the veteran's specific shelters that received funding from the EHAP-CD program from Proposition 46. Seven shelters received $6.9 million in program dollars, resulting in 342 beds statewide. This number reflects only the veterans' specific shelters that received funding through HCD it does not account for the beds that are available to veterans in non-veterans specific shelters. HCD does not collect information on the number of veterans who are served in those shelters. This bill would create the Veterans Housing and Assistance Program which would be modeled after the EHAP-CD and EHAP but would be available to homeless shelters and transitional housing providers that only serve veterans. There is no identified funding source for the program established in the bill. Proposition 1C funds are not available to fund a new emergency shelter construction program for veterans-only as they were approved by the voters to fund the existing EHAP-CD program. As noted above, the Governor vetoed funding for EHAP which provides operation grants to homeless shelters. This bill would be dependent upon some future source of funding which has not yet been identified by the author. Need for the bill : According to the author, veterans represent a significant portion of the homeless population. There are approximately 195,827 veterans that are homeless with an estimated 49,724 AB 702 Page 9 veterans homeless in California. Although veterans account for only 11% of the total population age 18 and older, homeless veterans represent 26% of the total homeless population. Also, the author notes that regardless of gender, veterans are more likely to be homeless than their non-veteran counterparts with male veterans being 1.25 times more likely to be homeless, and female veterans three times more likely to be homeless than non-veterans. According to the author, this bill is necessary because there are no programs that direclty address the homeless veterans problem. Staff comments : This bill would direct potential future resources of the state to serve homeless veterans through a program to provide grants and loans for veterans-only emergency shelters and transitional housing. As the author points out veterans represent 25% of the homeless population and are a subset of the larger homeless population that needs services and housing. Because this bill establishes a policy direction for future funding, that may be available for the development of affordable housing, it raises several policy questions that the committee may wish to consider: 1)Is it clear that veterans are under-served by the existing EHAP-CD program and therefore a new program for veterans' specific shelters is necessary to fill this potential gap? HCD has information on the number of beds that have been created in the veterans' specific shelters that have been funded using the EHAP-CD program, yet this number does not reflect the total number of veterans served by all the shelters funded through the EHAP-CD. Homeless veterans have access to shelters which are both veterans' specific and those that serve a larger population. HCD provides the funds to build shelters but does not quantify the number of veterans that are served by the homeless shelters. 2)Does creating a program solely for veterans solve the problem of a lack of housing for homeless veterans? The homeless veterans population varies depending upon the community. Larger cities like Los Angeles and San Francisco may have a proportionally larger homeless veteran populations than smaller cities. It is unclear whether or not there would be enough demand by veterans organizations and local governements who would access the proposed program funding to build AB 702 Page 10 shelters for homeless veterans. If this program was funded in the future, and there was not enough demand by veterans specific shelters, would the funding be available to other shelter providers who serve the larger population but also veterans? Committee amendment : The committee may wish to consider that homeless veterans are certainly a deserving population that should be served by the state's housing programs. It is unclear, however, from the current data collected by HCD to what degree homeless veterans are being served by all the shelters that receive loans under EHAP-CD, not just the veterans-specific shelters. The EHAP-CD program has existing funding, $50 million from Proposition IC that is available to homeless shelters for construction costs. In light of this, the committee may wish to consider whether it is the best use of limited resources to create a new program for veterans' specific shelters, or if it would be better to re-authorize funding for the EHAP program vetoed by the Governor. The author has agreed to amend the bill to re-authorize the existing EHAP program which provides operational grants to homeless shelters and transitional housing providers. Double referred : The Assembly Committee on Rules referred AB 702 to the Committee on Housing and Community Development and the Committee on Veterans Affairs. If AB 702 passes this committee, the bill must be referred to the Committee on Veterans Affairs. REGISTERED SUPPORT / OPPOSITION : Support Veterans Village of San Diego (sponsor) Opposition None on file. Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085