BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 702
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          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.









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          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. 








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          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.









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          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  








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            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. 








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             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  








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            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,  








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          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  








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          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  








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            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