BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1865| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ CONSENT Bill No: AB 1865 Author: Audra Strickland (R) Amended: 6/14/10 in Senate Vote: 21 SENATE TRANSPORTATION & HOUSING COMMITTEE : 6-0, 6/22/10 AYES: Lowenthal, Huff, DeSaulnier, Harman, Pavley, Simitian NO VOTE RECORDED: Ashburn, Kehoe, Oropeza SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 75-0, 6/2/10 - See last page for vote SUBJECT : Local Housing Trust Fund Matching Grant Program SOURCE : Ventura County Housing Trust Fund DIGEST : This bill reduces the minimum grant amount under the Local Housing Trust Fund Matching Grant program to $500,000 for all new trust funds regardless of county size. ANALYSIS : In November 2006, California voters approved Proposition 1C, the $2.85 billion Housing and Emergency Shelter Trust Fund Act of 2006. The bond act included $100 million for the Affordable Housing Innovation Fund and required that the Legislature program the specific uses and eligibility requirements for these funds. SB 586 (Dutton), Chapter 652, Statutes of 2007, allocated these funds to CONTINUED AB 1865 Page 2 four separate programs, including $35 million for the Local Housing Trust Fund Matching Grant (LHTF) program that the Department of Housing and Community Development (HCD) administers. Under existing law, the LHTF program matches contributions to local housing trust funds. To be eligible for matching funds, a local housing trust fund must receive contributions from private or governmental sources that are not otherwise restricted for housing programs. The awardee must also have an HCD-approved housing element and have submitted its annual housing element progress report, or if it is a nonprofit entity, it must fund projects located in jurisdictions with approved housing elements and submitted progress reports. The local housing trusts may, in turn, use LHTF program funds to support emergency shelters, rental housing, and for-sale housing affordable to households ranging from extremely low-income to moderate-income. If an awardee fails to continue funding and operating the local housing trust fund for at least five years, then the trust fund must repay HCD's award to the extent the funds have not yet been legally encumbered to specific projects. Under SB 586, half of the $35 million allocated to the LHTF program from Proposition 1C is reserved for newly established housing trust funds, as defined by HCD. Within this set-aside for newly established housing trust funds is an additional 36-month set-aside of an amount to be determined by HCD for trust funds in counties with a population of less than 425,000 persons. As originally established, the LHTF grants matched the local contributions on a dollar-for-dollar basis at a minimum of $1 million and up to a maximum of $2 million. In 2009, the Legislature enacted AB 570 (Arambula), Chapter 455, to reduce the minimum grant amount for new trust funds in counties of less than 425,000 persons to $500,000. Proponents of that bill argued that smaller communities would unlikely be able to meet a $1 million minimum match requirement and therefore be discouraged from creating a trust at all. This bill reduces the minimum grant amount under the LHTF CONTINUED AB 1865 Page 3 program to $500,000 for all new trust funds regardless of county size. Comments Purpose of the bill . This bill seeks to allow newly formed housing trusts in larger counties to better compete for state housing trust fund grants by lowering the minimum grant amount for all such applicants, not just those in smaller counties. The LHTF program creates a big incentive for cities and counties to create new housing trusts. Reducing the match requirement for all newly formed trusts will encourage more cities and counties to dedicate new resources to affordable housing, thereby growing the affordable housing pie, supporting additional affordable housing production, and resulting in new construction jobs. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 8/2/10) Ventura County Housing Trust Fund (source) California Coalition for Rural Housing California Housing Consortium Housing California San Joaquin Valley Housing Trust Ventura County Board of Supervisors ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill Berryhill, Blakeslee, Block, Blumenfield, Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello, Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Swanson, Torlakson, Torres, Torrico, Tran, Villines, Yamada, John A. Perez CONTINUED AB 1865 Page 4 NO VOTE RECORDED: Tom Berryhill, Lieu, Norby, Audra Strickland, Vacancy JJA:mw 8/4/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED