BILL ANALYSIS
AB 2136
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Date of Hearing: August 26, 2010
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 2136 (V. Perez) - As Amended: August 20, 2010
SUBJECT : Disaster relief: County of Imperial earthquake
SUMMARY : Adds the earthquake that struck Imperial County on
April 4, 2010 (Earthquake) to the list of disasters eligible for
state reimbursement of local property tax losses, beneficial
homeowners' property tax exemption treatment, and special "carry
forward" treatment of excess disaster losses. Specifically,
this bill :
1)Specify that loans provided under the "CalHome Program
Disaster Assistance" for Imperial County that have been made
to rehabilitate, reconstruct, or replace lower income
owner-occupied manufactured homes shall be due and payable in
10 years, with 20% of the original principal to be forgiven
annually for each additional year beyond the fifth year that
the manufactured home is owned and continuously occupied by
the borrower.
2)Provides that any dwelling that qualified for a homeowners'
property tax exemption before April 4, 2010, that was damaged
or destroyed by the Earthquake, and that has not changed
ownership since April 4, 2010, shall not be denied a
homeowners' exemption solely because that dwelling was
temporarily damaged or destroyed, or was being reconstructed
by the owner, or was temporarily uninhabited as a result of
restricted access.
3)Provides that any taxpayer's excess disaster loss resulting
from the Earthquake shall be carried forward to each of the
five taxable years following the taxable year for which the
loss is claimed. However, if there is any excess disaster
loss remaining after this five-year period, then the
applicable percentage of that excess disaster loss shall be
carried forward to each of the next 10 taxable years.
4)Specifies that, if the Commission on State Mandates determines
that this bill contains costs mandated by the state, local
agencies and school districts will be reimbursed for those
costs.
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5)Includes language to avoid chaptering conflicts with other
disaster-related bills.
6)Takes effect immediately as an urgency measure.
EXISTING LAW : Authorizes the CalHOME program, administered by
the Department of Housing and Community Development (HCD), which
provides grants to local agencies or nonprofits to assist
individual households and multiple-home ownership units,
including single family subdivisions. Generally, HCD provides
these moneys as loans payable after 20 years, but HCD may
convert loans into grants after the homeowner has occupied the
home for more than 10 years, with 10% of the original principal
reduced for each year until fully converted into a grant.
FISCAL EFFECT : According to the Senate Appropriations
Committee, providing CalHome loan forgiveness would accelerate
up to $10 million in revenue losses by ten years, beginning in
2015.
COMMENTS :
Background: The 7.2 earthquake now referred to as Sierra El
Mayor struck at 3:41 p.m. on April 4, 2010, just south of the
California-Mexico border, with the most serious damages for our
state occurring in Imperial County. On April 5, the Governor
declared a State of Emergency and issued an Executive Order on
April 8. On April 21, the U.S. Small Business Administration
declared the region qualified for low-interest loans to
business, homeowners, renters and nonprofits for
disaster-related repairs. On May 7, President Obama issued a
major disaster declaration, triggering the release of federal
funds in the areas of public infrastructure to help communities
recover from the earthquake.
According to the author, Imperial County now faces a host of
repair and recovery issues that the State has estimated will
exceed $91 million , including but not limited to:
serious damage to commercial properties, private
residences, schools, a city hospital, wastewater treatment
facilities, water storage tanks, roads, and bridges; and,
cracks and leakage from the All American Canal, which
carries water from the Colorado River to roughly one third
of the local population.
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The bulk of AB 2136 makes Imperial County eligible for state
reimbursement of local property tax losses, beneficial
homeowners' property tax exemption treatment, and special "carry
forward" treatment of excess disaster losses.
CalHome Program : Existing law permits CalHome Program loans to
be provided as a secured forgivable loan to an individual
household to rehabilitate, repair, or replace manufactured
housing in a mobilehome park that is not permanently affixed to
a foundation. Existing law requires that these loans be due and
payable in 20 years, with 10% of the original principal to be
forgiven annually for each additional year beyond the 10th year
that the home is owned and continuously occupied by the
borrower. This bill would require that loans provided pursuant
to the CalHome Program Disaster Assistance for Imperial County
that have been made for the purpose of rehabilitation,
reconstruction, or replacement of lower income owner-occupied
manufactured homes be due and payable in 10 years, with 20% of
the original principal to be forgiven annually for each
additional year beyond the 5th year that the manufactured home
is owned and continuously occupied by the borrower.
In response to the earthquake that damaged homes in Imperial
County in April, HCD issued a $10 million over-the-counter
(first come/first served until funds are depleted) Notice of
Funding Availability (NOFA) on May 6. The funds made available
through the NOFA are to be used for rehabilitation or
reconstruction of lower-income owner-occupied conventional and
manufactured homes damaged in the April 4 earthquake in Imperial
County. HCD does not make direct assistance to homeowners under
the CalHome program, rather local jurisdictions apply to HCD and
then make grants and loans to the homeowners.
To date, HCD has awarded $1.5 million to Imperial County for 36
households and $1,320,000 to the City of Calexico for 26
households. The maximum loan amount to each homeowner is
$60,000. The NOFA specifies that financial assistance provided
to an individual household to rehabilitate, repair, or replace
manufactured housing located in a mobilehome park and not
permanently affixed to a foundation shall be in the form of a
conditional grant due and payable in 20 years, with 10 percent
of the original principle to be forgiven annually for each
additional year beyond the tenth year that the manufactured home
is owned and continuously occupied by the borrower.
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AB 2136 alters the terms of the grant to due and payable in 10
years, with 20 percent of the original principal to be forgiven
annually for each additional year beyond the fifth year that the
manufactured home is owned and continuously occupied by the
borrower.
According to the Department, "HCD has made the awards to the
jurisdictions noted above but has not executed the Standard
Agreement (contract). In recognition of the proposed
amendments, HCD would provide for terms that could be altered by
later enacted statute."
According to the author, residents would like to use CalHOME
program funds to rehabilitate their homes so that they are
inhabitable again but many are low-income seniors and young
families who may not be living in the homes for the next 20
years. By reducing the term of the loan to 10 years and
accelerating the percentage of forgiveness, residents will be
more comfortable using these loans.
CalHOME loans are forgivable under existing law provided that
the resident maintain residence in the home. AB 2136 proposes a
minor change to existing law solely for the residents of
Imperial County in response to the earthquake.
REGISTERED SUPPORT / OPPOSITION :
Support
CA State Association of Counties
CA State Legislature Rural Caucus
City of Calexico
City of El Centro
County of Imperial
Regional Council of Rural Counties
Southern CA Association of Governments
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
AB 2136
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