BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 28X8|
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THIRD READING
Bill No: SB 28X8
Author: Yee (D), et al
Amended: 2/11/10
Vote: 21
SENATE TRANSPORTATION & HOUSING COMM : 6-0, 2/10/10
AYES: Lowenthal, DeSaulnier, Kehoe, Oropeza, Pavley,
Simitian
SENATE APPROPRIATIONS COMMITTEE : 6-1, 2/12/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Yee
NOES: Walters
SUBJECT : Proposition 1C allocations
SOURCE : Author
DIGEST : This bill revises the allocation of some general
obligation bond funds made available pursuant to the
Housing and Emergency Shelter Trust Fund Act of 2006
(Proposition 1C), and appropriates other bond funds from
Proposition 1C. Specifically, with respect to the $100
million transferred to the Affordable Housing Innovation
Fund, this bill: (1) reduces the amount made available for
the Affordable Housing Development and Acquisition Program
from $50 million to $25 million, eliminating the amount
previously made available to the Loan Fund, and retaining
the Practitioner Fund, (2) eliminates an allocation of $5
million that was made available for the Construction
Liability Insurance Reform Pilot Program, and eliminates
CONTINUED
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the program, (3) eliminates an allocation of $10 million
that was made available for the Innovative Homeownership
Program, and eliminates the program, (4) reduces the amount
made available for the local housing trust fund matching
grant program from $35 million to $17.5 million and deletes
requirements that half of the funds be made available for
newly established housing trust funds, (5) deletes a
requirement that funds made available for newly established
housing trust funds revert to the Self-Help Housing Fund if
unencumbered after 42 months, (6) requires the Department
of Housing and Community Development (HCD) to make $15
million available to the California Pollution Control
Financing Authority for loans and grants under the
California Recycle Underutilized Sites program for
brownfield cleanup, and (7) requires HCD to make $42.5
million available for the Multifamily Housing Program.
This bill appropriates $25 million from the Regional
Planning, Housing, and Infill Incentive Account to HCD for
the Housing-Related Parks Program and $5 million from the
Building Equity and Growth in Neighborhoods Account to HCD
for the BEGIN Program. If funds that are redirected or
appropriated by this bill are not awarded within 180 days,
HCD would submit a report to the Legislature to explain any
delays.
ANALYSIS : In November 2006, California voters approved
Proposition 1C, the $2.85 billion Housing and Emergency
Shelter Trust Fund Act of 2006.
Included within Proposition 1C was a $100 million
Affordable Housing Innovation Fund to be administered by
the Department of Housing and Community Development (HCD)
and "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
provided that expenditure of these funds was subject to
specific criteria establishing eligibility for and use of
the funds to be approved by the Legislature in subsequent
legislation. SB 586 (Dutton), Chapter 652 Statutes of
2007, programmed the $100 million available from the
Affordable Housing Innovation Fund in the following manner:
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1. $50 million for the Affordable Housing Revolving
Development and Acquisition Program to help non-profit
organizations acquire property to develop or preserve
affordable housing. The program was further broken into
two subcomponents: a $25 million Loan Fund open to a
wide range of non-profits to acquire specific parcels of
property and a $25 million Practitioner Fund to provide
$5 million lines of credit to large, well-established
non-profits for the acquisition of unspecified parcels
of property.
2. $35 million for the existing Local Housing Trust Fund
Matching Grant Program, which provides a 100 percent
state match for contributions to local housing trust
funds. The Legislature set aside half of the funds for
existing trust funds and half for new housing trust
funds.
3. $10 million for the Innovative Homeownership Program to
increase or maintain affordable homeownership
opportunities for Californians with lower incomes. HCD
recently issued a Request for Proposals for the Catalyst
Projects for California Sustainable Strategies Pilot
Program, under which approximately six large-scale
housing or mixed-use development projects that integrate
environmental, economic, and housing goals will receive
grants of roughly $1 million each from this pot of funds
and bonus points towards other non-housing state
programs.
4. $5 million for the Construction Liability Insurance
Reform Program to provide grants to the developers of
affordable, attached for-sale housing to improve the
quality of construction and reduce construction defect
liability insurance premiums.
Proposition 1C and subsequent implementation legislation
also provided funding for the following programs:
1. $345 million for the Multifamily Housing Program, which
funds the new construction, rehabilitation and
preservation of permanent and transitional rental homes
for lower income households, through loans to local
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governments, non-profit developers, and for-profit
developers.
2. $60 million for the California Recycle Underutilized
Sites (CALReUSE) program at the California Pollution
Control Financing Authority (CPCFA), which offers grants
and loans for brownfield cleanups that produce
residential and mixed use development in infill areas.
3. $200 million for the Housing-Related Parks Program,
which grants park acquisition and improvement funds to
cities and counties as a reward for the start of each
unit of affordable housing within their jurisdictions.
4. $125 million for the Building Equity and Growth in
Neighborhoods (BEGIN) Program, which provides grants to
local governments for the provision of downpayment
assistance loans to low or moderate income homebuyers
who purchase a home in a new development that has
received one or more local government development
incentives.
This bill provides that of the one hundred million dollars
($100,000,000) transferred to the Affordable Housing
Innovation Fund established in the State Treasury, the
following amounts shall be allocated as follows:
1. HCD shall make available the amount of twenty-five
million dollars ($25,000,000) for the Affordable Housing
Revolving Development and Acquisition Program
Practitioner Fund.
2. HCD shall make available the amount of fifteen million
dollars ($15,000,000) for the California Pollution
Control Financing Authority, in consultation with HCD,
to administer loans or grants under the CALReUSE
program.
3. HCD shall make available the amount of seventeen million
five hundred thousand dollars ($17,500,000) to award
grants to existing trust funds under the local housing
trust fund matching grant program.
4. HCD shall make available the amount of forty-two million
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five hundred thousand dollars ($42,500,000) for the
Multifamily Housing Program.
This bill requires that the sum of twenty-five million
dollars ($25,000,000) is hereby appropriated from the
Regional Planning, Housing, and Infill Incentive Account in
the Housing and Emergency Shelter Trust Fund of 2006 to HCD
for the Housing-Related Parks Program.
This bill requires that the sum of five million dollars
($5,000,000) is to be appropriated from the Building Equity
and Growth in Neighborhoods Account in the Housing and
Emergency Shelter Trust Fund of 2006 to HCD for the BEGIN
Program.
This bill specifies that if funds appropriated by this act
are not awarded within 180 days from the date the statute
enacting this act takes effect, HCD shall submit a report
to the Legislature with an explanation for the delay.
According to the Senate Transportation and Housing
Committee analysis, HCD and other implementing agencies
already have awarded the large majority of funds available
under Proposition 1C. In the case of some programs where
the Legislature had to enact implementing legislation after
passage of the bond and HCD thereafter had to develop
program guidelines, HCD was unable to issue Notices of
Funding Availability (NOFAs) prior to December 2008 when
the Department of Finance (DOF) put a freeze on the
issuance of new NOFAs or awards. As a result, no funds
have been awarded to date under these programs. The two
subcomponents of the Affordable Housing Revolving
Development and Acquisition Program ($50 million) and the
Construction Liability Insurance Reform Program ($5
million) fall into this category. In one other case, the
Local Housing Trust Fund Matching Grant Program, HCD issued
a NOFA for all of the existing trust fund money ($16.275
million) and roughly 1/3 ($5.4 million) of the new trust
fund money, received applications for all of the funds
available to existing trust funds, but was unable to make
any awards before DOF imposed the freeze on awards. With
respect to the Catalyst Projects for California Sustainable
Strategies Pilot Program ($10 million), HCD issued a
Request for Proposals on December 17, 2009. Applications
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were due on February 11, 2010, and, if the DOF freeze is
lifted, HCD hopes to make awards in April 2010.
On the other hand, HCD has awarded almost all of the $345
million available for the Multifamily Housing Program, and
each round has been heavily oversubscribed. HCD
anticipates one more round of Multifamily Housing Program
funding but will have a limited pot of only $26 million
available to award even though the level of applications
will surely be many times that amount. The CPCFA has
awarded all $60 million available for the CalREUSE Program
and has a known pipeline of projects totaling $98 million
that intend to apply as soon as funds are available.
According to the author's office, in a time when
residential construction has hit a record low, the $87.5
million appropriated in this bill will create much needed
jobs in construction by funding shovel-ready projects. A
portion of the funds will be redirected from programs that
have never fully been implemented or that may not be viable
given the current fiscal constraints on local governments.
These redirections will allow for increased funding for
successful existing programs with projects in the pipeline.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Redirection of bond funds:
From Innovation Fund $57,500 Bond*
To CALReUSE ($15,000) Bond**
To MHP ($42,500) Bond***
Bond appropriations:
To Housing/Parks Program $25,000 Bond****
To BEGIN Program $5,000 Bond*****
HCD Administration redirection of
staff (see staff comments) Bond
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____________ (various)
* Affordable Housing Innovation Fund
** Redirection of Affordable Housing Innovation Funds to
CALReUSE program
*** Housing Rehabilitation Loan Fund
**** Housing Urban-Suburban-and-Rural Parks Account
***** BEGIN Fund
This bill redirects $57.5 million in bond funds from the
Affordable Housing Innovation Fund to the CALReUSE Program
($15 million) and for the MHP Program ($42.5 million), and
would also make new bond fund appropriations for the
Housing Related Parks Program ($25 million) and the BEGIN
Program ($5 million). HCD indicates that the bill would
require the redirection of 6 PY of staff for three years
from existing bond-funded programs to the bond-funded
programs identified in the bill. Costs related to the
disruption from shifting of personnel among bond-funded
programs are unknown, but potentially substantial
considering the 180-day timeframes identified in the bill.
HCD also indicates that the suspension of other programs'
operations due to redirection of staff could have a
negative long-term impact.
RJG:nl 2/12/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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