BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 221
                                                                  Page  1

          Date of Hearing:   April 6, 2011

               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
                                 Norma Torres, Chair
                  AB 221 (Carter) - As Introduced:  February 1, 2011

           SUBJECT  :   Housing and Emergency Shelter Trust Fund Act of 2006: 
           supportive housing 

           SUMMARY  :   Allows Emergency Housing and Assistance Funds 
          approved by the voters in the   Housing and Emergency Shelter 
          Trust Fund Act of 2006 to be used for supportive housing 
          programs, which qualify for the Multi-family Housing Program 
          (MHP).  

           EXISTING LAW  :  The Housing and Emergency Trust Fund Act of 2002 
          and the Housing and Emergency Trust Fund Act of 2006 provided 
          $2.1 billion and $2.5 billion for affordable housing programs 
          respectively. 

           FISCAL EFFECT  :   Unknown 

           COMMENTS  :   

           Background:    In 2002, California voters approved Proposition 
          46, the $2.1 billion Housing and Emergency Shelter Trust Fund 
          Act.  Proposition 46 provided funding for the following 
          programs: Multi-family Housing Program (MHP); Emergency Housing 
          Assistance Program (EHAP); Supportive Housing; Farmworker 
          Housing Grant Program; CalHome Program; Local Housing Trusts; 
          Code Enforcement Program; California Homebuyer Downpayment 
          Assistance Program; and, Jobs Housing Improvement Account.  
          Funds provided under Proposition 46 were mostly exhausted by the 
          end of 2006.  

          In November 2006, California voters approved Proposition 1C, the 
          Housing and Emergency Trust Fund Act of 2006.  Proposition 1C 
          maintains funding provided under Proposition 46 for most of the 
          programs noted above including the Emergency Housing Assistance 
          Program Capital Development (EHAP-CD). The EHAP-CD program 
          provides grants for the construction, rehabilitation or 
          conversion of housing for emergency shelters.  Proposition 46 
          and Proposition 1C authorized funding for EHAP-CD for $195 
          million and $50 million receptively.









                                                                  AB 221
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          Proposition 1C also maintained funding for the Multi-family 
          Housing Program -Supportive Housing (MHP-SH) which provides 
          funding for multi-family housing with a supportive service 
          component.  Proposition 46 and Proposition 1C each included $195 
          million for the MHP-SH.

          Both bond Acts require the Bureau of State Auditor (BSA) to 
          periodically audit the bond proceeds to ensure they are being 
          used in a timely manner and for the purpose outlined in the 
          bond.  In November 2009, BSA audited the bond supported housing 
          programs, and found that HCD had promptly awarded funds for 
          eight of the ten programs funded by Proposition 1C. However as 
          of December 2008, HCD had not awarded any funds from Proposition 
          1C for EHAP-CD or the Affordable Innovation Fund.  

          In response to the auditor's finding, HCD explained that they 
          still had funds from the Proposition 46 for EHAP-CD and they 
          intended to use all of those funds before making any awards from 
          Proposition 1C.  In 2010-11, HCD awarded $17 million to 25 
          projects which should produce 818 shelter spaces, exhausting the 
          funds left in Proposition 46 for the EHAP-CD program.  

           Purpose of this bill  :  According to the author, for various 
          reasons including the state's suspension of bond activity in 
          2008-2009 and the limited number of funded requests for shelter 
          projects under earlier rounds of EHAP-CD a substantial amount of 
          EHAP funding remains available for allocation.  Since 2006, HCD 
          has awarded $31 million out of the Proposition 1C bond for the 
          EHAP-CD program, leaving $19 million in the program. In February 
          of this year, the Governor directed HCD to cancel all 
          outstanding NOFA's in anticipation of a pause on bond sales. 
          This included a NOFA for EHAP-CD for $6 million. 

          AB 221 would allow permanent supportive housing as a qualifying 
          use under the EHAP-CD.  Under the existing program, EHAP-CD can 
          be used to fund emergency shelters which are not required to 
          have supportive services.  This bill would allow projects that 
          serve homeless individuals and families and provide supportive 
          housing to compete for this funding. 

          According to the author, for various reasons including 
          suspension of bond activity in 2008 by the Pooled Money 
          Investment Board (PMIB) and the limited number of funded 
          requests for shelter projects under earlier rounds of the 
          EHAP-CD a substantial amount of EHAP funding remains available 








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          for allocation.  A changing emphasis on supportive housing and a 
          tightening of operating dollars may have also influence why 
          shelters have not sought out these funds.   While shelters play 
          an important role in assisting the homeless population, 
          increasingly shelters find themselves more dependent on less 
          reliable funding to provide for the operation of shelters.  This 
          added pressure makes it less likely that shelters have 
          additional funds for rehabilitating or constructing new 
          shelters.  In addition, the approach to combating homelessness 
          has shifted to a "housing first" model that seeks to secure 
          longer-term housing as a way to stabilize and better address the 
          needs of the homeless population.  

          While EHAP-CD has funding remaining, the Multifamily Housing - 
          Supportive Housing Program (MHP-SH) is oversubscribed and in 
          demand.   In 2008-09 HCD awarded 21 loans for MHP-SH among eight 
          counties totaling $112.6 million leveraging $332.4 million for 
          the production of 1,243 units.  In FY 2009-10, MHP-SH awarded 
          two loans among two counties totaling $3 million leveraging 
          $20.1 million for the production of 75 units.  There is $51 
          million left in MHP-SH from the original authorization of $195 
          million. 

           Related Legislation  : This bill is a reintroduction of AB 2536 
          (Carter) from last session. Both bills allow permanent 
          supportive housing as a qualifying use under the EHAP-CD.  Under 
          the existing program, EHAP-CD can be used to fund emergency 
          shelters which are not required to have supportive services.  
          This bill would allow projects that serve homeless individuals 
          and families and provide supportive housing to compete for this 
          funding. 

          AB 2536 (Carter) was vetoed, see the veto message below: 

               This bill would change the use of housing bonds contrary to 
               the intent of the voters in approving Proposition 1C.  
               These funds were intended to help some of the most 
               vulnerable Californians by funding the construction of 
               emergency shelters that also provide supportive service.  
               It is not consistent with the intent of the voters to
               redirect these funds to provide services to families in 
               permanent housing.

           Support if amended  :  The California Partnership to End Domestic 
          Violence (CPEDV) would support AB 221 if it was amended. CPEDV 








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          is concerned that it was not clear to their membership that they 
          could compete for EHAP-CD funds in prior rounds and therefore 
          domestic violence shelters have not submitted applications for 
          the program.  They are concerned that now that they are aware 
          that they can compete for the funds, this bill may disadvantage 
          them by increasing the pool of eligible applicants.    

          Staff comments  :  This bill is permissive, which means HCD is not 
          required to open the EHAP-CD program up for MHP-SH projects to 
          compete. The committee may wish to consider making the 
          conditions of this bill a requirement if it supports the policy 
          direction.   

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Partnership to End Domestic Violence (CPEDV)
          California Rural Legal Assistance Foundation
          Corporation for Supportive Housing
          Housing California
          Western Center on Law Poverty

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Lisa Engel / H. & C.D. / (916) 319-2085