BILL ANALYSIS                                                                                                                                                                                                    



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        ASSEMBLY THIRD READING
        AB 221 (Carter)
        As Introduced February 1, 2011
        Majority vote

         HOUSING             5-0         APPROPRIATIONS      17-0        
         
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        |Ayes:|Torres, Atkins, Bradford, |Ayes:|Fuentes, Harkey,          |
        |     |Cedillo, Hueso, Jeffries, |     |Blumenfield, Bradford,    |
        |     |Miller                    |     |Charles Calderon, Campos, |
        |     |                          |     |Davis, Donnelly, Gatto,   |
        |     |                          |     |Hall, Hill, Lara,         |
        |     |                          |     |Mitchell, Nielsen, Norby, |
        |     |                          |     |Solorio, Wagner           |
        |     |                          |     |                          |
         ----------------------------------------------------------------- 
         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).  

         FISCAL EFFECT  :  According to the Assembly Appropriations Committee, 
        the costs for Housing and Community Development (HCD) to include 
        supportive housing projects in future projects would be minor and 
        absorbable within existing resources.

         COMMENTS  :  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 








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        receptively.

        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 10 
        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 notice of 
        fundraising ability (NOFA's) in anticipation of a pause on bond 
        sales. This included a NOFA for EHAP-CD for $6 million. 

        AB 221 (Carter) 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 








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        earlier rounds of the EHAP-CD a substantial amount of EHAP funding 
        remains available 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) of 2010.  Both bills 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. 

        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.

         
        Analysis Prepared by  :    Lisa Engel / H. & C.D. / (916) 319-2085 
                                                                 FN:  0000960








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