BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 221 (Carter)
Hearing Date: 08/25/2011 Amended: As Introduced
Consultant: Mark McKenzie Policy Vote: T&H 8-1
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BILL SUMMARY: AB 221 would authorize the Department of Housing
and Community Development (HCD) to redirect specified general
obligation bond funds dedicated to the Emergency Housing
Assistance Program (EHAP) for expenditure on supportive housing
under the Multifamily Housing Program (MHP).
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Bond fund redirection Significant cost pressures to the extent
Bond*
HCD uses EHAP funds for supportive
housing under MHP
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* Potential shift from the Emergency Housing Assistance Fund to
the Housing Rehabilitation Loan Fund
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STAFF COMMENTS: SUSPENSE FILE.
The Housing and Emergency Shelter Trust Fund Act of 2002
(Proposition 46) authorized the issuance of $2.1 billion in
general obligation bonds for various housing programs, including
$195 million for the Supportive Housing Program under MHP and
$195 million for EHAP. The Housing and Emergency Shelter Trust
Fund Act of 2006 (Proposition 1C) authorized the issuance of
$2.85 billion in general obligation bond funds for housing
programs, including $195 million for the Supportive Housing
Program and $50 million for capital development grants under
EHAP. The Supportive Housing Program funds the construction,
rehabilitation, or preservation of rental homes with
complementary supportive services, such as drug and alcohol
treatment, mental health counseling, and workforce training, for
persons who have a disability and are homeless or at risk of
becoming homeless. EHAP provides grants for the rehabilitation,
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renovation, expansion, and site acquisition capital costs of
emergency shelters and transitional homes for homeless persons.
AB 221 would authorize HCD to use Proposition 46 and 1C bond
funds that are dedicated to EHAP for the Supportive Housing
Program under the MHP. The bill is intended to allow HCD the
flexibility to make funding available for supportive housing
projects if the demand for such programs exceeds demand for EHAP
projects.
In February of this year, the Governor directed HCD to hold bond
debts at its existing level and instituted a "pause" on the
issuance of any new bonds. As a result, HCD cancelled all open
and unawarded Notices of Funding Availability (NOFAs) for
Proposition 46 and 1C bond programs. After the release of the
Governor's May Revision of the 2011-12 Budget, the "bond pause"
was lifted and HCD received authority to release NOFAs and
approve new awards.
Since the passage of Proposition 46 in 2002, HCD has received
$320 million in applications and made $211 million in awards
under EHAP. In May of 2010, HCD issued a NOFA soliciting
applications to awarded up to $40 million in EHAP funding, but
only awarded $20 million. Staff notes that HCD is scheduled to
issue a NOFA for the final $20 million that remains in
Proposition 1C EHAP funds on August 15, 2011, and expects to
make awards by the end of the year, before this bill takes
effect. Applications for EHAP funds have generally exceeded
available funds, although demand may be impacted by reductions
in available federal and local funding for operating costs
associated with shelters funded under EHAP. Allocations for the
MHP-Supportive Housing Program have also typically been
oversubscribed.
HCD indicates that its administrative costs associated with
allocating EHAP funds for MHP-Supportive Housing projects would
be minor and absorbable if they exercised the authority provided
in the bill. Staff notes that any shifts in allocations from
EHAP to the MHP-Supportive Housing Program would create cost
pressures on the Emergency Housing Assistance Fund to the extent
that any Proposition 46 and Proposition 1C bonds are available
when the bill becomes operative.
Both Proposition 46 and 1C contain a provision that authorizes
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the Legislature to "amend provisions of law related to programs
to which funds are, or have been allocated?for the purpose of
improving the efficiency and effectiveness of the program, or
for the purpose of furthering the goals of the program." Staff
notes, however, that this bill would amend provisions of the
Bond Acts themselves, rather than the program enabling statutes.
The authorization to use bond funds approved by the voters for
use on a specific program to be allocated to another program may
be construed as being contrary to the will of the voters.
Staff notes that this bill is identical to AB 2536 (Carter),
which was vetoed by Governor Schwarzenegger with the following
message:
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.