BILL ANALYSIS                                                                                                                                                                                                    Ó


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                                 THIRD READING

          Bill No:  AB 221
          Author:   Carter (D)
          Amended:  As introduced
          Vote:     21

          AYES:  DeSaulnier, Gaines, Huff, Kehoe, Lowenthal, Pavley, 
            Rubio, Simitian
          NOES:  Harman

           ASSEMBLY FLOOR  :  79-0, 5/31/11 - See last page for vote

           SUBJECT  :    Housing bond allocations for emergency and 

           SOURCE  :     Author

           DIGEST  :    This bill allows the Department of Housing and 
          Community Development to expend bond funds earmarked for 
          the Emergency Housing Assistance Program (EHAP) either for 
          EHAP or for the Supportive Housing Program.

           ANALYSIS  :    As approved by the voters, the Housing and 
          Emergency Shelter Trust Fund Act of 2002, Proposition 46, 
          authorized the issuance of $2.1 billion in general 
          obligation bonds to finance various affordable housing 
          programs, most of which Department of Housing and Community 
          Development (HCD) administers.  Among other things, 
          Proposition 46 included funds for the following programs:  


                                                                AB 221

           $910 million for the Multifamily Housing Program (MHP), 
            which funds the new construction, rehabilitation, and 
            preservation of permanent and transitional rental homes 
            for lower income households, through loans to local 
            governments and developers.
           $195 for the Supportive Housing Program, a subprogram of 
            MHP which funds rental homes with support services for 
            persons who have a disability and are homeless or at 
            imminent risk of becoming homeless.
           $195 for EHAP, which provides grants for the 
            rehabilitation, renovation, expansion, and site 
            acquisition of emergency shelters and transitional homes 
            for homeless individuals.

          In November 2006, California voters approved Proposition 
          1C, the $2.85 billion Housing and Emergency Shelter Trust 
          Fund Act of 2006.  Among other things, Proposition 1C 
          included funds for the following programs:

           $345 million for MHP.
           $195 million for the Supportive Housing Program.
           $50 million for EHAP.

          This bill allows HCD to expend the funds earmarked for EHAP 
          in both Propositions 46 and 1C either for EHAP or for the 
          Supportive Housing Program. 

           Program challenges and status  .  Since the passage of 
          Proposition 46 in 2002, HCD has received $320 million in 
          applications and made $211 million in awards under EHAP.  
          These awards have now almost completely exhausted the 
          relatively large allocation of Proposition 46 funds for 
          EHAP and about half of the much smaller Proposition 1C 
          allocation.  In May 2010, HCD issued a Notice of Funding 
          Availability (NOFA) soliciting applications to award up to 
          $40 million in EHAP funding.  HCD made only $20 million in 
          awards under this NOFA.  HCD expects to offer the entire 
          remaining $20 million in Proposition 46 and 1C EHAP funds 
          in August of this year.  

          In spite of the large amount of funds awarded to date, the 


                                                                AB 221

          EHAP program has had its challenges.  Because these EHAP 
          funds come from general obligation bonds, HCD can only fund 
          capital improvements, not operating costs.  Shelter 
          operators have always had difficulty arranging operating 
          grants, never more so than now as public and philanthropic 
          entities cut back support.  As a result, many operators are 
          reluctant to build or expand.  In addition, HCD's $1 
          million limit on EHAP awards may not work for larger 
          projects that cost more than $1 million but have few other 
          sources of revenue.  While the needs of the homeless have 
          not gone away, these factors have surely dampened demand 
          for EHAP funds.  In spite of these challenges, it appears 
          likely that HCD will have awarded all, or close to all, of 
          the funding available to EHAP by the end of this year, in 
          which case this bill may become moot.  

           Previous legislation

           Last year, the author introduced an identical bill, AB 
          2536.  Governor Schwarzenegger vetoed that bill, stating:

            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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

          According to the Senate Appropriations Committee:

                          Fiscal Impact (in thousands)

           Major Provisions                2011-12     2012-13     2013-14    

          Bond fund redirection                                  
          Significant cost pressures to the extent                   
                              HCD uses EHAP funds for supportive


                                                                AB 221

                              Housing under MHP

          *Potential shift from the Emergency Housing Assistance Fund 
           to the Housing Rehabilitation Loan Fund

           SUPPORT  :   (Verified  9/8/11)

          California Communities United Institute
          Housing California
          National Alliance on Mental Health
          Western Center on Law and Poverty

           ARGUMENTS IN SUPPORT  :    According to the author's office, 
          a substantial amount of EHAP funding remains available 
          while the Supportive Housing Program is oversubscribed and 
          has a limited amount of funding remaining to finance the 
          many projects ready to go.  Moreover, in recent years the 
          focus of efforts to combat homelessness have shifted from 
          simply providing shelter to the more comprehensive "housing 
          first" model, in which homeless persons are placed in 
          housing first and they encouraged to take advantage 
          supportive services, such as drug and alcohol treatment, 
          mental health counseling, and workforce training.  These 
          housing first projects are eligible for funding under the 
          Supportive Housing Program but not under EHAP.  Therefore, 
          it makes sense to make the EHAP funds available for all 
          approaches that serve homeless individuals and families.

           ASSEMBLY FLOOR  : 
          AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill 
            Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, 
            Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, 
            Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, 
            Hagman, Halderman, Hall, Harkey, Hayashi, Roger 
            Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, 
            Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, 
            Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, 
            Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, 
            Portantino, Silva, Skinner, Smyth, Solorio, Swanson, 
            Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, 


                                                                AB 221

            John A. Pérez
          NO VOTE RECORDED: Gorell

          JJA:do  9/8/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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