BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 1951
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: atkins
VERSION: 4/16/12
Analysis by: Mark Stivers FISCAL: yes
Hearing date: June 26, 2012
SUBJECT:
Proposition 1C programs
DESCRIPTION:
This bill reprograms $30 million of Proposition 1C funds from
the Practitioner Fund and Construction Liability Insurance
Reform Pilot Program to the Multifamily Housing Program.
ANALYSIS:
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 the Multifamily Housing Program, under which
the Department of Housing and Community Development (HCD)
funds the new construction, rehabilitation, and preservation
of permanent and transitional rental homes for lower income
households through loans to local governments, non-profit
developers, and for-profit developers.
$100 million for the Affordable Housing Innovation Program "to
be 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." Proposition 1C directed the Legislature
to establish in statute specific criteria for use of these
funds. Subsequently, SB 586 (Dutton), Chapter 652, Statutes
of 2007, allocated these funds to a number of specific
purposes, including:
$25 million for the Loan Fund component of the
Affordable Housing Revolving Development and Acquisition
Program, under which HCD chooses a private sector entity to
AB 1951 (ATKINS) Page 2
manage a leveraged loan program for non-profits to acquire
property for the development or preservation of affordable
housing.
$25 million for the Practitioner component of the
Affordable Housing Revolving Development and Acquisition
Program, under which HCD makes available credit lines of up
to $5 million directly to large, established non-profits to
acquire property for the development or preservation of
affordable housing.
$5 million for the Construction Liability Insurance
Reform Project, under which HCD provides grants to the
developers of affordable, attached for-sale housing to
improve the quality of construction and reduce construction
defect liability insurance premiums.
With respect to the Practitioner Fund, SB 586 provides that
funds which a practitioner has not used within 36 months after
availability to the practitioner shall be disencumbered and
transferred to the Loan Fund. Proposition 1C itself provides
that any funds which HCD has not encumbered for the subprograms
of the Affordable Housing Innovation Program as set forth in
SB 586 within 30 months of availability to HCD shall revert to
the CalHome Program, under which HCD makes grants and loans to
local governments and non-profits for downpayment assistance,
home rehabilitation, counseling, self-help mortgage assistance
programs, and technical assistance for self-help and shared
housing.
To date, HCD has awarded all of the funds available for the
Multifamily Housing Program and the Loan Fund. With respect to
the Practitioner Fund, HCD developed a draft program proposal
and draft guidelines in 2009 and 2010 but, after further
evaluation, decided not to issue a Request for Qualifications
for the program. With respect to the Construction Liability
Insurance Reform Project, HCD made these funds available in 2009
to developers seeking assistance through the Building Equity and
Growth in Neighborhoods (BEGIN) Program but made no awards for
lack of demand.
This bill repeals the Practitioner Fund and the Construction
Liability Insurance Reform Project and allocates the $30 million
currently available for these programs to the Multifamily
Housing Program.
AB 1951 (ATKINS) Page 3
COMMENTS:
1.Purpose of the bill . According to the author, the funding
that Proposition 1C provided for the Multifamily Housing
Program has not adequately met California's needs. Meanwhile,
other funds available from Proposition 1C remain unused. As a
result, this bill seeks to reprogram idle funds to where they
can make the greatest impact on solving California's on-going
affordable housing crisis.
2.MHP highly oversubscribed and out of funds . In 2011, HCD
completed its final round of funding awards for the
Multifamily Housing Program. HCD received 27 applications
requesting a total of $142 million in funding. HCD was only
able to make eight awards with the $50.5 million in available
funding, an oversubscription ratio of 2.8 to 1. Since then,
redevelopment and its associated 20% setaside for affordable
housing, which generated roughly $1 billion per year, has
disappeared, which is likely to increase demand substantially
for this program, which currently has no funds remaining.
3.Within the realm of allowable uses . Proposition 1C requires
that the funds available for the Affordable Housing Innovation
Program "be 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." Proposition 1C further
directs the Legislature to establish more specific criteria in
statute. Because the Multifamily Housing Program clearly
meets the first of the two eligible uses of making loans for
the development of affordable housing, this bill meets the
intent of the voters. Moreover, Proposition 1C left it to the
Legislature to define eligible uses, which this bill does.
4.Appropriation needed . This bill "makeŬs] available" $30
million for the Multifamily Housing Program, but because the
appropriation for the Affordable Housing Innovation Fund in
which the money sits expires in June 2012, the bill may need
to "appropriate" the money to HCD for expenditure through the
Multifamily Housing Program.
Assembly Votes:
Floor: 52-26
Appr: 12-5
H&CD: 5-1
AB 1951 (ATKINS) Page 4
POSITIONS: (Communicated to the committee before noon on
Wednesday, June 20,
2012)
SUPPORT: Affordable Housing Associates
Burbank Housing Development Corporation
California Association of Veteran Services
Agencies
California Coalition for Rural Housing
California Housing Consortium
California Housing Partnership Corporation
Charities Housing
Corporation for Supportive Housing
Habitat for Humanity
Housing California
MidPen Housing Corporation
Non-Profit Housing Association of Northern
California
Opportunity Fund
Tenderloin Neighborhood Development Corporation
OPPOSED: None received.