BILL ANALYSIS Ó AB 1951 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1951 (Atkins) As Amended August 21, 2012 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |52-26|(May 30, 2012) |SENATE: |24-12|(August 22, | | | | | | |2012) | ----------------------------------------------------------------- Original Committee Reference: H. & C.D. SUMMARY : Transfers $30 million from the Affordable Housing Innovation Fund to the Multifamily Housing Program (MHP). The Senate amendments: 1)Appropriate the funds in the Housing Rehabilitation Loan Fund for the MHP. 2)Require the Department of Housing and Community Development (HCD) to issue a Notice of Funding Availability (NOFA) for MHP. 3)Requires the NOFA to specify that HCD shall consider persons with development disabilities, including autism and homeless, veterans, as special needs populations for the propose of granting bonus points to affordable housing developments. AS PASSED BY THE ASSEMBLY , this bill deleted two programs, the Practitioner Fund and the Construction Liability Insurance Reform Pilot Program, that are part of the Affordable Housing Innovation Fund created by Proposition 1C: Housing and Emergency Shelter Trust Fund Act of 2006 (Proposition 1C). Specifically, this bill: 1)Deleted the Practitioner Fund administered by the HCD and the $25 million appropriated to that fund. 2)Deleted the Construction Liability Insurance Reform Pilot Program administered by HCD and the $5 million appropriated to that program. 3)Required HCD to make $30 million available from the Affordable Housing Innovation Fund for the MHP. AB 1951 Page 2 4)Deleted the requirement that HCD provide a comparison of the cost of creating or preserving units funded by the Practitioner Fund and the Affordable Housing Revolving Development and Acquisition Program in its annual report that is due to the Legislature on or before December 31, 2013. FISCAL EFFECT : According to the Assembly Appropriations Committee, redirects $30 million in voter-approved bond funds. COMMENTS : Proposition 1C authorized the creation of the Affordable Housing Innovation Fund and transferred $100 million to the Fund. The bond required the funds to be expended for competitive grants or loans to sponsoring entities that develop, own, lend, or invest in affordable housing through pilot programs that demonstrate innovate, cost-savings approaches to creating or preserving affordable housing. The bond required that these programs be created statutorily through two-third vote bills. Any funds that were not spent within 30 months of being offered through the programs would revert to the Self-Help Housing Fund. In 2007, SB 586 (Dutton), Chapter 652, created several new programs funded by the Affordable Housing Innovation Fund including the Practitioner Fund and the Construction Liability Insurance Reform Pilot Program. The Practitioner Fund required HCD to make loans to non-profit entities to purchase land for affordable housing developments. Practitioners selected for the program were required to have experience as a lender to affordable housing developers and would have five years to spend the funds. They would also be required to leverage the Practitioner funds from non-state resources on a three to one basis. HCD developed draft guidelines for this program but they were not formalized and a Notice of Funding Availability (NOFA) was not issued for the program. The Construction Liability Insurance Reform Pilot Program was created to promote best practices for residential construction, quality control in affordable housing projects that receive loans from the California Housing Finance Agency (CalHFA). HCD has not developed guidelines for this program yet. Proposition 1C also authorized $195 million for the MHP program which funds the production or rehabilitation of affordable rental housing. MHP is the most popular program offered by HCD AB 1951 Page 3 and has been significantly oversubscribed in past years. There is no money left in MHP. Purpose of this bill: AB 1951 would collapse the Practitioner Fund ($25 million) and the Construction Liability Insurance Reform Pilot Program ($5 million) and roll the combined $30 million available to these two programs into MHP. Proposition 1C authorized the creation of the Affordable Housing Innovation Fund but required the Legislature develop programs to spend the funds with some parameters. Bond funds are close to exhausted and the likelihood of another bond measure to replenish the coffers is limited. In addition, the dissolution of redevelopment agencies eliminated the Low- and Moderate-Income Housing Fund as a source of funding for affordable housing. Unlike most other programs authorized by Proposition 1C, the Affordable Housing Innovation Fund, required legislative action to develop programs that met the parameters outlined in the bond for this pot of money. With limited resources available, the author supports moving funds into MHP where they can make a greater impact in solving California's ongoing housing crisis, while retaining the intent of the voters. The Senate amendments require HCD to grant bonus points to affordable housing developments that serve the autistic and homeless veterans when awarding funding through from the $30 million appropriated by this bill to MHP. Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0005374