BILL ANALYSIS Ó
AB 2447
Page 1
Date of Hearing: April 25, 2012
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 2447 (Skinner) - As Amended: April 17, 2012
SUBJECT : The California Neighborhood Revitalization
Partnership Act of 2012
SUMMARY : Establishes the California Neighborhood
Revitalization Partnership Act of 2012 (the Act).
Specifically, this bill :
1)Makes legislative findings.
2)Requires the California Housing Finance Agency (CalHFA) to
administer the Act in consultation with the Department of
Housing and Community Development (HCD) to finance affordable
housing for low- to moderate-income households and to
revitalize neighborhoods damaged by the foreclosure crisis.
3)Defines "agency" as CalHFA.
4)Defines "applicant" as a local government entity, housing
nonprofit organization, consortium of nonprofit entities or a
combination, and a for-profit developer that applies jointly
with a non-profit, local government, or consortium of
nonprofit entities.
5)Defines "executive director" as the executive director of
CalHFA.
6)Defines a "foreclosed property" as a home or residential
property for which title has been acquired by the foreclosing
entity at a trustee sale.
7)Defines "fund" as the California Neighborhood Revitalization
Fund.
8)Gives CalHFA's executive director or his or her designee the
following duties and responsibilities:
a) Facilitate the interaction and negotiation between
financial institutions, private investors, local
governments, and nonprofits or a consortium of nonprofits
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to identify and acquire foreclosed properties for resale,
rental, or lease-to-own for low- and moderate-income
families;
b) Award grants or loans to applicants from the Fund;
c) Develop strategies with the California Energy Commission
(CEC) and the California Public Utilities Commission (PUC)
to leverage investments to improve energy efficiency in the
rehabilitation of foreclosed homes; and
d) Maximize job and apprentice opportunities.
1)Establishes the Fund and deposits $25 million from the
California Homebuyer Downpayment Assistance Program (CHDAP)
into the Fund.
2)Requires, for purposes of implementing the Act, that an
unknown amount of money be appropriated to CalHFA on a
one-time basis and specifies that any further expenditures
will be subject to appropriation by the Legislature.
3)Limits the administrative costs of CalHFA to 5% of the
program's costs.
4)Permits CalHFA to accept and receive gifts, grants, or
donations from any agency of the United States, any agency of
the state, or any municipality, county, or other political
subdivision of the state.
5)Requires funding to be awarded in the form of grants or loans
on a competitive basis.
6)Provides that the eligible uses for the funds include, but are
not limited to, the following:
a) Establishing financing mechanisms for the purchase and
rehabilitation of foreclosed homes and residential
properties;
b) Creation of land banks for foreclosed homes;
c) Demolition of blighted structures; and
d) Redevelopment of demolished or vacant properties.
AB 2447
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1)Requires CalHFA to develop guidelines by March 14, 2013, in
consultation with HCD,
CEC, PUC, and others that must include, but not be limited to,
the following:
a) An application process for the funds;
b) A requirement of leveraged funds from other sources;
c) Project selection criteria;
d) Accountability and auditing requirements; and
e) Ranges for grant and loan amounts.
1)Requires CalHFA to hold not less than one public hearing prior
to adopting the guidelines.
2)Requires the guidelines to be adopted at a public hearing but
specifies that they are not subject to the Administrative
Procedures Act.
EXISTING LAW
1)Authorizes $200 million in voter-approved bonds for CHDAP
(Health and Safety Code Section 53545).
2)Provides that the Legislature may, from time to time, amend
the provisions of law relating to programs for which funds
are, or have been, allocated by Proposition 1C: Housing and
Emergency Shelter Trust Fund Act of 2006 (Proposition 1C) to
improve the efficiency and effectiveness of the program, or to
further the purpose of the program (Health and Safety Code
Section 53545).
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of this bill : According to the author, "the state lacks
a centralized entity to facilitate the interaction and
negotiation between financial institutions, private investors,
local governments and non-profits in the identification and
acquisition of foreclosed properties for re-sell, rental, or
lease-to-own structures for low-and moderate-income families.
AB 2447
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The state does not have a program in place to assist local
governments who are struggling with the unique and intensive
needs of repairing foreclosed properties and reintegrating them
into the housing market."
California Homebuyers Downpayment Assistance Program :
Proposition 1C authorized $200 million for the California
Homebuyers Downpayment Assistance Program (CHDAP). CHDAP,
administered by CalHFA, provides low- and moderate-income
first-time home buyers loans to purchase homes. The loans are
in the form of a deferred- payment, low-interest loan to reduce
the principal and interest payments and make the purchase
affordable. Downpayment assistance is limited to 3% of the
purchase price. Mortgage financing is provided by participating
lenders. Of the $200 million authorized under Proposition 1C for
CHDAP, $111 million remains. CalHFA reports receiving
approximately 400 applications for CHDAP per month and funding
approximately 287 loans at a maximum of $7,000 per loan. At
that rate, all remaining funds could be expended within four to
five years.
Neighborhood Stabilization Program (NSP): The federal Housing
and Economic Recovery Act of 2008 created the Neighborhood
Stabilization Program (NSP), which provided emergency assistance
to state and local governments to acquire and redevelop
foreclosed properties that might otherwise become sources of
abandonment and blight within their communities. The program
provided grants to every state and certain local communities to
purchase foreclosed or abandoned homes and to rehabilitate,
resell, or redevelop these homes in order to stabilize
neighborhoods and stem the decline in value of neighboring
homes. NSP had three rounds of funding. California received
funding in two of the three rounds. The eligible uses that AB
2447 provides for this program are the same as those allowed
under NSP.
Fannie Mae and Freddie Mac: Rent-to-Rehab program : Fannie Mae
and Freddie Mac (under receivership in the Federal Housing
Agency) have launched a pilot program in several states,
including California, to sell their inventory of approximately
250,000 properties in order to start clearing up their books,
stabilize home values, and revitalize communities.
The Federal Housing Finance Agency released a request for
information for such a program in August 2011, and then in late
AB 2447
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February 2012, Fannie Mae and its conservator, the Federal
Housing Finance Agency, announced a pilot sale of around 2,500
foreclosed properties in eight hard-hit markets nationwide. The
eight pilot markets are Atlanta; Chicago; three regions in
Florida; Las Vegas; Los Angeles; Riverside, California; and
Phoenix.
Targeting Limited Funds : The program, as described, is intended
to finance affordable housing for low- to moderate-income
households and to revitalize neighborhoods damaged by the
foreclosure crisis. The bill does not identify how funding will
be targeted. One option is to target funding to areas with high
rental costs to assist local governments and/or non-profits in
increasing the stock of affordable units in those areas.
Another option is to require homes to be on the market for a
certain period of time before they are eligible for the program.
This would likely lead to the purchase of homes that are less
desirable to private investors and more likely to remain a
blight on the community. This bill does not give CalHFA
direction on how funds should be distributed, instead leaving it
up to CalHFA to determine the process through guidelines.
Restrictions on Affordability : The goal of the program is to
assist local governments and nonprofits in acquiring foreclosed
properties for resale, rental, or lease-to-own for low- and
moderate-income families. In order to garner the most return
for the investment of voter-approved bonds, it seems appropriate
to ensure that rental units created through this program remain
affordable by attaching 55-year affordability covenants to the
units. This is consistent with requirements under the state's
primary rental housing funding program, the Multifamily Housing
Program.
If the money is used to create homes for purchase, the committee
may wish to consider requiring these units to also remain
affordable or to have some sort of equity-sharing agreement in
place. In an equity-sharing arrangement, when a home is sold the
homeowner and nonprofit or local government split the equity. A
challenge to an equity-sharing structure is that these homes
will likely be slow to increase in equity, leaving little to
split between a homeowner and a local government or nonprofit at
the time of sale.
Committee amends:
AB 2447
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On page 5, insert the following after line 13:
(6) Require affordability covenants of at least 55 years on
rental units funded through the Act.
(7) Priority for applicants that achieve the greatest
affordability.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085