BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 1220
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: desaulnier
VERSION: 4/16/12
Analysis by: Mark Stivers FISCAL: yes
Hearing date: April 24, 2012
SUBJECT:
Housing Opportunity and Market Stabilization (HOMeS) Trust Fund
DESCRIPTION:
This bill imposes a fee of $75 on the recording of each
real-estate related document, except for those documents
recorded in connection with a transfer subject to a documentary
transfer tax, and directs the money to the Housing Opportunity
and Market Stabilization (HOMeS) Trust Fund. The Legislature
may then appropriate these funds for the development,
acquisition, rehabilitation, and preservation of homes
affordable to low- and moderate-income households, including
emergency shelters, transitional and permanent rental housing,
foreclosure mitigation, and homeownership opportunities.
ANALYSIS:
Current law establishes a number of programs at the Department
of Housing and Community Development (HCD) and the California
Housing Finance Agency (CalHFA) to make housing more affordable
to California families and individuals, including the following
mainline programs:
Multifamily Housing Program, which 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.
Joe Serna, Jr. Farmworker Housing Program, which funds the
development of ownership or rental homes for agricultural
workers through grants to local governments and non-profit
organizations.
Emergency Housing Assistance Program, which funds emergency
shelters and transitional homes for homeless individuals and
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families through grants to counties and non-profit entities
for rehabilitation, renovation, expansion, site acquisition,
and equipment.
CalHome Program, which funds downpayment assistance, home
rehabilitation, counseling, self-help mortgage assistance
programs, and technical assistance for self-help and shared
housing through grants and loans.
California Homebuyer Downpayment Assistance Program, which
aids first-time homebuyers with down payment and/or closing
costs.
Historically, the state has funded these programs through the
sale of general obligations bonds. Most recently, the voters
approved a $2.1 billion bond through Proposition 46 in 2002 and
then $2.85 billion through Proposition 1C in 2006. HCD has
awarded almost all of the funds made available under these
propositions, particularly in these mainline programs.
Until 2011, the Community Redevelopment Law required
redevelopment agencies to set aside 20% of all tax increment
revenue to increase, improve, and preserve the community's
supply of low and moderate income housing available at an
affordable housing cost. In fiscal year 2009/10, redevelopment
agencies deposited $1.075 billion of property tax increment
revenues into their Low and Moderate-Income Housing Funds. With
the elimination of redevelopment agencies, this source of
funding for affordable housing is no longer available.
This bill imposes a fee of $75 on the recording of each
real-estate related document, except for those documents
recorded in connection with a transfer subject to a documentary
transfer tax, and directs the money to the HOMeS Trust Fund.
The Legislature may then appropriate these funds for the
development, acquisition, rehabilitation, and preservation of
homes affordable to low- and moderate-income households,
including emergency shelters, transitional and permanent rental
housing, foreclosure mitigation, and homeownership
opportunities. The bill further requires HCD to report annually
on the expenditure of these funds and requires the Bureau of
State Audits to conduct periodic audits to ensure that
departments award appropriated funds in a timely fashion and
consistent with legal requirements.
COMMENTS:
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1.Purpose of the bill . According to the author, having a
healthy housing market that provides an adequate supply of
homes affordable to families and individuals at all income
levels is critical to the economic prosperity and quality of
life in California. The decline in housing production has
played a significant role in creating and prolonging the Great
Recession. The lack of sufficient, affordable homes near jobs
impedes economic growth and development by making it difficult
for California employers to attract and retain employees.
Moreover, continued affordability gaps mean that California
has the second lowest homeownership rate in the nation, that
minimum wage earners have to work 120 hours per week to afford
the average two bedroom rental apartment, and that California
has the largest population of homeless persons in the nation.
The exhaustion of bond funds and the elimination of
redevelopment agencies means that millions of Californians
affected by the state's chronic housing shortage, including
seniors, veterans, people experiencing chronic homelessness,
working families, people with mental, physical, or
developmental disabilities, agricultural workers, people
exiting jails, prisons, and other state institutions,
survivors of domestic violence, and former foster and
transition-aged youth, will remain unhoused or living in
substandard and unaffordable conditions.
California desperately needs a permanent, ongoing source or
sources of funding dedicated to affordable housing
development. Such investment will create consistency and
predictability in the affordable housing market, leverage
billions of dollars in private investment, lessen demands on
law enforcement and dwindling health care resources as fewer
people are forced to live on the streets or in dangerous
substandard buildings, and increase businesses' ability to
attract and retain skilled workers. In addition, a dedicated
revenue source will allow a "pay as you go" approach, as
opposed to issuing bonds that require additional interest
costs.
2.Exempts documents related to sale transactions . In order to
promote homeownership opportunities, this bill exempts
documents made in connection with the sale of real property
from the new fee. This will ensure that transaction costs do
not increase for homebuyers.
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3.Revenue projections . Based on recording data from a variety
of past years, it is estimated that this bill will generate an
average of $525 million per year for the HOMeS Trust Fund,
ranging from $300 million per year in low-volume years to $750
million per year in high-volume years.
4.Allocation to be determined . This bill requires that monies
in the HOMeS Trust Fund go for the development, acquisition,
rehabilitation, and preservation of homes affordable to low-
and moderate-income households, including emergency shelters,
transitional and permanent rental housing, foreclosure
mitigation, and homeownership opportunities. Aside from these
general parameters, however, this bill does not allocate funds
to particular programs or uses. Instead, it leaves the
decision on allocation to the Legislature each year as part of
the budget process. This provides less certainty but ensures
that funds can address priority housing needs as they change
through the years. Nonetheless, it is the author's intent
that these monies fund a variety of housing needs, ranging
from homeless shelters to rental housing to homeownership,
and, where possible, use established and well-understood
programs. In addition to funding statewide programs, the
Legislature could also designate a portion of the funds as
block grants for cities and counties that meet certain
thresholds.
5.Types of documents covered . This bill applies the $75 fee to
the recording of all real estate-related documents except
those recorded in connection with a transfer subject to the
imposition of a documentary transfer tax and those expressly
exempted from payment of recording fees. There are many types
of documents that fall under the proposed fee, including, but
not limited to:
Deeds
Grant deeds
Trustee's deeds
Deeds of trust
Reconveyances
Quit claim deeds
Fictitious deeds of trust
Assignments of deeds of trust
Requests for notice of default
Abstracts of judgment
Subordination agreements
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Declarations of homestead
Abandonments of homestead
Notices of default
Releases or discharges
Easements
Notices of trustee sale
Notices of completion
Mechanic's liens
Maps
Covenants, conditions, and restrictions
1.Two-thirds vote required . Legislative Counsel has determined
that this bill would result in a change in state taxes for the
purpose of increasing state revenues within the meaning of
Section 3 of Article XIIIA of the California Constitution and
thus requires a 2/3 vote for passage.
2.Arguments in opposition . The California Taxpayers Association
argues that the fee is unreasonable and that funding for
low-income housing should not be placed on the backs of people
trying to record documents. The Howard Jarvis Taxpayers
Association believes that this is the wrong time to increase
taxes against struggling California families already suffering
through the highest foreclosure rates in 70 years. It cites
research ranking California as 14th among the states in
combined state and local per capita property taxes and
believes that existing taxes on property are already
excessive. The County Recorders Association of California
writes that the new fee places additional financial burdens at
the expense of ordinary Californians and will result in
significant increases in staff time to collect fees and
address unsatisfied customers.
The committee also received 73 letters of opposition from
local realtor boards based on the introduced version of the
bill. With the recent amendments to the bill that won the
support of the California Association of Realtors, it is
assumed that these letters are no longer current.
3.Double referral . The Rules Committee has referred this bill
to both this committee and the Governance and Finance
Committee. Because the Governance and Finance Committee is
scheduled to hear this bill on April 25, the author should
take any amendments agreed to in this committee in the
Governance and Finance Committee.
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POSITIONS: (Communicated to the committee before noon on
Wednesday, April 18,
2012)
SUPPORT:
California Housing Consortium (sponsor)
Housing California (sponsor)
AARP
A&B Painting
Affirmed Housing Group
Affordable Housing Associates
Aging Services of California
Alameda County Developmental Disability
Council
Alliance for Regional Solutions
Alpha Construction Company
AMCAL Multi-Housing
Anderson and Associates
Asian Pacific Environmental Network
BAR Architects
BAYC
Berkeley Food and Housing Project
Bernal Heights Neighborhood Center
Bonita House
Brayer Electric Company
BRC Advisors
Building Futures with Women and Children
Burbank Housing Corporation
Burbank Housing Development Corporation
Business Leaders Task Force
Cabrillo Economic Development Corporation
Cahill Contractors
California Association of Housing Authorities
California Association of Local Housing Finance Agencies
California Association of Realtors
California Building Industry Association
California Coalition for Rural Housing
California Coalition for Youth
California Housing Partnership Corporation
California Infill Builders Association
California Labor Federation
California Rural Legal Assistance Foundation
Calistoga Affordable Housing
Caritas Management Corporation
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Center for Sustainable Neighborhoods
Center on Policy Initiatives
Central Coast Residential Builders
Century Housing
Charities Housing
Christian Church Homes
City of Dublin
City of Oakland
City of San Leandro
City Heights Community Development Corporation
Clifford Beers Housing
CLUE-LA
Collaborative Project Consulting
Community Action to Fight Asthma
Community Economics
Community Corporation of Santa Monica
Community Housing Opportunities Corporation
Community Housing Partnership
Community Housing Works
Community Interfaith Services
Community of Friends
Core Companies
Corporation for Supportive Housing
Dahlin Group Architecture Planning
EAH Housing
East Bay Asian Local Development Corporation
East Bay Housing Organizations
Eden Housing
Enterprise Community Partners
Equity Community Builders
Eugene Burger Management Corporation
EveryOne Home
First United Methodist Church of Los Angeles
Fred Finch Youth Center
Goldfarb Lipman Attorneys
Greenbelt Alliance
Habitat for Humanity California
Habitat for Humanity East Bay
Habitat for Humanity Greater Los Angeles
Habitat for Humanity Greater San Francisco
Hearth Homes
Heffernan Insurance Brokers
Housing Advisory Group
Housing Consortium of the East Bay
Housing Leadership Council of San Mateo County
Housing Trust of Santa Clara County
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ICON Builders
Interfaith Committee for Worker Justice of San Diego County
Islamic Shura Council of Southern California
Jacobs Center for Neighborhood Innovation
Jamboree Housing Corporation
John Burton Foundation for Children Without Homes
Koning Eizenberg Architecture
Larkin Street Youth Services
Law Foundation of Silicon Valley
League of Women Voters of California
League of Women Voters of Marin County
Leddy Maytum Stacy Architects
LifeLong Medical Care
LifeSTEPS
LISC Bay Area
Los Angeles Business Council
L.A Family Housing
Many Mansions
Marin Environmental Housing Collaborative
Marin Partnership to End Homelessness
Mental Health America of Los Angeles
Mercy Housing
MidPen Housing
Mikiten Architecture
Mill Valley Affordable Housing Committee
Morley Builders
Move LA
Napa Valley Community Housing
National Equity Fund
Natural Resources Defense Council
Neighborhood Housing Services Silicon Valley
New Directions
Non-Profit Housing Association of Northern California
North County Lifeline
Opportunity Fund Northern California
Orange County Business Council
Palm Communities
Project Sentinel
Pyatok Architects
Public Advocates
DRA Infill Coalition
Regional Asthma Management and Prevention
Related California
Resources for Community Development
Rural Community Assistance Corporation
Sacramento Housing Alliance
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Sacramento Yolo Mutual Housing Association
St. Anne's
St. Anthony Foundation
St. Ignatius Parish, San Francisco
San Diego Building Trades Council Family Housing Corporation
San Diego Housing Federation
San Diego LGBT Community Center
San Gabriel Valley Housing and Homeless Coordinating Council
San Luis Obispo County Housing Trust Fund
Satellite Housing
Self-Help Enterprises
Shelter, Inc.
Sierra Business Council
Silicon Valley Leadership Group
South County Housing
Southern California Association of Non-Profit Housing
Stand Up for Neighborly Novato
State Building and Construction Trades Council of California
Stocktonians Taking Action to Neutralize Drugs
Sun Country Builders
Sunseri Construction
Treasure Island Homeless Development Initiative
United Homeless Healthcare Partners
USA Properties
Veterans Association of North County
Walton Construction Services
West Bay Housing Corporation
Western Center on Law and Poverty
Westport Construction
Yolo Community Care Continuum
OPPOSED:
California Bankers Association
California Land Title Association
California Mortgage Bankers Association
California Taxpayers Association
County Recorders Association of California
Howard Jarvis Taxpayers Association