California Legislature—2013–14 Regular Session

Assembly Bill No. 532

Introduced by Assembly Member Gordon

February 20, 2013

An act to amend Sections 50843.5 and 53545.9 of the Health and Safety Code, relating to housing, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 532, as introduced, Gordon. Local Housing Trust Fund.

Existing law establishes the Local Housing Trust Fund Matching Grant Program for the purpose of supporting local housing trust funds dedicated to the creation or preservation of affordable housing. Existing law requires the Department of Housing and Community Development to make available the amount of $35,000,000 for the Local Housing Trust Fund Matching Grant Program, from the continuously appropriated Housing and Emergency Shelter Trust Fund of 2006.

Under the grant program, the department is authorized to make matching grants available to cities, counties, cities and counties, and existing charitable nonprofit organizations that have created, funded, and operated housing trust funds. The minimum allocation to a program applicant is $1,000,000 for existing trust funds, or $500,000 for newly established housing trust funds. The maximum allocation for any applicant is $2,000,000. Under existing law, all funds provided under the grant program are to be matched on a dollar-for-dollar basis with moneys that are not required by any state or federal law to be spent on housing.

This bill would revise the law applicable to the above grant program, including (1) reducing the maximum allocation to $1,000,000 per notice of funding availability, (2) eliminating funding priorities for certain types of local housing trust funds, and (3) revising requirements relative to deed restrictions and equity sharing agreements applicable to for-sale housing projects or units within for-sale housing projects.

Under existing law, an applicant is required to continue funding the local housing trust fund from identified local sources, and continue the trust in operation for a period of no less than five years from the date of award.

This bill would extend that minimum time period for one additional year, for a housing trust fund already participating in the program on January 1, 2014.

Existing law requires 50% of the funds allocated to the Local Housing Trust Fund Matching Grant Program to be made available exclusively for newly established housing trust funds. Existing law requires funds set aside for newly established housing trust funds to be available for encumbrance for 42 months and, after that time, to revert to another specified housing fund.

This bill would remove the above restrictions, making the funds continuously available for purposes of the program and not reverting to another fund, thus making an appropriation. The bill also would authorize funding for a housing trust fund that had previously received a grant under the program.

Under existing law, the department awards funds under the grant program through the issuance of a Notice of Funding Availability (NOFA), as specified.

This bill would require the department to issue a new NOFA, no later than June 30, 2014.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 50843.5 of the Health and Safety Code
is amended to read:

50843.5.  

(a) Subject to the availability of funding, the
department shall make matching grants available to cities, counties,
city and counties, and charitable nonprofit organizations organized
under Section 501(c)(3) of the Internal Revenue Code that have
created and are operating or will operate housing trust funds. begin insert A
city, county, city and county, or charitable nonprofit organization
that has previously been awarded funding under this section shall
be eligible to apply for subsequent matching grants. end insert These funds
shall be awarded through the issuance of a Notice of Funding
Availability (NOFA).

(1) Applicants that provide matching funds from a source or
sources other than impact fees on residential development shall
receive a priority for funding.

(2) The department shall set aside funding for new trusts, as
defined by the department in the NOFA.

begin insert

(3) Notwithstanding any other law, the department shall issue
a new NOFA no later than June 30, 2014.

end insert

(b) Housing trusts eligible for funding under this section shall
have the following characteristics:

(1) Utilization of a public or joint public and private fund
established by legislation, ordinance, resolution, or a public-private
partnership to receive specific revenue to address local housing
needs.

(2) Receipt of ongoing revenues from dedicated sources of
funding such as taxes, fees, loan repayments, or private
contributions.

(c)  begin insert (1) end insert begin insert   end insert The minimum allocation to an applicant that is a newly
established trust shall be five hundred thousand dollars ($500,000).
The minimum allocation for all other trusts shall be one million
dollars ($1,000,000). No applicant may receive an allocation in
excess of begin delete two million dollars ($2,000,000) end delete begin insert one million dollars
($1,000,000) per NOFA end insert . All funds provided pursuant to this section
shall be matched on a dollar-for-dollar basis with moneys that are
not required by any state or federal law to be spent on housing.
No application for an existing housing trust shall be considered
unless the department has received adequate documentation of the
deposit in the local housing trust fund of the local match and the
identity of the source of matching funds. An application for a new
trust shall not be considered unless the department has received
adequate documentation, as determined by the department, that
an ordinance imposing or dedicating a tax or fee to be deposited
into the new trust has been enacted or the applicant has adopted a
legally binding commitment to deposit matching funds into the
new trust. Funds shall not be disbursed by the department to any
trust until all matching funds are on deposit and then funds may
be disbursed only in amounts necessary to fund projects identified
to receive a loan from the trust within a reasonable period of time,
as determined by the department. Applicants shall be required to
continue funding the local housing trust fund from these identified
local sources, and continue the trust in operation, for a period of
no less than five years from the date of award. If the funding is
not continued for a five-year period, then (1) the amount of the
department’s grant to the local housing trust fund, to the extent
that the trust fund has unencumbered funds available, shall be
immediately repaid, and (2) any payments from any projects funded
by the local housing trust fund that would have been paid to the
local housing trust fund shall be paid instead to the department
and used for the program or its successor. The total amount paid
to the department pursuant to (1) and (2), combined, shall not
exceed the amount of the department’s grant.

begin insert

(2) Notwithstanding paragraph (1), the required minimum
period of a housing trust fund already participating in the program
on January 1, 2014, shall be extended for one additional year.

end insert

(d) (1) Funds shall be used for the predevelopment costs,
acquisition, construction, or rehabilitation of the following types
of housing or projects:

(A) Rental housing projects or units within rental housing
projects. The affordability of all assisted units shall be restricted
for not less than 55 years.

(B) Emergency shelters, safe havens, and transitional housing,
as these terms are defined in Section 50801.

(C) For-sale housing projects or units within for sale housing
projects.

(2) At least 30 percent of the total amount of the grant and the
match shall be expended on projects, units, or shelters that are
affordable to, and restricted for, extremely low income households,
as defined in Section 50106. No more than 20 percent of the total
amount of the grant and the match shall be expended on projects
or units affordable to, and restricted for, moderate-income persons
and families whose income does not exceed 120 percent of the
area median income. The remaining funds shall be used for
projects, units, or shelters that are affordable to, and restricted for,
lower income households, as defined in Section 50079.5.

(3) If funds are used for the acquisition, construction, or
rehabilitation of for-sale housing projects or units within for-sale
housing projects, the grantee shall record a deed restriction against
the property that will ensure compliance with one of the following
requirements upon resale of the for-sale housing units, unless it is
in conflict with the requirements of another public funding source
or law:

(A) If the property is sold within 30 years from the date that
trust funds are used to acquire, construct, or rehabilitate the
property, the owner or subsequent owner shall sell the home at an
affordable housing cost, as defined in Section 50052.5, to a
household that meets the relevant income qualifications.

(B) The owner and grantee shall share the equity in the unit
pursuant to an equity-sharing agreement. The grantee shall reuse
the proceeds of the equity-sharing agreement consistent with this
section. To the extent not in conflict with another public funding
source or law, all of the following shall apply to the equity-sharing
agreement provided for by the deed restriction:

(i) Upon resale by an owner-occupant of the home, the
owner-occupant of the home shall retain the market value of any
improvements, the downpayment, and his or her proportionate
share of appreciation. The grantee shall recapture any initial
subsidy and its proportionate share of appreciation, which shall
then be used to make housing available to persons and families of
the same income category as the original grant and for any type
of housing or shelter specified in paragraph (1).

(ii) For purposes of this subdivision, the initial subsidy shall be
equal to the fair market value of the home at the time of initial sale
to the owner-occupant minus the initial sale price to the
owner-occupant, plus the amount of any downpayment assistance
or mortgage assistance. If upon resale by the owner-occupant the
market value is lower than the initial market value, then the value
at the time of the resale shall be used as the initial market value.

(iii) For purposes of this subdivision, the grantee’s proportionate
share of appreciation shall be equal to the ratio of the initial subsidy
to the fair market value of the home at the time of the initial sale.

begin insert

(4) Notwithstanding paragraph (3), a local housing trust fund
shall not be required to do either of the following:

end insert begin insert

(A) Record a separate deed restriction or equity sharing
agreement for any project or home that it finances, if a restriction
or agreement that meets the local housing trust fund’s requirements
has been, or will be, recorded against the property by another
public agency or charitable nonprofit organizations organized
under Section 501(c)(3) of the Internal Revenue Code.

end insert begin insert

(B) Record a deed restriction or equity sharing agreement for
any home that is, or will be, sold at fair market value.

end insert

(e) Loan repayments shall accrue to the grantee housing trust
for use pursuant to this section. If the trust no longer exists, loan
repayments shall accrue to the department for use in the program
or its successor.

(f) (1) In order for a city, county, or city and county to be
eligible for funding, the applicant shall, at the time of application,
meet both of the following requirements:

(A) Have an adopted housing element that the department has
determined, pursuant to Section 65585 of the Government Code,
is in substantial compliance with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of
Title 7 of the Government Code. begin insert The city, county, or city and
county shall maintain current substantial compliance of its housing
element in order to maintain eligibility for funding pursuant to
this section. end insert

(B) Have submitted to the department the annual progress report
required by Section 65400 of the Government Code within the
preceding 12 months, if the department has adopted the forms and
definitions pursuant to subparagraph (B) of paragraph (2) of
subdivision (a) of Section 65400 of the Government Code.

(2) In order for a nonprofit organization applicant to be eligible
for funding, the applicant shall agree to utilize funds provided
under this chapter only for projects located in cities, counties, or
a city and county that, at the time of application, meet both of the
following requirements:

(A) Have an adopted housing element that the department has
determined, pursuant to Section 65585 of the Government Code,
to be in substantial compliance with the requirements of Article
10.6 (commencing with Section 65580) of Chapter 3 of Division
1 of Title 7 of the Government Code.

(B) Have submitted to the department the annual progress report
required by Section 65400 of the Government Code within the
preceding 12 months, if the department has adopted the forms and
definitions pursuant to subparagraph (B) of paragraph (2) of
subdivision (a) of Section 65400 of the Government Code.

(g) Recipients shall have held, or shall agree to hold, a public
hearing or hearings to discuss and describe the project or projects
that will be financed with funds provided pursuant to this section.
As a condition of receiving a grant pursuant to this section, any
nonprofit organization shall agree that it will hold one public
meeting a year to discuss the criteria that will be used to select
projects to be funded. That meeting shall be open to the public,
and public notice of this meeting shall be provided, except to the
extent that any similar meeting of a city or county would be
permitted to be held in closed session.

(h) No more than 5 percent of the funds appropriated to the
department for the purposes of this program shall be used to pay
the costs of administration of this section.

(i) A local housing trust fund shall encumber funds provided
pursuant to this section no later than 36 months after receipt. Any
funds not encumbered within that period shall revert to the
department for use in the program or its successor.

(j) Recipients shall be required to file periodic reports with the
department regarding the use of funds provided pursuant to this
section. No later than December 31 of each year in which funds
are awarded by the program, the department shall provide a report
to the Legislature regarding the number of trust funds created, a
description of the projects supported, the number of units assisted,
and the amount of matching funds received.

SEC. 2.  

Section 53545.9 of the Health and Safety Code is
amended to read:

53545.9.  

Of the one hundred million dollars ($100,000,000)
transferred to the Affordable Housing Innovation Fund established
in the State Treasury under subparagraph (F) of paragraph (1) of
subdivision (a) of Section 53545, the following amounts shall be
allocated as follows:

(a) The department shall make available the amount of
twenty-five million dollars ($25,000,000) for the Affordable
Housing Revolving Development and Acquisition Program
established pursuant to Section 50705.

(b)  begin insert (1) end insert begin insert   end insert The department shall make available the amount of
thirty-five million dollars ($35,000,000) for the local housing trust
fund matching grant program established under Section 50843.5. begin delete The department shall make available 50 percent of this amount
exclusively for newly established housing trust funds. end delete

begin delete

(1) When awarding grants from the funds allocated under this
subdivision to existing trust funds, the department shall grant
preference to a housing trust fund that agrees to expend more than
65 percent of state funds for the purpose of downpayment
assistance to first-time homebuyers.

end delete begin delete

(2)  When awarding grants from the funds allocated under this
subdivision to newly established housing trust funds, the
department shall set aside funding, for a period of 36 months from
the date funds are first made available, for newly established
housing trust funds that are in a county with a population of less
than 425,000 persons, based on the decennial United States Census
for the year 2000.

end delete begin delete

(3) (A)

end delete

begin insert (2) end insert  Notwithstanding any other law, funds set aside for begin delete newly
established end delete housing trust funds begin insert pursuant to this subdivision end insert shall
be begin insert continuously end insert available for encumbrance begin delete for 42 months after the
date the funds are first made available and disbursements in
liquidation of the encumbrance shall be made before or during 48
months after the date funds are first made available end delete begin insert and
disbursement to those end insert begin insert trust funds, and shall not revert to the
Self-Help Housing Fund created by Section 50697.1, or any other
fund end insert .

begin delete

(B) Notwithstanding subparagraph (F) of paragraph (1) of
subdivision (a) of Section 53545, any funds not encumbered for
newly established housing trust funds within 42 months after the
date the funds are first made available shall revert to the Self-Help
Housing Fund created by Section 50697.1 and shall be available
for the purposes described in subparagraph (D) of paragraph (1)
of subdivision (a) of Section 53545.

end delete

(c) The department shall make available the amount of ten
million dollars ($10,000,000) for the Innovative Homeownership
Program, which the department shall develop and implement as
follows:

(1) The program shall be designed to increase or maintain
affordable homeownership opportunities for Californians with
lower incomes.

(2) The department shall adopt guidelines for the program that,
among other things, shall maximize the number of units assisted,
limit the expenditure of funds for administrative costs, and
maximize the leverage of public and private financing sources.

(3) The guidelines adopted by the department shall provide for
the issuance of a notice of funding availability soliciting
competitive proposals for the use of funds consistent with those
guidelines and with subparagraph (F) of paragraph (1) of
subdivision (a) of Section 53545.

(4) The guidelines adopted by the department shall not be subject
to the requirements of Chapter 6.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.

(5) The department shall include within the annual report
required under Section 50408 a detailed summary and description
of the manner in which funds made available under this subdivision
were expended during the previous year and a statement regarding
the manner in which those expenditures meet the intent of the
Legislature and the voters that funds from the Innovative Housing
Fund be expended in support of innovative, cost-saving approaches
to creating or preserving affordable housing.

(d) (1) The amount of thirty million dollars ($30,000,000) is
transferred from the Affordable Housing Innovation Fund to a
subaccount, which is hereby created, within the Housing
Rehabilitation Loan Fund. Notwithstanding Section 13340 of the
Government Code, the moneys transferred to the subaccount shall
be continuously appropriated to the department for the Multifamily
Housing Program authorized by Chapter 6.7 (commencing with
Section 50675) of Part 2 of Division 31.

(2) The department shall provide for the issuance of a notice of
funding availability soliciting competitive proposals for the use
of the funds appropriated in paragraph (1). The notice of funding
availability shall provide that the department will consider persons
with developmental disabilities, including, but not limited to, those
with autism, and homeless veterans as special needs populations
for purposes of granting bonus points to developments serving
special needs populations.