BILL NUMBER: AB 532	INTRODUCED
	BILL TEXT


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.  A
city, county, city and county, or charitable nonprofit organization
that has previous   ly been awarded funding under this
section shall be eligible to apply for subsequent matching grants.
 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. 
   (3) Notwithstanding any other law, the department shall issue a
new NOFA no later than June 30, 2014. 
   (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)  (1)    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 two million dollars
($2,000,000)   one m   illion dollars
($1,000,000) per NOFA  . 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. 
   (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. 
   (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. 
   (4) Notwithstanding paragraph (3), a local housing trust fund
shall not be required to do either of the following:  
   (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.  
   (B) Record a deed restriction or equity sharing agreement for any
home that is, or will be, sold at fair market value. 
   (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.  The city, county, or city and county
shall maint   ain current substantial compliance of its
housing element in order to maintain eligibility for funding pursuant
to this section. 
   (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)  (1)    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.  The department shall make available 50 percent of
this amount exclusively for newly established housing trust funds.
 
   (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.  
   (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.  
   (3) (A) 
    (2)  Notwithstanding any other law, funds set aside for
 newly established  housing trust funds 
pursuant to this subdivision  shall be  continuously 
available for encumbrance  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   and disbursement
to those   trust funds, and shall not revert to the
Self-Help Housing Fund created by Section 50697.1, or any other fund
 . 
   (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. 
   (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.