Amended in Senate September 3, 2013

Amended in Senate July 9, 2013

Amended in Assembly April 4, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 532


Introduced by Assembly Member Gordon

(Coauthors: Assembly Members Achadjian and Fong)

(Coauthor: Senator Hill)

February 20, 2013


An act to amend Sections 50843.5 and 53545.9 of the Health and Safety Code, relating to housing, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 532, as amended, 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 availabilitybegin insert for an end insertbegin insertexisting trust for which the matching funds come from a new revenue source identified or created on or after June 30, end insertbegin insert2012end insert, (2) revising 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 5 years from the date of award.

This bill would extend any award to a local housing trust that was under contract on January 1, 2013, by 12 months.

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 for new trusts, as defined,begin delete no later thanend deletebegin insert byend insert June 30, 2014.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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

P3    1

SECTION 1.  

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

3

50843.5.  

(a) Subject to the availability of funding, the
4department shall make matching grants available to cities, counties,
5cities and counties, and charitable nonprofit organizations
6organized under Section 501(c)(3) of the Internal Revenue Code
7that have created and are operating or will operate housing trust
8funds. These funds shall be awarded through the issuance of a
9Notice of Funding Availability (NOFA).

10(1) Applicants that provide matching funds from a source or
11sources other than impact fees on residential development shall
12receive a priority for funding.

13(2) The department shall set aside funding for new trusts, as
14defined by the department in the NOFA. Notwithstanding any
15other law, the department shall issue a new NOFAbegin delete no later thanend delete
16begin insert byend insert June 30, 2014, for new trusts, and, for purposes of this NOFA,
17a new trust shall include an existing trust for which the matching
18funds come from a new revenue source identified or created on or
19after June 30, 2012. For purposes of this paragraph, a new revenue
20source shall include, but is not limited to, a new tax, fee,
21contribution of public or private funds not already dedicated to
22housing, or an increase in an existing tax or fee directly adopted
23by a city, county, or city and county. The department may issue
24this NOFA pursuant to guidelines that shall not be subject to the
25requirements of Chapter 3.5 (commencing with Section 11340) of
26Part 1 of Division 3 of Title 2 of the Government Code.

27(b) Housing trusts eligible for funding under this section shall
28have the following characteristics:

29(1) Utilization of a public or joint public and private fund
30established by legislation, ordinance, resolution, or a public-private
31partnership to receive specific revenue to address local housing
32needs.

33(2) Receipt of ongoing revenues from dedicated sources of
34funding such as taxes, fees, loan repayments, or private
35contributions.

36(c) The minimum allocation to an applicant that is a newly
37established trust shall be five hundred thousand dollars ($500,000).
38The minimum allocation for all other trusts shall be one million
P4    1dollars ($1,000,000). No applicant may receive an allocation in
2excess ofbegin delete oneend deletebegin insert twoend insert million dollarsbegin delete ($1,000,000)end deletebegin insert ($2,000,000)end insert per
3NOFAbegin insert, and no existing trust for which the matching funds come
4from a new revenue source identified or created on or after June
530, 1012, may receive an allocation in excess of one million dollars
6($1,000,000) per NOFAend insert
. All funds provided pursuant to this section
7shall be matched on a dollar-for-dollar basis with moneys that are
8not required by any state or federal law to be spent on housing.
9No application for an existing housing trust shall be considered
10unless the department has received adequate documentation of the
11deposit in the local housing trust fund of the local match and the
12identity of the source of matching funds. An application for a new
13trust shall not be considered unless the department has received
14adequate documentation, as determined by the department, that
15an ordinance imposing or dedicating a tax or fee to be deposited
16into the new trust has been enacted or the applicant has adopted a
17legally binding commitment to deposit matching funds into the
18new trust. Funds shall not be disbursed by the department to any
19trust until all matching funds are on deposit and then funds may
20be disbursed only in amounts necessary to fund projects identified
21to receive a loan from the trust within a reasonable period of time,
22as determined by the department. Applicants shall be required to
23continue funding the local housing trust fund from these identified
24local sources, and continue the trust in operation, for a period of
25no less than five years from the date of award. If the funding is
26not continued for a five-year period, then (1) the amount of the
27department’s grant to the local housing trust fund, to the extent
28that the trust fund has unencumbered funds available, shall be
29immediately repaid, and (2) any payments from any projects funded
30by the local housing trust fund that would have been paid to the
31local housing trust fund shall be paid instead to the department
32and used for the program or its successor. The total amount paid
33to the department pursuant to (1) and (2), combined, shall not
34exceed the amount of the department’s grant.

35(d) (1) Funds shall be used for the predevelopment costs,
36acquisition, construction, or rehabilitation of the following types
37of housing or projects:

38(A) Rental housing projects or units within rental housing
39projects. The affordability of all assisted units shall be restricted
40for not less than 55 years.

P5    1(B) Emergency shelters, safe havens, and transitional housing,
2as these terms are defined in Section 50801.

3(C) For-sale housing projects or units within for-sale housing
4projects.

5(2) At least 30 percent of the total amount of the grant and the
6match shall be expended on projects, units, or shelters that are
7affordable to, and restricted for, extremely low income households,
8as defined in Section 50106. No more than 20 percent of the total
9amount of the grant and the match shall be expended on projects
10or units affordable to, and restricted for, moderate-income persons
11and families whose income does not exceed 120 percent of the
12area median income. The remaining funds shall be used for
13projects, units, or shelters that are affordable to, and restricted for,
14lower income households, as defined in Section 50079.5.

15(3) If funds are used for the acquisition, construction, or
16rehabilitation of for-sale housing projects or units within for-sale
17housing projects, the grantee shall record a deed restriction against
18the property that will ensure compliance with one of the following
19requirements upon resale of the for-sale housing units, unless it is
20in conflict with the requirements of another public funding source
21or law:

22(A) If the property is sold within 30 years from the date that
23trust funds are used to acquire, construct, or rehabilitate the
24property, the owner or subsequent owner shall sell the home at an
25affordable housing cost, as defined in Section 50052.5, to a
26household that meets the relevant income qualifications.

27(B) The owner and grantee shall share the equity in the unit
28pursuant to an equity-sharing agreement. The grantee shall reuse
29the proceeds of the equity-sharing agreement consistent with this
30section. To the extent not in conflict with another public funding
31source or law, all of the following shall apply to the equity-sharing
32agreement provided for by the deed restriction:

33(i) Upon resale by an owner-occupant of the home, the
34owner-occupant of the home shall retain the market value of any
35improvements, the downpayment, and his or her proportionate
36share of appreciation. The grantee shall recapture any initial
37subsidy and its proportionate share of appreciation, which shall
38then be used to make housing available to persons and families of
39the same income category as the original grant and for any type
40of housing or shelter specified in paragraph (1).

P6    1(ii) For purposes of this subdivision, the initial subsidy shall be
2equal to the fair market value of the home at the time of initial sale
3to the owner-occupant minus the initial sale price to the
4owner-occupant, plus the amount of any downpayment assistance
5or mortgage assistance. If upon resale by the owner-occupant the
6market value is lower than the initial market value, then the value
7at the time of the resale shall be used as the initial market value.

8(iii) For purposes of this subdivision, the grantee’s proportionate
9share of appreciation shall be equal to the ratio of the initial subsidy
10to the fair market value of the home at the time of the initial sale.

11(4) Notwithstanding subparagraph (A) of paragraph (1) or
12paragraph (3), a local housing trust fund shall not be required to
13record a separate deed restriction or equity agreement for any
14project or home that it finances, if a restriction or agreement that
15meets the requirements of subparagraph (A) of paragraph (1) or
16paragraph (3), as applicable, has been, or will be, recorded against
17the property by another public agency.

18(e) Loan repayments shall accrue to the grantee housing trust
19for use pursuant to this section. If the trust no longer exists, loan
20repayments shall accrue to the department for use in the program
21or its successor.

22(f) (1) In order for a city, county, or city and county to be
23eligible for funding, the applicant shall, at the time of application,
24meet both of the following requirements:

25(A) Have an adopted housing element that the department has
26determined, pursuant to Section 65585 of the Government Code,
27is in substantial compliance with the requirements of Article 10.6
28(commencing with Section 65580) of Chapter 3 of Division 1 of
29Title 7 of the Government Code.

30(B) Have submitted to the department the annual progress report
31required by Section 65400 of the Government Code within the
32preceding 12 months, if the department has adopted the forms and
33definitions pursuant to subparagraph (B) of paragraph (2) of
34subdivision (a) of Section 65400 of the Government Code.

35(2) In order for a nonprofit organization applicant to be eligible
36for funding, the applicant shall agree to utilize funds provided
37under this chapter only for projects located in cities, counties, or
38a city and county that meet both of the following requirements:

39(A) Have an adopted housing element that the department has
40determined, pursuant to Section 65585 of the Government Code,
P7    1to be in substantial compliance with the requirements of Article
210.6 (commencing with Section 65580) of Chapter 3 of Division
31 of Title 7 of the Government Code.

4(B) Have submitted to the department the annual progress report
5required by Section 65400 of the Government Code within the
6preceding 12 months, if the department has adopted the forms and
7definitions pursuant to subparagraph (B) of paragraph (2) of
8subdivision (a) of Section 65400 of the Government Code.

9(3) A city, county, or city and county that has received an award
10pursuant to this section shall not encumber any program funds
11unless it has an adopted housing element the department has
12determined, pursuant to Section 65585 of the Government Code,
13is in substantial compliance with the requirements of Article 10.6
14 (commencing with Section 65580) of Chapter 3 of Division 1 of
15Title 7 of the Government Code.

16(g) Recipients shall have held, or shall agree to hold, a public
17hearing or hearings to discuss and describe the project or projects
18that will be financed with funds provided pursuant to this section.
19As a condition of receiving a grant pursuant to this section, any
20nonprofit organization shall agree that it will hold one public
21meeting a year to discuss the criteria that will be used to select
22projects to be funded. That meeting shall be open to the public,
23and public notice of this meeting shall be provided, except to the
24extent that any similar meeting of a city or county would be
25permitted to be held in closed session.

26(h) No more than 5 percent of the funds appropriated to the
27department for the purposes of this program shall be used to pay
28the costs of administration of this section.

29(i) A local housing trust fund shall encumber funds provided
30pursuant to this section no later than 36 months after receipt. In
31addition, any award to a local housing trust that was under contract
32on January 1, 2013, shall be extended by 12 months, subject to
33progress benchmarks to be established by the department. Any
34funds not encumbered within that period shall revert to the
35department for use in the program or its successor.

36(j) Recipients shall be required to file periodic reports with the
37department regarding the use of funds provided pursuant to this
38section. No later than December 31 of each year in which funds
39are awarded by the program, the department shall provide a report
40to the Legislature regarding the number of trust funds created, a
P8    1description of the projects supported, the number of units assisted,
2and the amount of matching funds received.

3

SEC. 2.  

Section 53545.9 of the Health and Safety Code is
4amended to read:

5

53545.9.  

Of the one hundred million dollars ($100,000,000)
6transferred to the Affordable Housing Innovation Fund established
7in the State Treasury under subparagraph (F) of paragraph (1) of
8subdivision (a) of Section 53545, the following amounts shall be
9allocated as follows:

10(a) The department shall make available the amount of
11twenty-five million dollars ($25,000,000) for the Affordable
12Housing Revolving Development and Acquisition Program
13established pursuant to Section 50705.

14(b) (1) The department shall make available the amount of
15thirty-five million dollars ($35,000,000) for the local housing trust
16fund matching grant program established under Section 50843.5.
17The department shall make available 50 percent of this amount
18exclusively for newly established housing trust funds.

19(2) Notwithstanding any other law, funds set aside for housing
20trust funds pursuant to this subdivision shall be continuously
21available for encumbrance and disbursement to those trust funds,
22and shall not revert to the Self-Help Housing Fund created by
23Section 50697.1, or any other fund.

24(c) The department shall make available the amount of ten
25million dollars ($10,000,000) for the Innovative Homeownership
26Program, which the department shall develop and implement as
27follows:

28(1) The program shall be designed to increase or maintain
29affordable homeownership opportunities for Californians with
30lower incomes.

31(2) The department shall adopt guidelines for the program that,
32among other things, shall maximize the number of units assisted,
33limit the expenditure of funds for administrative costs, and
34maximize the leverage of public and private financing sources.

35(3) The guidelines adopted by the department shall provide for
36the issuance of a notice of funding availability soliciting
37competitive proposals for the use of funds consistent with those
38guidelines and with subparagraph (F) of paragraph (1) of
39subdivision (a) of Section 53545.

P9    1(4) The guidelines adopted by the department shall not be subject
2to the requirements of Chapter 6.5 (commencing with Section
311340) of Part 1 of Division 3 of Title 2 of the Government Code.

4(5) The department shall include within the annual report
5required under Section 50408 a detailed summary and description
6of the manner in which funds made available under this subdivision
7were expended during the previous year and a statement regarding
8the manner in which those expenditures meet the intent of the
9Legislature and the voters that funds from the Innovative Housing
10Fund be expended in support of innovative, cost-saving approaches
11to creating or preserving affordable housing.

12(d) (1) The amount of thirty million dollars ($30,000,000) is
13transferred from the Affordable Housing Innovation Fund to a
14 subaccount, which is hereby created, within the Housing
15Rehabilitation Loan Fund. Notwithstanding Section 13340 of the
16Government Code, the moneys transferred to the subaccount shall
17be continuously appropriated to the department for the Multifamily
18Housing Program authorized by Chapter 6.7 (commencing with
19Section 50675) of Part 2 of Division 31.

20(2) The department shall provide for the issuance of a notice of
21funding availability soliciting competitive proposals for the use
22of the funds appropriated in paragraph (1). The notice of funding
23availability shall provide that the department will consider persons
24with developmental disabilities, including, but not limited to, those
25with autism, and homeless veterans as special needs populations
26for purposes of granting bonus points to developments serving
27special needs populations.

28

SEC. 3.  

This act is an urgency statute necessary for the
29immediate preservation of the public peace, health, or safety within
30the meaning of Article IV of the Constitution and shall go into
31immediate effect. The facts constituting the necessity are:

32In order to prevent the expiration of funding needed to implement
33the Local Housing Trust Fund Matching Grant Program, it is
34necessary for this act to take effect immediately.



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