BILL ANALYSIS �
AB 532
Page 1
Date of Hearing: April 3, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 532 (Gordon) - As Introduced: February 20, 2013
SUBJECT : Local Housing Trust Fund
SUMMARY : Deletes the requirement that funds in the Local
Housing Trust Fund Matching Grant program for newly formed local
housing trust funds revert to the Self-Help Housing Fund and
continuously appropriates the funds to the Local Housing Trust
Fund Matching Grant program for new and existing local housing
trust funds. Specifically, this bill :
1)Deletes the requirement that any funds not encumbered in the
Local Housing Trust Fund Matching Grant program for newly
formed local housing trust funds reverts to the Self-Help
Housing Fund 30 months after the first Notice of Funding
Availability (NOFA).
2)Allows local housing trust funds that were previously awarded
funding under the Local Housing Trust Fund Matching Grant
program to apply for subsequent matching grants.
3)Reduces the maximum amount that a new or existing housing
trust fund can receive in matching funds from $2,000,000 to
$1,000,000 per application.
4)Requires the Department of Housing and Community Development
(HCD) to issue a NOFA for the Local Housing Trust Fund
Matching Grant program no later than June 30, 2014.
5)Requires local housing trust funds that have received matching
grants as of January 1, 2014 to operate for an additional one
year beyond the minimum five years.
6)Provides that a local housing trust fund is not required to
record a separate deed of trust or equity sharing agreement on
a project it finances if another public agency or nonprofit
organization records one that meets the local housing trust
fund's requirements.
7)Provides that a local housing trust fund is not required to
record a deed of trust or equity- sharing agreement on any
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home that is, or will be sold at fair market value.
8)Requires that a city or county that receives funding under the
Local Housing Trust Fund Matching Grant program maintain a
current and substantially compliant housing element to remain
eligible for funding.
9)Deletes the requirement that HCD set aside fifty percent of
the funding for the Local Housing Trust Fund Matching Grant
program for newly formed local housing trust funds.
EXISTING LAW
1)Establishes the Local Housing Trust Fund Matching Grant
Program to provide matching grants to cities, counties, and
nonprofit organizations for affordable rental housing
projects, emergency housing shelters, safe havens,
transitional housing, and for-sale housing (Health and Safety
Code 50842.2).
2)Requires HCD to set aside $17.5 million of the $35 million
made available under the Local Housing Trust Fund Matching
Grant Program for newly formed local housing trust funds, for
which the minimum allocation is $500,000 (Health and Safety
Code 50843.5).
3)Caps the amount of matching funds a local housing trust fund
can receive from the Local Housing Trust Fund Grant Program at
$2,000,000 (Health and Safety Code 50843.5).
4)Requires local housing trust funds to restrict the sale of
for-sale homes acquired, constructed, or rehabilitated using
Local Housing Trust Fund Matching Grant Program funds by
either:
a) Requiring the owner-occupant to sell the home at an
affordable cost if it is sold within 30 years from the date
the trust funds were used; or
b) Requiring an equity-sharing agreement that allows the
owner-occupant to retain the market value of any
improvements, the downpayment assistance, and his or her
proportionate share of the appreciation and the grantee to
recapture the initial subsidy and its proportionate share
of the appreciation, which must be used to assist another
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person or family in the same category of income as the
original grant.
(Health and Safety Code 50843.5)
FISCAL EFFECT : Unknown.
COMMENTS :
In 2006, the voters approved Proposition 1C: the Housing and
Emergency Shelter Trust Fund Act, which authorized $2.85 billion
for affordable housing programs for very low-, low- and
moderate-income individuals and families. The bond included
$100 million for the Affordable Housing Innovation Fund for
competitive grants or loans for programs that demonstrate
innovative, cost-saving approaches to creating or preserving
affordable housing. The bond required the Legislature to design
programs to implement this directive, subject to a two-thirds
vote. Any funds not encumbered for a program funded through the
Affordable Housing Innovation Fund within 30 months of being
made available revert to the Self-Help Housing Fund.
In 2007, SB 586 (Dutton), Chapter 652, authorized several
programs funded by the Affordable Housing Innovation Fund,
including $35 million for the Local Housing Trust Fund Matching
Grant Program. Originally established by Proposition 46 in
2002, the Local Housing Trust Fund Matching Grant Program
provides dollar-for-dollar matching grants to cities, counties,
or non-profit organizations that form a housing trust fund using
local dollars. The program requires that those communities that
have existing housing trust funds to provide a minimum match of
$1,000,000 and those that form new local housing trust funds to
provide a minimum match of $500,000. The maximum amount a local
housing trust fund can receive in matching funds is $2,000,000.
Half of the funding for the program, $17.5 million, was set
aside for newly formed housing trust funds.
At this point, the funding for existing housing trust funds has
been exhausted, however approximately $9 million remains for
newly formed housing trust funds. The NOFA for the newly formed
Local Housing Trust Fund Matching Grant Program was issued in
mid-2011, so without any legislative action the remaining $9
million will be transferred to the Self-Help Housing Program in
November of this year.
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Purpose of this bill : This bill would remove the requirement
that the remaining funding for the Local Housing Trust Fund
Matching Grant Program revert to the Self-Help Housing Program
at the end of the year. It would make the remaining funding
available to both newly formed and existing housing trust funds
and reduce the maximum amount a trust fund could receive in
matching state dollars to $1,000,000 from $2,000,000. HCD would
be directed to issue a new NOFA for the program no later than
June 30, 2014.
Deed restriction and equity sharing : Local housing trust funds
can use the matching grants for predevelopment costs,
acquisition, construction, or rehabilitation of emergency
shelters, rental housing, and for-sale homes. At least 30% of
funds must be used for units affordable to extremely low-income
households, no more than 20% for moderate-income households, and
the remainder to lower-income households.
If for-sale homes are financed through the local trust fund, the
fund must record a deed restriction against the property to
ensure that if the property is sold within 30 years it is sold
at an affordable rate or it must be sold subject to an
equity-sharing agreement to allow the trust fund to split the
equity with the owner.
This bill would allow a local housing trust fund to forego
recording a deed restriction or equity- sharing agreement on a
home it finances if another governmental entity that is
providing financing records a deed restriction or agreement that
reflects the local housing trust fund's interest. In many cases
rental housing projects funded through the local housing trust
fund will also receive low-income housing tax credits which
require the housing to be restricted to affordable levels for
55-years. This is the same standard as the local housing trust
fund. Also, if the local housing trust fund finances a home
that is or will be sold at fair market value, it would not need
to record a deed restriction or equity-sharing agreement on the
home. The motivation for this change is that local Housing
Trust Funds have found it difficult to market homes with these
restrictions to homebuyers. Despite this change, for-sale homes
would still be required to be sold to the initial buyer at an
affordable price, but the buyer could sell the home at fair
market value and retain any increase in the equity of the home.
The committee may wish to consider if this provision should be
restricted to for-sale homes where the trust fund dollars are
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used as down payment assistance. In that case, the local housing
trust fund could recover all of its initial investment; but it
would not maintain the unit as affordable for 30 years. HCD
operates other programs, including the CalHOME program, that are
also funded by Proposition 1C and that allows downpayment
assistance at a fixed interest rate without an equity-sharing
agreement or deed restriction.
Sponsors of the bill have stated that the demise of
redevelopment coupled with shrinking federal dollars for housing
makes local housing trust funds more valuable. Additionally,
existing housing trust funds provided examples of leveraging
local funds with state dollars to finance affordable housing.
The San Luis Obispo Housing Trust Fund (SLOHTF), received $1.5
million from the Local Housing Trust Fund Matching Program which
allowed them to construct 168 units of affordable housing.
According to SLOHTF, in 2010 30% of all housing starts in the
county were assisted using Local Housing Trust Fund Matching
Program dollars.
Urgency clause: This bill requires an urgency clause so that it
will take effect before November of this year when the funds in
the Local Housing Trust Fund Matching Grant Program are
scheduled to revert to the Self-Help Housing Program. The
author has received approval from Rules Committee to add an
urgency clause.
Committee amendments:
The Committee may wish to consider the following amendments
which would clarify portions of the bill.
1)On page 3, delete lines 7-8.
2)On page 4, delete lines 14-16.
3)On page 6, delete lines 1-2 and insert: B) For any funds that
are used solely for downpayment assistance, record a deed
restriction or equity sharing agreement for any home that is
sold at fair market value.
4)On page 6, line 26, delete ", at the time of application,"
5)On page 7, line 12 after "after receipt." Insert the following
"In addition, any award to a local housing trust that was
under contract on January 1, 2013 shall be extended by 12
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months."
6)On page 7, line 14 delete "or its successor"
7)Add an urgency clause.
REGISTERED SUPPORT / OPPOSITION :
Support
California Building Industry Association
California Rural Legal Assistance Foundation
Center for Community Change
EAH Housing
Housing Endowment and Regional Trust of San Mateo County
Housing Leadership Council of San Mateo County
Housing Trust Fund of Santa Barbara County
Housing Trust of Santa Clara County
LeadingAge California
Marin Workforce Housing Trust
MidPen Housing Corporation
Non-Profit Housing Association of Northern California
Orange County Housing Trust
Sacramento Housing Alliance
San Luis Obispo County Housing Trust Fund
Santa Clara County Association of REALTORS
Ventura County Housing Trust Fund
Western Center on Law & Poverty
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085