BILL ANALYSIS Ó
AB 532
Page 1
ASSEMBLY THIRD READING
AB 532 (Gordon)
As Amended April 4, 2013
2/3 vote. Urgency
HOUSING 7-0 APPROPRIATIONS 17-0
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|Ayes:|Torres, Beth Gaines, |Ayes:|Gatto, Harkey, Bigelow, |
| |Atkins, Brown, Chau, | |Bocanegra, Bradford, Ian |
| |Maienschein, Mullin | |Calderon, Campos, |
| | | |Donnelly, Eggman, Gomez, |
| | | |Hall, Ammiano, Linder, |
| | | |Pan, Quirk, Wagner, Weber |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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 million to $1
million 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)Extends the award for local housing trust funds that were
under contract for funds as of January 1, 2013, by one year.
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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
home that is sold for fair market value where Local Housing
Trust Fund Matching Grant funds are used solely for down
payment assistance.
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 50% of the funding
for the Local Housing Trust Fund Matching Grant program for
newly formed local housing trust funds.
10)Includes an urgency clause allowing the bill to take effect
immediately upon enactment.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill would result in over $8 million being
diverted from the Self-Help Housing Fund to the Local Housing
Trust Fund Matching Grant program. These are funds are from a
general obligation bond issue approved by the voters in 2006.
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.
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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 million 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 million.
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.
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 million from $2 million. 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
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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 Legislature may wish to consider if this provision should be
restricted to for-sale homes where the trust fund dollars are
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.
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Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0000798