BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 532 (Gordon) - Proposition 1C housing bonds: Local Housing
Trust Fund.
Amended: July 9, 2013 Policy Vote: T&H 11-0
Urgency: Yes Mandate: No
Hearing Date: August 12, 2013
Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 532, an urgency measure, would delete
provisions requiring the reversion of funds in the Local Housing
Trust Fund Matching Grant Program to the Self-Help Housing Fund
for expenditure in the CalHome Program. The bill would also
make specified changes to the LHTF Program, specify that funds
would be continuously available for encumbrance and disbursement
to housing trust funds, and require HCD to issue a Notice of
Funding Availability (NOFA) for new trusts, as defined, by June
30, 2014.
Fiscal Impact:
Diversion of approximately $8.1 million in general
obligation bond funds from the Self-Help Housing Fund to the
Affordable Housing Innovation Fund. Absent the bill, these
funds would be available for expenditure on the CalHome
Program.
Minor HCD administrative costs, likely less than $50,000,
to develop emergency guidelines, issue a NOFA by June 30,
2014, and allocate remaining funds in future years
(Affordable Housing Innovation Fund).
Background: Proposition 1C, The Housing and Emergency Shelter
Trust Fund Act of 2006, includes a provision to deposit $1.5
billion in continuously appropriated general obligation bond
funds into the Affordable Housing Account, of which $100 million
is transferred to the Affordable Housing Innovation Fund. These
funds are to be administered by the Department of Housing and
Community Development (HCD) for expenditure on "competitive
grants or loans to sponsoring entities that develop, own, lend,
or invest in affordable housing and used to create pilot
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programs to demonstrate innovative, cost-saving approaches to
creating or preserving affordable housing." The bond act
specifies that subsequent statutory provisions establishing
criteria for funding would require approval of 2/3 of the
membership of each house of the Legislature. Any funds not
encumbered for these purposes within 30 months of availability
will revert to the Self-Help Housing Fund, and made available to
HCD for purposes of enabling households to become or remain
homeowners pursuant to the CalHome Program.
SB 586 (Dutton), Chap 652/2007, allocated the $100 million from
the Affordable Housing Innovation Fund among four programs,
including $35 million for the existing Local Housing Trust Fund
Matching Grant (LHTF) Program. Originally established by
Proposition 46 in 2002, the LHTF Program provides
dollar-for-dollar matching grants to cities, counties, or
non-profit organizations that form a housing trust fund using
local dollars that meet specified requirements. Grant funds may
use the funds to support emergency shelters, rental housing, and
for-sale housing affordable to extremely low-, low-, and
moderate-income households. The minimum allocation is $500,000
for a newly established trust and $1 million for all others,
with a maximum grant for all recipients of $2 million. SB 586
requires HCD to make 50 percent of the funds available for newly
established housing trust funds, requires all awardees to
encumber program funds for specific uses within 36 months, gives
preference to existing trust fund applicants that to provide
more than 65% of available funds for downpayment assistance to
first-time homebuyers, and to grant preference to new trust
funds that are established in counties with a population of less
than 425,000.
To date, all funding for existing housing trust funds has been
allocated, but approximately $8.1 million remains for newly
formed housing trust funds. All funds made available for new
trusts are scheduled to revert to the CalHome Program in
November of 2013. The CalHome Program provides grants to
cities, counties, and non-profit entities for specified
homeownership programs.
Proposed Law: AB 532 would eliminate the reversion of funds to
the Self-Help Housing Fund, and instead require any funds set
aside for the LHTF Program pursuant to SB 586 to be continuously
available for encumbrance and disbursement to trust funds. The
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bill would also:
Require HCD to issue a NOFA by June 30, 2014, pursuant to
emergency guidelines, for new trusts, defined to include
existing trusts that matching funds from a new source
identified or created on or after June 30, 2012.
Change the maximum grant amount from $2 million to $1
million per NOFA.
Specify that a housing trust fund is not required to record
a specified deed restriction for a project it finances if
such a restriction has been recorded against the property by
another agency.
Require the extension of any award to a housing trust that
was under contract on January 1, 2013 by 1 year, subject to
progress benchmarks established by HCD.
Eliminates the preference for existing trust funds that
agree to spend 65 percent of state funds for downpayment
assistance to first-time homebuyers.
Eliminates the set-aside for newly established trusts in
counties with a population of less than 425,000 persons, and
the general requirement that HCD set aside funding for new
trusts from future appropriations.
Prohibit a city or county that received an award from
encumbering the funds unless it has adopted an HCD-approved
housing element.
Staff Comments: Proposition 1C requires the bond funds from the
Affordable Housing Innovation Fund that are unencumbered within
30 months of availability will revert to the Self-Help Housing
Fund, and be made available to HCD for purposes of enabling
households to become or remain homeowners pursuant to the
CalHome Program. In addition, SB 586 requires funds for newly
established trusts in the LHTF Program that are not awarded
within 42 months of availability revert to the CalHome Program.
AB 532 would instead retain unencumbered funds from the
Affordable Housing Innovation Fund for use in the LHTF Program.