BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 532|
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THIRD READING
Bill No: AB 532
Author: Gordon (D), et al.
Amended: 9/5/13 in Senate
Vote: 27 - Urgency
SENATE TRANSPORTATION & HOUSING COMMITTEE : 11-0, 7/2/13
AYES: DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,
Lara, Liu, Pavley, Roth, Wyland
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/30/13
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 77-1, 5/28/13 - See last page for vote
SUBJECT : Local Housing Trust Fund
SOURCE : Author
DIGEST : This bill deletes 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. This bill also makes specified changes to the Local
Housing Trust Fund (LHTF) Program, specifies that funds would be
continuously available for encumbrance and disbursement to
housing trust funds, and requires the Department of Housing and
Community Development (HCD) to issue a Notice of Funding
Availability (NOFA) for new trusts, as defined, by June 30,
2014.
Senate Floor Amendments of 9/5/13 clarify that a trust that has
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previously received a grant through the LHTF Program may not
receive an allocation in excess of $1 million per NOFA.
ANALYSIS : In November 2006, California voters approved
Proposition 1C, the $2.85 billion Housing and Emergency Shelter
Trust Fund Act of 2006. The bond act included $100 million for
the Affordable Housing Innovation Fund and required that the
Legislature program the specific uses and eligibility
requirements for these funds. SB 586 (Dutton, Chapter 652,
Statutes of 2007) allocated these funds to four separate
programs, including $35 million for the LHTF program that HCD
administers.
Under existing law, the LHTF program matches contributions to
local housing trust funds. To be eligible for matching funds, a
local housing trust fund must receive contributions from private
or governmental sources that are not otherwise restricted for
housing programs. The awardee must also have an HCD-approved
housing element and have submitted its annual housing element
progress report, or if it is a non-profit entity, it must fund
projects located in jurisdictions with approved housing elements
and submitted progress reports. The local housing trusts may in
turn use LHTF program funds to support emergency shelters,
rental housing, and for-sale housing affordable to households
ranging from extremely low-income to moderate-income. If an
awardee fails to continue funding and operating the local
housing trust fund for at least five years, then the trust fund
must repay HCD's award to the extent the funds have not yet been
legally encumbered to specific projects. For each rental unit
assisted, the awardee must record an affordability covenant
ensuring affordability for 55 years. For homeownership units,
the awardee must record either a resale restriction or an equity
sharing agreement against the property.
Under SB 586, half of the $35 million allocated to the LHTF
program from Proposition 1C is reserved for newly established
housing trust funds as defined by HCD. Within this set-aside
for newly established housing trust funds is an additional
36-month set-aside of an amount to be determined by HCD for
trust funds in counties with a population of less than 425,000
persons.
The LHTF grants match the local contributions on a
dollar-for-dollar basis at a minimum of $500,000 for newly
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established trust funds and $1 million for existing trust funds
with a maximum grant of $2 million for either. Awardees must
encumber program funds for specific uses within 36 months of
receipt.
HCD has awarded all of the funds available for existing trusts
to nine recipients. HCD has awarded less than half of the funds
available for new housing trusts to five recipients.
Approximately $8 million remains for newly formed housing
trusts. Pursuant to SB 586, funds for newly established trusts
that HCD does not award within 42 months of availability revert
to HCD's CalHome program, which provides grants to cities,
counties, and non-profits for homeownership programs. This
reversion will occur in November 2013.
This bill eliminates the reversion of funds to the Self-Help
Housing Fund, and instead requires any funds set aside for the
LHTF Program pursuant to SB 586 to be continuously available for
encumbrance and disbursement to trust funds. This bill also:
1.Requires 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, and specifies
that a trust that has previously received a grant through the
LHTF Program may not receive an allocation in excess of $1
million per NOFA.
2.Specifies 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.
3.Requires the extension of any award to a housing trust that
was under contract on January 1, 2013 by one year, subject to
progress benchmarks established by HCD.
4.Eliminates the preference for existing trust funds that agree
to spend 65% of state funds for downpayment assistance to
first-time homebuyers.
5.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
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trusts from future appropriations.
6.Prohibits a city or county that received an award from
encumbering the funds unless it has adopted an HCD-approved
housing element.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
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).
SUPPORT : (Verified 8/31/13)
California Building Industry Association
California Housing Consortium
California Housing Partnership Corporation
California Rural Legal Assistance Foundation
Center for Community Change
City of Goleta
City of San Luis Obispo
EAH Housing
Habitat for Humanity San Luis Obispo County
HEART of San Mateo County
HIP Housing
Housing California
Housing Leadership Council of San Mateo County
Housing Trust Fund of Santa Barbara County
Housing Trust of Silicon Valley
League of California Cities
Marin Workforce Housing Trust
MidPen Housing
Non-Profit Housing Association of Northern California
North Valley Housing Trust
Orange County Housing Trust
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Sacramento Housing Alliance
San Diego Housing Federation
San Luis Obispo County Housing Trust Fund
Santa Clara County Association of Realtors
Silicon Valley Leadership Group
Ventura County Housing Trust Fund
Western Center on Law on Poverty
ARGUMENTS IN SUPPORT : According to the author, local housing
trust funds have proven to be capable of leveraging significant
private matching dollars to finance affordable housing. Housing
trusts support the construction, acquisition, and preservation
of affordable housing units for very low-, low-, and
moderate-income residents throughout California. Each housing
trust operates locally to best serve its community's needs by
supporting the housing development process and assisting
first-time homebuyers. It is not for lack of interest that new
housing trusts have not exhausted the funds set aside for them.
The economic downturn coupled with the demise of redevelopment
has led to less housing trusts developing than anticipated. The
funds are currently set to shift into HCD's CalHOME Program in
November 2013. This bill seeks to keep the LHTF program funds
from reverting and instead makes them available for both new and
existing trusts to apply for until expended. Successful
existing trusts should be able to access and make use of these
funds to address the high need for affordable housing
development in California.
ASSEMBLY FLOOR : 77-1, 5/28/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
V. Manuel P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. P�rez
NOES: Donnelly
NO VOTE RECORDED: Holden, Vacancy
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JA:AL:nl 9/6/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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