BILL ANALYSIS �
AB 532
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CONCURRENCE IN SENATE AMENDMENTS
AB 532 (Gordon)
As Amended September 5, 2013
2/3 vote. Urgency
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|ASSEMBLY: |77-1 |(May 28, 2013) |SENATE: |36-0 |(September 10, |
| | | | | |2013) |
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Original Committee Reference: H. & C.D.
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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)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.
3)Provides that in order to qualify for the program existing
local housing trusts must provide local matching funds from a
new revenue source.
4)Defines a new revenue source for existing local housing trust
funds as including but not limited to a new tax, fee,
contribution of public or private funds not already dedicated
to housing, or an increase in an existing tax or fee directly
adopted by a city, county, or city and county.
5)Extends the award for local housing trust funds that were
under contract for funds as of January 1, 2013, by one year,
subject to progress benchmarks established by HCD.
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6)Provides that a local housing trust fund that has previously
received a grant through the program may not receive a new
allocation of more than $1 million per NOFA.
7)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 either of the following
requirements:
a) For rental units the affordability is restricted to not
less than 55 years; or
b) For for-sale units the sale of the home is subject to an
equity sharing agreement or if the home is sold within 30
years it must be sold at affordable cost.
1)Prohibits a city or county from encumbering funds awarded from
the Local Housing Trust Fund Matching Grant program unless it
has an adopted housing element that is in substantial
compliance with state law.
2)Includes an urgency clause allowing the bill to take effect
immediately upon enactment.
The Senate amendments make the following changes to the Assembly
version of the bill:
1)Require existing housing trust funds to identify and create a
new source for matching funds, on or after June 30, 2012, to
qualify for funding.
2)Prohibit a housing trust fund from encumbering any funds
unless its housing element has been deemed by the HCD to be in
substantial compliance.
3)Require HCD to set benchmarks that an existing housing trust
fund must meet in order to receive a 12 month extension to use
already awarded funds.
4)Delete the requirement that when awarding funds to existing
housing trust funds that HCD give preference to housing trust
funds that agree to expend more than 65% of funding for down
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payment assistance for first time homebuyers.
5)Delete the requirement that HCD set aside, for the first 36
months from the date that funds are made available, funding
for newly formed housing trust funds that are in counties with
a population of less than 425,000 people.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)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.
2)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).
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 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.
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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. Existing housing trust funds, those
that have already received a previous award, would be required
to identify and create a new revenue source for the local match
portion to qualify. 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
trust 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. 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. 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.
Sponsors of the bill have stated that the demise of
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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.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN:
0002687