BILL ANALYSIS Ó
AB 639
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Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 639 (John A. Pérez) - As Introduced: February 20, 2013
Policy Committee: Veterans
AffairsVote: 8-0
Housing and Community Development 7-0
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill amends Proposition 12 of 2008, which authorizes the
issuance of $900,000,000 in general obligation (GO) bonds for
the constructions, rehabilitation and preservation of affordable
multifamily, supportive and transitional housing for veterans,
if approved by the voters at the November, 2014, general
election. Specifically, this bill:
1)Requires the program to be administered by HCD in
collaboration with the California Department of Veterans
Affairs (CalVet). Requires HCD to establish a program to
focus on veterans at risk of homelessness or experiencing
temporary or chronic homelessness.
2)Allows the Legislature, by majority vote, to amend the
provisions of the act for the purpose of improving program
effectiveness and accountability, or for the purpose of
furthering overall program goals.
FISCAL EFFECT
1)One-time General Fund costs of about $220,000 to include in
the voter pamphlet the text and analysis of the bond measure
and any arguments for and against the measure.
2)Total debt service would be about $25 million a year,
depending on the interest rate and the timing of the sales.
This is a new obligation of the state because this bill
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redirects debt authorization rather than increasing it.
3)GO bonds are backed by the full faith and credit of the state.
Most GO bonds are paid off from the General Fund. The bonds
authorized for the CalVet home loan program, are unusual
because the payments made by the veterans participating in the
program have been sufficient to retire the bonds, so the
General Fund has been protected. However, if payments made
by veterans participating in the program do not fully cover
principal and interest payments on the bonds, the General Fund
would pay the difference. It is unknown if the program
proposed by this bill can achieve the same record of
repayment.
COMMENTS
1)Purpose . According to the author, the Legislature must
advance a comprehensive, coordinated and cost-effective
approach to respond to the housing and services needs of our
veterans. The Veterans Housing and Homeless Prevention Act of
2014 will expand housing and service options for veterans,
cost-effectively leverage public dollars, reduce the number of
homeless veterans and the attendant public costs and place
California at the forefront of our nation's efforts to end
veterans' homelessness by 2016.
2)Support . The California Special Districts Association and
County of Los Angeles supports this bill because it will shift
$600 million in unused Proposition 12 bond funds authority to
alternative types of housing that will better respond to the
needs and changing demographics of current California
veterans, and will leverage public and private dollars, and
decrease other public costs associated with the high rates of
post-traumatic stress, substance abuse and unemployment in the
current homeless veteran population.
3)Background . Despite California's high number of homeless
veterans, the state does not have many programs that directly
target this population. HCD offers programs that support the
development of multifamily rental housing for low income
Californians, including supportive and transitional housing,
but none are veteran-specific. HCD's programs have been
funded since 2002 from two voter-approved housing bonds,
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Proposition 46 of 2002 and Proposition 1C of 2006. These
funds are nearly gone and it is unclear when additional funds
will be available for these programs. In addition, the
elimination of redevelopment agencies meant a loss of around
$1 billion per year in affordable housing funding, funds that
generally worked in concert with state dollars and other
sources of funding to produce affordable units to serve
low-income Californians.
4)CalVet Home Loan program. CalVet runs the California Veteran
Farm and Home Purchase Program, often referred to as the
CalVet Home Loan Program, which was established in 1921 and
reauthorized in 1943 and again in 1974. The program provides
loans to veterans for single-family residences. California
voters have approved 23 veterans' bonds since 1943 to provide
funding for the program. The most recent was Proposition 12 in
2008, which authorized $900 million in bonding authority. The
prior bond, Proposition 32 of 2000, authorized $500 million in
bonding authority. To date, CalVet has not issued any of the
bonds approved under Proposition 12, and has about $230
million in bonding authority left under Proposition 32.
While the program has assisted over 420,000 veterans over the
years, it has seen a sharp decline in activity over the last
decade. In 2003, the program issued 1,130 new loans; in 2012
it issued just 83. In the same time period, the program's
portfolio of outstanding loans declined from 20,169 to 7,913.
According to CalVet staff as interest rates rise in the open
market, the CalVet Home Loan product will become increasingly
attractive. This bill leaves a substantial amount of money
for the existing program to continue and expand as the state
and national economies recover from recession.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081