BILL ANALYSIS Ó
AB 639
Page 1
ASSEMBLY THIRD READING
AB 639 (John A. Pérez)
As Introduced February 20, 2013
2/3 vote. Urgency
HOUSING 7-0 VETERANS AFFAIRS 8-0
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|Ayes:|Torres, Beth Gaines, |Ayes:|Muratsuchi, Chávez, |
| |Atkins, Brown, Chau, | |Atkins, Brown, Eggman, |
| |Maienschein, Mullin | |Fox, Salas, Yamada |
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APPROPRIATIONS 16-0
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|Ayes:|Gatto, Harkey, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, Eggman, | | |
| |Gomez, Hall, Ammiano, | | |
| |Linder, Pan, Quirk, | | |
| |Wagner, Weber | | |
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SUMMARY : Authorizes the issuance of $600 million 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)Authorizes the issuance of $600 million in GO bonds, the
proceeds of which are to be made available to the Department
of Housing and Community Development (HCD) for the purpose of
constructing, rehabilitating, and preserving affordable
multifamily, supportive, and transitional housing for
veterans.
2)Restricts the use of bond proceeds to only those housing units
designated for veterans and their families.
3)Requires the program to be administered by HCD in
collaboration with the California Department of Veterans
Affairs (CalVet).
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4)Requires HCD to establish a program to focus on veterans at
risk of homelessness or experiencing temporary or chronic
homelessness.
5)Requires HCD, to the extent feasible, to establish and
implement programs that, among other things:
a) Leverage public, private, and nonprofit program and
fiscal resources;
b) Prioritize projects that combine housing and supportive
services, such as job training, mental health and drug
treatment, or physical rehabilitation;
c) Promote public and private partnerships; and
d) Foster innovative financing opportunities.
6)Allows the Legislature, by majority vote, to amend the
provisions of the act for the purpose of improving program
efficiency, effectiveness, and accountability, or for the
purpose of furthering overall program goals.
7)Creates the Housing for Veterans Fund and requires the
proceeds of bonds issued and sold pursuant to the bill to be
deposited in the fund.
8)Subjects bonds deposited in Housing for Veterans Fund to
annual appropriation, as determined by the Legislature.
9)Requires the measure to be submitted to the voters at the
November 4, 2014, general election.
10)Contains an urgency clause.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
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.
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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
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 : Various studies indicate that veterans are more
likely than the general population to become homeless, and make
up a disproportionate share of the homeless population.
Although veterans are only about 8% of the U.S. population, they
make up approximately 15% to 20% of the homeless population.
Veterans' homelessness is particularly acute in certain parts of
the country, including California, which is home to 25%, or
about 19,000, of the nation's homeless veterans. Los Angeles
alone is home to over 8,000 homeless veterans. With respect to
the nation's homeless veterans who are unsheltered, nearly 44%
are located in California.
In addition to the veterans who are already experiencing
homelessness, there are many more veterans who have unstable
housing situations that place them at risk of homelessness. For
some, remaining housed may be as basic as having more affordable
housing options. For others, the challenges are more complex and
may involve a range of issues from lack of job training to
needing ongoing treatment for substance abuse or mental health
issues.
Numerous studies have shown that providing housing along with
the supportive services individuals need to address mental
health, substance abuse, and other issues has a net benefit in
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terms of public costs. For example, in 2009, the Los Angeles
Economic Roundtable compared the public costs for individuals in
supportive housing compared to similar individuals who were
homeless. The study concluded that the typical public cost for a
homeless person is $2,897 per month, compared with just $605 per
month in public cost for a resident in supportive housing. The
stabilizing effect of housing plus supportive services is
demonstrated by a 79% reduction in public costs. In short,
public costs go down when people are no longer homeless.
Despite California's high number of homeless veterans, the state
does not have any programs that are directly targeted at serving
this population, or at serving lower-income veterans who are at
risk of homelessness. HCD offers various 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, Proposition 46 of
2002 and Proposition 1C of 2006. These funds are nearly gone and
it is unclear when additional funds will be available. 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 for
lower-income Californians.
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, including condominiums and planned
unit developments; farms; units in cooperative developments; and
mobilehomes in rental parks or on land owned by the veteran.
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.
CalVet's Home Loan Program is funded primarily by veterans'
bonds, a type of tax-exempt GO bond. Although GO bonds are
always backed by the full faith and credit of the state, the
bonds issued for the CalVet home loan program are unusual
because the payments made by the veterans participating in the
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program always have been sufficient to retire the bonds. The
program has never had a General Fund cost. The Legislature has
placed on the ballot and 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.
This bill establishes the Veterans Housing and Homeless
Prevention Act to restructure $600 million of the $900 million
in bonds approved by the voters for the CalVet Home Loan Program
in 2008 and use them to fund the construction and rehabilitation
of affordable multifamily, supportive, and transitional housing
for veterans. The move would leave CalVet with $530 million in
bonds for its home loan program. The bill tasks HCD with
administering the new funding program in collaboration with
CalVet and restricts the use of bond proceeds to housing units
designated for veterans and their families. The focus of the
program would be on housing for veterans who are homeless or at
risk for homelessness and in need of services such as mental
health counseling, substance abuse treatment, job training, and
physical therapy. Restructuring the bonds requires voter
approval, which would be sought at the 2014 general election.
Analysis Prepared by : Anya Lawler / H. & C.D. / (916)
319-2085 FN: 0000874