BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 639
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: J. Pérez
VERSION: 2/20/13
Analysis by: Mark Stivers FISCAL: yes
Hearing date: July 2, 2013 URGENCY: YES
SUBJECT:
Veterans Housing and Homeless Prevention Act of 2014
DESCRIPTION:
This bill authorizes, subject to voter approval, the issuance of
$600 million in general obligation bonds for the construction,
rehabilitation, and preservation of multifamily housing for
veterans and their families that is affordable, supportive, and
transitional.
ANALYSIS:
Since 1921, the California Department of Veterans Affairs (CDVA)
has administered the California Veteran Farm and Home Purchase
Program, often referred to as the CalVet Home Loan Program. The
program provides loans to veterans for the purchase of
single-family residences, farms, units in cooperative
developments, and mobilehomes.
The CalVet Home Loan Program receives funding from the issuance
of general obligation bonds that voters have approved, including
Proposition 32 of 2000 which authorized $500 million in bonds
and Proposition 12 in 2008 which authorized $900 million in
bonds. While these are general obligation bonds, the state's
General Fund has never contributed to repaying the bonds as CDVA
repays the bonds with the mortgage payments its borrowers make.
In practice, therefore, these bonds are like revenue bonds. To
date, CDVA has about $230 million in bonding authority left
under Proposition 32 and has not issued any of the bonds
approved under Proposition 12.
This bill , subject to voter approval on the November 2014
ballot, reduces the Proposition 12 bonding authority for the
CalVet Home Loan Program from $900 million to $300 million and
authorizes the issuance of $600 million in general obligation
bonds for the construction, rehabilitation, and preservation of
AB 639 (J. PÉREZ) Page 2
multifamily housing for veterans and their families that is
affordable, supportive, and transitional. In addition, the
bill:
Provides that the Department of Housing and Community
Development (HCD), in collaboration with CDVA, shall expend
the funds in a manner that focuses on veterans at risk of
homelessness or experiencing temporary or chronic
homelessness. To the extent feasible, the expenditures shall
also leverage other public, private, and non-profit resources,
prioritize projects that combine housing and supportive
services, promote public and private partnerships, and foster
innovative financing opportunities.
Allows the Legislature to amend the provisions of the
voter-approved act for the purpose of improving program
efficiency, effectiveness, and accountability or for the
purpose of furthering overall program goals.
Appropriates from the General Fund an amount necessary to pay
the principal and interest on the bonds and subjects HCD's
expenditures to legislative appropriation.
Requires the California Housing Finance Agency to include in
its annual report an evaluation of any program HCD establishes
to implement this bill.
Contains an urgency clause.
COMMENTS:
1.Purpose of the bill . According to the author, CDVA has
roughly $1.1 billion in remaining bond authority for the
CalVet Home Loan Program and is doing little new business
while a growing body of research indicates an overwhelming and
unmet need for affordable, supportive, multifamily housing for
veterans. California leads the nation in the number of
homeless veterans and is home to one quarter of all the
nation's homeless veterans. This bill will restructure
Proposition 12, the CalVet bond of 2008, to allow for the
development of multifamily housing for veterans, with a
priority for projects that align housing with services. At
the same time, the bill preserves over $500 million in
Proposition 32 and Proposition 12 bonding authority for the
CalVet Home Loan Program to meet future needs. Ultimately,
the bill will reduce the number or homeless veterans and
contribute to a comprehensive, coordinated, and cost-effective
AB 639 (J. PÉREZ) Page 3
approach to respond to the full spectrum of housing and
service needs of our veterans.
2.CalVet Home Loan Program status . Since its inception in 1921,
the CalVet Home Loan Program has assisted over 420,000
veterans to purchase a home or farm. Over the last decade,
however, it has seen a sharp decline in activity. 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. While
recovery in the general housing market may increase homebuyer
demand among veterans, program participation depends largely
on how competitive CDVA's interest rates are with other loan
products, and CDVA has had difficulty competing against the
historically low interest rates available in the private
market in the last few years. In any event, CDVA's existing
CalVet bond authority far exceeds foreseeable demand.
3.Fiscal impact on the General Fund . The CalVet Home Loan
Program serves home buying veterans, and other than HCD's
general affordable housing programs, there is no comparable
program to serve the needs of veterans who need affordable
rental housing, including those who need supportive housing to
escape homelessness. This bill helps fill that critical gap.
Because there is general agreement on the policy merits of
meeting this need, the central question this bill poses is a
fiscal one. As discussed above, the current CalVet bonds act
like revenue bonds. CDVA repays them with mortgage payments
from its borrowers, and the state's General Fund is a backstop
that has never been called on. In order to make multifamily
housing rents, particularly those for homeless veterans,
affordable, public loans must minimize or eliminate debt
service payments by deferring principal and interest payments
to the end of the loan term. As a result, there will be no
amortized mortgage payments with which CDVA or HCD can repay
the bonds and that responsibility will fall to the General
Fund. The Assembly Appropriations Committee estimates that
annual debt service on the bonds this bill authorizes will
amount to $25 million per year, depending on interest rates.
4.Reporting requirement . The bill empowers HCD, in
collaboration with CDVA, to implement its provisions but
requires the California Housing Finance Agency to report
annually on HCD's implementation of the bill. The committee
may wish to consider placing the reporting requirement in
HCD's annual report or require a joint report from HCD and
CDVA. This would also resolve a chaptering conflict that the
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bill currently has with AB 1317 (Frazier).
5.Technical amendment . On page 7 lines 36-37 strike
"multifamily housing that is affordable, supportive, and
transitional" and insert "affordable multifamily supportive
housing and affordable multifamily transitional housing".
6.Double-referral . The Senate Rules Committee has referred this
bill to both this committee and the Committee on Veterans
Affairs.
Assembly Votes:
Floor: 77-0
Appr: 16-0
VA: 8-0
H&CD: 7-0
POSITIONS: (Communicated to the committee before noon on
Wednesday, June 26,
2013.)
SUPPORT:
Affirmed Housing Group
American Federation of State, County, and Municipal Employees
American Legion - Department of California
AMVETS - Department of California
Association for Los Angeles Deputy Sheriffs
Association of California Health Care Districts
Attorney General Kamala Harris
Burbank Housing Development Corporation
California Association of County Veterans Service Officers
California Association of Veteran Service Agencies
California Building Industry Association
California Conference of Carpenters
California Hospital Association
California Housing Consortium
California Housing Partnership Corporation
California Judges Association
California Labor Federation
California Latino Legislative Caucus
California Medical Association
California Nurses Association
California Professional Firefighters
California Rural Legal Assistance Foundation
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California Special Districts Association
California State Association of Counties
California State Commanders Veterans Council
California State Council of Service Employees
California State Sheriff's Association
Century Housing
City and County of San Francisco
City of Azusa
City of Burbank
City of Los Angeles
City of Murrieta
City of Oakland
City of Sacramento
City of San Jose
Corporation for Supportive Housing
County of Butte
County of Del Norte
County of Los Angeles
County of San Bernardino
County of Santa Clara
Housing California
JP Morgan Chase
League of California Cities
Los Angeles Area Chamber of Commerce
Los Angeles County Probation Officers Union
Los Angeles Homeless Services Authority
Los Angeles Police Protective League
Los Angeles Regional Reentry Partnership
New Directions
Riverside Sheriff's Association
Salvation Army Haven
San Diego Housing Commission
San Diego Housing Federation
St. Anthony Foundation
State Building and Construction Trades Council of California
State Treasurer Bill Lockyer
Swords to Plowshares
United Native Housing Development Corporation
United States Veterans Initiative
United Way of Greater Los Angeles
Urban Counties Caucus
Veterans of Foreign Wars - Department of California
Vietnam Veterans of America - California State Council
Western Center on Law and Poverty
OPPOSED: None received.
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