BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 639
Author: John A. Pérez (D), et al.
Amended: 9/6/13 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 VETERANS AFFAIRS COMMITTEE : 7-0, 7/9/13
AYES: Hueso, Knight, Block, Correa, Lieu, Nielsen, Roth
NO VOTE RECORDED: Vacancy
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/30/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 77-0, 5/29/13 - See last page for vote
SUBJECT : Veterans Housing and Homeless Prevention Act of 2014
SOURCE : California Association of Veteran Services Agencies
Corporation for Supportive Housing
DIGEST : This bill authorizes the issuance of $600 million in
general obligation (GO) bonds for the acquisition, construction,
rehabilitation, and preservation of affordable multifamily
supportive housing, affordable multifamily transitional housing,
or related facilities for veterans and their families - if
approved by the voters at the June, 2014, General Election.
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Senate Floor Amendments of 9/6/13 move the measure to the June
2014 ballot, limit administrative costs of implementing the bill
to 5%, remove references to funding services, require that 50%
of the funds awarded for capital development serve extremely
low-income households and that 60% of these units be supportive
housing, and address other concerns of the administration.
Note: These funds are taken from the approximately $1.1
billion in remaining bond authority under the Home Loan
Program (Program) managed by the Department of Veterans
Affairs (CalVet).
ANALYSIS : Since 1921, CalVet 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 Program receives funding from the issuance of GO 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 GO
bonds, the state's General Fund has never contributed to
repaying the bonds as CalVet repays the bonds with the mortgage
payments its borrowers make. In practice, therefore, these
bonds are like revenue bonds. To date, CalVet 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:
1.Subject to voter approval on the June 3, 2014 ballot, reduces
the Proposition 12 bonding authority for the Program from $900
million to $300 million and authorizes issuance of $600
million in GO bonds for the acquisition, construction,
rehabilitation, and preservation of affordable multifamily
supportive housing, affordable multifamily transitional
housing, affordable rental housing, or related facilities for
veterans and their families to allow veterans to access and
maintain housing stability.
2.Defines the following terms:
A. "Supportive housing" has the same meaning as defined in
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paragraph (2) of subdivision (b) of Section 50675.14 of the
Health and Safety Code, but is not restrictive to only
projects with five or more units.
B. "Transitional housing" has the same meaning as defined
in subdivision (h) of Section 50675.2 of the Health and
Safety Code, but is not restrictive to only projects with
five or more units.
C. "Affordable rental housing" shall mean a rental housing
development, as defined in subdivision (d) of Section
50675.2 of the Health and Safety Code, with affordable
rents, as defined in subdivision (a) of Section 50675.2 of
the Health and Safety Code, but neither definition is
restrictive to only projects with five or more units.
D. "Veteran" means any person who served in the active
military, naval, or air service of the United States, or as
a member of the National Guard who was called to and
released from active duty or active service, for a period
of not less than 90 consecutive days or was discharged from
the service due to a service-connected disability within
that 90-day period.
1.Establishes CalVet as the program board.
2.Establishes the Housing for Veterans Finance Committee
(Committee), solely for the purpose of authorizing the
issuance and sale of the GO bonds authorized by the Program.
Provides that the Committee consists of the Controller; the
Treasurer; the Director of Finance; the Secretary of Business,
Consumer Services, and Housing; and the Secretary of Veterans
Affairs, or their designated representatives. Designates the
Treasurer as Committee Chair.
3.Requires the California Housing Finance Agency, the Department
of Housing and Community Development (HCD), and the CalVet
(departments) work collaboratively pursuant to the memorandum
of understanding to carry out the duties and functions of this
bill. Requires no later than August 15, 2014, that the
departments enter into a memorandum of understanding to
address their respective and shared responsibilities in
implementing, overseeing, and evaluating the Program and to
provide it to both budget committees of both legislative
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houses.
4.Requires the departments:
A. Establish and implement programs for the above purposes.
B. Leverage public and nonprofit program and fiscal
resources.
C. Promote public private partnerships.
D. Ensure program guidelines and terms provide threshold
requirements or scoring criteria, or both, to advance
applicants with experience in combining permanent or
transitional housing, or both, with supportive services for
veterans, or for partnering with housing developers or
service providers with experience offering housing or
services to veterans.
1.Provides that the Program funds be expended 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.
2.Requires the departments ensure at least 50% of funds awarded
for capital development under this bill provide housing to
veteran households with extremely low incomes, as defined in
Section 50106 of the Health and Safety Code.
3.Requires, in determining whether a potential tenant is
eligible for supportive, affordable, or transitional housing
targeted to extremely low income households under this bill,
eligibility be take into consideration all of a household's
income sources upon initial tenancy.
4.Requires at least 60% of units funded targeting extremely
low-income households shall be supportive housing.
5.Provides this bill shall not deter the departments from
funding projects serving mixed-income populations.
6.Provides the departments may review, adopt, amend, and repeal
guidelines or terms, or both, to implement this bill. Any
guidelines or terms adopted to implement this bill are not be
subject to the Administrative Procedures Act.
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7.Prohibits the departments from purchasing, operating, or
managing properties, except in the event of a foreclosure on a
borrower or grantee.
8.Establishes a stakeholder process for developing program
guidelines that shall include, but not be limited to,
organizations that have experience providing housing or
homeless services, or both, to veterans, housing developers,
and public and private agencies that serve the veteran
population.
9.Allows the Legislature to amend, by majority vote, 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.
10.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.
11.Requires HCD's annual report to include an evaluation, in
collaboration with CalVet, of any program established by HCD
to implement this bill.
12.Limits administrative costs to 5%.
Background
CalVet Home Loan Program . CalVet has been making low-interest
financing available to qualified veterans since 1921, and to
date, more than 430,000 veterans have benefited from loans
provided by the Program.
CalVet finances new and existing single-family homes, farms,
condominiums and mobilehomes on land owned by the veteran or in
rental parks by acquiring property selected by the veteran and
reselling the property to the veteran under a land sale contract
(Contract of Purchase). Under a Contract of Purchase, the
veteran holds an equitable interest, and CalVet holds legal
title to the property. The Program also provides home
improvement loans, construction loans and conditional commitment
(rehabilitation) loans. There are no purchase price
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restrictions on the properties which can be purchased with
CalVet bond funds, nor are there income limitations on the
veteran borrower.
The program is financed by bonds. While those bonds are GO
bonds, they operate more like revenue bonds in that they are
repaid by CalVet loan holders through the payment of principal
and interest on their loans. The bonds are backed by the full
faith and credit of the State of California and must be
authorized by a vote of the people at a statewide election. The
GO bonds used to finance the program are 30-year bonds we set up
all new loans for 30-year terms.
CalVet is a "full service" lender. Veterans can obtain direct
financing through the Program, as well as loan servicing and
certain home protection coverage (Fire and Hazard insurance,
Disaster Indemnity coverage for earthquake and flood, and Life
and Disability insurance through a policy with an independent
vendor).
To be eligible for a CalVet loan, an individual must have
received a discharge classified as Honorable or Under Honorable
Conditions, and served a minimum of 90 days active duty (not
including active duty for training purposes only). There are
exceptions to the 90 days service requirement for veterans who:
1.Were discharged sooner due to a service-connected disability,
or
2.Are eligible to receive a U.S. military campaign or
expeditionary medal, or
3.Were called to active duty from the Reserves or National Guard
due to a Presidential Executive Order.
Current members of the California National Guard or the U.S.
Military Reserves who have served a minimum of one year of a six
year obligation are also eligible provided they qualify as first
time home buyers or purchase properties located in certain
targeted areas.
CalVet home loans are funded through the sale of tax-exempt
bonds. The Program has been totally self-supporting and no
taxpayer funds have been used to repay its bonds.
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Program-eligible housing . Historically, the Program has focused
on traditional, single-family residential structures; however,
veterans' housing needs have changed somewhat in recent decades
as the state becomes increasingly urbanized and less rural and
the lingering effects of the economic downturn.
In 2010 the Legislature enacted AB 2087 (Torres, Chapter 542)
which expands the definition of "home" under the provisions of
the Home Loan Program to include residences with two to four
units.
In 2011 the Legislature enacted AB 1084 (Davis, Chapter 377)
which expands the definition of loan-eligible "cooperative
housing corporation" to include a shared equity cooperative.
The National Association of Housing Cooperatives describes
cooperative housing as "the coming together of people in a
democratic basis to own or control the housing and/or community
facilities in which they live." Typically this is accomplished
by establishing a not-for-profit corporation. Like any
corporation, ownership of the assets (real estate) is
accomplished through ownership of stock in the company. Rather
than paying a mortgage payment each month, each tenant
(stockowner) pays his/her share of the total operating costs of
the corporation. Benefits to the veteran under such an
arrangement include establishing personal income tax deductions,
lower turnover rates, lower real estate tax (in some local
areas), controlled maintenance costs, and resident participation
and control.
Declining program participation . While the Program has assisted
over 430,000 veterans over the years, it has seen a sharp
decline in activity over the last decade. This decline is due
to both the economic recession and the fact that interest rates
offered under the Program are not competitive with interest
rates offered by commercial lenders. 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
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Total debt service of approximately $25 million annually
(General).
Approximately $220,000 in one-time ballot printing/mailing
costs (General).
SUPPORT : (Verified 8/30/13)
California Association of Veteran Services Agencies (co-source)
Corporation for Supportive Housing (co-source)
Attorney General Kamala Harris
State Treasurer Bill Lockyer
Administrators Association of California
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
Burbank Housing Development Corporation
Butte County Board of Supervisors
California Association of Counties
California Association of Food Banks
California Building Industry Association
California Conference of Carpenters
California Housing Consortium
California Judges Association
California Labor Federation
California Medical Association
California Nurses Association
California Professional Firefighters
California Rural Legal Assistance Foundation
California Special Districts Association
California Special Districts Association
California State Association of Counties
California State Council of Service Employees
California State Sheriff's Association
Century Housing
Cities of Azusa, Burbank, Los Angeles, Rancho Murrieta, Oakland,
Sacramento, San
Jose and Whittier
City and County of San Francisco
Counties of Butte, Del Norte, Los Angeles, San Bernardino, and
Santa Clara
County Alcohol and Drug Program
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Housing California
JP Morgan Chase
League of California Cities
Los Angeles Area Chamber of Commerce
Los Angeles Business Leaders Task Force
Los Angeles County Board of Supervisors
Los Angeles County Probation Officers Union
Los Angeles County Sheriff's Department
Los Angeles Homeless Services Authority
Los Angeles Police Protective League
Los Angeles Regional Reentry Partnership
New Directions, Inc.
Riverside Sheriff's Association
Salvation Army Haven
San Diego Gas and Electric
San Diego Housing Commission
San Diego Housing Federation
Southern California Gas Company
St. Anthony Foundation
State Building and Construction Trades Council of California
Swords to Plowshares
U.S. VETS
United Native Housing Development Corporation
United Way of Greater Los Angeles
Urban Counties Caucus
Veterans of Foreign Wars - Department of California
Veterans Village of San Diego
Vietnam Veterans of America - California State Council
Western Center on Law and Poverty
ARGUMENTS IN SUPPORT : According to the author, CalVet has
roughly $1.1 billion in remaining bond authority for its 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 Program to meet future needs. Ultimately, the
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bill will reduce the number or homeless veterans and contribute
to a comprehensive, coordinated, and cost-effective approach to
respond to the full spectrum of housing and service needs of our
veterans.
ASSEMBLY FLOOR : 77-0, 5/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Jones, Jones-Sawyer, Levine, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Holden, Linder, Vacancy
JA:ej 9/9/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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