BILL ANALYSIS Ó
AB 835
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Date of Hearing: April 30, 2013
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Mark Stone, Chair
AB 835 (Muratsuchi) - As Amended: March 14, 2013
SUBJECT : Child Care Facilities Financing
SUMMARY : Permits the Department of Housing and Community
Development (HCD) to renegotiate child care facility loan terms.
Specifically, this bill :
1)Authorizes HCD, with the agreement of the borrower, to amend
the terms of a loan originally entered into with the
California Technology, Trade and Commerce Agency with funding
provided by the Child Care and Development Facilities Direct
Loan Fund (Loan Fund), and guaranteed by the Child Care and
Development Facilities Loan Guaranty Fund (Guaranty Fund).
EXISTING LAW
1)Establishes the Loan Fund and the Guaranty Fund to be
administered by HCD in coordination with the State
Superintendent of Public Instruction (SSPI) for the purposes
of providing 30-year fixed rate facility loans to prospective
or licensed child care providers.
2)Requires the loans to be used for the following purposes:
a) To obtain, maintain, renew, expand, or revise a child
care license;
b) To make necessary health and safety improvements;
c) To make seismic improvements;
d) To provide access for disabled children; and
e) To expand upon or preserve existing child care
operations.
3)Reverts all loan repayments to the Loan Fund to the state's
general fund.
AB 835
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FISCAL EFFECT : Unknown
COMMENTS :
California Child Care Facilities Financing (CCFF) Program
In 2004, the state abolished the California Technology, Trade,
and Commerce Agency (TTCA) in an effort to streamline government
and reduce budget expenditures in light of the ongoing budget
shortfall at that time. Pursuant to SB 1097 (Committee on
Budget and Fiscal Review), Chapter 225, Statutes of 2004,
various components of the TTCA were transferred to other
agencies and departments as necessary, which included
transitioning the responsibility for the CCFF Program to HCD.
The purpose of the CCFF program was to provide 30-year amortized
low interest loans to prospective and licensed child care
centers to help increase the availability of child care in
California.
Unfortunately, not many child care agencies took advantage of
the CCFF program, and its loan repayments were reverted to the
state's general fund in 2008 through the adoption of AB 1389
(Committee on Budget) Chapter 751, Statutes of 2008, which
maintained the Loan Fund and the Guaranty Fund for purposes of
seeing out the repayment of loans issued prior to 2008, but
redirects all repayments into the state's general fund.
Lack of Aligned HCD Authority to Renegotiate CCFF Program Loan
Terms
One of the unintended consequences of the transfer of the CCFF
Program from the abolished TTCA to HCD was the lack of authority
to renegotiate loan terms; authority the HCD currently has for
other loans under their jurisdiction.
This measure simply seeks to provide HCD the authority it
otherwise has for other loans it administers to include CCFF
Program Loans it is now required to administer as a result of
the abolishment and transfer of administrative responsibilities
of the former TTCA.
According to HCD, of the 12 CCFF Program Loans transferred from
the TTCA to HCD, eight are currently in repayment and four have
defaulted with two of them entering into bankruptcy status.
This measure raises the question of whether the four programs
currently in default could have been kept from going into
default if HCD had been previously granted the authority to
AB 835
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renegotiate the terms of their loans.
Need for the Bill
Writing to the need of the bill, the author states:
When the Governor and Legislature reorganize or merge
departments and agencies, some programs may be
inadvertently affected. In the case of the CCFF Program,
the program was transferred to HCD. Unfortunately, when
the program was transferred the statute was not updated to
reflect the change. As a matter of practicality, HCD
should be given statutory oversight of the CCFF Program so
that it can effectively manage loans issued through the
program.
AB 835 is necessary to provide the HCD Department with the
statutory authority to prevent non-profit organizations -
such as the Harbor City Boys and Girls Club - from being
unnecessarily foreclosed upon. This bill allows loan
modifications as they would have been under the [TTCA] had
it not been eliminated.
REGISTERED SUPPORT / OPPOSITION :
Support
Boys and Girls Clubs of the South Bay
AB 835
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Opposition
None on file
Analysis Prepared by : Chris Reefe / HUM. S. / (916) 319-2089