BILL ANALYSIS Ó
AB 835
Page 1
ASSEMBLY THIRD READING
AB 835 (Muratsuchi)
As Amended March 14, 2013
Majority vote
HUMAN SERVICES 5-0 APPROPRIATIONS 13-4
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|Ayes:|Stone, Maienschein, |Ayes:|Gatto, Bocanegra, |
| |Ammiano, | |Bradford, |
| |Ian Calderon, Garcia | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Rendon, Linder, Pan, |
| | | |Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Wagner |
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SUMMARY : Permits the Department of Housing and Community
Development (HCD) to renegotiate child care facility loan terms.
Specifically, this bill 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).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, there are no significant costs associated with this
legislation.
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 (Budget and Fiscal
Review Committee), 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
AB 835
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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
(Budget Committee) 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
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.
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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.
Analysis Prepared by : Chris Reefe / HUM. S. / (916) 319-2089
FN: 0000601