Amended in Senate September 6, 2013

Amended in Senate September 3, 2013

Amended in Senate August 13, 2013

Amended in Senate July 2, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 873

Introduced by Assembly Member Chau

(Coauthor: Senator Torres)

February 22, 2013

An act to amend Sections 50802 and 50803 of the Health and Safety Code, relating to begin delete housing end delete begin insert housing, end insert and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 873, as amended, Chau. Housing: emergency housing and assistance funding.

Existing law requires the Department of Housing and Community Development to administer the Emergency Housing and Assistance Program. Under the program, moneys from the continuously appropriated Emergency Housing and Assistance Fund are available for the purposes of providing shelter, as specified, to homeless persons at as low a cost and as quickly as possible, without compromising the health and safety of shelter occupants, to encourage the move of homeless persons from shelters to a self-supporting environment as soon as possible, to encourage provision of services for as many persons at risk of homelessness as possible, to encourage compatible and effective funding of homeless services, and to encourage coordination among public agencies that fund or provide services to homeless individuals, as well as agencies that discharge people from their institutions.

Existing law requires the department to distribute funds appropriated for activities providing for capital development programs, including acquisition, leasing, construction, and rehabilitation of sites for emergency shelter and transitional housing for homeless persons, as grants in the form of forgivable deferred loans, as prescribed. Existing law requires the department to make funding available to each project as a loan with a term of 5 years for rehabilitation, 7 years for substantial rehabilitation, or 10 years for acquisition and rehabilitation or new construction.

This bill would authorize the department to also make funding available as a loan with a term of 20 years for conversion to permanent supportive housing for homeless families and individuals.

Existing law requires that grants awarded by the department pursuant to these provisions be used by a grant recipient to defray costs of eligible activities defined in department regulations.

This bill would provide that these grants may also be awarded pursuant to department requirements and would authorize the department to develop requirements that are not subject to review by the Office of Administrative Law, as specified. The bill would also expand eligible activities to include capital development loans for the conversion of emergency shelter or transitional housing to permanent supportive housing for homeless families or individuals, and the provision of effective approaches to rapidly rehouse homeless clients, including homeless system assessments, street outreach and housing and services engagement efforts, coordinated care services, housing location and stabilization services, and rental assistance costs, including deposits and costs necessary for occupancy. The bill would require the department to give priority for capital development funds to applicants proposing capital development loans for the conversion of emergency shelter or transitional housing to permanent supportive housing for homeless families or individuals and to give priority for noncapital development funds to applicants that propose effective approaches to rapidly rehouse homeless clients and that leverage additional funding sources or focus on high-cost users of more than one system of care.

The bill would require that the department, no later than June 30, 2015, transfer any unobligated Proposition 46 and Proposition 1C bond funds derived from bonds remaining in the Emergency Housing and Assistance Fund to the Housing Rehabilitation Loan Fund, less any funds needed for state operations to support outstanding awards as determined by the Department of Housing and Community Development, to be expended for the Multifamily Housing Program for supportive housing for a specified target population.

By authorizing the use of continuously appropriated funds for new purposes, this bill would make an appropriation.

begin insert

This bill would also incorporate changes in Section 50802 of the Health and Safety Code proposed by AB 1109, that would become operative on the date this bill becomes operative only if AB 1109 and this bill are both chaptered and become effective on or before January 1, 2014, and this bill is chaptered last.

end insert

Vote: ²⁄₃. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 50802 of the Health and Safety Code is
amended to read:

50802.  

(a) The department shall ensure that not less than 20
percent of the moneys in the Emergency Housing and Assistance
Fund shall be allocated to nonurban counties during any given
fiscal year. If the funds designated for facilities operation that are
allocated to nonurban counties are not awarded by the end of that
fiscal year, then those unencumbered funds shall be allocated in
the next fiscal year to urban counties. Funds for capital
development that are not awarded by the end of the second fiscal
year shall be awarded in the subsequent fiscal year to urban
counties.

(b) The amount of funds that the department allocates from the
Emergency Housing and Assistance Fund to each region, excluding
funds allocated pursuant to subdivision (a), shall be based upon a
formula that accords at least 20 percent weight to each of the
following factors:

(1) The relative number of persons in the region below the
poverty line according to the most recent federal census, updated,
if possible, with an estimate by the Department of Finance,
compared to the total of the urban counties.

(2) The relative number of persons unemployed within each
region, based on the most recent one-year period for which data
is available, compared to the total of the urban counties.

(c) Grant funds shall be disbursed as expeditiously as possible
by the department.

(d) The department shall use not more than 5 percent of the
amount available for funds pursuant to this chapter to defray the
department’s administrative costs pursuant to this chapter.

(e) Notwithstanding any other provision of this chapter, the
department shall distribute funds appropriated for purposes of the
activities specified in paragraphs (2) and (7) of subdivision (a) of
Section 50803 as grants in the form of forgivable deferred loans,
subject to all of the following:

(1) Funding shall be made available to each project as a loan
with a term of five years for rehabilitation, seven years for
substantial rehabilitation, 10 years for acquisition and rehabilitation
or new construction, or 20 years for conversion to permanent
supportive housing for homeless families and individuals. Each
deferred loan shall be secured by a deed of trust and promissory
note. Repayment of the loan shall be deferred as long as the project
is used as an emergency shelter begin insert , permanent supportive housing, end insert
or transitional housing. At the completion of the specified year
term, the loan shall be forgiven. If a transfer or conveyance of the
project property, however, occurs prior to that time that results in
the property no longer being used as an emergency shelter begin insert ,
permanent supportive housing, end insert or transitional housing, the
department shall terminate the grant and require the repayment of
the deferred loan in full.

(2) Applications for funding shall be made pursuant to
department-issued statewide “Notices of Funding Availability”
without the need for additional regulations.

(3) The department shall set forth the criteria for evaluating
applications in the “Notices of Funding Availability” and shall
make deferred loans based on those applications that best meet the
criteria.

(4) The department shall specify in the “Notice of Funding
Availability” both maximum and minimum grant amounts that
may be varied for urban and nonurban counties.

(5) Contracts for projects that have not begun construction
within the initial 12-month period shall be terminated and funds
reallocated. The department, however, may extend this period by
a period not to exceed 12 months.

begin insert

begin insert SEC. 1.5. end insert   

end insert

begin insert Section 50802 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

50802.  

(a) The department shall ensure that not less than 20
percent of the moneys in the Emergency Housing and Assistance
Fund shall be allocated to nonurban counties during any given
fiscal year. If the funds designated for facilities operation that are
allocated to nonurban counties are not awarded by the end of that
fiscal year, then those unencumbered funds shall be allocated in
the next fiscal year to urban counties. Funds for capital
development that are not awarded by the end of the second fiscal
year shall be awarded in the subsequent fiscal year to urban
counties.

(b) The amount of funds that the department allocates from the
Emergency Housing and Assistance Fund to each region, excluding
funds allocated pursuant to subdivision (a), shall be based upon a
formula that accords at least 20 percent weight to each of the
following factors:

(1) The relative number of persons in the region below the
poverty line according to the most recent federal census, updated,
if possible, with an estimate by the Department of Finance,
compared to the total of the urban counties.

(2) The relative number of persons unemployed within each
region, based on the most recent one-year period for which data
is available, compared to the total of the urban counties.

(c) Grant funds shall be disbursed as expeditiously as possible
by the department.

(d) The department shall use not more than 5 percent of the
amount available for funds pursuant to this chapter to defray the
department’s administrative costs pursuant to this chapter.

(e) Notwithstanding any other provision of this chapter, the
department shall distribute funds appropriated for purposes of the
activities specified in begin delete paragraph end delete begin insert paragraphs end insert (2) begin insert and (7) end insert of
subdivision (a) of Section 50803 as grants in the form of forgivable
deferred loans, subject to all of the following:

(1)  begin insert (A) end insert begin insert   end insert Funding shall be made available to each project as a
loan with a term of five years for rehabilitation, seven years for
substantial rehabilitation, begin delete or end delete 10 years for acquisition and
rehabilitation or new begin delete construction. end delete begin insert construction, or 20 years for
conversion to permanent supportive housing for homeless families
and individuals. end insert Each deferred loan shall be secured by a deed of
trust and promissory note. Repayment of the loan shall be deferred
as long as the project is used as an emergency shelter begin insert , permanent
supportive housing, end insert or transitional housing. At the completion of
the specified year term, the loan shall be forgiven. If a transfer or
conveyance of the project property, however, occurs prior to that
time that results in the property no longer being used as an
emergency shelter begin insert , permanent supportive housing, end insert or transitional
housing, the department shall terminate the grant and require the
repayment of the deferred loan in full.

begin insert

(B) If the property is transitioned from an emergency shelter
or transitional housing to permanent supportive housing, and
serves people who are homeless or at risk of homelessness, the
loan may also be deferred and forgiven according to subparagraph
(A), as if it had remained an emergency shelter or transitional
housing. Prior to a transition, a project shall obtain department
approval to transition to permanent supportive housing to ensure
that the proposed transition is consistent with this subdivision. In
considering whether to approve a transition, the department shall
evaluate the following factors: the suitability of the building for
use as permanent supportive housing and project financial
feasibility. A project transitioned to permanent supportive housing
pursuant to this subdivision shall have a loan term of 20 years
from the beginning of its approved use as permanent supportive
housing for people who are homeless or at risk of homelessness.
If a transitioned project property is no longer being used as
permanent supportive housing for people who are homeless or at
risk of homelessness, the department shall terminate the loan and
require repayment of the deferred loan in full.

end insert begin insert

(i) For purposes of this subparagraph, “permanent supportive
housing” has the same meaning as the term “supportive housing,”
as defined in paragraph (2) of subdivision (b) of Section 50675.14.

end insert begin insert

(ii) For purposes of this subparagraph, “people who are
homeless” means individuals described in Section 11302 of Title
42 of the United States Code, and paragraph (2) of subdivision
(e) of Section 11139.3 of the Government Code.

end insert

(2) Applications for funding shall be made pursuant to
department-issued statewide “Notices of Funding Availability”
without the need for additional regulations.

(3) The department shall set forth the criteria for evaluating
applications in the “Notices of Funding Availability” and shall
make deferred loans based on those applications that best meet the
criteria.

(4) The department shall specify in the “Notice of Funding
Availability” both maximum and minimum grant amounts that
may be varied for urban and nonurban counties.

(5) Contracts for projects that have not begun construction
within the initial 12-month period shall be terminated and funds
reallocated. The department, however, may extend this period by
a period not to exceed 12 months.

SEC. 2.  

Section 50803 of the Health and Safety Code is
amended to read:

50803.  

(a) Grants awarded by the department pursuant to this
chapter shall be used by a grant recipient to defray costs of eligible
activities defined in department regulations or guidelines,
including, but not limited to, any of the following activities:

(1) Operating facilities, including, but not limited to, operations
staff salaries, maintenance, repair, utilities, equipment, and debt
reduction.

(2) Providing for capital development programs, such as
acquisition, leasing, construction, and rehabilitation of sites for
emergency shelter and transitional housing for homeless persons.

(3) Administrative costs.

(4) Operating expenses relating to supervising and counseling
clients.

(5) Providing residential rental assistance.

(6) Leasing or renting rooms for provision of temporary shelter.

(7) Capital development loans for the conversion of emergency
shelter or transitional housing to permanent supportive housing
for homeless families or individuals. The department shall establish
the maximum loan limits for the loans in the notice of funding
availability.

(8) Providing effective approaches to rapidly rehouse homeless
clients. Eligible activities include, but are not limited to, homeless
system assessments, street outreach and housing and services
engagement efforts, coordinated care services, housing location
and stabilization services, and rental assistance costs, including
deposits and costs necessary for occupancy.

(b) Funds allocated to a nonurban county pursuant to subdivision
(a) of Section 50802 may be used to pay the cost of leasing or
renting individual units, hotel rooms, or motel rooms for use as
emergency shelters. No more than 15 percent of the funds allocated
to a region other than a nonurban county shall be expended for
this purpose.

(c) By regulation, the department shall establish a level, not to
exceed 5 percent of a grant award, which any eligible recipient
may use to defray administrative costs.

SEC. 3.  

(a) Notwithstanding any provision of Chapter 11.5
(commencing with Section 50800) of Part 2 of Division 31 of the
Health and Safety Code, the Department of Housing and
Community Development shall do all of the following with respect
to notices of funding availability issued on or after the effective
date of this act and prior to July 1, 2015:

(1) Make funding available on a competitive basis statewide.

(2) Give priority for capital development funds to applicants
proposing activities described in paragraph (7) of subdivision (a)
of Section 50803 of the Health and Safety Code.

(3) Give priority for noncapital development funds to applicants
that propose activities described in paragraph (8) of subdivision
(a) of Section 50803 and that leverage additional funding sources
or focus on high-cost users of more than one system of care.

(4) Accept applications from eligible organizations, public
housing authorities, tribal governments, and continuum of care
entities.

(b) The Department of Housing and Community Development
may award funds under the notices of funding available described
in subdivision (a) pursuant to requirements developed by the
department and included in the notices of funding available that
are not subject to the requirements of Chapter 3.5 (commencing
with Section 11340) of Part 1 of Title 2 of the Government Code.

(c) No later than June 30, 2015, the Department of Housing and
Community Development shall transfer any unobligated
Proposition 46 and Proposition 1C bond funds remaining in the
Emergency Housing and Assistance Fund to the Housing
Rehabilitation Loan Fund, less any funds needed for state
operations to support outstanding awards as determined by the
Department of Housing and Community Development, to be
expended for the Multifamily Housing Program authorized by
Chapter 6.7 (commencing with Section 50675) of Part 2 of Division
31 of the Health and Safety Code, to be used for supportive housing
for the target population identified in Section 50675.14.

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

Section 1.5 of this bill incorporates amendments to
Section 50802 of the Health and Safety Code proposed by both
this bill and Assembly Bill 1109. It shall only become operative if
(1) both bills are enacted and become effective on or before
January 1, 2014, (2) each bill amends Section 50802 of the Health
and Safety Code, and (3) this bill is enacted after Assembly Bill
1109, in which case Section 1 of this bill shall not become
operative.

end insert