BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 873 (Chau) - Emergency Housing and Assistance Program.
Amended: August 13, 2013 Policy Vote: T&H 10-0
Urgency: No Mandate: No
Hearing Date: August 19, 2013
Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 873 would establish new eligible uses and
priorities for funding under the Emergency Housing and
Assistance Program (EHAP), with an added focus on providing
permanent supportive housing for homeless families and
individuals.
Fiscal Impact:
One time of up to $50,000 for the Department of Housing and
Community Development (HCD) to implement the provisions of
the bill, including the adoption of emergency guidelines and
issuing notices of funding availability (NOFAs). HCD
indicates these costs would be absorbable.
One-time diversion of approximately $500,000 in general
obligation bond funds in 2015 from the Emergency Housing and
Assistance Fund to the Housing Rehabilitation Loan Fund for
use in the Multifamily Housing Program.
Potential future cost pressures to provide more operational
funds for supportive services that are offered in
conjunction with supportive housing. HCD programs that may
be subject to future cost pressures are the EHAP-operating
facility grant program and the Supportive Housing Program,
which are funded from bond funds and the General Fund.
Background: Under existing law, HCD administers the EHAP to fund
capital development activities for emergency shelters,
transitional housing, and safe havens that provide shelter and
supportive services for homeless individuals and families, and
to provide operating grants for emergency shelters, transitional
housing, and supportive services for homeless individuals and
families. The capital development activities provided under
EHAP-CD have historically been funded with general obligation
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bond funds, while operational funding provided through the
EHAP-operating facility grant program is supported by the
General Fund. Proposition 1C, the Housing and Emergency Shelter
Trust Fund Act of 2006, provided $50 million in general
obligation bond funds for EHAP-CD, nearly all of which has been
allocated.
HCD allocates EHAP-CD funds as grants in the form of forgivable
deferred loans with terms of five years for rehabilitation
projects, seven years for substantial rehabilitation, or ten
years for acquisition and rehabilitation or new construction.
All loans have a 3% simple interest rate, with deferred payments
as long as the project is used as an emergency shelter or
transitional housing, and the loan is forgiven in its entirety
at the end of the term. If the property subject to the loan is
no longer used as an emergency shelter or transitional housing
within the term of the loan, HCD terminates the grant and
requires repayment of the deferred loan in full.
Proposed Law: AB 873 would establish new eligible uses and
priorities for funding under EHAP. Specifically, this bill would
authorize HCD to:
Award EHAP capital development funds as grants in the form
of 20-year forgivable deferred loans for the conversion of
emergency shelters or transitional housing to permanent
supportive housing for homeless families or individuals.
Award EHAP operating facilities grants for rapidly
rehousing 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..
Award EHAP funds on a competitive statewide basis pursuant
to specified emergency guidelines until June 30, 2015. The
guidelines require that priority be given to conversions to
permanent supportive housing when awarding capital grants,
and to services associated with rapidly rehousing homeless
clients when awarding operating facilities grants.
The bill would also require HCD to transfer any unobligated
Proposition 46 and Proposition 1C bond funds remaining in the
Emergency Housing and Assistance Fund as of June 30, 2015 to the
Multifamily Housing Program for supportive housing purposes.
Any funds necessary for HCD's continued support for outstanding
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awards under the EHAP would be retained in the fund for future
state operations expenditures.
Related Legislation: AB 1109 (Bonilla), which was referred to
the Suspense File on August 12, 2013, would allow an exception
to repayment requirements for EHAP-CD loan recipients if the
property is converted from an emergency shelter or transitional
housing to permanent affordable housing for the homeless. Since
both AB 1109 and AB 873 amend the same section of law, both
bills will need to be amended to address chaptering conflicts
prior to final action by the Legislature.
Staff Comments: HCD indicates that there is currently a balance
of $10.6 million in the Emergency Housing and Assistance Fund.
Approximately $6.4 million is authorized for expenditure in the
2013-14 fiscal year. Of the remaining $4.2 million, HCD
indicates that approximately $3.7 million is in reserve for
continued state operations costs to administer the EHAP,
including long-term monitoring of outstanding deferred payment
forgivable loans. As such, there is only about $500,000 in
unobligated funds that will remain for transfer to the
Multifamily Housing Program on June 30, 2015.
Staff notes that permanent supportive housing that serves the
homeless generally has associated complementary supportive
services, such as drug and alcohol treatment, mental health
counseling, and workforce training. AB 873 authorizes HCD to
award EHAP operating facilities grant funding for services
associated with rapidly rehousing homeless clients, and allows
EHAP-CD funds to be used for converting emergency shelter and
transitional housing to permanent housing for homeless families
and individuals. These provisions could create additional
demand for services for the homeless, potentially creating cost
pressures to provide more state funding for EHAP operating
facility grants or the Supportive Housing Program, to pay for
those services.