BILL ANALYSIS Ó AB 1109 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1109 (Bonilla) As Amended September 6, 2013 2/3 vote ----------------------------------------------------------------- |ASSEMBLY: |71-0 |(May 24, 2013) |SENATE: |38-0 |(September 12, | | | | | | |2013) | ----------------------------------------------------------------- Original Committee Reference: H. & C.D. SUMMARY : Allows a loan recipient under the capital development component of the Emergency Housing and Assistance Program (EHAP-CD) to transition the property from an emergency shelter or transitional housing to permanent supportive housing that serves people who are homeless or at risk of homelessness and still have the loan deferred and forgiven at the end of the loan term. The Senate amendments : 1)Limit the bill to transitions to permanent supportive housing that serves people who are homeless or at risk of homelessness, rather than transitions to any type of permanent affordable housing. 2)Require a project to obtain approval from the Department of Housing and Community Development (HCD) prior to a transition to permanent supportive housing to ensure that the proposed transition is consistent with all EHAP requirements. 3)Require HCD to evaluate the suitability of the building for use as permanent supportive housing and the project's financial feasibility in considering whether to approve a transition. 4)Require a loan term of 20 years from the beginning of the approved use as permanent supportive housing for a transitioned project. 5)Require HCD to terminate the loan and require repayment of the deferred loan in full if a transitioned property is no longer being used as permanent supportive housing during the loan term. AB 1109 Page 2 6)Include chaptering amendments to address conflicts between this bill and AB 873 (Chau) of the current legislative session. AS PASSED BY THE ASSEMBLY , this bill allowed a loan recipient under EHAP-CD to transition the property from an emergency shelter or transitional housing to permanent affordable housing and still have the loan deferred and forgiven at the end of the loan term. FISCAL EFFECT : According to the Senate Appropriations Committee: 1)Minor one-time costs, less than $50,000, for the Department of Housing and Community Development (HCD) to revise existing regulations to allow an exception to EHAP-CD repayment conditions for deferred loans. Minor ongoing costs to update loan documents for loan recipients who wish to convert a property to permanent affordable housing. (Emergency Housing and Assistance Fund) 2)Potential 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. COMMENTS : EHAP-CD funds the construction, rehabilitation, expansion, and site acquisition of emergency shelters and transitional housing for homeless individuals and families. The program offers deferred payment loans at 3% simple interest to local government agencies and nonprofit corporations. Loan terms range from five to 10 years based on the type of development activity and are forgiven when the term is complete. During the loan term, use of the property for anything other than a shelter or transitional housing triggers automatic loan repayment. Under EHAP, emergency shelters can provide housing for homeless individuals and families for up to six months, while transitional housing may provide shelter for up to 24 month. However, all new federal homeless assistance dollars are going AB 1109 Page 3 to support permanent housing solutions due to mounting evidence that for most populations, temporary shelter is more costly and less successful at reducing homelessness than permanent housing. Transitional housing providers have been able to renew their previous federal grants thus far, but they are not competitive for new monies and they do not increase the overall competitiveness of their Continuum of Care (a Continuum of Care is a geographical administrative unit through which homeless assistance providers in a specific area work together to apply for federal funding). AB 221 (Carter), Chapter 546, Statutes of 2011, allowed HCD to use EHAP funds for permanent supportive housing, but the bill only applied to new loans and did not give existing loan recipients the ability to convert. Thus, providers who have outstanding EHAP loans cannot transition their service model to compete for new federal funds because state law locks them in to the emergency shelter or transitional housing model until the term of their loan ends. This is true even if modifying their service model would allow them to better serve their target population. This bill addresses this issue by allowing existing EHAP-CD loan recipients to convert their facilities into permanent supportive housing for those individuals and families who are homeless or at risk of homelessness. HCD would have to evaluate whether the new use meets all requirements of the EHAP program, the project is financially feasible, and the building is suitable for permanent supportive housing before approving a transition. Analysis Prepared by : Anya Lawler / H. & C.D. / (916) 319-2085 FN: 0002622