BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1109
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1109 (Bonilla)
          As Amended  September 6, 2013
          2/3 vote
           
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          |ASSEMBLY:  |71-0 |(May 24, 2013)  |SENATE: |38-0 |(September 12, |
          |           |     |                |        |     |2013)          |
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           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
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          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
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          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


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