BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1929
                                                                  Page 1

          Date of Hearing:   April 30, 2014

               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
                                   Ed Chau, Chair
                  AB 1929 (Chau) - As Introduced:  February 19, 2014

                               AS PROPOSED TO BE AMENDED

          SUBJECT  :   Mental Health Services Act housing program

           SUMMARY  :    Expressly authorizes county mental health  
          departments, the Department of Health Care Services (DHCS), and  
          the California Housing Finance Agency (CalHFA) to continue  
          partnering in the development of permanent supportive housing  
          for people with mental illness.  Specifically,  this bill  : 

          1)Expressly authorizes a county mental health department to  
            deposit Mental Health Services Act (MHSA) funding with CalHFA  
            and receive assistance from CalHFA in developing supportive  
            housing units for people with mental illness.

          2)Provides that CalHFA will continue to coordinate with DHCS to  
            administer the use of these funds.

          3)Authorizes CalHFA to charge an administrative fee, paid from a  
            county's MHSA funds, equal to 1% of future deposits, unless a  
            county has committed fewer than $1 million, in which case the  
            agency may charge up to 1.5%, but not to exceed the reasonable  
            costs of providing services, to cover the cost of providing  
            this assistance.

          4)Releases MHSA housing program funds currently held by CalHFA  
            to their respective counties, upon request of those counties,  
            to be used for the purpose of providing housing assistance for  
            people with mental illness who are homeless or at risk of  
            homelessness.

           EXISTING LAW  : 

          1)Imposes a tax of 1% on personal earnings over $1 million for  
            the purpose of financing new or expanded mental health  
            services, pursuant to Proposition 63, the Mental Health  
            Services Act (MHSA). 

          2)Requires the State Department of Mental Health (DMH) to  








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            provide counties with resources to support county mental  
            health programs and monitor progress toward statewide goals  
            for children, transition age youth, adults, older adults, and  
            families, and addresses a broad continuum of prevention, early  
            intervention and service needs and the necessary  
            infrastructure, technology and training elements to support  
            this system.

          3)Establishes the MHSA housing program, which provides permanent  
            supportive housing for people with mental illness, and  
            allocates up to $75 million per year for this purpose.  
            (Executive Order S-07-06)  

          4)Authorizes CalHFA to finance permanent supportive housing for  
            people with mental illness.  (Health & Safety Code Sections  
            51050.1, 51312-51318)

          5)Allows the Legislature to add provisions to clarify procedures  
            and terms of the MHSA by a majority vote.

           FISCAL EFFECT  :   Unknown.

           COMMENTS  :   

           Background:  
           
          In 2004, California voters approved Proposition 63: the MHSA.   
          The MHSA imposes a 1% tax on personal earnings over $1 million  
          to fund county-run mental health programs.  Through Executive  
          Order S-07-06 in 2006, Governor Schwarzenegger directed the  
          creation of the MHSA housing program, with a stated goal of  
          providing 10,000 permanent supportive housing units for  
          individuals with mental illness and their families and an  
          allocation of up to $75 million per year in MHSA funds for this  
          purpose. SB 257 (Chesbro), Chapter 748, Statutes of 2006,  
          codified CalHFA's authority to finance permanent supportive  
          housing for people with mental illness and directed CalHFA, in  
          conjunction with DMH and the Department of Housing and Community  
          Development (HCD) to present a plan to the Legislature for the  
          use of Proposition 63 funds for the development of supportive  
          housing projects.

          In 2007, county mental health departments agreed to a one-time  
          set aside of $400 million of Proposition 63 revenue with CalHFA.  
           These funds were allocated these funds to all but the eight  








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          least populated counties for the purpose of building permanent  
          supportive housing for people with mental illness who are  
          homeless or at risk of homelessness.   Of this $400 million,  
          counties were authorized to use $75 million per year for capital  
          costs and $40 million per year for operating and maintenance  
          costs. 

          To administer the $400 million allocated for the MHSA housing  
          program, a partnership was created between CalHFA and the  
          Department of Mental Health (DMH). DMH was subsequently folded  
          into the Department of Health Care Services (DHCS) during  
          reorganization in 2013.  CalHFA underwrites the requests for  
          capital funds and capitalizes operating expenses. DHCS evaluates  
          each applicant's proposed target population and supportive  
          services plan. Once funds are awarded, CalHFA oversees all  
          development and financial aspects of the project and DHCS  
          oversees the provision of services. CalHFA also provides  
          technical assistance to county mental health departments to  
          select special needs housing that would best meet the needs of a  
          county's residents with mental illness, and charges an  
          administrative fee for this assistance.  As a result of  
          partnering with CalHFA, many counties have created permanent  
          supportive housing units for homeless people with mental  
          illness.
            
          While most counties have already expended their share of the  
          $400 million allocation, others have not because they received  
          small allocations that do not make construction of housing units  
          feasible. These funds reside with the State, and releasing them  
          to their respective counties will give these counties additional  
          flexibility in providing housing assistance to residents with  
          mental illness.  AB 1929 defines "housing assistance" for  
          purposes of these released funds as including, but not limited  
          to, rental assistance or capitalized operating subsidies,  
          housing relocation assistance, security deposits, utility  
          deposits, or other move-in cost assistance, utility payments,  
          moving cost assistance, and capital funding to build or  
          rehabilitate housing affordable to people experiencing  
          homelessness or at risk of homelessness.  
           
          Counties currently receive their MHSA allocations directly, and  
          county mental health departments have discretion to dedicate  
          additional MHSA funding toward housing. Some larger counties  
          have indicated they would like to deposit funds into the housing  
          program and have CalHFA continue to provide technical assistance  








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          to select housing projects.  
                                                             
           Purpose of the Bill  :  Supportive housing has proven to be an  
          effective strategy for reducing homelessness among those with  
          mental illness.  At any given moment more than 133,000  
          Californians are homeless. Of these Californians, roughly 33,800  
          - or 25% - are considered chronically homeless.  According to  
          researchers, at least one-third of chronically homeless people  
          are mentally ill.

          AB 1929 expressly authorizes county mental health departments,  
          CalHFA, and DHCS to partner in the development of permanent  
          supportive housing for people with mental illness.  County  
          mental health departments may continue to deposit MHSA funding  
          with CalHFA.  In return, counties may receive technical  
          assistance from CalHFA, as well as assistance with financing the  
          acquisition, construction, rehabilitation, refinancing, or  
          development of supportive housing units for people with mental  
          illness. CalHFA is authorized to charge counties a fee, paid  
          from MHSA funds, for providing this assistance.

          Additionally, this bill releases unexpended funds from the  
          original $400 million allocation to their respective counties,  
          upon request of those counties.  As these funds were originally  
          set aside for housing purposes, counties must use them to  
          provide housing assistance for people with mental illness who  
          are homeless or at risk of homelessness. Releasing these funds  
          directly to the counties will better enable them to utilize  
          these funds for housing assistance.

          Below is a mock-up of the bill as proposed to be amended:


          SECTION 1.

           The Legislature finds and declares all of the following:

          (a) The Mental Health Services Act (hereafter, the MHSA), an  
          initiative measure approved by the voters in November 2004 as  
          Proposition 63, provides funding for local assistance for  
          designated mental health programs.

          (b) A critical component of the success of community services  
          for persons with mental illness is the availability of  
          supportive housing.








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          (c )  It is the intent of the Legislature that the California  
          Housing Finance Agency (CalHFA) continue the MHSA housing  
          program.   The State Department of Mental Health, CalHFA, and the  
          County Mental Health Directors Association partnered together to  
          administer a housing program under which $400,000,000 in MHSA  
          funds were initially made available to finance the capital costs  
          associated with the development, acquisition, construction, or  
          rehabilitation, or all, of permanent supportive housing for  
          individuals with mental illness and their families, including  
          homeless individuals with mental illness and their families.
           
           (d)  Through Executive Order S-07-06 in 2006, Governor  
          Schwarzenegger directed the creation of the MHSA housing  
          program.  The Department of Mental Health, in consultation with  
          the California Mental Health Directors Association, was directed  
          to allocate up to seventy-five million dollars ($75,000,000)  
          annually in MHSA funding to finance the development,  
          acquisition, construction, and/or rehabilitation of 10,000  
          permanent supportive housing units for individuals with mental  
          illness and their families, especially homeless individuals with  
          mental illness and their families.

          (e) SB 257 (Chesbro), Chapter 748, Statutes of 2006, authorized  
          CalHFAto finance permanent supportive housing for individuals  
          with mental illness.  SB 257 also directed CalHFA, in  
          conjunction with the Department of Mental Health Services (DMH)  
          and the Department of Housing and Community Development (HCD) to  
          present a plan to the Legislature for the use of MHSA funds for  
          the development of supportive housing projects. 

           (f)  In 2007, county mental health departments agreed to set  
          aside $400 million of Proposition 63 revenue with CalHFA, and  
          allocate these funds to all but the eight least populated  
          counties for the purpose of building permanent supportive  
          housing. Counties were authorized to use $75,000,000 per year  
          for capital costs and $40,000,000 per year for operating and  
          maintenance costs.  While most counties have already expended  
          their share of these funds, others have not because they  
          received small allocations that do not make construction of  
          housing units feasible.  Releasing these funds to their  
          respective counties will enable these counties to better utilize  
          these funds for housing support and assistance for persons with  
          serious mental illness and homeless or at risk of homelessness.









                                                                 AB 1929
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          (g)   Counties currently receive a direct allocation of MHSA  
          funds, and have the discretion to dedicate additional funds for  
          supportive housing purposes.    Funding under the MHSA has is  
          available to local agencies for development of supportive  
          housing.   However, the complexity of the process surrounding the  
          financing and development of capital projects presents obstacles  
          to the development of this housing in sufficient quantities.    
           Some counties have found it beneficial to continue utilizing  
          CalHFA's assistance, given the complexity of developing  
          supportive housing.
           
          (  h  ) The purpose of this act is to provide a statutory structure  
          to  promote and  facilitate this process by authorizing county  
          mental health departments to more fully utilize   the  MHSA funds  
          for housing purposes, including  the assistance of  the   CalHFA.   
           California Housing Finance Agency.  

           SEC. 2.

           Section 51312.5 is added to the Health and Safety Code, to  
          read:

           (a) A county mental health department may deposit with the  
          agency funding received by the county under the Mental   h  Health   
          Services Act for the development of housing to meet the special  
          housing needs of persons with mental illness.  

           (b) The agency may receive MHSA funding from a county to finance  
          the acquisition, construction, rehabilitation, refinancing, or  
          development of special needs housing for persons with mental  
          illness. The agency shall continue its coordination with DHCS to  
          administer the use of these funds.
          
           (c) The agency may enter into financial and other agreements  
          with the county, and other agencies as necessary, to commit  
          sufficient county funds derived from the MHSA, including, but  
          not limited to, funds from future allocations   , for the purpose  
          of securing revenue bonds issued by the agency under this  
          chapter for the purposes of meeting the special housing needs of  
          persons with mental illness.
            
          (d) The agency shall provide technical assistance to a county  
          mental health department as necessary to assist the county in  
          selecting the special needs housing that would best meet the  
          needs of the county's residents with mental illness.








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           (e)  The agency may charge the county a fee  , of up to 1 percent  
          of future allocations, to cover the reasonable costs incurred by  
          the agency  for providing assistance under this  chapter not to  
          exceed the actual costs of those services  .  chapter, unless the  
          county has committed fewer than one million dollars ($1,000,000)  
          in which case the agency may charge the county a fee of up to  
          1.5 percent of future allocations.  These fees may be paid from  
          the county MHSA funds. 

          (  f) The agency shall release unexpended MHSA housing funding  
          from the initial four-hundred-million-dollars ($400,000,000)  
          allocation upon the request of the respective county. The county  
          shall dedicate these funds, within one year of receipt of the  
          funds from the agency, to providing housing assistance to  
          persons with serious mental illness who are homeless, or  
          mentally ill persons at risk of being homeless. The county shall  
          track the expenditure of these funds and report these  
          expenditures to the agency. For purposes of this subdivision,  
          "housing assistance" includes, but is not limited to, each of  
          the following:

          1)Rental assistance or capitalized operating subsidies.

          2)Housing relocation services.

          3)Security deposits, utility deposits, or other move-in cost  
            assistance.

          4)Utility payments.

          5)Moving cost assistance.

          6)Capital funding to build or rehabilitate affordable housing  
            for homeless, mentally ill persons or mentally ill persons at  
            risk of being homeless.


           SEC. 3.

           The Legislature finds and declares that this act clarifies  
          procedures and terms of the Mental Health Services Act within  
          the meaning of Section 18 of the Mental Health Services Act. 










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           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Council of Community Mental Health Agencies
          Housing California
          National Alliance on Mental Illness
          Mental Health America of California
          California Psychiatric Association
          The California Chapter of the American College of Emergency  
          Physicians
          Western Center of Law and Poverty

           Opposition 
           
          None on file
           
          Analysis Prepared by  :    Rebecca Rabovsky / H. & C.D. / (916)  
          319-2085