BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1929| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT Bill No: AB 1929 Author: Chau (D) Amended: 6/26/14 in Senate Vote: 21 SENATE HEALTH COMMITTEE : 8-0, 6/18/14 AYES: Hernandez, Morrell, Beall, DeSaulnier, Evans, Monning, Nielsen, Wolk NO VOTE RECORDED: De León SENATE TRANSPORTATION & HOUSING COMMITTEE : 11-0, 6/24/14 AYES: DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso, Lara, Liu, Pavley, Roth, Wyland SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 77-0, 5/27/14 (Consent) - See last page for vote SUBJECT : California Housing Finance Agency: Mental Health Services Act funding: special needs housing for person with mental illness SOURCE : Author DIGEST : This bill allows county mental health departments to deposit Proposition 63 (Mental Health Services Act, MHSA) funding with the California Housing Finance Agency (CalHFA), as specified. This bill allows CalHFA to use those funds, as specified, for special housing needs for those with mental CONTINUED AB 1929 Page 2 illness. This bill requires CalHFA to provide technical assistance to counties, as specified, and allows CalHFA to charge a fee to counties of up to 1.5% of the MHSA loan amount per project, as specified. This bill requires counties to dedicate funds, as specified, to provide housing assistance to those with serious mental illness who are homeless or to the mentally ill at risk of being homeless. ANALYSIS : Existing law: 1.Authorizes CalHFA to finance permanent special needs housing, including for those with mental health illness. 2.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. 3.Imposes a tax of 1% on personal earnings of over $1 million for the purpose of financing new or expanded mental health services, pursuant to the MHSA. Allows the Legislature to add provisions to clarify procedures and terms of the MHSA by a majority vote. This bill: 1.Allows a county mental health department to deposit MHSA funding with CalHFA to develop housing to meet the special housing needs of those with mental illness. 2.Allows CalHFA to receive MHSA funding from counties to finance the acquisition, construction, rehabilitation, refinancing, or development of special needs housing for those with mental illness. Requires CalHFA to coordinate with the Department of Health Care Services (DHCS) to administer the use of the MHSA funds. 3.Allows CalHFA to enter into financial and other agreements with county and other agencies to commit sufficient county MHSA funds, including future allocations. 4.Requires CalHFA to provide technical assistance to county mental health departments as necessary to assist the county in CONTINUED AB 1929 Page 3 selecting special needs housing that best meets the needs of county residents with mental illness. 5.Allows CalHFA to charge a county a fee of up to 1% of future allocations to cover the reasonable costs incurred by CalHFA for providing technical assistance. Allows CalHFA to charge a county a fee of up to 1.5% of the MHSA loan amount per project, if the county has committed less than $1 million. Allows the fees to be paid from the county's MHSA funds. 6.Requires CalHFA to release unencumbered MHSA funding from the initial $400 million allocation upon request of the respective county. Requires the county to dedicate the funds, within one year of receipt, to providing housing assistance to those with serious mental illness who are homeless or to the mentally ill at risk of being homeless. Requires the county to track expenditure of the funds and report to CalHFA. Defines "housing assistance" to include, but is not limited to: A. Rental assistance or capitalized operating subsidies; B. Housing relocation services; C. Security deposits, utility deposits, or other move-in cost assistance; D. Utility payments; E. Moving cost assistance; F. Capital funding to build or rehabilitate affordable housing for homeless; or, mentally ill people or for the mentally ill at risk of being homeless. 7.Specifies that these provisions do not preclude a county from depositing funding from sources other than the funds derived from the MHSA with CalHFA for the purpose of developing supportive housing for persons with mental illness. 8.Specifies that it is the Legislature's intent that CalHFA continue the MHSA Housing Program. Comments CONTINUED AB 1929 Page 4 According to the author's office, 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. This bill 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 unencumbered 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. In 2004, California voters approved Proposition 63 (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 to provide, on behalf of counties, both capital and operating subsidy funding for the development of permanent supportive housing for individuals with serious mental illness and who are homeless or at risk of homelessness. The Executive Order stated a goal of providing 10,000 permanent supportive housing units for individuals with mental illness and their families. To administer the MHSA Housing Program, CalHFA and the Department of Mental Health -subsequently folded into DHCS - created a partnership. CalHFA underwrites the requests for CONTINUED AB 1929 Page 5 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. In 2007, 50 county mental health departments agreed to a one-time set-aside of $400 million of MHSA revenue for the MHSA Housing Program to build an estimated 2,500 units of permanent supportive housing for people with mental illness who are homeless or at risk of homelessness. While most counties have already used their share of the $400 million allocation, others have not because they received small allocations that do not make construction of housing units feasible. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 8/5/14) California American College of Emergency Physicians California Council of Community Mental Health Agencies California Mental Health Directors Association California Psychiatric Association California Rural Legal Assistance Foundation Housing California Mental Health America of California National Alliance on Mental Illness, California National Association of Social Workers, California Chapter San Diego Housing Federation Western Center on Law and Poverty ARGUMENTS IN SUPPORT : Supporters argue that this bill is needed to codify practices and procedures from the Executive Order that put into place the MHSA Housing Program, which since its inception has helped to build more than 2,500 affordable places for people with severe mental illnesses. Supporters argue that this approach has demonstrated very good results for people with mental disorders and could continue to be very valuable in meeting the housing needs of this vulnerable CONTINUED AB 1929 Page 6 population. ASSEMBLY FLOOR : 77-0, 5/27/14 AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Perea, John A. Pérez, V. Manuel Pérez, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins NO VOTE RECORDED: Patterson, Quirk-Silva, Vacancy JL:k 8/5/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED