BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          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





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          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  







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            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







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          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  







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          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  







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          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:kd  8/7/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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