BILL ANALYSIS                                                                                                                                                                                                    Ó






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: SB 391
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  Desaulnier
                                                         VERSION: 4/2/13
          Analysis by:  Mark Stivers                     FISCAL:  yes
          Hearing date:  April 9, 2013



          SUBJECT:

          California Homes and Jobs Act of 2013

          DESCRIPTION:

          This bill imposes a fee of $75 on the recording of each real  
          estate-related document, except for those documents recorded in  
          connection with a transfer subject to a documentary transfer  
          tax, and directs the money to the California Homes and Jobs  
          Trust Fund.  The Legislature may then appropriate these funds  
          for the development, acquisition, rehabilitation, and  
          preservation of homes affordable to low- and moderate-income  
          households, including emergency shelters, transitional and  
          permanent rental housing, foreclosure mitigation, and  
          homeownership opportunities.

          ANALYSIS:

          Current law establishes a number of programs at the Department  
          of Housing and Community Development (HCD) and the California  
          Housing Finance Agency (CalHFA) to make housing more affordable  
          to California families and individuals, including the following  
          main programs:

           Multifamily Housing Program, which funds the new construction,  
            rehabilitation, and preservation of permanent and transitional  
            rental homes for lower income households through loans to  
            local governments, non-profit developers, and for-profit  
            developers.

           Joe Serna, Jr., Farmworker Housing Program, which funds the  
            development of ownership or rental homes for agricultural  
            workers through grants to local governments and non-profit  
            organizations.

           Emergency Housing Assistance Program, which funds emergency  
            shelters and transitional homes for homeless individuals and  




          SB 391 (DESAULNIER)                                    Page 2

                                                                       


            families through grants to counties and non-profit entities  
            for rehabilitation, renovation, expansion, site acquisition,  
            and equipment.

           CalHome Program, which funds downpayment assistance, home  
            rehabilitation, counseling, self-help mortgage assistance  
            programs, and technical assistance for self-help and shared  
            housing through grants and loans.

           California Homebuyer Downpayment Assistance Program, which  
            aids first-time homebuyers with down payment and/or closing  
            costs.

          Historically, the state has funded these programs through the  
          sale of general obligations bonds.  Most recently, the voters  
          approved a $2.1 billion bond through Proposition 46 in 2002 and  
          then a $2.85 billion bond through Proposition 1C in 2006.  These  
          funds financed the construction, rehabilitation, and  
          preservation of 57,220 affordable apartments, including 2,500  
          supportive homes for people experiencing homelessness, and over  
          11,600 shelter spaces.  In addition, these funds have helped  
          57,290 families become or remain homeowners.  HCD has awarded  
          almost all of the funds made available under these propositions,  
          particularly in these main programs.  

          Until 2011, the Community Redevelopment Law required  
          redevelopment agencies to set aside 20% of all tax increment  
          revenue to increase, improve, and preserve the community's  
          supply of low- and moderate-income housing available at an  
          affordable housing cost.  In fiscal year      2009-10,  
          redevelopment agencies deposited $1.075 billion of property tax  
          increment revenues into their Low- and Moderate-Income Housing  
          Funds.  With the elimination of redevelopment agencies, this  
          source of funding for affordable housing is no longer available.

           This bill  imposes a fee of $75 on the recording of each real  
          estate-related document, except for those documents recorded in  
          connection with a transfer subject to a documentary transfer  
          tax, and directs the money to the California Homes and Jobs  
          Trust Fund.  The Legislature may then appropriate these funds  
          for the development, acquisition, rehabilitation, and  
          preservation of homes affordable to low- and moderate-income  
          households, including emergency shelters, transitional and  
          permanent rental housing, foreclosure mitigation, and  
          homeownership opportunities.  The Legislature may also  
          appropriate up to 5% of the funds for administering housing  




          SB 391 (DESAULNIER)                                    Page 3

                                                                       


          programs that receive an appropriation from the fund.  The bill  
          further requires HCD to report annually to the Legislature on  
          the expenditure of these funds and the Bureau of State Audits to  
          conduct periodic audits to ensure that state agencies award  
          appropriated funds in a timely fashion consistent with legal  
          requirements.
          
          COMMENTS:

           1.Purpose of the bill  .  According to the author, everyone in  
            California needs a safe and affordable place to call home.   
            For U.S. military veterans, former foster youth, families with  
            children, people with disabilities, seniors on fixed incomes,  
            and other vulnerable Californians, however, the housing crisis  
            isn't over.  Millions of Californians are caught in the  
            "perfect storm" - mortgages remain out of reach, credit  
            standards have tightened, and the foreclosure crisis has  
            pushed more people into a rental market already suffering from  
            decades of short supply - leading to record-setting rent  
            increases.  The most vulnerable, who struggled to make rent  
            before the foreclosure crisis, face even more uncertainty in  
            today's rental housing market.  They risk joining the more  
            than 130,000 Californians who are homeless on any given night.  
             

            Moreover, rents and mortgages within the reach of working  
            families are critical to maintaining California's business  
            competitiveness.  Numerous business groups say California  
            needs to increase the supply of housing options affordable to  
            workers so companies can compete for the talent that drives  
            California's economy.  

            At the same time, California's investment in affordable homes  
            has dried up.  State agencies have awarded nearly all of the  
            voter-approved bond funding for affordable housing.  Likewise,  
            the elimination of redevelopment agencies has cut off funding  
            from the low- and moderate-income housing set aside.  

            The California Homes and Jobs Act begins to restore  
            California's historic investments in affordable homes by  
            creating an ongoing, pay-as-you-go source of funding dedicated  
            to affordable housing development.  The act will: 

                 Create 29,000 jobs annually, primarily in the  
               beleaguered construction sector.
                 Help businesses attract and retain the talent that fuels  




          SB 391 (DESAULNIER)                                    Page 4

                                                                       


               California's economy. 
                 Leverage an additional $2.78 billion in federal and  
               local funding and bank loans to build affordable homes and  
               create jobs.
                 Deploy these dollars in California communities through a  
               successful private/public partnership model.
                 Get California building again to create affordable home  
               options for all Californians.

           1.Exempts documents related to sale transactions  .  In order to  
            promote homeownership opportunities, this bill exempts  
            documents made in connection with the sale of real property  
            from the new fee.  This will ensure that transaction costs do  
            not increase for homebuyers.
           
          2.Revenue projections  .  Based on recording data from a variety  
            of past years, it is estimated that this bill will generate an  
            average of $525 million per year for the Homes and Jobs Trust  
            Fund, ranging from $300 million per year in low-volume years  
            to $750 million per year in high-volume years.

           3.Allocation to be determined  .  This bill requires that monies  
            in the Homes and Jobs Trust Fund go for the development,  
            acquisition, rehabilitation, and preservation of homes  
            affordable to low- and moderate-income households, including  
            emergency shelters, transitional and permanent rental housing,  
            foreclosure mitigation, and homeownership opportunities.   
            Aside from these general parameters, however, this bill does  
            not allocate funds to particular programs or uses.  Instead,  
            it leaves the decision on allocation to the Legislature.  This  
            provides less certainty but ensures that funds can address  
            priority housing needs as they change through the years.   
            Nonetheless, it is the author's intent that these monies fund  
            a variety of housing needs, ranging from homeless shelters and  
            permanent supportive housing to rental housing to  
            homeownership, and, where possible, use established and  
            well-understood programs.    

           4.Types of documents covered  .  This bill applies the $75 fee to  
            the recording of all real estate-related documents except  
            those recorded in connection with a transfer subject to the  
            imposition of a documentary transfer tax and those expressly  
            exempted from payment of recording fees.  There are many types  
            of documents that fall under the proposed fee, including, but  
            not limited to: 





          SB 391 (DESAULNIER)                                    Page 5

                                                                       



                 Deeds and grant deeds
                 Trustees' deeds and deeds of trust
                 Amendments of deeds of trust
                 Quit claim deeds
                 Fictitious deeds of trust
                 Assignments of deeds of trust
                 Construction trust deeds
                 Reconveyances
                 Easements
                 Maps
                 Lot line adjustments
                 Covenants, conditions, and restrictions
                 Affidavits
                 Abstracts of judgment
                 Subordination agreements
                 Declarations and abandonments of homestead
                 Requests for notice of default
                 Notices of default 
                 Notices of trustee sale
                 Substitution of trustee
                 Trustee's deed upon sale
                 Notices of completion
                 Notice of rescission of declaration of default
                 Liens
                 Releases or discharges
                 Leases and assignments of leases
                 Assignments of rents
                 Uniform Commercial Code amendment, assignment,  
               continuation, statement, or termination

           1.Two-thirds vote required  .  Legislative Counsel has determined  
            that this bill would result in a change in state taxes for the  
            purpose of increasing state revenues within the meaning of  
            Section 3 of Article XIIIA of the California Constitution and  
            thus requires a 2/3 vote for passage.

           2.Arguments in opposition  .  The Orange County Board of  
            Supervisors states that the proposed fee has no relation to  
            affordable housing and places additional financial burdens on  
            ordinary Californians.  The County Recorders Association of  
            California and its members point out that some recordings or  
            transactions involve more than one document, in which case the  
            per-document fee will add to the already substantial cost of  
            recording.  In addition, county recorders will encounter  
            significant increases in staff time to collect fees and  




          SB 391 (DESAULNIER)                                    Page 6

                                                                       


            address unsatisfied customers.

           3.Double referral  .  The Rules Committee has referred this bill  
            to both this committee and the Governance and Finance  
            Committee.  
          
          PRIOR LEGISLATION

          SB 1220 (DeSaulnier) of 2012 was substantively identical to this  
          bill.  SB 1220 received 25 votes on the Senate Floor but needed  
          27 for passage.
          
          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             April 3,  
          2013.)

          SUPPORT:  


          California Housing Consortium (sponsor)
          Housing California (sponsor)
          AARP
          Abode Communities
          A Community of Friends
          Alameda County Developmental Disabilities Council
          Alpha Construction Company
          AMCAL Multi-Housing
          American Baptist Homes of the West
          Amstutz Associates
          Angelus Plaza
          Asian Pacific Environmental Network
          Association of Regional Center Agencies
          Asthma Coalition of Los Angeles County
          Bay Area Business Roundtable
          Bay Area Community Land Trust
          Bay Area Council
          BRIDGE Housing
          Burbank Housing Development Corporation
          Cabrillo Economic Development Corporation
          Cahill Contractors
          California Apartment Association
          California Association of Housing Authorities
          California Association of Local Housing Finance Agencies
          California Building Industry Association
          California Coalition for Rural Housing
          California Coalition for Youth




          SB 391 (DESAULNIER)                                    Page 7

                                                                       


          California Conference of Carpenters
          California Council of Community Mental Health Agencies
          California Disability Services Association
          California Housing Partnership Corporation
          California Partnership to End Domestic Violence
          California Police Chiefs Association
          California Reinvestment Coalition
          California Rural Legal Assistance Foundation
          Casa Major
          Century Housing
          Century Villages at Cabrillo
          CHISPA
          City of Emeryville
          City of Lynwood
          City of Oakland
          City of Oxnard
          City of Pasadena
          City of San Joaquin
          City of San Jose
          City of Santa Barbara
          City of Santa Monica
          City of West Hollywood
          Coachella Valley Housing Coalition
          Community Corporation of Santa Monica
          Community Health Improvement Partners
          Community Housing Opportunities Corporation
          Community Housing Works
          Corporation for Supportive Housing
          County of Alameda
          County of Contra Costa 
          Curtom-Dunsmuir
          Domus Development
          EAH Housing
          East Bay Developmental Disabilities Legislative Coalition
          East Bay Housing Organizations
          East LA Community Corporation
          Eden Housing
          Enterprise Community Partners
          Environmental Health Coalition
          Episcopal Community Services of San Francisco
          First Place for Youth
          Foundation for Affordable Housing
          Gonzalez Goodale Architects
          Habitat for Humanity California
          Habitat for Humanity Greater San Francisco
          Habitat for Humanity Inland Valley




          SB 391 (DESAULNIER)                                    Page 8

                                                                       


          Habitat for Humanity Pomona Valley
          Habitat for Humanity Riverside
          Habitat for Humanity San Gabriel Valley
          Habitat for Humanity San Luis Obispo County
          Habitat for Humanity Santa Cruz County
          Hamilton Family Center
          Highridge Costa Housing Partners
          Hollywood Community Housing Corporation
          Home Builders Association of Tulare/Kings Counties
          Home Start
          Homes for Life Foundation
          Housing Authority for the City of San Buenaventura
          Housing Choices Coalition for People with Developmental  
            Disabilities
          Housing Leadership Council of San Mateo County
          ICON Builders
          InnerCity Struggle
          Interfaith Community Services
          International Association for Women of Color Day
          Jamboree Housing Corporation
          John Stewart Company
          Kennedy Commission
          The KTGY Group
          Larkin Street Youth Services
          Laurin Associates
          Lauterbach and Associates
          LeSar Development Consultants
          LifeSTEPS
          LINC Housing
          Loaves and Fishes
          Local Initiatives Support Corporation
          Los Angeles Area Chamber of Commerce
          Los Angeles Business Council
          Los Angeles Business Leaders Task Force on Homelessness
          Los Angeles Community Action Network
          L.A. Family Housing
          LA Voice
          Law Foundation of Silicon Valley
          Leading Age California
          League of Women Voters of California
          Lutheran Office of Public Policy
          Mammoth Lakes Housing
          Marin Workforce Housing Trust
          Mental Health America of Los Angeles
          Mercy Housing
          MidPen Housing Corporation




          SB 391 (DESAULNIER)                                    Page 9

                                                                       


          Multicultural Communities for Mobility
          Nancy Lewis Associates
          National Community Renaissance
          National Housing Law Project
          Natural Resources Defense Council
          Neighborhood Housing Services of Los Angeles County
          Neighborhood Partnership Housing Services
          NeighborWorks Orange County
          Non-Profit Housing Association of Northern California
          Northern Circle Indian Housing Authority
          Northern California Community Loan Fund
          Opportune Companies
          Orange County Business Council
          Orange County Housing Trust
          Pacific Clinics
          Palm Communities
          Pasadena Public Health Department
          Peninsula Interfaith Action
          Penny Lane Centers
          People Assisting the Homeless
          Peoples' Self-Help Housing Corporation
          PolicyLink
          Public Advocates
          Related California
          Resources for Community Development
          Ruiz Brothers Construction Co.
          Rural Community Assistance Corporation
          Rural Communities Housing Development Corporation
          Sacramento Homeless Organizing Committee
          Sacramento Housing Alliance
          St. Joseph Center
          St. Paul's Senior Home and Services
          San Benito County Housing and Economic Development Department
          San Gabriel Valley Consortium on Homelessness
          San Luis Obispo County Housing Trust Fund
          Self-Help Enterprises
          Service Employees International Union (SEIU) California State  
            Council
          Sierra Business Council
          Sierra Club California
          Silicon Valley Leadership Group
          Skid Row Housing Trust
          Sonoma County Task Force for the Homeless
          Southeast Asian Community Alliance
          Southern California Association of Non-Profit Housing
          SPUR




          SB 391 (DESAULNIER)                                    Page 10

                                                                       


          Stand Up for Neighborly Novato
          State Treasurer Bill Lockyer
          Step Up on Second
          Sun Country Builders
          Sunseri Construction
          Tenderloin Neighborhood Development Corporation
          Thai Community Development Center
          Thomas Safran and Associates
          Turning Point Community Programs
          United Homeless Healthcare Partners
          United States Veterans Initiative
          United Ways of California
          United Way of Fresno County
          United Way of Greater Los Angeles
          Valley Economic Development Center
          Venice Community Housing Corporation
          Visionary Home Builders
          Wakeland Housing and Development Corporation
          Walton Construction Services
          Western Center on Law and Poverty

          OPPOSED:   


          Butte County Clerk-Recorder
          Calaveras County Clerk-Recorder
          Colusa County Clerk Recorder
          County Recorders' Association of California
          County of Orange
          El Dorado County Recorder-Clerk
          Inyo County Clerk Recorder
          Marin County Assessor-Recorder-Clerk
          Nevada County Clerk-Recorder
          Plumas County Clerk
          San Bernardino County Recorder-Clerk
          San Luis Obispo County Clerk-Recorder
          Sonoma County Clerk-Recorder-Assessor
          Stanislaus County Clerk-Recorder