BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 391 (DeSaulnier) - California Homes and Jobs Act of 2013.
Amended: May 7, 2013 Policy Vote: T&H 6-3; G&F 5-2
Urgency: Yes Mandate: Yes
Hearing Date: May 23, 2013 Consultant: Mark McKenzie
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: SB 391, an urgency measure, would impose a fee of
$75 on the recording of real estate documents, except those
recorded in connection with a property transfer, as specified.
Fee revenues would be available for expenditure for affordable
housing purposes, upon appropriation by the Legislature.
Fiscal Impact:
Unknown fee revenue gains ranging from $300 million to $720
million per year depending on the volume of recorded
documents (California Homes and Jobs Trust Fund - CHJ Trust
Fund).
Estimated annual administrative costs of approximately $5.4
million (CHJ Trust Fund) to fund up to 47 positions at the
Department of Housing and Community Development (HCD). All
HCD administrative costs are fully covered by fees
collected.
Costs in the range of $250,000 to $350,000 (CHJ Trust Fund)
in 2016-17 to the Bureau of State Audits (BSA) to conduct an
initial audit. Ongoing periodic audit costs in the range of
$150,000 to $250,000 (CHJ Trust Fund). All BSA audit costs
are fully covered by fees collected.
Unknown local mandate costs, not state-reimbursable. The
bill authorizes the county recorder to deduct actual and
necessary costs to administer to collection of recordation
fees prior to transmitting the balance to the state.
Background: The Department of Housing and Community Development
and the California Housing Finance Agency (CalHFA) administer
numerous programs designed to make housing more affordable for
California families and individuals, including: the Multifamily
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Housing Program, which funds construction, rehabilitation, and
preservation of housing for lower income households; the Joe
Serna, Jr. Farmworker Housing Program, which funds the
development of ownership or rental homes for agricultural
workers; the Emergency Housing Assistance Program, which funds
emergency shelters and transitional homes for homeless
individuals and families; the CalHome Program, which funds
downpayment assistance, home rehabilitation, counseling,
self-help mortgage assistance programs, and technical
assistance; and the California Homebuyer Downpayment Assistance
Program, which aids first-time homebuyers with down payment
and/or closing costs.
The state has typically funded state housing programs through
the issuance of general obligations bonds. Most recently,
voters approved Proposition 46 in 2002, which provided $2.1
billion in housing bonds, and Proposition 1C in 2006, which
authorized the issuance of an additional $2.85 billion in
general obligation bonds for various housing programs. Nearly
all of the Propositions 46 and 1C bond funds that support
affordable housing projects and programs have been allocated,
although the State Treasurer has not yet issued bonds to finance
all of the programs that have received an allocation.
Apart from general obligation bonds, tax increment revenues
provided pursuant to the Community Redevelopment Law have also
been a major source of affordable housing funds. Specifically,
existing law required redevelopment agencies to deposit 20% of
all tax increment revenue available to the agency into their Low
and Moderate-Income Housing Funds to increase, improve, and
preserve the community's supply of low and moderate income
housing available at an affordable housing cost. In the 2009-10
fiscal year, $1.075 billion of redevelopment property tax
increment revenues were set aside for affordable housing. As
part of a General Fund solution in the 2011-12 budget, however,
ABx1 26 (Blumenfield) was enacted to eliminate redevelopment
agencies, thereby eliminating a significant source of housing
funds.
This bill is intended to provide a permanent source of
affordable housing funds to partially offset the loss of funding
due to the elimination of redevelopment tax increment funds and
the impending depletion of housing bond funds.
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Proposed Law: SB 391 would enact the California Homes and Jobs
Act of 2013. Specifically, this bill would impose a fee of $75
at the time of recording of specified real estate instruments,
papers, or notices, not including those recorded in connection
with a transfer subject to the imposition of a documentary
transfer tax (property transfers). After deducting
administrative costs incurred by the county recorder, the fee
revenues would be sent to HCD on a quarterly basis for deposit
in the California Homes and Jobs Trust Fund (CHJ Trust Fund),
created by the bill. The funds would be available, upon
appropriation by the Legislature, for support of the
development, acquisition, rehabilitation, and preservation of
housing affordable to low and moderate income households, and to
cover HCD administrative costs, as well as costs for periodic
audits. Specified purposes for the funds include foreclosure
mitigation, homeownership opportunities, emergency shelters, and
transitional and permanent rental housing, including necessary
service and operating subsidies.
This bill would require the Bureau of State Audits (BSA) to
conduct periodic audits, beginning two years after enactment, to
ensure that the annual allocation to individual programs is
awarded by HCD in a timely fashion. SB 391 would also require
HCD to include information in its existing annual report on how
the funds provided by the bill were expended in the previous
year, including efforts to promote a geographically balanced
distribution of funds.
Related Legislation: SB 1220 (DeSaulnier), a nearly identical
bill, failed passage on the Senate Floor in 2012 on a vote of
25-13.
Staff Comments: HCD estimates that revenues from a $75 per
document recording fee on the specified real estate related
documents would generate approximately $300 million annually
during years when real estate transactions are at lowest levels
and up to $720 million annually during years when transactions
are at their highest point.
Based on historical staffing levels for rental and homeowner
programs previously administered by HCD, the Department
estimates the need for up to 47 positions in the first full year
of operation at an estimated cost of $5.4 million as a result of
this bill. This assumes that revenues from the new fee would
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primarily be used for expenditure on existing programs. There
could be additional costs associated with structuring new
programs or revising existing programs to accommodate the
priorities of the Legislature or the Administration when the
funds are appropriated. The bill does not currently provide
detail on how the funds would be allocated. The redirection of
existing HCD staff dedicated to current bond-funded programs to
any new programs supported by fee revenues would occur as a part
of the annual budget process.
HCD and CalHFA, the likely administrators of the housing
programs to be funded by this measure, have historically
maintained administrative costs at 5% or less of the funding
allocated for existing state-administered housing programs.
This bill continues this practice by explicitly authorizing up
to 5% of the funds deposited in the CHJ Trust Fund for
administering housing programs that receive an appropriation
from the fund.
Under the Joint Rules of the Senate and Assembly, Rule 37.4 (b)
specifies that "any bill requiring action by the Bureau of State
Audits shall contain an appropriation for the cost of any study
or audit." To comply with this requirement, the bill explicitly
authorizes funds appropriated by the Legislature from the CHJ
Trust Fund to be used to pay for costs of periodic audits, as
specified.
Staff notes that 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 would thus
require the approval of 2/3 of the membership of each house of
the Legislature for passage. Prior to 2010, specified fees
could be enacted by majority vote, but this authority was
significantly limited by Proposition 26 (2010).
PROPOSED AMENDMENTS would require the Department of Industrial
Relations (DIR) to monitor and enforce prevailing wage
requirements on projects in excess of $1 million that are
financed from the affordable housing funds generated by this
bill. The amendments would also require reimbursement for the
DIR costs, but subject to a cap of one-fourth of 1 percent of
the amount of the contract.
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