BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 391| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 391 Author: DeSaulnier (D), et al. Amended: 5/20/13 Vote: 27 - Urgency SENATE TRANSPORTATION & HOUSING COMMITTEE : 6-3, 4/9/13 AYES: DeSaulnier, Beall, Hueso, Lara, Liu, Pavley NOES: Gaines, Galgiani, Wyland NO VOTE RECORDED: Cannella, Roth SENATE GOVERNANCE & FINANCE COMMITTEE : 5-2, 4/24/13 AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu NOES: Knight, Emmerson SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/23/13 AYES: De León, Hill, Lara, Padilla, Steinberg NOES: Walters, Gaines SUBJECT : California Homes and Jobs Act of 2013 SOURCE : California Housing Consortium Housing California DIGEST : This bill imposes, beginning January 1, 2014, 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 (Trust Fund). The Legislature may then appropriate these funds for the development, acquisition, rehabilitation, and preservation of CONTINUED SB 391 Page 2 homes affordable to low- and moderate-income households, including emergency shelters, transitional and permanent rental housing, foreclosure mitigation, and homeownership opportunities. ANALYSIS : Existing law establishes a number of programs at the Department of Housing and Community Development (HCD) and the California Housing Finance Agency 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 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 CONTINUED SB 391 Page 3 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: 1. Enacts the California Homes and Jobs Act of 2013 (Act) which imposes a fee, beginning January 1, 2014, of $75 on the recording of each real estate instrument, paper, or notice, except for those documents recorded in connection with a transfer subject to a documentary transfer tax, and directs the money to the Trust Fund. 2. Allows the funds to be appropriated 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. 3. Limits administrative costs to 5% of the funds for administering housing programs that receive an appropriation from the Trust Fund. 4. Requires HCD to report annually to the Legislature on how funds made available and allocated under this Act, including efforts to promote a geographically balanced distribution of the funds. 5. Requires the Department of Industrial Relations to monitor and enforce prevailing wage requirements for construction contracts for public works projects over $1,000,000, that are funded, in whole or in part, by this bill. CONTINUED SB 391 Page 4 6. Requires the Bureau of State Audits (BSA) to conduct periodic audits to ensure that state agencies award appropriated funds in a timely fashion consistent with legal requirements. Requires the first audit be conducted within two years of the effective date of the Act. Background Types of documents covered . This bill applies the $75 fee to the recording of all real estate instrument, paper, or notice 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: 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 CONTINUED SB 391 Page 5 Uniform Commercial Code amendment, assignment, continuation, statement, or termination FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: Unknown fee revenue gains ranging from $300 million to $720 million per year depending on the volume of recorded documents (Trust Fund). Estimated annual administrative costs of approximately $5.4 million (Trust Fund) to fund up to 47 positions at the HCD. All HCD administrative costs are fully covered by fees collected. Costs in the range of $250,000 to $350,000 (Trust Fund) in 2016-17 to the BSA to conduct an initial audit. Ongoing periodic audit costs in the range of $150,000 to $250,000 (Trust Fund). All BSA audit costs are fully covered by fees collected. Unknown local mandate costs, not state-reimbursable. This 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. SUPPORT : (Verified 5/23/13) California Housing Consortium (co-source) Housing California (co-source) State Treasurer Bill Lockyer A Community of Friends AARP Abode Communities Advent Companies AFSCME Alameda County Developmental Disabilities Council Alpha Construction Company AMCAL Multi-Housing American Baptist Homes of the West American Planning Association, California Chapter Amity Foundation CONTINUED SB 391 Page 6 Amstutz Associates Angelus Plaza Ashwood Construction Asian Pacific Environmental Network Aspiranet Association of Regional Center Agencies Asthma Coalition of Los Angeles County Bay Area Business Roundtable Bay Area Community Land Trust Bay Area Council Bay Area Regional Health Inequities Initiative BRC Advisors 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 California Conference of Carpenters California Council for Affordable Housing California Council of Community Mental Health Agencies California Disability Services Association California Housing Partnership Corporation California Labor Federation California Mental Health Directors Association California Mental Health Planning Council California Partnership to End Domestic Violence California Police Chiefs Association California Reinvestment Coalition California Rural Legal Assistance Foundation California School Employees Association Carson Chamber of Commerce Casa Major Central City Association Century Housing Century Villages at Cabrillo Cesar Chavez Foundation CHISPA Cities of Berkeley, Burbank, Calexico, Del Mar, El Centro, El Monte, Emeryville, Fairfield, Goleta, Jurupa Valley, CONTINUED SB 391 Page 7 Livingston, Los Angeles, Lynwood, Oakland, Oxnard, Pasadena, Sacramento, San Francisco, San Joaquin, San Jose, San Luis Obispo, San Mateo, Santa Barbara, Santa Monica, Torrance, Ventura, Vista, and West Hollywood Coachella Valley Housing Coalition Community Corporation of Santa Monica Community Health Improvement Partners Community Housing Improvement Program Community Housing Opportunities Corporation Community Housing Works Community Working Group Contra Costa Health Services Corporation for Supportive Housing Counties of Alameda, Contra Costa, and San Francisco Curtom-Dunsmuir Dignity Health DMB Pacific Ventures Domus Development Drug Policy Alliance Duncan Group EAH Housing East Bay Developmental Disabilities Legislative Coalition East Bay Housing Organizations East LA Community Corporation Ecumenical Council Pasadena Area Congregations Eden Housing Enterprise Community Partners Environmental Health Coalition Episcopal Community Services of San Francisco First Place for Youth Foundation for Affordable Housing Fullerton Chamber of Commerce Gonzalez Goodale Architects Habitat for Humanity California Habitat for Humanity East Bay/Silicon Valley Habitat for Humanity Greater San Francisco Habitat for Humanity Inland Valley 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 CONTINUED SB 391 Page 8 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 Housing Works ICON Builders InnerCity Struggle Integrity Housing Interfaith Community Services International Association for Women of Color Day Jamboree Housing Corporation John Stewart Company Kennedy Commission L.A. Family Housing LA Voice LA Works Larkin Street Youth Services Laurin Associates Lauterbach and Associates Law Foundation of Silicon Valley Leading Age California League of California Cities League of Women Voters of California LeSar Development Consultants LifeSTEPS LINC Housing Little Tokyo Service Center 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 Los Angeles Regional Reentry Partnership Lutheran Office of Public Policy Mammoth Lakes Housing Marin Workforce Housing Trust Mental Health America of Los Angeles Mental Health Systems Mercy Housing CONTINUED SB 391 Page 9 MidPen Housing Corporation Move LA Multicultural Communities for Mobility Mutual Housing California Nancy Lewis Associates National Community Renaissance National Council of La Raza National Housing Law Project Natural Resources Defense Council Neighborhood Housing Services of Los Angeles County Neighborhood Partnership Housing Services NeighborWorks Orange County Nevada/California Indian Housing Association New Directions Non-Profit Housing Association of Northern California Northern California Community Loan Fund Northern Circle Indian Housing Authority Opportune Companies Orange County Business Council Orange County Housing Trust Pacific Clinics Palm Communities Partner Energy Pasadena Police Department Pasadena Public Health Department Peace Officers Research Association of California Peninsula Interfaith Action Penny Lane Centers People Assisting the Homeless Peoples' Self-Help Housing Corporation PICO California PMG PolicyLink Public Advocates Related California Resources for Community Development Ruiz Brothers Construction Co. Rural Communities Housing Development Corporation Rural Community Assistance Corporation Sacramento Homeless Organizing Committee Sacramento Housing Alliance San Benito County Housing and Economic Development Department San Diego Community Land Trust San Diego Regional Chamber of Commerce CONTINUED SB 391 Page 10 San Gabriel Valley Consortium on Homelessness San Gabriel Valley Council of Governments 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 Bank 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 SRO Housing Corporation St. Joseph Center St. Joseph Health St. Paul's Senior Home and Services Stand Up for Neighborly Novato State Building and Construction Trades Council of California State Independent Living Council Step Up on Second Sun Country Builders Sunseri Construction Supervisor Mark Ridley-Thomas, Los Angeles County T.R.U.S.T. South LA TELACU Residential Management, Inc. Tenderloin Neighborhood Development Corporation Thai Community Development Center The Arc The KTGY Group Thomas Safran and Associates Turning Point Community Programs United Cerebral Palsy in California United Homeless Healthcare Partners United States Veterans Initiative United Way of Fresno County United Way of Greater Los Angeles United Ways of California Valley Economic Development Center Venice Community Housing Corporation Veterans of Foreign Wars of the U.S. Greater El Monte Post Visionary Home Builders CONTINUED SB 391 Page 11 Wakeland Housing and Development Corporation Walton Construction Services Ward Economic Development Corporation West Angeles Community Development Corporation Western Center on Law and Poverty Westport Construction Women Organizing Resources, Knowledge, and Services OPPOSITION : (Verified 5/23/13) Board of Equalization Member George Runner Board of Equalization Member Michelle Steel Butte County Clerk-Recorder Calaveras County Clerk-Recorder California Association of Legal Document Assistants California Association of Realtors California Credit Union League California Document Preparers California Escrow Association California Land Surveyors Association California Land Title Association California Taxpayers Association Cities of Camarillo, Cypress, and Waterford Colusa County Clerk Recorder Counties of Butte, Colusa, Lassen, Mono, Orange, San Luis Obispo, and Sierra County Recorders' Association of California El Dorado County Recorder-Clerk Hamman Real Estate Inyo County Clerk Recorder Kern County Assessor-Recorder Marin County Assessor-Recorder-Clerk Nevada County Clerk-Recorder Orange County Clerk-Recorder Plumas County Clerk Riverside County Assessor-County Clerk-Recorder San Bernardino County Recorder-Clerk San Luis Obispo County Clerk-Recorder Santa Barbara County Clerk, Recorder and Assessor Sierra County Clerk-Recorder Sonoma County Clerk-Recorder-Assessor Stanislaus County Clerk-Recorder Western Mining Alliance Yolo County Clerk-Recorder CONTINUED SB 391 Page 12 ARGUMENTS IN SUPPORT : According to the author's office, everyone in California needs a safe and affordable place to call home. For United States military veterans, former foster youth, families with children, people with disabilities, seniors on fixed incomes, and other vulnerable Californians, however, the housing crisis is not 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 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. 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 address unsatisfied customers. CONTINUED SB 391 Page 13 JA:k 5/23/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED