BILL ANALYSIS Ó
AB 90
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Date of Hearing: April 15, 2015
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
AB
90 (Chau) - As Amended April 6, 2015
SUBJECT: Federal Housing Trust Fund.
SUMMARY: Designates the Department of Housing and Community
Development (HCD) as the agency responsible for administering
the federal Housing Trust Fund (HTF). Specifically, this bill:
1)Requires HCD to administer the HTF funds through programs that
produce, rehabilitate, or support the operation of rental
housing for extremely low- and very low-income households.
2)Allows up to 10% of the HTF funds to be used to support
first-time homeownership for extremely low- and very
low-income households.
3)Requires that any project funded from the federal HTF must be
restricted to fifty-five years affordability.
4)Requires HCD, in collaboration with the California Housing
Finance Agency (CalHFA), to develop an allocation plan to show
how the HTF funds will be spent based on the priority needs
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identified in the state's consolidated plan.
5)Requires HCD to submit the allocation plan to the Assembly
Committee on Housing and Community Development and the Senate
Committee on Transportation and Housing thirty days prior to
receiving the HTF funds.
6)Requires the allocation plan to give priority to projects
based on the following:
a) Geographic diversity;
b) The extent to which rents are affordable, especially to
low-income households;
c) The merits of a project;
d) Applicants readiness; and
e) The extent to which projects will use nonfederal funds.
1)Requires HCD to convene a stakeholder process to inform the
allocation plan and to include organizations that provide
rental housing to extremely low- and very low-income
households or assist extremely low- and very low-income
households to become homeowners.
EXISTING LAW: Federal law defines extremely low-income
households as households with incomes between zero and 30% of
area median income and very low-income families' incomes as
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between 30% and 50% of area median income.
FISCAL EFFECT: Unknown.
COMMENTS:
Background :
The Public Policy Institute of California has identified that
more than 36% of mortgaged homeowners and 47% of all renters are
spending more than 35% of their household incomes on housing. In
California we have about 134,000 homeless people living in our
streets, parks, alleys, and freeway off-ramps. At the same time
vacancy rates are low and rents are increasing.
According to the U.S. Department of Housing and Urban
Development, California has six of the most expensive rental
markets in the country. Nationwide, rents in 2014 grew the
fastest in the San Jose and San Francisco metropolitan areas,
increasing by 14.4% and 13.5%, respectively. Between 2006 and
2011, rents increased throughout the state by an average of ten
percent. Lower-income households represent a majority of renter
households. Out of 5.1 million renters in California, 60% are in
lower-income households, while one in four renter households are
in the extremely low-income. One in two renters in California
pay in excess of 30% of their income towards housing and one in
four renters pay half of their income towards housing.
The funding sources to support construction of affordable
housing have drastically diminished over the last five years.
The dissolution of redevelopment agencies eliminated up to $1
billion in funding that was available for affordable housing
construction. The last statewide housing bond was approved in
2008 and the proceeds of those bonds have been exhausted.
The Federal Housing Trust Fund :
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The Housing and Economic Recovery Act (HERA) of 2008 directed
Fannie Mae and Freddie Mac to set aside 0.042% of new business
for the federal HTF. Sixty-five percent was directed to the
federal HTF and 35% to the Capital Magnet Fund. Before the funds
could be directed toward the HTF, the banking and foreclosure
crisis hit and funding for the program was put on hold. In
December of last year, the Federal Housing Finance Agency lifted
the suspension of funding and directed Fannie Mae and Freddie
Mac to set aside funds for the HTF starting on January 1, 2015.
It is anticipated that funds may be allocated as soon as the
summer of 2016.
The HTF is a permanent federal funding source for affordable
housing and the funds must be used to produce, preserve,
rehabilitate, or support the operation of rental housing for
extremely low- and very low-income families, including homeless
families, and for homeownership for extremely low- and very
low-income families. Ninety percent of funding from the HTF
must be used toward rental housing and up to 10% may be used
toward homeownership. Additionally, seventy-five percent of
funding must go toward extremely low-income families. Further,
when there is only $1 billion available in the federal HTF then
100% of the funds must be used to benefit extremely low-income
households.
Based on estimates, for every $250,000 that is generated for the
HTF, approximately $30 million will be allocated to California.
Federal guidelines require that the HTF be distributed to states
by a formula based on:
Shortage and availability of rental housing for
extremely-low income families and very-low income families;
Number of extremely low- and very low-income families
who are severely rent burdened or pay more than 50% of
their income toward rent and utilities.
Purpose of the bill :
Each state is required to choose a state agency to administer
the HTF. AB 90 establishes HCD as that agency and requires the
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department to develop a plan for how the funds will be spent.
The federal guidelines require states to develop an allocation
plan each year to show how the HTF will be distributed in the
coming year. The allocation plan must be based on the priority
needs identified in the state's consolidated plan. AB 90 aligns
with the federal requirements to develop an allocation plan for
how the fund will be allocated each year.
Support unless amended :
Habitat for Humanity supports the overall direction of AB 90,
however they request that up to 10% of funds go to the CalHome
Program. According to Habitat for Humanity, "after redevelopment
agencies dissolved, CalHome became the primary source of state
funding for Habitat for Humanity affiliates throughout the
state. It provides grants to local public agencies or nonprofit
corporations for first-time homebuyers, down payment assistance,
and self-help homeownership." CalHome was funded by the two
previous state voter-approved bonds but those fund are
exhausted.
REGISTERED SUPPORT / OPPOSITION:
Support
Bridge Housing
California Building Industry (CBIA)
California Infill Builders Federation
California Housing Consortium
California Rural Legal Assistance Foundation
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Habitat for Humanity
Highridge Costa Housing Partners, LLC
Highridge Costa Investors, LLC
Housing California
Leading Age California
National Association of Social Workers California Chapter
(NASW-CA)
Non-Profit Housing Association of Northern California (NPH)
San Diego County Apartment Association (SDCAA)
Western Center on Law and Poverty
Opposition
None on file
Analysis Prepared
by: Lisa Engel/H. & C.D./(916) 319-2085
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