BILL ANALYSIS Ó
AB 90
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
90 (Chau) - As Amended April 22, 2015
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|Policy |Housing and Community |Vote:|7 - 0 |
|Committee: |Development | | |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY: This bill designates the Department of Housing and
Community Development (HCD) as the agency responsible for
administering the federal Housing Trust Fund (HTF).
Specifically, this bill:
AB 90
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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
homeownership for extremely low- and very low-income
households.
3)Requires that any rental project funded from the federal HTF
must restrict affordability for fifty-five years, and requires
that any homeownership project funded from the federal HTF
must restrict affordability for thirty years.
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
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 geographic diversity, affordability of rents
(especially to low-income households), the merits of a
project, the applicant's readiness, and the extent to which
AB 90
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projects will use nonfederal funds.
7)Requires HCD to convene a stakeholder process to inform the
development of 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.
FISCAL EFFECT
1)One-time costs in FY 2015-16 of approximately $590,000 (GF) to
HCD for 4.5 PYs, operating expenses and equipment to
development the program based on the typical number of
applications received and awards made under the MHP and HOME
programs. Some or all of this amount would be reimbursable out
of HCDs allocation of the federal HTF once funds are received.
2)On-going costs in the range of $1 million (federal funds) for
continued administration and evaluation of the program with
adjustments each year, depending on the size and growth of the
federal HTF and HCD's allocation. This cost falls within the
allowable administrative costs reimbursable from the federal
HTF.
Note: According to CalHFA, the latest estimate of Fannie Mae and
Freddie Mac contributions for the calendar year 2015 as
originally authorized by HERA is about $350 million, with an
estimated allocation to California of $41 million.
Administrative costs to administer the funds may not exceed 10
percent of the annual allocation, pursuant to HUD regulations.
COMMENTS:
AB 90
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Purpose. Each state is required to choose a state agency to
administer the federal HTF. AB 90 establishes HCD as that agency
and requires the 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 designate an agency and develop an allocation plan for
spending the funds.
Background. 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 2014, 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, 100%
of the funds must be used to benefit extremely low-income
households.
Federal guidelines require that the HTF be distributed to states
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by a formula based on the shortage and availability of rental
housing for extremely-low income families and very-low income
families, and the 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.
Based on estimates, for every $250 million that is generated for
the federal HTF, approximately $30 million will be allocated to
California.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081