BILL ANALYSIS Ó
AB 90
Page 1
ASSEMBLY THIRD READING
AB
90 (Chau and Atkins)
As Amended April 22, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+---------------------+---------------------|
|Housing |7-0 |Chau, Steinorth, | |
| | |Burke, Chiu, Beth | |
| | |Gaines, Lopez, | |
| | |Mullin | |
| | | | |
|----------------+------+---------------------+---------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, | |
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 90
Page 2
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 rental project funded from the federal HTF be
restricted to 55 years affordability.
4)Requires that any homeownership program funded from the federal
HTF be restricted to thirty years affordability.
5)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.
6)Requires HCD to submit the allocation plan to the Assembly
Housing and Community Development Committee and the Senate
Transportation and Housing Committee 30 days prior to receiving
the HTF funds.
7)Requires the allocation plan to give priority to projects based
on the following:
a) Geographic diversity;
AB 90
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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.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1)One-time costs in Fiscal Year 2015-16 of approximately $590,000
(General Fund) to HCD for 4.5 Past Years, operating expenses and
equipment to development the program based on the typical number
of applications received and awards made under the Multifamily
Housing Program and Home Investment Partnerships 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.
AB 90
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Note: According to California Housing Financing Agency, the
latest estimate of Fannie Mae and Freddie Mac contributions for
the calendar year 2015 as originally authorized by Housing and
Economic Recovery Act is about $350 million, with an estimated
allocation to California of $41 million. Administrative costs to
administer the funds may not exceed 10% of the annual allocation,
pursuant to United States (U.S.) Department of Housing and Urban
Development regulations.
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
AB 90
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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:
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, 75% 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.
Federal guidelines require that the HTF be distributed to states
by a formula based on:
AB 90
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1)Shortage and availability of rental housing for extremely-low
income families and very-low income families;
2)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. This bill 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. This bill aligns
with the federal requirements to develop an allocation plan for
how the fund will be allocated each year.
Analysis Prepared by:
Lisa Engel / H. & C.D. / (916) 319-2085 FN:
0000681