BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 90 Hearing Date: 6/30/2015
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|Author: |Chau |
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|Version: |4/22/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Alison Dinmore |
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SUBJECT: Federal Housing Trust Fund
DIGEST: This bill designates the California Department of
Housing and Community Development (HCD) as the agency
responsible for administering the federal Housing Trust Fund
(HTF), pursuant to the federal Housing and Economic Recovery Act
of 2008.
ANALYSIS:
Existing law:
1)Created the federal HTF as part of the Housing and Economic
Recovery Act of 2008 (HERA). This program will allocate funds
to state and state-designated entities on a formula basis for
the production or preservation of affordable housing. Federal
regulations, released in January 2015, specify how states must
use these funds.
2)Defines extremely low-income (ELI) households as households
with incomes between zero and 30% of area median income and
very low-income (VLI) families' incomes as between 30% and 50%
of area median income.
3)Requires HCD to report on or before December 31 of each year
to the Governor and both houses of the Legislature on the
operations and accomplishments during the prior fiscal year of
the housing programs administered by it.
AB 90 (Chau) Page 2 of ?
This bill:
1)Designates HCD as the agency responsible for administering the
federal HTF pursuant to HERA.
2)Requires HCD to administer the funds through programs that
produce, preserve, rehabilitate, and support the operation of
rental housing for ELI and VLI households.
3)Allows up to 10% of funding to be used to support
homeownership for ELI and VLI households.
4)Requires any rental project funded by the federal HTF to be
affordable for 55 years.
5)Requires any homeownership program funded from the federal HTF
to be affordable for 30 years.
6)Requires the department to collaborate with the California
Housing Finance Agency (CalHFA) to develop an allocation plan
to demonstrate how the federal funds shall be distributed
based upon the priority housing needs identified in the state
consolidated plan. The allocation plan shall give priority to
projects based on:
a) Geographic diversity;
b) The extent to which rents are affordable, especially to
extremely low-income households;
c) The merits of a project;
d) Applicants' readiness; and
e) The extent to which projects will use nonfederal funds.
7)Requires HCD to submit the allocation plan to the Assembly
Committee on Housing and Community Development and the Senate
Transportation and Housing Committee 30 days prior to
receiving the HTF funds.
8)Requires HCD and CalHFA to convene a stakeholder process to
inform the development of the allocation plan. Stakeholders
shall include, but not be limited to, organizations that
provide rental housing for ELI households and VLI households
AB 90 (Chau) Page 3 of ?
or assist ELI households and VLI households to become
homeowners.
9)Requires HCD to add to a yearly report, due to the Governor
and both houses of the legislature on or before December 31 of
each year, an evaluation of the program established by the
department to meet the federal HTF program guidelines.
COMMENTS:
Purpose of the bill. According to the author, our state is
facing an affordable housing crisis. 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. This bill is part
of a larger package of bills to address the growing affordable
housing crisis. This bill designates HCD as the state entity
responsible for administering the federal HTF. It also requires
HCD to develop an allocation plan for how to spend the funds and
to provide that plan to this committee and our counterpart in
the Assembly. The allocation plan will be developed through a
stakeholder process. HCD is required to report back to the
Legislature on how HTF funds are spent.
Lack of funding for affordable housing. The U.S. Department of
Housing and Urban Development (HUD) defines "affordable" as
housing that costs no more than 30% of a household's monthly
income. That means rent and utilities in an apartment or the
monthly mortgage payment and housing expenses for a homeowner
should be less than 30% of a household's monthly income to be
considered affordable. According to the national Center for
Housing Policy, 34% of working renters in California spend half
or more of their income on housing. Among all 50 states,
California has the highest fraction of working renters who spend
half or more of their income on housing.
According to HUD, California has six of the most expensive
rental markets in the country. Nationwide, rents in 2014 grew
the fastest in San Jose and San Francisco, by 14.4% and 13.5%
respectively. Lower income individuals represent a majority of
renter households. Additionally, California has 113,952
homeless people, which accounts for 20% of the nation's homeless
AB 90 (Chau) Page 4 of ?
population. California also has the highest rate of unsheltered
people at 62.7% (71,437 were unsheltered).
In recent years, the funding for the construction of affordable
housing has dramatically decreased with the loss of
redevelopment funds and the expenditure of funding from the last
state-wide housing bond.
Federal Housing Trust Fund. HTF is an affordable-housing
production program that will complement existing federal, state,
and local efforts to increase and preserve the supply of decent,
safe, and sanitary affordable housing for ELI and VLI
households, including homeless families. The HTF was created
under the HERA of 2008. HERA directed Fannie Mae and Freddie
Mac to set aside .042% of new mortgage purchases in the federal
HTF. Sixty-five percent was directed to the federal HTF and 35%
to the Capitol Magnet Fund. Unfortunately, before the funds
could be directed to the HTF, the banking and mortgage 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 May and Freddie Mac to set aside
funds for the HTF beginning on January 1, 2015. These funds may
be allocated as soon as the summer of 2016 on a formula basis.
States and state-designated entities are eligible grantees for
the HTF. A state must use at least 80% of each annual grant for
rental housing, up to 10% for homeownership, and up to 10% for
the grantee's reasonable administrative and planning costs. In
each fiscal year, not less than 75% of funds awarded to each
grantee must be provided to rental or homeownership projects
that benefit ELI or families with incomes at or below the
poverty line, whichever is greater. Additionally, when there is
only $1 billion available in the federal HTF, 100% of the funds
must be used to benefit ELI households.
HTF funds may be used for the production or preservation of
affordable housing through the acquisition, new construction,
reconstruction, and/or rehabilitation of non-luxury housing with
suitable amenities. All HTF-assisted units will be required to
have a minimum affordability period of 30 years.
Federal law requires money to be distributed to states by
formula. This formula is based upon shortage of rental
properties affordable and available to ELI and VLI households
and number of ELI and VLI renter households paying more than 50%
AB 90 (Chau) Page 5 of ?
of their income for rent and utilities. Priority will be given
to ELI households. The amount of money a state receives depends
on the shortage of affordable rental housing. Each state and
the District of Columbia (DC) shall receive a minimum of $3
million. If the HTF does not have sufficient funds to provide
$3 million to each state and DC, HUD will publish a notice in
the Federal Register describing an alternative method and seek
comments.
Assembly Votes:
Floor: 80-0
Appr: 17-0
H&CD: 7-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 24, 2015.)
SUPPORT:
Abode Communities
AARP, CA
A Community of Friends
ACCESS
BIA of Southern California's Los Angeles/Ventura Chapter
Bridge Housing
California Catholic Conference of Bishops
California Building Industry Association,)
California Catholic Conference
California Chamber of Commerce
California Community Foundation
Californians for Safety and Justice
California Housing Consortium
California Infill Builders Federation
California Rural Legal Assistance Foundation
City and County of San Francisco
City of Los Angeles
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City of Morgan Hill
City of San Jose
City of Santa Monica
City of Torrance
City of West Hollywood
Coalition for Economic Survival
Community Corporation of Santa Monica
Department of Housing and Community Development of Los Angeles
East LA Community Corporation
Enterprise Community Partners
Habitat for Humanity
Highridge Costa Housing Partners
Highridge Costa Investors
Housing Authority of the City of Los Angeles
Housing California
Hunger Advocacy Network
Inquilinos Unidos
Jewish Family Services of San Diego
Leading Age California
League of California Cities
LINC Housing
Los Angeles Business Council
Mayor, City of Long Beach - Robert Garcia
Mayor, City of Los Angeles - Eric Garcetti
Mayor, City of Oakland - Libby Schaaf
Mayor, City of Sacramento - Kevin Johnson
Mayor, City of San Francisco - Ed Lee
Mayor, City of San Jose - Sam Liccardo
Mayor, City of Santa Ana - Miguel Pulido
Mercy Housing California
National Association of Social Workers, California Chapter
Non- Profit Housing Association of Northern California
PATH
Public Counsel
Related California
San Diego and Imperial Counties Labor Council
San Diego County Apartment Association
Santa Clara County Board of Supervisors
SEIU California
Southern California Association of Nonprofit Housing
Skid Row Housing Trust
United Way of Greater Los Angeles
Western Center on Law and Poverty
West Hollywood Community Housing Corporation
WORKS
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OPPOSITION:
None received
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