BILL ANALYSIS Ó
AB 90
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CONCURRENCE IN SENATE AMENDMENTS
AB
90 (Chau and Atkins)
As Amended August 31, 2015
Majority vote
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|ASSEMBLY: | 80-0 | (June 4, |SENATE: | 40-0 | (September 2, |
| | |2015) | | |2015) |
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Original Committee Reference: H. & C.D.
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 existing or
newly-created 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 through a recorded and
enforceable affordability covenant.
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4)Requires that any homeownership program funded from the
federal HTF be restricted to 30 years affordability through
either a recorded and enforceable affordability covenant or a
recorded and enforceable equity recapture agreement.
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 and guidelines 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
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rental housing to extremely low- and very low-income
households or assist extremely low- and very low-income
households to become homeowners.
2)Provides that HCD may adopt, amend, or repeal guidelines to
implement this chapter, and exempts these guidelines from the
Administrative Procedure Act.
3)Includes chaptering out amendments.
The Senate amendments:
1)Clarify that HCD must administer the HTF funds through
existing or newly-created programs.
2)Require that any home ownership program funded from the HTF
shall restrict affordability through either a recorded and
enforceable affordability covenant or a recorded and
enforceable equity recapture agreement.
3)Require that any rental project funded from the federal HTF
shall restrict affordability through a recorded and
enforceable affordability covenant.
4)Provide that HCD may adopt, amend, or repeal guidelines to
implement this chapter, and exempt these guidelines from the
Administrative Procedure Act.
5)Make technical, clarifying changes.
6)Include chaptering out amendments.
FISCAL EFFECT: According to the Senate Appropriations
Committee:
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1)One-time HCD costs of approximately $589,000 in Fiscal Year
2015-16 for 4.5 Personnel Year (PY) of staff time to develop a
program for distribution of federal HTF funds (General Fund).
It is likely that these funds could be reimbursed from the
initial distribution of federal funds, which is expected in
2016-17.
2)On-going HCD costs in the range of $1 million in 2016-17 for 9
PY of staff time for program evaluation, development, and
administration (federal funds). HCD's ongoing administrative
costs would be adjusted annually, based upon expected
allocations of federal HTF funds. All costs are expected to
be below the ten percent allowance for administrative costs
that may be retained by HCD from federal HTF allocations.
3)Ongoing HCD local assistance expenditures of approximately $40
million, beginning in 2016-17 (federal funds). Amounts of HTF
funds available for expenditure are dependent upon federal
formulas and the aggregate amount of mortgages funded through
specified federal entities
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 United States 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 10%.
Lower-income households represent a majority of renter
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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: 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.
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Federal guidelines require that the HTF be distributed to states
by a formula based on:
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 this 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 funds
will be allocated each year.
Analysis Prepared by:
Rebecca Rabovsky / H. & C.D. / (916) 319-2085 FN: 0002064