Amended in Senate August 4, 2016

Amended in Senate August 2, 2016

Amended in Senate July 16, 2015

Amended in Senate June 23, 2015

Amended in Assembly April 30, 2015

Amended in Assembly April 16, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 723


Introduced by Assembly Member Chiu

February 25, 2015


An act to amend Sections 50833, 51335, and 51340 of the Health and Safety Code, relating to housing, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 723, as amended, Chiu. Housing: finance.

(1) Existing law requires the Department of Housing and Community Development to allocate funds under the federal Community Development Block Grant Program to cities and counties. Existing law requires the department to determine and announce, in the applicable Notice of Funding Availability, the maximum amount of grant funds that may be used for economic development projects and programs, housing for persons and families of low or moderate income or for purposes directly related to the provision or improvement of housing opportunities for these persons and families, and for cities and counties that apply on behalf of certain Indian tribes. Existing law requires the department to develop and use certain eligibility criteria and requirements for certain economic development fund applications.

This bill would authorize the Department of Housing and Community Development to issue a Notice of Funding Availability under which the director of the department could determine that an applicant previously awarded funds is eligible to apply for, and receive, additional funds pursuant to the Community Development Block Grant Program, without regard to whether the applicant has expended at least a certain percentage of funds previously awarded.

(2) Existing law authorizes the Housing Finance Agency to issue revenue bonds for the purpose of financing the acquisition, construction, rehabilitation, refinancing, or development of multifamily rental housing and for the provision of capital improvements in connection with, and determined necessary to, that multifamily rental housing. Existing law requires no less than 20%, or 15% for those multifamily rental housing developments located in a target area, as defined, of the total number of units in a multifamily rental housing development, financed or for which financing has been extended or committed from the proceeds of sale of each bond issuance of the agency, to be for occupancy on a priority basis by lower income households. Existing law further requires that not less than 12 of the units required for occupancy on a priority basis by lower income households be for occupancy on a priority basis for very low income households.

This bill wouldbegin delete repeal the requirement that at least 15% of the total number of units in a target area development be for occupancy on a priority basis for lower income households. The bill would additionally repeal the requirement that not less than end deletebegin delete12end deletebegin delete of the units required for occupancy on a priority basis by lower income households be for occupancy on a priority basis for very low income households. The bill would make conforming changes.end deletebegin insert authorize the agency to waive the priority requirements for very low income households upon approval of the board and a specified determination.end insert

Existing law prohibits rental payments on units required for occupancy by very low income households paid by persons occupying the units from exceeding 30% of 50% of the area median income, and sets forth occupancy assumptions for adjusting rents for household size, as specified.

This bill would instead prohibit rental payment on units required for occupancy by lower income households paid by persons occupying the units from exceeding 30% of 80% of the area median income, and would authorize the agency to also utilize occupancy assumptions that it has determined are appropriate and commercially reasonable for financing pursuant to these provisions.

Existing law provides that the authorization to issue revenue bonds for these purposes constitutes an alternative method to issue bonds for making construction loans and mortgage loans for multifamily rental housing.

This bill would instead provide that the authorization to issue revenue bonds for these purposes constitutes an alternative method to finance construction loans and mortgage loans for multifamily rental housing.

(3) This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Section 50833 of the Health and Safety Code is
2amended to read:

3

50833.  

(a) The department shall determine and announce in
4the applicable NOFA the percentage of the total amount of the
5State Block Grant Program funds set aside for economic
6development that shall be allocated to make economic development
7planning and technical assistance grants to eligible small cities or
8counties for business attraction, retention, and expansion programs
9for the development of local economic development strategies,
10predevelopment grant feasibility studies, and downtown
11revitalization programs. Eligible small cities or counties may
12contract with public agencies or nonprofit economic development
13corporations and other eligible subgrantees or for-profit
14corporations or entities to provide these services. Each applicant
15shall be required to provide a cash match of up to 25 percent of
16the total amount requested. A technical assistance grant received
17under this set-aside is in addition to the city or county ceiling,
18under Section 50832, or its ability to apply under the economic
19development or general program set-asides. The department shall
20determine and announce in the applicable NOFA the maximum
21per year grant amount. Each applicant shall not receive more than
22two grants per year and shall be eligible to apply each year,
23although no applicant shall receive grants in excess of the
P4    1maximum amount determined by the department and announced
2in the applicable NOFA in any one year. Funds not applied for or
3allocated under this section may be used for other economic
4development purposes under Sections 50832 and 50832.1.

5(b) The department shall determine and announce in the
6applicable NOFA the percentage of the total amount of the State
7Block Grant Program funds not used for economic development
8that shall be set aside to make technical assistance grants to eligible
9small cities or counties for purposes including, but not limited to:
10inventory of housing needing rehabilitation in the district, income
11surveys of area residents, and any general studies of housing needs
12in the district. Each applicant shall be required to provide a cash
13match of up to 25 percent of the total amount requested. A technical
14assistance grant received under this set-aside is in addition to the
15city or county ceiling or its ability to apply under the economic
16development or general program set-asides. Unexpended funds
17allocated under this section shall revert to the general program,
18but not to the economic development set-aside. The department
19shall determine and announce in the applicable NOFA the
20maximum grant amount per application. Each applicant shall not
21receive more than two grants per year and shall be eligible to apply
22each year, although no applicant shall receive grants in excess of
23the maximum amount determined by the department and announced
24 in the applicable NOFA in any one year.

25(c) If, under federal law, the economic development planning
26and technical assistance grants and the general allocation planning
27and assistance grants are considered to be administrative
28expenditures, the department may reduce the percentages of the
29set-asides by up to the amount necessary to remain within the
30allowable limits for administrative expenditures.

31(d) Two or more jurisdictions may pool their funds and make
32a joint application for the same project.

33(e) General administrative activity planning studies shall not be
34counted against allocations under this section.

35(f) The department may issue a NOFA under which the director
36may determine that an applicant with one or more current
37Community Development Block Grant agreements signed in 2012
38or later, for which the expenditure deadline established in the grant
39agreement or agreements has not yet passed, is eligible to apply
40for and receive an award of, funds pursuant to this chapter, without
P5    1regard to whether the applicant has expended at least 50 percent
2of Community Development Block Grant Funds awarded in 2012
3or thereafter. For any applicant that is so determined, the director
4shall include in the application file a written confirmation of
5eligibility and any award of funds. An application made pursuant
6to the director’s determination under this section may be evaluated
7solely on the basis of eligibility, need, benefit, or readiness, without
8regard to any specific rating criteria provided by Section 7078 of
9the California Code of Regulations. The awarding of funds to an
10applicant pursuant to the director’s determination under this section
11does not exempt those funds from consideration under any
12expenditure requirement under law.

13

SEC. 2.  

Section 51335 of the Health and Safety Code is
14amended to read:

15

51335.  

(a) (1) Not less than 20 percent of the total number of
16units in a multifamily rental housing development financed, or for
17which financing has been extended or committed, pursuant to this
18chapter shall be for occupancy on a priority basis by lower income
19households.begin insert If a multifamily rental housing development is located
20within a targeted area, as described by Section 143(j) of Title 26
21of the United States Code, not less than 15 percent of the total
22number of units financed, or for which financing has been extended
23or committed pursuant to this chapter, shall be for occupancy on
24a priority basis by lower income households. Not less than one-half
25of the units required for occupancy on a priority basis by lower
26income households shall be for occupancy on a priority basis for
27very low income households. However, with approval of the board,
28the agencyend insert
begin insert may waive the priority requirements for very low
29income households in designated geographic areas of the state
30upon a determination that the housing needs of a substantial
31number of lower income households will not otherwise be met.end insert

32The rental payments on the units required for occupancy by
33lower income households paid by the persons occupying the units
34(excluding any supplemental rental assistance from the state, the
35federal government, or any other public agency to those persons
36or on behalf of those units) shall not exceed 30 percent of 80
37percent of area median income. If the sponsor elects to establish
38a base rent for all or part of the units for lower income households,
39the base rents shall be adjusted for household size. In adjusting
40rents for household size, the agency shall either assume that one
P6    1person will occupy a studio unit, two persons will occupy a
2one-bedroom unit, three persons will occupy a two-bedroom unit,
3four persons will occupy a three-bedroom unit, and five persons
4will occupy a four-bedroom unit, or utilize occupancy assumptions
5that it determines to be appropriate and commercially reasonable
6for financing extended pursuant to this chapter.

7(2) The local agency issuing permits for the development of the
8multifamily rental housing development shall consider
9opportunities to contribute to the economic feasibility of the units
10and to the provision of units for very low income households
11through concessions and inducements such as the following:

12(A) Reductions in construction and design requirements.

13(B) Reductions in setback and square footage requirements and
14the ratio of vehicular parking spaces that would otherwise be
15required.

16(C) Granting density bonuses.

17(D) Providing expedited processing of permits.

18(E) Modifying zoning code requirements to allow mixed use
19zoning.

20(F) Reducing or eliminating fees and charges for filing and
21processing applications, petitions, permits, planning services, water
22and sewer connections, and other fees and charges.

23(G) Reducing or eliminating requirements relating to monetary
24exactions, dedications, reservations of land, or construction of
25public facilities.

26(H) Other financial incentives or concessions for the multifamily
27rental housing development which result in identifiable cost
28reductions, as determined by the agency. The agency shall ensure
29that the local agency issuing permits for the development considers
30its responsibilities under this section and makes a good faith effort
31to enhance the feasibility of the project and to provide housing for
32lower income households and very low income households.

33(3) The agency shall not permit a selection criteria to be applied
34to certificate holders under Section 8 of the United States Housing
35Act of 1937 (42 U.S.C. Sec. 1437f) that is any more burdensome
36than the criteria applied to all other prospective tenants.

37(4) It is the intent of the Legislature that the agency finance
38projects that assist in meeting the urgent need for providing shelter
39for lower income households, very low income households, and
40persons and families of low or moderate income. To that end, the
P7    1quality of materials and the amenities provided should not be
2excessive so as to hinder the prospect of achieving the stated goal.
3The Legislature finds and declares that the design standards utilized
4by the agency in the past including, but not limited to, the design
5requirements adopted to govern the new construction program
6under Section 8 of the United States Housing Act of 1937 (42
7U.S.C. Sec. 1437f), are substantially in excess of those required
8for a decent, healthy, and safe residential unit and intends, by the
9amendment adding this paragraph to this section by the Statutes
10of 1985, that the agency finance multifamily rental developments
11with substantially less costly design requirements than those
12required by the agency prior to January 1, 1986.

13(5) It is the intent of the Legislature that the agency finance
14projects that assist in meeting the urgent need for providing shelter
15for families. To that end, developments with three- and
16four-bedroom units affordable to larger families shall have priority
17over competing developments.

18(b) As a condition of financing pursuant to this chapter, the
19housing sponsor shall enter into a regulatory agreement with the
20agency providing that units reserved for occupancy by lower
21income households remain available on a priority basis for
22occupancy until the bonds are retired. The regulatory agreement
23shall contain a provision making the covenants and conditions of
24the agreement binding upon successors in interest of the housing
25sponsor and, notwithstanding any other provision of law, these
26burdens of the regulatory agreement shall run with the land. The
27regulatory agreement shall be recorded in the office of the county
28recorder of the county in which the multifamily rental housing
29development is located. The regulatory agreement shall be recorded
30in the grantor-grantee index to the name of the property owner as
31grantor and to the name of the agency as grantee.

32(c)  The agency shall ensure that units occupied by lower income
33households are of comparable quality and offer a range of sizes
34and number of bedrooms comparable to those units which are
35available to other tenants.

36(d) (1) The agency shall give priority to processing construction
37loans and mortgage loans or may take other steps such as reducing
38loan fees for multifamily rental housing developments which
39incorporate innovative and energy-efficient techniques which
40reduce development or operating costs and which have the lowest
P8    1feasible per unit cost, as determined by the agency, based on
2efficiency of design, the elimination of improvements that are not
3required by applicable building standards, or a reduction in the
4amount of local fees imposed on the development.

5(2) The agency shall give equal priority to processing
6construction loans and mortgage loans or may take other steps
7such as reducing loan fees on multifamily rental housing
8developments which do any of the following:

9(A) Utilize federal housing or development assistance.

10(B) Utilize redevelopment funds or other local financial
11assistance, including, but not limited to, contributions of land, or
12for which local fees have been reduced.

13(C) Are sponsored by a nonprofit housing organization.

14(D) Provide a significant number of housing units, as determined
15by the agency, as part of a coordinated jobs and housing plan
16adopted by a local government.

17(E) Exceed a ratio whereby 20 percent of the units are reserved
18for occupancy by lower incomebegin insert households, or whereby 10 percent
19of the units are reserved for occupancy by very low income
20households, or which provide units for lower income households
21or very low incomeend insert
households for the longest period of time
22beyond the minimum number of years.

23(e) (1) New and existing rental housing developments may be
24syndicated after prior written approval of the agency. The agency
25shall grant that approval only after the agency determines that the
26terms and conditions of the syndication comply with this section.

27(2) The terms and conditions of the syndication shall not reduce
28or limit any of the requirements of this chapter or regulations
29adopted or documents executed pursuant to this chapter. No
30requirements of the state shall be subordinated to the syndication
31agreement. A syndication shall not result in the provision of fewer
32assisted units, or the reduction of any benefits or services, than
33were in existence prior to the syndication agreement.

34

SEC. 3.  

Section 51340 of the Health and Safety Code is
35amended to read:

36

51340.  

This chapter constitutes an alternative method to finance
37construction loans and mortgage loans for multifamily rental
38housing pursuant to the provisions of this chapter.

39

SEC. 4.  

This act is an urgency statute necessary for the
40immediate preservation of the public peace, health, or safety within
P9    1the meaning of Article IV of the Constitution and shall go into
2immediate effect. The facts constituting the necessity are:

3The lack of availability of affordable housing is of vital statewide
4importance and must be addressed as quickly as possible, and
5therefore this act must take immediate effect.



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