BILL NUMBER: AB 723 AMENDED
BILL TEXT
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
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 1/2 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 would 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
1/2 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. authorize the
agency to waive the priority requirements for very low income
households upon approval of the board and a specified determination.
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: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 50833 of the Health and Safety Code is amended
to read:
50833. (a) The department shall determine and announce in the
applicable NOFA the percentage of the total amount of the State Block
Grant Program funds set aside for economic development that shall be
allocated to make economic development planning and technical
assistance grants to eligible small cities or counties for business
attraction, retention, and expansion programs for the development of
local economic development strategies, predevelopment grant
feasibility studies, and downtown revitalization programs. Eligible
small cities or counties may contract with public agencies or
nonprofit economic development corporations and other eligible
subgrantees or for-profit corporations or entities to provide these
services. Each applicant shall be required to provide a cash match of
up to 25 percent of the total amount requested. A technical
assistance grant received under this set-aside is in addition to the
city or county ceiling, under Section 50832, or its ability to apply
under the economic development or general program set-asides. The
department shall determine and announce in the applicable NOFA the
maximum per year grant amount. Each applicant shall not receive more
than two grants per year and shall be eligible to apply each year,
although no applicant shall receive grants in excess of the maximum
amount determined by the department and announced in the applicable
NOFA in any one year. Funds not applied for or allocated under this
section may be used for other economic development purposes under
Sections 50832 and 50832.1.
(b) The department shall determine and announce in the applicable
NOFA the percentage of the total amount of the State Block Grant
Program funds not used for economic development that shall be set
aside to make technical assistance grants to eligible small cities or
counties for purposes including, but not limited to: inventory of
housing needing rehabilitation in the district, income surveys of
area residents, and any general studies of housing needs in the
district. Each applicant shall be required to provide a cash match of
up to 25 percent of the total amount requested. A technical
assistance grant received under this set-aside is in addition to the
city or county ceiling or its ability to apply under the economic
development or general program set-asides. Unexpended funds allocated
under this section shall revert to the general program, but not to
the economic development set-aside. The department shall determine
and announce in the applicable NOFA the maximum grant amount per
application. Each applicant shall not receive more than two grants
per year and shall be eligible to apply each year, although no
applicant shall receive grants in excess of the maximum amount
determined by the department and announced in the applicable NOFA in
any one year.
(c) If, under federal law, the economic development planning and
technical assistance grants and the general allocation planning and
assistance grants are considered to be administrative expenditures,
the department may reduce the percentages of the set-asides by up to
the amount necessary to remain within the allowable limits for
administrative expenditures.
(d) Two or more jurisdictions may pool their funds and make a
joint application for the same project.
(e) General administrative activity planning studies shall not be
counted against allocations under this section.
(f) The department may issue a NOFA under which the director may
determine that an applicant with one or more current Community
Development Block Grant agreements signed in 2012 or later, for which
the expenditure deadline established in the grant agreement or
agreements has not yet passed, is eligible to apply for and receive
an award of, funds pursuant to this chapter, without regard to
whether the applicant has expended at least 50 percent of Community
Development Block Grant Funds awarded in 2012 or thereafter. For any
applicant that is so determined, the director shall include in the
application file a written confirmation of eligibility and any award
of funds. An application made pursuant to the director's
determination under this section may be evaluated solely on the basis
of eligibility, need, benefit, or readiness, without regard to any
specific rating criteria provided by Section 7078 of the California
Code of Regulations. The awarding of funds to an applicant pursuant
to the director's determination under this section does not exempt
those funds from consideration under any expenditure requirement
under law.
SEC. 2. Section 51335 of the Health and Safety Code is amended to
read:
51335. (a) (1) Not less than 20 percent of the total number of
units in a multifamily rental housing development financed, or for
which financing has been extended or committed, pursuant to this
chapter shall be for occupancy on a priority basis by lower income
households. If a multifamily rental housing development is
located within a targeted area, as described by Section 143(j) of
Title 26 of the United States Code, not less than 15 percent of the
total number of units financed, or for which financing has been
extended or committed pursuant to this chapter, shall be for
occupancy on a priority basis by lower income households. Not less
than one-half of the units required for occupancy on a
priority basis by lower income households shall be for occupancy on a
priority basis for very low income households. However, with
approval of the board, the agency may waive the priority
requirements for very low income households in designated geographic
areas of the state upon a determination that the housing needs of a
substantial number of lower income households will not otherwise be
met.
The rental payments on the units required for occupancy by lower
income households paid by the persons occupying the units (excluding
any supplemental rental assistance from the state, the federal
government, or any other public agency to those persons or on behalf
of those units) shall not exceed 30 percent of 80 percent of area
median income. If the sponsor elects to establish a base rent for all
or part of the units for lower income households, the base rents
shall be adjusted for household size. In adjusting rents for
household size, the agency shall either assume that one person will
occupy a studio unit, two persons will occupy a one-bedroom unit,
three persons will occupy a two-bedroom unit, four persons will
occupy a three-bedroom unit, and five persons will occupy a
four-bedroom unit, or utilize occupancy assumptions that it
determines to be appropriate and commercially reasonable for
financing extended pursuant to this chapter.
(2) The local agency issuing permits for the development of the
multifamily rental housing development shall consider opportunities
to contribute to the economic feasibility of the units and to the
provision of units for very low income households through concessions
and inducements such as the following:
(A) Reductions in construction and design requirements.
(B) Reductions in setback and square footage requirements and the
ratio of vehicular parking spaces that would otherwise be required.
(C) Granting density bonuses.
(D) Providing expedited processing of permits.
(E) Modifying zoning code requirements to allow mixed use zoning.
(F) Reducing or eliminating fees and charges for filing and
processing applications, petitions, permits, planning services, water
and sewer connections, and other fees and charges.
(G) Reducing or eliminating requirements relating to monetary
exactions, dedications, reservations of land, or construction of
public facilities.
(H) Other financial incentives or concessions for the multifamily
rental housing development which result in identifiable cost
reductions, as determined by the agency. The agency shall ensure that
the local agency issuing permits for the development considers its
responsibilities under this section and makes a good faith effort to
enhance the feasibility of the project and to provide housing for
lower income households and very low income households.
(3) The agency shall not permit a selection criteria to be applied
to certificate holders under Section 8 of the United States Housing
Act of 1937 (42 U.S.C. Sec. 1437f) that is any more burdensome than
the criteria applied to all other prospective tenants.
(4) It is the intent of the Legislature that the agency finance
projects that assist in meeting the urgent need for providing shelter
for lower income households, very low income households, and persons
and families of low or moderate income. To that end, the quality of
materials and the amenities provided should not be excessive so as to
hinder the prospect of achieving the stated goal. The Legislature
finds and declares that the design standards utilized by the agency
in the past including, but not limited to, the design requirements
adopted to govern the new construction program under Section 8 of the
United States Housing Act of 1937 (42 U.S.C. Sec. 1437f), are
substantially in excess of those required for a decent, healthy, and
safe residential unit and intends, by the amendment adding this
paragraph to this section by the Statutes of 1985, that the agency
finance multifamily rental developments with substantially less
costly design requirements than those required by the agency prior to
January 1, 1986.
(5) It is the intent of the Legislature that the agency finance
projects that assist in meeting the urgent need for providing shelter
for families. To that end, developments with three- and four-bedroom
units affordable to larger families shall have priority over
competing developments.
(b) As a condition of financing pursuant to this chapter, the
housing sponsor shall enter into a regulatory agreement with the
agency providing that units reserved for occupancy by lower income
households remain available on a priority basis for occupancy until
the bonds are retired. The regulatory agreement shall contain a
provision making the covenants and conditions of the agreement
binding upon successors in interest of the housing sponsor and,
notwithstanding any other provision of law, these burdens of the
regulatory agreement shall run with the land. The regulatory
agreement shall be recorded in the office of the county recorder of
the county in which the multifamily rental housing development is
located. The regulatory agreement shall be recorded in the
grantor-grantee index to the name of the property owner as grantor
and to the name of the agency as grantee.
(c) The agency shall ensure that units occupied by lower income
households are of comparable quality and offer a range of sizes and
number of bedrooms comparable to those units which are available to
other tenants.
(d) (1) The agency shall give priority to processing construction
loans and mortgage loans or may take other steps such as reducing
loan fees for multifamily rental housing developments which
incorporate innovative and energy-efficient techniques which reduce
development or operating costs and which have the lowest feasible per
unit cost, as determined by the agency, based on efficiency of
design, the elimination of improvements that are not required by
applicable building standards, or a reduction in the amount of local
fees imposed on the development.
(2) The agency shall give equal priority to processing
construction loans and mortgage loans or may take other steps such as
reducing loan fees on multifamily rental housing developments which
do any of the following:
(A) Utilize federal housing or development assistance.
(B) Utilize redevelopment funds or other local financial
assistance, including, but not limited to, contributions of land, or
for which local fees have been reduced.
(C) Are sponsored by a nonprofit housing organization.
(D) Provide a significant number of housing units, as determined
by the agency, as part of a coordinated jobs and housing plan adopted
by a local government.
(E) Exceed a ratio whereby 20 percent of the units are reserved
for occupancy by lower income households, or whereby 10 percent
of the units are reserved for occupancy by very low income
households, or which provide units for lower income households or
very low income households for the longest period of time
beyond the minimum number of years.
(e) (1) New and existing rental housing developments may be
syndicated after prior written approval of the agency. The agency
shall grant that approval only after the agency determines that the
terms and conditions of the syndication comply with this section.
(2) The terms and conditions of the syndication shall not reduce
or limit any of the requirements of this chapter or regulations
adopted or documents executed pursuant to this chapter. No
requirements of the state shall be subordinated to the syndication
agreement. A syndication shall not result in the provision of fewer
assisted units, or the reduction of any benefits or services, than
were in existence prior to the syndication agreement.
SEC. 3. Section 51340 of the Health and Safety Code is amended to
read:
51340. This chapter constitutes an alternative method to finance
construction loans and mortgage loans for multifamily rental housing
pursuant to the provisions of this chapter.
SEC. 4. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
The lack of availability of affordable housing is of vital
statewide importance and must be addressed as quickly as possible,
and therefore this act must take immediate effect.