Amended in Senate August 18, 2016

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 Bill No. 723

Introduced by Assembly begin delete Member Chiu end delete begin insert Members Chiu and Thurmond end insert

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 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 begin delete 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 end delete begin insert would, commencing September 1, 2016, end insert authorize the agency to also utilize occupancy assumptions that it has determined are appropriate and commercially reasonable for financing begin insert extended end insert 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
begin delete lower end delete begin insert very low end insert 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
begin delete 80 end delete begin insert 50 end insert percent of area median income. If the sponsor elects to
establish a base rent for all or part of the units for lower income
begin insert households and very low income end insert 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 begin insert commencing September 1, 2016, end insert 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.

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

Nothing in this act shall be interpreted to modify the
terms of any regulatory agreement recorded on or before August
31, 2016, including, but not limited to, terms that incorporate
Section 51335 of the Health and Safety Code by reference.

end insert

begin delete SEC. 4. end delete

begin insert SEC. 5. end insert   

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.