BILL ANALYSIS Ó
AB 1335
Page 1
Date of Hearing: May 20, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1335 (Atkins) - As Amended May 14, 2015
-----------------------------------------------------------------
|Policy |Housing and Community |Vote:|5 - 1 |
|Committee: |Development | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: Yes State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill, an urgency measure, establishes the Building Homes
and Jobs Act of 2015 (the Act) to provide funding for affordable
housing. Specifically, this bill:
AB 1335
Page 2
1)Establishes the Building Homes and Jobs Trust Fund (Trust
Fund) within the State Treasury.
2)Beginning January 1, 2016, imposes a $75 fee, capped at $255
per single transaction, on real estate recorded documents, as
defined, excluding documents associated with home sales.
3)Requires the fee, minus any administrative cost to the county
recorder for collection, to be transferred quarterly to the
Department of Housing and Community Development (HCD) and
deposited into the Trust Fund. Requires any moneys
appropriated by the Legislature, and any other moneys made
available from other sources, to be deposited into the Trust
Fund.
4)Requires 20% of the money deposited into the Trust Fund to be
used for affordable homeownership activities, and allows the
remaining 80% of money upon appropriation by the Legislature,
to be expended for low and moderate income housing purposes,
as defined.
5)Establishes the Building Homes and Jobs Trust Fund Governing
Board and specifies its membership.
6)Requires HCD, in consultation with others, to develop a
Building Homes and Jobs Investment Strategy (investment
strategy).
7)Requires the State Auditor to conduct periodic audits and
requires HCD to provide, in its annual report to the
Legislature, information on the program.
8)Declares the Legislature's intent to enact legislation to
create a Secretary of Housing to oversee all activities
related to housing.
FISCAL EFFECT:
AB 1335
Page 3
1)On-going revenues in the range of $300 and $500 million
(Building Homes and Jobs Trust Fund) annually from the
recording fee.
2)Onetime costs to HCD of approximately $230,000 (GF), for three
positions for six months, to develop the investment strategy,
including holding public workshops and establishing the
Governing Board.
3)On-going, intermittent costs of approximately $200,000 (GF)
for consultations necessary for the required five-year updates
to the investment strategy.
4)Unknown, on-going costs to HCD to administer the housing
programs that receive an appropriation from the Trust Fund.
The bill allows HCD to receive an appropriation of up to 5% of
the moneys in the Trust Fund to cover its administrative
costs.
5)Potential future cost pressures to create a Secretary of
Housing.
6)County recorder costs are not reimbursable by the State. The
bill specifies that recorders can retain a portion of the fee
necessary to cover their costs.
COMMENTS:
1)Purpose. According to the author, "increased and ongoing
funding for affordable housing is critical to stabilize the
AB 1335
Page 4
state's housing development and construction marketplace. If
developers know that there is a sustainable source of funding
available, they will take on the risk that comes with
development - and create a reliable pipeline of well-paying
construction jobs in the process. The Building Homes and Jobs
Act will utilize a pay as you go approach and generate
hundreds of millions of dollars annually for affordable
housing through a $75 fee on real estate recorded documents,
excluding those documents associated with home sales. Funds
generated will leverage an additional $2 to $3 billion in
federal, local, and bank investment."
2)Background. Historically, the state has invested in low- and
moderate-income housing primarily by providing funding for
construction. Developers typically use multiple sources of
financing, including voter-approved housing bonds, state and
federal low-income housing tax credits, private bank
financing, and local matching dollars.
Proposition 46 of 2002 and Proposition 1C of 2006 together
provided $4.95 billion for affordable housing. These funds
financed the construction, rehabilitation, and preservation of
57,220 affordable apartments, including 2,500 supportive homes
for people experiencing homelessness, and over 11,600 shelter
spaces. In addition, these funds have helped 57,290 families
become or remain homeowners. Nearly all of these funds have
been awarded.
Until 2011, the Community Redevelopment Law required
AB 1335
Page 5
redevelopment agencies to set aside 20% of all tax increment
revenue to increase, improve, and preserve the community's
supply of low- and moderate-income housing. In fiscal year
2009-10, redevelopment agencies collectively deposited $1.075
billion of property tax increment revenues into their low- and
moderate-income housing funds. With the elimination of
redevelopment agencies, this source of funding for affordable
housing is no longer available.
California has reduced its funding for the development and
preservation of affordable homes from approximately $1.7
billion a year to nearly nothing. According to the California
Housing Partnership, California has a shortfall of 1,465,884
affordable units for extremely low- and very-low income
households.
3)Arguments in support. Supporters, primarily business
organizations, agree that creating a sustainable and
self-renewing source of funding will help leverage billions in
federal and local funds, and bank loans to develop and operate
housing affordable to families, seniors, people with
disabilities, and persons experiencing homelessness.
Supporters estimate that the Trust Fund could generate 29,000
jobs annually, primarily in the construction sector.
4)Arguments in opposition. County recorders argue that exempting
documents recorded in connection with a real estate purchase
would unfairly burden lower income people while exempting
persons buying million dollar homes. They are also concerned
that the bill does not require that a percentage of the funds
collected would be distributed back to the communities where
the tax was collected. The Executive Council of Homeowners is
concerned that the recording fee would be imposed on homeowner
AB 1335
Page 6
associations (HOAs) requiring them to increase their members'
assessments.
5)Prior Legislation. SB 391 (DeSaulnier) of 2104 would have
imposed a $75 fee on every real estate recorded document,
excluding those recorded in connection with a transfer subject
to a documentary transfer tax. The bill was held in Assembly
Appropriations Committee.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081