BILL ANALYSIS Ó
AB 1335
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ASSEMBLY THIRD READING
AB
1335 (Atkins)
As Amended May 14, 2015
2/3 vote. Urgency
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+---------------------+---------------------|
|Housing |5-1 |Chau, Burke, Chiu, |Beth Gaines |
| | |Lopez, Mullin | |
| | | | |
|----------------+------+---------------------+---------------------|
|Appropriations |12-4 |Gomez, Bonta, |Chang, Gallagher, |
| | |Calderon, Daly, |Jones, Wagner |
| | |Eggman, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Quirk, Rendon, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Establishes the Building Homes and Jobs Act of 2015 (the
Act) to provide funding for affordable housing. Specifically,
this bill:
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1)Incudes legislative findings.
2)Defines "Department" to mean the Department of Housing and
Community Development (HCD).
3)Defines "Governing Board" to mean the Building Homes and Jobs
Trust Fund Governing Board.
4)Establishes the Building Homes and Jobs Trust Fund (the Trust
Fund) within the State Treasury.
5)Beginning January 1, 2016, imposes a $75 fee on every real
estate instrument, paper, or notice that is required or
permitted by law per each single transaction per parcel of real
property, excluding real estate instruments, papers, or notices
recorded in connection with a transfer subject to a documentary
transfer tax.
6)Defines real estate instrument, paper, or notice as a document
relating to real property, including but not limited to the
following: deed, grant deed, trustee's deed, deed of trust,
conveyance, quit claim deed, fictitious deed of trust,
assignment of deed of trust, request for notice of default,
abstract of judgment, subordination agreement, declaration of
homestead, abandonment of homestead, notice of default, release
or discharge, easement, notice of trustee sale, notice of
completion, UCC financing statement, mechanic's lien maps, and
covenants, conditions, and restrictions.
7)Requires the fee, minus any administrative cost to the county
recorder for collection, to be transferred quarterly to HCD and
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deposited into the Trust Fund.
8)Requires any moneys appropriated by the Legislature to be
deposited into the Trust Fund as well as any other moneys made
available to HCD for the purposes of the Trust Fund from any
other sources.
9)Requires a county to pay HCD any interest, at the legal rate, on
any funds that are not transferred within 30 days of the end of
a quarter.
10)Requires any interest or other increment resulting from the
investment of money in the Trust Fund to be deposited into the
Trust Fund.
11)Prohibits the transfer of any money in the Fund to any other
fund except for the Surplus Money Investment Fund.
12)Requires 20% of the money deposited into the Trust Fund to be
used for affordable owner-occupied workforce housing.
13)Allows the remaining 80% of money in the Trust Fund, upon
appropriation by the Legislature, to be expended for the
following purposes:
a) Development, acquisition, rehabilitation, and preservation
of housing affordable to extremely low-, very low-, low- and
moderate-income households including necessary operating
subsidies;
b) Affordable rental and ownership housing that meets the
needs of a growing workforce up to 120% of area median income
(AMI);
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c) Matching portions of funds placed into local or regional
housing trust funds;
d) Matching portions of funds in the Low- and Moderate-Income
Housing Asset Funds of former redevelopment agencies retained
by successor agencies;
e) Capitalized reserves for services connected to the
creation of new permanent supportive housing, including, but
not limited to, developments funded through the Veterans
Housing and Homelessness Prevention Program;
f) Emergency shelters, transitional housing, and rapid
re-housing services;
g) Accessibility modifications;
h) Efforts to acquire and rehabilitate foreclosed, vacant, or
blighted homes;
i) Homeownership opportunities, including but not limited to
down payment assistance; and
j) Up to 5% to HCD for the cost of administering programs
funded by the Trust Fund.
1)Establishes the Governing Board made up of the following
members:
a) A representative from California Housing Finance Agency
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(CalHFA);
b) A representative from HCD;
c) A representative from the Treasurer's Office;
d) No fewer than two real estate licensees one from northern
California and one from southern California with not less
than 10 years of real estate experience and membership in a
real estate trade organization with not less than 20,000
licensees;
e) A local government representative from northern
California, appointed by the Governor;
f) A local government representative from southern
California, appointed by the Governor;
g) A representative from the home building industry from
northern California, appointed by the Governor;
h) A representative from the home building industry from
southern California, appointed by the Governor;
i) Six public members including:
i) One nonprofit affordable housing developer, appointed
by the Speaker of the Assembly;
ii) One nonprofit affordable housing developer, appointed
by the President Pro Tempore of the Senate;
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iii) One for-profit affordable housing developer, appointed
by the Speaker of the Assembly;
iv) One for-profit affordable housing developer, appointed
by the President Pro Tempore of the Senate;
v) Two additional members, one appointed by the Speaker
of the Assembly and the other by the President Pro Tempore
of the Senate, that represent or has experience in one or
more of the following areas:
(1) Private sector lending;
(2) For-profit affordable housing development;
(3) Nonprofit affordable housing development;
(4) Working with special needs populations,
including persons experiencing homelessness;
(5) Architecture;
(6) Housing development consultation; and
(7) Housing issues related academia.
2)Requires the overall public membership of the Governing Board to
contribute to a balance among geographic areas and between rural
and urban interests.
3)Gives the Governing Board the authority to review and approve
recommendations from HCD for all funds distributed from the
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Trust Fund.
4)Requires HCD, in consultation with the CalHFA, the California
Tax Credit Allocation Committee, and the California Debt Limit
Allocation Committee, to develop a Building Homes and Jobs
Investment Strategy (investment strategy).
5)Requires HCD to submit the first investment strategy to the
Legislature as part of the Governor's May Revise of the Budget
Act in 2015-16 and every five years thereafter as part of the
Budget Act beginning in 2020-21.
6)Requires the investment strategy to do all of the following:
a) Identify the statewide needs, goals, objectives, and
outcomes for housing for a five-year time period;
b) Requires the goals to include targets of the total number
of affordable homes created and preserved with the funds;
c) Promote a geographically balanced distribution of funds,
including consideration of a direct allocation of funds to
local governments;
d) Emphasize investments that serve households that are at or
below 60% of AMI; and
e) Meet the following minimum objectives:
i) Encourage economic development and job creation by
meeting the housing needs of a growing workforce up to 120%
of AMI;
ii) Identify opportunities to coordinate among state
departments and agencies to achieve greater efficiencies;
increase the amount of federal investment in housing
production, services, and operating costs; and promote
energy efficiency in housing produced;
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iii) Incentivize the use and coordination of nontraditional
funding sources, including philanthropic funds, local
realignment funds, non-housing tax increment, the federal
Patient Protection and Affordable Care Act funds, and other
resources; and
iv)Incentivize innovative approaches that produce savings to
local and state services by reducing the instability of
housing for frequent high-cost users of institutions such
as hospitals, jails, detoxification facilities, psychiatric
hospitals, and emergency shelters.
1)Requires HCD to hold at least four public workshops in different
regions of the state to inform development of the investment
strategy.
2)Requires the Governing Board to review and advise HCD regarding
the investment strategy prior to its submission to the
Legislature.
3)Requires expenditure requests contained in the Governor's
proposed budget to be consistent with the investment strategy.
4)Requires moneys in the Trust Fund to be appropriated through the
annual budget act.
5)Requires the State Auditor to conduct periodic audits to
determine if HCD is awarding the annual allocation to individual
programs in a timely manner and consistent with the Act.
6)Requires HCD to provide the following information in its annual
report to the Legislature:
a) How funds were allocated in the prior year;
b) Efforts to promote geographic balance when distributing
the funds;
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c) An assessment of the impact of the Trust Fund on job
creation and the economy;
d) The effectiveness of programs directed toward persons who
are homeless or at risk of homelessness at keeping those
persons housed; and
e) A determination as to whether any moneys derived from the
recording fee are being allocated by the state for any
purpose not authorized by the Act and this information must
be provided to the county recorders.
1)Provides that if HCD determines that any moneys collected from
the recording fee are being allocated by the state for any
purpose not authorized by the Act, the county recorders will
immediately cease collection of the fees and only resume
collection of the recording fee after receiving notice that the
fees are being allocated by the state for the purposes of the
Act.
2)Declares the Legislature's intent to enact legislation to create
a Secretary of Housing to oversee all activities related to
housing and that all professional entities that play a role in
the housing market would be authorized to be incorporated in
order to have a clearer and more unified approach to housing in
the state.
3)Includes an urgency clause.
FISCAL EFFECT: According to the Assembly Appropriations Committee
1)On-going recording fee revenues in the range of $300 and $500
million annually (Building Homes and Jobs Trust Fund).
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2)Onetime costs to HCD of approximately $230,000 (General Fund
(GF)), for three positions for six months, to develop the
investment strategy, including holding public workshops, forming
an advisory committee, 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.
COMMENTS:
Background: California is facing a housing affordability crisis
on many fronts. According to the Public Policy Institute of
California (PPIC), as of February 2015, roughly 36% of mortgaged
homeowners and approximately 48% of all renters are spending more
than one-third of their household incomes on housing. California
continues to have the second lowest homeownership rate in the
nation and the Los Angeles metropolitan area is now a majority
renter region. In fact, five of the eight lowest homeownership
rates in the nation are in California metropolitan areas.
California has 12% of the United States population, but 20% of its
homeless population - 63% of these homeless Californians are
unsheltered (the highest rate in the nation). At any given time,
134,000 Californians are homeless. California has 24% of the
nation's homeless veterans and one-third of the nation's
chronically homeless. The state also has the largest numbers of
unaccompanied homeless children and youth, with 30% of the
national total.
Purpose of this bill: According to the author, "increased and
ongoing funding for affordable housing is critical to stabilize
the state's housing development and construction marketplace. If
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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."
Previous state funding for housing: Historically, the state has
invested in low- and moderate-income housing primarily by
providing funding for construction. Because of the high cost of
land and construction and the subsidy needed to keep housing
affordable to residents, affordable housing is expensive to build.
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.
Voter-approved bonds have been an important source of funding to
support the construction of affordable housing. 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 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
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source of funding for affordable housing is no longer available.
California has reduced its funding for the development and
preservation of affordable homes by 79% - 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.
Funding mechanism: Although an important source of funding in the
past for affordable housing, voter-approved bonds are not a
permanent or reliable source. To provide for a stable and
permanent source of funding for affordable housing, several states
have set up state housing trust funds funded by a document
recording fee. This bill would establish the Building Homes and
Jobs Act, to be funded by a $75 fee on recorded real estate
documents, excluding those recorded in connection with the sale of
a property. Estimates suggest that the recording fee would
generate an average between $300 and $500 million a year for
affordable housing. This bill caps the amount of fees that could
be charged per single transaction to $225. This means that an
individual will only be charged on three documents recorded in a
transaction. The fee would be charged on a "real estate
instrument, paper, or notice." This bill includes a list of
possible documents on which the fee could be charged, however,
this is not an exhaustive list and there may be others.
How the Trust Fund can be used: This bill authorizes funds in the
Trust Fund to be appropriated for a variety of uses. Twenty
percent of the Trust Fund is set aside for affordable
homeownership activities. The remaining 80% can be used for the
development, acquisition, rehabilitation, and preservation of low-
and moderate-income housing; affordable rental and ownership
housing that meets the needs of a growing workforce up to 120% of
AMI, match funds in local housing trust funds and funds in the Low
and Moderate-Income Housing Asset funds of former redevelopment
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agencies; capitalize the reserves for services for new permanent
supportive housing including developments funded through the
Veterans Housing and Homeless Prevention Program; emergency
shelters, transitional housing, and rapid rehousing; accessibility
modifications; efforts to acquire and rehabilitate foreclosed and
vacant homes, and for homeownership opportunities including down
payment assistance. Unlike voter-approved bond funds, the Trust
Fund could be used to support services and operating expenses for
supportive and transitional housing.
Investment strategy: This bill gives the Legislature the
authority to appropriate funds that are deposited into the Trust
Fund. In order to direct that investment through an informed and
strategic process, the bill requires HCD, in consultation with
other relevant state housing agencies and committees, to develop
an investment strategy for the Trust Fund. HCD would be required
to submit the first investment strategy to the Legislature as part
of the May revision to the Governor's proposed budget in 2015-16.
Every five years after, beginning in 2020-21, HCD would be
required to revise the investment strategy. To inform the
investment strategy, HCD must hold four public hearings throughout
the state. HCD is already required to develop a Statewide Housing
Plan every four years to identify the statewide needs, goals,
objectives, and outcomes for housing, which would inform the
investment strategy.
In preparing the investment strategy, HCD would be required to
identify the statewide needs and goals for housing for the next
five years and to attach targets of the total number of affordable
homes created and preserved with the funds. HCD would also be
required to promote a geographically balanced distribution of the
funds, including some consideration of providing funds directly to
local governments. In addition, the investment strategy would
have to emphasize investments in housing affordable to households
at or below 60% of AMI, generally referred to as low-, very low-
and extremely low-income households. This bill also sets out
minimum objectives that must be met in the investment strategy.
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Related Legislation: Last session, SB 391 (DeSaulnier) of the
2013-14 Regular Session, would have imposed a $75 fee on every
real estate instrument, paper, or notice that is required or
permitted by law, excluding real estate instruments, papers, or
notices recorded in connection with a transfer subject to a
documentary transfer tax. The bill was held in Assembly
Appropriations Committee.
This bill differs from SB 391 in the following ways:
1)Sets a cap of $225 on fees charged on a per parcel per
transaction basis;
2)Creates a 20% set aside of funding for homeownership programs;
3)Requires the creation of a Governing Board to review and approve
recommendations from HCD for all funds distributed from the
Trust Fund and to advise and approve the Investment Strategy
that HCD must develop for the Trust Fund.
4)Directs the county recorders to stop collecting the fee if HCD
determines that the funds are not being used to support the
purposes authorized by the Building Homes and Jobs Act; and
5)Declares the intent of the Legislature to create a Secretary of
Housing to oversee all of the housing activities related to the
state and to have a clearer and more unified approach to housing
in the state.
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Analysis Prepared by:
Lisa Engel / H. & C.D. / (916) 319-2085 FN:
0000654