AB 1628, as amended, Committee on Budget. No Place Like Home Program: financing.
(1) The Mental Health Services Act (MHSA), an initiative measure enacted by the voters as Proposition 63 at the November 2, 2004, statewide general election, imposes a 1% tax on that portion of a taxpayer’s taxable income that exceeds $1,000,000 and requires that the revenue from that tax be deposited in the Mental Health Services Fund to fund various county mental health programs. The MHSA authorizes the Legislature to amend its provisions by a 2/3 vote, provided that the amendment is consistent with and furthers the intent of the act.
Existing law, known as the No Place Like Home Program, requires the Department of Housing and Community Development to award $2,000,000,000 among counties to finance capital costs, including, but not limited to, acquisition, design, construction, rehabilitation, or preservation, and to capitalize operating reserves, of permanent supportive housing for the target population, as specified. Existing law requires the department to distribute $1,800,000,000 through a competitive program and to allocate $200,000,000 among all counties within this state on an “over-the-counter” population basis.
The bill would authorize the California Health Facilities Financing Authority and the department to, among other things, enter into contracts to provide services pursuant to the No Place Like Home Program related to permanent supportive housing. The bill would also authorize the authority to issue taxable or tax-exempt revenue bonds in an amount not to exceed $2,000,000,000 for these purposes and to make secured or unsecured loans to the department in connection with financing permanent supportive housing pursuant to the No Place Like Home Program. The bill would require that the dollar limit on amounts distributed under the No Place Like Home Program be based on the principal amount of bonds issued by the authority and loaned to the department.
The bill would additionally authorize the use of moneys in the Mental Health Services Fund for the purposes of the No Place Like Home Program. The bill would also establish and continuously appropriate the Supportive Housing Program Subaccount in the Mental Health Services Fund. The bill would require the Controller, prior to any transfer, deposit, or expenditure from the fund for any other purpose, to transfer from the Mental Health Services Fund to the Supportive Housing Program Subaccount an amount necessary to cover the costs the authority is required to pay to the department pursuant to an above-described service contract, as determined by the authority but not to exceed an aggregate amount of
begin delete one hundred forty million ($140,000,000)end delete per year. The bill would prohibit moneys in the Supportive Housing Subaccount from being loaned to the General Fund pursuant to specified statutes.
The bill would exempt service contracts between the department and the authority pursuant to these provisions from specified public contracting laws. The bill would also exempt loan agreements between the department and the authority and revenue bonds issued by the authority from any other law applicable to the execution of those agreements or issuance of those bonds, including the California Environmental Quality Act.
(2) Existing law establishes the No Place Like Home Fund and continuously appropriates the moneys in this fund to the Department of Housing and Community Development for the purposes of the No Place Like Home Program. Existing law requires the deposit of, among other moneys, any proceeds from the issuance of bonds by the Treasurer.
This bill would instead require the department to deposit into the fund the proceeds of loans derived from the issuance of bonds under this bill by the California Health Facilities Financing Authority. The bill would additionally continuously appropriate moneys in the fund to the Treasurer and the authority for purposes of the No Place Like Home Program.
(3) Existing law requires counties to annually report specified information to the Department of Housing and Community Development on activities funded under the No Place Like Home Program, including information on the funded supportive housing development. Existing law also requires the department to report specified information on the program to the Legislature by December 31 of each year, commencing with the year after the first full year in which the program is in effect.
This bill would require the department to monitor compliance by counties with the grant and loan agreements and regulatory agreements pursuant to which funds are distributed pursuant to the competitive portion of the No Place Like Home Program and enforce those agreements to the extent necessary and desirable in order to provide, to the greatest degree possible, the successful provision of permanent supportive housing. The bill would require the department to submit a report to the California Health Facilities Financing Authority by December 31 of each year, commencing with the year after the first full year in which the program is in effect, that contains specified information about the counties participating in the program and the services that have been provided pursuant to any service contracts between the department and the authority, as described above.
(4) Existing law establishes a procedure by which a public agency may bring an action in the superior court to determine the validity of any matter authorized by other law. Existing law authorizes an action under this procedure to determine the legality of any action by the Department of Housing and Community Development related to the No Place Like Home Program. Existing law requires the department to issue its first request for proposal for the competitive program no later than 180 days, and to make its first allocation of “over-the-counter” funds within 60 days, after the deadline for appeals under the validation procedure.
This bill would recast this authorization to instead authorize an action to determine the validity of any service contract or loan agreement between the department and the California Health Facilities Financing Authority, as described above, in accordance with specified provisions governing actions to determine the validity of bonds, warrants, contracts, obligations, or evidences of indebtedness. The bill would instead require the department to issue its first request for proposal no later than 180 days, and to make its first allocation of “over-the-counter” funds as soon as reasonably practical, but no later than 150 days, after the effective date of a final judgment with no further opportunity for appeals, in any court proceeding affirming the validity of the service contracts between the department and the authority and any bonds issued by the authority.
(5) Existing law authorizes the Department of Finance to authorize a loan from the General Fund to the No Place Like Home Fund for cashflow purposes in an amount not to exceed $1,000,000. Existing law requires that a loan comply with certain requirements, including that the purpose of the loan is to allow the department to begin implementation activities related to the No Place Like Home Program, including drafting program guidelines and regulations.
This bill would instead authorize the Department of Finance to authorize one or more loans from the General Fund to the No Place Like Home Fund in an aggregate amount not to exceed $2,000,000. The bill would additionally authorize loans for the purpose of allowing the Department of Housing and Community Development, the California Health Facilities Financing Authority, and the Treasurer to implement the above-described provisions pertaining to service contracts and loan agreements between the department and the authority and revenue bonds issued by the authority.
(6) Existing law makes various findings and declarations regarding the No Place Like Home Program.
This bill would make additional findings and declarations pertaining to the financing and implementation of the No Place Like Home Program. The bill would also make various technical and conforming changes to the No Place Like Home Program.
(7) This bill would declare that its provisions further the intent of the MHSA.
(8) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.
Vote: 2⁄3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 15463 is added to the Government Code,
(a) For purposes of this section, the following
4definitions shall apply:
5(1) “No Place Like Home Program” has the same meaning as
6“program” as defined in Section 5849.2 of the Welfare and
8(2) “No Place Like Home Fund” means the No Place Like Home
9Fund established pursuant to Section 5849.4 of the Welfare and
11(3) “Permanent supportive housing” has the same meaning as
12“supportive housing” as defined in Section 50675.14 of the Health
13and Safety Code, except that “permanent supportive housing” shall
14include associated facilities if used to provide services to housing
16(b) The authority may issue taxable or tax-exempt revenue bonds
17in an amount not to exceed two billion dollars ($2,000,000,000),
18exclusive of refunding bonds but including any net premium
19derived from the sale of the bonds, pursuant to Sections 15441 to
2015450, inclusive, for the purpose of financing permanent supportive
21housing pursuant to the No Place Like Home Program or to refund
22bonds previously issued pursuant to this section. The authority
23may also utilize bond proceeds to fund necessary reserves,
24capitalized interest, credit enhancement or liquidity costs, or costs
26(c) The authority may make secured or unsecured loans to the
27Department of Housing and Community Development in
28connection with financing permanent supportive housing pursuant
29to the No Place Like Home Program or to refund bonds previously
30issued pursuant to this section, in accordance with an agreement
P6 1between the authority and the Department of Housing and
3(d) The authority may enter into any agreement for credit
4enhancement or liquidity, execute any instruments, and do any
5other acts it deems necessary, convenient, or desirable in
6connection with revenue bonds issued pursuant to this section or
7carry out any power expressly granted pursuant to this section.
8(e) (1) This section provides a complete, additional, and
9alternative method for performing the acts authorized by this
10section and shall be construed as supplemental and additional to
11powers conferred by other laws; provided, however, that the
12issuance of the bonds and refunding bonds and the execution of
13any agreements under this section are not subject to, and need not
14comply with, the requirements of any other law applicable to the
15issuance of those bonds or refunding bonds and the execution of
16those agreements, including, but not limited to, the California
17Environmental Quality Act (Division 13 (commencing with Section
1821000) of the Public Resources Code).
19(2) Except as provided in paragraph (1), the financing of
20permanent supportive housing pursuant to the No Place Like Home
21Program pursuant to this section shall not exempt the permanent
22supportive housing from the requirements of any other law
23otherwise applicable to the project.
Section 5849.1 of the Welfare and Institutions Code
25 is amended to read:
(a) The Legislature finds and declares that this part is
27consistent with and furthers the purposes of the Mental Health
28Services Act, enacted by Proposition 63 at the November 2, 2004,
29statewide general election, within the meaning of Section 18 of
31(b) The Legislature further finds and declares all of the
33(1) Housing is a key factor for stabilization and recovery to
34occur and results in improved outcomes for individuals living with
35a mental illness.
36(2) Untreated mental illness can increase the risk of
37homelessness, especially for single adults.
38(3) California has the nation’s largest homeless population that
39is disproportionally comprised of women with children, veterans,
40and the chronically homeless.
P7 1(4) California has the largest number of homeless veterans in
2the United States at 24 percent of the total population in our nation.
3Fifty percent of California’s veterans live with serious mental
4illness and 70 percent have a substance use disorder.
5(5) Fifty percent of mothers experiencing homelessness have
6experienced a major depressive episode since becoming homeless
7and 36 percent of these mothers live with post-traumatic stress
8disorder and 41 percent have a substance use disorder.
9(6) Ninety-three percent of supportive housing tenants who live
10with mental illness and substance use disorders voluntarily
11participated in the services offered.
12(7) Adults who receive 2 years of “whatever-it-takes,” or Full
13Service Partnership services, experience a 68 percent reduction in
15(8) For every dollar of bond funds invested in permanent
16supportive housing, the state and local governments can leverage
17a significant amount of additional dollars through tax credits,
18Medicaid health services funding, and other housing development
20(9) Tenants of permanent supportive housing reduced their visits
21to the emergency department by 56 percent, and their hospital
22admissions by 45 percent.
23(10) The cost in public services for a chronically homeless
24Californian ranges from $60,000 to $100,000 annually. When
25housed, these costs are cut in half and some reports show reductions
26in cost of more than 70 percent, including potentially less
27involvement with the health and criminal justice systems.
28(11) Californians have identified homelessness as their top tier
29priority; this measure seeks to address the needs of the most
30vulnerable people within this population.
31(12) Having counties provide mental health programming and
32services is a benefit to the state.
33(13) The Department of Housing and Community Development
34is the state entity with sufficient expertise to implement and oversee
35a grant or loan program for permanent supportive housing of the
37(14) The California Health Facilities Financing Authority is
38authorized by law to issue bonds and to consult with the Mental
39Health Services Oversight and Accountability Commission and
40the Department of Health Care Services concerning the
P8 1implementation of a grant program for California counties
2to support the development of programs that increase access to,
3and capacity for, crisis mental health services. It is therefore
4appropriate for the Department of Housing and Community
6Development to provide grants or loans to California counties for
7permanent supportive housing for the target population.
8(15) Use of bond funding will accelerate the availability of
9funding for the grant or loan program to provide permanent
10supportive housing for the target population as compared to relying
11on annual allocations from the Mental Health Services Fund and
begin delete countriesend delete to provide permanent supportive
13housing for homeless individuals living with mental illness.
14(16) The findings and declarations set forth in subdivision (c)
15of Section 5849.35 are hereby incorporated herein.
Section 5849.2 of the Welfare and Institutions Code
17 is amended to read:
As used in this part, the following definitions shall
20(a) “At risk of chronic homelessness” includes, but is not limited
21to, persons who are at high risk of long-term or intermittent
22homelessness, including persons with mental illness exiting
23institutionalized settings, including, but not limited to, jail and
24mental health facilities, who were homeless prior to admission,
25transition age youth experiencing homelessness or with significant
26barriers to housing stability, and others, as defined in program
28(b) “Authority” means the California Health Facilities Financing
29Authority established pursuant to Part 7.2 (commencing with
30Section 15430) of Division 3 of Title 2 of the Government Code.
31(c) “Chronically homeless” has the same meaning as defined
32in Section 578.3 of Title 24 of the Code of Federal Regulations,
33as that section read on May 1, 2016.
34(d) “Commission” means the Mental Health Services Oversight
35and Accountability Commission established by Section 5845.
36(e) “Committee” means the No Place Like Home Program
37Advisory Committee established pursuant to Section 5849.3.
38(f) “County” includes, but is not limited to, a city and
begin delete countyend delete
39 and a city receiving funds pursuant to Section 5701.5.
P9 1(g) “Department” means the Department of Housing and
3(h) “Development sponsor” has the same meaning as “sponsor”
4as defined in Section 50675.2 of the Health and Safety Code.
5(i) “Fund” means the No Place Like Home Fund established
6pursuant to Section 5849.4.
7(j) “Homeless” has the same meaning as defined in Section
8578.3 of Title 24 of the Code of Federal Regulations, as that section
9read on May 1, 2016.
10(k) “Permanent supportive housing” has the same meaning as
11“supportive housing,” as defined in Section 50675.14 of the Health
12and Safety Code, except that “permanent supportive housing” shall
13include associated facilities if used to provide services to housing
15(l) “Program” means the process for awarding funds and
16distributing moneys to applicants established in Sections 5849.7,
175849.8, and 5849.9 and the ongoing monitoring and enforcement
18of the applicants’ activities pursuant to Section 5849.8, 5849.9,
20(1) “Competitive program” means that portion of the program
21established by Section 5849.8.
22(2) “Distribution program” means that portion of the program
23described in Section 5849.9.
population” means individuals or households as
25provided in Section 5600.3 who are homeless, chronically
26homeless, or at risk of chronic homelessness.
Section 5849.3 of the Welfare and Institutions Code
28 is amended to read:
(a) There is hereby established the No Place Like
30Home Program Advisory Committee. Membership on the
31committee shall be as follows:
32(1) The Director of Housing and Community Development, or
33his or her designee, who shall serve as the chairperson of the
35(2) The Director of Health Care Services, or his or her designee,
36and an additional representative.
37(3) The Secretary of Veterans Affairs, or his or her designee.
38(4) The Director of Social Services, or his or her designee.
39(5) The Treasurer, or his or her designee.
P10 1(6) The chair of the Mental Health Services Oversight and
2Accountability Commission, or his or her designee.
3(7) A chief administrative officer of a small county or a member
4of a county board of supervisors of a small county, as provided by
5subdivision (d) of Section 5849.6, to be appointed by the Governor.
6(8) A chief administrative officer of a large county or a member
7of a county board of supervisors of a large county, as provided by
8subdivision (b) of Section 5849.6, to be appointed by the Governor.
9(9) A director of a county behavioral health
department, to be
10appointed by the Governor.
11(10) An administrative officer of a city, to be appointed by the
13(11) A representative of an affordable housing organization, to
14be appointed by the Speaker of the Assembly.
15(12) A resident of supportive housing, to be appointed by the
17(13) A representative of a community mental health
18organization, to be appointed by the Senate Rules Committee.
19(14) A representative of a local or regional continuum of care
20organization that coordinates homelessness funding, to be
21appointed by the Governor.
22(b) The committee shall do all of the following:
23(1) Assist and advise the department in the implementation of
25(2) Review and make recommendations on the department’s
27(3) Review the department’s progress in distributing moneys
28pursuant to this part.
29(4) Provide advice and guidance more broadly on statewide
Section 5849.35 is added to the Welfare and
32Institutions Code, to read:
(a) The authority may do all of the following:
34(1) Consult with the commission and the Department of Health
35Care Services concerning the implementation of the No Place Like
36Home Program, including the review of annual reports provided
37to the authority by the department pursuant to Section 5849.11.
38(2) Enter into one or more contracts with the department for the
39department to provide, and the authority to pay the department for
40providing, services described in Sections 5849,7, 5849.8, and
P11 15849.9, related to permanent supportive housing for the target
2population. Prior to entering into any contract pursuant to this
3 paragraph, the executive director of the authority shall transmit a
4copy of the contract approved by the authority to the commission.
5The contract shall be deemed approved by the commission unless
6it acts within 10 days to disapprove the contract.
7(3) On or before June 15 and December 15 of each year, the
8authority shall notify the Controller of the amounts the authority
9is required to pay as provided in Section 5890 for the following
10six month period to the department pursuant to any service contract
11entered into pursuant to paragraph (2).
12(b) The department may do all of the following:
13(1) Enter into one or more contracts with the authority to provide
14services described in Section 5849.7, 5849.8, and 5849.9, related
15 to permanent supportive housing for the target population.
16Payments received by the department under any service contract
begin delete authorizesend delete by this paragraph shall be used, prior to any
18other allocation or distribution, to repay loans from the authority
19pursuant to Section 15463 of the Government Code.
20(2) Enter into one or more loan agreements with the authority
21as security for the repayment of the revenue bonds issued by the
22authority pursuant to Section 15463 of the Government Code. The
23department shall deposit the proceeds of these loans, excluding
24any loans relating to refunding bonds, into the fund. The
25department’s obligation to repay these loans shall be limited to
26amounts received pursuant to its service contracts with the
28(3) The department may assign its right to receive payments
29under the service contracts entered into pursuant to paragraph (1)
30directly to the authority or its bond trustee, which may be the
32(c) The Legislature hereby finds and declares both of the
34(1) The consideration to be paid by the authority to the
35department for the services provided pursuant to the contracts
36authorized by paragraph (2) of subdivision (a) and paragraph (1)
37of subdivision (b) is fair and reasonable and in the public interest.
38(2) The service contracts and payments made by the
39to the department pursuant to a service contract authorized by
40paragraph (2) of subdivision (a) and paragraph (1) of subdivision
P12 1(b) and the loan agreements and loan repayments made by the
2department to the authority pursuant to a loan agreement authorized
3by paragraph (2) of subdivision (b) shall not constitute a debt or
4liability, or a pledge of the faith and credit, of the state or any
6(d) The state hereby covenants with the holders from time to
7time of any bonds issued by the authority pursuant to Section 15463
8of the Government Code that it will not alter, amend, or restrict
9the provisions of this section, subdivision (f) of Section 5890, or
10subdivision (b) of Section 5891 in any manner adverse to the
11interests of those bondholders so long as any of those bonds remain
12outstanding. The authority may include this covenant in the
13resolution, indenture, or other documents governing the bonds.
14(e) Agreements under this section are not subject to, and need
15not comply with, the requirements of any other law applicable to
16the execution of those agreements, including, but not limited to,
17the California Environmental Quality Act (Division 13
18(commencing with Section 21000) of the Public Resources Code).
19(f) Part 2 (commencing with Section 10290) of Division 2 of
20the Public Contract Code shall not apply to any contract entered
21into between the authority and the department under this section.
Section 5849.4 of the Welfare and Institutions Code
23 is amended to read:
(a) The No Place Like Home Fund is hereby created
25within the State Treasury and, notwithstanding Section 13340 of
26the Government Code, continuously appropriated to the
27department, the authority, and the Treasurer for the purposes of
28this part. Up to five percent of the amount deposited in the fund
29may be used for administrative expenses in implementing this part.
30(b) There shall be paid into the fund the following:
31(1) Any moneys from the receipt of loan proceeds by the
32department derived from the issuance of bonds by the authority
33for the purpose of implementing the program.
34(2) Any other federal or state grant, or from any private donation
35or grant, for the purposes of this part.
36(3) Any interest payment, loan repayments, or other return of
Section 5849.5 of the Welfare and Institutions Code
39 is amended to read:
The department may adopt guidelines or regulations,
2including emergency regulations to expedite the award of moneys
3pursuant to this part, in consultation with the California State
4Association of Counties and other stakeholders, as necessary to
5exercise the powers and perform the duties conferred or imposed
6on it by this part. Any guideline or regulation adopted pursuant to
7this section shall not be subject to the requirements of the
8Administrative Procedure Act (Chapter 3.5 (commencing with
9Section 11340) of Part 1 of Division 3 of Title 2 of the Government
10 Code). The department shall consult with key stakeholders,
11including, but not limited to, counties.
Section 5849.7 of the Welfare and Institutions Code
13 is amended to read:
(a) In order to finance permanent supportive housing
15for the target population, the department may enter into one or
16more contracts with the authority as authorized pursuant to Section
175849.35 to provide services for the benefit of the people of the
18state as described in this section and Sections 5849.8 and 5849.9.
19The department shall use its best efforts to provide or cause to be
20provided permanent supportive housing for the target population
21in consideration for service contract payments to be received from
23(b) In furtherance of its service obligations under any service
24contract with the authority, the department shall administer a
25competitive program, pursuant to Section 5849.8, and distribution
26program, pursuant to Section 5849.9, for awarding a total amount
27not to exceed two billion dollars ($2,000,000,000) among counties
28to finance capital costs including, but not limited to, acquisition,
29design, construction, rehabilitation, or preservation, and to
30capitalize operating reserves, of permanent supportive housing for
31the target population. For purposes of this section and Section
325849.8 and 5849.9, measurement of the dollar limit on amounts
33to be distributed by the department shall be based on the principal
34amount of bonds issued by the authority and loaned to the
35department, exclusive of any refunding bonds but including any
36net premium derived from the sale of the bonds, for deposit in the
37fund. There shall be no dollar limit on the distribution of moneys
38in the fund derived from the sources described in paragraphs (2)
39and (3) of subdivision (b) of Section 5849.4.
P14 1(c) For the competitive program established by Section 5849.8,
2the following shall apply:
3(1) A county may apply as the sole applicant if it is the
4development sponsor or jointly with a separate entity as
6(2) Funded developments shall integrate the target population
7with the general public.
8(3) Funded developments shall utilize low barrier tenant
9selection practices that prioritize vulnerable populations and offer
10flexible, voluntary, and individualized supportive services.
11(4) The guidelines may provide for alternative housing models,
12such as shared housing models of fewer than five units. Integration
13requirements may be modified in shared housing.
14(5) Funds shall be offered as deferred payment loans to finance
15capital costs including acquisition, design, construction,
16rehabilitation, or preservation, and to capitalize operating reserves
17of, permanent supportive housing for the target population.
18(6) The department shall adopt guidelines establishing income
19and rent standards.
Section 5849.8 of the Welfare and Institutions Code
21 is amended to read:
(a) In furtherance of the department’s obligations to
23the authority under any service contract entered into pursuant to
24Section 5849.35, the department may allocate an amount not to
25exceed one billion eight hundred million dollars ($1,800,000,000)
26from the fund for the purposes of the competitive program
27described in this subdivision and the alternative process described
28in subdivision (b). The department shall develop a competitive
29application process for the purpose of awarding moneys pursuant
30to this section. In considering applications, the department shall
31do all of the following:
32(1) Restrict eligibility to applicants that meet the following
34(A) The county commits to provide mental health supportive
35services and to coordinate the provision of or referral to other
36services, including, but not limited to, substance use treatment
37services, to the tenants of the supportive housing development for
38at least 20 years. Services shall be provided onsite at the supportive
39housing development or in a location otherwise easily accessible
40to tenants. The county may use, but is not restricted to using, any
P15 1of the following available funding sources as allowed by state and
3(i) The Local Mental Health Services Fund established pursuant
4to subdivision (f) of Section 5892.
5(ii) The Mental Health Account within the Local Health Welfare
6Trust Fund established pursuant to Section 17600.10.
7(iii) The Behavioral Health Subaccount within the County Local
8Revenue Fund 2011 established pursuant to paragraph (4) of
9subdivision (f) of Section 30025 of the Government Code.
10(iv) Funds received from other private or public entities.
11(v) Other county funds.
12(B) The county has developed a county plan to combat
13homelessness, which includes a description of homelessness
14countywide, any special challenges or barriers to serving the target
15population, county resources applied to address the issue, available
16community-based resources, an outline of partners and
17collaborations, and proposed solutions.
18(C) Meet other threshold requirements including, but not limited
19to, developer capacity to develop, own, and operate a permanent
20supportive housing development for the target population,
21application proposes a financially feasible development with
22reasonable development costs.
23(2) The department shall evaluate applications using, at
24minimum, the following criteria:
25(A) The extent to which units assisted by the program are
26restricted to persons who are chronically homeless or at risk of
27chronic homelessness within the target population.
28(B) The extent to which funds are leveraged for capital costs.
29(C) The extent to which projects achieve deeper affordability
30through the use of non-state project-based rental assistance,
31operating subsidies, or other funding.
32(D) Project readiness.
33(E) The extent to which applicants offer a range of on and
34off-site supportive services to tenants, including mental health
35services, behavioral health services, primary health, employment,
36and other tenancy support services.
37(F) Past history of implementing programs that use
38evidence-based best practices that have led to the reduction of the
39number of chronic homeless or at risk of chronic homelessness
40individuals within the target population.
P16 1(b) The department
may establish an alternative process for
2 allocating funds directly to counties, as calculated in Section
35849.6, with at least five percent of the state’s homeless population
4and that demonstrate the capacity to directly administer loan funds
5for permanent supportive housing serving the target population
6and the ability to prioritize individuals with mental health
7supportive needs who are homeless or at risk of chronic
8homelessness, consistent with this part and as determined by the
9department. The department shall adopt guidelines establishing
10the parameters of an alternative process, if any, and requirements
11for local administration of funds, including, but not limited to,
12project selection process, eligible use of funds, loan terms, rent
13and occupancy restrictions, provision of services, and reporting
14and monitoring requirements. Counties participating in the
15alternative process shall not be eligible for the competitive process
16and shall be limited to funds in proportion to their share of the
17percentage of the statewide homeless population, as calculated by
18the department in Section 5849.6. Funds not committed to
19supportive housing developments within two years following award
20of funds to counties shall be returned to the state for the purposes
21of the competitive program. The department shall consider the
22following when selecting participating counties:
23(1) Demonstrated ability to finance permanent supportive
24housing with local and federal funds, and monitor requirements
25for the life of the loan.
26(2) Past history of delivering supportive services to the target
27population in housing.
28(3) Past history of committing project-based
30(4) Ability to prioritize the most vulnerable within the target
31population through coordinated entry system.
32(c) The department shall set aside 8 percent of funds offered in
33Rounds 1 through 4, inclusive, for the competitive program for
34small counties as provided in subdivision (d) of Section 5849.6.
35(d) The department shall award funds for the competitive
36program in at least four rounds as follows:
37(1) The department shall issue its first request for proposal for
38the competitive program no later than 180 days after the effective
39date of a final judgment, with no further opportunity for appeals,
40in any court proceeding affirming the validity of the contracts
P17 1authorized by the authority and the department pursuant to Section
25849.35 and any bonds authorized to be issued by the authority
3pursuant to Section 15463 of the Government Code and any
4contracts related to those bonds.
5(2) The second round shall be completed no later than one year
6after the completion of the first round.
7(3) The third round shall be completed no later than one year
8after the completion of the second round.
9(4) The fourth round shall be completed no later than one year
10after the completion of the third round.
11(5) Subsequent rounds shall occur annually thereafter in order
12to fully exhaust remaining funds and the department may
13discontinue the use of the competitive groupings in Section 5849.6,
14the alternative process in subdivision (b) for any funds not awarded
15by the county, and the rural set aside funds as set forth in
17(e) (1) Any loans made by the department pursuant to this
18section shall be in the form of secured deferred payment loans to
19pay for the eligible costs of development. Principal and
20accumulated interest is due and payable upon completion of the
21term of the loan, which shall be established through program
22guidelines adopted pursuant to Section 5849.5. The loan shall bear
23simple interest at a rate of three percent per annum on the unpaid
24principal balance. The department shall require annual loan
25payments in the minimum amount necessary to cover the costs of
26project monitoring. For the first 15 years of the loan term, the
27amount of the required loan payments shall not exceed forty-two
28hundredths of 1 percent per annum.
29(2) The department may establish maximum loan-to-value
30requirements for some or all of the types of projects that are eligible
31for funding under this part, which shall be established through
32program guidelines adopted pursuant to Section 5849.5.
33(3) The department shall establish per-unit and per-project loan
34limits for all project types.
35(f) (1) The department may designate an amount not to exceed
36four percent of funds allocated for the competitive program, not
37including funding allocated pursuant to subdivision (b), in order
38to cure or avert a default on the terms of any loan or other
39obligation by the recipient of financial assistance, or bidding at
40any foreclosure sale where the default or foreclosure sale would
P18 1jeopardize the department’s security in the rental housing
2development assisted pursuant to this part. The funds so designated
3shall be known as the “default reserve.”
4(2) The department may use default reserve funds made
5available pursuant to this section to repair or maintain any rental
6housing development assistance pursuant to this part to protect the
7department’s security interest.
8(3) The payment or advance of funds by the department pursuant
9to this subdivision shall be exclusively within the department’s
10discretion, and no person shall be deemed to have any entitlement
11to the payment or advance of those funds. The amount of any funds
12expended by the department for the purposes of curing or averting
13a default shall be added to the loan amount secured by the rental
14housing development and shall be payable to the department upon
16(g) (1) Prior to disbursement of any funds for loans made
17pursuant this section, the department shall enter into a regulatory
18agreement with the development sponsor that provides for all of
20(A) Sets standards for tenant selection to ensure occupancy of
21assisted units by eligible households of very low and low income
22for the term of the agreement.
23(B) Governs the terms of occupancy agreements.
24(C) Contains provisions to maintain affordable rent levels to
25serve eligible households.
26(D) Provides for periodic inspections and review of year-end
27fiscal audits and related reports by the department.
28(E) Permits a developer to distribute earnings in an amount
29established by the department and based on the number of units
30in the rental housing development.
31(F) Has a term for not less than the original term of the loan.
32(G) Contains any other provisions necessary to carry out the
33purposes of this part.
34(2) The agreement shall be binding upon the developer and
35successors in interest upon sale or transfer of the rental housing
36development regardless of any prepayment of the loan.
37(3) The agreement shall be recorded in the office of the county
38recorder in the county in which the real property subject to the
39agreement is located.
P19 1(h) (1) The department shall monitor compliance by counties
2of the grant and loan agreements and regulatory agreements
3pursuant to which funds are distributed pursuant to this section,
4and to which the department may be a third party beneficiary, and
5enforce those agreements to the extent necessary and desirable in
6order to provide, to the greatest degree possible, the successful
7provision of permanent supportive housing.
8(2) The department shall annually report to the authority the
9status of its efforts pursuant to this section and Section 5849.9, as
10set forth in Section 5849.11.
11(i) The department may provide technical assistance to counties
12or developers of supportive housing to facilitate the construction
13of permanent supportive housing for target populations.
Section 5849.9 of the Welfare and Institutions Code
15 is amended to read:
(a) In furtherance of the department’s obligations to
17the authority under any service contract entered into under Section
185849.35, in addition to the competitive program established by
19Section 5849.8, the department may distribute an amount not to
20exceed two hundred million dollars ($200,000,000) from the fund
21on an “over-the-counter” basis to finance the construction,
22rehabilitation, or preservation, and to capitalize operating reserves,
23of permanent supportive housing for individuals in the target
24population with a priority for those with mental health supportive
25needs who are homeless or at risk of chronic homelessness. Funds
26to be awarded pursuant to this section shall be available to all
27counties within the state proportionate to the number of homeless
28persons residing within each county as calculated in Section 5849.6
29or in the amount of five hundred thousand dollars ($500,000),
30whichever is greater. A county receiving these funds shall commit
31to provide mental health supportive services and coordinate the
32provision of, or referral to, other services, including, but not limited
33to, substance abuse treatment services, to the tenants of the
34supportive housing development for at least 20 years. Services
35shall be provided onsite at the supportive housing development or
36at a location otherwise easily accessible to the tenants.
37(b) Funds not awarded within 18 months following the first
38allocation of moneys in accordance with subdivision (d) shall be
39used for the purposes of the competitive program.
P20 1(c) The moneys
described in subdivision (a) shall be
2administered either in accordance with the procedures for awarding
3funds to local agencies established by the existing Mental Health
4Services Act housing program administered by the Department of
5Health Care Services and the California Housing Finance Agency
6or alternative procedures developed by the department for
7distributing these moneys that enhance the efficiency and goals of
8the distribution program.
9(d) The department shall make the first allocation of moneys
10pursuant to this section as soon as reasonably practical and in any
11event no later than 150 days after the effective date of a final
12judgment, with no further opportunity for appeals, in any court
13proceeding affirming the validity of the contracts authorized by
14the authority and the department pursuant to Section 5849.35 and
15 any bonds authorized to be issued by the authority pursuant to
16Section 15463 of the Government Code and any contracts related
17to those bonds.
Section 5849.11 of the Welfare and Institutions Code
19 is amended to read:
(a) The counties shall annually report to the
21department on activities funded under this part, including
22information on the funded supportive housing development.
23Reported information shall include location of projects, number
24of units assisted, occupancy restrictions, number of individuals
25and households served, related income levels, and homeless,
26veteran, and mental health status
27(b) The department shall submit a report on the program to the
28Legislature by December 31 of each year, commencing with the
29year after the first full year in which the program is in effect. The
30report shall contain the following:
31(1) The processes established for distributing funds.
32(2) The distribution of funds among counties.
33(3) Any recommendations as to modifications to the program
34for the purpose of improving efficiency or furthering the goals of
36(c) The report required to be submitted by subdivision (b) shall
37be submitted in compliance with Section 9795 of the Government
39(d) The department shall submit a report to the authority by
40December 31 of each year, commencing with the year after the
P21 1first full year in which the program is in effect, that contains the
2information described in subdivision (a) and paragraphs (1) and
3(2) of subdivision (b) for all counties participating in the program
4and the services that have been provided pursuant to any service
5contracts entered into pursuant to Section 5849.35.
Section 5849.13 of the Welfare and Institutions Code
7 is repealed.
Section 5849.13 is added to the Welfare and
9Institutions Code, to read:
An action to determine the validity of any contract
11or loan authorized pursuant to Section 5849.35 or of any bond
12authorized to be issued pursuant to Section 15463 of the
13Government Code, and any contracts related to those bonds, may
14be brought in accordance with Section 17700 of the Government
Section 5849.14 of the Welfare and Institutions Code
17 is amended to read:
The Department of Finance may authorize one or
19more loans from the General Fund to the No Place Like Home
20Fund for cashflow purposes in an aggregate amount not to exceed
21two million dollars ($2,000,000) subject to the following
23(a) The loans are for either of the following purposes:
24(1) To allow the department to begin program implementation
25activities, including, but not limited to, drafting program guidelines
27(2) To allow the department, the authority, and the Treasurer
28to implement Section 5849.35 of this Code and Section 15463 of
29the Government Code, including, but not limited to, payment for
30financial advisory and legal services to prepare for, and in
31connection with, any validation action pursuant to Section 5849.13
32or any other court action regarding this part or Section 15463 of
33the Government Code.
34(b) The loans are short term, and shall be repaid within 30 days
35after the deposit of bond proceeds into the fund pursuant to
36paragraph (1) of subdivision (b) of Section 5849.4.
37(c) Interest charges may be waived pursuant to subdivision (e)
38of Section 16314 of the Government Code.
Section 5890 of the Welfare and Institutions Code is
40amended to read:
(a) The Mental Health Services Fund is hereby created
2in the State Treasury. The fund shall be administered by the state.
3Notwithstanding Section 13340 of the Government Code, all
4moneys in the fund are, except as provided in subdivision (d) of
5Section 5892, continuously appropriated, without regard to fiscal
6years, for the purpose of funding the following programs and other
7related activities as designated by other provisions of this division:
8(1) Part 3 (commencing with Section 5800), the Adult and Older
9Adult System of Care Act.
10(2) Part 3.2 (commencing with Section 5830), Innovative
12(3) Part 3.6 (commencing with Section 5840), Prevention and
13Early Intervention Programs.
14(4) Part 3.9 (commencing with Section 5849.1), No Place Like
16(5) Part 4 (commencing with Section 5850), the Children’s
17Mental Health Services Act.
18(b) Nothing in the establishment of this fund, nor any other
19provisions of the act establishing it or the programs funded shall
20be construed to modify the obligation of health care service plans
21and disability insurance policies to provide coverage for mental
22health services, including those services required under Section
231374.72 of the Health and Safety Code and Section 10144.5 of the
24Insurance Code, related to mental health parity. Nothing in this
25act shall be construed to modify the oversight duties of the
26Department of Managed Health Care or the duties of the
27Department of Insurance with respect to enforcing these obligations
28of plans and insurance policies.
29(c) Nothing in this act shall be construed to modify or reduce
30the existing authority or responsibility of the State Department of
31Health Care Services.
32(d) The State Department of Health Care Services shall seek
33approval of all applicable federal Medicaid approvals to maximize
34the availability of federal funds and eligibility of participating
35children, adults, and seniors for medically necessary care.
36(e) Share of costs for services pursuant to Part 3
37with Section 5800), and Part 4 (commencing with Section 5850)
38of this division, shall be determined in accordance with the
39Uniform Method for Determining Ability to Pay applicable to
40other publicly funded mental health services, unless this Uniform
P23 1Method is replaced by another method of determining co-payments,
2in which case the new method applicable to other mental health
3services shall be applicable to services pursuant to Part 3
4(commencing with Section 5800), and Part 4 (commencing with
5Section 5850) of this division.
6(f) The Supportive Housing Program Subaccount is hereby
7created in the Mental Health Services Fund. Notwithstanding
8Section 13340 of the Government Code, all moneys in the
9subaccount are continuously appropriated, without regard to fiscal
10years, to the California Health Facilities Financing Authority to
11provide funds to meet its financial obligations pursuant to any
12service contracts entered into pursuant to Section 5849.35.
13Notwithstanding any other law, including any other provision of
14this section, starting on the first day of each month, the Controller
15shall, prior to any transfer, deposit, or expenditure from the fund
begin delete onlyend delete other purpose, transfer from the Mental Health
17Services Fund to the Supportive Housing Program Subaccount an
18amount which has been certified by the California Health Facilities
19Financing Authority pursuant to paragraph (3) of subdivision (a)
20of Section 5849.35, but not to exceed an aggregate amount of one
21hundred forty million ($140,000,000) per year. If in any month
22the amounts in the subaccount are insufficient to fully pay the
23amount certified by the California Health Facilities Financing
24Authority, the shortfall shall be carried over to the next month.
25Moneys in the Supportive Housing Subaccount shall not be loaned
26the General Fund pursuant to Sections 16310 or 16381 of the
Section 5891 of the Welfare and Institutions Code is
29amended to read:
(a) The funding established pursuant to this act shall be
31utilized to expand mental health services. Except as provided in
32subdivision (j) of Section 5892 due to the state’s fiscal crisis, these
33funds shall not be used to supplant existing state or county funds
34utilized to provide mental health services. The state shall continue
35to provide financial support for mental health programs with not
36less than the same entitlements, amounts of allocations from the
37General Fund or from the Local Revenue Fund 2011 in the State
38Treasury, and formula distributions of dedicated funds as provided
39in the last fiscal year which ended prior to the effective date of
40this act. The state shall not make any change to the structure of
P24 1financing mental health services, which increases a county’s share
2of costs or financial risk for mental health services unless the state
3includes adequate funding to fully compensate for such increased
4costs or financial risk. These funds shall only be used to pay for
5the programs authorized in Sections 5890 and 5892. These funds
6may not be used to pay for any other program. These funds may
7not be loaned to the state General Fund or any other fund of the
8state, or a county general fund or any other county fund for any
9purpose other than those authorized by Section 5890 and 5892.
10(b) (1) Notwithstanding subdivision (a), and except as provided
11in paragraph (2), the Controller may use the funds created pursuant
12to this part for loans to the General Fund as provided in Sections
1316310 and 16381 of the Government Code. Any such loan shall
14be repaid from the General Fund with interest computed at 110
15percent of the Pooled Money Investment Account rate, with interest
16commencing to accrue on the date the loan is made from the fund.
17This subdivision does not authorize any transfer that would
18interfere with the carrying out of the object for which these funds
20(2) This subdivision does not apply to the Supportive Housing
21Program Subaccount created by subdivision (f) of Section 5890
22or any moneys paid by the California Health Facilities Financing
23Authority to the Department of Housing and Community
24Development as a service fee pursuant to a service contract
25authorized by Section 5849.35.
26(c) Commencing July 1, 2012, on or before the 15th day of each
27month, pursuant to a methodology provided by the State
28Department of Health Care Services, the Controller shall distribute
29to each Local Mental Health Service Fund established by counties
30pursuant to subdivision (f) of Section 5892, all unexpended and
31unreserved funds on deposit as of the last day of the prior month
32in the Mental Health Services Fund, established pursuant to Section
335890, for the provision of programs and other related activities set
34forth in Part 3 (commencing with Section 5800), Part 3.2
35(commencing with Section 5830), Part 3.6 (commencing with
36Section 5840), and Part 4 (commencing with Section 5850).
37(d) Counties shall base their expenditures on the county mental
38health program’s three-year program and expenditure plan or
39annual update, as required by Section 5847. Nothing in this
40subdivision shall affect subdivision (a) or (b).
The Legislature finds and declares that this act
2furthers the intent of the Mental Health Services Act, enacted by
3Proposition 63 at the November 2, 2004, statewide general election.
This act is a bill providing for appropriations related
5to the Budget Bill within the meaning of subdivision (e) of Section
612 of Article IV of the California Constitution, has been identified
7as related to the budget in the Budget Bill, and shall take effect