BILL ANALYSIS Ó
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Senator Mark Leno, Chair
2015 - 2016 Regular
Bill No: AB 1628 Hearing Date: August 11,
2016
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|Author: |Committee on Budget |
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|Version: |August 9, 2016 As amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Ibele |
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Subject: No Place Like Home Program: financing
Summary: This bill provides the financing framework for the No Place
Like Home (NPLH) program, and authorizes bond issuance, loan
agreements, and service contracts related to the program. The
measure also provides substantive and technical changes to
existing statutes governing the program.
Background: AB 1618 (Committee on Budget), Chapter 43, Statutes of 2016
created the NPLH program. AB 1618 requires the Department of
Housing and Community Development (HCD) to award $2 billion to
counties for permanent supportive housing for the homeless;
establishes the framework for financing the NPLH program through
the counties; requires counties to annually report to HCD on
program status; addresses the process for validation of the
financing; and addresses other matters regarding the NPLH
program.
Proposed
Law: This measure would facilitate and authorize the issuances of
bonds by the California Health Facilities Financing Authority
(CHFFA) for the purposes of establishing a grant program for
counties to develop and administer permanent supported housing
for homeless, chronically homeless and at risk of chronic
homelessness. The measure establishes a framework for the
provision of housing through authorized service contract,
addresses loans to be made by CHFFA for supportive housing,
specifies the use for funds for projects across the state, and
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provides administrative structure for the program. Specifically,
this bill:
1.Authorizes, allows or directs CHFFA to:
a. Issue taxable or tax-exempt bonds in an amount not to
exceed $2 billion for the purpose of financing permanent
supportive housing pursuant to the NPLH program.
b. Make secured or unsecured loans to HCD in connection
with financing permanent supportive housing pursuant to the
NPLH program.
c. Enter into one or more service contracts with HCD for
the provision of permanent supportive housing pursuant to
the NPLH program and allows CHFFA to pay HCD for these
services.
i. Service agreements are exempt from the public
contract code and subject to a 10 day review by Mental
Health Services Oversight and Accountability Commission
(Commission), after which time they are deemed approved
unless disapproved.
d. Notify, twice annually, the State Controller of amounts
it is required to pay to HCD for any service contract
obligations.
2.Authorizes, allows and directs HCD to:
a. Enter into service contracts with CHFFA to provide
permanent supportive housing services, pursuant to
'competitive' and 'distribution' programs, as described
below.
b. Enter into loan agreements with CHFFA, with loan
proceeds to be deposited into the No Place Like Home Fund,
to be used for permanent supportive housing.
c. Use payments received pursuant to any service contracts
to repay loans from CHFFA before any other allocation or
distribution.
d. Assign payments received pursuant to the service
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contracts to CHFFA or the State Treasurer, and stipulates
that HCD's obligation to repay the loans is limited to
amounts received pursuant to its service contracts with
HCD.
3.Enumerates the Legislature's declarations that:
a. HCD is the state entity with sufficient expertise to
implement and oversee the supportive housing program.
b. CHFFA is authorized to issue bonds and consult with
the Mental Health Services Oversight and Accountability
Commission and the Department of Health Care Services
concerning the implementation of the supportive housing
program.
c. It is appropriate for HCD to provide grants or loans
to California counties to permanent supportive housing.
d. Bond funding will accelerate the availability of
funding for the grant or loan program to provide permanent
supportive housing compared to annual allocations from the
Mental Health Services Fund.
e. Consideration paid with respect to the service
contracts is fair and reasonable; the service contracts,
payment on service contracts, loan agreements and loan
repayments are not a debt or liability of the state;
covenants to bond holders of any bonds issued that it will
not change provisions of this and related statutes in a
manner that would impair the interests of the bond holder.
4.Provides for the payment into the NPLH Fund amounts of loans
to HCD derived from bond proceeds to be used for implementing
the program and allows for up to five percent of deposits to
the NPLH Fund to be used for administrative expenses, and
allows for HCD to adopt emergency regulations to expedite the
award of moneys.
5.Provides that HCD shall award up to $2 billion, based on the
amount of principal amount of bonds sold, for permanent
supportive housing not exceeding $1.8 billion for a
competitive program and not exceeding $200 million for the
non-competitive distribution ("over the counter") programs as
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set forth in existing statute.
a. Specifies that for competitive program:
i. HCD is to Issue its first request for proposals
under the competitive program no later than 180 days
after a final judgment regarding the validity of the
service contracts and the bonds.
ii. HCD is to monitor compliance by counties of any
grant and loan agreements and enforce those agreements
in order to provide for the provision of permanent
supportive housing and provide technical assistance to
participating counties or developers.
b. Specifies for the non-competitive distribution
program:
i. HCD must provide the first allocation of moneys
as soon as reasonably practical and no later than 150
days after a final judgment regarding the validity of
the service contracts or the bonds.
ii. Counties receiving funds must commit to providing
mental health supportive services, including substance
abuse treatment services, for 20 years, as with the
competitive program.
6.Allows for the loan of up to $2 million from the General Fund
to, among other activities indicated in existing statute,
allow HCD, CHFFA and the State Treasurer to pay for financial
advisory service and legal services in connection with any
validation action, with such loans repayable after the deposit
of loan proceeds resulting from the issuance of bonds.
7.Requires HCD to annually report to CHFFA regarding permanent
supportive housing activities by the counties, process for
distributing funds, counties funds received, and
recommendations for modifications to the program.
8.Creates the Supportive Housing Program Subaccount in the
Mental Health Services Fund, with moneys in the subaccount
continuously appropriated to CHFFA to provide funds to meet
its obligations under any service contracts with HCD. The
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State Controller shall transfer amounts to the subaccount
based on a certification from CHFFA of amounts necessary to
pay for the service contracts, not to exceed $140 million
annually, with subaccount moneys unavailable for loan to the
General Fund.
9.Includes the Legislature's declaration that the measure
furthers the intent of the Mental Health Services Act and
provides for an appropriation related to 2016 Budget Act.
Fiscal
Effect: The measure would allow for bonds to be issued in an amount not
to exceed $2 billion, with debt service not to exceed $140
million annually when all the bonds have been issued. The
measure would result in no new state costs, but shift the use of
revenues directed to the Mental Health Services Fund.
Comments: This measure provides a financing mechanism for the NPLH
program, approved by the Legislature and signed by the Governor
in June of this year.
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