BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW 
                              Senator Mark Leno, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 1628         Hearing Date:    August 11,  
          2016
           ----------------------------------------------------------------- 
          |Author:   |Committee on Budget                                   |
          |----------+------------------------------------------------------|
          |Version:  |August 9, 2016    As amended                          |
           ----------------------------------------------------------------- 
           ---------------------------------------------------------------- 
          |Urgency:  |No                     |Fiscal:    |Yes              |
           ---------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Consultant|Mark Ibele                                            |
          |:         |                                                      |
           ----------------------------------------------------------------- 
          

                  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  







          AB 1628 (Committee on Budget)                           Page 2  
          of ?
          
          
          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  








          AB 1628 (Committee on Budget)                           Page 3  
          of ?
          
          
               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  








          AB 1628 (Committee on Budget)                           Page 4  
          of ?
          
          
            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  








          AB 1628 (Committee on Budget)                           Page 5  
          of ?
          
          
            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.
          
          
                                      -- END --