BILL ANALYSIS                                                                                                                                                                                                    






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          |SENATE RULES COMMITTEE            |                       AB 1628|
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                                   THIRD READING 


          Bill No:  AB 1628
          Author:   Committee on Budget   
          Amended:  8/16/16 in Senate
          Vote:     27 

           SENATE BUDGET & FISCAL REVIEW COMMITTEE:  15-1, 8/11/16
           AYES:  Leno, Nielsen, Allen, Anderson, Beall, Block, Glazer,  
            Mitchell, Monning, Moorlach, Nguyen, Pan, Pavley, Roth, Wolk
           NOES:  Stone
           NO VOTE RECORDED:  Hancock

           ASSEMBLY FLOOR:  Not relevant

           SUBJECT:   No Place Like Home Program:  financing


          SOURCE:    Author


          DIGEST:  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.  
          This bill also provides substantive and technical changes to  
          existing statutes governing the program.


          ANALYSIS:  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  








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          financing; and addresses other matters regarding the NPLH  
          program.

          This bill facilitates and authorizes 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. This  
          bill 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 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 review by Mental Health  
                 Services Oversight and Accountability Commission, and  
                 deemed approved unless action is taken to disapprove  
                 them.

             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  







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               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  
               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  







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            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  
            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.







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          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  
            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 this bill furthers  
            the intent of the Mental Health Services Act and provides for  
            an appropriation related to 2016 Budget Act.

          FISCAL EFFECT:   Appropriation:    Yes         Fiscal  
          Com.:YesLocal:   No

          According to the Senate Budget and Fiscal Review Committee, this  
          bill allows 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. This bill will result in no  
          new state costs, but shift the use.


          SUPPORT:   (Verified8/15/16)


          None received


          OPPOSITION:   (Verified8/15/16)


          None received


          Prepared by:Mark Ibele / B. & F.R. / (916) 651-4103
          8/16/16 17:55:11







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