BILL ANALYSIS Ó
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 1969
(Steinorth) - As Amended April 13, 2016
SUBJECT: Affordable housing: home purchase assistance
SUMMARY: Creates a program administered by the California
Housing Financing Agency (CalHFA) to provide downpayment
assistance to homeowners in newly constructed developments in
jurisdictions that provide incentives and waive local fees.
Specifically, this bill:
1)Requires the California Housing Finance Agency (CalHFA) to
provide downpayment assistance to first-time homebuyers in
development projects located in a city, county, or city and
county that provides incentives, reduces developer or impact
fees, or reduces or removes regulatory barriers to
constructing the development projects.
2)Requires CalHFA to identify and objectively measure the types
of local agency actions or incentives that it determines
appropriately reduce developer or impact fees or reduce or
remove regulatory barriers to housing construction.
3)Provides these incentives may include but are limited to
modifications to any of the following:
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a) Local design review requirements;
b) Building code enforcement;
c) Onsite or offsite improvement requirements;
d) Project design;
e) Permit processing; or
f) A 30% reduction in the schedule of local fees, charges,
and other exactions on local developers within the local
agency's jurisdiction within 12 months or more prior to the
submission of the application. Requires the local agency to
provide verification of the reduction with supporting
documents showing successive annual fee schedules to the
agency.
1)Defines "local fees, charges and other exactions" to include:
a) planning and zoning fees;
b) environmental documentation fees;
c) plan check fees;
d) school fees;
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e) school mitigation fees;
f) highway road, traffic, and transit fees;
g) water, wastewater, sewer, and drainage fees;
h) utility or water connection fees;
i) public safety fees;
j) capital facilities fees;
aa) affordable housing fees and assessments;
bb) parks and recreation fees; and
cc) any other fee that may substitute for the requirements
of onsite or offsite improvement requirements.
1)Appropriates an unspecified amount from the General Fund to
CHDAP to fund this program.
2)Provides that after 4 years, if CalHFA determines that the
funding for this program is no longer needed then the funding
shall revert to the general California Homebuyer Downpayment
Assistance Program (CHDAP) except that the funding can still
be used for this program.
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EXISTING LAW:
1)Requires the California Housing Finance Agency (CalHFA) to
administer a down payment assistance program.
2)Creates CHDAP, a deferred-payment, low interest, junior
mortgage loan to reduce principal and interest payments and
make financing affordable to first-time low- and
moderate-income home buyers.
FISCAL EFFECT: Unknown.
COMMENTS:
Background:
CalHFA operates the CHDAP and provides homebuyers between 3% and
6% in downpayment assistance secured as a second mortgage on the
home. The program operates as a revolving loan and when a home
is sold CalHFA is repaid allowing the funds to go to another
homebuyer. There is approximately $150 million available in
CHDAP at this time. The program can provide down payments to
individuals that make up to 120% of the area median income (AMI)
and just recently raised its income limits to 140% of AMI in
high cost areas. CalHFA operates independently of the state
General Fund and derives the funding for its down payment
assistance program from the sale of bonds.
The Building Equity and Growth in Neighborhoods Program (BEGIN),
administered by HCD, provided grants to local governments that
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provided incentives or reduced regulatory barriers to
construction of new for-sale affordable housing (a BEGIN
project). The grants could be used by local governments to
provide downpayment assistance to qualifying first-time
homebuyers of low- and moderate-income purchasing newly
constructed homes in a BEGIN project. Homebuyers were required
to occupy the home as their principal residence for at least
five years. Downpayment assistance was secured as a second
mortgage loan and the amount of the loan could not exceed 20% of
the purchase price. HCD established the types of objective and
measurable incentives and reductions in regulatory barriers to
new construction of for-sale, affordable housing units including
but limited to standards relating to housing density, project
design, parking requirements, permit processing, and fee
reductions. There is currenlty no money available in the BEGIN
program.
Similar to the BEGIN program, this bill would reward local
governments that provide incentives and or remove or reduce
local barriers to construction with down payment assistance.
Unlike the BEGIN program, the downpayment assistance would be
provided directly by CalHFA through the CHDAP program rather
than administered by local governments.
Purpose of this bill : According to the author, "California is in
the midst of a housing crisis. There is a substantial lack of
new home construction: according to the California Homebuilding
Foundation, the number of annual housing permits in 2015 was
similar to the slowest years in the 1980s and 1990s. This
shortage is hitting the affordable and middle-class housing
markets alike.
The cost of housing in California is significant. According to
the nonpartisan Legislative Analyst's Office, California has the
second-highest median home price in the nation and residents'
housing costs, as a share of income, remain far above the
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national average. In fact, more than half of middle-class
California families spend more than 30 percent of their income
on housing. Increased housing costs lead to significant
trade-offs for the middle class California family including:
postponing or foregoing homeownership, living in more crowded
housing, commuting farther to work each day, or choosing to work
and live elsewhere. AB 1969 will make a one-time appropriation
for the California Homebuyer's Downpayment Assistance Program
(CHDAP). Those new funds may be loaned only to homebuyers in
cities and counties who have reduced regulatory and fiscal
impediments to new home construction. The California Housing
Finance Agency will be tasked with determining what local
actions would qualify, including changes to land use controls,
permit processing, and a 30% reduction in developer fees. Any
unused funds would revert to CHDAP for its general use."
Staff comments :
The BEGIN program awarded local governments that encouraged
construction of new affordable housing for low- and moderate-
income families. Because this bill would require CalHFA to
provide downpayment assistance directly to a borrower in a newly
constructed unit through CHDAP and CalHFA is limited to
providing downpayment assistance to low- and moderate-income
buyers then the result would be the same. The committee may
wish to clarify with the author that his intent is to encourage
the production of housing affordable to low- and moderate-income
homebuyers. The committee may wish to amend the bill to require
any newly constructed units that are subject to this bill are
affordable to low- and moderate- income buyers.
This bill would include as one of the fees that can be waived on
the development and "affordable housing fee or assessment" the
committee may wish to consider deleting that option.
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After four years of operation this bill would allow the funding
for this program to be redirected to the general CHDAP program
for downpayment assistance statewide. However, it would also
allow this program to continue to be available. The committee
may wish to consider if that would create administrative
challenges for CalHFA and if it would not be better to shut down
the program after four years if it is not in demand. The
committee may also wish to consider shortening this time to two
years.
The committee may wish to consider aligning the funding in this
program with other funding sources and state land use policies
by requiring all or a portion of the funding to go to projects
that are in a designated infill site and are close to public
transit.
Committee amendments:
1)Amend the bill to require any newly constructed units to be
affordable to low- and moderate- income buyers.
2)Delete "affordable housing fee or assessment" on the list of
fees that can be waived/reduced.
3)Delete the language that allows the program to continue to
operate after the funding has been transferred to the larger
CHDAP program.
4)Require the fund to revert back to the larger CHDAP program in
two years rather than four.
5)Require developments to also be in a designated infill site
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and are close to public transit.
REGISTERED SUPPORT / OPPOSITION:
Support
California Association of Realtors
League of California Cities
Opposition
None on File
Analysis Prepared by:Lisa Engel / H. & C.D. / (961) 319-2085,
Lisa Engel / H. & C.D. / (916) 319-2085
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