BILL ANALYSIS Ó
AB 1969
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1969 (Steinorth) - As Amended May 10, 2016
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|Policy |Housing and Community |Vote:|6 - 1 |
|Committee: |Development | | |
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Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY: This bill appropriates $10 million from the State
General Fund to the California Homebuyer's Downpayment
Assistance Program (CHDAP) 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.
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2)Requires local agencies to provide verification of the
required reduction in local fees, charges, and other exactions
to CalHFA.
3)Provides that after 4 years, if CalHFA determines that the
funding for this program will not be utilized for the purposes
set forth in this bill, then the funding shall be available
for the general purposes of the CHDAP.
FISCAL EFFECT:
1)This bill contains a $10 million appropriation from the State
General Fund to the CHDAP. Existing law provides that 5% of
this amount ($500,000) can be used to fund CalHFAs
administrative costs.
2)Unknown, but likely minor, potentially reimbursable state
mandate costs to local agencies, to the extent affected
agencies choose to submit a claim to the Commission on State
Mandates and the Commission determines that costs associated
with this bill are a reimbursable mandate.
COMMENTS:
1)Purpose. 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
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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 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."
2)CHDAP. 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.
3)The Building Equity and Growth in Neighborhoods Program
(BEGIN). Administered by HCD, BEGIN provided grants to local
governments that 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%
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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
currently 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 will be
provided directly by CalHFA through the CHDAP program rather
than be administered by local governments.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081