BILL ANALYSIS Ó
AB 2200
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON EDUCATION
Patrick O'Donnell, Chair
AB 2200
(Thurmond) - As Amended March 17, 2016
[The bill was double referred to the Committee on Housing and
Community Development and was heard by that committee as it
relates to issues under its jurisdiction.]
SUBJECT: School Employee Housing Assistance Program
SUMMARY: Requires California Housing Finance Agency (CalHFA) to
administer a grant program to provide development financing
assistance to qualified school districts for the creation of
affordable rental housing for school districts employees,
including teachers. Specifically, this bill:
1)Defines "affordable rental housing" to mean housing that
serves persons and families of low or moderate income as
defined in the Health and Safety Code (Section 50093).
2)Defines "qualified developer" to mean a developer that has
partnered with a qualified school district to create
affordable rental housing for school district employees,
including teachers.
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3)Defines "qualified school district" to mean a school district
that satisfies the following:
a) Has acquired and designated surplus land from a school
district, special district, or city;
b) Has a high average cost for the recruitment of teachers;
c) Has a low retention rate; and
d) Has 60% of its students participating in the National
School Lunch Program.
4)Provides that CalHFA shall provide financial assistance in the
form of predevelopment grants to qualified school districts
and loans to qualified developers.
5)Requires CalHFA to do all of the following to administer the
grant program:
a) Be responsible for overseeing the program;
b) Award predevelopment grants to qualified school
districts;
c) Make loans to qualified developers; and
d) Publish deadlines and written procedures for the
program.
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6)Requires a school district seeking a predevelopment grant to
apply to the California Department of Education (CDE) for
certification as a qualified school district.
7)Requires the CDE to certify that a school district seeking a
predevelopment grant meets the definition of a qualified
school district.
8)Requires a qualified school district seeking a predevelopment
grant to do both of the following:
a) Apply for a predevelopment grant in the form and manner
prescribed by CalHFA; and
b) Submit the certification provided by the California
Department of Education (CDE).
9)Creates the School Employee Housing Assistance Fund (the Fund)
in the State Treasury.
10)Continuously appropriates $100,000,000 from the General Fund
to the Fund.
11)Requires the CalHFA to make loans to qualified developers
using a project selection process it establishes that meets
all of the following requirements:
a) To the extent feasible, ensures a reasonable geographic
distribution of funds
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b) Requires applications for projects to meet minimum
threshold requirements, including, but not limited to, all
of the following:
i) The proposed project is located within reasonable
proximity to public transportation and services;
ii) Development costs for the proposed project are
reasonable compared to costs of comparable projects in
the area; and
iii) The proposed project is feasible.
c) The proposed project leverages other funds where they
are available.
12)Requires loans to be made for a term on not less than 55
years.
13)Provides that principal and accumulated interest is due and
payable upon completion of the term of the loan, and the loan
shall bear simple interest at the rate of 3% per year.
14)Requires any moneys received in repayment of loans, including
interest, be deposited in the Fund.
15)Specifies the maximum loan amount shall be $10 million.
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EXISTING LAW: Defines eligible basis certification as a
certification from a certified public accountant or tax attorney
that project costs included in applicant's calculation of
eligible basis are allowed by IRC Section 42, as amended, and
are presented in accordance with standard accounting procedures.
If the project uses HOME Investment Partnership Program funds,
then the tax professional must further certify as to the
treatment of HOME Program funds for purposes of eligible basis
calculations. (Tax Credit Allocation Committee regulations for
the Low Income Housing Tax Credit Program)
FISCAL EFFECT: Total effect unknown. Includes an appropriation
from the General Fund of $100,000,000.
COMMENTS:
Background. California has seen a drastic decline in funding to
support the construction of affordable housing for very low-,
low- and moderate-income families. Historically, the state has
invested in low- and moderate-income housing primarily by
providing funding for construction. Because of the high cost of
land and construction and the subsidy needed to keep housing
affordable to residents, affordable housing is expensive to
build. Developers typically use multiple sources of financing,
including voter-approved housing bonds, state and federal
low-income housing tax credits, private bank financing, and
local matching dollars.
Voter-approved bonds have been an important source of funding to
support the construction of affordable housing. Proposition 46
of 2002 and Proposition 1C of 2006 together provided $4.95
billion for affordable housing. These funds financed the
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construction, rehabilitation, and preservation of 57,220
affordable apartments, including 2,500 supportive homes for
people experiencing homelessness, and over 11,600 shelter
spaces. In addition, these funds have helped 57,290 families
become or remain homeowners. Nearly all of these funds have been
awarded. In addition, prior to their dissolutions redevelopment
agencies generated as much as $1.7 billion a year in local
funding to support affordable housing.
CalHFA, the state's affordable housing bank, provides down
payment assistance to qualified low- and moderate-income buyers
through a loan secured on the property that is repaid when a
home sells. In addition, CalHFA provides loans to multifamily
housing developers to construct housing affordable housing.
CalHFA does not receive funding from the General Fund and pays
for its programs by issuing bonds which are then repaid from
loan proceeds. The Department of Housing and Community
Development (HCD) operates a variety of programs that support
the acquisition, rehabilitation and construction of affordable
housing to very low-, low- and moderate-income households. The
Multi-Family Housing Program provides gap financing to
affordable housing developers. Developments financed using MHP
or CalHFA's multi-family loans agree to provide the housing for
a term of 55 years.
This bill requires CalHFA to create and administer a grant
program to provide both predevelopment grants and development
grants to qualified school districts for the creation of
affordable rental housing for school employees, including
teachers. Only school districts with a high average cost for
recruiting teachers and a low retention rate would be eligible
for the grant.
Purpose of this bill. According to the author, "There is no
existing program that allows financially-strained school
districts to receive funding for the development of school
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employee housing. Some school districts in California have begun
to increase teacher retention by providing housing to teachers.
School districts in Los Angeles and Santa Clara, with San
Francisco considering such a plan, have teachers in
district-sponsored housing. However, for financially-strapped
districts in high-cost areas, such a proven solution is not an
option for attracting new teachers into the district. And while
the Extra Credit Teacher Home Purchase Program does incentivize
homeownership for school employees, for many new teachers
beginning their career, rental housing is the first step prior
to homeownership-a step that those in high-cost areas cannot
take. AB 2200 seeks to close the achievement gap by allowing
school employees, including teachers, to remain in the cities
where they work. Specifically, the bill creates a $100 million
grant program which will provide financial assistance to school
districts that cannot independently fund housing for school
employees. Gap financing will be given to school districts
which: (1) have acquired land for development (2) can show high
recruitment costs and low retention rates (3) have 60% of
students participating in the Free and Reduced Lunch Program.
The grant allocates 5% of its funds towards predevelopment costs
that school districts that cannot independently fund. "
Arguments in support. According to the sponsor of the bill, the
City of Oakland, "statistics show that the price of housing in
California has risen exponentially in the last decade, while
educator's wages have remained largely stagnant. This is
especially true in the Bay Area where starting teacher salaries
remain in the low $50,000 range and median home process are over
$1,000,000."
K-12 Policy considerations:
1) This bill requires grants be made for "affordable rental
housing" for school district employees including teachers,
however it does not define the income levels that would be
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eligible for the housing. This bill also does not require
that the affordable housing units be restricted by
affordability covenants to ensure that the housing remains
affordable.
2) This bill requires CalHFA to assist a school district
that is not eligible to receive a development grant to
apply for other a public funds. It is unclear what other
public funds would be used for; in addition, CalHFA likely
does not have the expertise to assist a school district in
applying for public funds.
3) This bill requires the CDE to certify that a school
district seeking a predevelopment grant meets the
definition of a qualified school district. To meet that
definition, a school district must, in addition to other
criteria, have a high average cost for the recruitment of
teachers and a low retention rate. These are imprecise
metrics, which leaves it to the discretion of the CDE to
determine what is a high cost of recruitment and what is a
low retention rate. Moreover, the CDE does not currently
collect data on the cost of recruitment or retention rates.
Therefore, it is unclear how the CDE would make these
certifications.
4) This bill defines "qualified districts" to be, among
other criteria, a district in which at least 60% of its
pupils are enrolled in the National School Lunch Program.
According to the author's office, the purpose of this bill
is to help "financially strapped" districts provide housing
assistance for their employees, but this criterion
misidentifies financially strapped districts. Under the
local control funding formula (LCFF) which was enacted in
2013, districts that enroll large numbers and percentages
of pupils who are eligible for free and reduced-price
meals, English learners, or in foster care receive
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additional funding in the form of supplemental grant and
concentration factor funding. By contrast, districts that
have few pupils in these categories receive little or no
supplemental grant and concentration factor funding and,
under LCFF, are more financially strapped than districts
with 60% or more of their pupils in the lunch program. In
addition, a district that does not meet the 60% requirement
(such as many Silicon Valley districts) is more likely to
be located in an area with higher housing costs and a
larger gap between housing costs and employee pay.
5) This bill transfers $100 million from the General Fund
to the School Employee Housing Assistance Fund. Because
the original source of the grants would be the General
Fund, any predevelopment grants awarded to qualified school
districts likely would count toward the Proposition 98
minimum school funding guarantee. Accordingly, funding for
ongoing Proposition 98 programs would be reduced by an
amount equal to predevelopment grants awarded to school
districts.
6) This bill requires a school district to acquire and
designate surplus land to be eligible for the funds. Once
property is designated as "surplus," existing law requires
the property to be offered to charter schools and local
governments. If the author intends to require the use of
district property for teacher housing, the author may wish
to consider striking the requirement that land be
designated as "surplus."
REGISTERED SUPPORT / OPPOSITION:
Support
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California Catholic Conference, Inc.
California Teachers Association
City of Walnut Creek
Oakland Unified School District
State Building and Construction Trades Council of California
One individual
Opposition
None received
Analysis Prepared by:Rick Pratt / ED. / (916) 319-2087
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