BILL ANALYSIS Ó AB 2200 Page 1 Date of Hearing: May 18, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2200 (Thurmond) - As Amended April 14, 2016 ----------------------------------------------------------------- |Policy |Housing and Community |Vote:|5 - 1 | |Committee: |Development | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Education | |5 - 0 | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires California Housing Finance Agency (CalHFA) to administer a program to provide financing assistance to qualified school districts and qualified developers for the creation of affordable rental housing for school districts employees, including teachers. Only school districts with a high average cost for recruiting teachers, a low retention rate, and with 60% of their students participating in the National School Lunch Program would be eligible. This bill appropriates $100 AB 2200 Page 2 million from the General Fund to fund the program and allows for reimbursements to affected agencies and departments. FISCAL EFFECT: 1)This bill appropriates $100 million (GF) to the newly created School Employee Housing Assistance Fund. 2)This bill requires money in the Fund to be continuously appropriated to CalHFA for the following purposes: a) to reimburse the agency for administrative costs, not to exceed 5% of the total appropriation ($5 million); b) to reimburse the State Department of Education for the costs of certifying qualified school districts, not to exceed and unspecified percent of the total appropriation; and c) to make predevelopment grants to qualified school districts, not to exceed 5% of the total appropriation ($5 million). 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. COMMENTS: AB 2200 Page 3 1)Purpose. According to the author, "There is no existing program that allows financially-strained school districts to receive funding for the development of school 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." 2)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. 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. Developments financed using AB 2200 Page 4 CalHFA's multi-family loans agree to provide the housing for a term of 55 years. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081