BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2319


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          Date of Hearing:  April 13, 2016


               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT


                                  David Chiu, Chair


          AB 2319  
          (Gordon) - As Introduced February 18, 2016


          SUBJECT:  California Infrastructure and Economic Development  
          Bank


          SUMMARY:  Authorizes the California Infrastructure and Economic  
          Development Bank (IBank) to provide financial assistance to  
          affordable housing projects.    Specifically, this bill:  


          1)Defines "affordable housing" to mean a dwelling available for  
            purchase or lease by persons and families who qualify as  
            extremely low-, very low-, low- or moderate-income as defined.


          2)Makes an appropriation by expanding the authority of the IBank  
            to expend funds in a continuously appropriated fund.


          EXISTING LAW:  


          1)Establishes the I-Bank within the Governor's Office of  
            Business and Economic Development (GO-Biz) and authorizes it  
            to undertake a variety of infrastructure related financial  
            activities including, but not limited to, the administration  
            of a revolving loan fund, oversight of the Small Business  








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            Finance Center, and the issuance of tax-exempt and taxable  
            revenue bonds.

          2)Defines "project" for purposes of the IBank to mean designing,  
            acquiring, planning, permitting, entitling, constructing,  
            improving, extending, restoring, financing and generally  
            development of  public development facilities or economic  
            development facilities within the state or financing   
            transition costs or the acquisition of property or both upon  
            approval of financing order by the Public Utilities  
            Commission.


          3)Defines "extremely low-income households" to mean persons and  
            families whose incomes do not exceed 30% of median area  
            income.


          4)Defines "very low-income households" to mean persons and  
            families whose incomes do not exceed 50% of median area  
            income.


          5)Defines "low-income households" to mean persons and families  
            whose income does not exceed 80% of median area income.


          6)Defines "moderate-income households" to mean persons and  
            families of low- or moderate- income whose income exceeds the  
            income limit for lower income households.


          FISCAL EFFECT: Unknown.  2/3 vote. 


          COMMENTS:  


           Overview of the IBank:   The I-Bank was established in 1994 to  








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          promote "economic revitalization, enable future development, and  
          encourage a healthy climate for jobs in California."  Housed  
          within GO-Biz, it is governed by a five-member board of  
          directors comprised of the Director of GO-Biz (chair), the State  
          Treasurer, the Director Department of Finance, the  
          Transportation Agency, and a Governor's appointee.  With the  
          exception of funds for program support and the Small Business  
          Loan Guarantee Program administration, which must be annually  
          appropriated by the State Legislature, all IBank funds are  
          continuously appropriated without regard to fiscal year. The  
          I-Bank administers three programs:  (1) the Infrastructure State  
          Revolving Fund which provides direct low-cost financing to  
          public agencies for a variety of public infrastructure projects;  
          (2) the Conduit Bond Program which provides financing for  
          manufacturing companies, public benefit nonprofit organizations,  
          public agencies and other eligible entities; and (3) the Small  
          Business Finance Center which helps small businesses access  
          private financing through loan guarantees, direct loans, and  
          performance bond guarantees.  


           Overview of the State's Housing Departments and Agencies  :  


          The California Housing Finance Agency (CalHFA) is the state's  
          affordable housing lender. CalHFA funds its programs by issuing  
          bonds and then repays the bonds with loan proceeds. The agency  
          is completely self-supporting and receives no General Fund  
          money.  The agency provides low interest rate mortgages to low  
          and moderate income homebuyers in California, as well as down  
          payment and closing costs assistance. Since inception, CalHFA  
          has provided $19.6 billion in mortgages to 153,000 first-time  
          homebuyers. CalHFA loans are used for the acquisition,  
          rehabilitation and permanent financing to preserve, maintain and  
          increase the supply of affordable multi-family rental housing.   
          Since its creation, CalHFA has made $192 million in loans for  
          affordable housing.  










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           Purpose of this bill  :  According to the author, "AB 2475 creates  
          a forgivable loan program, housed within the IBank, to assist  
          local governments in financing critical new affordable housing  
          projects. The program will hold loan recipients accountable to  
          meeting required criteria that contribute positive outcomes back  
          to the state as well as local communities. Through working  
          together, local governments, developers, and the state can  
          integrate major regional planning and development targets into  
          much needed affordable housing projects. In return, loans will  
          be eligible for partial or full forgiveness upon project  
          completion. AB 2475 takes advantage of the IBank's expertise in  
          development financing, and places responsibility for  
          administering this new program there. However, the bill also  
          recognizes that meeting the specific requirements of the program  
          are essential to its success. Because of this, the loan  
          forgiveness determination occurs after project completion, and  
          requires that IBank consults with the Strategic Growth Council  
          (SGC) and California Housing Finance Agency (CalHFA) on whether  
          the project meets the required criteria.  By integrating these  
          entities into the final project review, the IBank will be able  
          to leverage experts in sustainable development and housing  
          finance to ensure that the criteria of the program have been  
          met."

           Staff comments:   The IBank currently has approximately $300  
          million of infrastructure loans in its pipeline.  Adding to the  
          types of loans it makes would add to the demand for IBanks  
          existing programs.  The IBank does not provide loans for  
          affordable housing developments so its staff is not familiar  
          with underwriting necessary to make these loans.  The committee  
          may wish to consider an amendment to make clear that the IBank  
          may provide loans for infrastructure that supports affordable  
          housing rather than the development itself.   


           Committee amendments: 








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            1)  (b) "  Infrastructure for   A  affordable housing" means  
              infrastructure  that supports affordable housing. Affordable  
              housing is defined as  dwellings available for purchase or  
              lease by persons and families who qualify as low- or  
              moderate-income, as defined in Section 50093 of the Health  
              and Safety Code, very low income households, as defined in  
              Section 50105 of the Health and Safety Code, or extremely  
              low income households, as defined in Section 50106 of the  
              Health and Safety Code.


             2)  p) (q)  "Project" means designing, acquiring, planning,  
              permitting, entitling, constructing, improving, extending,  
              restoring, financing, and generally developing public  
              development facilities facilities,  infrastructure for   
              affordable housing,  or economic development facilities  
              within the state or financing transition costs or the  
              acquisition of transition property, or both, upon approval  
              of a financing order by the Public Utilities Commission, as  
              provided in Article 5.5 (commencing with Section 840) of  
              Chapter 4 of Part 1 of Division 1 of the Public Utilities  
              Code.


            3)  Page 5, line 16, delete the second "facilities" 


          


           Double referred  :  If AB 2319 passes this committee, the bill  
          will be referred to the Committee on Jobs, Economic Development,  
          and the Economy.


          









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          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Apartment Association


          California State Association of Counties (CSAC)


          League of California Cities


          City of Lakeport


          City of Oakland




          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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