BILL ANALYSIS Ó
AB 2319
Page 1
Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2319 (Gordon) - As Introduced February 18, 2016
-----------------------------------------------------------------
|Policy |Housing and Community |Vote:|6 - 1 |
|Committee: |Development | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| |Jobs, Economic Development, | |6 - 0 |
| |and the Economy | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY: This bill authorizes the financing of an affordable
housing project by the California Infrastructure and Economic
Development Bank (IBank), including financing through the
Infrastructure State Revolving Fund (ISRF). Specifically, this
bill:
1)Removes the prohibition on the development of housing from the
definition of economic development facility.
2)Expands the definition of a project to include affordable
AB 2319
Page 2
housing.
3)Authorizes the issuance of bonds and the loaning of funds from
ISRF for the financing of affordable housing.
4)Defines "affordable housing" to mean a dwelling available for
purchase or lease by persons and families who qualify as low- or
moderate-income, very low income households, or extremely low
income households, as defined.
FISCAL EFFECT:
1)One-time cost of approximately $100 million (GF) to initially
fund an affordable housing lending program. GOBiz staff
indicate that affordable housing financing is sufficiently
different than general infrastructure financing to necessitate a
new program within IBank. ISRF was originally funded with $110
million in state general funds that are continuously recycled
and bonded against. They anticipate developing a similar
affordable housing lending program.
2)One-time costs of approximately $500,000 (GF) to develop
criteria, priorities, and guidelines and set up the
organizational structure for the program.
3)Ongoing costs of approximately $800,000 (GF) to fund 6 PYs to
manage the program, including 2 originating loan officers, an
administering loan officer, a compliance officer, a program
manager, and an administrative support position.
COMMENTS:
1)Purpose. According to the author, "California is in the middle
AB 2319
Page 3
of a housing crisis, and affordability is one of the biggest
challenges. Over 2.2 million low-income households compete for
only 664,000 affordable rental homes. This leaves over 1.5
million in the lowest-income population without access to
affordable housing.
The elimination of redevelopment agencies, together with the
expiration of state housing bonds, has left the state with fewer
options to finance housing projects and leverage federal
dollars. AB 2319 recognizes that the state requires regional
development strategies to incorporate housing, transportation,
land use, and anticipated growth into long-term planning. This
bill would provide housing developers, agencies, and local
governments with access to an existing funding tool by allowing
the IBank to accept financing applications for affordable
housing projects."
2)Background. The IBank was established in 1994 to finance public
infrastructure and private development. 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 of the Department of Finance, the Secretary of the
Transportation Agency, and an appointee of the Governor. The
day-to-day operations are directed by the Executive Director who
is an appointee of the Governor and is subject to confirmation
by the California State Senate.
The IBank does not receive any ongoing GF support, but is
financed through fees, interest income and other revenues
derived from its public and private sector financing activities.
AB 2319
Page 4
The IBank administers three core programs: (1) the ISRF which
provides direct low-cost financing for public infrastructure
projects and economic development facilities; (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 assists small businesses access to
private financing through loan guarantees, direct loans, and
performance bond guarantees. There is no pledge of IBank or
state general funds for any of the conduit revenue bonds.
3)Infrastructure State Revolving Fund: The ISRF provides
financing to assist in the development of a wide variety of
infrastructure and economic development projects. ISRF Program
funding is available in amounts ranging from $50,000 to
$25,000,000, with loan terms of up to 30 years.
Examples of eligible projects include, but are not limited to:
drainage, water supply and flood control; libraries and other
educational facilities; environmental mitigation measures;
sewage collection and treatment; solid waste collection and
disposal; water treatment and distribution; and public safety
facilities.
The IBank recently approved $56.3 million in loans to state and
local governmental entities and local government-sponsored
AB 2319
Page 5
not-for-profit organizations for necessary infrastructure and
economic expansion projects. The total ISRF loan outstanding
balance, as of October 2015, was $294 million.
The ISRF Program operates as a "leveraged loan program," which
means its funding is derived through the issuance of revenue
bonds secured by the repayments received from approved ISRF
Program Financings. IBank has issued several series of
tax-exempt revenue bonds to provide additional ISRF Program
financing. ISRF bonds are paid solely from repayments received
from ISRF borrowers, and are neither backed nor guaranteed by
the state or other IBank funds.
4)Related Legislation. AB 2475 (Gordon), also before this
Committee today, creates the Local Government Affordable Housing
Forgivable Loan Program within the IBank.
Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081
AB 2319
Page 6