BILL ANALYSIS Ó
AB 2441
Page 1
Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2441
(Thurmond) - As Amended March 18, 2016
SUBJECT: Housing: Workforce Housing in High-Cost Areas Pilot
Program
SUMMARY: Establishes the Workforce Housing in High Cost Areas
Pilot Program administered by the Department of Housing and
Community Development (HCD). Specifically, this bill:
1)States the intent of the Legislature in enacting this bill
that funds allocated to cities and administered by HCD be of
maximum benefit in meeting the needs of persons and families
of low- or moderate-income.
2)Defines "eligible city or city and county" to mean a city that
resides within a county that is defined by the United State
Department of Housing Urban Development (HUD) as a high-cost
county.
3)Defines a "notice of funding available" (NOFA) to mean a
public announcement that an estimated amount of funding will
be awarded by a department program according to a specified
criteria and schedules.
AB 2441
Page 2
4)Defines "persons and families of low or moderate income" to
mean persons and families whose income exceeds 60% percent of
area median income (AMI), adjusted for family size, but no
higher than 120% percent of AMI.
5)Requires HCD, subject to availability, to award grant funding
to eligible cities and counties that apply for financing.
6)Requires HCD to determine the appropriate amount of the grant
for purposes of accomplishing the intent of the Legislature.
7)Requires an eligible city or city and county to do all of the
following:
a) Use the grant funds awarded to it for the predevelopment
costs, acquisition, construction,or rehabilitation of
rental housing projects or units within rental housing
projects restricted to affordable levels for 55 years;
b) Hold a public hearing pursuant to the Ralph M. Brown Act
to discuss and describe the project that will be financed;
and
c) File periodic reports with HCD regarding the use of
funds.
1)Require on or before December 31 of each year in which funds
are awarded, HCD must provide a report to the Legislature
regarding the number of grants awarded, a description of the
projects funded, the number of units funded and the amount of
matching funds received.
AB 2441
Page 3
2)Requires the program to operate until all appropriated funds
have been awarded.
3)Requires HCD, once all funds are appropriated and the pilot
program is terminated, to provide a report to the Assembly and
Senate Committees on Appropriations that evaluates the need
for housing of persons and families of low and moderate income
in cities or cities and counties that receive funds from this
program. Requires the report to include a recommendation on
whether or not the pilot program should continue.
4)Makes the requirement to submit a report inoperative four
years after the report becomes due.
EXISTING LAW:
FISCAL EFFECT: Unknown.
COMMENTS:
This bill creates the Workforce Housing in High Cost Areas Pilot
Program to provide grants to cities in high cost counties, as
defined by HUD, for predevelopment costs, acquisition,
construction, or rehabilitation of rental housing projects or
units within rental housing projects restricted to affordable
levels for 55 years. The bill limits the program to high cost
counties as defined by HUD. For purposes of setting national
loan limits for Federal Housing Administration insured loans,
HUD identifies the following California counties as high-cost:
Alameda, Contra Costa, Los Angeles, Marin, Orange, San Benito,
San Francisco, San Mateo, Santa Barbara, Santa Clara, and Santa
AB 2441
Page 4
Cruz.
Purpose of this bill : According to the author, "A divergence
between median rents and median income has led to greater
housing unaffordability in such high-cost areas. To illustrate,
this year alone the average rental price in Oakland has risen
13.7 percent to $2,806 per month. Such a high rent has come to
put pressure on individuals who historically fall outside of
state-subsidy. All state funds that subsidize the development of
multi-family housing is capped at 60% AMI. In high-cost
metropolitan areas, the free market does not naturally provide
housing for many above that income designation. In sum, existing
programs are not flexible to provide housing that meets the
needs of a diverse and complex housing crisis. The result of
programs with such gaps in coverage has been the displacement of
workers from their communities. The displacement of workers is
not only a detriment to communities themselves, but also to
California as a whole, as economically diverse communities are
undermined. As residents are displaced away from their jobs,
commutes will increase as well as traffic in California's
highways effectively undermining California's goals to reduce
carbon emissions. Notwithstanding the strain of long commutes on
family life, the importance of neighborhood and environment in
preparing children from working families for success and social
mobility cannot be understated. And for those who brave such
steep rental housing costs, have their capacity to save income
and move towards homeownership undercut."
Staff comments:
AB 2441
Page 5
The Workforce Housing in High Cost Areas Pilot Program has
elements of several different existing programs -the CalHOME
program and the Local Housing Trust Fund program-operated by
HCD. The CalHOME program provides grants and loans to local
governments and nonprofit organizations for rehabilitation of
existing homes, mortgage assistance, real property acquisition,
site development, predevelopment, and construction period
expenses of homeownership development projects, or permanent
financing for mutual housing and cooperative developments. The
Local Housing Trust Fund program provides matching grants to
cities, counties, and qualified non-profit organizations for
loans for construction of rental housing projects with units
restricted for at least 55 years to households earning less than
60% of AMI and for downpayment assistance to qualified
first-time homebuyers. The program proposed by this bill is
different than both of those programs in that it allows the
funding to be used for projects that serve up to 120% of AMI.
To reduce the administrative cost of creating a new program, the
author may wish to consider changing those programs to allow
flexibility to serve families and individuals making 120% of AMI
in high cost areas.
Committee amendments :
The committee may wish to consider the following amendments:
Delete the requirement that funding go to projects that
serve between 60% and 120% of AMI.
Allow funding to go up to 120% of AMI in high cost areas
as defined by the Department of Housing and Urban
Development in their limits for FHA loans.
Allow local governments to use the funds for downpayment
AB 2441
Page 6
assistance with limitations developed by HCD to maximize
the use of the funds.
Make clear that a local government must provide matching
funds to qualify for the program.
Change the name of the program to the Workforce Housing
Pilot Program.
REGISTERED SUPPORT / OPPOSITION:
Support
None on File
Opposition
None on File
Analysis Prepared by:Lisa Engel / H. & C.D. / (916) 319-2085,
Lisa Engel / H. & C.D. / (961) 319-2085
AB 2441
Page 7