BILL ANALYSIS Ó
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2441 (Thurmond) - As Amended April 26, 2016
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|Policy |Housing and Community |Vote:|6 - 1 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY: The bill establishes the Workforce Housing Pilot
Program administered by the Department of Housing and Community
Development (HCD). Specifically, this bill:
1)Requires HCD, subject to availability of funding, to award
grant funding to eligible cities that apply for financing and
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to determine the appropriate amount of the grant to benefit
persons and families of low or moderate income.
2)Requires an eligible city to use the grant funds for the
predevelopment costs, acquisition, construction, or
rehabilitation of rental housing projects or units within
rental housing projects that serve low or moderate income
persons and families, and are restricted to affordable levels
for 55 years;
3)Allows an eligible city to use the grant funds to provide
downpayment assistance to persons or families of low or
moderate income.
4)Requires all grant funds awarded to be matched on a
dollar-for-dollar basis, except in hardship cases.
5)Requires HCD to provide periodic reports to the Legislature
including a report once all the appropriated funds are
depleted and the program is terminated in order to recommend
whether or not the program should continue.
FISCAL EFFECT:
1)One-time cost of $200 million (GF) to provide grant funding
for the program, assuming this bill will be funded in the same
manner as a similar budget proposal. Of this, $150 million
(75%) will be set aside for rental construction/rehabilitation
and $50 million will be set aside for downpayment assistance.
a. Rental housing: HCD estimates staffing costs of
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approximately $1.2 million (GF) annually to provide 15
awards of $10 million each.
b. Downpayment Assistance: HCD estimates staffing costs
of approximately $875,000 annually to provide 20 units
with $50,000 each.
2)Ongoing costs of approximately $345,000 for ongoing management
and monitoring for both components.
3)Unknown, but potentially significant costs to HCD for legal
and contract services.
COMMENTS:
1)Purpose. 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 are capped at 60% area medium income
(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."
2)Background. The program created by this bill has features of
the CalHOME program and the Local Housing Trust Fund program,
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both 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.
This bill creates a new, but similar, program that allows
funding to be used for projects that serve up to 120% of AMI.
3)High Cost Counties. This 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 Cruz.
4)Budget Proposal. The program proposed in this bill is similar
to one described in the Assembly Democrats Housing Budget
Request which allocates $200 million for the program and sets
aside 75% ($150 million) for rental
construction/rehabilitation and 25% ($50 million) for
downpayment assistance.
5)Technical Amendment Needed. The most recent amendments
changed the name of the pilot program, but the change was
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missed in one place. On page 3, line 17, strike out "in
High-Cost Areas"
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081