BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 2441 Hearing Date: 6/28/2016
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|Author: |Thurmond |
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|Version: |6/20/2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Alison Dinmore |
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SUBJECT: Housing: Workforce Housing Pilot Program
DIGEST: This bill creates the Workforce Housing Pilot Program
under the Department of Housing and Community Development (HCD).
Grant funds shall be used for the predevelopment costs,
acquisition, construction, or rehabilitation of rental housing
projects or units within rental housing projects or provide
downpayment assistance to serve persons and families of low or
moderate income.
ANALYSIS:
Existing California housing programs include:
1) Housing Enabled by Local Partnerships (HELP) Program,
administered by the California Housing Finance Agency, which
provides deferred housing loans to local agencies to determine
the specific housing activity and use of the funds in
providing for the acquisition, development, rehabilitation, or
preservation of affordable rental or ownership housing. This
program funds up to 120% area median income (AMI) for
homeownership and at or below 80% AMI for rental housing
activities. This program is not currently funded.
2) Local Housing Trust Fund Matching Grant Program,
administered by HCD, which offers competitive grants or loans
to local housing trust funds that develop, own, lend, or
invest in affordable housing and are used to create pilot
programs to demonstrate innovative, cost-saving approaches to
AB 2441 (Thurmond) Page 2 of ?
creating or preserving affordable housing. This program is
not currently funded.
3) Multifamily Housing Program, administered by HCD, which
assists the new construction, rehabilitation, and preservation
of permanent and transitional rental housing for lower income
households at or below 80% AMI through deferred payment loans.
This program is not currently funded.
4) CalHome program, administered by HCD, which provides: grants
to local public agencies or nonprofit corporations for
first-time homebuyer downpayment assistance, home
rehabilitation, including manufactured homes not on permanent
foundations, acquisition and rehabilitation, homebuyer
counseling, self-help mortgage assistance programs, or
technical assistance for self-help homeownership; loans for
real property acquisition, site development, predevelopment,
construction period expenses of homeownership development
projects, or permanent financing for mutual housing and
cooperative developments; and assistance to individual
households, in the form of deferred-payment loans, payable on
sale or transfer of the homes, or when they cease to be
owner-occupied, or at maturity. This program is not currently
funded.
This bill:
1) Establishes the Workforce Housing Pilot Program, which
requires HCD to grand funding to eligible recipients and to
determine the amount of the grant. An eligible recipient
means a city that resides within a county that is defined by
the U.S. Department of Housing and Urban Development as a
"high-cost" county or a city operating a housing trust fund.
A city that does not reside in a high-cost county, but is
experiencing a rise in home prices and rental prices such that
low- or moderate-income families are unable to live where they
work, may also qualify.
2) Requires an eligible local government to do all of the
following:
a) Use the grant funds for predevelopment costs,
acquisition, construction, or rehabilitation of rental
housing projects or units within rental housing projects
that serve persons and families of low or moderate income.
The affordability shall be restricted to at least 55 years.
AB 2441 (Thurmond) Page 3 of ?
b) Hold a public hearing, subject to the Brown Act, to
discuss and describe the project that will be financed.
c) File periodic reports with HCD regarding the use of
grant funds.
3) An eligible recipient may use the grant funds to provide
downpayment assistance to persons and families of low or
moderate income. HCD shall set limits on the amount of
downpayment assistance provided to maximize the use of the
funds.
4) Requires all funds awarded to be matched dollar-for-dollar,
except when an eligible recipient is suffering from a hardship
and is unable to generate the matching funds.
5) Requires HCD, on or before December 31 of each year in which
funds are awarded, to 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.
6) Requires HCD, upon the depletion of awarded funds and the
termination of the pilot program, to submit a report to the
Senate and Assembly Appropriations Committees. The report
shall evaluate the need for housing of persons and families of
low or moderate income in areas that received grants and shall
recommend whether the program should continue.
COMMENTS:
1)Purpose of the bill. According to the author, housing costs
are rising throughout the U.S., but are particularly high in
California, which is home to five of the 10 most expensive
large metropolitan housing markets. The author asserts that
existing programs are not flexible enough to meet these
growing needs. For multifamily housing, the only existing
program which caps at above 60% area median income (AMI) is
the Multifamily Housing Program. This program, however, is
oversubscribed and as a result, the competitive advantage is
given to lower-income developers such that no development
above 60% AMI is funded. For homeownership programs, many
state programs are capped at 80% AMI, and those that are
capped at120% AMI have limitations that make them inadequate
for high-cost areas. The author asserts that even though the
homeownership programs are capped at a higher AMI, they are
AB 2441 (Thurmond) Page 4 of ?
limited because they do not provide assistance to persons who
own homes owned by a community land trust.
Upon appropriation, this bill would provide direct assistance
to cities in high-cost areas for the creation of affordable
housing. Eligible activities include downpayment assistance
and the predevelopment costs, acquisition, construction, and
rehabilitation of rental housing projects or units within
rental housing projects.
2)Existing programs. HCD and CalHFA already administer a number
of housing programs that fund rental housing construction and
downpayment assistance for low- to moderate-income households.
Many housing developers, in order to fill funding gaps, rely
upon federal and state housing tax credits. These programs,
unlike some state housing programs, cap at 60% AMI. For this
reason, many housing projects that apply for state funding
provide housing to lower income levels (i.e., below 60% AMI)
to access these tax credits.
This new program is nearly identical to, and provides similar
flexibility to, local agencies as the existing HELP Program,
which is administered by CalHFA, except that it is a loan
program rather than a grant program as contemplated in this
bill. The committee may wish to consider the need to create a
new program when existing successful programs accomplish the
same goals as the new program in this bill.
3)Hardship? This bill provides that recipients shall match any
state funds awarded under this new program to be matched
dollar-for-dollar, but this requirement is not necessary if
the recipient can demonstrate a "hardship." It is not clear
who determines that hardship. The author intended for a state
agency to have the flexibility to make the determination of
what constitutes a hardship and for an applicant to adequately
demonstrate that hardship. HCD has no experience making such
a determination.
When redevelopment agencies (RDAs) were dissolved, successor
agencies were established to wind down their obligations and
responsibilities. Generally, the city or county that formed
the RDA serves as the successor agency. Successor agencies
are required to receive a "finding of completion" from the
Department of Finance (DOF), which requires undergoing due
diligence reviews and making payments to DOF. Once it
AB 2441 (Thurmond) Page 5 of ?
receives a finding of completion, a successor agency has
additional discretion regarding former agency real property
assets, loan repayments to the local government community that
formed the agency, and use of proceeds from bonds issued by
the former RDA. The author will accept an amendment requiring
the applicant to demonstrate its hardship to the DOF and for
the DOF to determine whether an applicant suffers a hardship.
Assembly Votes:
Floor: 56-19
Appr: 14-2
H&CD: 6-1
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 22, 2016.)
SUPPORT:
American Federation of State, County and Municipal Employees
Apartment Association, California Southern Cities
Apartment Association of Orange County
California Association of Realtors
City of Santa Monica
East Bay Rental Housing Association
League of California Cities
North Valley Property Owners Association
State Building and Construction Trades Council
OPPOSITION:
None received
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