BILL ANALYSIS Ó
AB 2475
Page 1
Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2475
(Gordon) - As Amended March 18, 2016
SUBJECT: Loan program: California Infrastructure and Economic
Development Bank
SUMMARY: Creates the Local Government Affordable Housing
Forgivable Loan Program with the Infrastructure and Economic
Development Bank (IBank). Specifically, this bill:
1)Defines "affordable housing" to mean a dwelling available for
purchase or lease by persons and families who qualified as
extremely low-, very low-, low- or moderate-income.
2)Defines "loan program" to mean the Local Government Affordable
Housing Forgivable Loan Program.
3)Defines a "local government" to mean a city, county, or city
and county.
4)Requires the IBank to develop and administer the loan program
to make loans to local government for the development of
affordable housing by local government with terms and
conditions the IBank deems to be in the best interests of the
AB 2475
Page 2
state.
5)Provides that a local government will not be required to repay
one-half of the principal of, and accrued interest on a loan,
if all of the following requirements have been met to the
satisfaction of the board:
a) The affordable housing financed is compatible with a
local government's sustainable community strategy (SCS).
b) The affordable housing financed contributes to the
reduction of greenhouse gasses pursuant to local
government's sustainable community strategy (SCS).
c) Each affordable housing unit financed by the loan is
restricted by deed to remain affordable for 55 years.
d) At least 75% of the dwellings in the affordable housing
development financed with loan proceeds are affordable to
extremely low- and very low income households.
e) The local government contributed to the affordable
housing development in an amount of funds that are equal
to, or infrastructure improvements that are equal in value,
to the amount of the loan.
1)Provides that a local government will not be required to repay
any amount of a loan if all of the following requirements have
been met to the satisfaction of the IBank:
a) The requirements above in (5) a) through e) have been
AB 2475
Page 3
met;
b) The local government waives at least 50% of any
development or permitting fees it could have imposed on a
developer in the ordinary course of approving the
affordable housing development; and
c) The affordable housing development includes onsite
access to services needed by residents including but not
limited to social and medical services.
1)Requires the IBank to determine whether a local government is
excused from repaying half or all of a loan after the
completion of the development of the affordable housing
development.
2)Requires the IBank to consult with the Strategic Growth
Council (SGC) and the California Housing Finance Agency
(CalHFA) to determine if the local government has met the
requirements for a partial or total forgiveness of the loan.
3)Requires the SGC and CalHFA to respond to a request for
consultation from the IBank in a reasonable time.
4)Requires the IBank to establish a process for a local
government to apply for a reduction in the loan repayment.
5)Makes an appropriation by expanding the authority of the IBank
to expend funds in a continuously appropriated fund.
AB 2475
Page 4
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
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" means persons and families
whose income does not 80% of median area income.
6)Defines "moderate-income households" means persons and
families of low or moderate income whose income exceeds the
income limit for lower income households.
AB 2475
Page 5
FISCAL EFFECT: Unknown. 2/3 vote.
COMMENTS:
This bill would direct IBank to develop a new loan program to
make loans to local governments for affordable housing
developments. If a local government meets certain requirements
the IBank would forgive either half of the loan amount or the
full loan amount. To qualify to have half of the loan forgiven,
a local government would have to: develop affordable housing
that is compatible the communities greenhouse gas reduction
plan, or SCS, the affordable housing development would need to
contribute to a reduction in greenhouse gases, at least 75% of
the affordable housing units in the development would need to be
for extremely low- and very low-income households restricted for
55 years, and the local government would have to contribute an
amount equal to the amount of the loan or infrastructure
improvements equal to the amount of the loan. To get the entire
loan forgiven, the local government would have to comply with
all of the requirements listed above and waive at least 50% of
any development or permitting fees it could have imposed on a
developer and the development would have to include onsite
services for residents including social services and medical
services.
Overview of the IBank: The I-Bank was established in 1994 to
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
AB 2475
Page 6
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. The I-Bank
does not receive any ongoing General Fund support, rather it is
financed through fees, interest income and other revenues
derived from its public and private sector financing activities.
According to its Comprehensive Annual Financial Report for the
fiscal year ended June 2013, its programs continued to provide
revenues sufficient to cover operating expenses. 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. There is no commitment of I-Bank
or state funds for any of the conduit revenue bonds. Since its
creation in 1994, the I-Bank has loaned, financed, or
participated in over $34 billion in infrastructure and economic
expansion projects. This includes over $400 million to local
and state agencies.
Overview of the California Housing Finance Agency (CalHFA) :
CalHFA is the state's affordable housing lender, supporting
homeownership and rental housing for low- and moderate income
families. 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
provides loans 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 to local
AB 2475
Page 7
agencies for affordable housing.
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:
Who builds affordable housing ? This bill would make loans to
local governments for the development of affordable housing
for low and moderate income families that support state and
local efforts to reduce greenhouse gas reduction. Local
governments don't build affordable housing.
Who should operate this new program ? The state has an
affordable housing lender in CalHFA with expertise lending to
AB 2475
Page 8
developers who construct affordable housing. The committee may
wish to consider whether it makes sense to house this program
within CalHFA rather than the IBank.
Committee amendments:
The committee may wish to consider an amendment to require
CalHFA to operate this new program rather than the IBank.
Double referred: If AB 2475 passes this committee, the bill will
be referred to the Committee on Local Government
REGISTERED SUPPORT / OPPOSITION:
Support
AB 2475
Page 9
California State Association of Counties (CSAC)
City of Oakland
League of California Cities
Opposition
None on file
Analysis Prepared by:Lisa Engel / H. & C.D. / (916) 319-2085,
Lisa Engel / H. & C.D. / (961) 319-2085