BILL ANALYSIS Ó
AB 2475
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, 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. Specifically, this bill:
1)Creates, within the California Infrastructure and Economic
Development Bank (I-Bank),
the Local Government Affordable Housing Forgivable Loan Program
(loan program).
2)Defines the following terms for the loan program:
a) "Affordable housing" to mean a dwelling available for
purchase or lease by persons and families who qualify as
low- and moderate-income, very low-income households, or
extremely low-households, as defined.
b) "Loan program" to mean the Local Government Affordable
Housing Forgivable Loan Program established by this
chapter; and,
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c) "Local government" to mean a city, county, or city and
county.
3)Requires the I-Bank to develop and administer the loan program
to make loans to a local government for the development of
affordable housing by the local government on terms and
conditions the I-Bank deems in the best interests of the
state.
4)Specifies that a local government shall not be required to
repay a loan made pursuant to the loan program, as follows:
a) A local government shall not be required to repay
one-half of the principal of, and accrued interest on, a
loan made pursuant to the loan program, if all of the
following requirements have been satisfied by the local
government to the satisfaction of the Board:
i) The affordable housing financed with the loan
proceeds is compatible with the Sustainable Communities
Strategy (SCS);
ii) The affordable housing financed with the loan
proceeds contributes to the reduction of greenhouse gases
pursuant to the SCS;
iii) Each dwelling of affordable housing financed with
the loan proceeds is restricted by deed to remain
affordable housing for 55 years from the completion of
the dwelling;
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iv) At least 75% of the dwellings in an affordable
housing development financed with the loan proceeds are
affordable to very low-income households, or extremely
low- income households, as defined, at either an
affordable housing cost or an affordable rent, as
defined; and,
v) The local government contributed to development of
the affordable housing financed with the loan proceeds in
an amount of funds that are equal to, or infrastructure
improvements that are equal to, the amount of the loan.
5)Specifies that a local government shall not be required to
repay any amount of a loan made pursuant to the loan program,
if all of the following requirements have been satisfied by
the local government to the satisfaction of the Board of the
I-Bank:
a) All the requirements listed in 4), above;
b) The local government waived at least 50% of any
development or permitting fees it could have imposed on a
developer in the ordinary course of approving the
development of the affordable housing financed with the
loan proceeds; and,
c) The affordable housing development financed with the
loan proceeds includes onsite access to services needed by
the residents of the affordable housing, including, but not
limited to, social services and medical services.
6)Requires the Board of the I-Bank to determine whether a local
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government is excused from repaying half or all of the loan
after the completion of the development of the affordable
housing financed with the loan proceeds.
7)Requires the Board of the I-Bank to make a determination
pursuant to 6), above, only after consulting with the
Strategic Growth Council and the California Housing Finance
Agency regarding whether the local government met the
requirements of 4), above. Requires the Strategic Growth
Council and the California Housing Finance Agency to respond
to a request for consultation from the Board within a
reasonable time.
8)Requires the I-Bank Board to establish a process for a local
government to apply for a reduction in loan repayment.
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 I-Bank 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.
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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" to mean persons and families
whose income does not 80% of median area income.
6)Defines "moderate-income households" to mean persons and
families of low or moderate income whose income exceeds the
income limit for lower-income households.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
1)Bill Summary. This bill would direct I-Bank to develop a new
loan program to make loans to local governments for affordable
housing developments. If a local government meets certain
requirements, the I-Bank 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 with 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
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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.
This bill is an author-sponsored measure.
2)Author's Statement. According to the author, "AB 2475 creates
a forgivable loan program, housed within the I-Bank, 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 I-Bank'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 is essential
to its success. Because of this, the loan forgiveness
determination occurs after project completion, and requires
that
I-Bank 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 I-Bank will be
able to leverage experts in sustainable development and
housing finance to ensure that the criteria of the program
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have been met.
"Rather than giving out funding in the form of matching grants
for these critical developments, AB 2475 requires recipients
follow through on promises. This strategy supports the
State's climate action goals to reduce GHGs, while also
addressing the housing crisis by providing funding to local
governments for housing projects. Integrating state goals
with local needs is mutually beneficial.
"The I-Bank was created within Go-BIZ in 1994 to provide
financial assistance for infrastructure and development
projects that stimulate the economy, promote job creation, and
strengthen California communities. To do this, the I-Bank has
authority to issue bonds, finance public agencies, provide
credit enhancements, acquire or lease facilities, and leverage
State and Federal dollars for its various programs."
3)Two-thirds vote. The I-Bank Fund is a continuously
appropriated fund; therefore, because this bill expands
I-Bank's duties, this bill will require a two-thirds vote of
each house.
4)Policy Considerations. The I-Bank currently funds projects
related to infrastructure including city streets, county
highways, drainage, water supply and flood control,
educational facilities, environmental mitigation measures,
parks and recreational facilities, port facilities, power and
communications, public transit, sewage collection and
treatment, solid waste collection and disposal, water
treatment and distribution, defense conversion, public safety
facilities, state highways, military infrastructure, and goods
movement-related infrastructure. This bill would expand the
scope of I-Bank's programs to include affordable housing.
5)Arguments in Support. Supporters argue that these loans have
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the potential to help build many additional units and create
additional jobs and economic activity.
6)Arguments in Opposition. Opponents note concern with the deed
restriction provision contained in the bill.
7)Double-Referral. This bill was heard in the Housing and
Community Development Committee on April 13, 2016, where it
passed with a 6-1 vote.
REGISTERED SUPPORT / OPPOSITION:
Support
American Planning Association, California Chapter
California State Association of Counties (CSAC)
City of Oakland
League of California Cities
Opposition
California Association of Realtors (unless amended)
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Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958