BILL ANALYSIS Ó
AB 2475
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Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2475 (Gordon) - As Amended March 18, 2016
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|Policy |Housing and Community |Vote:|6 - 1 |
|Committee: |Development | | |
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| |Local Government | |5 - 2 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY: This bill creates the Local Government Affordable
Housing Forgivable Loan Program within the Infrastructure and
Economic Development Bank (IBank). Specifically, this bill:
1)Requires the IBank to develop and administer the loan program
to make loans to local government for affordable housing
AB 2475
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developments with terms and conditions the IBank deems to be
in the best interests of the state.
2)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 based on whether a local government meets certain
requirements including:
a) The affordable housing must be compatible with the
community's greenhouse gas reduction plan, and must
contribute to a reduction in greenhouse gases,
b) 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,
c) 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.
d) To get the entire loan forgiven, the local government
would additionally 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.
1)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.
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FISCAL EFFECT:
1)One-time cost of approximately $100 million (GF) to initially
fund a meaningful loan program. Future ongoing costs of an
unknown amount to backfill any forgiven debt to allow the
program to continue to operate.
2)One-time costs of approximately $500,000 (GF) to develop
criteria, priorities, and guidelines and set up the
organizational structure for the forgivable housing loan
program.
3)Ongoing costs of approximately $800,000 (GF) to fund 6 PYs to
manage the program, including 2 originating loan officers, an
administering loan officer, a compliance officer, a program
manager, and an administrative support position.
COMMENTS:
1)Purpose. 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. 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
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loan forgiveness determination occurs after project
completion, and requires that IBank consult with the 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."
2)Background. The IBank was established in 1994 to finance
public infrastructure and private development. Housed within
GO-Biz, it is governed by a five-member board of directors
comprised of the Director of GO-Biz (chair), the State
Treasurer, the Director of the Department of Finance, the
Secretary of the Transportation Agency, and an appointee of
the Governor. The day-to-day operations are directed by the
Executive Director who is an appointee of the Governor and is
subject to confirmation by the California State Senate.
The IBank does not receive any ongoing General Fund support,
but is financed through fees, interest income and other
revenues derived from its public and private sector financing
activities. The IBank 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. 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.
The IBank 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
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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 IBank's
programs to include affordable housing.
3)Related Legislation. AB 2319 (Gordon), also before this
Committee today, authorizes the financing of an affordable
housing project by the California IBank, including financing
through the Infrastructure State Revolving Fund (ISRF).
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081