BILL ANALYSIS Ó
AB 2734
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Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2734 (Atkins) - As Amended April 5, 2016
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|Policy |Housing and Community |Vote:|6 - 1 |
|Committee: |Development | | |
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| | | | |
|-------------+-------------------------------+-----+-------------|
| |Local Government | |7 - 1 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill enacts the Local Control Affordable Housing Act to
redirect state savings realized from the dissolution of
redevelopment agencies (RDAs). Requires the Department of
Finance (DOF) to determine, each year, the amount of General
Fund savings as a result of the dissolution of RDAs, and
requires that 50% of those savings or $1 billion, whichever is
less, be redirected to the Department of Housing and Community
Development (HCD) for distribution to both state-level programs
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and local agencies for housing purposes.
FISCAL EFFECT:
Cost of $500 million GF to redirect money to HCD for housing
purposes, including approximately $5 million for the startup
costs, including 34 positions, at HCD in the first year assuming
the bill would allocate 50 percent of $1 billion to HCD.
Ongoing costs of $3.8 million to staff the program in the out
years.
COMMENTS:
1)Purpose. According to the author: "Increasing the construction
and availability of affordable housing is good for our
economy, the state budget, job creation, and families.
Affordable housing saves money - on average, a single homeless
Californian incurs $2,897 per month in county costs for
emergency room visits and in-patient hospital stays as well as
the costs of arrests and incarceration. Roughly 79% of these
costs are cut when that person has an affordable home.
Development creates jobs - an estimated 29,000 jobs are
created for every $500 million spent on affordable housing.
Affordable housing alleviates poverty - California households
with the lowest 25% of incomes spend 67% of their income on
housing, leaving little left over for other essential needs."
2)Funding for Housing. Historically, the state has invested in
low- and moderate-income housing primarily by providing
funding for construction. Because of the high cost of land and
construction and the subsidy needed to keep housing affordable
to residents, affordable housing is expensive to build.
Developers typically use multiple sources of financing,
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including voter-approved housing bonds, state and federal
low-income housing tax credits, private bank financing, and
local matching dollars.
Voter-approved bonds to support the construction of affordable
housing include Proposition 46 of 2002 and Proposition 1C of
2006, which together provided $4.95 billion for affordable
housing. These funds financed the construction,
rehabilitation, and preservation of 57,220 affordable
apartments, including 2,500 supportive homes for people
experiencing homelessness, and over 11,600 shelter spaces. In
addition, these funds have helped 57,290 families become or
remain homeowners. Nearly all of these funds have been
awarded.
California's affordable housing funding has declined 66.5%
since 2008, a loss of over $1.7 billion per year. More than
$1 billion of this total comes from the loss of redevelopment
funds that were directed to affordable housing purposes.
According to the California Housing Consortium, California has
a shortfall of 1.5 million affordable units for extremely low-
and very-low income renter households. The Public Policy
Institute of California reports that 31.5% of mortgaged
homeowners and 47.4% of renters spend more than one-third of
their total household income on housing and, that while
California has 12% of the nation's population, it has 20% of
the nation's homeless.
3)Recent Legislation.
a) AB 1335 (Atkins), 2015, sought funding for affordable
housing through the increase of a document recording fee
for real estate related transactions (excluding home
sales). That bill died on the Assembly Floor.
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b) AB 2 (Alejo), Chapter 319, Statutes of 2015, allows for
the creation of Community Revitalization Authorities which
allow for a more limited use of tax increment financing for
infrastructure that includes affordable housing.
c) SB 628 (Beall), Chapter 785, Statutes of 2014,
established enhanced infrastructure finance districts which
allowed the financing of infrastructure projects (that
could include affordable housing) by establishing a process
to use tax increment financing in a more limited way than
existed in redevelopment.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081