BILL ANALYSIS Ó
SB 858
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Date of Hearing: August 10, 2016
ASSEMBLY COMMITTEE ON BUDGET
Philip Ting, Chair
SB
858 (Committee on Budget and Fiscal Review) - As Amended August
8, 2016
SENATE VOTE: 2/3 Vote
SUBJECT: Budget Act of 2016
SUMMARY: Makes necessary statutory and technical changes to
implement the Budget Act of 2016 related to the No Place Like
Home (NPLH) Program. Specifically, this bill:
1) Provides that the California Health Facilities Financing
Authority (CHFFA) may issue taxable or tax exempt revenue
bonds in an amount not to exceed $2 billion, for the
purposes of financing permanent supportive housing pursuant
the NPLH Program or to refund bonds previously issued
pursuant to this section.
2) Allows CHFFA to utilize bond proceeds to fund necessary
reserves, capitalized interest, credit enhancements or
liquidity costs or costs of insurance.
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3) Provides that the CHFFA may make secured or unsecured
loans to the Department of Housing and Community
Development (HCD) in connection with financing permanent
supportive housing pursuant to NPLH Program or to refund
bonds previously issued pursuant to the section, in
accordance with an agreement between the authority and HCD.
4) Allows CHFFA to enter into any agreement for credit
enhancement or liquidity, execute any instruments, and do
any other acts it deems necessary, convenient, or desirable
in connection with revenue bonds issued pursuant to this
section.
5) Provides that this section is a complete, additional,
and alternative method for performing acts authorized and
shall be constructed as supplemental and additional to
powers conferred by other laws; provided, however that the
issuance of the bonds and refunding bonds and the execution
of any agreements under this section are not subject to,
and need not comply with, the requirements of any other law
applicable to the issuance of those bonds or refunding
bonds and the execution of those agreements, including, but
not limited to the California Environmental Quality Act
(CEQA).
6) States that the financing of permanent supportive
housing pursuant to the NPLH Program shall not exempt the
permanent supportive housing from the requirements of any
other law otherwise applicable to the project, except as
provided in Section 15463 (e)(1).
7) Includes new findings and declarations related to the
Mental Health Services Act, including the following:
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a. HCD is the state entity with sufficient
expertise to implement and oversee a grant or loan
program for permanent supportive housing of the target
population.
b. CHFFA is authorized by law to issue bonds and
to consult with the Mental Health Services Oversight
and Accountability Commission and the Department of
Health Care Services (DHCS) concerning the
implementation of a grant program for California
counties.
c. Use of bond funding will accelerate the
availability of funding for the grant or loan program
to provide permanent supportive housing for the target
population as compared to relying on annual
allocations from the Mental Health Services Fund and
better allow counties to provide permanent supportive
housing for homeless individuals living with mental
illness.
8) Defines "authority" to mean CHFFA established pursuant
to Part 7.2 (commencing with Section 15430) of Division 3
of Title 2 of the Government Code.
9) Defines "Commission" to mean the Mental Health Services
Oversight and Accountability Commission established by
Section 5845 of the Welfare and Institutions Code.
10)Amends the definition of "County" to include, but is not
limited to, a city and county, and a city receiving funds
pursuant to Section 5701.5.
11)Amends the definitions of "Program" to mean the process
for awarding funds and distributing moneys to applicants
established in Sections 5849.7, 5849.8, 5849.9 and the
ongoing monitoring and enforcement of the applicants'
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activities pursuant to Section 5849.8, 5849.9, and 5849.11.
12)Provides that the authority may do the following:
a. Consult with the commission and DHCS
concerning the implementation of the NPLH Program,
including review of the annual reports provided to the
authority by the department pursuant to this section.
b. Enter into one or more contracts with HCD for
HCD to provide, and CHFFA to pay HCD for providing
services described in Sections 5849.7, 5849.8, 5849.9,
related to permanent supportive housing for the target
population. Prior to entering into any contract
pursuant to the paragraph, the executive director of
CHFFA shall transmit a copy of the contract approved
by CHFFA to the commission. The contract shall be
deemed approved by the commission unless it acts
within 10 days to disapprove the contract.
c. On or before June 15 and December 15 of each
year, the authority shall notify the Controller of the
amounts the authority is required to pay as provided
in Section 5890 for the following six month period to
the department pursuant to any service contact
entered.
13)Provides that HCD may do the following:
a. Enter into one or more contracts with CHFFA to
provide services described in Sections 5849.7, 5849.8,
5849.9, related to permanent supportive housing for
the target population. Payments received by HCD under
any service contract authorizes by this paragraph
shall be used, prior to any other allocation or
distribution, to repay loans from CHFFA pursuant to
Section 15463 of the Government Code.
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b. Enter into or more loan agreements with CHFFA
as security for the repayment of the revenue bonds
issued by CHFFA. HCD shall deposit the proceeds of
these loans, excluding any loans relating to refunding
bonds, into the fund. HCD's obligation to repay these
loans shall be limited to amounts received pursuant to
its trustee, which may be the Treasurer.
14)Includes the following additional findings and
declarations:
a. The consideration to be paid by CHFFA to HCD
for the services provided pursuant to the contracts
authorized by paragraph (2) of subdivision (a) and
paragraph (1) of subdivision (b) is fair and
reasonable and in the public interest.
b. The services contracts and payments made by
CHFFA to HCD pursuant to a service contract authorized
by paragraph (2) of subdivision (a) and paragraph (1)
of subdivision (b) and the loan agreements and loan
repayments made by HCD to CHFFA pursuant to a loan
agreement authorized by paragraph (2) of subdivision
(b) shall not constitute a debt or liability, or a
pledge of the faith and credit, of the state or any
political subdivision.
15)Requires the state to hereby covenant with the holders
from time to time of any bonds issued by CHFFA pursuant to
Section 15463 of the Government Code that it will not
alter, amend, or restrict the provisions of this section,
subdivision (f) of Section 5890, or subdivision (b) of
Section 5891 in any manner adverse to the interests of
those bondholders so long as any of those bonds remain
outstanding. CHFFA may include this covenant in the
resolution, indenture or other documents governing the
bonds.
16)Amends the NPLH Fund to be continuously appropriated to
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HCD, CHFFA, and the Treasurer, not just HCD.
17)Amends the language relating to the NPLH Fund, to state
that any moneys from the receipt of the loan proceeds by
HCD derived from the issuance of bonds by CHFFA (strikes
out the Treasurer) for the purposes of implementing the
program.
18)States that in order to finance permanent supportive
housing the target population, HCD may enter into one or
more contacts with CHFFA. States that HCD shall use its
best efforts to provide or cause to be provided permanent
supportive housing for the target population in
consideration for service contract payments to be received
from CHFFA.
19)Provides that for the measurement of dollar limit on
amounts to be distributed by HCD shall be based on the
principal amount of bonds issued by CHFFA and loaned to
HCD, exclusive of any refunding bonds but including any net
premium derived from the sale of the bonds, for deposit in
the fund.
20)Provides that there is no dollar limit on the distribution
of moneys in the fund derived from the sources described in
paragraphs (2) and (3) of subdivision (b) of Section
5849.4.
21)Clarifies that the 8% set aside for small counties is for
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a competitive program.
22)Clarifies that HCD shall award funds in at least 4 rounds
for the competitive program.
23)Clarifies that the first request for proposal shall be
issued 180 days after the effective date of a final
judgment, with no further opportunity for appeals, in any
court proceeding affirming the validity of the contracts
authorized by the authority and the department.
24)Adds that HCD shall monitor compliance by counties of the
grant and loan agreements and regulatory agreements to
funds distributed to this section, and to which HCD may be
a third party beneficiary, and enforce those agreements to
the extent necessary and desirable in order to provide to
the greatest degree possible, the successful provision of
permanent supportive housing.
25)Requires HCD to report annually to the authority the
status of its efforts.
26)Allows HCD to provide technical assistance to counties or
developers of supportive housing to facilitate the
construction of permanent supportive housing for target
populations.
27)Requires a county receiving funds to commit to provide
mental health services and coordinate the provision of, or
referral to, other services, including, but not limited to,
substance abuse treatment services, to the tenants of the
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supportive housing development for at least 20 years.
Services shall be provided onsite at the supportive housing
development or at a location otherwise easily accessible to
the tenants.
28)Changes from 60 days to150 days, after the effective date
of a final judgment, whit no further opportunity for
appeals, in any court proceeding affirming the validity of
the contracts authorized by the authority and the
department for the department to make the first allocation
of moneys pursuant to this section.
29)Requires HCD to submit a report to CHFFA by December 31 of
each year, commencing with the year after the first full
year in which the program is in effect, that contains the
information, for all counties participating in the program
and the services that have been provided.
30)Repeals Section 5849.13 of the Welfare and Institution
Code.
31)Requires that an action to determine the validity of any
contract or loan authorized pursuant to Section 5849.35 or
any bond authorized to be issued pursuant to Section 15463
of the Government Code, and any contracts related to those
bonds, may be brought in accordance with Section 17700 of
the Government Code.
32)Allows the Department of Finance (DOF) to authorize one or
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more loans from the General Fund to the NPLH fund for
cashflow purposes. Increases from an aggregate amount not
to exceed $1 million to an amount not to exceed $2 million,
assuming the loans are for either of the following
conditions:
a. To allow HCD to begin program implementation
activities, including but not limited to, drafting
program guidelines and regulations.
b. To all HCD, CHFFA, and the Treasurer to
implement Section 5948.35 of this Welfare and
Institutions Code and Section 15463 of the Government
Code, including but not limited to, payment for
financial advisory and legal services to prepare for,
and in connections with, any validation action
pursuant to Section 5849.13 of any other court action
regarding this part or Section 15463 of the Government
Code.
33)Creates the Supportive Housing Program Subaccount within
the Mental Health Services Fund. All moneys in the
subaccount are continuously appropriated, without regard to
fiscal years, to the CHFFA to provide funds to meet its
financial obligations pursuant to any service contracts
entered into pursuant to Section 58849.35.
34)Requires the Controller, starting on the first day of each
month, to prior to any transfer, deposit or expenditure
from the fund for only other purpose, transfer from the
Mental Health Services Fund to the Supportive Housing
Program Subaccount an amount which has been certified by
the CHFFA, but not to exceed an aggregate amount of $140
million per year.
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35)Requires any shortfall to be carried over to the next
month if in any month the amounts in the subaccount are
insufficient to fully pay the amount certified by the
CHFFA.
36)Prohibits moneys in the Supporting Housing Subaccount to
be loaned to the General Fund.
37)Exempts the Supportive Housing Program Subaccount created
by subdivision (f) of Section 5890 or any moneys paid by
CHFFA to HCD as a service fee pursuant to a service
contract authorized by Section 5849.35.
38)Makes various technical amendments necessary to the
implementation of the NPLH Program.
39)Makes findings and declarations that this act furthers the
intent of the Mental Health Services Act, enacted by
Proposition 63 at the November 2, 2004, statewide general
election.
40)Provides an appropriation related to the budget.
EXISTING LAW:
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1) Existing law includes the Mental Health Services Act
(MHSA), an initiative enacted by the voters as Proposition
63, at the November 2, 2004, statewide general election,
imposes a 1% tax on that portion of a taxpayer's taxable
income that exceeds $1 million and requires that the
revenue from the tax be deposited in the Mental Health
Services Fund to fund various county mental health
programs.
2) Existing law creates the NPLH Program, which requires
the Department of Housing and Community Development to
award $2 billion among counties to finance capital costs,
including but not limited to, acquisition, design,
construction, rehabilitation, or preservation, and to
capitalize operating reserves, of permanent supportive
housing for a target population.
FISCAL EFFECT:
1) Includes a continuous appropriation for the Supportive
Housing Program Subaccount created in the Mental Health
Services Fund.
COMMENTS:
1) This trailer bill provides the bond financing language
necessary to implement the No Place Like Home Program.
2) Under this program, up to $140 million is transferred
from the first revenues into the Mental Health Services Act
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Fund to a subaccount for the CHFFA each year.
3) Through a services contract between CHFFA and HCD, CHFFA
agrees to pay HCD up to $140 million annually for HCD to
implement and administer grants or loans to counties for
supportive housing. The services contract is a contingent
obligation of CHFFA, which is an exception to the
constitutional debt limit provision. Without the
exception, the bond language would be subject to approval
by the voters.
4) Under this proposal CHFFA issues bonds and loans the
proceeds, not to exceed $2 billion to HCD. HCD deposits
proceeds into the NPLH to fund grants or loans to counties
for supportive housing, as administered by HCD.
5) Under a loan agreement between CHFFA and HCD, CHFFA
agrees to loan bond proceeds to HCD in exchange for HCD
agreeing to assign its services payments received to CHFFA
for use as debt service on the bonds.
6) Under the NPLH Program passed in June, there is a 5% cap
on administrative costs.
7) With respect to the CEQA language included in WIC
5849.35 (e) and GC 15463 (e)(1), where the services
contract and all the bond documents may be approved much
earlier than when the counties may be ready to apply for
grants or loans, the language clarifies that the approval
of a service contract between HCD and CHFFA is not an
"approval of a project triggering (and thereby violating)
CEQA. The language does not exempt the housing projects
from the CEQA process.
REGISTERED SUPPORT / OPPOSITION:
SB 858
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Support
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Opposition
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Analysis Prepared by:Genevieve Morelos / BUDGET / (916)
319-2099