BILL ANALYSIS Ó
SB 858
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SENATE THIRD READING
SB
858 (Committee on Budget and Fiscal Review)
As Amended August 18, 2016
2/3 vote. Urgency
SENATE VOTE: 25-11
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Budget |20-5 |Ting, Bloom, Bonta, |Obernolte, Travis |
| | |Campos, Chiu, Cooper, |Allen, Chávez, |
| | |Gordon, Holden, Irwin, |Harper, Patterson |
| | |Kim, Lackey, McCarty, | |
| | |Melendez, Mullin, | |
| | |Nazarian, O'Donnell, | |
| | |Rodriguez, Thurmond, | |
| | |Wilk, Williams | |
| | | | |
| | | | |
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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
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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 and through loans under subdivision (d).
2)Allows CHFFA to utilize bond proceeds to fund necessary
reserves for principal and interest, capitalized interest,
credit enhancements or liquidity costs, costs of insurance,
administrative expenses under Section 5849.4 of the Welfare
and Institutions Code, and to reimburse loans under Section
5849.14 of the Welfare and Institutions Code.
3)Adds that the authority may provide for the issuance of bonds
of the authority for the purpose of redeeming, refunding, or
retiring any bonds or any series or issue of bonds then
outstanding issued under subdivision (b), including the
payment of any redemption premium and any interest accrued or
to accrue to the date of redemption, purchase, or maturity of
the bonds.
4)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.
5)Clarifies that loan proceeds to be used to fund reserves for
principal and interest, capitalized interest, credit
enhancement and liquidity costs, expenses of funding,
financing, and refinancing, administrative expenses under
Section 5849.4 of the Welfare and Institutions Code, and to
reimburse loans under Section 5849.14 of the Welfare and
Institutions Code.
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6)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.
7)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).
8)States that the funding or financing under this section shall
not exempt the permanent supportive housing from the
requirements of any other law otherwise applicable to the
permanent supportive housing, except as provided in Section
15463 (e)(1).
9)Includes new findings and declarations related to the Mental
Health Services Act, including the following:
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 State Department of
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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.
10) 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.
11) Defines "Commission" to mean the Mental Health Services
Oversight and Accountability Commission established by Section
5845 of the Welfare and Institutions Code.
12) 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.
13) 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' activities
pursuant to Section 5849.8, 5849.9, and 5849.11.
14) Provides that the authority may do the following:
a) Consult with the commission and DHCS concerning the
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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
to the Commission a copy of the contract in substantially
final form. 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 certify to the Controller 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.
15) 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.
b) Enter into or more loan agreements with CHFFA as
security for the repayment of the revenue bonds issued by
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CHFFA. HCD shall deposit the proceeds of these loans,
excluding any refinancing loans to redeem, refund, or
retire bonds, into the fund. HCD's obligation to make
payments under these loan agreements shall be limited
obligations payable solely from amounts received pursuant
to its service contracts with CHFFA.
c) May pledge or assign its right to receive all or a
portion of the payments under the service contracts entered
pursuant to paragraph (1) directly to CHFFA or its bond
trustee, for the payment of principal, premiums, if any,
and interest under any loan agreement authorized by
paragraph (2).
16) 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.
17) Requires the state to hereby covenant with the holders from
time to time of any bonds issued by CHFFA pursuant to Section
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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.
18) Amends the NPLH Fund to be continuously appropriated to
HCD, CHFFA, and the Treasurer, not just HCD.
19) Allows accounts and subaccounts to be created with the fund
as needed.
20) 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 under subdivision
(b) of Section 15463 of the Government Code.
21) 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.
22) 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.
23) Provides that there is no dollar limit on the distribution
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of moneys in the fund derived from the sources described in
paragraphs (2) and (3) of subdivision (b) of Section 5849.4.
24) Clarifies that the 8% set aside for small counties is for a
competitive program.
25) Clarifies that HCD shall award funds in at least 4 rounds
for the competitive program.
26) 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.
27) Requires HCD to monitor county compliance with applicable
program regulations, loan agreements and regulatory agreements
and any agreements related to the program that designate HCD
as a third party beneficiary, and enforce those regulations
and agreements to the extent necessary and desirable in order
to provide to the greatest degree possible, the successful
provision of permanent supportive housing.
28) Requires HCD to report annually to the authority the status
of its efforts.
29) Allows HCD to provide technical assistance to counties or
developers of supportive housing to facilitate the
construction of permanent supportive housing for target
populations.
30) Requires a county receiving funds to commit to provide
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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
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.
31) 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.
32) 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.
33) Repeals Section 5849.13 of the Welfare and Institution
Code.
34) 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.
35) Allows the Department of Finance (DOF) to authorize one or
more loans from the General Fund to the NPLH fund for cash
flow purposes. Increases from an aggregate amount not to
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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.
36) Creates the Supportive Housing Program Subaccount within
the Mental Health Services Fund. All moneys in the subaccount
are reserved and 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.
37) Requires the Controller, starting no later than the last
day of each month, prior to any transfer, or expenditure from
the fund for any other purpose for the following month,
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.
38) 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.
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39) Prohibits moneys in the Supporting Housing Subaccount to be
loaned to the General Fund.
40) 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.
41) Makes various technical amendments necessary to the
implementation of the NPLH Program.
42) 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.
43) Provides a continuous appropriation related to the budget.
EXISTING LAW:
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
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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: 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 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.
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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.
Analysis Prepared by:
Genevieve Morelos / BUDGET / (916) 319-2099 FN:
0004308