BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 879 Hearing Date: 5/3/2016
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|Author: |Beall |
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|Version: |3/30/2016 |
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|Urgency: |Yes |Fiscal: |Yes |
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|Consultant|Randy Chinn |
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SUBJECT: Affordable Housing Bond Act of 2016
DIGEST: This bill authorizes the issuance of $3 billion in
General Obligation (GO) bonds for affordable housing.
ANALYSIS:
Existing law establishes the Housing and Emergency Shelter Trust
Fund Act of 2006 (Prop 1C), which authorized $2.85 billion in
general obligation bonds for housing and related capital
improvements, upon voter approval in the November 2006 general
election. This bond was approved.
This bill:
Authorizes the issuance of $3 billion in GO bonds, subject to
approval by voters in the November 2016 general election, for
the following affordable housing purposes:
1)$1.5 billion to the existing Multifamily Housing Program to
assist in the construction, rehabilitation, and preservation
of permanent and transitional rental housing for persons with
incomes of up to 60% of the area median income
2)$300 million for transit-oriented development, upon
appropriation by the Legislature, pursuant to the existing
Transit-Oriented Development Implementation Program
3)$300 million for infill infrastructure financing grants, upon
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appropriation by the Legislature, for new construction and
rehabilitation of infrastructure that supports high-density
affordable and mixed-income housing in locations designated as
infill;
4)$300 million for farmworker housing pursuant to the existing
Joe Serna, Jr. Farmworker Housing Grant Fund
5)$300 million for matching grants to the Local Housing Trust
Matching Grant Program, upon appropriation by the Legislature
6)$300 million to the existing CalHome Program to provide
direct, forgivable loans for mortgage assistance
COMMENTS:
1)Purpose. California is facing a housing crisis. California
is home to 21 of the 30 most expensive rental housing markets
in the country, which has had a disproportionate impact on the
middle class and the working poor. A person earning minimum
wage must work three jobs on average to pay the rent for a
two-bedroom unit. Additionally, units affordable to
low-income earners, if available, are often in serious states
of disrepair. California also faces a housing shortage: 2.2
million extremely low-income (ELI) and very low-income (VLI)
renter households are competing for only 664,000 affordable
rental homes. Further, California has seen a reduction of
$1.5 billion in annual state investment dedicated to housing
in recent years.
As demonstrated through Prop 1C and the 92,000 units it
created, SB 879 will have a real and lasting impact on the
housing shortage by providing $3 billion to fund existing and
successful affordable housing programs in California.
Further, SB 879 will create jobs and provide local benefits
through the construction of affordable housing. The estimated
one-year impacts of building 100 rental apartments in a
typical local area include $11.7 million in local income, $2.2
million in taxes and other revenue for local governments, and
161 local jobs (1.62 jobs per apartment). The additional,
annually recurring impacts of building 100 rental apartments
in a typical local area include $2.6 million in local income,
$503,000 in taxes and other revenue for local governments, and
44 local jobs (.44 jobs per apartment).
SB 879 (Beall) Page 3 of ?
2)Need for affordable housing well-documented. According to a
recent Legislative Analyst's Office report, California's High
Housing Costs: Causes and Consequences, California's home
prices and rents are higher than just about anywhere else in
the country. This has dramatic impacts not only for
California households across all income levels, but for the
state's overall economy. According to the report, there are a
number of factors that have contributed to these prices,
including far less housing construction in California's
coastal areas than is needed, high land prices in the coastal
regions, and high builders' costs.
Economic and social policies continue to contribute to the
lack of housing in California. The federal Budget Control Act
of 2011 initiated automatic federal spending cuts of $85
billion (also referred to as "sequestration"). These cuts,
which went into effect in March 2013, severely impacted
homeless services and affordable housing programs. For
example, the Center on Budget and Policy Priorities estimated
that between 125,000 and 185,000 low-income families lost
housing assistance nationally by the end of 2014 as a result.
Additionally, as of July 2014, sequestration had cost
California's low-income families nearly 15,000 housing
vouchers.
California has also seen a significant reduction of funding at
the state level in recent years. Proposition 46 of 2002
provided $2.1 billion for a variety of affordable housing
programs, and Prop 1C of 2006 provided an additional $2.85
billion. Both Prop 46 and Prop 1C provided roughly 4-5 years
of funding, and the state's Department of Housing and
Community Development (HCD) has awarded just about all of
these funds. California also recently lost tax increment as a
funding stream for affordable housing with the dissolution of
redevelopment agencies. With the loss of redevelopment and
expenditure of the last voter-approved housing bonds, $1.5
billion of annual state investment dedicated to housing has
been eliminated.
In March 2016, this committee held an informational hearing on
affordable housing. The committee also heard that
California's 2.2 million extremely low-income and very
low-income renter households are competing for only 664,000
affordable rental units. Representatives from the San Diego
Housing Commission and the Bay Area Council also described the
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affordable housing shortages in their areas.
3)Results from Proposition 1C, the last affordable housing bond.
In November 2006, California voters approved Prop 1C, the
$2.85 billion Housing and Emergency Shelter Trust Fund Act of
2006, by a 58%/42% margin. Prop 1C provided $1.5 billion for
affordable housing, $0.85 billion for infill incentives, $0.2
billion for housing related parks in urban, suburban and rural
areas, and $0.3 billion for the provision of infrastructure
necessary for transit-oriented development. According to HCD,
Prop1C resulted in 92,000 housing units and 3,000 shelter
spaces, with $250 million remaining to be spent.
4)Economic benefits of housing. The author has identified many
economic benefits resulting from the building of housing
pursuant to this bill, including $11.7 million in local
income, $2.2 million in taxes and other revenue for local
governments, and 161 local jobs. These figures come from an
April 2015 analysis by the National Association of Home
Builders and are based on national averages.
5)Program descriptions. This bill proposes new funding for
several existing programs, which are described below along
with the funding proposed in this bill. These programs all
received funding under Prop 1C.
Multifamily Housing Program ($1.5 billion) - The
Multifamily Housing Program assists the new construction,
rehabilitation, and preservation of permanent and
transitional rental housing for lower income households
through loans to local governments and non- and for-profit
developers. Funds are for incomes up to 60% of area median
income.
Transit-Oriented Development Implementation Program
($0.3 billion) - Under the program, low-interest loans are
available as gap financing for rental housing developments
that include affordable units, and as mortgage assistance
for homeownership developments. Grants to cities,
counties, and transit agencies are for the provision of the
infrastructure necessary for the development of higher
density uses within close proximity to a transit station
and loans for the planning and development of affordable
housing within one-quarter mile of a transit station.
SB 879 (Beall) Page 5 of ?
Infill Infrastructure Financing Grants ($0.3 billion) -
This program assists in the new construction and
rehabilitation of infrastructure that supports higher
density affordable and mixed-income housing in locations
designated as infill, such as water and sewer extensions.
Joe Serna, Jr. Farmworker Housing Grant Program ($0.3
billion) - This program finances the new construction,
rehabilitation, and acquisition of owner-occupied and
rental units for agricultural workers, with a priority for
lower income households.
Local Housing Trust Matching Grant Program ($0.3
billion) - This provides matching grants to local
governments and non-profits that raise money for affordable
housing.
CalHome - This program provides grants to local public
agencies and nonprofit developers to assist individual
households through deferred-payment loans. The funds would
provide direct, forgivable loans to assist development
projects involving multiple ownership units, including
single-family subdivisions. This money would also be
available to self-help mortgage assistance programs and
manufactured homes.
Related Legislation:
Senate Proposal - Senate President Pro Tem De Leon and a
bipartisan group of Senators have proposed a $2 billion bond for
permanent supportive housing for the chronically homeless who
suffer from mental illness through a repurposing of the
Proposition 63 funds. This is being considered in the budget
discussions.
Assembly Democratic Proposal - Speaker Rendon and other Assembly
Democrats have proposed allocating $1.3 billion in one-time
funds for affordable housing and homeless shelters through the
budget.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
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Wednesday,
April 27, 2016.)
SUPPORT:
California Coalition for Rural Housing
California Housing Consortium
California Housing Partnership Corporation
League of California Cities
Nonprofit Housing Association of Northern California
OPPOSITION:
None received.
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