BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 879 (Beall) - Affordable Housing Bond Act of 2016
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: May 5, 2016 |Policy Vote: T. & H. 9 - 1, |
| | GOV. & F. 5 - 1 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: Yes |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: May 23, 2016 |Consultant: Mark McKenzie |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 879, an urgency measure, would enact the Affordable
Housing Bond Act of 2016, which authorizes the sale of $3
billion in general obligation bonds, upon approval by voters at
the November 8, 2016 statewide general election.
Fiscal
Impact:
Bond costs : Total principal and interest costs of
approximately $4.89 billion to pay off the bonds ($3 billion
in principal and $1.89 billion in interest), with average
annual debt service payments of $163 million (General Fund),
when all bonds are sold, and assuming a 30-year maturity and
an interest rate of 3.5%. If interest rates increase to 5% in
the near future, annual debt service would be approximately
$195 million (General Fund) and total principal and interest
costs over the repayment period would be approximately $5.86
SB 879 (Beall) Page 1 of
?
billion.
Administrative costs : The Department of Housing and Community
Development (HCD) and the California Housing Finance Agency
(CHFA) would incur increased staffing costs, likely in the
range of $100 to $150 million in total over multiple fiscal
years, to administer the various housing programs funded by
this Bond Act. These funds would represent a portion of the
bond funds allocated to HCD and CHFA to fund the specified
programs (up to 5% of bond proceeds).
Ballot costs : One-time costs in the range of $414,000 to
$552,000 to the Secretary of State (SOS) for printing and
mailing costs to place the measure on the ballot in the
November, 2016 statewide election. (General Fund)
Background: Existing law, as enacted by SB 1227 (Burton), Chapter 26/2002,
establishes the Housing and Emergency Shelter Trust Fund Act of
2002, authorizing the sale of $2.1 billion in general obligation
bonds for various affordable housing programs, upon approval by
the voters. Subsequently, the 2002 Act was approved by the
voters as Proposition 46 in the November, 2002 general election.
According to HCD, Proposition 46 assisted in the construction
of 91,000 units of housing, including 10,000 shelter spaces.
Existing law, as enacted by SB 1689 (Perata), Chapter 27/2006,
establishes the Housing and Emergency Shelter Trust Fund Act of
2006, authorizing the sale of $2.85 billion in general
obligation bonds for various affordable housing programs, upon
approval by the voters. Subsequently, the 2006 Act was approved
by the voters as Proposition 1C at the November, 2006 general
election. According to HCD, 92,000 housing units and 3,000
shelter spaces were constructed with Proposition 1C bond funds,
with $250 million remaining to be spent.
Since the dissolution of redevelopment agencies, and its
associated dedicated funding for affordable housing, there is a
critical shortage of permanent funding for those purposes.
Proposed Law:
SB 879 (Beall) Page 2 of
?
SB 879, an urgency measure, enacts the Affordable Housing Bond
Act of 2016, which places a $3 billion bond on the November,
2016, general election ballot. The measure creates the
Affordable Housing Bond Act Trust Fund of 2016, and states the
Legislature's intent that all bond proceeds be deposited in the
Fund. The bill allocates funds from the Fund to the following
accounts, when the bonds are issued and sold:
$1.5 billion to the Multifamily Housing Account, to be
continuously appropriated to the existing Multifamily
Housing Program to construct, rehabilitate, and preserve
traditional and rental housing for persons with incomes of
up to 60% of the area median income.
$600 million to the Transit-Oriented Development and
Infill Infrastructure Account, which the bill creates
within the Fund. The bill then allocates funds from the
Account as follows:
o $300 million to the Transit-Oriented
Development Implementation Fund pursuant to the
existing Transit-Oriented Development Implementation
Program.
o $300 million to the Infill Infrastructure
Financing Account, which the bill creates within the
Account, upon appropriation by the Legislature, for
infill incentive grants to assist in the new
construction or rehabilitation of infrastructure that
supports high-density affordable and mixed-income
housing in locations designated as infill, as
specified by statute.
$600 million to the Special Populations Housing Account,
which the bill creates within the Fund. The bill then
allocates funds from the Account as follows:
o $300 million continuously appropriated for
transfer to the existing Joe Serna, Jr. Farmworker
Housing Grant Fund.
o $300 million to the Local Housing Trust Fund
Matching Grant Program Account, which the bill
creates, upon appropriation by the Legislature, to
provide matching grants to local public agencies and
SB 879 (Beall) Page 3 of
?
nonprofit organizations that raise money for
affordable housing, as specified by statute.
$300 million to the Home Ownership Development Account,
which the bill creates within the Fund, and continuously
appropriates to the existing CalHome Program to provide
direct, forgivable loans to assist development projects
involving multiple ownership units, including single-family
subdivisions, for self-help mortgage assistance programs,
and for manufactured homes.
The measure only takes effect if enacted by voters at the
November 8, 2016, statewide general election, makes legislative
findings and declarations supporting its provisions, and
contains an urgency clause giving the measure immediate effect
if enacted.
Related
Legislation: The following proposals are currently under
consideration in budget discussions:
Senate Proposal : Senate pro Tempore De León 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 by reallocating
funding generated by the surtax on incomes over $1 million
imposed by the Mental Health Services Act (Proposition 63).
Assembly Democratic Proposal : Assembly Speaker Rendon
and other Assembly Democrats have proposed allocating $1.3
billion in funds and tax credits for affordable housing and
homeless shelters.
Staff
Comments: The current market for California general obligation
bonds is very favorable. The State Treasurer recently sold
$2.95 billion in general obligation bonds (including refinancing
SB 879 (Beall) Page 4 of
?
$1.96 billion in existing bond debt) which enjoyed extremely
high demand and the lowest borrowing costs on 30-year bonds in
the last three decades, with yields of 3.05%. The estimates
noted above reflect a slightly higher interest rate of 3.5%, but
also note the difference in debt service costs if the rate rose
to historical averages of 5%.
Staff notes that infrastructure spending results in increased
economic activity and employment, which has both one-time and
ongoing impacts. For instance, the author cites a study by the
National Association of Home Builders (NAHB) that estimates
construction of 100 multifamily housing units has a one-time
local impact of $11.7 million in local income, $2.2 million in
taxes and other revenue for local governments, and 161 local
jobs. The NAHB study notes additional recurring annual local
impacts of $2.6 million in local income, $503,000 in taxes and
other local government revenue, and 44 local jobs. Data is
unavailable to substantiate these secondary local impacts.
SOS indicates that printing and mailing costs associated with
placing a measure on the statewide ballot are approximately
$69,000 per page, depending on the length of the ballot. The
fiscal estimates noted above reflect the addition of 6-8 pages
in the Voter Information Guide. Actual costs would depend upon
the length of the title and summary, analysis by the Legislative
Analyst's Office, proponent and opponent arguments, and text of
the proposal. Staff notes that Proposition 1C took up 8 pages
in the 2006 Voter Information Guide.
-- END --