BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 879|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 879
Author: Beall (D)
Amended: 5/5/16
Vote: 27 - Urgency
SENATE TRANS. & HOUSING COMMITTEE: 9-1, 5/3/16
AYES: Beall, Cannella, Allen, Galgiani, Leyva, McGuire,
Mendoza, Roth, Wieckowski
NOES: Gaines
NO VOTE RECORDED: Bates
SENATE GOVERNANCE & FIN. COMMITTEE: 5-1, 5/11/16
AYES: Hertzberg, Beall, Hernandez, Lara, Pavley
NOES: Moorlach
NO VOTE RECORDED: Nguyen
SENATE APPROPRIATIONS COMMITTEE: 5-1, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Nielsen
NO VOTE RECORDED: Bates
SUBJECT: Affordable Housing Bond Act of 2016
SOURCE: Author
DIGEST: This bill authorizes the issuance of $3 billion in
general obligation (GO) bonds for affordable housing, subject to
voter approval in the November 8, 2016, general election.
ANALYSIS: Existing law establishes the Housing and Emergency
SB 879
Page 2
Shelter Trust Fund Act of 2006 (Prop 1C), which authorized $2.85
billion in GO 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
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 and very low-income renter
SB 879
Page 3
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).
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.
SB 879
Page 4
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 to 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.
3)Results from Prop 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,
Prop 1C resulted in 92,000 housing units and 3,000 shelter
spaces, with $250 million remaining to be spent.
4) 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.
a) Multifamily Housing Program ($1.5 billion) - The
Multifamily Housing Program assists with 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.
b) 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,
SB 879
Page 5
counties, and transit agencies help provide 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.
c) 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.
d) 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.
e) Local Housing Trust Matching Grant Program ($0.3
billion) - This program provides matching grants to local
governments and non-profits that raise money for affordable
housing.
f) 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.
1)Economic benefits of housing. 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.
SB 879
Page 6
Moreover, according to the California Housing Partnership
Corporation, for every $0.70 California invests, the bond
proceeds will leverage $3 in federal funding (tax credits and
tax exempt bonds) that would not be available but for the
investment of these funds.
Finally, the author asserts that investing in housing
construction will actually save Californians money over time.
In support, he notes a 2015 study conducted by the Economic
Roundtable on homelessness in Santa Clara County. The
estimated cost to the public of permitting homeless residents
to remain homeless was $62,473 per person annually, while the
estimated average cost of housing each individual was $19,767
annually, a savings of $42,706 annually. He also notes a 2009
study conducted in Los Angeles by the Economic Roundtable
which found that public costs are reduced by 79% when the
chronically homeless are housed and 50% when the entire
homeless population is housed.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
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
billion.
Administrative costs: 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
SB 879
Page 7
$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)
SUPPORT: (Verified 5/27/16)
California Apartment Association
California Coalition for Rural Housing
California Economic Summit
California Housing Consortium
California Housing Partnership Corporation
City and County of San Francisco
City of Berkeley Housing Advisory Commissioner Marian Wolfe
City of Santa Monica
Coachella Valley Housing Coalition
Community Economics Inc.
EAH Housing
Eden Housing
First Community Housing
Food Empowerment Project
Gubb and Barshay, LLP
Hello Housing
League of California Cities
Mammoth Lakes Housing
MidPen Housing
Non-Profit Housing Association of Northern California
Northern California Community Loan Fund
Paulett Taggart Architects
Resources for Community Development
San Diego Housing Federation
Silicon Valley Independent Living Center
Sonoma County Board of Supervisors
SV@Home
TLCS, Inc.
OPPOSITION: (Verified5/27/16)
Howard Jarvis Taxpayers Association
Prepared by:Randy Chinn / T. & H. / (916) 651-4121
SB 879
Page 8
5/28/16 17:11:54
**** END ****