BILL ANALYSIS Ó
SB 879
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Date of Hearing: June 15, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
SB
879 (Beall) - As Amended June 9, 2016
SENATE VOTE: 28-9
SUBJECT: Affordable Housing Bond Act of 2016
SUMMARY: Authorizes the issuance of $3 billion in general
obligation (GO) bonds for affordable housing construction,
subject to approval by the voters, in the November 2016
election. Specifically, this bill:
1)Includes legislative findings and declarations.
2)Authorizes the issuance of $3 billion in GO bonds, subject to
approval by voters for the following affordable housing
purposes:
a) $1.5 billion to the existing Multifamily Housing Program
(MHP) to assist in the construction, rehabilitation, and
preservation of permanent and transitional rental housing
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for persons with incomes of up to 60% of the area median
income;
b) $300 million for transit-oriented development, upon
appropriation by the Legislature, pursuant to the existing
Transit-Oriented Development Implementation Program;
c) $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;
d) $300 million, continuously appropriated, for farmworker
housing pursuant to the existing Joe Serna, Jr. Farmworker
Housing Grant Fund;
e) $300 million for matching grants to the Local Housing
Trust Matching Grant Program, upon appropriation by the
Legislature; and
f) $300 million continuously appropriated for the existing
CalHome Program to provide direct, forgivable loans for
mortgage assistance.
1)Authorizes the Legislature to amend the programs to which
funds are or have been allocated by this bond act, to improve
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the efficiency and effectiveness or to further the goals of
the programs.
2)Includes the following definitions:
a) "Board" means the Department of Housing and Community
Development for programs administered by the department and
the California Housing Finance Agency for programs
administered by the agency;
b) "Committee" means the Housing Finance Committee; and
c) "Fund" means the Affordable Housing Bond Act Trust Fund
of 2016.
1)Authorizes the committee to determine whether or it is
necessary and desirable to issue bonds, upon a request by the
board, and if so the bonds will be issued and sold.
2)Authorizes the board to request the Pooled Money Investment
Board to make a loan from the Pooled Money Investment Account
to support the bond.
EXISTING LAW: Existing law established 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.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill would have the following fiscal impact:
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1)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.
2)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).
3)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)
COMMENTS:
Background: California is facing a housing affordability crisis
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on many fronts. According to the Public Policy Institute of
California (PPIC), as of February 2015, roughly 36% of mortgaged
homeowners and approximately 48% of all renters are spending
more than one-third of their household incomes on housing.
California continues to have the second lowest homeownership
rate in the nation and the Los Angeles metropolitan area is now
a majority renter region. In fact, five of the eight lowest
homeownership rates in the nation are in California metropolitan
areas. California has 12% of the United States population, but
20% of its homeless population - 63% of these homeless
Californians are unsheltered (the highest rate in the nation).
At any given time, 134,000 Californians are homeless. California
has 24% of the nation's homeless veterans and one-third of the
nation's chronically homeless. The state also has the largest
numbers of unaccompanied homeless children and youth, with 30%
of the national total.
Previous state funding for housing : Historically, the state has
invested in low- and moderate-income housing primarily by
providing funding for construction. Because of the high cost of
land and construction and the subsidy needed to keep housing
affordable to residents, affordable housing is expensive to
build. Developers typically use multiple sources of financing,
including voter-approved housing bonds, state and federal
low-income housing tax credits, private bank financing, and
local matching dollars.
Voter-approved bonds have been an important source of funding to
support the construction of affordable housing. Proposition 46
of 2002 and Proposition 1C of 2006 together provided $4.95
billion for affordable housing. These funds financed the
construction, rehabilitation, and preservation of 57,220
affordable apartments, including 2,500 supportive homes for
people experiencing homelessness, and over 11,600 shelter
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spaces. In addition, these funds have helped 57,290 families
become or remain homeowners. Nearly all of these funds have been
awarded.
Until 2011, the Community Redevelopment Law required
redevelopment agencies to set aside 20% of all tax increment
revenue to increase, improve, and preserve the community's
supply of low- and moderate-income housing. In fiscal year
2009-10, redevelopment agencies collectively deposited $1.075
billion of property tax increment revenues into their low- and
moderate-income housing funds. With the elimination of
redevelopment agencies, this source of funding for affordable
housing is no longer available.
California has reduced its funding for the development and
preservation of affordable homes by 79% -- from approximately
$1.7 billion a year to nearly nothing. According to the
California Housing Partnership, California has a shortfall of
1,465,884 affordable units for extremely low- and very-low
income households.
Programs funded by the proposed bond : According to the author,
the proposed $3 billion bond will have many economic benefits
resulting from the building of housing, 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.
This bill proposes $3 billion in GO bonds to provide new
funding for several existing programs, which are described below
along with the funding proposed in this bill.
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Multifamily Housing Program: 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:
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.
Infill Infrastructure Financing Grants: 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: 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.
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Local Housing Trust Matching Grant Program: 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.
Two of the programs funded by the proposed bond, the
Transit-Oriented Development Implementation Program and Infill
Infrastructure Financing Grants, were created prior to the
creation of the Affordable Housing Sustainable Communities
(AHSC) program which funds affordable housing in
transit-oriented developments to support the state's goals of
greenhouse gas reduction. These programs should be reviewed to
determine if they need to be revised to avoid overlap with the
AHSC program.
Staff comments:
The committee may wish to consider giving the Legislature
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authority to reallocate funds within the programs included in
the proposed bond. This authority would allow the Legislature to
respond if funds are not being used efficiently and to meet the
overall intent of the bond, increasing the supply of affordable
housing.
Technical amendment:
On page 5, line 34, after "Trust" insert "Fund"
REGISTERED SUPPORT / OPPOSITION:
Support
Burbank Housing Development
California Coalition for Rural Housing
California Economic Summit
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California Housing Consortium
California Housing Partnership Corporation
City and County of San Francisco
City of San Jose
City of Santa Monica
Community Economics, Inc.
EAH Housing
Eden Housing
First Community Housing
Food Empowerment Project
Gubb & Barshay, LLP
Hello Housing
League of California Cities
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Mammoth Lakes Housing, Inc.
Marian Wolfe, Ph.D., Housing Advisory Commissioner
MidPen Housing Corporation
Nonprofit Housing Association of Northern California
Northern California Community Loan Fund
Paulett Taggart Architects
Resources for Community Development
Silicon Valley Independent Living Center
Sonoma County Board of Supervisors
SV@Home
SV@Home
TLCS, Inc.
Opposition
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Howard Jarvis Taxpayers Association
Analysis Prepared by:Lisa Engel / H. & C.D. / (961) 319-2085