BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  June 29, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 879  
          (Beall) - As Amended June 16, 2016


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          Urgency:  Yes State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:  This bill enacts 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. The bill further creates the  
          Affordable Housing Bond Act Trust Fund of 2016 (Fund), and  
          states the Legislature's intent that all bond proceeds be  
          deposited in the Fund.  The bill allocates funds from the Fund  








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          to the following accounts, when the bonds are issued and sold:


          1)$1.5 billion to the existing Multifamily Housing Program (MHP)  
            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)$600 million to the Transit-Oriented Development and Infill  
            Infrastructure Account, which the bill creates within the  
            Fund, and then allocates funds from the Account as follows:
             a)   $300 million to the Transit-Oriented Development  
               Implementation Fund pursuant to the existing  
               Transit-Oriented Development Implementation Program. 



             b)   $300 million to the Infill Infrastructure Financing  
               Account, which the bill creates within the Account. These  
               moneys are available, 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.



          1)$600 million to the Special Populations Housing Account, which  
            the bill creates within the Fund, and then allocates funds  
            from the Account as follows:
             a)   $300 million continuously appropriated for transfer to  
               the existing Joe Serna, Jr. Farmworker Housing Grant Fund.



             b)   $300 million to the Local Housing Trust Fund Matching  
               Grant Program Account, which the bill creates. These moneys  








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               are available, upon appropriation by the Legislature, to  
               provide matching grants to local public agencies and  
               nonprofit organizations that raise money for affordable  
               housing, as specified by statute.



          1)$300 million continuously appropriated for the existing  
            CalHome Program to provide direct, forgivable loans for  
            mortgage assistance.



          Further, the bill authorizes the Legislature to amend the  
          programs to which funds are or have been allocated by this bond  
          act, to improve the efficiency and effectiveness or to further  
          the goals of the programs.  


          FISCAL EFFECT:


          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 (GF), 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 (GF) 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  








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            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. (GF).   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.  





           COMMENTS:


          1)Purpose and Background. This 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.  Existing law, as enacted by SB 1227 (Burton),  
            Chapter 26, Statutes of 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.










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            Existing law, as enacted by SB 1689 (Perata), Chapter 27,  
            Statutes of 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.








          1)Related  
          Legislation.2) 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).  (SB 1618, Senate Committee on Budget  
            and Fiscal Review.)


            In addition, the Legislature and the Governor continue to  
            negotiate a "By Right" proposal tied to $400 million proposal  








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            for affordable housing efforts.
          





          Analysis Prepared by:Jennifer Swenson / APPR. / (916)  
          319-2081