BILL ANALYSIS Ó SB 879 Page 1 Date of Hearing: June 29, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 879 (Beall) - As Amended June 16, 2016 ----------------------------------------------------------------- |Policy |Housing and Community |Vote:|4 - 2 | |Committee: |Development | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 SB 879 Page 2 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 SB 879 Page 3 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 SB 879 Page 4 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. SB 879 Page 5 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 SB 879 Page 6 for affordable housing efforts. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081