BILL ANALYSIS
Appropriations Committee Fiscal Summary
304 (Mullin)
Hearing Date: 8/18/03 Amended: 7/21/03
Consultant: Miriam Barcellona Ingenito Policy Vote:
H&CD 6-2
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BILL SUMMARY: AB 304 would authorize the California Housing
Finance Agency (CHFA) to (1) establish higher assistance
levels for down payment assistance to teachers and school
personnel; and (2) make $6.25 million of existing funds
available for down payment assistance loans to be made for
up to six percent of the home sale price to low-income
first-time homebuyers under the Homeownership in
Revitalization Areas Program (HIRAP).
Fiscal Impact (in thousands)
Major Provisions 2003-04 2004-05 2005-06
Fund
Increase Individual No change in total state funding.
Reduction BF
Loan Allocations in total number loans available.
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*Proposition 46, housing bond
STAFF COMMENTS: Proposition 46 allocated $25 million for
down payment assistance to fund part of the Extra Credit
Teacher Home Purchase Program. The bond's proceeds are
available to assist teachers and other school personnel who
are first-time low- and moderate-income homebuyers by
utilizing existing mortgage financing. Under existing law,
assistance is limited to $7,500 or 3 percent of the home
sales price. AB 304 would amend that provision to allow
CHFA to establish higher assistance limits, where
necessary, to ensure sufficient assistance to allow program
participation in high cost areas. STAFF NOTES that AB 304
does not specify what criteria is involved in determining
"necessity," "high cost areas," nor does it specify a
maximum amount loans could be made in those high cost
areas. AB 304 would lead to fewer individuals being
assisted by this program.
Proposition 46 allocated $12.5 million to CHFA for HIRAP.
Under HIRAP, funds may be used for down payment assistance
to low-income first-time homebuyers who have received
homeownership counseling. AB 304 limits "community
revitalization areas" to targeted neighborhoods identified
by qualified nonprofit organizations as those neighborhoods
in need of economic stimulation, renovation, and
rehabilitation through efforts that include increase
homeownership opportunities for low-income families.
Commencing January 1, 2004, AB 304 would allow $6.25
million of funds allocated for HIRAP to be available for
down payment assistance in an amount not to exceed six
percent of the home sales price. If after one year, more
than half of the $6.25 million is already encumbered, AB
304 would require CHFA to discontinue that program and make
all remaining funds available for down payment assistance
pursuant to existing law (3 percent). If less than half of
the $6.25 million is encumbered after one year, CHFA would
be authorized to make the entire $12.5 million available at
the six percent rate or may continue allowing half to be at
six percent and half at three percent. STAFF NOTES funds
that are not encumbered by October 2005 would revert for
general use in the California Homebuyer's Downpayment
Assistance Program under the provisions of the bond.
Proposition 46 authorized the Legislature to amend the
provisions of the bond to further the purposes of improving
the efficiency and effectiveness of the program or for the
purpose of furthering the goals of the programs. It is not
clear that by changing the funding formula percentage
(thereby potentially benefiting fewer people), AB 304 would
further the goals of Proposition 46.