BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1129
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Arambula
VERSION: 6/9/08
Analysis by: Mark Stivers FISCAL: yes
Hearing date: June 17, 2008
SUBJECT:
Local Housing Trust Fund Matching Grant Program
DESCRIPTION:
This bill makes various changes to the Local Housing Trust Fund
Matching Grant Program to facilitate access to program funds for
newly established housing trusts in smaller counties.
ANALYSIS:
In November 2006, California voters approved Proposition 1C, the
$2.85 billion Housing and Emergency Shelter Trust Fund Act of
2006. The bond act included $100 for the Affordable Housing
Innovation Fund and required that the Legislature program the
specific uses and eligibility requirements for these funds. SB
586 (Dutton), Chapter 652, Statutes of 2007, allocated these
funds to four separate programs, including $35 million for the
Local Housing Trust Fund Matching Grant (LHTF) program,
administered by the Department of Housing and Community
Development (HCD).
Under existing law, the LHTF program matches contributions to
local housing trust funds. To be eligible for matching funding,
a local housing trust fund must receive contributions for at
least five years from private or governmental sources that are
not otherwise restricted for housing programs. The grantee must
also have an HCD-approved housing element, or if a non-profit,
fund projects located in communities with approved elements.
AB 1129 (ARAMBULA) Page 2
The grant from HCD matches the local contributions on a
dollar-for-dollar basis at a minimum of $1 million and up to a
maximum of $2 million. HCD must receive adequate documentation
that the local matching funds have been deposited in the fund
and of the source of these funds. The local housing trusts may
in turn use program funds to support emergency shelters, rental
housing, and for-sale housing affordable to households ranging
from extremely low-income to moderate-income. Under SB 586,
half of the $35 million allocated to this program by Proposition
1C is reserved for newly established housing trust funds, as
defined by HCD. Within this setaside for newly established
housing trust funds is an additional setaside for 36 months of
an amount to be determined by HCD for trust funds in counties
with a population of less than 425,000 persons.
This bill makes a number of changes to the LHTF program.
Specifically, the bill:
Increases from 425,000 to 700,000 the population threshold for
the setaside reserved for newly established housing trust
funds in smaller counties.
Lowers the minimum matching grant for newly establish housing
trust funds in counties with a population of less than 700,000
persons from $1 million to $500,000.
Provides that newly established housing trust funds in
counties of less than 700,000 persons need not have the
matching funds on deposit but must provide adequate
documentation that the funds have been pledged.
COMMENTS:
1.Purpose of the bill . According to the author, this bill
allows smaller, rural county housing trust funds to better
compete under the LHTF program. The author is particularly
interested in facilitating the development of the eight-county
San Joaquin Valley Regional Housing Trust (SJV Trust). The
matching resources available under the LHTF program are
critical to generating funding commitments from participants
in this trust. While the members of the SJV Trust will work
in a coordinated fashion, several of the participants plan to
operate their own trust funds. Because of their small size,
they are unlikely to be able to meet the current $1 million
minimum match requirement. In addition, the current
population threshold for the small county setaside excludes
AB 1129 (ARAMBULA) Page 3
two of the SJV Trust's eight counties, as well as five other
relatively small counties statewide. Lastly, due to their
limited budgets, it is difficult for smaller counties to hold
precious matching funds idly on deposit while HCD considers a
jurisdiction's application. This bill would allow new housing
trust funds in smaller counties to pledge rather than deposit
matching funds until HCD awards the grant.
2.Counties affected . Increasing the population threshold from
425,000 to 700,000 for housing trust funds to access the
setaside for newly established trust funds in small counties
will add seven counties to the eligibility list: Solano,
Monterey, Santa Barbara, Tulare, Sonoma, Stanislaus, and San
Joaquin.
3.Providing cash flow flexibility for new trusts . Under current
law, applicants for LHTF matching grant must provide HCD with
adequate documentation that the local matching funds have been
deposited in the trust fund at the time of application. This
presents a cash flow problems for many local governments who
may be reluctant to tie up precious funds until they know for
certain that their applications have been approved. The bill
seeks to remedy this problem by stating that new trust funds
in smaller counties need not have the matching funds on
deposit but must provide adequate documentation that the funds
have been pledged. This language is vague. In addition, new
trust funds in counties of any size are likely to have the
same issue. It is not clear why the bill limits this
flexibility to new trust funds in smaller counties. The
committee may wish to more clearly define what is required of
new trusts in lieu of having the money on deposit and provide
this flexibility to all new trusts.
4.Requiring submission of annual housing element reports . Most
HCD programs that require an applicant city or county to have
an HCD-approved housing element also require the city or
county to have submitted its annual housing element
implementation report within the previous 12 months. For no
apparent reason, the LHTF program is an exception to this
rule. The committee may wish to consider requiring that local
government applicants have submitted their latest housing
element annual report in order to receive and LHTF matching
grant.
5.Technical amendments .
AB 1129 (ARAMBULA) Page 4
On page 3, strike lines 1-8 and insert:
50843.5. (a) Subject to the availability of funding, the
department shall make matching grants available to cities,
counties, a city and county, and charitable nonprofit
organizations organized under Section 501(c)(3) of the
Internal Revenue Code that have created and are operating
or will operate housing trust funds. These funds shall be
awarded through the issuance of a Notice of Funding
Availability (NOFA).
On page 3, lines 24-25 strike ", as defined by the
department under paragraph (2) of subdivision (a),"
Assembly Votes (the bill was in a significantly different form):
Floor: 49-25
H&CD: 5-2
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 11, 2008)
SUPPORT: San Joaquin Valley Regional Housing Trust
(sponsor)
California Coalition for Rural Housing
Council of Fresno County Governments
Fresno City Councilperson Cynthia Sterling
OPPOSED: None received.