BILL ANALYSIS
AB 570
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Date of Hearing: April 15, 2009
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 570 (Arambula) - As Amended: March 27, 2009
SUBJECT : Local housing trust fund matching grant program
SUMMARY : Reduces the minimum grant amount a newly established
housing trust fund that represents a county with a population of
less than 425,000 can receive from the Local Housing Trust Fund
Matching Grant Program (Program), administered by the Department
of Housing and Community Development (HCD), from $1 million to
$500,000. Specifically, this bill :
1)Requires, before an application can be considered, an
applicant for a newly established trust fund must provide
adequate documentation, as determined by HCD, that an
ordinance imposing or dedicating a tax or fee to be deposited
in the new trust or a legally binding commitment to deposit
the matching funds in a trust has been adopted.
2)Prohibits HCD from disbursing any funds to any trust until all
matching funds are on deposit.
3)Provides that funds may only be disbursed in the amounts
necessary to fund projects that have been identified to
receive a loan from a trust with in a reasonable period of
time.
4)Provides that in determining whether or not a county has a
population of less than 425,000, HCD must use the United
States Census for 2000.
EXISTING LAW :
1)Allocates $35 million of the $100 million Affordable Housing
Innovation Fund from Proposition 1C to the Program.
2)Requires that half of the funds are to be made available for
newly established housing trusts.
3)Requires HCD to grant preference to trust funds that agree to
expend more than 65% of the state funds for down payment
assistance to first time homebuyers.
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4)Requires HCD, when making grants to newly established trust
funds, to set aside funding for 36 months from the date the
funds are first made available for newly established trust
funds in counties of less than 425,000 persons.
FISCAL EFFECT : Unknown
COMMENTS : In 2002, California voters approved Proposition 46,
the $2.1 billion Housing and Emergency Shelter Trust Fund Act.
Proposition 46 provided funding for the following programs:
Multifamily Housing Program; Emergency Housing Assistance
Program; Supportive Housing; Farmworker Housing Grant Program;
CalHome Program; Local Housing Trusts; Code Enforcement Program;
California Homebuyer Downpayment Assistance Program; and, Jobs
Housing Improvement Account. Funds provided under Proposition
46 were mostly exhausted by the end of 2006.
In November 2006, California voters approved Proposition 1C, the
Housing and Emergency Trust Fund Act of 2006. Proposition 1C
maintains funding provided under Proposition 46 for most, but
not all, of the programs noted above. One of the programs not
included in Proposition 1C was funding for local housing trusts.
Proposition 1C did include however, $100 million for the
Affordable Housing Innovation Fund to be used for "competitive
grants or loans to sponsoring entities that develop, own, lend,
or invest in affordable housing and are used to create pilot
programs to demonstrate innovative, cost-saving approaches to
creating or preserving affordable housing."
In 2007, the case was successfully made that local housing
trusts are inherently innovative, that is local housing leaders
can design individualized local programs to address affordable
housing needs in their communities. Therefore, $35 million was
made available for local housing trusts to apply for grants.
One-half of the $35 million is to be made available strictly for
new trusts. Additionally, when awarding grants to new trusts,
HCD is required to set aside funding for a period of 36 months
for trusts in counties with a population of less than 425,000.
This bill seeks to allow smaller, rural county housing trusts to
better compete for state housing trust fund grants by lowering
the minimum grant amount for newly established small county
trusts. Newly formed trusts in smaller counties would be
required to provide a match of $500,000 rather than $1 million.
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Need for the bill : According to the author, in order to take
advantage of the funding for housing trusts funds authorized in
Proposition IC, the San Joaquin Valley Housing Trust (SJV
Housing Trust) was established in 2008, with membership from
counties and cities throughout the eight county regions. A
number of those counties are small, rural areas with fewer local
resources for planning and developing affordable housing.
Several of those counties plan to establish their own housing
trusts. According to the author, housing trusts that may be
established in smaller rural counties such as those that are
members of the SJV Housing Trust face disadvantages in winning
state grants. Those disadvantages include difficulties in
raising local funding to match grants, dollar for dollar, and
obtaining those local funds prior to the award of a state grant.
Similar legislation :
This bill is similar to AB 1129 (Arambula) from last session.
The Governor vetoed the bill with the following veto message:
I am returning Assembly Bill 1129 without my signature.
I am supportive of providing additional flexibility for
small rural jurisdictions to participate in the Local
Housing Trust Fund program by reducing the minimum
participation level and allowing flexibility for local
governments to provide dedicated fee revenue in lieu of a
one-time match. However, the bill is silent on when local
governments may expend state funds that are on deposit
awaiting local matching funds. Allowing local governments
to expend state funds without the accompanying local
matching funds undermines the purpose of a matching grant
program.
For these reason, I am returning this bill without my
signature.
The author has addressed the concern raised by the Governor's
veto message by requiring the local housing trust to have
matching funds on deposit before HCD may disburse funds. The
bill outlines two possible sources of the funding, either a fee
or tax that the local jurisdiction imposes to fund the match or
a legal binding commitment. HCD has discretion to determine
AB 570
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whether the documentation is adequate to qualify for a match of
Program funds. Additionally once funds are on deposit they may
only be disbursed to fund projects identified to receive a loan
as determined by HCD.
REGISTERED SUPPORT / OPPOSITION :
Support
Affordable Homes Collaborative
Aging Services of California
American Federation of State County and Municipal Employees
California Rural Legal Assistance Foundation
Housing California
Non-Profit Housing Association of Northern California
San Joaquin Valley Housing Trust
San Luis Obispo County Housing Trust Fund
Western Center on Law & Poverty
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085