BILL ANALYSIS
AB 570
Page 1
ASSEMBLY THIRD READING
AB 570 (Arambula)
As Amended March 27, 2009
Majority vote
HOUSING 5-0 APPROPRIATIONS 11-2
------------------------------------------------------------------
|Ayes:|Torres, De La Torre, Eng, |Ayes:|De Leon, Ammiano, Charles |
| |Ma, Saldana | |Calderon, Krekorian, |
| | | |Fuentes, Monning, |
| | | |John A. Perez, Price, |
| | | |Skinner, Solorio, |
| | | |Torlakson |
| | | | |
|-----+--------------------------+-----+---------------------------|
| | |Nays:|Nielsen, Audra Strickland |
| | | | |
------------------------------------------------------------------
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.
AB 570
Page 2
FISCAL EFFECT : Negligible state costs. Potential reallocation
toward smaller counties of a portion of the $17.5 million in
grants currently set aside under the existing Program for newly
created housing trusts.
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.
AB 570
Page 3
Similar legislation: This bill is similar to AB 1129 (Arambula)
from last session. Governor Schwarzenegger vetoed the bill with
the following veto message: "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."
The author has addressed the concern raised in 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
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.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0000471