BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 570
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Arambula
VERSION: 3/27/09
Analysis by: Mark Stivers FISCAL: yes
Hearing date: June 9, 2009
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 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 jurisdictions with approved elements. 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
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funds have been deposited in the fund and of the source of these
funds. The local housing trusts may in turn use LHTF program
funds to support emergency shelters, rental housing, and
for-sale housing affordable to households ranging from extremely
low-income to moderate-income. If an awardee fails to continue
funding and operating the local housing trust fund for at least
five years, then the trust must repay HCD's award to the extent
the funds have not yet been legally encumbered to specific
projects.
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 36-month
setaside 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:
Provides that the 425,000 population threshold for the
setaside reserved for newly established housing trust funds in
smaller counties shall be based on the 2000 census, as opposed
to the most recent population estimates of the Department of
Finance.
Lowers the minimum matching grant for a newly establish
housing trust fund in a county with a population of less than
425,000 persons from $1 million to $500,000.
Provides that newly established housing trust funds need not
have the matching funds on deposit at the time of application
to HCD but must instead provide adequate documentation, as
determined by HCD, that an ordinance imposing or dedicating a
tax or fee to be deposited into the new trust has been enacted
or the applicant has adopted a legally binding commitment to
deposit matching funds into the new trust.
Provides that HCD shall not disburse funds to any trust until
all matching funds are on deposit and that disbursements shall
be in the minimum amounts necessary to meet a trust's
commitments to specific projects.
COMMENTS:
1.Purpose of the bill . According to the author, this bill
allows smaller, rural county housing trusts to better capture
AB 570 (ARAMBULA) Page 3
state matching grants. The author is particularly interested
in facilitating the development of the eight-county San
Joaquin Valley Regional Housing Trust (SJV Trust). The SJV
Trust will not be one trust but rather a coordinated
association of several trusts, some of which will serve single
counties. The matching resources available under the LHTF
program are critical to generating funding commitments from
participants. Because of their small size, many of the
jurisdictions in the SJV Trust are unlikely to be able to meet
the current $1 million minimum match requirement. This bill
lowers the minimum grant for small counties to $500,000. Due
to their limited budgets, it is also difficult for smaller
counties to hold precious matching funds idly on deposit while
HCD considers a jurisdiction's application. This bill allows
new housing trusts to show that they have funding sources in
place or pledged rather than on deposit at the time of
application. Lastly, one of the counties in the San Joaquin
Valley just recently surpassed the 425,000 population
threshold to qualify for the small county setaside. This bill
allows this county and others that have surpassed the
threshold since the 2000 census to remain eligible for the
small county setaside.
2.Counties affected . Basing population on the 2000 census
rather than the 2009 population estimates by the Department of
Finance will allow an additional four counties (Monterey,
Santa Barbara, Solano, and Tulare) to qualify for the small
county setaside for new housing trusts.
3.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. HCD's regulations establishing a form on which local
governments can submit their report should be adopted before
this bill takes effect. 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, provided that HCD's regulations have
taken effect.
4.Previous bill vetoed . In 2008, the author carried a similar
bill, AB 1129. That bill was vetoed. The Governor's signing
message stated:
AB 570 (ARAMBULA) Page 4
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 attempted to address the concern raised by the
Governor's veto message by requiring the local housing trusts
to have matching funds on deposit before HCD may disburse its
matching funds. In addition, the bill provides that HCD will
disburse funds only in amounts necessary to fund projects
identified to receive a loan from the trust.
5.Technical amendment . On page 2, strike lines 4-7 and insert:
department shall make matching grants available to cities,
counties, city and counties, 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.
Assembly Votes:
Floor: 55-21
Apprs: 11-2
H&CD: 5-0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 3, 2009)
SUPPORT: San Joaquin Valley Housing Trust (sponsor)
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
AB 570 (ARAMBULA) Page 5
San Luis Obispo County Housing Trust Fund
Western Center on Law & Poverty
OPPOSED: None received.