BILL NUMBER: AB 1865	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Audra Strickland

                        FEBRUARY 12, 2010

   An act to amend Section 50843.5 of the Health and Safety Code,
relating to housing.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1865, as introduced, Audra Strickland. Local Housing Trust Fund
Matching Grant Program.
   Existing law establishes the Local Housing Trust Fund Matching
Grant Program for the purpose of supporting local housing trust funds
dedicated to the creation or preservation of affordable housing.
Under the grant program, the Department of Housing and Community
Development is authorized to make matching grants available to
cities, counties, city and counties, and existing charitable
nonprofit organizations that have created, funded, and operated
housing trust funds. Existing law establishes the minimum allocation
to a program applicant at $500,000 for a newly established trust, as
defined, that is in a county with a population of less than 425,000
persons, based on the decennial United States Census for the year
2000, and at $1,000,000 for all other trusts.
   This bill would instead establish the minimum allocation to a
program applicant at $500,000 for all newly established trusts.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 50843.5 of the Health and Safety Code is
amended to read:
   50843.5.  (a) Subject to the availability of funding, the
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. These
funds shall be awarded through the issuance of a Notice of Funding
Availability (NOFA).
   (1) Applicants that provide matching funds from a source or
sources other than impact fees on residential development shall
receive a priority for funding.
   (2) The department shall set aside funding for new trusts, as
defined by the department in the NOFA.
   (b) Housing trusts eligible for funding under this section shall
have the following characteristics:
   (1) Utilization of a public or joint public and private fund
established by legislation, ordinance, resolution, or a
public-private partnership to receive specific revenue to address
local housing needs.
   (2) Receipt of ongoing revenues from dedicated sources of funding
such as taxes, fees, loan repayments, or private contributions.
   (c) The minimum allocation to an applicant that is a newly
established trust  , and is in a county with a population
that conforms with paragraph (2) of subdivision (c) of Section
53545.9,  shall be five hundred thousand dollars ($500,000).
 The minimum allocation for all other trusts shall be one
million dollars ($1,000,000).  No applicant may receive an
allocation in excess of two million dollars ($2,000,000). All funds
provided pursuant to this section shall be matched on a
dollar-for-dollar basis with money that is not required by any state
or federal law to be spent on housing. No application for an existing
housing trust shall be considered unless the department has received
adequate documentation of the deposit in the local housing trust
fund of the local match and the identity of the source of matching
funds. An application for a new trust shall not be considered unless
the department has received adequate documentation, as determined by
the department, 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. Funds shall not be disbursed by the department to
any trust until all matching funds are on deposit and then funds may
be disbursed only in amounts necessary to fund projects identified
to receive a loan from the trust within a reasonable period of time,
as determined by the department. Applicants shall be required to
continue funding the local housing trust fund from these identified
local sources, and continue the trust in operation, for a period of
no less than five years from the date of award. If the funding is not
continued for a five-year period, then (1) the amount of the
department's grant to the local housing trust fund, to the extent
that the trust fund has unencumbered funds available, shall be
immediately repaid, and (2) any payments from any projects funded by
the local housing trust fund that would have been paid to the local
housing trust fund shall be paid instead to the department and used
for the program or its successor. The total amount paid to the
department pursuant to (1) and (2), combined, shall not exceed the
amount of the department's grant.
   (d) (1) Funds shall be used for the predevelopment costs,
acquisition, construction, or rehabilitation of the following types
of housing or projects:
   (A) Rental housing projects or units within rental housing
projects. The affordability of all assisted units shall be restricted
for not less than 55 years.
   (B) Emergency shelters, safe havens, and transitional housing, as
these terms are defined in Section 50801.
   (C) For sale housing projects or units within for sale housing
projects.
   (2) At least 30 percent of the total amount of the grant and the
match shall be expended on projects, units, or shelters that are
affordable to, and restricted for, extremely low income persons and
families, as defined in Section 50106. No more than 20 percent of the
total amount of the grant and the match shall be expended on
projects or units affordable to, and restricted for, moderate-income
persons and families whose income does not exceed 120 percent of the
area median income. The remaining funds shall be used for projects,
units, or shelters that are affordable to, and restricted for, lower
income persons and families, as defined in Section 50079.5.
   (3) If funds are used for the acquisition, construction, or
rehabilitation of for sale housing projects or units within for sale
housing projects, the grantee shall record a deed restriction against
the property that will ensure compliance with one of the following
requirements upon resale of the for sale housing units, unless it is
in conflict with the requirements of another public funding source or
law:
   (A) If the property is sold within 30 years from the date that
trust funds are used to acquire, construct, or rehabilitate the
property, the owner or subsequent owner shall sell the home at an
affordable housing cost, as defined in Section 50025.5, to a
household that meets the relevant income qualifications.
   (B) The owner and grantee shall share the equity in the unit
pursuant to an equity sharing agreement. The grantee shall reuse the
proceeds of the equity sharing agreement consistent with this
section. To the extent not in conflict with another public funding
source or law, all of the following shall apply to the equity-sharing
agreement provided for by the deed restriction:
   (i) Upon resale by an owner-occupant of the home, the
owner-occupant of the home shall retain the market value of any
improvements, the downpayment, and his or her proportionate share of
appreciation. The grantee shall recapture any initial subsidy and its
proportionate share of appreciation, which shall then be used to
make housing available to persons and families of the same income
category as the original grant and for any type of housing or shelter
specified in paragraph (1).
   (ii) For purposes of this subdivision, the initial subsidy shall
be equal to the fair market value of the home at the time of initial
sale to the owner-occupant minus the initial sale price to the
owner-occupant, plus the amount of any downpayment assistance or
mortgage assistance. If upon resale by the owner-occupant the market
value is lower than the initial market value, then the value at the
time of the resale shall be used as the initial market value.
   (iii) For purposes of this subdivision, the grantee's
proportionate share of appreciation shall be equal to the ratio of
the initial subsidy to the fair market value of the home at the time
of the initial sale.
   (e) Loan repayments shall accrue to the grantee housing trust for
use pursuant to this section. If the trust no longer exists, loan
repayments shall accrue to the department for use in the program or
its successor.
   (f) (1) In order for a city, county, or city and county to be
eligible for funding, the applicant shall, at the time of
application, meet both of the following requirements:
   (A) Have an adopted housing element that the department has
determined, pursuant to Section 65585 of the Government Code, is in
substantial compliance with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of Title 7
of the Government Code.
   (B) Have submitted to the department the annual progress report
required by Section 65400 of the Government Code within the preceding
12 months, if the department has adopted the forms and definitions
pursuant to subparagraph (B) of paragraph (2) of subdivision (a) of
Section 65400 of the Government Code.
   (2) In order for a nonprofit organization applicant to be eligible
for funding, the applicant shall agree to utilize funds provided
under this chapter only for projects located in cities, counties, or
a city and county that, at the time of application, meet both of the
following requirements:
   (1) Have an adopted housing element that the department has
determined, pursuant to Section 65585 of the Government Code, to be
in substantial compliance with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of Title 7
of the Government Code.
   (2) Have submitted to the department the annual progress report
required by Section 65400 of the Government Code within the preceding
12 months, if the department has adopted the forms and definitions
pursuant to subparagraph (B) of paragraph (2) of subdivision (a) of
Section 65400 of the Government Code.
   (g) Recipients shall have held, or shall agree to hold, a public
hearing or hearings to discuss and describe the project or projects
that will be financed with funds provided pursuant to this section.
As a condition of receiving a grant pursuant to this section, any
nonprofit organization shall agree that it will hold one public
meeting a year to discuss the criteria that will be used to select
projects to be funded. That meeting shall be open to the public, and
public notice of this meeting shall be provided, except to the extent
that any similar meeting of a city or county would be permitted to
be held in closed session.
   (h) No more than 5 percent of the funds appropriated to the
department for the purposes of this program shall be used to pay the
costs of administration of this section.
   (i) A local housing trust fund shall encumber funds provided
pursuant to this section no later than 36 months after receipt. Any
funds not encumbered within that period shall revert to the
department for use in the program or its successor.
   (j) Recipients shall be required to file periodic reports with the
department regarding the use of funds provided pursuant to this
section. No later than December 31 of each year in which funds are
awarded by the program, the department shall provide a report to the
Legislature regarding the number of trust funds created, a
description of the projects supported, the number of units assisted,
and the amount of matching funds received.