BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 1865
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: strickland
VERSION: 6/14/10
Analysis by: Mark Stivers FISCAL: yes
Hearing date: June 22, 2010
SUBJECT:
Local Housing Trust Fund Matching Grant Program
DESCRIPTION:
This bill reduces the minimum grant amount under the Local
Housing Trust Fund Matching Grant program to $500,000 for all
new trust funds regardless of county size.
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 million 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, that the Department of Housing and Community
Development (HCD) administers.
Under existing law, the LHTF program matches contributions to
local housing trust funds. To be eligible for matching funds, a
local housing trust fund must receive contributions from private
or governmental sources that are not otherwise restricted for
housing programs. The awardee must also have an HCD-approved
housing element and have submitted its annual housing element
progress report, or if it is a non-profit entity, it must fund
projects located in jurisdictions with approved housing elements
and submitted progress reports. The local housing trusts may in
turn use LHTF program funds to support emergency shelters,
rental housing, and for-sale housing affordable to households
AB 1865 (STRICKLAND) Page 2
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 fund
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 the LHTF
program from 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.
As originally established, the LHTF grants matched the local
contributions on a dollar-for-dollar basis at a minimum of $1
million and up to a maximum of $2 million. In 2009, the
Legislature enacted AB 570 (Arambula), Chapter 455, to reduce
the minimum grant amount for new trust funds in counties of less
than 425,000 persons to $500,000. Proponents of that bill
argued that smaller communities would unlikely be able to meet a
$1 million minimum match requirement and therefore be
discouraged from creating a trust at all.
This bill reduces the minimum grant amount under the LHTF
program to $500,000 for all new trust funds regardless of county
size.
COMMENTS:
1.Purpose of the bill . This bill seeks to allow newly formed
housing trusts in larger counties to better compete for state
housing trust fund grants by lowering the minimum grant amount
for all such applicants, not just those in smaller counties.
The LHTF program creates a big incentive for cities and
counties to create new housing trusts. Reducing the match
requirement for all newly formed trusts will encourage more
cities and counties to dedicate new resources to affordable
housing, thereby growing the affordable housing pie,
supporting additional affordable housing production, and
resulting in new construction jobs.
2.Impact on administrative costs . The original intent of
setting a minimum grant amount of $1 million was to keep down
HCD's administrative costs. It is more expensive to
AB 1865 (STRICKLAND) Page 3
administer a large number of small grants. This bill seeks to
balance this concern with the desire to increase use of the
program and the reality of how much smaller communities can
raise for affordable housing.
Assembly Votes:
Floor: 75-0
Appr: 17-0
HCD: 9-0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 16, 2010)
SUPPORT: Ventura County Housing Trust Fund (sponsor)
California Coalition for Rural Housing
California Housing Consortium
Housing California
San Joaquin Valley Housing Trust
Ventura County Board of Supervisors
OPPOSED: None received.