BILL ANALYSIS
AB 2536
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Date of Hearing: April 14, 2010
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 2536 (J. Perez) - As Amended: April 8, 2010
SUBJECT : Housing & Emergency Shelter Trust Fund Act of 2006:
supportive housing
SUMMARY : Allows Emergency Housing and Assistance Funds
approved by the voters in the Housing & Emergency Shelter
Trust Fund Act of 2006 to be used for supportive housing
programs, which qualify for the Multifamily Housing Program.
EXISTING LAW The Housing and Emergency Trust Fund Act of 2002
and the Housing and Emergency Trust Fund Act of 2006 provided
$2.1 billion and $2.5 billion for affordable housing programs
respectively.
FISCAL EFFECT : Unknown
COMMENTS :
Background: 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 (EHAP); 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 of the
programs noted above including the Emergency Housing Assistance
Program Capital Development (EHAP-CD). The EHAP-CD program
provides grants for the construction, rehabilitation or
conversion of housing for emergency shelters. Proposition 46
and Proposition 1C authorized funding for EHAP-CD for $195
million and $50 million receptively.
Both bond Acts require the Bureau of State Auditor (BSA) to
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periodically audit the bond proceeds to ensure they are being
used in a timely manner and for the purpose outlined in the
bond. In November 2009, BSA audited the bond supported housing
programs, and found that HCD had promptly awarded funds for
eight of the ten programs funded by Proposition 1C. However as
of December 2008, HCD had not awarded any funds from Proposition
1C for EHAP-CD or the Affordable Innovation Fund.
In response to the auditor's finding, HCD explained that they
still had funds from the Proposition 46 for EHAP-CD and they
intended to use all of those funds before making any awards from
Proposition 1C. In July of 2009, HCD announced that it was
awarding $7 million in conditional wards for EHAP-CD. The
awards were conditional because of the freeze Pooled Money
Investment Board (PMIB) placed on bond awards made after
December 18, 2008. HCD recently announced that they have
permission by the Department of Finance (DOF) to issue Notice of
Funding Availability (NOFA) again, effective immediately. As a
result, HCD plans to issue a NOFA for EHAP-CD for $39 million.
AB 2536 would allow permanent supportive housing as a qualifying
use under the EHAP-CD. Under the existing program, EHAP-CD can
be used to fund emergency shelters which are not required to
have supportive services and do not have a limit on the length
of time an individual can stay in the housing. This bill would
allow projects that provide supportive housing and generally
have a limit on the amount of time individuals can remain in the
housing for 24 months.
Purpose of this bill : According to the author, the auditor's
report and the demand for the program provide evidence that a
deficiency exists in EHAP-CD. Since 2006, HCD has released one
NOFA for the EHAP-CD program. HCD received $24.5 million in
applications for $47 million in funding. Only $7 million
awarded from those applications. Suspension of bond activity in
December of 2008 alone does not explain why the funds have been
slow in being sought by shelter providers. Rather other
developments in housing policy have also influenced why shelters
have not sought out these funds. While shelters play an
important role in assisting the homeless population,
increasingly shelters find themselves more dependent on less
reliable funding to provide for the operation of shelters. This
added pressure makes it less likely that shelters have
additional funds for rehabilitating or constructing new
shelters. In addition, the approach to combating homelessness
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has shifted to a "housing first" model that seeks to secure
longer-term housing as a way to stabilize and better address the
needs of the homeless population.
On the other hand, the Multifamily Housing - Supportive Housing
Program (MHP-SH) has only $20 million remaining. In fact the
program is oversubscribed and in demand. HCD has issued three
NOFAs and received $268 million in applications for the roughly
$177 million available in MHP-SH.
The approach in AB 2536 recognizes the new realities facing
shelters and seeks to expand ways to assist the homeless
population. Making supportive housing projects eligible for
bond funds under this program while at the same time retaining
the eligibility of shelters to also compete for the funds helps
to advance the policy goals of housing the homeless and putting
bond dollars to work on shovel ready projects.
Arguments in support: According to the Corporation for
Supportive Housing, for a number of reasons, this Program has
been undersubscribed, while funds for the Multifamily Housing
Supportive Housing Program (MHP-SH), also funded under
Proposition 1C for the creation of permanent housing for
homeless families and individuals, has been oversubscribed. In
fact, in the four years since the passage of Proposition 1C,
only about 20% of the EHAP-CD funding has been awarded, whereas
almost all of the funding for the MHP-SH program has been
committed. Allowing supportive housing project sponsors to apply
for remaining EHAP-CD funds will provide for the expedited
expenditure of these funds for the same population the voters
intended to assist.
Staff comments : Due to the fact that HCD has issued any new
NOFAs for EHAP-CD since December 18, 2008, it is somewhat
unclear how many emergency shelter projects may be prepared to
apply now that a new NOFA has been announced. This bill will
not take effect until January 1, 2011, which means that the
pending NOFA should give a good indication if there are viable
emergency shelters that are going to apply for the remaining
funds. Additionally, the bill does not limit the EHAP-CD funds
solely to supportive housing, but rather adds it as a possible
use of the funds.
REGISTERED SUPPORT / OPPOSITION :
AB 2536
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Support
Corporation for Supportive Housing
Housing California
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085