BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2536 (Carter)
Hearing Date: 07/15/2010 Amended: 06/01/2010
Consultant: Mark McKenzie Policy Vote: T&H 6-0
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BILL SUMMARY: AB 2536 would authorize the Department of Housing
and Community Development (HCD) to redirect specified general
obligation bond funds dedicated to the Emergency Housing
Assistance Program (EHAP) for supportive housing under the
Multifamily Housing Program (MHP).
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Bond fund redirection Potential cost pressures of up to
$30,000Bond*
to the extent HCD used EHAP funds for
supportive housing under MHP
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* Potential shift from the Emergency Housing Assistance Fund to
the Housing Rehabilitation Loan Fund
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STAFF COMMENTS: This bill may meet the criteria for referral to
the Suspense File to the extent HCD exercises the authority
granted by this bill and shifts bond funds to supportive housing
that would otherwise be used for EHAP.
The Housing and Emergency Shelter Trust Fund Act of 2002
(Proposition 46) authorized the issuance of $2.1 billion in
general obligation bonds for various housing programs, including
$195 million for the Supportive Housing Program under MHP and
$195 million for EHAP. The Housing and Emergency Shelter Trust
Fund Act of 2006 (Proposition 1C) authorized the issuance of
$2.85 billion in general obligation bond funds for housing
programs, including $195 million for the Supportive Housing
Program and $50 million for EHAP. The Supportive Housing
Program funds the construction, rehabilitation, or preservation
of rental homes and complementary supportive service operating
costs, such as drug and alcohol treatment, mental health
counseling, and workforce training, for persons who have a
disability and are homeless or at risk of becoming homeless.
EHAP provides grants for the rehabilitation, renovation,
expansion, and site acquisition capital costs of emergency
shelters and transitional homes for homeless persons.
AB 2536 would authorize HCD to use Proposition 46 and 1C bond
funds that are dedicated to EHAP for the Supportive Housing
Program under the MHP. The bill is intended to allow HCD the
flexibility to make funding available for supportive housing
projects if the demand for such programs exceeds demand for EHAP
projects.
On May 13, 2010, HCD issued a Notice of Funding Availability
under EHAP soliciting applications for $40 million in available
funds. To the extent that all of these funds are awarded, all
of the remaining Proposition 46 EHAP funds will be exhausted and
$20
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AB 2536 (Carter)
million of the available Proposition 1C funds will be expended.
HCD expects to offer and award the remaining $30 million in
Proposition 1C EHAP funds in 2011. Historically, applications
for EHAP funds have exceeded available funds, although future
demand may be impacted by reductions in available federal and
local funding for operating costs associated with shelters
funded under EHAP. Allocations for the MHP-Supportive Housing
Program have also typically been oversubscribed.
HCD indicates that its administrative costs associated with
allocating EHAP funds for MHP-Supportive Housing projects would
be minor and absorbable if they exercised the authority provided
in the bill. Staff notes that any shifts in allocations from
EHAP to the MHP-Supportive Housing Program would create cost
pressures on the Emergency Housing Assistance Fund since there
appears to be sufficient demand for those resources in the
2010-11 fiscal year. Up to $30 million in EHAP funds could be
used for supportive housing if HCD used all of the available
funds for the alternate purpose provided in this bill.
Staff notes that the State General Obligation Bond Law generally
requires bond funds to be used for capital projects with a
useful life of at least 15 years, and it is generally
recommended that the useful life be at least equal to the
repayment period of the bonds. Notwithstanding this provision,
Proposition 46 and 1C authorized general obligation bond funds
to be used for supportive services operating costs related to
the MHP-Supportive Housing Program. This bill would allow more
bond funds to be used for operating expenses, rather than
capital projects; the state General Fund would repay bonds used
for these one-time operating expenses over a 30-year period.