BILL ANALYSIS
SB 450
Page 1
Date of Hearing: July 8, 2009
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
SB 450 (Lowenthal) - As Introduced: February 26, 2009
SENATE VOTE : 37-0
SUBJECT : Federal Housing Trust Fund
SUMMARY : Designates the Department of Housing & Community
Development (HCD) as the agency responsible for administering
the federal Housing Trust Fund (HTF) pursuant to the Housing and
Economic Recovery Act of 2008. Specifically, this bill :
1)Requires HCD to award funding generated by the federal HTF
through the Multifamily Housing Program (MHP).
2)Permits the Legislature to appropriate up to 10% of the
funding generated by the federal HTF to the CalHOME program.
3)Allows HCD to amend its regulations as needed to comply with
federal law.
EXISTING LAW
1)Establishes the MHP to provide loans for the construction,
acquisition or rehabilitation of rental housing (Health &
Safety Code 50675 et al).
2)Establishes the CalHOME program, within HCD to provide grants
and loans to local public agencies and nonprofit corporations
for projects or programs that enable low- and very low-income
people to become or remain homeowners (Health and Safety Code
Section 50650.3).
FISCAL EFFECT : Unknown
COMMENTS :
The federal Housing and Economic Recovery Act (HERA) of 2008
required the U.S. Department of Housing and Urban Development
(HUD) to establish a national Housing Trust Fund (HTF). The HTF
will provide grants to states to increase the supply of rental
housing for extremely low- and very-low income families
SB 450
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including homeless families and to increase homeownership for
extremely low- and very low-income families. The funding for the
national HTF is generated by Fannie Mae and Freddie Mac who will
contribute a portion of the value of the new loans purchased to
the fund. The Federal Housing Finance Administration
indefinitely suspended contributions to the HTF as of December
2008, until the financial stability of Fannie Mae and Freddie
Mac is restored. According to the author, it is unlikely that
this suspension will be limited before fiscal year 2010.
Despite the suspension, President Obama proposed $1 billion
appropriation for the HTF in his 2009 budget.
The national HTF is envisioned as a permanent source of federal
funding for affordable housing. The HTF funds will be
distributed to states in the form of block grants through a
formula. The funding is to be used for affordable rental
housing and first-time homebuyer assistance. Ninety percent
of the funds must be used for the production, preservation,
rehabilitation or operation of rental housing affordable to very
low-income households that earn 50% of area median income or
less and at least 75% of these funds must benefit extremely
low-income households those, earning 30% of area median income
or less, or households with incomes below the federal poverty
line. Up to 10% of HTF funds can be used to assist very
low-income, first-time homebuyers through the production,
preservation and rehabilitation of affordable homes or through
down payment, closing costs and mortgage assistance.
This bill would designate two existing programs, the MHP and the
CalHOME program operated by HCD as the recipients of the federal
funding generated by the HTF. MHP provides long-term deferred
loans to the developers of affordable rental housing to cover
the gap between development costs and the amount of debt that
can be supported by affordable rents. The CalHOME program
provides grants and loans to low-income and very low-income
individuals to become or remain homeowners. The funds are
distributed through local public agencies and private nonprofit
corporations that then make loans and grants directly to
low-income households. The grants can be used for homebuyer
downpayment assistance, rehabilitation, homebuyer counseling,
self-help mortgage assistance programs, or shared housing
homeownership. Loans may be used for the purchase of real
property, site development, predevelopment, construction and
other expenses incurred to develop homeownership development
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projects including single family subdivisions.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation
Century Housing
Non-profit Housing Association of Northern California
Western Center on Law & Poverty
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085