BILL ANALYSIS
SB 450
Page 1
Date of Hearing: August 19, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 450 (Lowenthal) - As Introduced: February 26, 2009
Policy Committee: Housing and
Community Development Vote: 6-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill dedicates funds that California receives from the
federal Housing Trust Fund primarily to the Department of
Housing and Community Development's Multifamily Housing Program
(MHP), except that the Legislature may appropriate up to 10
percent of the funds to the CalHome Program.
FISCAL EFFECT
No state costs. HCD indicates that any costs associated with
administration of the bill would be recouped from the federal
allocations.
COMMENTS
1)Rationale . The purpose of this bill is to 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.
2)Background . The federal Housing and Economic Recovery Act 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
SB 450
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supply of rental housing for extremely low- and very-low
income families 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, which 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 lifted
before fiscal year 2010.
The national HTF is intended to be 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.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081