BILL ANALYSIS
SB 450
Page 1
SENATE THIRD READING
SB 450 (Lowenthal)
As Introduced February 26, 2009
Majority vote
SENATE VOTE :37-0
HOUSING 6-0 APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Torres, Harkey, Eng, |Ayes:|De Leon, Conway, Ammiano, |
| |Knight, Ma, Saldana | | |
| | | |Charles Calderon, Coto, |
| | | |Davis, Duvall, Fuentes, |
| | | |Hall, Harkey, Miller, |
| | | |John A. Perez, Skinner, |
| | | |Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Hill |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
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.
FISCAL EFFECT : No state costs. HCD indicates that any costs
associated with administration of the bill would be recouped
from the federal allocations.
COMMENTS : The federal Housing and Economic Recovery Act of 2008
required the U.S. Department of Housing and Urban Development to
establish a national HTF. The HTF will provide grants to states
to increase the supply of rental housing for extremely low- and
SB 450
Page 2
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 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 lifted 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
down payment 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
SB 450
Page 3
other expenses incurred to develop homeownership development
projects including single family subdivisions.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0002485