BILL NUMBER: SB 813 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JULY 1, 2009
AMENDED IN SENATE MAY 12, 2009
INTRODUCED BY Senator Kehoe
FEBRUARY 27, 2009
An act to amend Section 33080.2 of the Health and Safety
Code, relating to redevelopment. An act to add
Sections 50517.12, 50650.8, 50862.6, and 50896.4 to the
Health and Safety Code, relating to community development.
LEGISLATIVE COUNSEL'S DIGEST
SB 813, as amended, Kehoe. Local agencies: redevelopment:
annual report. Community development: grant and loan
securitization programs.
Under existing law, there are programs providing assistance for,
among other things, multifamily housing, emergency housing,
farmworker housing, home ownership for very low and low-income
households, and downpayment assistance for first-time home buyers
administered by the Department of Housing and Community Development.
The Joe Serna, Jr. Farmworker Housing Grant program provides grants
and loans for the construction or rehabilitation of housing for
agricultural employees and their families or for the acquisition of
manufactured housing to address and remedy the impacts of
displacement of farmworker families. The CalHome program provides
grants and loans to enable low- and very low income households to
become or remain homeowners. The Building Equity and Growth in
Neighborhoods (BEGIN) program is established to make grants and loans
to be used for downpayment assistance to qualifying first-time home
buyers of low- and moderate-incomes purchasing newly constructed
homes in a BEGIN project. Existing federal law establishes the HOME
Investment Partnership Act, which allocated funds to states and local
governments to eligible states to among other things, expand the
supply of affordable housing. The department is the state agency
responsible for the state's allocation of HOME funds.
This bill would make legislative findings and declarations
relating the securitization of second mortgage loans with funds made
available by the department. The bill would require, for the purposes
of each of the above programs, a grant or loan for an individual
household in a mutual self-help housing program to include a deferred
payment grant or loan, respectively, due on sale or transfer, or
when the property ceases to be owner-occupied, as specified. The bill
would require the department to implement the special grant and loan
securitization programs through regulation exempt from a specified
provision of existing law. The bill would provide that the authority
for the special grant and loan securitization programs expire on
January 1, 2014.
Under the Community Redevelopment Law, a redevelopment agency is
required to submit to its legislative body annually any audit
undertaken by another governmental agency, and an annual report, as
specified. Existing law requires the agency to inform the legislative
body of any major violations of the Community Redevelopment Law
based on the independent financial report and that the failure to
correct a major violation may result in the filing of an action by
the Attorney General. Existing law requires the legislative body to
review any report submitted and take any appropriate action on that
report within the first meeting of the legislative body occurring
more than 21 days from the receipt of the report.
This bill would instead require the legislative body to review any
report submitted and, within 30 days of receiving the audit, adopt a
written response that indicates what action, if any, the agency
intends to take to correct the major audit violation. The bill would
require the legislative body to send a copy of its written response
to the grand jury.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) Many first-time home owners assisted by nonprofit corporations
to achieve home ownership through mutual self-help construction have
been challenged by a combination of costs of land purchased before
current market conditions arose, low appraised values of proposed
homes due to foreclosures and related economic conditions, and the
costs of land, government fees, and construction.
(b) These nonprofit corporations and potential homeowners are
eligible for financial assistance under the Joe Serna Jr. Farmworker
Housing Grant, CalHome, Building Equity and Growth in Neighborhoods
(BEGIN), and HOME programs administered by the Department of Housing
and Community Development.
(c) As a result of present market conditions, financing to pay all
costs often exceeds the depressed level of current home values.
Therefore, neither adequate construction lending nor sufficient
permanent financing can be obtained.
(d) Authorizing an alternative but financially sound means of
securing second mortgage loans made with funds available through the
Department of Housing and Community Development would provide housing
for hard-working households, stimulate the construction labor and
materials industry, and improve neighborhoods and areas with empty
lots.
(e) Because self-help first-time home buyers usually remain in
their homes for extended periods of time, an alternative
unconventional means of securing loans by utilizing future increases
in value when market conditions stabilize should be employed for at
least five years in order to allow for orderly resumption and
continuation of these first-time homeowner programs.
SEC. 2. Section 50517.12 is added to the
Health and Safety Code , to read:
50517.12. (a) For purposes of this chapter, a grant for an
individual household in a mutual self-help housing program shall
include a deferred payment grant due on sale or transfer, except as
provided herein, or when the property ceases to be owner-occupied,
which shall be payable only from the difference between the appraised
value at the time that the grant made pursuant to this chapter is
recorded and the appraised value at the time repayment is due.
(b) The amount of the deferred payment grant specified in
subdivision (a) shall not be treated for any purposes as affecting
the loan-to-value ratio of the financing on the property at the time
the grant is made, and the amount of the grant shall not exceed the
difference between the loan secured by a first deed of trust and the
total development cost, including an amount attributable to sweat
equity as approved by the department, for the home and property
secured by that grant.
(c) If necessary to achieve the housing costs required by this
chapter and qualify for a first mortgage, the department shall
approve the deferred payment grant authorized by this section in
addition to grants or loans otherwise authorized by this chapter.
However, the latter grants or loans shall not be secured only by the
increase in equity but, instead, shall be payable upon sale or
transfer after satisfaction of other approved liens on the property.
SEC. 3. Section 50650.8 is added to the
Health and Safety Code , to read:
50650.8. (a) For purposes of this chapter, a loan for an
individual household in a mutual self-help housing program shall
include a deferred payment loan due on sale or transfer, except as
provided herein, or when the property ceases to be owner-occupied,
which shall be payable only from the difference between the appraised
value at the time that the CalHome loan is recorded and the
appraised value at the time repayment is due.
(b) The amount of the deferred payment loan specified in
subdivision (a) shall not be treated for any purposes as affecting
the loan-to-value ratio of the financing on the property at the time
the CalHome loan is made, and the amount of the deferred payment loan
shall not exceed the difference between the loan secured by a first
deed of trust and the total development cost, including an amount
attributable to sweat equity as approved by the department, for the
home and property secured by that loan.
(c) If necessary to achieve the housing costs required by this
chapter and qualify for a first mortgage, the department shall
approve the deferred payment loan authorized by this section in
addition to loans otherwise authorized by this chapter. However, the
latter loans shall not be secured only by the increase in equity but,
instead, shall be payable upon sale or transfer after satisfaction
of other approved liens on the property.
SEC. 4. Section 50862.6 is added to the
Health and Safety Code , to read:
50862.6. (a) For purposes of this chapter, a loan for an
individual household in a mutual self-help housing program shall
include a deferred payment loan due on sale or transfer, except as
provided herein, or when the property ceases to be owner-occupied,
which shall be payable only from the difference between the appraised
value at the time that the BEGIN loan is recorded and the appraised
value at the time repayment is due.
(b) The amount of the deferred payment loan specified in
subdivision (a) shall not be treated for any purposes as affecting
the loan-to-value ratio of the financing on the property at the time
the BEGIN loan is made, and the amount of the deferred payment loan
shall not exceed the difference between the loan secured by a first
deed of trust and the total development cost, including an amount
attributable to sweat equity as approved by the department, for the
home and property secured by that loan. If necessary to achieve the
housing costs required by this chapter and qualify for a first
mortgage, the department shall approve both the deferred payment loan
authorized by this section in addition to loans otherwise authorized
by this chapter. However, the latter loans shall not be secured only
by the increase in equity but, instead, shall be payable upon sale
or transfer after satisfaction of other approved liens on the
property.
SEC. 5. Section 50896.4 is added to the
Health and Safety Code , to read:
50896.4. (a) For purposes of this chapter, a loan for an
individual household in a mutual self-help housing program shall
include a deferred payment loan due on sale or transfer, except as
provided herein, or when the property ceases to be owner-occupied,
which shall be payable only from the difference between the appraised
value at the time that the HOME loan is recorded and the appraised
value at the time repayment is due.
(b) The amount of deferred payment loan specified in subdivision
(a) shall not be treated for any purposes as affecting the
loan-to-value ratio of the financing on the property at the time the
HOME loan is made, and the amount of the deferred payment loan shall
not exceed the difference between the loan secured by a first deed of
trust and the total development cost, including an amount
attributable to sweat equity as approved by the department, for the
home and property secured by that loan.
(c) If necessary to achieve the housing costs required by this
chapter and qualify for a first mortgage, the department shall
approve both the deferred payment loan authorized by this section in
addition to loans otherwise authorized by this chapter. However, the
latter loans shall not be secured only by the increase in equity but,
instead, shall be payable upon sale or transfer after satisfaction
of other approved liens on the property.
SEC. 6. (a) The Department of Housing and
Community Development shall implement the special grant and loan
securitization programs authorized by Sections 2, 3, 4, and 5 of this
act through regulations that shall be exempt from Chapter 3.5
(commencing with Section 11340) of Part 1 of Title 2 of the
Government Code, following at least one consultation with the program
sponsors who receive, and represent the homeowners benefiting from,
the special grant or loan.
(b) The special grant and loan securitization programs established
by this act shall apply to any existing contract with a local
government or nonprofit entity for funds under the Joe Serna Jr.
Farmworker Housing Grant Program (Chapter 3.2, (commencing with
Section 50517.5) of Part 2 of Division 31 of the Health and Safety
Code), CalHOME Program (Chapter 6 (commencing with section 50650) of
Part 2 of Division 31 of the Health and Safety Code), Building Equity
and Growth in Neighborhoods (BEGIN) (Chapter 14.5 (commencing with
Section 50860) of Part 2 of Division 31 of the Health and Safety
Code), or HOME program (Chapter 16 (commencing with Section 50896) of
Part 2 of Division 31 of the Health and Safety Code) and shall
authorize homeowner loans or grants with funds that have not yet been
expended for mortgage, grant, or take-out financing on behalf of
eligible households.
(c) The authority for the special grant and loan securitization
programs authorized by this act shall expire on January 1, 2014,
unless a later enacted statute, that is enacted before January 1,
2014, deletes or extends that date.
SECTION 1. Section 33080.2 of the Health and
Safety Code is amended to read:
33080.2. (a) When the agency presents the annual report to the
legislative body pursuant to Section 33080.1, the agency shall inform
the legislative body of any major violations of this part based on
the independent financial audit report. The agency shall inform the
legislative body that the failure to correct a major violation of
this part may result in the filing of an action by the Attorney
General pursuant to Section 33080.8.
(b) The legislative body shall review any report submitted
pursuant to Section 33080.1 and, within 30 days of receiving the
audit, adopt a written response that indicates what action, if any,
the agency intends to take to correct the major violation. The
legislative body shall send a copy of its written response to the
grand jury.