BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 958|
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CONSENT
Bill No: SB 958
Author: Lowenthal (D)
Amended: 4/6/10
Vote: 21
SENATE TRANSPORTATION & HOUSING COMM : 8-0, 3/23/10
AYES: Lowenthal, Huff, Ashburn, DeSaulnier, Kehoe,
Oropeza, Pavley, Simitian
NO VOTE RECORDED: Harman
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Federal Housing Trust Fund
SOURCE : Author
DIGEST : This bill dedicates funds that California
receives from the National Housing Trust Fund primarily to
the Department of Housing and Community Development's
Multifamily Housing Program, except that the Legislature
may appropriate up to 10 percent of the funds to the
CalHome Program.
ANALYSIS : On July 30, 2008, President Bush signed into
law HR 3221, the Housing and Economic Recovery Act of 2008.
Among the bill's numerous provisions is the establishment
of the National Housing Trust Fund (NHTF).
The federal government will distribute NHTF funds to the
states in the form of block grants with the amounts for
CONTINUED
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each state to be determined by formula. The purposes of
the NHTF are to increase and preserve the supply of rental
housing for extremely low- and very low-income households,
including homeless individuals and families, and to
increase homeownership for extremely low- and very
low-income households. At least 90 percent of the funds
must be used for the production, preservation,
rehabilitation, or operation of rental housing affordable
to very low-income households (those earning 50 percent of
area median income or less), and at least 75 percent of
these funds must benefit extremely low-income households
(those earning 30 percent of area median income or less) or
households with incomes below the federal poverty line. Up
to 10 percent of NHTF 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 cost, and mortgage
assistance.
The NHTF is envisioned as a permanent program with
dedicated sources of funding not subject to annual
Congressional appropriations. HR 3221 requires Freddie Mac
and Fannie Mae, the federal government-sponsored entities
that purchase and securitize mortgages, to contribute a
portion of the value of their new loan purchases to the
fund. While this requirement will ultimately create
revenue for the fund, the new federal administrator of
Freddie Mac and Fannie Mae, the Federal Housing Finance
Administration, has indefinitely suspended contributions to
NHTF as of December 2008 in order to restore Freddie and
Fannie to fiscal health, and it is unknown at this time
when the administrator will lift this suspension.
Nonetheless, it is possible that the federal jobs bill
currently pending in Congress will include $1 billion for
the NHTF. In addition, President Obama has proposed a $1
billion appropriation for the NHTF as part of his fiscal
year 2010 budget.
Current state law establishes the Multifamily Housing
Program (MHP), administered by the Department of Housing
and Community Development (HCD), as California's omnibus
rental housing finance program. MHP provides long-term
deferred loans to the developers of affordable rental
housing to cover the gap between development costs and the
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amount of debt that can be supported by affordable rents.
One of the goals of MHP is to target the lowest-income
households, including extremely low-income households.
Housing units assisted through MHP remain affordable for 55
years.
Current state law also establishes the CalHome Program,
administered by HCD, as the state's omnibus homeownership
program. CalHome provides grants to local governments and
non-profit organizations to help low-income families become
or remain homeowners. Recipients may use funds to provide
home-buyer counseling, home rehabilitation loans,
downpayment assistance, self-help mortgage assistance, and
technical assistance for self-help and shared housing.
This bill designates HCD as the state agency responsible
for administering NHTF funds and requires HCD to award the
funds through the MHP Program, except that the Legislature
may appropriate up to 10 percent of NHTF funds for HCD to
award under the CalHome Program. The bill further requires
HCD to amend its regulations as needed to comply with
federal law relating to NHTF funds and to provide the
following reports to the Legislature:
1.A notification describing HCD's plan for distributing
NHTF funds, including a schedule for the release of all
funds, no later than 30 days after receipt of the federal
funds.
2.A notification detailing the cumulative amounts of funds
awarded and expended, no later than 180 days after
receipt of the federal funds and on or before December 31
of each year thereafter.
Formula Pending
The federal Department of Housing and Urban Development
(HUD) has released draft regulations to establish the
formula for distributing NHTF funds among the states.
Assuming $1 billion is available nationally in 2010,
California would receive roughly $193 million under the
current draft formula. The public comment period has
closed on the draft regulations, and HUD is expected to
release final regulations shortly. Thereafter, HUD is
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expected to release draft program regulations governing how
it will implement the program.
Related Legislation
Except for the addition of the reporting requirements, this
bill is identical to SB 450 (Lowenthal), which was approved
unanimously by the Senate in April 2009. SB 450 was later
amended to address a different subject matter. This bill
is also identical to a special session bill recently
approved by this committee, SB 27 X8 (Lowenthal).
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/14/10)
California Rural Legal Assistance Foundation
Western Center for Law and Poverty
ARGUMENTS IN SUPPORT : According to the author's office,
NHTF funds should start flowing to California in 2010.
Therefore, it is necessary to designate a state entity to
receive the funds and to begin planning for how to expend
these funds. Ultimately, NHTF funds will serve the same
purpose as MHP funds: to provide long-term, deferred loans
to developers of highly-targeted affordable housing to fill
gaps between project costs and borrowing capacity. As a
result, it makes sense to use the existing omnibus
framework of MHP to distribute NHTF funds. This will
simplify administration, expedite awards, and ensure ease
of use for developers.
JJA:nl 4/14/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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