BILL ANALYSIS
SB 958
Page 1
Date of Hearing: June 16, 2010
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
SB 958 (Lowenthal) - As Amended: April 6, 2010
SENATE VOTE : 35-0
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 (HERA) 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)Requires HCD to submit the following to the Legislature:
a) A description of how the department plans to distribute
the funds, including a schedule for the release of the
funds no later than 30 days after receipt of the funds; and
b) A description of the cumulative amounts of funds awarded
and expended no later than 180 days after receipt of the
funds and every year after that on or before December 31 of
each year.
1)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 Section 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
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people to become or remain homeowners (Health and Safety Code
Section 50650.3).
FISCAL EFFECT : Unknown.
COMMENTS :
Background : 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 HTF. 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 (AMI) or less and at least 75% of
these funds must benefit extremely low-income households those,
earning 30% of AMI or less, or households with incomes below the
federal poverty line. State's have discretion to use 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
other expenses incurred to develop homeownership development
projects including single family subdivisions.
Funding for the national HTF is generated by Fannie Mae and
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Freddie Mac who will contribute a portion of the value of the
new loans purchased to the fund. The Federal Housing Finance
Administration (HFA) indefinitely suspended contributions to the
HTF as of December 2008, until the financial stability of Fannie
Mae and Freddie Mac is restored. In 2009, President Obama
proposed $1 billion appropriation for the HTF in his budget. In
addition the jobs bill currently pending in Congress includes $1
billion for the HTF. HUD released the draft regulations for
distributing funding for the program. Based on the draft
formula, provided the funding remains at $1 billion, California
could receive approximately $193 million.
Related legislation : Except for the reporting requirement, this
bill was identical to SB 450 (Lowenthal) as introduced. The bill
passed the committee on July 8, 2009 by a vote of 6 to 0.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation
Western Center on Law & Poverty
Opposition
None of file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085