BILL ANALYSIS
SB 958
Page 1
Date of Hearing: June 30, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 958 (Lowenthal) - As Amended: April 6, 2010
Policy Committee: Housing and
Community Development Vote: 9 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill designates the Department of Housing and Community
Development (HCD) as the primary state agency responsible for
administering the federal Housing Trust Fund (HTF).
Specifically, this bill:
1)Requires that HCD administer the funds pursuant to the
multifamily housing program (MHP).
2)Authorizes the Legislature to appropriate up 10% of MHP
funding for the CalHOME Program.
3)Requires HCD to submit notifications to the Legislature on the
department's plan for distributing the funds and detailing the
cumulative amount of funding awarded and expended.
FISCAL EFFECT
1)Workload associated with providing the required information to
the Legislature should be minor and absorbable within existing
resources.
2)Costs associated with administration of the federal Housing
Trust Fund 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
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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
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 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.
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.
3)Key Issue . The HTF is one of a package of programs enacted by
the U.S. Congress with the intent of stimulating the nation's
economy by providing indirect financial assistance to critical
industries and to families. Because the federal government
has yet to issue its regulations for the HTF, however, the
steps the state must take to receive and to distribute the
funds are not known. Moreover, and consistent with federal
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practice, those regulations are expected to take precedence
over any contrary state policy or program design.
4)Related Legislation . Except for the reporting requirement,
this bill is identical to SB 450 (Lowenthal) heard by this
committee in 2009. That bill was later amended to remove
those provisions and instead contain provisions concerning
emissions reductions. Currently SB 450 contains provisions
concerning class size reduction and is awaiting hearing in the
Assembly Education Committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081