BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 1672
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: torres
VERSION: 6/19/12
Analysis by: Mark Stivers FISCAL: Yes
Hearing date: June 26, 2012
SUBJECT:
Housing-Related Parks Program
DESCRIPTION:
This bill makes a number of changes to the Housing-Related Parks
Program.
ANALYSIS:
In November 2006, California voters approved Proposition 1C, the
$2.85 billion Housing and Emergency Shelter Trust Fund Act of
2006. Among other things, Proposition 1C included $200 million
for "housing-related parks grants in urban, suburban, and rural
areas, subject to the conditions and criteria that the
Legislature may provide in statute."
AB 2494 (Caballero), Chapter 641, Statutes of 2008, created the
program for the expenditure of these funds, named it the
Housing-Related Parks Program (HRPP), and assigned
administration of the program to the Department of Housing and
Community Development (HCD) in conjunction with the Department
of Parks and Recreation (DPR). The purpose of the HRPP is to
reward cities and counties that have permitted new housing units
affordable to very low- or low-income households on which
construction has started with grants for the creation,
development, or rehabilitation of park and recreation
facilities, including land acquisition. To be eligible for an
HRPP grant, a city and county must meet all of the following
conditions:
Have an HCD-approved housing element and have submitted its
annual housing element progress report within the previous 12
months.
Document a housing start within the program year for a housing
unit that is affordable to very low- or low-income households.
Qualifying rental units must be subject to covenants ensuring
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affordability for 55 years. Qualifying ownership units must
be affordable at initial sale and, if subsidized with public
funds, subject to affordability restrictions established by
HCD that, at a minimum, require that public funds be returned
and reused for a period of at least 20 years.
Current law further requires that HCD establish base awards on a
per-bedroom basis for each affordable unit, with the grant for
very-low income units being greater than the grant for
low-income units. HCD has set the base award at $500 per
bedroom for a low-income unit and $750 per bedroom for a very
low-income unit. Current law further requires HCD to award
bonus funds to cities and counties for all of the following,
with the amount HCD awards in parentheses:
Units affordable to extremely low-income households. ($250 per
bedroom)
Units in infill projects. ($250 per bedroom)
The city or county has exceeded overall housing production
thresholds established by HCD. ($50 per low-income bedroom,
$75 per very-low income bedroom)
The city or county commits to spending the funds in an area
that meets the definition of a park deficient community.
($100 per bedroom)
The city or county commits to spending the funds on a new or
improved park or community recreational facility that serves a
disadvantaged community. ($100 per bedroom)
The city or county commits to spending the funds on a facility
that supports infill development. ($100 per bedroom)
The city or county has conformed its general plan to the
regional blueprint. ($100 per bedroom)
HRPP is not a competitive program. It is more like an
entitlement. Cities and counties that meet the criteria are
guaranteed a funding award. If more jurisdictions qualify for
grants than there are funds available, HCD pro-rates the grant
awards. While HCD awards funds based on housing starts, current
law requires that it disburse funds only upon documentation of a
city or county certificate of occupancy or final inspection
after construction is complete. In order to avoid small grants,
a city or county must qualify for at least $75,000 worth of
funding in order to receive a grant. If a city or county does
not meet that threshold, it may count its housing starts from
that program's years towards the next year's application.
To date, HCD has made awards for housing units started in the
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2010 calendar year and expects to make awards for housing units
started in the 2011 calendar year very soon. HCD and the
Legislature anticipated that HCD would make roughly $25 million
in awards per year. Largely due to the slowdown in housing
construction generally and the decrease in funding available to
finance affordable housing development specifically, however,
awards have significantly lagged this expectation. In HRPP's
first year, HCD awarded only $8.8 million. HCD is likely to
award $11.3 million for calendar year 2011.
This bill makes a number of changes to the Housing-Related Parks
Program, as follows:
Allows cities and counties also to obtain awards for acquired,
substantially rehabilitated, and preserved affordable housing
units for which the city or county has committed financial
assistance, as those terms are defined in housing element law,
except that the city or county may have committed assistance
at any time during the housing element period.
Grants awards for new housing based on building permits issued
rather than housing starts.
Requires a city or county to have submitted its annual housing
element progress report for the preceding calendar year, as
opposed a report within the preceding 12 months.
Repeals the prohibition on HCD disbursing funds prior to
receiving documentation of a city or county certificate of
occupancy or final inspection.
Requires HCD to grant a "substantial" bonus for the following:
New affordable housing units.
The city or county commiting to spending the funds in an
area that meets the definition of a park-deficient
community.
The city or county commiting to spending the funds on a
new or improved park or community recreational facility
that serves a disadvantaged community.
Requires HCD to grant a regular bonus for the following:
Units affordable to extremely low-income households.
Units in infill projects.
The city or county has exceeded overall housing
production thresholds established by HCD.
The city or county commiting to spending the funds on a
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facility that supports infill development.
The city or county conforming its general plan to the
regional blueprint.
COMMENTS:
1.Purpose of the bill . The author introduced this bill to
simplify the application process for HRPP, to enable
jurisdictions to receive their grant funds sooner, to allow
awards for the acquisition, rehabilitation, and preservation
of affordable housing, as opposed to just new construction,
and to increase incentives for local governments to spend
award funds in park-deficient and disadvantaged neighborhoods.
Under current law, HCD makes HRPP awards based on the number
of housing starts in a city or county in a given year. The
HRPP statute defines a housing start to mean that the local
government has issued a completed foundation inspection.
Unfortunately, there is little consistency in documenting
foundation inspections across jurisdictions, which has left
some jurisdictions unsure how to document their eligibility or
confused as to whether they even are eligible for HRPP funds.
In addition, some types of construction, such as podium
structures, do not involve a foundation inspection. This bill
replaces housing starts with building permits, which all
cities and counties already issue and track, as the way to
document HRPP eligibility.
This bill also eliminates a requirement that HCD not disburse
funds to local governments until they issue certificates of
occupancy for the units that qualified them for the HRPP
award. Generally an 18-month lag occurs between the time a
city or county issues a building permit and the time units are
completed, which means that local governments must wait a
substantial amount of time between receiving an award and
actually getting the money. While the intent of the
requirement is to ensure that the units that qualify a
jurisdiction for an award actually get built, it is extremely
rare for an affordable housing project not to proceed through
the construction process once the city or county has issued
building permits. In addition, given that the HRPP is
intended to reward local governments for approving affordable
housing, it does not necessarily make sense to rescind an
award in the event that a project fails to proceed despite
having received all necessary local approvals.
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The author is also concerned that HRPP park grants have not
necessarily gone to those communities that are most in need of
park facilities. Although the law allows for HCD to award
bonus funds to cities and counties that meet the definition of
park deficiency, HCD has given that criterion the lowest
amount of bonus funds. In an effort to steer more of the
funding to disadvantaged and park-deficient communities, this
bill requires that HCD award substantial bonus funds to cities
and counties that commit to spending the funds in a
park-deficient or disadvantaged neighborhood.
2.Moving money vs. creating incentives . Originally envisioned
as a $25 million per year program, HRPP will award less than
$25 million over its first two years for the reasons stated
above. One general goal of this bill is to increase the
amount of money getting out the door for park development.
There are two possible ways to achieve this goal: 1)
expanding eligibility criteria so that more cities and
counties are eligible for awards, and 2) increasing awards for
currently eligible activities. The author has chosen the
former route by allowing cities and counties to qualify for
funding by committing financial assistance to the acquisition,
substantial rehabilitation, or preservation of affordable
housing units.
While rewarding any city and county efforts to increase the
stock of affordable housing is laudable, the HRPP was
originally intended to help overcome the frequent
not-in-my-backyard (NIMBY) opposition to new affordable
housing developments. Acquisition, substantial
rehabilitation, and preservation projects, on the other hand,
generally do not face NIMBY opposition because they involve
existing buildings and usually do not require discretionary
land use approvals. HRPP awards are unlikely to influence
city and county decisions regarding these types of projects,
but if HRPP rewards cities and counties for these projects,
fewer funds will be available to incentivize cities and
counties to approve new developments that often do face NIMBY
hurdles. The author has sought to balance these interests by
requiring HCD to award substantial bonus funds for new
construction projects. The committee may wish to consider
whether rewarding cities and counties for approving relatively
non-controversial projects is a better approach than
increasing award amounts for more controversial new
development or than maintaining the current program structure
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for a longer period of time.
3.Effect of bonus changes . In an attempt to funnel a greater
percentage of HRPP funds to parks in disadvantaged and
park-deficient neighborhoods, this bill increases the bonuses
for a city's or county's commitment to spend HRPP funds in
such areas and decreases the relative bonuses for infill
projects, reaching deeper housing affordability, and meeting
overall housing goals. As a practical matter, this will
likely require HCD to flip some of its current bonuses. The
bonuses for infill housing and extremely low-income units that
are currently at $250 per bedroom are likely to become $100
per bedroom, and the bonuses for serving disadvantaged and
park-deficient neighborhoods that are currently at $100 per
bedroom are likely to become $250 per bedroom. The committee
may wish to consider what city or county decisions should
receive the highest bonuses.
Assembly Votes:
Floor: 50-26
Appr: 12-5
WP&W: 9-3
H&CD: 4-2
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 20, 2012)
SUPPORT: Housing California
League of California Cities
OPPOSED: None received.