BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1672 (Torres) - Housing-Related Parks Program
Amended: June 19, 2012 Policy Vote: T&H 6-3
Urgency: No Mandate: No
Hearing Date: August 6, 2012
Consultant: Mark McKenzie
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 1672 would revise the criteria that the
Department of Housing and Community Development (HCD) uses to
award grants of bond funds from the Housing-Related Parks
Program.
Fiscal Impact:
Potential acceleration of bond sales, which could result in
increased debt service payments in the short term if demand
exceeds original expectations of expenditure (Housing
Urban-Suburban-and-Rural Parks Account - Proposition 1C bond
funds).
Minor costs to HCD to revise program guidelines (Housing
Urban-Suburban-and-Rural Parks Account).
Background: The Housing and Emergency Shelter Trust Fund Act of
2006 (Proposition 1C) authorizes the issuance of $2.85 billion
in general obligation bonds, including $200 for housing-related
parks grants in urban, suburban, and rural areas, which would be
available upon appropriation by the Legislature.
Existing law, as enacted by AB 2494 (Caballero) Chap 641/2008,
established the Housing-Related Parks Program (HRPP) to provide
grants for the creation, development, or rehabilitation of park
and recreation facilities. HCD administers the program and
awards grants to any city and county based on the number of
affordable housing starts for newly constructed units in a given
year, based on specified criteria. Awards are calculated on a
per-bedroom basis and HCD has set the base award amount at $500
per bedroom for low-income unit and $750 per bedroom for a very
low-income unit, and awards bonus funds for extremely low-income
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units, infill projects, and to cities and counties that meet
other criteria. If eligibility for funds exceeds the amount
available, HCD reduces all grants proportionately.
The Legislature has only made a single appropriation of $25
million in HRPP funds to date. Although it was originally
anticipated that HCD would make $25 million in awards each year,
demand has been very low because of both the slowdown in housing
construction and a decrease in funding available for affordable
housing development. HCD only awarded $8.8 million for 2010
housing starts after issuing an initial Notice of Funding
Availability (NOFA) for $25 million. After issuing a second
NOFA for 2011 housing starts, another $11.3 million was awarded.
The Legislature did not make an appropriation of new funds in
the 2012-13 Budget Act, and HCD indicates that the remaining
amount from the initial appropriation is insufficient to issue
another NOFA.
Proposed Law: AB 1672 would revise the eligibility criteria for
the HRPP. Specifically, this bill would:
Base awards on building permits, rather than housing
starts.
Expand eligibility to allow awards for both new housing
units and affordable housing units substantially
rehabilitated, acquired, or preserved with committed local
assistance.
Require a local jurisdiction's application to include
documentation on issuance of building permits for new
housing units or issuance of a certificate of occupancy for
acquired, rehabilitated, and preserved housing units, as
specified.
Repeal a prohibition on HCD disbursing funds prior to
receiving documentation of a city or county certificate of
occupancy or final inspection.
Require HCD to award "substantial" bonus funds for new
housing units, to jurisdictions that commit to funding new
park facilities or park improvements in a disadvantaged
community, and to jurisdictions that qualify as park
deficient.
Require HCD to award additional bonus funds for units
affordable to extremely low-income persons, units in infill
projects, jurisdictions that have exceeded specified
housing production thresholds, jurisdictions that conforms
its general plan to a regional blueprint, and those
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demonstrating funds will be spent to support infill
development.
Staff Comments: This bill is intended to remove barriers to
awarding funds in the HRPP, expedite distribution of grant
funds, and increase incentives to jurisdictions to spend
allocations in park-deficient areas, infill developments, and
disadvantaged communities.
By basing awards on building permits rather than housing starts,
and expanding the program to include acquisition,
rehabilitation, and preservation of existing low-income housing,
AB 1672 will likely result in more successful applications and
potentially larger individual allocations. As noted above, the
existing program criteria, combined with extenuating economic
conditions, have resulted in weak overall demand for the program
to date. While the bill is expected to increase demand from
current levels, it is unlikely that the bill's changes to the
program will increase demand over the initial expectations of
$25 million per year. To the extent that demand exceeds initial
expectations, however, AB 1672 could create pressure to fund the
program at a higher annual amount, resulting in an acceleration
of bond appropriations and corresponding debt service payments.
Any increase in bond appropriations would not likely occur until
at least several years after the program has experienced excess
in demand for funds over several cycles.