BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1951 (Atkins) - Proposition 1C housing bonds.
Amended: August 6, 2012 Policy Vote: T&H 6-3
Urgency: No Mandate: No
Hearing Date: August 6, 2012
Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1951 would eliminate two programs included in
the Affordable Housing Innovation Fund, established by
Proposition 1C, and transfer $30 million in bond funds to the
Multifamily Housing Program (MHP).
Fiscal Impact: Diversion of $30 million in general obligation
bond funds from the Affordable Housing Innovation Fund to the
Housing Rehabilitation Loan Fund and continuously appropriated
to HCD for expenditure under the MHP. Absent this bill, these
bond funds would otherwise revert for expenditure under the
CalHome Program.
Background: Proposition 1C, The Housing and Emergency Shelter
Trust Fund Act of 2006, includes a provision to deposit $1.5
billion in continuously appropriated general obligation bond
funds into the Affordable Housing Account, of which $100 million
is transferred to the Affordable Housing Innovation Fund. These
funds are to be administered by the Department of Housing and
Community Development (HCD) for expenditure on "competitive
grants or loans to sponsoring entities that develop, own, lend,
or invest in affordable housing and used to create pilot
programs to demonstrate innovative, cost-saving approaches to
creating or preserving affordable housing." The bond act
specifies that subsequent statutory provisions establishing
criteria for funding would require approval of 2/3 of the
membership of each house of the Legislature. Any funds not
encumbered for these purposes within 30 months of availability
will revert to the Self-Help Housing Fund, and made available to
HCD for purposes of enabling households to become or remain
homeowners pursuant to the CalHome Program.
SB 586 (Dutton), Chap 652/2007, allocated the $100 million from
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the Affordable Housing Innovation Fund among the following
programs:
$50 million to the new Affordable Housing Revolving
Development and Acquisition Program, which was split evenly
between a Loan Fund and a Practitioner Fund, as specified.
$5 million to the new Construction Liability Insurance
Reform Pilot Program.
$35 million to the existing Local Housing Trust Fund
Matching Grant Program.
$10 million to the Innovative Homeownership Program.
Under the $25 million Practitioner Fund component of the
Affordable Housing Revolving Development and Acquisition
Program, HCD makes available credit lines of up to $5 million to
large, established non-profits to acquire property for the
development or preservation of affordable housing. Any funds
non used within 36 months of availability to the practitioner
would be disencumbered and transferred to the Loan Fund.
Under the $5 million Construction Liability Insurance Reform
Pilot Project, HCD provides grants to developers of affordable,
attached for-sale housing to improve the quality of construction
and reduce construction defect liability insurance premiums.
Proposition 1C also transferred a total of $395 million in bond
funds for use under the MHP. HCD provides loans under the
program to local governments, and both non-profit and for-profit
developers to fund new construction, rehabilitation, and
preservation of permanent and transitional rental homes for
lower income households, as specified.
Proposed Law: AB 1951 would repeal both the Practitioner Fund
component of the Affordable Housing Revolving Development and
Acquisition Program and the Construction Liability Insurance
Reform Pilot Project and the associated bond fund allocations.
The bill would also transfer $30 million from the Affordable
Housing Innovation Fund to a subaccount in the Housing
Rehabilitation Loan Fund and continuously appropriate those
funds to HCD for the Multifamily Housing Program. Lastly, AB
1951 would require HCD to issue a notice of funding availability
(NOFA), soliciting proposals for use of the funds. The NOFA
would specify that persons with developmental disabilities,
including those with autism and homeless veterans, as special
needs populations for purposes of granting bonus points to
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developments serving those populations.
Staff Comments: To date, HCD has awarded all of the funds
available for the Multifamily Housing Program and the Loan Fund
component of the Affordable Housing Revolving Development and
Acquisition Program. With respect to the Practitioner Fund,
however, HCD developed a draft program proposal and draft
guidelines in 2009 and 2010 but, after further evaluation,
decided not to issue a Request for Qualifications for the
program. With respect to the Construction Liability Insurance
Reform Pilot Program, HCD made full amount of funds available in
2009 to developers seeking assistance through the Building
Equity and Growth in Neighborhoods (BEGIN) Program, but there
was no demand for the program and no awards were made.
This bill is intended to repeal two unsuccessful programs
established under SB 586 (Dutton), and instead use the $30
million in bond funds for an established program at HCD that
currently has no funding source, but has been historically
oversubscribed when funding is available.
Staff notes that Proposition 1C requires the bond funds from the
Affordable Housing Innovation Fund that are unencumbered within
30 months of availability will revert to the Self-Help Housing
Fund, and be made available to HCD for purposes of enabling
households to become or remain homeowners pursuant to the
CalHome Program. AB 1951 would instead transfer unencumbered
funds from the Affordable Housing Innovation Fund for use in the
MHP.
Recommended Amendments: Staff recommends that the bill be
amended for clarifying purposes, as follows:
Page 3, strike out lines 25-30, and insert:
(a) The department shall make available the amount of
twenty-five million dollars ($25,000,000) for the
Affordable Housing Revolving Development and Acquisition
Program established under Section 50705.
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