BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1220 (DeSaulnier) - Housing Opportunity and Market
Stabilization (HOMeS) Trust Fund Act of 2012
Amended: April 16, 2012 Policy Vote: T&H 6-2, G&F 5-2
Urgency: No Mandate: Yes
Hearing Date: May 7, 2012 Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1220 would impose a fee of $75 on the recording
of real estate documents, except those recorded in connection
with a property transfer, as specified. Fee revenues would be
available for expenditure for affordable housing purposes, upon
appropriation by the Legislature.
Fiscal Impact:
Unknown fee revenue gains ranging from $300 million to $720
million per year (HOMeS Fund), depending on the volume of
recorded documents.
Estimated annual administrative costs of approximately $5.4
million (General Fund or HOMeS Fund) to fund up to 47
positions at the Department of Housing and Community
Development (HCD).
Costs in the range of $250,000 to $350,000 (General Fund)
in 2015-16 to the Bureau of State Audits (BSA) to conduct an
initial audit. Ongoing periodic audit costs in the range of
$150,000 to $250,000 (General Fund).
Background: The Department of Housing and Community Development
and the California Housing Finance Agency (CalHFA) administer
numerous programs designed to make housing more affordable for
California families and individuals, including: the Multifamily
Housing Program, which funds construction, rehabilitation, and
preservation of housing for lower income households; the Joe
Serna, Jr. Farmworker Housing Program, which funds the
development of ownership or rental homes for agricultural
workers; the Emergency Housing Assistance Program, which funds
emergency shelters and transitional homes for homeless
individuals and families; the CalHome Program, which funds
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downpayment assistance, home rehabilitation, counseling,
self-help mortgage assistance programs, and technical
assistance; and the California Homebuyer Downpayment Assistance
Program, which aids first-time homebuyers with down payment
and/or closing costs.
The state has typically funded state housing programs through
the issuance of general obligations bonds. Most recently,
voters approved Proposition 46 in 2002, which provided $2.1
billion in housing bonds, and Proposition 1C in 2006, which
authorized the issuance of an additional $2.85 billion in
general obligation bonds for various housing programs. Nearly
all of the Propositions 46 and 1C bond funds that support
affordable housing projects and programs have been allocated,
although the State Treasurer has not yet issued bonds to finance
all of the programs that have received an allocation.
Apart from general obligation bonds, tax increment revenues
provided pursuant to the Community Redevelopment Law have also
been a major source of affordable housing funds. Specifically,
existing law required redevelopment agencies to deposit 20% of
all tax increment revenue available to the agency into their Low
and Moderate-Income Housing Funds to increase, improve, and
preserve the community's supply of low and moderate income
housing available at an affordable housing cost. In the 2009-10
fiscal year, $1.075 billion of redevelopment property tax
increment revenues were set aside for affordable housing. As
part of a General Fund solution in the 2011-12 budget, however,
ABx1 26 (Blumenfield) was enacted to eliminate redevelopment
agencies, thereby eliminating a significant source of housing
funds.
This bill is intended to provide a permanent source of
affordable housing funds to partially offset the loss of funding
due to the elimination of redevelopment tax increment funds and
the impending depletion of housing bond funds.
Proposed Law: SB 1220 would enact the Home Opportunity and
Market Stabilization (HOMeS) Trust Fund Act of 2012.
Specifically, this bill would impose a fee of $75 at the time of
recording of specified real estate instruments, not including
those recorded in connection with a transfer subject to the
imposition of a documentary transfer tax (property transfers).
After deducting administrative costs incurred by the county, the
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fee revenues would be sent to HCD on a quarterly basis for
deposit in the Housing Opportunity and Market Stabilization
(HOMeS) Fund, created by the bill. The funds would be
available, upon appropriation by the Legislature, for support of
the development, acquisition, rehabilitation, and preservation
of housing affordable to low and moderate income households.
Specified purposes include foreclosure mitigation, homeownership
opportunities, emergency shelters, and transitional and
permanent rental housing, including necessary service and
operating subsidies.
This bill would require the Bureau of State Audits (BSA) to
conduct periodic audits, beginning two years after enactment, to
ensure that the annual allocation to individual programs is
awarded by HCD in a timely fashion. SB 1220 would also require
HCD to include information in its existing annual report on how
the funds provided by the bill were expended in the previous
year.
Staff Comments: HCD estimates that revenues from a $75 per
document recording fee on the specified real estate related
documents would generate approximately $300 million annually
during years when real estate transactions are at lowest levels
and up to $720 million annually during years when transactions
are at their highest point.
Based on historical staffing levels for rental and homeowner
programs previously administered by HCD, the Department
estimates the need for up to 47 positions in the first full year
of operation at an estimated cost of $5.4 million as a result of
this bill. This assumes that revenues from the new fee would
primarily be used for expenditure on existing programs. There
could be additional costs associated with structuring new
programs or revising existing programs to accommodate the
priorities of the Legislature or the Administration when the
funds are appropriated. The bill does not currently provide
detail on how the funds would be allocated. The redirection of
existing HCD staff dedicated to current bond-funded programs to
any new programs supported by fee revenues would occur as a part
of the budget process.
HCD and CalHFA, the likely administrators of the housing
programs to be funded by this measure, have historically
maintained administrative costs at 5% or less of the funding
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allocated for existing state-administered housing programs.
Staff notes that the bill does not currently provide explicit
authorization for HCD to recover administrative costs from the
HOMeS Fund (see recommended amendment below).
Staff notes that Legislative Counsel has determined that this
bill would result in a change in state taxes for the purpose of
increasing state revenues within the meaning of Section 3 of
Article XIIIA of the California Constitution, and would thus
require the approval of 2/3 of the membership of each house of
the Legislature for passage. Prior to 2010, specified fees
could be enacted by majority vote, but this authority was
significantly limited by Proposition 26 (2010).
Recommended Amendments: Under the 2011-12 Joint Rules of the
Senate and Assembly, Rule 37.4 (b) specifies that "any bill
requiring action by the Bureau of State Audits shall contain an
appropriation for the cost of any study or audit." To comply
with this requirement, staff recommends the bill be amended to
provide for payment of BSA's periodic audit costs from the HOMeS
Fund, and to specify a schedule of ongoing audits.
SB 1220 specifies that new fee revenues are sent to HCD for
deposit in the HOMeS Fund and are available for specified
affordable housing purposes, upon appropriation by the
Legislature, but there is no provision to pay for HCD's actual
and necessary costs to administer the expenditure of the funds.
Absent specific authority to recover administrative costs, this
burden could fall to the General Fund. Staff recommends the
bill be amended to specify that the fee revenues deposited into
the HOMeS Fund may be used to cover HCD's costs to administer
the programs supported by those revenues, upon appropriation by
the Legislature.
The bill currently requires that fee revenues be sent to HCD for
deposit in the HOMeS Fund, after deducting administrative costs
incurred by the county. Staff recommends an amendment to
specify the county recorder as the agent to collect the fee,
deduct actual administrative costs, and forward the funds to
HCD.
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