BILL NUMBER: SB 1593 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Alarcon
FEBRUARY 18, 2000
An act to add Chapter 6 (commencing with Section 50650) to Part 2
of Division 31 of the Health and Safety Code, relating to housing.
LEGISLATIVE COUNSEL'S DIGEST
SB 1593, as introduced, Alarcon. Homeownership Assistance
Program.
Existing law contains various programs relating to housing
assistance, including the Senior Citizens' Shared Housing Program,
the California Self-Help Housing Program, and specified federal
programs.
This bill would establish the Homeownership Assistance Program, to
be administered by the Department of Housing and Community
Development, and local agencies by agreement with the department, to
provide loans and grants for acquisition, construction,
rehabilitation, and operation of housing and assistance to individual
households, in conjunction with certain existing programs.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 6 (commencing with Section 50650) is added to
Part 2 of Division 31 of the Health and Safety Code, to read:
CHAPTER 6. HOMEOWNERSHIP ASSISTANCE PROGRAM
50650. The Legislature finds and declares as follows:
(a) An adequate supply of safe and affordable housing is the
foundation for strong and sustainable communities. Owner occupied
housing is a key housing resource, contributing to neighborhood
stability as well as economic vitality.
(b) In California, homeownership is beyond the reach of a large
segment of the population. There are also many homeowners who lack
the resources to make necessary repairs to their homes, or who would
welcome the opportunity to share them with suitable tenants.
(c) Reflecting California's diversity, there is a variety of
proven approaches to the promotion of homeownership within the state.
The purpose of the Homeownership Assistance Program established by
this chapter is to support existing homeownership programs aimed at
lower and very low income households and operated by private
nonprofit and local government agencies, and thereby to increase
homeownership, encourage neighborhood revitalization and sustainable
development, and maximize use of existing homes.
50650.1. This chapter shall be known and may be cited as the
Homeownership Assistance Program (HAP).
50650.2. The department shall administer this chapter.
50650.3. For purposes of this chapter, "distressed area" means a
community or neighborhood, including, but not limited to, an
empowerment zone (26 U.S.C. Sec. 1392), an enterprise zone (Section
7073 of the Government Code), an enterprise community (26 U.S.C. Sec.
1392), a redevelopment project area, a local agency military base
recovery area (LAMBRA) (Section 7105 of the Government Code), or a
qualified census tract (26 U.S.C. Sec. 42(d)(5)(C)(ii)), that
suffers economic distress such as high unemployment or
underemployment, low incomes, or persistent and concentrated poverty.
Except as otherwise provided in this chapter, or unless the context
requires otherwise, the definitions contained in Chapter 2
(commencing with Section 50050) shall apply to this chapter.
50650.4. Funds made available for the purposes of this chapter
shall be known as Homeownership Assistance Program funds and shall be
utilized for the following purposes:
(a) Grants for technical assistance, development cost write-downs,
and predevelopment and land purchase costs of a nonprofit
corporation that is assisted through the Habitat for Humanity
program, administered by the federal Department of Housing and Urban
Development or that is organized for the specific and primary purpose
of building and rehabilitating housing for sale at no profit to
low-income families, with financing in the form of a zero interest
rate loan.
(b) Construction and permanent loans to households or housing
being assisted through the Youthbuild program administered by the
Department of Housing and Urban Development.
(c) Loans for the rehabilitation, or acquisition and
rehabilitation, of substandard homes in distressed areas.
(d) Grants for technical assistance, development cost write-downs,
and mortgage assistance for self-help housing. These grants shall
be made pursuant to the California Self-Help Housing Program
established pursuant to Chapter 7.5 (commencing with Section 50690).
(e) Grants for the operation of shared housing programs. These
grants shall be made pursuant to the department's existing Senior
Citizens' Shared Housing Program established by Chapter 3.6
(commencing with Section 50533), subject to the special condition
that the households to be assisted need not be senior citizens.
(f) Grants to entities receiving funds for homeownership
activities under the state HOME program administered by the
department as authorized by Chapter 16 (commencing with Section
50896). These grants shall supplement state HOME awards, and shall
be used as loans for the same purposes as the HOME funds.
(g) Loans for the rehabilitation, or acquisition and
rehabilitation, of housing being assisted by Neighborhood Housing
Services or other Neighborworks programs supported by the
Neighborhood Reinvestment Corporation (42 U.S.C. Sec. 8101 and
following).
(h) Loans for construction, rehabilitation, or acquisition and
rehabilitation, of homes to be controlled by residents as
cooperatives or mutual housing.
(i) In the event of a conflict between this chapter and any of the
aforementioned existing department programs, this chapter shall
govern.
50650.5. (a) Loans made pursuant to subdivision (h) of Section
50650.4 shall be originated and serviced by the department.
(b) Loans made to individual households pursuant to subdivisions
(b), (c), (f), and (g) of Section 50650.4 shall be originated by
local agencies or nonprofit corporations pursuant to agreements
between the department and the entities originating the loans. The
department may use up to 5 percent of the funds appropriated for the
purposes of this chapter to cover reasonable administrative costs
incurred by the entities originating the loans. These loans may be
serviced by either the department or the entities that originated the
loans. To provide an incentive for quality servicing, the
department may allow entities that service their loans to retain a
portion of loan repayments.
(c) Grants made pursuant to subdivisions (d) and (e) of Section
50650.4 shall be originated and managed as if they were being made
under the existing California Self-Help Housing Program and the
existing Senior Shared Housing Program, respectively, subject to the
above-specified special condition with respect to the Senior Shared
Housing Program. The department may use up to 5 percent of the grant
funds appropriated for the purposes of this chapter to cover
reasonable administrative costs.
50650.6. (a) All loans made from funds allocated to this chapter
shall bear simple interest at the rate of 3 percent per year and loan
repayments may be deferred if required to maintain continued
occupancy or ownership by low-income households.
(b) For loans to individual households, the department shall
establish loan payment terms that do all of the following:
(1) Provide a financial incentive for occupancy by the assisted
household for at least five years.
(2) Allow for assistance to low and very low income households.
(3) Prevent assisted households from realizing windfall gains.
(4) Result in low administrative costs.
(c) To achieve the objectives in subdivision (b), the department
may forgive all or a portion of the interest on a loan.
50650.7. (a) The department may establish per unit and per
project loan limits.
(b) The department may establish loan-to-value requirements.
50650.8. All awards made pursuant to this chapter shall be
conditioned on Homeownership Assistance Program funds being matched
by grantees with at least equal amounts of local, federal, or private
funds, other cash investments, or in-kind contributions.
50650.9. Applications for loans shall be evaluated based on
threshold and competitive rating criteria. Threshold criteria shall
include the capacity of the applicant to implement the activity being
proposed. Rating criteria shall include the extent to which the
activity provides homeownership opportunities for households at the
lowest income levels, consistent with project economic feasibility.
50650.10. If an appropriation to be administered pursuant to any
single subdivision of Section 50650.4 is ten million dollars
($10,000,000) or less, the department may administer the funds using
guidelines that shall not be subject to the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Title 2
of the Government Code). If an appropriation to be administered
pursuant to a single subdivision of Section 50650.4 exceeds that
amount, the department may administer the funds using guidelines for
15 months, during which time those guidelines shall not be subject to
the Administrative Procedure Act.