BILL NUMBER: SB 1593 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 22, 2000
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 amended, Alarcon. Homeownership Assistance
CalHome 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
CalHome 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 to provide funds to
local public agencies or nonprofit corporations as either grants for
programs that assist individual households or loans that assist
multi-unit development projects .
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 CALHOME 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
CalHome 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). as the
CalHome Program.
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)
50650.3. Funds appropriated for purposes of this chapter shall be
used to enable low- and very low-income households to become or
remain homeowners. Funds shall be provided by the department to
local public agencies or nonprofit corporations as either grants for
programs that assist individual households or loans that assist
multi-unit development projects. Grant funds may be used for
technical assistance for self-help and senior shared housing
homeownership, or to provide loans to individual households for
first-time homebuyer downpayment assistance, home rehabilitation, or
home acquisition and rehabilitation programs. Loan funds may be used
for land purchase, site development, predevelopment, and
construction period expenses incurred on homeownership development
projects, and permanent financing for mutual housing or cooperative
developments. Upon completion of construction, the department may
convert project loans into grants for programs of assistance to
individual homeowners. Financial assistance provided to individual
households shall be in the form of deferred payment loans, repayable
upon sale or transfer of the homes, when they cease to be
owner-occupied, or upon the loan maturity date. All loan repayments
shall be used for activities allowed under this section.
50650.4. To be eligible to receive a grant or loan, local public
agencies or nonprofit corporations shall demonstrate sufficient
organizational stability and capacity to carry out the activity for
which they are requesting funds, including where applicable, the
capacity to manage a portfolio of individual loans over an extended
time period. Capacity may be demonstrated by substantial successful
experience performing similar activities, or through other means
acceptable to the department. In allocating funds, the department
shall utilize a competitive application process, using weighted
evaluation criteria, including, but not limited to, the extent that
the program and project utilizes volunteer or self-help labor, trains
youth in construction skills, or involves community participation.
50650.5. For the purposes of this chapter, mutual housing and
cooperative housing shall be deemed to be forms of homeownership.
For these project types: (a) program funds shall be used for project
development costs only; (b) the department shall enter into a
regulatory agreement limiting occupant incomes, occupancy charges,
and share purchase terms for 55 years; and (c) notwithstanding
Section 50650.3, program assistance shall be provided in the form of
a deferred payment loan.
50650.6. The department may use up to 5 percent of the funds
appropriated for the purposes of this chapter for its costs in
administering the program.
50650.7. For appropriations of fifteen million dollars
($15,000,000) 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 24
months, during which time those guidelines shall not be subject to
the Administrative Procedure Act.
50560.8. Not less than 20 percent of the funds granted pursuant
to this chapter shall be allocated to rural areas. For purposes of
this chapter, "rural area" shall have the same meaning as in Section
50199.21.