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AB-59 Local Housing Trust Fund Matching Grant Program.(2017-2018)

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Date Published: 12/07/2016 08:55 PM
AB59:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill
No. 59


Introduced by Assembly Member Thurmond

December 07, 2016


An act to amend Section 50843.5 of the Health and Safety Code, relating to housing.


LEGISLATIVE COUNSEL'S DIGEST


AB 59, as introduced, Thurmond. Local Housing Trust Fund Matching Grant Program.
(1) Existing law establishes the Local Housing Trust Fund Matching Grant Program for the purpose of supporting local housing trust funds dedicated to the creation or preservation of affordable housing. Under the grant program, the department is authorized to make matching grants available to cities, counties, cities and counties, and existing charitable nonprofit organizations that have created, funded, and operated housing trust funds. The minimum allocation to a program applicant is $1,000,000 for existing trust funds, or $500,000 for newly established housing trust funds. The maximum allocation for any applicant is $2,000,000, unless the applicant has previously received a grant through the program, in which case the maximum allocation is $1,000,000. Under existing law, all funds provided under the grant program are to be matched on a dollar-for-dollar basis with moneys that are not required by any state or federal law to be spent on housing.
This bill would recast these provisions to instead authorize the department to make grants to eligible recipients, defined as cities that meet specified criteria and charitable nonprofit organizations organized under certain provisions of the Internal Revenue Code that apply jointly with a qualifying city, that have created or are operating or will operate housing trust funds. The bill would increase the maximum allocation for an eligible recipient to $5,000,000 or, if the eligible recipient has previously received a grant through the program, $2,500,000. The bill would also provide that an eligible recipient would not be required to provide matching funds if the eligible recipient is suffering a hardship, as determined by the Department of Finance, and is unable to generate matching funds, and that the maximum allocation to an eligible recipient suffering hardship would be $10,000,000 or, if the eligible recipient has previously received a grant through the program, $5,000,000.
(2) Existing law requires that funds awarded pursuant to the program be used for the predevelopment costs, acquisition, construction, or rehabilitation of rental housing projects with an affordability restriction for at least 55 years, emergency shelters, safe havens, transitional housing, for-sale housing projects, or units within for-sale housing projects.
This bill would remove emergency shelters, safe havens, and transitional housing from the authorized use of funds. The bill would instead authorize funds to be used for community land trusts, as defined, and housing projects constructed by Habitat for Humanity of California, Inc., or California Habitat for Humanity affiliates. The bill would make findings that the effect that authorizing the use of these funds for housing projects constructed by Habitat for Humanity of California, Inc., or California Habitat for Humanity affiliates serves a public purpose and does not constitute a gift of public funds.
(3) Under existing law, at least 30% of the total amount of the grant and the match must be expended on projects, units, or shelters that are affordable to, and restricted for, extremely low income households; up to 20% of the total amount of the grant and the match must be expended on projects or units affordable to, and restricted for, moderate-income persons and families whose income does not exceed 120% of the area median income; and the remaining funds must be used for projects, units, or shelters that are affordable to, and restricted for, lower income households.
The bill would instead require that funds distributed by the Department of Housing and Community Development be expended on projects or units that are affordable to, and restricted for, persons and families whose income does not exceed 120% of the area median income, if the projects or units are to be owned by the occupants, or 100% of the area median income, if the projects or units are rental housing projects or units. The bill would require that at least 50% of the total amount of the grant and match be expended on projects or units that are affordable to, and restricted for, persons and families whose income does not exceed 60% of the area median income, but that no more than 20% of the total amount of the grant and match be expended on projects or units affordable to, and restricted for, persons and families whose income does not exceed 30% of the area median income.
(4) Existing law requires an applicant for a grant provide the department with adequate documentation of the deposit in the local housing trust fund of the local match and the identity of the source of matching funds and adequate documentation that an ordinance imposing or dedicating a tax or fee to be deposited into the new trust has been enacted or the applicant has adopted a legally binding commitment to deposit matching funds into the new trust.
This bill would additionally require an eligible recipient to provide a proposed expenditure plan. The bill would provide that an eligible recipient may subsequently amend its expenditure plan subject to the approval of the department.
(5) Existing law requires recipients to have held, or agree to hold, a public hearing or hearings to discuss and describe the project or projects that will be financed with grant funds. Under existing law, any nonprofit organization, as a condition to receiving a grant, must agree that it will hold one public meeting a year to discuss the criteria that will be used to select projects to be funded. Existing law requires that the meeting be open to the public, and public notice of this meeting be provided, except to the extent that any similar meeting of a city or county would be permitted to be held in closed session.
This bill would recast this provision to require that an eligible recipient hold, or agree to hold, a public hearing or hearings in accordance with the Ralph M. Brown Act to discuss and describe the project or projects that will be financed with grant funds. The bill, if the eligible recipient that is a charitable nonprofit organization, as provided, would require that the city that has applied jointly with the charitable nonprofit organization hold the public hearing.
(6) This bill would make various technical and conforming changes to the Local Housing Trust Fund Matching Grant Program. The bill would also make findings and declarations with regard to all of its provisions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 50843.5 of the Health and Safety Code is amended to read:

50843.5.
 (a) Subject to the availability of funding, the department shall make matching grants available to cities, counties, cities and counties, and charitable nonprofit organizations organized under Section 501(c)(3) of the Internal Revenue Code eligible recipients that have created and are operating or will operate housing trust funds. These funds shall be awarded through the issuance of a Notice of Funding Availability (NOFA).
(1) Applicants Eligible recipients that provide matching funds from a source or sources other than impact fees on residential development shall receive a priority for funding.
(2) The department shall set aside funding for new trusts, as defined by the department in the NOFA. Notwithstanding any other law, the department shall issue a new NOFA by June 30, 2014, for new trusts, and, for purposes of this NOFA, a new trust shall include an existing trust for which the matching funds come from a new revenue source identified or created on or after June 30, 2012. For purposes of this paragraph, a new revenue source shall include, but is not limited to, a new tax, fee, contribution of public or private funds not already dedicated to housing, or an increase in an existing tax or fee directly adopted by a city, county, or city and county. city. The department may issue this NOFA pursuant to guidelines that shall not be subject to the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.
(3) As used in this section, “eligible recipient” means any of the following:
(A) A city that resides within a county that is defined by the United States Department of Housing and Urban Development as a “high-cost” county.
(B) A city that does not reside within a county that is defined by the United States Department of Housing and Urban Development as a “high-cost” county but has been determined by the department to be experiencing a rise in home prices and rental prices such that persons and families of low or moderate income are unable to live where they work.
(C) A charitable nonprofit organization organized under Section 501(c)(3) of the Internal Revenue Code that applies jointly with a city described in subparagraph (A) or (B).
(b) Housing trusts eligible for funding under this section shall have the following characteristics:
(1) Utilization of a public or joint public and private fund established by legislation, ordinance, resolution, or a public-private partnership to receive specific revenue to address local housing needs.
(2) Receipt of ongoing revenues from dedicated sources of funding such as taxes, fees, loan repayments, or private contributions.
(c) (1) The minimum allocation to an applicant eligible recipient that is a newly established trust shall be five hundred thousand dollars ($500,000). The minimum allocation for all other trusts eligible recipients shall be one million dollars ($1,000,000). An applicant may eligible recipient shall not receive an allocation in excess of two five million dollars ($2,000,000) per NOFA, and a trust ($5,000,000) if the eligible recipient is required to provide matching funds, or ten million dollars ($10,000,000) if the eligible recipient is not required to provide matching funds by reason of hardship, per NOFA. A trust that has previously received a grant through the program may not receive an allocation in excess of one million dollars ($1,000,000) two million five hundred thousand dollars ($2,500,000) if the eligible recipient is required to provide matching funds, or five million dollars ($5,000,000) if the eligible recipient is not required to provide matching funds by reason of hardship, per NOFA. All
(2) All funds provided pursuant to this section shall be matched on a dollar-for-dollar basis with moneys that are not required by any state or federal law to be spent on housing. An This paragraph shall not apply if the eligible recipient is suffering a hardship and is unable to generate matching funds. An eligible recipient may demonstrate the hardship to the Department of Finance, and the Department of Finance shall determine whether the eligible recipient is suffering a hardship. The eligible recipient shall submit any information requested by the Department of Finance for purposes of determining whether a hardship exists.
(3) An application for an existing housing trust shall not be considered unless the department has received adequate all of the following:
(A) Adequate documentation of the deposit in the local housing trust fund of the local match and the identity of the source of matching funds. An application for a new trust shall not be considered unless the department has received adequate funds, if matching funds are required.
(B) Adequate documentation, as determined by the department, that an ordinance imposing or dedicating a tax or fee to be deposited into the new trust has been enacted or the applicant eligible recipient has adopted a legally binding commitment to deposit matching funds into the new trust. Funds trust, if matching funds are required.
(C) A proposed expenditure plan, which the eligible recipient shall prepare or cause to be prepared. The eligible recipient may subsequently amend its expenditure plan subject to the approval of the department.
(4) Funds shall not be disbursed by the department to any trust until all matching funds funds, if any, are on deposit and then funds may be disbursed only in amounts necessary to fund projects or units identified to receive a loan from the trust within a reasonable period of time, as determined by the department. Applicants An eligible recipient shall be required to continue funding the local housing trust fund from these identified local sources, and continue the trust in operation, for a period of no less than five years from the date of award. If the funding is not continued for a five-year period, then (1) the amount of the department’s grant to the local housing trust fund, to the extent that the trust fund has unencumbered funds available, shall be immediately repaid, and (2) any payments from any projects funded by the local housing trust fund that would have been paid to the local housing trust fund shall be paid instead to the department and used for the program or its successor. The total amount paid to the department pursuant to (1) and (2), combined, shall not exceed the amount of the department’s grant.
(d) (1) Funds shall be used for the predevelopment costs, acquisition, construction, or rehabilitation of the following types of housing or projects:
(A) Rental housing projects or units within rental housing projects. The affordability of all assisted units shall be restricted for not less than at least 55 years.

(B)Emergency shelters, safe havens, and transitional housing, as these terms are defined in Section 50801.

(C)

(B) For-sale housing projects or units within for-sale housing projects.
(C) Community land trusts, as that term is defined in Section 402.1 of the Revenue and Taxation Code.
(D) Housing projects constructed by Habitat for Humanity of California, Inc., or California Habitat for Humanity affiliates.
(2) Funds distributed by the department shall be expended on projects or units that are affordable to, and restricted for, persons and families whose income does not exceed 120 percent of the area median income, if the projects or units are to be owned by the occupants, or 100 percent of the area median income if the projects or units are rental housing projects or units. At least 30 50 percent of the total amount of the grant and the match shall be expended on projects, units, or shelters projects or units that are affordable to, and restricted for, extremely low income households, as defined in Section 50106. persons and families whose income does not exceed 60 percent of the area median income. No more than 20 percent of the total amount of the grant and the match shall be expended on projects or units affordable to, and restricted for, moderate-income persons and families whose income does not exceed 120 30 percent of the area median income. The remaining funds shall be used for projects, units, or shelters that are affordable to, and restricted for, lower income households, as defined in Section 50079.5.
(3) If funds are used for the acquisition, construction, or rehabilitation of for-sale housing projects or units within for-sale housing projects, the grantee shall record a deed restriction against the property that will ensure compliance with one of the following requirements upon resale of the for-sale housing units, unless it is in conflict with the requirements of another public funding source or law:
(A) If the property is sold within 30 years from the date that trust funds are used to acquire, construct, or rehabilitate the property, the owner or subsequent owner shall sell the home at an affordable housing cost, as defined in Section 50052.5, to a household that meets the relevant income qualifications.
(B) The owner and grantee shall share the equity in the unit pursuant to an equity-sharing agreement. The grantee shall reuse the proceeds of the equity-sharing agreement consistent with this section. To the extent not in conflict with another public funding source or law, all of the following shall apply to the equity-sharing agreement provided for by the deed restriction:
(i) Upon resale by an owner-occupant of the home, the owner-occupant of the home shall retain the market value of any improvements, the downpayment, and his or her proportionate share of appreciation. The grantee shall recapture any initial subsidy and its proportionate share of appreciation, which shall then be used to make housing available to persons and families of the same income category as the original grant and for any type of housing or shelter project specified in paragraph (1).
(ii) For purposes of this subdivision, the initial subsidy shall be equal to the fair market value of the home at the time of initial sale to the owner-occupant minus the initial sale price to the owner-occupant, plus the amount of any downpayment assistance or mortgage assistance. If upon resale by the owner-occupant the market value is lower than the initial market value, then the value at the time of the resale shall be used as the initial market value.
(iii) For purposes of this subdivision, the grantee’s proportionate share of appreciation shall be equal to the ratio of the initial subsidy to the fair market value of the home at the time of the initial sale.
(4) Notwithstanding subparagraph (A) of paragraph (1) or paragraph (3), a local housing trust fund shall not be required to record a separate deed restriction or equity agreement for any project or home that it finances, if a restriction or agreement that meets the requirements of subparagraph (A) of paragraph (1) or paragraph (3), as applicable, has been, or will be, recorded against the property by another public agency.
(e) Loan repayments shall accrue to the grantee housing trust for use pursuant to this section. If the trust no longer exists, loan repayments shall accrue to the department for use in the program or its successor.
(f) (1) In order for a city, county, or city and county city to be eligible for funding, the applicant shall, at the time of application, meet both of the following requirements:
(A) Have an adopted housing element that the department has determined, pursuant to Section 65585 of the Government Code, is in substantial compliance with the requirements of Article 10.6 (commencing with Section 65580) of Chapter 3 of Division 1 of Title 7 of the Government Code.
(B) Have submitted to the department the annual progress report required by Section 65400 of the Government Code within the preceding 12 months, if the department has adopted the forms and definitions pursuant to subparagraph (B) of paragraph (2) of subdivision (a) of Section 65400 of the Government Code.
(2) In order for a nonprofit organization applicant eligible recipient to be eligible for funding, the applicant eligible recipient shall agree to utilize funds provided under this chapter only for projects located in cities, counties, or a city and county cities that meet both of the following requirements:
(A) Have an adopted housing element that the department has determined, pursuant to Section 65585 of the Government Code, to be in substantial compliance with the requirements of Article 10.6 (commencing with Section 65580) of Chapter 3 of Division 1 of Title 7 of the Government Code.
(B) Have submitted to the department the annual progress report required by Section 65400 of the Government Code within the preceding 12 months, if the department has adopted the forms and definitions pursuant to subparagraph (B) of paragraph (2) of subdivision (a) of Section 65400 of the Government Code.
(3) A city, county, or city and county city that has received an award pursuant to this section shall not encumber any program funds unless it has an adopted housing element the department has determined, pursuant to Section 65585 of the Government Code, is in substantial compliance with the requirements of Article 10.6 (commencing with Section 65580) of Chapter 3 of Division 1 of Title 7 of the Government Code.
(g) Recipients An eligible recipient shall have held, or shall agree to hold, a public hearing or hearings in accordance with the requirements of the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code) to discuss and describe the project or projects that will be financed with funds provided pursuant to this section. As a condition of receiving a grant pursuant to this section, any If the eligible recipient is a charitable nonprofit organization shall agree that it will hold one public meeting a year to discuss the criteria that will be used to select projects to be funded. That meeting shall be open to the public, and public notice of this meeting shall be provided, except to the extent that any similar meeting of a city or county would be permitted to be held in closed session. organization, as described in subparagraph (C) of paragraph (3) of subdivision (a), the city that has applied jointly with the charitable nonprofit organization shall hold the public hearing.
(h) No more than 5 percent of the funds appropriated to the department for the purposes of this program shall be used to pay the costs of administration of this section.
(i) A local housing trust fund shall encumber funds provided pursuant to this section no later than 36 months after receipt. In addition, any award to a local housing trust that was under contract on January 1, 2013, shall be extended by 12 months, subject to progress benchmarks to be established by the department. Any funds not encumbered within that period shall revert to the department for use in the program or its successor.
(j) Recipients shall be required to file periodic reports with the department regarding the use of funds provided pursuant to this section. No later than December 31 of each year in which funds are awarded by the program, the department shall provide a report to the Legislature regarding the number of trust funds created, a description of the projects supported, the number of units assisted, and the amount of matching funds received. received, if applicable.
(k) In enacting the amendments made by the act adding this subdivision, it is the intent of the Legislature to ensure that funds allocated to eligible recipients and administered by the Department of Housing and Community Development be of maximum benefit in meeting the needs of persons and families of low or moderate income. It is the intent of the Legislature to support Californians residing in areas where housing prices have risen to levels that are unaffordable. The Legislature intends that these funds be provided to eligible recipients in areas that are experiencing a rise in home prices and rental prices so that they may assist individuals who are not able to live where they work.

SEC. 2.

 The Legislature finds and declares that authorizing grant moneys awarded by the Department of Housing and Community Development for local housing trust funds to be used to housing projects constructed by Habitat for Humanity of California, Inc., or California Habitat for Humanity affiliates serves the public purpose of ensuring access to affordable housing for the residents of this state and does not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution.