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AB-1377 Student housing: California Student Housing Revolving Loan Fund Act of 2021: community college student housing.(2021-2022)

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Date Published: 02/19/2021 09:00 PM
AB1377:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1377


Introduced by Assembly Member McCarty

February 19, 2021


An act to add Section 76011.5 to, and to add Chapter 14.28 (commencing with Section 67329.1) to Part 40 of Division 5 of Title 3 of, the Education Code, relating to student housing, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 1377, as introduced, McCarty. Student housing: California Student Housing Revolving Loan Fund Act of 2021: community college student housing.
Existing law establishes the California Community Colleges, under the administration of the Board of Governors of the California Community Colleges, the University of California, under the administration of the Regents of the University of California, and the California State University, under the administration of the Trustees of the California State University, as the 3 segments of public postsecondary education in this state.
Existing law establishes the California School Finance Authority, and authorizes the authority to issue revenue bonds to finance projects for a single or several participating parties, defined to include a community college district that undertakes the financing or refinancing of a project.
Existing law, the California Educational Facilities Authority Act, authorizes the California Educational Facilities Authority, among other things, to develop student housing on or near public institutions of higher education through the use of agreements with participating nonprofit entities.
This bill would establish the California Student Housing Revolving Loan Fund Act of 2021 to provide loans to qualifying applicants of the University of California, the California State University, and the California Community Colleges for the purpose of constructing affordable student housing, as specified. The bill would establish the California Student Housing Revolving Fund in the State Treasury, and would continuously appropriate moneys in the fund without regard to fiscal years, thereby making an appropriation, to the California School Finance Authority to provide loans to qualifying applicants of the California Community Colleges, as provided, and to the California Educational Facilities Authority, to provide loans to qualifying applicants of the University of California or the California State University, as specified. The bill would require each authority to submit a report, by March 15, 2023, to the Department of Finance and the budget committees of the Assembly and Senate containing information on the act, as provided.
This bill would require the California School Finance Authority to administer a competitive grant program to provide planning grants to California community colleges that are exploring or determining if they can offer affordable student rental housing, as defined. The bill would require the authority to ensure that the selection process meets certain requirements, and to provide technical assistance to community colleges that receive planning grant funds for the purpose of exploring and determining if they can offer affordable student rental housing. The bill would make the implementation of these provisions contingent upon an appropriation by the Legislature in the annual Budget Act or another statute for these purposes.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) Housing is often the most expensive component of college costs for California students, even more than tuition.
(2) The lack of rental housing is often a significant problem for California communities near college campuses.
(3) The University of California, the California State University, and the California Community Colleges often lack debt capacity to build enough student housing to meet demand.
(4) The COVID-19 pandemic has caused a severe economic recession, and state-funded construction projects can be a tool to help the state’s economy to recover.
(b) It is the intent of the Legislature that all of the following occur:
(1) That one-time state funding be used to provide loans to public college and university applicants to support affordable student housing projects.
(2) That the rates charged to students for housing supported by the California Student Housing Revolving Loan Fund will be below local market rental rates for comparable housing, also taking into account the costs of utilities, food service, operations, maintenance, and other services included in the rent for student housing.
(3) That, to the extent practical, loan repayments and interest earned on the loans serve as a source of reserve and security for the payment of principal and interest on future revenue bonds, the proceeds of which are to be used for affordable student housing projects.

SEC. 2.

 Chapter 14.28 (commencing with Section 67329.1) is added to Part 40 of Division 5 of Title 3 of the Education Code, to read:
CHAPTER  14.28. California Student Housing Revolving Loan Fund Act of 2021
Article  1. Title

67329.1.
 This chapter shall be known, and may be cited, as the California Student Housing Revolving Loan Fund Act of 2021.

Article  2. Definitions

67329.2.
 As used in this chapter, unless the context requires otherwise, the following definitions apply:
(a) “Allocation” means the portion of the initial California Student Housing Revolving Loan Fund Act of 2021 appropriation allocated to each designated authority to provide loans pursuant to this chapter.
(b) “Authority” means, for a college applicant, the California School Finance Authority created and authorized pursuant to the California School Finance Authority Act (Chapter 18 (commencing with Section 17170) of Part 10 of Division 1 of Title 1). For a university applicant, “authority” means the California Educational Facilities Authority created and authorized pursuant to the California Educational Facilities Authority Act (Chapter 2 (commencing with Section 94100) of Part 59 of Division 10). The meaning of “authority” as used in this chapter depends on the college or university system of which the applicant is a member.
(c) “Campus” means a community college district, or a campus of the University of California or the California State University.
(d) “College applicant” means a community college district, or the Office of the Chancellor of the California Community Colleges on behalf of a community college district.
(e) “Fund” means the California Student Housing Revolving Loan Fund established by this chapter.
(f)  “Student housing project” means one or more housing facilities to be occupied by students of one or more campuses. These facilities are determined to be educational facilities, which also may include dining, academic and student support service spaces, and other necessary and usual attendant and related facilities and equipment.
(g) “University applicant” means a campus of the University of California or the California State University, the Office of the President of the University of California on behalf of one or more campuses of the University of California, or the Office of the Chancellor of the California State University on behalf of one or more campuses of the California State University.

Article  3. The California Student Housing Revolving Loan Fund

67329.3.
 (a) The California Student Housing Revolving Loan Fund is hereby established in the State Treasury to provide loans to qualifying college and university applicants for the purpose of constructing affordable student housing. Notwithstanding Section 13340 of the Government Code, all moneys in the fund are hereby continuously appropriated without regard to fiscal years for purposes of this chapter.
(b) The Treasurer may pledge any or all of the moneys in the fund as security for payment of the principal of, and interest on, a particular issuance of bonds by a designated lending authority pursuant to this chapter. For that purpose, or as necessary or convenient to the accomplishment of any other purpose of this chapter, the Treasurer may divide the fund into separate accounts or subaccounts.
(c) The Treasurer may invest moneys in the fund that are not required for its current needs, including proceeds from the sale of bonds, in eligible securities specified in Section 16430 of the Government Code, and may include deposit for investment in the Surplus Money Investment Fund pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code. Notwithstanding Section 16305.7 of the Government Code, all interest or other increment resulting from the investment or deposit of moneys from the fund shall be deposited in the fund. Moneys in the fund shall not be subject to transfer to any other funds pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, except to the Surplus Money Investment Fund.
(d) If the Treasurer sells bonds for either authority that include a bond counsel opinion to the effect that the interest on the bonds is excluded from gross income for federal tax purposes, subject to designated conditions, the Treasurer may maintain separate accounts for the investment of bond proceeds and for the investment of earnings on those proceeds. The Treasurer may use or direct the use of those proceeds or earnings to pay any rebate, penalty, or other payment required under federal law or take any other action with respect to the investment and use of those bond proceeds required or desirable under federal law to maintain the tax-exempt status of those bonds and to obtain any other advantage under federal law on behalf of the funds of this state.

Article  4. Criteria and Process

67329.4.
 (a) Each authority shall develop a uniform application that includes requests for relevant information, such as project goals, costs, number of students to be housed, timeline for the project, financial feasibility of the project, and other information deemed necessary for evaluation of creditworthiness and public benefit criteria established by each authority pursuant to this chapter. The applications shall be available by February 1, 2022, in accordance with each authority’s existing regulations or any necessary amendments, which shall be undertaken as emergency regulations, if necessary.
(b) The initial preliminary applications for projects to be considered pursuant to this chapter shall be submitted to the designated authority by July 1, 2022. Thereafter, the authority may establish subsequent application periods, as necessary.
(c) Applications may be submitted to the designated authority by college and university applicants as set forth in this chapter pursuant to the following:
(1) The California Educational Facilities Authority shall consider applications from university applicants.
(2) The California School Finance Authority shall consider applications from college applicants.
(d) Applications shall demonstrate all of the following:
(1) Construction on the project could begin by December 31, 2022, or by the earliest possible date thereafter, as stated in the application.
(2) The per-bed rate for students will be below local market rental rates for comparable student housing, also taking into account the costs of utilities, food service, operations, maintenance, and other services included in the student housing rent.
(3) Receipt of a loan from the authority shall result in a public benefit, such as the ability to reduce rents, serve more students, provide additional onsite student support services, or other tangible benefits that would not be practical without receipt of the loan.
(e) In the event that an authority receives or anticipates receiving more applications than its allocation of state funding can support, the authority may consider any of the following criteria in selecting projects:
(1) The timeline for construction, with priority given to projects that can begin construction the earliest.
(2) The campus’ unmet demand for student housing, with priority given to applicants with greater unmet demand for student housing.
(3) A local match is available, with priority given to applicants with a local match.
(4) When considered as a whole, the applications approved pursuant to this chapter are fairly representative of various geographical regions of the state and the University of California, the California State University, and the California Community Colleges.

Article  5. Repayment and Bond Issuance

67329.5.
 (a) Each authority shall establish a schedule for lease payments to be made for each loan, within a reasonable period of time not to exceed a 30-year period, designed to result in full payment of the loan, together with interest thereon, at a rate set by the authority.
(b) Each authority may issue revenue bonds and enter into related agreements, and take all other actions necessary and convenient for the issuance of revenue bonds, in accordance with its authorizing statutes, as amended from time to time.
(c) Each authority may use amounts deposited in the fund, including, but not limited to, loan repayments and interest earned on the loans, as a source of reserve and security for the payment of principal and interest on revenue bonds, the proceeds of which are deposited in the fund or in a designated fund or account of the authority established for that purpose. The purpose of any such revenue bonds is to augment the fund.
(d) (1) Notwithstanding any other provision of law, revenue bonds issued under this chapter are not and shall not be deemed to constitute a debt or liability of the state, or any political subdivision thereof, and are not and shall not be deemed to be a pledge of the faith and credit of the state, or any political subdivision thereof, other than the authority. Revenue bonds of the authority shall be payable solely from funds provided under this chapter.
(2) Each revenue bond of the authority shall include a statement on the face of the bond that neither the State of California nor the authority is obligated to pay the principal or interest thereon, except from revenues of the authority, and shall also include a statement that neither the faith or credit, nor the taxing power of the State of California, or any political subdivision, is pledged to the payment of the principal or interest of the bonds.
(3) The issuance of revenue bonds under this chapter shall not directly, indirectly, or contingently obligate the state, or any political subdivision thereof, to levy or pledge any form of taxation, or make any appropriation for their payment.

Article  6. Rulemaking

67329.6.
 Each authority may adopt, amend, or repeal rules and regulations pursuant to this chapter as emergency regulations. The adoption, amendment, or repeal of these regulations is conclusively presumed to be necessary for the immediate preservation of the public peace, health, safety, or general welfare within the meaning of Section 11346.1 of the Government Code.

Article  7. Reporting

67329.7.
 Each authority shall provide a report to the Department of Finance and the budget committees of the Assembly and Senate by March 15, 2023. The report shall include, but shall not necessarily be limited to, all of the following information:
(a) The number of projects receiving loans.
(b) The total dollar amount of loans made.
(c) The dollar amount of the loan provided for each project.
(d) The terms of the loan for each project.

Article  8. Administrative Costs

67329.8.
 Each authority may charge against the fund its administrative costs, which shall not exceed 3 percent of the authority’s respective allocation amount or proportion of the fund, as the fund may be augmented by revenue bonds over time.

SEC. 3.

 Section 76011.5 is added to the Education Code, immediately following Section 76011, to read:

76011.5.
 (a) The California School Finance Authority shall administer a competitive grant program to provide planning grants for California Community Colleges that are exploring or determining if they can offer affordable student rental housing.
(b) In awarding grants pursuant to this section to qualified community colleges, the California School Finance Authority shall ensure that the selection process meets all of the following requirements:
(1) To the extent feasible, ensures a reasonable geographic distribution of funds.
(2) Requires that the proposed affordable student rental housing project be feasible.
(3) Requires that the planning activities related to the proposed affordable student rental housing project be reasonable compared to the costs of comparable projects in the area.
(4) The proposed affordable student rental housing project leverages other funds where they are available.
(c) A community college that receives a grant pursuant to this section may use those grant moneys for one or more of the following purposes in connection with an affordable student rental housing project:
(1) Feasibility studies.
(2) Engineering studies.
(3) Financing studies.
(4) Environmental impact studies.
(5) Architectural plans.
(6) Application fees.
(7) Legal services.
(8) Permitting costs.
(9) Bonding.
(10) Site preparation.
(d) The California School Finance Authority shall provide technical assistance to community colleges that receive planning grant funds for the purpose of exploring and determining if they can offer affordable student rental housing.
(e) For purposes of this section, the following definitions apply:
(1) “Affordable student rental housing” means housing for students charged at below market rate.
(2) “Feasible” means that a project may be accomplished in a successful manner within a reasonable period of time, taking into account economic, environmental, social, and technological factors.
(f) The implementation of this section is contingent upon an appropriation by the Legislature in the annual Budget Act or another statute for purposes of this section.