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AB-1423 Housing programs: multifamily housing programs: expenditure of loan proceeds.(2021-2022)

Senate:
1st
Cmt
2nd
3rd
2nd
3rd
Pass
Assembly:
Int
1st
Cmt
2nd
3rd
Pass
Pass
Veto
Bill Status
AB-1423
Daly (A)
-
-
Housing programs: multifamily housing programs: expenditure of loan proceeds.
03/22/21
An act to add Section 50406.9 to the Health and Safety Code, relating to housing.
Assembly
09/10/21
08/30/21

Type of Measure
Inactive Bill - Vetoed
Majority Vote Required
Non-Appropriation
Fiscal Committee
Non-State-Mandated Local Program
Non-Urgency
Non-Tax levy
Last 5 History Actions
Date Action
10/04/21 Vetoed by Governor.
09/15/21 Enrolled and presented to the Governor at 5 p.m.
09/08/21 Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 78. Noes 0.).
09/08/21 Assembly Rule 77 suspended. (Ayes 42. Noes 13.)
09/07/21 In Assembly. Concurrence in Senate amendments pending. May be considered on or after September 9 pursuant to Assembly Rule 77.
Governor's Veto Message
To the Members of the California State Assembly:

I am returning Assembly Bill 1423 without my signature.

This bill would allow borrowers who receive Department of Housing and Community Development multifamily housing program funds to use awarded funds for construction financing, permanent financing, or a combination of the two.

The high cost of construction lending has impeded California's ability to build more permanent housing and drive down the cost of living in our state. While I appreciate the intent of the bill - to lower the cost of affordable housing construction - it presents a number of legal and implementation concerns.

AB 1423 would delegate the state's authority to administer bond proceeds to private, third-party lenders, which raises legal questions about consistency with the bond authority approved by California voters.

In addition, the bill would create significant risks for state dollars by placing the Department in a subordinate position to recover funds after a first lender. If a project should fail mid-construction, taxpayer dollars would be threatened.

That said, California must do more to explore how to drive down costs of construction lending. I am directing the Department to explore best practices for reducing these costs in ways that do not imperil state finances. California must continue to bring more certainty and speed to the development process - reforms that will materially drive down the cost of construction lending without direct state subsidy.


Sincerely,





Gavin Newsom