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AB-561 Help Homeowners Add New Housing Program: accessory dwelling unit financing.(2021-2022)

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Date Published: 08/27/2021 04:00 AM
AB561:v95#DOCUMENT

Amended  IN  Senate  August 26, 2021
Amended  IN  Senate  July 15, 2021
Amended  IN  Senate  July 12, 2021
Amended  IN  Assembly  April 06, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 561


Introduced by Assembly Members Ting and Bloom
(Principal coauthors: Senators Hertzberg and Skinner)
(Coauthors: Assembly Members Boerner Horvath and Quirk-Silva)

February 11, 2021


An act to add Chapter 12 (commencing with Section 51515) to Part 3 of Division 31 of the Health and Safety Code, relating to housing.


LEGISLATIVE COUNSEL'S DIGEST


AB 561, as amended, Ting. Help Homeowners Add New Housing Program: accessory dwelling unit financing.
Existing law provides for the creation by local ordinance, or by ministerial approval if a local agency has not adopted an ordinance, of accessory dwelling units in areas zoned to allow single-family or multifamily dwelling residential use in accordance with specified standards and conditions.
This bill would require the Treasurer’s office, by April 1, 2022, to develop provide a report to the Legislature regarding the creation of the Help Homeowners Add New Housing Program with the purpose of assisting homeowners, as defined, in qualifying for loans to construct additional housing units on their property, including accessory dwelling units and junior accessory dwelling units. The bill would, with regard to the development of recommendations for the program, require the Treasurer to consult with the California Housing Financing Agency, Agency and the Department of Housing and Community Development, and would also authorize the Treasurer to consult with various other entities, including federal mortgage agencies, private lenders, community development financial institutions, community-based organizations, and local housing trust funds. The bill would require the report to examine the feasibility of, among other things, providing at least 80% of program funding to homeowners at or below 100% of the area median income of each county in the state. The bill would additionally require the report to provide recommendations regarding these provisions. The bill would authorize the Treasurer to include in the report other findings and recommendations that may be helpful to the implementation and operation of the program.

This bill would require the Treasurer to require participating homeowners to rent or lease out any accessory dwelling unit built with financing from the program for a minimum of 2 years. The bill would require the program to provide a share of assistance to homeowners at or below 100% of the area median income of the county in which the accessory dwelling unit is located. The bill would authorize the program to include conventional first mortgages, participating 2nd mortgages, and grants as assistance options.

This bill would require the Treasurer to conduct at least one public meeting prior to adopting program regulations. The bill would require the Treasurer to conduct outreach activities, particularly in disadvantaged communities, to disseminate information about the program to eligible homeowners. The bill would require the Treasurer to submit a report to the Legislature, by April 1, 2023, and annually thereafter, detailing progress toward meeting the program objective of increased accessory dwelling unit production, as specified.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Over the last few years, the state has lowered the regulatory barriers that have historically prevented homeowners from developing additional housing units, such as accessory dwelling units and junior accessory dwelling units, on their single-family home properties. As a result, construction of these units has increased by 50 percent and added much needed housing. In the City of Los Angeles, the number of permits for accessory dwelling unit construction has soared by nearly 3,500 percent from 2016 to 2018, inclusive.
(b) However, the construction of these additional units remains limited in many areas of the state due to a lack of financing options for the cost of construction if a homeowner lacks significant appreciated equity within their residence to refinance or sufficient income to increase their loan balances.
(c) Far too many homeowners, even those with strong credit scores, documented income, and favorable loan-to-value ratios, cannot readily access federal government-backed mortgages to finance the costs of building additional units because mortgage products currently require tenants in place and a year or more of documented rental income.
(d) Addressing this gap in the marketplace and allowing existing mortgage lenders to offer construction bridge loans would enable homeowners to take advantage of historically low mortgage interest rates that will likely be available during the next several years.
(e) It is the intent of the Legislature to establish a state-backed lending mechanism to encourage banks, credit unions, and other mortgage originators to make construction loans to homeowners to bridge existing federally backed loans.

SEC. 2.

 Chapter 12 (commencing with Section 51515) is added to Part 3 of Division 31 of the Health and Safety Code, to read:
CHAPTER  12. Help Homeowners Add New Housing Program

51515.
 This chapter shall be known, and may be cited, as the Help Homeowners Add New Housing Program.

51516.
 For purposes of this chapter:
(a) “Homeowner” means an owner of a single-family residential property that does not own more than three residential properties that consist of one to four units.
(b) “Program” means the program established pursuant to subdivision (a) of Section 51517.

51517.
 (a) The Treasurer’s office shall, by April 1, 2022, establish and administer furnish a report to the Legislature that provides recommendations on creating the Help Homeowners Add New Housing Program pursuant to this chapter. Program. The purpose of the program is would be to assist homeowners in qualifying for loans to construct additional housing units on their property, including accessory dwelling units and junior accessory dwelling units.
(b) (1)The Treasurer shall consult with the Department of Housing and Community Development and the California Housing Financing Agency in establishing and administering developing recommendations for the program. The Treasurer may also consult with other entities in developing recommendations for the program, including, but not limited to, federal mortgage agencies, private lenders, community development financial institutions, community-based organizations, local housing trust funds, joint powers authorities, regional housing finance authorities, and credit unions.

(2)The Treasurer shall include both of the following requirements in the program:

(A)A share of program assistance shall be designated for homeowners at or below 100 percent of the area median income of the county in which the home is located.

(B)Participating homeowners shall be required to rent or lease out any accessory dwelling unit built with financing from the program for a minimum of two years.

(3)The Treasurer may include conventional first mortgages, participating second mortgages, and grants as assistance options for the program.

(4)The Treasurer shall not offer balloon repayment plans to participating homeowners under the program.

(c)The Treasurer shall conduct at least one public meeting prior to adopting program regulations.

(d)(1)The Treasurer shall ensure a reasonable rate of participation in the program across all areas of the state.

(2)The Treasurer shall conduct outreach activities, particularly in disadvantaged communities, to disseminate information about the program to eligible homeowners.

(e)The Treasurer shall submit a report to the Legislature, by April 1, 2023, and annually thereafter, detailing progress toward meeting the program objective of increased accessory dwelling unit production, as well as the average income of participating homeowners and the renters of accessory dwelling units created under the program. The report required under this subdivision shall be submitted in compliance with Section 9795 of the Government Code.

(c) The report shall examine the feasibility of, and provide recommendations regarding, all of the following:
(1) Providing at least 80 percent of program funding to homeowners at or below 100 percent of the area median income of each county in the state.
(2) Providing various assistance options to homeowners, including, but not limited to, conventional first mortgages, participating second mortgages, and grants.
(3) Requiring homeowners to rent or lease any accessory dwelling unit built with program funds for a minimum of 10 years.
(4) Prohibiting the program from providing financing with balloon repayment plans.
(5) Outreach activities, particularly in disadvantaged communities, to disseminate information about the program to homeowners and encourage a reasonable rate of participation across the state.
(d) Within the report provided for under subdivision (c), the Treasurer may include any other findings and recommendations that may be helpful to the implementation and operation of the program.