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AB-1891 Housing trust funds.(2001-2002)



Current Version: 09/20/02 - Chaptered

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AB1891:v91#DOCUMENT

Assembly Bill No. 1891
CHAPTER 725

An act to add Section 50843 to the Health and Safety Code, relating to housing.

[ Filed with Secretary of State  September 20, 2002. Approved by Governor  September 20, 2002. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1891, Diaz. Housing trust funds.
Existing law creates, among other housing programs, the Multifamily Housing Program, and the Emergency Housing and Assistance Program.
This bill would require the Department of Housing and Community Development to establish a program to make matching grants to local agencies or nonprofit entities that have housing trust funds, to provide financing for rental housing projects affordable to very low income families, as prescribed. Unused funds would revert for use in the Multifamily Housing Program.
The bill would become operative only if the Housing and Emergency Shelter Trust Fund Act of 2002, as proposed by Senate Bill 1227 of the 2001–02 Regular Session, is enacted by the voters, and would provide that specified amounts appropriated pursuant to that act would be used for purposes of this bill.

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


SECTION 1.

 Section 50843 is added to the Health and Safety Code, to read:

50843.
 (a) The Legislature finds and declares all of the following:
(1) Local housing trusts are locally developed responses to regional housing needs, and are responsive to local control.
(2) Local housing trusts have an excellent record of accomplishment of serving as efficient vehicles for disbursing resources at the local level.
(3) Currently there are 10 city and three county housing trusts throughout California producing thousands of units of affordable housing through the utilization of millions of dollars of locally generated funds, resulting in the leverage of millions more for the development of affordable housing.
(4) Housing trusts are local sources of revenue for affordable housing and very often are a direct result of local constituencies coming together around affordable housing. These relationships are often long term and include a broad set of community players that go beyond the traditional supporter of affordable housing.
(b) There is hereby established the Local Housing Trust Fund Matching Grant Program, to be administered by the department, for the purpose of supporting local housing trust funds dedicated to the creation or preservation of affordable housing as described in this section. Local housing trust funds shall be funded on an ongoing basis from private contributions or governmental sources that are not otherwise restricted in use for housing programs.
(c) For the purposes of this program, the following provisions shall apply:
(1) The department may make matching grants available to cities and counties, or a city and county, that have created, funded, and operated housing trust funds prior to January 1, 2003, and to existing charitable nonprofit organizations described in Section 501(c)(3) of the Internal Revenue Code that have created, funded, and operated housing trust funds prior to January 1, 2003. These funds shall be awarded through the issuance of a Notice of Funding Availability (NOFA). The department may establish competitive criteria consistent with the funding priorities used in the Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675)) to be used in the event that applications exceed the funds available. Applicants 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 may make matching grants available to new local housing trusts created by cities and counties, or a city and county, and to fund new housing trusts created by charitable nonprofit organizations described in Section 501(c)(3) of the Internal Revenue Code that provide low-income housing assistance. As used in this section, “new housing trust” means a housing trust that was not in existence prior to January 1, 2003. The department may consider grant applications, submitted pursuant to this paragraph, and determine their eligibility for funding, in the order in which they are received.
(3) Housing trusts eligible for funding under this section shall have the following characteristics:
(A) They utilize 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.
(B) They receive ongoing revenues from dedicated sources of funding such as taxes, fees, loan repayments, or private contributions.
(4) The minimum allocation under this subdivision to an applicant shall be one million dollars ($1,000,000), and no applicant may receive an allocation in excess of two million dollars ($2,000,000). All funds provided pursuant to this section shall be matched on a dollar-for-dollar basis. No application shall be considered unless the department has received adequate documentation of the deposit in the local housing trust fund of the local match and the identity of the source of matching funds. Applicants 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 (A) the amount of the department’s grant to the local housing trust fund, to the extent that the trust fund has encumbered funds available, shall be immediately repaid, and (B) any payments from the project 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 to fund projects under the Multifamily Housing Program, or its successor. The total amount paid to the department pursuant to (A) and (B), combined, shall not exceed the amount of the department’s grant.
(5) Funds shall be used to provide loans for the construction of rental housing projects, or for construction of units within rental housing projects, affordable to, and restricted for, very low income persons and families earning less than 60 percent of the area median income. All assisted units shall be restricted for not less than 55 years. Projects receiving funds allocated pursuant to this section shall not be eligible for funding through the Multifamily Housing Program. Loan repayments shall accrue to the grantee housing trust, or to the department if the trust is no longer in existence, to support the development of rental housing consistent with the Multifamily Housing Program or a successor program.
(6) In order for a city, county, or city and county to be eligible for funding, the applicant shall have, at the time of application, 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. In order for a nonprofit organization applicant to be eligible for funding, the applicant shall agree to utilize funds provided under this chapter only for projects located in cities, counties, or a city and county that have, at the time of application, 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. For the purposes of this section, eligible local housing trust funds may not include any ongoing restricted fund that is required to be established pursuant to federal or state law.
(7) Recipients shall have held, or shall agree to hold, a public hearing or hearings 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 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.
(d) No more than 5 percent of the funds appropriated to the department pursuant to subparagraph (C) of paragraph (1) of subdivision (a) of Section 53533 shall be used to pay the costs of administration of this section.
(e) A local housing trust fund shall encumber funds provided pursuant to this section no later than 30 months after receipt. Any funds not encumbered within that period shall revert to the department for use in the Multifamily Housing Program.
(f) 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, 2005, 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.
(g) This program shall be operated under guidelines adopted by the department and 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.

SEC. 2.

 If the Housing and Emergency Shelter Trust Fund Act of 2002 is approved by the voters:
(a) Fifteen million dollars ($15,000,000) of the funds appropriated to the department pursuant to subparagraph (C) of paragraph (1) of subdivision (a) of Section 53533 of the Health and Safety Code shall be used for the purposes of paragraph (1) of subdivision (c) of Section 50843 of the Health and Safety Code.
(b) Ten million dollars ($10,000,000) of the funds appropriated to the department pursuant to subparagraph (C) of paragraph (1) of subdivision (a) of Section 53533 of the Health and Safety Code shall be used for the purposes of paragraph (2) of subdivision (c) of Section 50843 of the Health and Safety Code, except that any such funds that are not encumbered by the department within 24 months of availability shall be used for the purposes of paragraph (1) of subdivision (c) of Section 50843 of the Health and Safety Code.

SEC. 3.

 This act shall become operative only if the Housing and Emergency Shelter Trust Fund Act of 2002, as proposed by Senate Bill 1227 of the 2001–02 Regular Session, is enacted by the voters and contains authority to use bond proceeds for the purposes of this act.