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SB-1400 Accessory Dwelling Unit Construction Bond Act of 2020.(2019-2020)



Current Version: 04/08/20 - Amended Senate

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SB1400:v97#DOCUMENT

Amended  IN  Senate  April 08, 2020
Amended  IN  Senate  March 26, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 1400

Introduced by Senator Umberg

February 21, 2020

An act to add Part 17 (commencing with Section 54100) to Division 31 of the Health and Safety Code, relating to housing, by providing the funds necessary therefor through an election for the issuance and sale of bonds of the State of California and for the handling and disposition of those funds, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


SB 1400, as amended, Umberg. Accessory Dwelling Unit Construction Bond Act of 2020.

(1)Existing

Existing law, the Veterans and Affordable Housing Bond Act of 2018, which was approved by the voters as Proposition 1 at the November 6, 2018, statewide general election, authorizes the issuance of bonds in the amount of $4,000,000,000 pursuant to the State General Obligation Bond Law and requires the proceeds from the sale of these bonds to be used to finance various housing programs and a specified program for farm, home, and mobilehome purchase assistance for veterans, as provided. Existing law authorizes a city, county, or city and county to provide for the creation of accessory dwelling units in areas zoned to allow single-family or multifamily use by an ordinance that complies with specified requirements. Existing law requires the city, county, or city and county to ministerially approve or disapprove an application for a permit to create an accessory dwelling unit received pursuant to such an ordinance within 120 days.
This bill would enact the Accessory Dwelling Unit Construction Bond Act of 2020 (bond act), which, if adopted, would authorize the issuance of bonds in the amount of $500,000,000 pursuant to the State General Obligation Bond Law to finance the Accessory Dwelling Unit Construction Program, established as part of the bond act. The bill would authorize the Department of Housing and Community Development to enter into a contract under that program with a homeowner to provide financing to pay for the eligible costs incurred by the homeowner in constructing an accessory dwelling unit on the homeowner’s property, subject to specified terms and conditions. The bill would require that moneys received from a homeowner for the repayment of financing provided under the program to be used to pay debt service when due on bonds issued pursuant to the bond act.

(2)Existing law contains provisions related to elections and voting, including a requirement that a measure submitted to the people by the Legislature appear on the ballot of the first statewide election occurring at least 131 days after the adoption of the proposal by the Legislature and that the Secretary of State mail state voter information guides to voters.

This bill would require the Secretary of State, notwithstanding specified provisions of existing law relating to elections and voting, to submit the Accessory Dwelling Unit Construction Bond Act of 2020 at the next statewide general election following the effective date of the bill.

This bill would provide for submission of the Accessory Dwelling Unit Bond Act of 2020 to the voters at the next statewide general election following its effective date, in accordance with specified law.

(3)This

This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Part 17 (commencing with Section 54100) is added to Division 31 of the Health and Safety Code, to read:

PART 17. Accessory Dwelling Unit Construction Bond Act of 2020

CHAPTER  1. General Provisions

54100.
 This part shall be known, and may be cited, as the Accessory Dwelling Unit Construction Bond Act of 2020.

54102.
 As used in this part:
(a) “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons and includes permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. For purposes of this division, “accessory dwelling unit” includes the following:
(1) An efficiency unit, as defined in Section 17958.1.
(2) A manufactured home, as defined in Section 18007.
(b) “Borrower” means a homeowner who has entered into a contract to finance the construction of an accessory dwelling unit with the department.
(c) “Committee” means the Accessory Dwelling Unit Construction Finance Committee created pursuant to Section 54132.
(d) “Construction fund” means the Accessory Dwelling Unit Construction Trust Fund of 2020 created pursuant to Section 54112.
(e) “Debt service” means the principal, regardless of whether due at maturity, by redemption, or acceleration, premium, if any, or interest payable on any date with respect to any series of bonds issued pursuant to this part.
(f) “Department” means the Department of Housing and Community Development.
(g) “Eligible costs” means all costs, including costs of design, preparation, and inspection, incurred in the construction of an accessory dwelling unit on property owned by a borrower.
(h) “Financing” means a loan made by the department pursuant to the program to a homeowner for eligible costs and that is secured by deed of trust or mortgage upon the property where the accessory dwelling unit is proposed to be constructed.
(i) “Homeowner” means a person who owns and resides on property and proposes to construct an accessory dwelling unit on that property.
(j) “Payment fund” means the Accessory Dwelling Unit Bond Payment Fund created pursuant to Section 54113.
(k) “Program” means the Accessory Dwelling Unit Construction Program established in Chapter 2 (commencing with Section 54110).
(l) “Property” means the residence where the accessory dwelling unit is proposed to be constructed.

54104.
 This part shall only become operative upon adoption by the voters at the next statewide general election following the effective date of the act adding this section.

CHAPTER  2. Accessory Dwelling Unit Construction Program
Article  1. General Provisions

54110.
 It is the intent of the Legislature in enacting, and the intent of the voters in approving, this act to provide homeowners with the opportunity to construct accessory dwelling units on their properties by providing financial assistance for that construction. It is further the intent of the Legislature and the voters that repayment of the bonds authorized by this part be primarily financed by the repayment of loans provided to homeowners under this chapter.

54111.
 (a) There is hereby established the Accessory Dwelling Unit Construction Program, which the department shall administer.
(b) In implementing this part, the department shall do all of the following:
(1) Adopt rules and regulations consistent with this part to establish preferences in providing loans pursuant to this part.
(2) Prescribe and determine the qualifications of applicants under the program, consistent with Section 54120.
(3) Establish an application fee, which shall not exceed the reasonable amount incurred by the department to process an application under this part.

54112.
 (a) The Accessory Dwelling Unit Construction Trust Fund of 2020 is hereby created within the State Treasury. The proceeds of bonds issued pursuant to this part, except for refunding bonds issued pursuant to Section 54140, shall be deposited in the construction fund and used to provide financing under the program, consistent with the requirements of this part.
(b) Notwithstanding Section 13340 of the Government Code, moneys in the construction fund are continuously appropriated to the department for purposes of providing loans to homeowners to finance the construction of accessory dwelling units, as provided in this chapter.

54113.
 (a) The Accessory Dwelling Unit Construction Bond Payment Fund is hereby created within the State Treasury as a revolving special fund. Notwithstanding Section 13340 of the Government Code, moneys in the payment fund are continuously appropriated to the Treasurer for the sole purpose of paying debt service when due on bonds issued pursuant to this part.
(b) All moneys in the payment fund are necessary for immediate use and shall not be considered “surplus money,” for the purposes of Section 16470 of the Government Code.
(c) Moneys in the payment fund shall be used solely as described in subdivision (a), and therefore the moneys in that fund shall not be borrowed by, or transferred to, the General Fund pursuant to subdivision (a) of Section 16310 of the Government Code or any other similar authority, or to the General Cash Revolving Fund pursuant to Section 16381 of the Government Code or any other similar authority.
(d) Moneys in the payment fund may be transferred to an account within the Refunding Escrow Fund created by Section 16784 of the Government Code for the purposes of paying debt service in connection with the refunding of bonds issued pursuant to Section 54140.

54114.
 For the purposes of this chapter, the department shall have the following powers:
(a) To make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter with any governmental agency, private corporation, or other entity or individual.
(b) To determine the terms and conditions of any mortgage instrument, deed of trust, or promissory note used or executed in conjunction with financing pursuant to this chapter.
(c) To employ architects, engineers, attorneys, accountants, construction and financial experts, and other advisers, consultants, and agents as may be necessary in its judgment.
(d) To provide advice, technical information, and consultative and technical service in connection with financing pursuant to this division.
(e) To procure insurance against any loss in connection with its assets, including mortgages and deeds of trust, in the amounts and from insurers as it deems desirable.
(f) To establish, revise from time to time, and charge and collect fees and charges in connection with financing provided by the department pursuant to this chapter.
(g) To do any and all things necessary or convenient to the exercise of other powers under this chapter.

54115.
 The Legislature may amend the provisions of this chapter for the purposes of improving the efficiency and effectiveness of the program or to further the goals of the program.

Article  2. Financing for Accessory Dwelling Units

54120.
 (a) The department may enter into a contract with a homeowner to provide financing to pay for the eligible costs incurred by the homeowner in constructing an accessory dwelling unit on the homeowner’s property.
(b) In order to achieve efficient processing and approval of loans, the department shall do all of the following:
(1) Establish systems, procedures, technologies, and guidelines necessary to achieve efficient processing of applications for financing submitted to the program, with the intent of achieving loan delivery within an average of 30 days. These shall include, but may not be limited to, systems and technologies for the electronic transfer of loan funds and related fees.
(2) Develop a system pursuant to which a homeowner, or the homeowner’s authorized agent, may submit and track an application for financing pursuant to this chapter electronically.
(3) On or before April 1, 2021, promulgate all regulations necessary to implement this section, with the intent of achieving loan delivery within an average of 30 days through measures including, but not limited to, optimal participation in the loan origination process by qualified private sector real estate mortgage associations.
(c) A contract entered into pursuant to this section shall be subject to the following terms and conditions:
(1) The proposed accessory dwelling unit complies with the requirements of Section 65852.2 of the Government Code and any ordinance adopted by a local agency in accordance with that section.
(2) The department is satisfied of the desirability of the construction of the accessory dwelling unit.
(3) The homeowner provides documentation sufficient to demonstrate that the homeowner is the owner of the property on which the accessory dwelling is to be constructed, or will be the owner of that real property.
(4) The homeowner pays a reasonable fee set by the department to cover the cost of any preliminary service of the department that may be necessary to process the application.
(5) (A) The homeowner files adequate plans and specifications for the accessory dwelling unit to be constructed on the property, together with a contract, executed by a contractor licensed by the Contractors’ State License Board for the construction of the accessory dwelling unit in accordance with the plans and specifications within 12 months after the department approves the financing in accordance with this chapter.
(B) The department may require a bond or other security instrument executed by the contractor in an amount determined by the department providing for compliance with the terms of the contract and for the payment of persons furnishing material or labor on the construction of the accessory dwelling unit, executed by a surety company, or other financial institution, authorized to do business in the State of California. The department may also require course-of-construction insurance for public liability, property damage, and workers’ compensation.
(6) The department approves plans, specifications, contracts, and other required documents or security instruments.

54121.
 A homeowner applying for financing under the program shall provide the department with any information, in the form prescribed by the department, that will enable the department to determine the homeowner’s eligibility and qualifications under this chapter.

54122.
 The department may contract with state or federally chartered banks or savings and loan associations for originating or servicing financing authorized by this chapter.

Article  3. Financing Repayment

54125.
 The department shall set the interest rate on financing provided pursuant to the program at an amount that is necessary to pay the interest on the bonds issued pursuant to this part and to defray costs of administration incurred by the department pursuant to this part.

54126.
 (a) The balance of the loan amount may be amortized over a period fixed by the department, not exceeding 40 years, together with interest thereon at the rate determined pursuant to Section 54125.
(b) The borrower may pay any or all installments still remaining unpaid on any installment date.
(c) On a case-by-case basis, the department may for good cause postpone the payment of the whole or any part of any installment on financing provided pursuant to this chapter, upon any terms the department determines proper.
(d) Each installment shall include an amount sufficient to pay the principal and interest on the financing pursuant to the contract with the department.

54127.
 If a borrower indebted to the department under a contract for financing pursuant to this chapter dies, the borrower’s rights and obligations under a financing contract entered into pursuant to this chapter shall devolve upon the borrower’s heirs, devisees, or personal representatives, subject to all rights, claims, and charges of the department. If the borrower’s heir, devisee, or personal representative defaults on the financing contract, that default shall have the same effect as would default on the part of the borrower with respect to any right, claim, or charge of the department.

54128.
 All moneys received by the department from a borrower for the repayment of financing provided under this chapter shall be deposited in the payment fund and used in accordance with Section 54113.

CHAPTER  3. Fiscal Provisions

54130.
 (a) Bonds in the total amount of five hundred million dollars ($500,000,000), or so much thereof as is necessary, not including the amount of any refunding bonds issued in accordance with Section 54140, may be issued and sold to provide a fund to be used for carrying out the purposes expressed in this part and to reimburse the General Obligation Bond Expense Revolving Fund pursuant to Section 16724.5 of the Government Code. The bonds, when sold, shall be and constitute a valid and binding obligation of the State of California, and the full faith and credit of the State of California is hereby pledged for the punctual payment of both principal of, and interest on, the bonds as the principal and interest become due and payable.
(b) The Treasurer shall issue and sell the bonds authorized in subdivision (a) in the amount determined by the committee to be necessary or desirable pursuant to Section 54133. The bonds shall be issued and sold upon the terms and conditions specified in a resolution to be adopted by the committee pursuant to Section 16731 of the Government Code.

54131.
 (a) The bonds authorized by this part shall be prepared, executed, issued, sold, paid, and redeemed as provided in the State General Obligation Bond Law (Chapter 4 (commencing with Section 16720) of Part 3 of Division 4 of Title 2 of the Government Code), except for subdivisions (a) and (b) of Section 16727 of the Government Code, as amended from time to time, and all of the provisions of that law apply to the bonds and to this part and are hereby incorporated in this part as though set forth in full in this part.
(b) For purposes of this part, the references to “committee” in the State General Obligation Bond Law shall mean the Accessory Dwelling Unit Construction Finance Committee created in Section 54132, and the references to “board” in the State General Obligation Bond Law shall mean the department.

54132.
 (a) Solely for the purpose of authorizing the issuance and sale pursuant to the State General Obligation Bond Law of the bonds authorized by this part, the Accessory Dwelling Unit Construction Finance Committee is hereby created.
(b) The committee consists of the Treasurer, the Controller, the Director of Finance, and the Director of Housing and Community Development. Notwithstanding any other law, any member may designate a representative to act as that member for all purposes as though the member were personally present.
(c) The Treasurer shall serve as chairperson of the committee. A majority of the committee may act for the committee.

54133.
 The committee shall determine by resolution whether or not it is necessary or desirable to issue and sell bonds authorized pursuant to this part in order to carry out the actions specified in this part and, if so, the amount of bonds to be issued and sold. Successive issues of bonds may be authorized and sold to carry out those actions progressively, and it is not necessary that all of the bonds authorized to be issued be sold at any one time.

54134.
 (a) There shall be collected each year and in the same manner and at the same time as other state revenue is collected, in addition to the ordinary revenues of the state, a sum in an amount required to pay the principal of, and interest on, the bonds each year. It is the duty of all officers charged by law with any duty in regard to the collection of the revenue to do and perform each and every act that is necessary to collect that additional sum.
(b) On the dates on which funds are to be remitted pursuant to Section 16676 of the Government Code for the payment of debt service on the bonds issued pursuant to this part in each fiscal year, there shall be transferred to the payment fund to pay the debt service all of the money in the fund, not in excess of the amount of debt service then due and payable. If the money transferred on the remittance dates is less than debt service then due and payable, the balance remaining unpaid shall be transferred to the General Fund out of the payments fund as soon as it shall become available, together with interest thereon from the remittance date until paid, at the same rate of interest as borne by the bonds, compounded semiannually. This subdivision does not grant any lien on, the payment fund, or the moneys therein to the holders of any bonds issued under this article. This subdivision shall not apply in the case of any debt service that is payable from the proceeds of any refunding bonds.

54135.
 Notwithstanding Section 13340 of the Government Code, there is hereby continuously appropriated from the General Fund in the State Treasury, for the purposes of this part and without regard to fiscal years, an amount that equals the total of the following:
(a) The sum annually necessary to pay the principal of, and interest on, bonds issued and sold pursuant to this part, as the principal and interest become due and payable.
(b) The sum necessary to carry out Section 54137.

54136.
 The board may request the Pooled Money Investment Board to make a loan from the Pooled Money Investment Account, in accordance with Section 16312 of the Government Code, for the purpose of carrying out this part less any amount withdrawn pursuant to Section 54137. The amount of the request shall not exceed the amount of the unsold bonds that the committee has, by resolution, authorized to be sold for the purpose of carrying out this part, excluding any refunding bonds authorized pursuant to Section 54140, less any amount loaned pursuant to this section and not yet repaid and any amount withdrawn from the General Fund pursuant to Section 54137 and not yet returned to the General Fund. The board shall execute any documents required by the Pooled Money Investment Board to obtain and repay the loan. Any amounts loaned shall be deposited in the construction fund to be allocated by the board in accordance with this part.

54137.
 For the purposes of carrying out this part, the Director of Finance may authorize the withdrawal from the General Fund of an amount not to exceed the amount of the unsold bonds that have been authorized by the committee to be sold for the purpose of carrying out this part, excluding any refunding bonds authorized pursuant to Section 54140, less any amount loaned pursuant to Section 54136 and not yet repaid, and any amount withdrawn from the General Fund pursuant to this section and not yet returned to the General Fund. Any amounts withdrawn shall be deposited in the construction fund. Any moneys made available under this section shall be returned to the General Fund from proceeds received from the sale of bonds for the purpose of carrying out this part.

54138.
 All moneys deposited in the construction fund that are derived from premium and accrued interest on bonds sold pursuant to this part shall be reserved in the construction fund and shall be available for transfer to the General Fund as a credit to expenditures for bond interest, except those amounts derived from premium may be reserved and used to pay the cost of bond issuance prior to any transfer to the General Fund.

54139.
 Pursuant to the State General Obligation Bond Law (Chapter 4 (commencing with Section 16720) of Part 3 of Division 4 of Title 2 of the Government Code), the cost of bond issuance shall be paid out of the bond proceeds, including premium, if any. To the extent the cost of bond issuance is not paid from premiums received from the sale of bonds, these costs shall be shared proportionally by each program funded through this part by the applicable bond sale.

54140.
 The bonds issued and sold pursuant to this part may be refunded in accordance with Article 6 (commencing with Section 16780) of Chapter 4 of Part 3 of Division 4 of Title 2 of the Government Code, which is a part of the State General Obligation Bond Law. Approval by the voters of the state for the issuance of the bonds described in this part includes the approval of the issuance of any bonds issued to refund any bonds originally issued under this part or any previously issued refunding bonds.

54141.
 Notwithstanding any other provision of this part, or of the State General Obligation Bond Law, if the Treasurer sells bonds pursuant to this part that include a bond counsel opinion to the effect that the interest on the bonds is excluded from gross income for federal tax purposes under designated conditions or is otherwise entitled to any federal tax advantage, the Treasurer may maintain separate accounts for the bond proceeds invested and for the investment 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.

54142.
 The proceeds from the sale of bonds authorized by this part are not “proceeds of taxes” as that term is used in Article XIII B of the California Constitution, and the disbursement of these proceeds is not subject to the limitations imposed by that article.

SEC. 2.

 Section 1 of this act shall take effect upon the approval by the voters of the Accessory Dwelling Unit Construction Bond Act of 2020, as set forth in Section 1 of this act.
SEC. 3.

(a)(1)Notwithstanding Sections 9040, 9043, 9044, 9061, and 9082 of the Elections Code, or any other law, Section 1 of this act shall be submitted by the Secretary of State to the voters at the next statewide general election following the effective date of this act.

(2)The requirement of Section 9040 of the Elections Code that a measure submitted to the people by the Legislature appear on the ballot of the first statewide election occurring at least 131 days after the adoption of the proposal by the Legislature shall not apply to Section 1 of this act.

(b)The Secretary of State shall include in the ballot pamphlets mailed pursuant to Section 9094 of the Elections Code the information specified in Section 9084 of the Elections Code regarding Section 1 of this act. If that inclusion is not possible, the Secretary of State shall publish a supplemental ballot pamphlet regarding Section 1 of this act to be mailed with the ballot pamphlet. If the supplemental ballot pamphlet cannot be mailed with the ballot pamphlet, the supplemental ballot pamphlet shall be mailed separately.

(c)Notwithstanding Section 9054 of the Elections Code or any other law, the translations of the ballot title and the condensed statement of the ballot title required pursuant to Section 9054 of the Elections Code for Section 1 of this act may be made available for public examination at a later date than the start of the public examination period for the ballot pamphlet.

(d)Notwithstanding Sections 13115 and 13117 of the Elections Code, Section 1 of this act and any other measure placed on the ballot by the Legislature for the next statewide general election after the 131-day deadline set forth in Section 9040 of the Elections Code shall be placed on the ballot, following all other ballot measures, in the order in which they qualified as determined by chapter number.

SEC. 3.

 Section 1 of this act shall be submitted to the voters at the next statewide election in accordance with provisions of the Government Code and the Elections Code governing the submission of a statewide measure to the voters.

SEC. 4.

  This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to maximize the time available for the analysis and preparation of the proposed issuance of bonds pursuant to Section 1 of this act, it is necessary that this act take effect immediately.