Date of Hearing: August 11, 2020

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 795

Author:(Beall, et al.) – As Amended Ver:August 3, 2020

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill, upon appropriation by the Legislature, makes available up to $2 billion annually for allocation to various existing housing, homelessness and pre-apprenticeship programs, and to two newly created infrastructure financing programs at the State Coastal Conservancy and Strategic Growth Council (SGC) and the Governor’s Office of Business and Economic Development (Go-Biz). Specifically, this bill:

1. Of the amount made available in any fiscal year, requires the State Controller to allocate $1.808 billion, or a proportional amount of the total made available, as follows:
2. $500 million to the Multifamily Housing Program at the California Department of Housing and Community Development (HCD).
3. $300 million to the Infill Infrastructure Grant Program at HCD.
4. $200 million to the Local Housing Trust Fund Matching Grant Program at HCD.
5. $75 million to the CalHome Program at HCD.
6. $75 million to the Joe Serna Jr. Farmworker Housing Program;
7. $650 million to the Homeless Housing, Assistance, and Prevention program (HHAPP) at the Business Consumer Services and Housing Agency (BCSHA).
8. $8 million to the California Workforce Development Board (CWDB) for distribution to local agencies to participate in, invest in, or partner with new or existing pre-apprenticeship training programs.
9. Of the amount made available in any fiscal year, requires the State Controller to allocate $192 million, or a proportional amount of the total made available, as follows:
10. $100 million to the State Coastal Conservancy and SGC, for the Climate, Sea Level, and Natural Disaster Program, to protect communities from the effects of climate change, including but not limited to, sea level rise, wildfires and flood protection.
11. $92 million to Go-Biz for the Community Economic Development Program, for specified purposes including revitalizing and restoring neighborhoods, converting vacant commercial property to affordable housing, developing student, faculty and staff housing, and supporting small businesses.
12. Specifies that the affected state entities may use up to 5% of the moneys allocated for administrative costs incurred in allocating the funds.
13. Establishes the Climate, Sea Level and Natural Disaster Program, to be jointly administered by the State Coastal Conservancy and SGC, and the Community Economic Development Program within Go-Biz, and specifies the duties and requirements of each program, including adopting guidelines for the allocation and use of funds.

FISCAL EFFECT:

1. Ongoing General Fund (GF) cost pressures of up to $2 billion annually, beginning in fiscal year (FY) 2021-22.
2. Each affected state agency would incur administrative costs, the actual amount of which is unknown and dependent upon the amount of funding appropriated by the Legislature, to implement and staff the provisions of this bill. As is customary, this bill allows up to 5% of the annual amount allocated to each program to be used to cover these costs. Assuming the maximum amount is allocated, the affected agencies estimate administrative costs (General Fund) as follows:
   
3. HCD estimates costs ranging from $11.3 million to $20.5 million annually, increasing over time to meet monitoring obligations, and 50 to 80 staff positions to administer up to $1.15 billion annually to the five specified programs.
4. BCSHA would incur unknown, but likely significant annual costs for staff to administer up to $650 million annually to the agency for the HHAPP.
5. CWDB would incur unknown annual costs, minimally in the hundreds of thousands of dollars, to administer the distribution of up to $8 million annually.
6. GO-Biz estimates costs of $1.67 million annually and up to 13 staff to establish and administer the new Community Economic Development Program.
7. SGC estimates costs of approximately $672,000 and the State Coastal Conservancy estimates costs of approximately $545,000 to establish and jointly administer the new Climate, Sea Level, and Natural Disaster Program.

COMMENTS:

1. Purpose. This bill seeks to allocate up to $2 billion annually from the General Fund to provide a sustainable state funding source for affordable housing programs, homelessness and economic development, particularly in the time of COVID-19.
2. Affordable Housing Investments. The Legislature has enacted numerous measures in recent years to facilitate affordable housing production and address the housing shortage. The housing package of 2017 made an effort to promote higher density housing, streamline housing approval processes and increase zoning for housing while providing more state enforcement power. That package included SB 2 (Atkins), which required recorders to collect a $75 fee on every real estate instrument, paper, or notice. Once collected, these fees will fund various housing programs. The package also included SB 3 (Beall), which placed a $4 billion bond before voters on the November 2018 ballot, which voters approved, $3 billion of which funds existing affordable housing programs at HCD. Additionally, in 2018, the voters approved Proposition 2, which provides $2 billion for housing construction for chronically homeless persons experiencing a mental illness.
3. Homeless Program investments. Existing law establishes the HHAPP under the BCSHA. HHAPP is a new program established as part of the 2019 budget, to build on the Homeless Emergency Aid Program (HEAP), which was created in the 2018 budget. HHAPP provides additional funds to help local jurisdictions combat homelessness. Under HHAPP, $650 million in one-time General Fund monies was directed to 13 of California’s largest cities, the 44 Continuums of Care and all 58 counties. All HHAPP funds must be expended by May 31, 2023.

AB 83 (Committee on Budget), Chapter 15, Statutes of 2020, the housing and homelessness budget trailer bill, among other provisions, provides $300 million for Round 2 of HHAPP and requires funds from the Coronavirus Relief Fund to provide housing for individuals and families who are experiencing homelessness or who are at risk of homelessness be disbursed in accordance with the Multifamily Housing Program (commonly known as Project Room Key), including grants to cities, counties, and other local public entities.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: July 29, 2020

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

SBPCA Bill Id:SB 795

Author:(Beall) – As Amended Ver:June 18, 2020

SENATE VOTE: 29-10

SUBJECT: Economic development: housing: workforce development: climate change infrastructure

SUMMARY: Allocates $10 billion over five years to several existing housing, homelessness, and pre-apprenticeship programs, as well as creating two new infrastructure financing programs at the Governor’s Office of Business and Economic Development (Go-Biz). Specifically, this bill:

1. Requires the Controller to allocate and deposit $1.808 billion each year to the following programs over five years:
   1. $500 million each year for five years to the Multifamily Housing Program at the California Department of Housing and Community Development (HCD). Projects funded under this program must be deemed to be public works;
   2. $300 million each year for five years to the Infill Infrastructure Grant Program at HCD. Projects funded under this program must be deemed to be public works;
   3. $200 million each year for five years to the Local Housing Trust Fund Matching Grant Program at HCD. Projects funded under this program must be deemed to be public works;
   4. $75 million each year for five years to the CalHome Program at HCD;
   5. $75 million each year for five years to the Joe Serna Jr. Farmworker Housing Program;
   6. $650 million each year for five years to the Homeless Housing, Assistance, and Prevention program (HHAPP) at the Business Consumer Services and Housing Agency; and
   7. $8 million each year for five years to the California Workforce Development Board for distribution to local agencies to participate in, invest in, or partner with new or existing pre-apprenticeship training programs.
2. Requires the Controller to allocate $192 million each year, over five years, to Go-Biz to be used as follows:
   1. $100 million each year for five years to a new Climate, Sea Level, and Natural Disaster Program, for the purpose of protecting communities dealing with the effects of climate change, including but not limited to, sea level rise, wildfires, and flood protection. Go-Biz must work in consultation with the Office of Planning and Research (OPR).
   2. $92 million each year for five years to a new Community Economic Development Program, working in consultation with HCD, for the following purposes:
      1. Promoting strong neighborhoods through support of local community planning and engagement efforts to revitalize and restore neighborhoods, including repairing infrastructure, parks, and rehabilitating and building housing and public facilities;
      2. Converting vacant and underutilized commercial property into housing affordable to families earning less than 120 percent of the area median income (AMI);
      3. Developing on-campus or off-campus housing for students, faculty, and school employees of a campus of the University of California (UC), California State University (CSU), or California Community Colleges (CCC);
      4. Promoting public private partnerships; and
      5. Supporting small businesses and job growth for affected residents.
3. Requires Go-Biz to adopt guidelines for the allocation and use of funds allocated under (2). The guidelines must provide the following:
   1. Eligible applicants include: a city, county, city and county, joint powers authority (JPA), EIFD, AHA, CRIA, transit village development district, UC, CSU, or CCC.
   2. In order to be eligible to receive funds, an applicant must comply with the following requirements:
      1. The applicant has a compliant housing element;
      2. The applicant has not been found to have violated the Housing Accountability Act or Density Bonus Law within the past five years, or after January 1, 2021, whichever is more recent;
      3. The applicant has not taken any of the following actions, whether by legislative body of the applicant or electorate exercising its local initiative or referendum power, that has the following effects:
4. Established or implemented any provision that: i) limits the number of land use approvals or permits necessary for the approval and construction of housing, ii) caps the number of housing units that can be approved or constructed, or iii) limits the population of the applicant jurisdiction;
5. Imposes a moratorium or enforces an existing moratorium on housing development;
6. Requires voter approval of any updates to the housing element; or
7. Downzones a parcel or parcels within an existing zoning district below what was allowed under the general plan and zoning ordinances of the applicant jurisdiction in effect on January 1, 2018.
   1. An applicant for funding shall submit to Go-Biz a plan for outreach to, and retention of, women, minority, disadvantaged youth, formerly incarcerated and other underrepresented subgroups in coordination with the California Workforce Investment Board and local boards, to increase their representation and employment opportunities in the building and construction trades.
   2. Requires an applicant to certify that a skilled and trained workforce will be used to complete the projects as specified. This provision does not apply to any of the following: a housing project that is 100 percent affordable, exclusive of any legally required manager’s units, to households earning 80 percent AMI or below, housing projects consisting of 25 units or less, or housing projects located in a county with a population of 100,000 or fewer, or the housing project is for student or faculty housing.
   3. Requires projects funded by either program to be considered a public work.

EXISTING LAW:

1. Authorizes local agencies to create Enhanced Infrastructure Financing Districts (EIFDs) to finance specified infrastructure projects and facilities.
2. Authorizes a local government to create Community Revitalization and Investment Authorities (CRIAs) to use tax increment revenue to improve infrastructure, assist businesses, and support affordable housing in disadvantaged communities.
3. Authorizes a local government to establish an Affordable Housing Authority (AHA) to fund affordable housing.
4. Establishes the Neighborhood Infill and Transit Improvements Act, or NIFTI, in EIFD law and allows the infrastructure financing plan to contain a provision for the addition of any increase of the total receipts of local sales and use taxes (SUTs) and attribute those taxes to the NIFTI.
5. Authorizes a local government to establish a transit village development district which addresses, among other things housing within ½ mile of the main entrance of a transit station.

FISCAL EFFECT: Unknown

COMMENTS:

Author’s statement: According to the Author, “These unprecedented times call for urgent action to help protect our most vulnerable. Keeping people in their homes and building more affordable housing must be at the top of our priority list.

COVID-19 illuminates what we already knew: there is a dramatic shortfall of 1.5 million units of affordable housing. With unemployment rates skyrocketing, more and more Californians are facing housing insecurity. While rent moratoriums provide a short-term reprieve, once they are lifted, an even greater number of families will be pushed into homelessness.

To make matters worse, housing production programs in California are almost entirely funded with bond revenue. According to HCD, there is only about $2 billion in bond funds remaining.

SB 795 creates a sustainable state fund source, with the sole purpose of tackling the homeless and affordable housing crisis. The bill invests in existing programs to quickly get local government the funding they need to address and prevent homelessness and jumpstart the construction of affordable housing.”

Recent affordable housing investments. California is in the midst of a serious housing crisis, largely due to a shortage of housing stock, most notably for lower-income households. The Legislature has enacted numerous measures to facilitate affordable housing production and address the housing shortage. The housing package of 2017 made an effort to promote higher density housing, streamline housing approval processes, and increase zoning for housing while providing more state enforcement power. That package included SB 2 (Atkins), which required recorders to collect a $75 fee on every real estate instrument, paper, or notice. Once collected, these fees will fund various housing programs. The package also included SB 3 (Beall), which placed a $4 billion bond before voters on the November 2018 ballot, which voters approved, $3 billion of which fund existing affordable housing programs at HCD. Additionally, in 2018, the voters approved Proposition 2, which provides $2 billion for housing construction for chronically homeless persons experiencing a mental illness.

Housing program descriptions. This bill proposes new funding for several existing programs, which are described below along with the funding proposed in this bill. These programs all received funding under Prop 1 (2018).

1. Multifamily Housing Program ($500 million each year for five years) — The Multifamily Housing Program assists the new construction, rehabilitation, and preservation of permanent and transitional rental housing for lower income households through loans to local governments and non- and for-profit developers. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $839 million in available funds for this program.
2. Infill Infrastructure Financing Grants ($300 million each year for five years) — this program assists in the new construction and rehabilitation of infrastructure that supports higher density affordable and mixed-income housing in locations designated as infill, such as water and sewer extensions. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $284 million in available funds for this program.
3. Joe Serna, Jr. Farmworker Housing Grant Program ($75 million each year for five years) — this program finances the new construction, rehabilitation, and acquisition of owner-occupied and rental units for agricultural workers, with a priority for lower income households. There is currently $240 million in available funds for this program.
4. Local Housing Trust Matching Grant Program ($200 million each year for five years) — this program provides matching grants to local governments and non-profits that raise money for affordable housing. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $227 million in available funds for this program.
5. CalHome ($75 million each year for five years) — this program provides grants to local public agencies and nonprofit developers to assist individual households through deferred-payment loans. The funds would provide direct, forgivable loans to assist development projects involving multiple ownership units, including single-family subdivisions. This money would also be available to self-help mortgage assistance programs and manufactured homes. There is currently $227 million in available funds for this program.

Homeless program investments. This bill proposes to invest $650 million each year for five years to the HHAPP at the Business Consumer Services and Housing Agency. HHAPP is a new program established as part of the 2019 budget, aimed to build on the Homeless Emergency Aid Program (HEAP) which was created in the 2018 budget. HHAPP provides additional funds to help local jurisdictions combat homelessness. Under HHAPP, $650 million in one-time General Fund monies was directed to 13 of California’s largest cities, the 44 Continuums of Care, and all 58 counties. HHAPP requires applicants for funds to demonstrate efforts at regional coordination in their application, and to demonstrate how the requested fund will close existing gaps in addressing homelessness. Eligible uses are defined as evidence-based solutions that address and prevent homelessness, including rental assistance and rapid rehousing; operating subsidies in affordable or supportive housing units, shelters, and navigation centers; incentives to landlords; outreach and coordination to help vulnerable populations access permanent housing and supportive housing; systems support for regional partnerships; innovative solutions such as hotel and motel conversions; diversion to permanent housing; and new shelters and navigation centers based on demonstrated need. All HHAPP funds must be expended by May 31, 2023.

In Governors’ May Revise budget, the Governor proposed $750 million in federal funding and directs the use of those funds to purchase hotels and motels to be owned and operated by local governments and non-profits for purposes of sheltering vulnerable populations experiencing homelessness. The funds will also be used to provide technical assistance to local governments and others seeking to purchase and operate these hotels and motels to address homelessness.

As noted above, the Governor has proposed this year to restructure the overall approach to homeless funding. Additionally, the Homeless Coordinating and Financing Council is statutorily required to develop a state strategy to address homelessness; it may be prudent to base any ongoing funding on that strategy.

New infrastructure program investments. This bill also creates two new infrastructure programs at GoBiz. The first is the Climate, Sea Level, and Natural Disaster Program, which provides funds to local governments and specified local financing districts for the purposes of financing the construction, repair, replacement, and maintenance of infrastructure related to protecting communities from the effects of climate change. This program receives $100 million per year for five years. The second program, the Community Economic Development Program, funds a variety of uses, including converting vacant and underutilized property into affordable housing, developing college student and faculty housing, promoting public private partnerships, and supporting small businesses and job growth for affected residents. The program also specifies that the funds may be used to “[p]romot[e] strong neighborhoods through support of local community planning and engagement efforts to revitalize and restore neighborhoods, including repairing infrastructure, parks, and rehabilitating and building housing and public facilities.”

Eligible applicants include cities and counties, local financing districts, and specified universities and colleges. Projects funded under these programs will be public works and require a skilled and trained workforce, except for specified housing projects.

In order to create a truly state-local partnership, this bill provides that jurisdictions that have passed any anti-housing or slow growth measures, failed to adopt a compliant housing element or found to be in violation of specific state housing laws in the prior five years shall be ineligible to receive funds from these programs.

No appropriation: This bill would appropriate $10 billion dollars to existing and newly created programs. No funding was included in the budget this year for these programs, and the state faces a multi-billion dollar deficit. Although, these programs are laudable and in many cases, the keystone affordable housing programs, funding is not available for them in this year’s budget.

Staff comments:

This bill proposes several new and specified local financing districts for the purposes of financing the construction, repair, replacement, and maintenance of infrastructure related to protecting communities from the effects of climate change. These programs are located at GoBiz which has experience providing infrastructure financing to local governments but is not the lead agency with policy expertise on climate change. The committee may wish to consider, moving the Climate, Sea Level, and Natural Disaster Program to the Coastal Conservancy and Strategic Growth Counsel.

Committee amendment:

1. Move the Climate, Sea Level, and Natural Disaster Program from GoBIZ to the Coastal Conservancy and Strategic Growth Counsel.

REGISTERED SUPPORT / OPPOSITION:

Support

Affordable Housing Network of Santa Clara County
All Home
Better Way Forward to House California

Bay Area Council
Bill Wilson Center
California Community Builders
Catholic Charities of Santa Clara County
Chan Zuckerberg Initiative
Cities Association of Santa Clara County
City of Burbank
City of Oceanside

City of Oroville

City of Placentia
City of San Jose

City of Santa Monica
City of Saratoga
City of Thousand Oaks

City of West Hollywood
First Community Housing
Habitat for Humanity California
League of California Cities
LifeMoves
Los Angeles County Division League of California Cities

Los Angeles County Business Federation -BizFed
Midpeninsula Regional Open Space District
Orange County Council of Governments
San Francisco Foundation
San Jose/Silicon Valley NAACP

Santa Clara Valley Open Space Authority
Schneider Electric North America
Silicon Valley Community Foundation
Silicon Valley Leadership Group
South Bay Cities Council of Governments

SV@Home
Working Partnerships USA

Oppose

American Fire Sprinkler Association, San Diego Chapter
Associated Builders and Contractors - Southern California Chapter
Independent Roofing Contractors of California
Western Electrical Contractors Association

Oppose Unless Amended

Associated Builders and Contractors Northern California Chapter

Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085

Date of Hearing: July 28, 2020

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

SBPCA Bill Id:SB 795

Author:(Beall) – As Amended Ver:June 18, 2020

SENATE VOTE: 29-10

SUBJECT: Economic development: housing: workforce development: climate change infrastructure

SUMMARY: Allocates $10 billion over five years to several existing housing, homelessness, and pre-apprenticeship programs, as well as creating two new infrastructure financing programs at the Governor’s Office of Business and Economic Development (Go-Biz). Specifically, this bill:

1. Requires the Controller to allocate and deposit $1.808 billion each year to the following programs over five years:
   1. $500 million each year for five years to the Multifamily Housing Program at the California Department of Housing and Community Development (HCD). Projects funded under this program must be deemed to be public works;
   2. $300 million each year for five years to the Infill Infrastructure Grant Program at HCD. Projects funded under this program must be deemed to be public works;
   3. $200 million each year for five years to the Local Housing Trust Fund Matching Grant Program at HCD. Projects funded under this program must be deemed to be public works;
   4. $75 million each year for five years to the CalHome Program at HCD;
   5. $75 million each year for five years to the Joe Serna Jr. Farmworker Housing Program;
   6. $650 million each year for five years to the Homeless Housing, Assistance, and Prevention program (HHAPP) at the Business Consumer Services and Housing Agency; and
   7. $8 million each year for five years to the California Workforce Development Board for distribution to local agencies to participate in, invest in, or partner with new or existing pre-apprenticeship training programs.
2. Requires the Controller to allocate $192 million each year, over five years, to Go-Biz to be used as follows:
   1. $100 million each year for five years to a new Climate, Sea Level, and Natural Disaster Program, for the purpose of protecting communities dealing with the effects of climate change, including but not limited to, sea level rise, wildfires, and flood protection. Go-Biz must work in consultation with the Office of Planning and Research (OPR).
   2. $92 million each year for five years to a new Community Economic Development Program, working in consultation with HCD, for the following purposes:
      1. Promoting strong neighborhoods through support of local community planning and engagement efforts to revitalize and restore neighborhoods, including repairing infrastructure, parks, and rehabilitating and building housing and public facilities;
      2. Converting vacant and underutilized commercial property into housing affordable to families earning less than 120 percent of the area median income (AMI);
      3. Developing on-campus or off-campus housing for students, faculty, and school employees of a campus of the University of California (UC), California State University (CSU), or California Community Colleges (CCC);
      4. Promoting public private partnerships; and
      5. Supporting small businesses and job growth for affected residents.
3. Requires Go-Biz to adopt guidelines for the allocation and use of funds allocated under (2). The guidelines must provide the following:
   1. Eligible applicants include: a city, county, city and county, joint powers authority (JPA), EIFD, AHA, CRIA, transit village development district, UC, CSU, or CCC.
   2. In order to be eligible to receive funds, an applicant must comply with the following requirements:
      1. The applicant has a compliant housing element;
      2. The applicant has not been found to have violated the Housing Accountability Act or Density Bonus Law within the past five years, or after January 1, 2021, whichever is more recent;
      3. The applicant has not taken any of the following actions, whether by legislative body of the applicant or electorate exercising its local initiative or referendum power, that has the following effects:
4. Established or implemented any provision that: i) limits the number of land use approvals or permits necessary for the approval and construction of housing, ii) caps the number of housing units that can be approved or constructed, or iii) limits the population of the applicant jurisdiction;
5. Imposes a moratorium or enforces an existing moratorium on housing development;
6. Requires voter approval of any updates to the housing element; or
7. Downzones a parcel or parcels within an existing zoning district below what was allowed under the general plan and zoning ordinances of the applicant jurisdiction in effect on January 1, 2018.
   1. An applicant for funding shall submit to Go-Biz a plan for outreach to, and retention of, women, minority, disadvantaged youth, formerly incarcerated and other underrepresented subgroups in coordination with the California Workforce Investment Board and local boards, to increase their representation and employment opportunities in the building and construction trades.
   2. Requires an applicant to certify that a skilled and trained workforce will be used to complete the projects as specified. This provision does not apply to any of the following: a housing project that is 100 percent affordable, exclusive of any legally required manager’s units, to households earning 80 percent AMI or below, housing projects consisting of 25 units or less, or housing projects located in a county with a population of 100,000 or fewer, or the housing project is for student or faculty housing.
   3. Requires projects funded by either program to be considered a public work.

EXISTING LAW:

1. Authorizes local agencies to create Enhanced Infrastructure Financing Districts (EIFDs) to finance specified infrastructure projects and facilities.
2. Authorizes a local government to create Community Revitalization and Investment Authorities (CRIAs) to use tax increment revenue to improve infrastructure, assist businesses, and support affordable housing in disadvantaged communities.
3. Authorizes a local government to establish an Affordable Housing Authority (AHA) to fund affordable housing.
4. Establishes the Neighborhood Infill and Transit Improvements Act, or NIFTI, in EIFD law and allows the infrastructure financing plan to contain a provision for the addition of any increase of the total receipts of local sales and use taxes (SUTs) and attribute those taxes to the NIFTI.
5. Authorizes a local government to establish a transit village development district which addresses, among other things housing within ½ mile of the main entrance of a transit station.

FISCAL EFFECT: Unknown

COMMENTS:

Author’s statement: According to the Author, “These unprecedented times call for urgent action to help protect our most vulnerable. Keeping people in their homes and building more affordable housing must be at the top of our priority list.

COVID-19 illuminates what we already knew: there is a dramatic shortfall of 1.5 million units of affordable housing. With unemployment rates skyrocketing, more and more Californians are facing housing insecurity. While rent moratoriums provide a short-term reprieve, once they are lifted, an even greater number of families will be pushed into homelessness.

To make matters worse, housing production programs in California are almost entirely funded with bond revenue. According to HCD, there is only about $2 billion in bond funds remaining.

SB 795 creates a sustainable state fund source, with the sole purpose of tackling the homeless and affordable housing crisis. The bill invests in existing programs to quickly get local government the funding they need to address and prevent homelessness and jumpstart the construction of affordable housing.”

Recent affordable housing investments. California is in the midst of a serious housing crisis, largely due to a shortage of housing stock, most notably for lower-income households. The Legislature has enacted numerous measures to facilitate affordable housing production and address the housing shortage. The housing package of 2017 made an effort to promote higher density housing, streamline housing approval processes, and increase zoning for housing while providing more state enforcement power. That package included SB 2 (Atkins), which required recorders to collect a $75 fee on every real estate instrument, paper, or notice. Once collected, these fees will fund various housing programs. The package also included SB 3 (Beall), which placed a $4 billion bond before voters on the November 2018 ballot, which voters approved, $3 billion of which fund existing affordable housing programs at HCD. Additionally, in 2018, the voters approved Proposition 2, which provides $2 billion for housing construction for chronically homeless persons experiencing a mental illness.

Housing program descriptions. This bill proposes new funding for several existing programs, which are described below along with the funding proposed in this bill. These programs all received funding under Prop 1 (2018).

1. Multifamily Housing Program ($500 million each year for five years) — The Multifamily Housing Program assists the new construction, rehabilitation, and preservation of permanent and transitional rental housing for lower income households through loans to local governments and non- and for-profit developers. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $839 million in available funds for this program.
2. Infill Infrastructure Financing Grants ($300 million each year for five years) — this program assists in the new construction and rehabilitation of infrastructure that supports higher density affordable and mixed-income housing in locations designated as infill, such as water and sewer extensions. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $284 million in available funds for this program.
3. Joe Serna, Jr. Farmworker Housing Grant Program ($75 million each year for five years) — this program finances the new construction, rehabilitation, and acquisition of owner-occupied and rental units for agricultural workers, with a priority for lower income households. There is currently $240 million in available funds for this program.
4. Local Housing Trust Matching Grant Program ($200 million each year for five years) — this program provides matching grants to local governments and non-profits that raise money for affordable housing. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $227 million in available funds for this program.
5. CalHome ($75 million each year for five years) — this program provides grants to local public agencies and nonprofit developers to assist individual households through deferred-payment loans. The funds would provide direct, forgivable loans to assist development projects involving multiple ownership units, including single-family subdivisions. This money would also be available to self-help mortgage assistance programs and manufactured homes. There is currently $227 million in available funds for this program.

Homeless program investments. This bill proposes to invest $650 million each year for five years to the HHAPP at the Business Consumer Services and Housing Agency. HHAPP is a new program established as part of the 2019 budget, aimed to build on the Homeless Emergency Aid Program (HEAP) which was created in the 2018 budget. HHAPP provides additional funds to help local jurisdictions combat homelessness. Under HHAPP, $650 million in one-time General Fund monies was directed to 13 of California’s largest cities, the 44 Continuums of Care, and all 58 counties. HHAPP requires applicants for funds to demonstrate efforts at regional coordination in their application, and to demonstrate how the requested fund will close existing gaps in addressing homelessness. Eligible uses are defined as evidence-based solutions that address and prevent homelessness, including rental assistance and rapid rehousing; operating subsidies in affordable or supportive housing units, shelters, and navigation centers; incentives to landlords; outreach and coordination to help vulnerable populations access permanent housing and supportive housing; systems support for regional partnerships; innovative solutions such as hotel and motel conversions; diversion to permanent housing; and new shelters and navigation centers based on demonstrated need. All HHAPP funds must be expended by May 31, 2023.

In Governors’ May Revise budget, the Governor proposed $750 million in federal funding and directs the use of those funds to purchase hotels and motels to be owned and operated by local governments and non-profits for purposes of sheltering vulnerable populations experiencing homelessness. The funds will also be used to provide technical assistance to local governments and others seeking to purchase and operate these hotels and motels to address homelessness.

As noted above, the Governor has proposed this year to restructure the overall approach to homeless funding. Additionally, the Homeless Coordinating and Financing Council is statutorily required to develop a state strategy to address homelessness; it may be prudent to base any ongoing funding on that strategy.

New infrastructure program investments. This bill also creates two new infrastructure programs at GoBiz. The first is the Climate, Sea Level, and Natural Disaster Program, which provides funds to local governments and specified local financing districts for the purposes of financing the construction, repair, replacement, and maintenance of infrastructure related to protecting communities from the effects of climate change. This program receives $100 million per year for five years. The second program, the Community Economic Development Program, funds a variety of uses, including converting vacant and underutilized property into affordable housing, developing college student and faculty housing, promoting public private partnerships, and supporting small businesses and job growth for affected residents. The program also specifies that the funds may be used to “[p]romot[e] strong neighborhoods through support of local community planning and engagement efforts to revitalize and restore neighborhoods, including repairing infrastructure, parks, and rehabilitating and building housing and public facilities.”

Eligible applicants include cities and counties, local financing districts, and specified universities and colleges. Projects funded under these programs will be public works and require a skilled and trained workforce, except for specified housing projects.

In order to create a truly state-local partnership, this bill provides that jurisdictions that have passed any anti-housing or slow growth measures, failed to adopt a compliant housing element or found to be in violation of specific state housing laws in the prior five years shall be ineligible to receive funds from these programs.

No appropriation: This bill would appropriate $10 billion dollars to existing and newly created programs. No funding was included in the budget this year for these programs, and the state faces a multi-billion dollar deficit. Although, these programs are laudable and in many cases, the keystone affordable housing programs, funding is not available for them in this year’s budget.

Staff comments:

This bill proposes several new and specified local financing districts for the purposes of financing the construction, repair, replacement, and maintenance of infrastructure related to protecting communities from the effects of climate change. These programs are located at GoBiz which has experience providing infrastructure financing to local governments but is not the lead agency with policy expertise on climate change. The committee may wish to consider, moving the Climate, Sea Level, and Natural Disaster Program to the Coastal Conservancy and Strategic Growth Counsel.

Committee amendment:

1. Move the Climate, Sea Level, and Natural Disaster Program from GoBIZ to the Coastal Conservancy and Strategic Growth Counsel.

REGISTERED SUPPORT / OPPOSITION:

Support

Affordable Housing Network of Santa Clara County
All Home
Better Way Forward to House California

Bay Area Council
Bill Wilson Center
California Community Builders
Catholic Charities of Santa Clara County
Chan Zuckerberg Initiative
Cities Association of Santa Clara County
City of Burbank
City of Oceanside

City of Oroville

City of Placentia
City of San Jose

City of Santa Monica
City of Saratoga
City of Thousand Oaks

City of West Hollywood
First Community Housing
Habitat for Humanity California
League of California Cities
LifeMoves
Los Angeles County Division League of California Cities

Los Angeles County Business Federation -BizFed
Midpeninsula Regional Open Space District
Orange County Council of Governments
San Francisco Foundation
San Jose/Silicon Valley NAACP

Santa Clara Valley Open Space Authority
Schneider Electric North America
Silicon Valley Community Foundation
Silicon Valley Leadership Group
South Bay Cities Council of Governments

SV@Home
Working Partnerships USA

Opposition

Oppose

American Fire Sprinkler Association, San Diego Chapter
Associated Builders and Contractors - Southern California Chapter
Independent Roofing Contractors of California
Western Electrical Contractors Association

Oppose Unless Amended

Associated Builders and Contractors Northern California Chapter

Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085

 THIRD READING  

Bill No: SB 795

Author: Beall (D), McGuire (D) and Portantino (D), et al.

Amended: 6/18/20

Vote: 21

SENATE HOUSING COMMITTEE: 8-2, 5/26/20

AYES: Wiener, Caballero, Durazo, McGuire, Roth, Skinner, Umberg, Wieckowski

NOES: Morrell, Moorlach

NO VOTE RECORDED: Bates

SENATE APPROPRIATIONS COMMMITTEE: 5-1, 6/18/20

AYES: Portantino, Bradford, Hill, Leyva, Wieckowski

NOES: Jones

NO VOTE RECORDED: Bates

SUBJECT: Economic development: housing: workforce development: climate change infrastructure

SOURCE: Author

DIGEST:

This bill allocates $10 billion over five years to several existing housing, homelessness, and pre-apprenticeship programs, as well as creating two new infrastructure financing programs at the Governor’s Office of Business and Economic Development (Go-Biz).

ANALYSIS:

Existing law:

1. Authorizes local agencies to create Enhanced Infrastructure Financing Districts (EIFDs) to finance specified infrastructure projects and facilities.
2. Authorizes a local government to create Community Revitalization and Investment Authorities (CRIAs) to use tax increment revenue to improve infrastructure, assist businesses, and support affordable housing in disadvantaged communities.
3. Authorizes a local government to establish an Affordable Housing Authority (AHA) to fund affordable housing.
4. Establishes the Neighborhood Infill and Transit Improvements Act, or NIFTI, in EIFD law and allows the infrastructure financing plan to contain a provision for the addition of any increase of the total receipts of local sales and use taxes (SUTs) and attribute those taxes to the NIFTI.
5. Authorizes a local government to establish a transit village development district which addresses, among other things housing within ½ mile of the main entrance of a transit station.

This bill appropriates $10 billion continuously without regard to fiscal years for five years. The funds shall be distributed in the following manner:

1. Requires the Controller to allocate and deposit $1.808 billion each year to the following programs over five years:
   1. $500 million each year for five years to the Multifamily Housing Program at the California Department of Housing and Community Development (HCD). Projects funded under this program shall be deemed to be public works.
   2. $300 million each year for five years to the Infill Infrastructure Grant Program at HCD. Projects funded under this program shall be deemed to be public works.
   3. $200 million each year for five years to the Local Housing Trust Fund Matching Grant Program at HCD. Projects funded under this program shall be deemed to be public works.
   4. $75 million each year for five years to the CalHome Program at HCD.
   5. $75 million each year for five years to the Joe Serna Jr. Farmworker Housing Program.
   6. $650 million each year for five years to the Homeless Housing, Assistance, and Prevention program (HHAPP) at the Business Consumer Services and Housing Agency.
   7. $8 million each year for five years to the California Workforce Development Board for distribution to local agencies to participate in, invest in, or partner with new or existing pre-apprenticeship training programs.
2. Requires the Controller to allocate $192 million each year, over five years, to Go-Biz to be used as follows:
   1. $100 million each year for five years to a new Climate, Sea Level, and Natural Disaster Program, for the purpose of protecting communities dealing with the effects of climate change, including but not limited to, sea level rise, wildfires, and flood protection. Go-Biz shall work in consultation with the Office of Planning and Research (OPR).
   2. $92 million each year for five years to a new Community Economic Development Program, working in consultation with HCD, for the following purposes:
      1. “Promoting strong neighborhoods through support of local community planning and engagement efforts to revitalize and restore neighborhoods, including repairing infrastructure, parks, and rehabilitating and building housing and public facilities.”
      2. Converting vacant and underutilized commercial property into housing affordable to families earning less than 120% of the area median income (AMI).
      3. Developing on-campus or off-campus housing for students, faculty, and school employees of a campus of the University of California (UC), California State University (CSU), or California Community Colleges (CCC).
      4. Promoting “public private partnerships.”
      5. Supporting small businesses and job growth for affected residents.
3. Requires Go-Biz to adopt guidelines for the allocation and use of funds allocated under (2). The guidelines shall provide the following:
   1. Eligible applicants include: a city, county, city and county, joint powers authority (JPA), EIFD, AHA, CRIA, transit village development district, UC, CSU, or CCC.
   2. In order to be eligible to receive funds, an applicant shall comply with the following requirements:
      1. The applicant has a compliant housing element.
      2. The applicant has not been found to have violated the Housing Accountability Act or Density Bonus Law within the past five years, or after January 1, 2021, whichever is more recent.
      3. The applicant has not taken any of the following actions, whether by legislative body of the applicant or electorate exercising its local initiative or referendum power, that has the following effects:
         1. Established or implemented any provision that: i) limits the number of land use approvals or permits necessary for the approval and construction of housing, ii) caps the number of housing units that can be approved or constructed, or iii) limits the population of the applicant jurisdiction.
         2. Imposes a moratorium or enforces an existing moratorium on housing development.
         3. Requires voter approval of any updates to the housing element.
         4. Downzones a parcel or parcels within an existing zoning district below what was allowed under the general plan and zoning ordinances of the applicant jurisdiction in effect on January 1, 2018.
   3. An applicant for funding shall submit to Go-Biz a plan for outreach to, and retention of, women, minority, disadvantaged youth, formerly incarcerated and other underrepresented subgroups in coordination with the California Workforce Investment Board and local boards, to increase their representation and employment opportunities in the building and construction trades.
   4. Requires an applicant to certify that a skilled and trained workforce will be used to complete the projects as specified. This provision shall not apply to any of the following: a housing project that is 100% affordable, exclusive of any legally required manager’s units, to households earning 80% AMI or below, housing projects consisting of 25 units or less, or housing projects located in a county with a population of 100,000 or fewer, or the housing project is for student or faculty housing.
   5. Requires projects funded by either program to be considered a public work.

Comments

1. Housing program descriptions. This bill proposes new funding for several existing programs, which are described below along with the funding proposed in this bill. These programs all received funding under Prop 1 (2018).
2. Multifamily Housing Program ($500 million each year for five years) — The Multifamily Housing Program assists the new construction, rehabilitation, and preservation of permanent and transitional rental housing for lower income households through loans to local governments and non- and for-profit developers. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $839 million in available funds for this program.
3. Infill Infrastructure Financing Grants ($300 million each year for five years) — this program assists in the new construction and rehabilitation of infrastructure that supports higher density affordable and mixed-income housing in locations designated as infill, such as water and sewer extensions. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $284 million in available funds for this program.
4. Joe Serna, Jr. Farmworker Housing Grant Program ($75 million each year for five years) — this program finances the new construction, rehabilitation, and acquisition of owner-occupied and rental units for agricultural workers, with a priority for lower income households. There is currently $240 million in available funds for this program.
5. Local Housing Trust Matching Grant Program ($200 million each year for five years) — this program provides matching grants to local governments and non-profits that raise money for affordable housing. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $227 million in available funds for this program.
6. CalHome ($75 million each year for five years) — this program provides grants to local public agencies and nonprofit developers to assist individual households through deferred-payment loans. The funds would provide direct, forgivable loans to assist development projects involving multiple ownership units, including single-family subdivisions. This money would also be available to self-help mortgage assistance programs and manufactured homes. There is currently $227 million in available funds for this program.
7. Homeless program investments. This bill proposes to invest $650 million each year for five years to the HHAPP at the Business Consumer Services and Housing Agency. HHAPP is a new program established as part of the 2019 budget, aimed to build on the Homeless Emergency Aid Program (HEAP) which was created in the 2018 budget. HHAPP provides additional funds to help local jurisdictions combat homelessness. Under HHAPP, $650 million in one-time General Fund monies was directed to 13 of California’s largest cities, the 44 CoCs, and all 58 counties. HHAPP requires applicants for funds to demonstrate efforts at regional coordination in their application, and to demonstrate how the requested fund will close existing gaps in addressing homelessness. Eligible uses are defined as evidence-based solutions that address and prevent homelessness, including rental assistance and rapid rehousing; operating subsidies in affordable or supportive housing units, shelters, and navigation centers; incentives to landlords; outreach and coordination to help vulnerable populations access permanent housing and supportive housing; systems support for regional partnerships; innovative solutions such as hotel and motel conversions; diversion to permanent housing; and new shelters and navigation centers based on demonstrated need. All HHAPP funds must be expended by May 31, 2023.

In Governors’ May Revise budget, the Governor proposed $750 million in federal funding and directs the use of those funds to purchase hotels and motels to be owned and operated by local governments and non-profits for purposes of sheltering vulnerable populations experiencing homelessness. The funds will also be used to provide technical assistance to local governments and others seeking to purchase and operate these hotels and motels to address homelessness.

As noted above, the Governor has proposed this year to restructure the overall approach to homeless funding. Additionally, the Homeless Coordinating and Financing Council is statutorily required to develop a state strategy to address homelessness; it may be prudent to base any ongoing funding on that strategy.

1. New infrastructure program investments. This bill also creates two new infrastructure programs at GoBiz. The first is the Climate, Sea Level, and Natural Disaster Program, which provides funds to local governments and specified local financing districts for the purposes of financing the construction, repair, replacement, and maintenance of infrastructure related to protecting communities from the effects of climate change. This program receives $100 million per year for five years. The second program, the Community Economic Development Program, funds a variety of uses, including converting vacant and underutilized property into affordable housing, developing college student and faculty housing, promoting public private partnerships, and supporting small businesses and job growth for affected residents. Eligible applicants include cities and counties, local financing districts, and specified universities and colleges. Projects funded under these programs will be public works and require a skilled and trained workforce, except for specified housing projects.

In order to create a truly state-local partnership, this bill provides that jurisdictions that have passed any anti-housing or slow growth measures, failed to adopt a compliant housing element or found to be in violation of specific state housing laws in the prior five years shall be ineligible to receive funds from these programs.

1. Double-referral. This bill was also referred to the Senate Business, Professions, and Economic Development Committee, who continues to monitor it.
2. Appropriations Amendments. This bill was amended to do the following:
3. Increase the amount annually allocated to the CWDB for specified preapprenticeship training programs by $3 million (to $8 million total), and reduce the amount allocated to GO-Biz for the Community Economic Development Program by $3 million (to $92 million).
4. Authorize HCD, the BCSH Agency, GO-Biz, and the CWDA to use up to 5% of the funds allocated to the respective state entities for administrative costs, as specified.
5. Require GO-Biz to consult with the Governor’s Office of Planning and Research or other appropriate state agencies when awarding funds under the Climate, Sea Level, and Natural Disaster Program.
6. Require GO-Biz to consult with HCD and any other appropriate state entity when awarding funds under the Community Economic Development Program.
7. Delete provisions that continuously appropriate $10 billion from the General Fund, and instead make up to $2 billion available for the specified programs each fiscal year, upon appropriation by the Legislature.
8. Specify that amounts allocated by the SCO to the specified programs would be reduced by a proportional amount if the Legislature appropriates less than $2 billion in a given fiscal year.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee:

• Ongoing General Fund cost pressures of up to $2 billion annually, beginning in 2021-22.
  
• The Department of Housing and Community Development (HCD) estimates it would incur the following administrative costs over the next five years, to the extent the maximum amount of funding ($1.15 billion) is allocated to the department for the five specified programs:
  • 2021-22: $11,322,000 and 50 PY of staff
  • 2022-23: $13,368,000 and 63 PY of staff
  • 2023-24: $15,093,000 and 72 PY of staff
  • 2024-25: $18,208,000 and 88 PY of staff
  • 2025-26: $20,520,000 and 100 PY of staff

Actual administrative costs are unknown and would depend upon the amount of funding appropriated by the Legislature. Staff notes that HCD would fund these positions from the annual allocations. (General Fund)

• The Business and Consumer Services and Housing (BCSH) Agency would incur unknown significant costs for staff to administer up to $650 million in funding that would be allocated to the Agency for the Homeless Housing, Assistance, and Prevention Program (HHAPP). Actual administrative costs depend upon the amount of funding appropriated by the Legislature. Staff notes that the BCSH Agency would fund its administrative costs and staff from the amounts appropriated for the HHAPP.
  
• GO-Biz estimates it would incur annual costs of up to $2.9 million annually and require up to 22 PY of staff to administer the two new programs, to the extent the maximum amount of funding is appropriated and allocated for that purpose. Actual administrative costs are unknown and would depend upon the amount of funding appropriated by the Legislature. Staff notes that GO-Biz would fund these positions from the annual allocations. (General Fund)
  
• The California Workforce Development Board (CWDA) would incur annual costs, minimally in the hundreds of thousands of dollars, if it were to administer the distribution of $8 million annually. Actual administrative costs are unknown and would depend upon the amount of funding appropriated by the Legislature. Staff notes that CWDA would fund its administrative costs from the annual allocations. (General Fund)

SUPPORT: (Verified 6/18/20)

Affordable Housing Network of Santa Clara County
All Home
Bay Area Council
Bill Wilson Center
BizFed - Los Angeles County
California Community Builders
Catholic Charities of Santa Clara County
Chan Zuckerberg Initiative
City of Santa Monica
City of Thousand Oaks
First Community Housing
League of California Cities
LifeMoves
Los Angeles County Business Federation
Midpeninsula Regional Open Space District
Orange County Council of Governments
San Francisco Foundation
San Jose/Silicon Valley NAACP
Schneider Electric
Silicon Valley Community Foundation
Silicon Valley Leadership Group
Working Partnerships USA

1 Individual

OPPOSITION: (Verified 6/18/20)

Associated Builders and Contractors - Merit Training Trust Fund

Associated Builders and Contractors - Southern California Chapter

Associated Builders and Contractors Northern California Chapter

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: According to the author, “These unprecedented times call for urgent action to help protect our most vulnerable.  Keeping people in their homes and building more affordable housing must be at the top of our priority list. COVID-19 illuminates what we already knew: there is a dramatic shortfall of 1.5 million units of affordable housing. With unemployment rates skyrocketing, more and more Californians are facing housing insecurity. While rent moratoriums provide a short-term reprieve, once they are lifted, an even greater number of families will be pushed into homelessness.

SB 795 creates a sustainable state fund source, with the sole purpose of tackling the affordable housing crisis. The bill invests in existing programs to quickly get local governments the funding they need to address and prevent homelessness and jumpstart the construction of affordable housing, especially among low-income renters. We need a stimulus measure to boost our economy and get people back to work. SB 795 strategically invests in a continuum of emergency and permanent affordable housing to get and keep Californians off our streets while generating high wage jobs.”

ARGUMENTS IN OPPOSITION: Associated Builders and Contractors Northern California Chapter are opposed unless amended to remove the provision that provides funding for union-only pre-apprenticeship programs. Specifically, the bill provides $5 million per year for five years to the California Workforce Development Board which follows the multi-craft core curriculum. According to the opposition, this excludes other “nationally recognized curriculum and training programs used by state and federally approved apprenticeship programs.”

Prepared by: Alison Hughes / HOUSING / (916) 651-4124

6/23/20 18:59:04

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 795 (Beall) - Economic development: housing: workforce development: climate change infrastructure

Bill Summary:

SB 795 would continuously appropriate $10 billion from the General Fund for allocation over five years to specified existing affordable housing, homelessness assistance, and workforce development programs, as well as two new infrastructure and economic development programs established under the Governor’s Office of Business and Economic Development (GO-Biz).

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on June 18, 2020

Fiscal Impact:

• Ongoing General Fund cost pressures of up to $2 billion annually, beginning in 2021-22. .
  
• The Department of Housing and Community Development (HCD) estimates it would incur the following administrative costs over the next five years, to the extent the maximum amount of funding ($1.15 billion) is allocated to the department for the five specified programs:
  • 2021-22: $11,322,000 and 50 PY of staff
  • 2022-23: $13,368,000 and 63 PY of staff
  • 2023-24: $15,093,000 and 72 PY of staff
  • 2024-25: $18,208,000 and 88 PY of staff
  • 2025-26: $20,520,000 and 100 PY of staff

Actual administrative costs are unknown and would depend upon the amount of funding appropriated by the Legislature. Staff notes that HCD would fund these positions from the annual allocations. (General Fund)

• The Business and Consumer Services and Housing (BCSH) Agency would incur unknown significant costs for staff to administer up to $650 million in funding that would be allocated to the Agency for the Homeless Housing, Assistance, and Prevention Program (HHAPP). Actual administrative costs depend upon the amount of funding appropriated by the Legislature. Staff notes that the BCSH Agency would fund its administrative costs and staff from the amounts appropriated for the HHAPP.
  
• GO-Biz estimates it would incur annual costs of up to $2.9 million annually and require up to 22 PY of staff to administer the two new programs, to the extent the maximum amount of funding is appropriated and allocated for that purpose. Actual administrative costs are unknown and would depend upon the amount of funding appropriated by the Legislature. Staff notes that GO-Biz would fund these positions from the annual allocations. (General Fund)
  
• The California Workforce Development Board (CWDA) would incur annual costs, minimally in the hundreds of thousands of dollars, if it were to administer the distribution of $8 million annually. Actual administrative costs are unknown and would depend upon the amount of funding appropriated by the Legislature. Staff notes that CWDA would fund its administrative costs from the annual allocations. (General Fund)

Author Amendments:

The author’s amendments would do the following:

• Increase the amount annually allocated to the CWDB for specified preapprenticeship training programs by $3 million (to $8 million total), and reduce the amount allocated to GO-Biz for the Community Economic Development Program by $3 million (to $92 million).
• Authorize HCD, the BCSH Agency, GO-Biz, and the CWDA to use up to 5% of the funds allocated to the respective state entities for administrative costs, as specified.
• Require GO-Biz to consult with the Governor’s Office of Planning and Research or other appropriate state agencies when awarding funds under the Climate, Sea Level, and Natural Disaster Program.
• Require GO-Biz to consult with HCD and any other appropriate state entity when awarding funds under the Community Economic Development Program.

Committee Amendments:

In addition, the committee amendments would do the following:

• Delete provisions that continuously appropriate $10 billion from the General Fund, and instead make up to $2 billion available for the specified programs each fiscal year, upon appropriation by the Legislature.
• Specify that amounts allocated by the SCO to the specified programs would be reduced by a proportional amount if the Legislature appropriates less than $2 billion in a given fiscal year.

-- END --

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 795 (Beall) - Economic development: housing: workforce development: climate change infrastructure

Bill Summary:

SB 795 would continuously appropriate $10 billion from the General Fund for allocation over five years to specified existing affordable housing, homelessness assistance, and workforce development programs, as well as two new infrastructure and economic development programs established under the Governor’s Office of Business and Economic Development (GO-Biz).

Fiscal Impact:

• Continuous appropriation of $10 billion from the General Fund for expenditure over the 2020-21 fiscal year and each of the following four fiscal years. The bill would require the State Controller’s Office (SCO) to allocate $2 billion each year over the five year period to specified existing and new programs.
  
• The Department of Housing and Community Development estimates it would incur the following costs to administer the $1.15 billion in funding that would be allocated to the department for the five specified programs:
  • 2020-21: $11,322,000 and 50 PY of staff
  • 2021-22: $13,368,000 and 63 PY of staff
  • 2022-23: $15,093,000 and 72 PY of staff
  • 2023-24: $18,208,000 and 88 PY of staff
  • 2024-25: $20,520,000 and 100 PY of staff
  • 2025-26: $14,402,000 and 74 PY of staff
  • 2026-27: $12,640,000 and 65 PY of staff
  • 2027-28: $13,786,000 and 71 PY of staff

HCD further notes that it would incur ongoing costs for 35 PY of Asset Management and Compliance staff to monitor the increased portfolio of projects for the 55-year affordability term. (General Fund)

• The Business and Consumer Services and Housing (BCSH) Agency would incur unknown significant costs for staff to administer the $650 million in funding that would be allocated to the Agency for the Homeless Housing, Assistance, and Prevention Program (HHAPP). Staff assumes the BCSH Agency would fund its administrative costs and staff from the annual allocations.
  
• GO-Biz estimates it would incur annual costs of approximately $2.9 million annually and require 22 PY of staff to administer the two new programs that receive $195 million in allocations. Staff assumes that GO-Biz would fund these positions from the annual allocations. (General Fund)
  
• The California Workforce Development Board (CWDA) would incur annual costs, minimally in the hundreds of thousands of dollars, to administer the distribution of $5 million annually. Staff assumes CWDA would fund its administrative costs from the annual allocations. (General Fund)

Background:

Existing law establishes various affordable housing programs under HCD, including the following:

• The Multifamily Housing Program assists the new construction, rehabilitation, and preservation of permanent and transitional rental housing for lower income households through loans to local governments and non- and for-profit developers. The bill further requires that projects that receive these funds shall be deemed to be public works. There are currently $839 million in available funds for this program.
• The Infill Infrastructure Financing Grant program assists in the new construction and rehabilitation of infrastructure that supports higher density affordable and mixed-income housing in locations designated as infill, such as water and sewer extensions. There are currently $284 million in available funds for this program.
• The Joe Serna, Jr. Farmworker Housing Grant Program finances the new construction, rehabilitation, and acquisition of owner-occupied and rental units for agricultural workers, with a priority for lower income households. There are currently $240 million in available funds for this program.
• The Local Housing Trust Matching Grant Program provides matching grants to local governments and non-profits that raise money for affordable housing. There are currently $227 million in available funds for this program.
• The CalHome Program provides grants to local public agencies and nonprofit developers to assist individual households through deferred-payment loans. Program funding provides direct, forgivable loans to assist development projects involving multiple ownership units, including single-family subdivisions. Funding is also available to self-help mortgage assistance programs and manufactured homes. There are currently $227 million in available funds for this program.

Existing law establishes the Homeless Housing, Assistance, and Prevention Program (HHAPP) under the Business Consumer Services and Housing Agency. HHAPP is a new program established as part of the 2019 budget, aimed to build on the Homeless Emergency Aid Program (HEAP) which was created in the 2018 budget. HHAPP provides additional funds to help local jurisdictions combat homelessness. Under HHAPP, $650 million in one-time General Fund monies was directed to 13 of California’s largest cities, the 44 Continuums of Care, and all 58 counties. HHAPP requires applicants for funds to demonstrate efforts at regional coordination in their application, and to demonstrate how the requested fund will close existing gaps in addressing homelessness. Eligible uses are defined as evidence-based solutions that address and prevent homelessness, including rental assistance and rapid rehousing; operating subsidies in affordable or supportive housing units, shelters, and navigation centers; incentives to landlords; outreach and coordination to help vulnerable populations access permanent housing and supportive housing; systems support for regional partnerships; innovative solutions such as hotel and motel conversions; diversion to permanent housing; and new shelters and navigation centers based on demonstrated need. All HHAPP funds must be expended by May 31, 2023.

In Governors’ May Revise budget, the Governor proposed $750 million in federal funding and directs the use of those funds to purchase hotels and motels to be owned and operated by local governments and non-profits for purposes of sheltering vulnerable populations experiencing homelessness. The funds will also be used to provide technical assistance to local governments and others seeking to purchase and operate these hotels and motels to address homelessness.

Proposed Law:

SB 795 would continuously appropriate $10 billion from the General Fund for expenditure over the 2020-21 fiscal year and each of the four subsequent fiscal years, for the purpose of providing emergency economic recovery and development and climate disaster and response.

Allocations for existing state programs: The bill would require the SCO to allocate $1.805 billion each year over the five year period as follows:

• $500 million annually to the Multifamily Housing Program at HCD. Projects funded under this program shall be deemed to be public works.
• $300 million annually to the Infill Infrastructure Grant Program at HCD. Projects funded under this program shall be deemed to be public works.
• $200 million annually to the Local Housing Trust Fund Matching Grant Program at HCD. Projects funded under this program shall be deemed to be public works.
• $75 million annually to the CalHome Program at HCD.
• $75 million annually to the Joe Serna Jr. Farmworker Housing Program.
• $650 million annually to the Homeless Housing, Assistance, and Prevention program (HHAPP) at the Business Consumer Services and Housing Agency.
• $5 million annually to the California Workforce Development Board for distribution to local agencies to participate in, invest in, or partner with new or existing pre-apprenticeship training programs.

Allocations for new GO-Biz programs: The bill would require the SCO to allocate $195 million each year over the five year period to GO-Biz to be used as follows:

• $100 million each year for five years to a new Climate, Sea Level, and Natural Disaster Program, for the purpose of protecting communities dealing with the effects of climate change, including but not limited to, sea level rise, wildfires, and flood protection.
• $95 million each year for five years to a new Community Economic Development Program, for the following purposes:
  • Promoting strong neighborhoods through support of local community planning and engagement efforts to revitalize and restore neighborhoods, including repairing infrastructure, parks, and rehabilitating and building housing and public facilities.
  • Converting vacant and underutilized commercial property into housing affordable to families earning less than 120% of the area median income.
  • Developing on-campus or off-campus housing for students, faculty, and school employees of a campus of the University of California (UC), California State University (CSU), or California Community Colleges (CCC).
  • Promoting public private partnerships.
  • Supporting small businesses and job growth for affected residents.

SB 795 would require GO-Biz to adopt guidelines for the allocation and use of funds under its purview that allocated under (2). The guidelines shall provide the following:

• Eligible applicants include: a city, county, city and county, joint powers authority, Enhanced Infrastructure Financing District, Affordable Housing Authority, Community Revitalization and Investment Authority, transit village development district, the University of California, the California State University, or the California Community Colleges.
• In order to be eligible to receive funds, an applicant must comply with the following requirements:
• The applicant has a compliant housing element.
• The applicant has not been found to have violated the Housing Accountability Act or Density Bonus Law within the past five years, or after January 1, 2021, whichever is more recent.
• The applicant has not taken any of the following actions, whether by legislative body of the applicant or electorate exercising its local initiative or referendum power, that has the following effects:
  • Established or implemented any provision that: i) limits the number of land use approvals or permits necessary for the approval and construction of housing, ii) caps the number of housing units that can be approved or constructed, or iii) limits the population of the applicant jurisdiction.
  • Imposes a moratorium or enforces an existing moratorium on housing development.
  • Requires voter approval of any updates to the housing element.
  • Downzones a parcel or parcels within an existing zoning district below what was allowed under the general plan and zoning ordinances of the applicant jurisdiction in effect on January 1, 2018.

With respect to the GO-Biz programs, the bill would also:

• Require an applicant for funding to submit to Go-Biz a plan for outreach to, and retention of, women, minority, disadvantaged youth, formerly incarcerated and other underrepresented subgroups in coordination with the California Workforce Investment Board and local boards, to increase their representation and employment opportunities in the building and construction trades.
• Require an applicant to certify that a skilled and trained workforce will be used to complete the projects as specified, unless the project is: a housing project that is 100% affordable, exclusive of any legally required manager’s units, to households earning 80% AMI or below; housing projects consisting of 25 units or less; housing projects located in a county with a population of 100,000 or fewer; or the housing project is for student or faculty housing.
• Require projects funded by either program to be considered a public work.

Related Legislation:

SB 5 (Beall), which was vetoed by Governor Newsom last year, would have established the Affordable Housing and Community Development Investment Program to provide funding for local entities to pay for specified projects, including affordable housing, transit-oriented development, infill development, housing-related infrastructure, neighborhood revitalization, and infrastructure to protect communities from sea-level rise. When fully implemented, the bill would have allocated up to $2 billion annually in Educational Revenue Augmentation Fund (ERAF) property tax revenues to local entities for those projects, and require state General Fund backfills to school entities for the associated loss of property tax revenues, as specified. The Governor’s veto message stated the following:

California is in a housing crisis, and I have consistently maintained we need to use all the tools in our toolbox to address it. However, this bill would increase costs by $2 billion annually once fully implemented. Legislation with such a significant fiscal impact needs to be part of budget deliberations so that it can be considered in light of other priorities.

Staff Comments:

This bill would continuously appropriate $10 billion from the General Fund for expenditure over five fiscal years. The Committee may wish to weigh the housing production, economic development, and job creation benefits of the bill against the massive budget deficits and program cuts facing the state for the foreseeable future in the wake of the devastating global COVID-19 pandemic.

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SENATE COMMITTEE ON HOUSING

Senator Scott Wiener, Chair

2019 - 2020 Regular

Bill No: SB 795 Hearing Date: 5/26/2020

SUBJECT: Economic development: housing: workforce development: climate change infrastructure

DIGEST: This bill allocates $10 billion over five years to several existing housing, homelessness, and pre-apprenticeship programs, as well as creating two new infrastructure financing programs at the Governor’s Office of Business and Economic Development (Go-Biz)

ANALYSIS:

Existing law:

1. Authorizes local agencies to create Enhanced Infrastructure Financing Districts (EIFDs) to finance specified infrastructure projects and facilities.
2. Authorizes a local government to create Community Revitalization and Investment Authorities (CRIAs) to use tax increment revenue to improve infrastructure, assist businesses, and support affordable housing in disadvantaged communities.
3. Authorizes a local government to establish an Affordable Housing Authority (AHA) to fund affordable housing.
4. Establishes the Neighborhood Infill and Transit Improvements Act, or NIFTI, in EIFD law and allows the infrastructure financing plan to contain a provision for the addition of any increase of the total receipts of local sales and use taxes (SUTs) and attribute those taxes to the NIFTI.
5. Authorizes a local government to establish a transit village development district which addresses, among other things housing within ½ mile of the main entrance of a transit station.

This bill appropriates $10 billion continuously without regard to fiscal years for five years. The funds shall be distributed in the following manner:

1. Requires the Controller to allocate and deposit $1.805 billion each year to the following programs over five years:
   1. $500 million each year for five years to the Multifamily Housing Program at the California Department of Housing and Community Development (HCD). Projects funded under this program shall be deemed to be public works.
   2. $300 million each year for five years to the Infill Infrastructure Grant Program at HCD. Projects funded under this program shall be deemed to be public works.
   3. $200 million each year for five years to the Local Housing Trust Fund Matching Grant Program at HCD. Projects funded under this program shall be deemed to be public works.
   4. $75 million each year for five years to the CalHome Program at HCD.
   5. $75 million each year for five years to the Joe Serna Jr. Farmworker Housing Program.
   6. $650 million each year for five years to the Homeless Housing, Assistance, and Prevention program (HHAPP) at the Business Consumer Services and Housing Agency.
   7. $5 million each year for five years to the California Workforce Development Board for distribution to local agencies to participate in, invest in, or partner with new or existing pre-apprenticeship training programs.
2. Requires the Controller to allocate $195 million each year, over five years, to Go-Biz to be used as follows:
   1. $100 million each year for five years to a new Climate, Sea Level, and Natural Disaster Program, for the purpose of protecting communities dealing with the effects of climate change, including but not limited to, sea level rise, wildfires, and flood protection.
   2. $95 million each year for five years to a new Community Economic Development Program, for the following purposes:
      1. “Promoting strong neighborhoods through support of local community planning and engagement efforts to revitalize and restore neighborhoods, including repairing infrastructure, parks, and rehabilitating and building housing and public facilities.”
      2. Converting vacant and underutilized commercial property into housing affordable to families earning less than 120% of the area median income (AMI).
      3. Developing on-campus or off-campus housing for students, faculty, and school employees of a campus of the University of California (UC), California State University (CSU), or California Community Colleges (CCC).
      4. Promoting “public private partnerships.”
      5. Supporting small businesses and job growth for affected residents.
3. Requires Go-Biz to adopt guidelines for the allocation and use of funds allocated under (2). The guidelines shall provide the following:
   1. Eligible applicants include: a city, county, city and county, joint powers authority (JPA), EIFD, AHA, CRIA, transit village development district, UC, CSU, or CCC.
   2. In order to be eligible to receive funds, an applicant shall comply with the following requirements:
      1. The applicant has a compliant housing element.
      2. The applicant has not been found to have violated the Housing Accountability Act or Density Bonus Law within the past five years, or after January 1, 2021, whichever is more recent.
      3. The applicant has not taken any of the following actions, whether by legislative body of the applicant or electorate exercising its local initiative or referendum power, that has the following effects:
         1. Established or implemented any provision that: i) limits the number of land use approvals or permits necessary for the approval and construction of housing, ii) caps the number of housing units that can be approved or constructed, or iii) limits the population of the applicant jurisdiction.
         2. Imposes a moratorium or enforces an existing moratorium on housing development.
         3. Requires voter approval of any updates to the housing element.
         4. Downzones a parcel or parcels within an existing zoning district below what was allowed under the general plan and zoning ordinances of the applicant jurisdiction in effect on January 1, 2018.
   3. An applicant for funding shall submit to Go-Biz a plan for outreach to, and retention of, women, minority, disadvantaged youth, formerly incarcerated and other underrepresented subgroups in coordination with the California Workforce Investment Board and local boards, to increase their representation and employment opportunities in the building and construction trades.
   4. Requires an applicant to certify that a skilled and trained workforce will be used to complete the projects as specified. This provision shall not apply to any of the following: a housing project that is 100% affordable, exclusive of any legally required manager’s units, to households earning 80% AMI or below, housing projects consisting of 25 units or less, or housing projects located in a county with a population of 100,000 or fewer, or the housing project is for student or faculty housing.
   5. Requires projects funded by either program to be considered a public work.

COMMENTS

1. Author’s Statement. According to the author, “These unprecedented times call for urgent action to help protect our most vulnerable.  Keeping people in their homes and building more affordable housing must be at the top of our priority list. COVID-19 illuminates what we already knew: there is a dramatic shortfall of 1.5 million units of affordable housing. With unemployment rates skyrocketing, more and more Californians are facing housing insecurity. While rent moratoriums provide a short-term reprieve, once they are lifted, an even greater number of families will be pushed into homelessness.

SB 795 creates a sustainable state fund source, with the sole purpose of tackling the affordable housing crisis. The bill invests in existing programs to quickly get local governments the funding they need to address and prevent homelessness and jumpstart the construction of affordable housing, especially among low-income renters. A long-term investment in housing production is difficult in today’s fiscal climate, but we can’t continue to operate business as usual. We need a stimulus measure to boost our economy and get people back to work. SB 795 strategically invests in a continuum of emergency and permanent affordable housing to get and keep Californians off our streets while generating high wage jobs.”

1. Recent affordable housing and homelessness investments. California is in the midst of a serious housing crisis, largely due to a shortage of housing stock, most notably for lower-income households. The Legislature has enacted numerous measures to facilitate affordable housing production and address the housing shortage. The housing package of 2017 made an effort to promote higher density housing, streamline housing approval processes, and increase zoning for housing while providing more state enforcement power. That package included SB 2 (Atkins), which required recorders to collect a $75 fee on every real estate instrument, paper, or notice. Once collected, these fees will fund various housing programs. The package also included SB 3 (Beall), which placed a $4 billion bond before voters on the November 2018 ballot, which voters approved, $3 billion of which fund existing affordable housing programs at HCD. Additionally, in 2018, the voters approved Proposition 2, which provides $2 billion for housing construction for chronically homeless persons experiencing a mental illness.
   
2. Housing program descriptions. This bill proposes new funding for several existing programs, which are described below along with the funding proposed in this bill. These programs all received funding under Prop 1 (2018).
3. Multifamily Housing Program ($500 million each year for five years) — The Multifamily Housing Program assists the new construction, rehabilitation, and preservation of permanent and transitional rental housing for lower income households through loans to local governments and non- and for-profit developers. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $839 million in available funds for this program.
4. Infill Infrastructure Financing Grants ($300 million each year for five years) — this program assists in the new construction and rehabilitation of infrastructure that supports higher density affordable and mixed-income housing in locations designated as infill, such as water and sewer extensions. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $284 million in available funds for this program.
5. Joe Serna, Jr. Farmworker Housing Grant Program ($75 million each year for five years) — this program finances the new construction, rehabilitation, and acquisition of owner-occupied and rental units for agricultural workers, with a priority for lower income households. There is currently $240 million in available funds for this program.
6. Local Housing Trust Matching Grant Program ($200 million each year for five years) — this program provides matching grants to local governments and non-profits that raise money for affordable housing. The bill further requires that projects that receive these funds shall be deemed to be public works. There is currently $227 million in available funds for this program.
7. CalHome ($75 million each year for five years) — this program provides grants to local public agencies and nonprofit developers to assist individual households through deferred-payment loans. The funds would provide direct, forgivable loans to assist development projects involving multiple ownership units, including single-family subdivisions. This money would also be available to self-help mortgage assistance programs and manufactured homes. There is currently $227 million in available funds for this program.
8. Homeless program investments. This bill proposes to invest $650 million each year for five years to the HHAPP at the Business Consumer Services and Housing Agency. HHAPP is a new program established as part of the 2019 budget, aimed to build on the Homeless Emergency Aid Program (HEAP) which was created in the 2018 budget. HHAPP provides additional funds to help local jurisdictions combat homelessness. Under HHAPP, $650 million in one-time General Fund monies was directed to 13 of California’s largest cities, the 44 CoCs, and all 58 counties. HHAPP requires applicants for funds to demonstrate efforts at regional coordination in their application, and to demonstrate how the requested fund will close existing gaps in addressing homelessness. Eligible uses are defined as evidence-based solutions that address and prevent homelessness, including rental assistance and rapid rehousing; operating subsidies in affordable or supportive housing units, shelters, and navigation centers; incentives to landlords; outreach and coordination to help vulnerable populations access permanent housing and supportive housing; systems support for regional partnerships; innovative solutions such as hotel and motel conversions; diversion to permanent housing; and new shelters and navigation centers based on demonstrated need. All HHAPP funds must be expended by May 31, 2023.

In Governors’ May Revise budget, the Governor proposed $750 million in federal funding and directs the use of those funds to purchase hotels and motels to be owned and operated by local governments and non-profits for purposes of sheltering vulnerable populations experiencing homelessness. The funds will also be used to provide technical assistance to local governments and others seeking to purchase and operate these hotels and motels to address homelessness.

As noted above, the Governor has proposed this year to restructure the overall approach to homeless funding. Additionally, the Homeless Coordinating and Financing Council is statutorily required to develop a state strategy to address homelessness; it may be prudent to base any ongoing funding on that strategy.

1. New infrastructure program investments. This bill also creates two new infrastructure programs at GoBiz. The first is the Climate, Sea Level, and Natural Disaster Program, which provides funds to local governments and specified local financing districts for the purposes of financing the construction, repair, replacement, and maintenance of infrastructure related to protecting communities from the effects of climate change. This program receives $100 million per year for five years. The second program, the Community Economic Development Program, funds a variety of uses, including converting vacant and underutilized property into affordable housing, developing college student and faculty housing, promoting public private partnerships, and supporting small businesses and job growth for affected residents. The program also specifies that the funds may be used to “[p]romot[e] strong neighborhoods through support of local community planning and engagement efforts to revitalize and restore neighborhoods, including repairing infrastructure, parks, and rehabilitating and building housing and public facilities.”

Eligible applicants include cities and counties, local financing districts, and specified universities and colleges. Projects funded under these programs will be public works and require a skilled and trained workforce, except for specified housing projects.

In order to create a truly state-local partnership, this bill provides that jurisdictions that have passed any anti-housing or slow growth measures, failed to adopt a compliant housing element or found to be in violation of specific state housing laws in the prior five years shall be ineligible to receive funds from these programs.

1. Opposition. Associated Builders and Contractors Northern California Chapter are opposed unless amended to remove the provision that provides funding for union-only pre-apprenticeship programs. Specifically, the bill provides $5 million per year for five years to the California Workforce Development Board which follows the multi-craft core curriculum. According to the opposition, this excludes other “nationally recognized curriculum and training programs used by state and federally approved apprenticeship programs.”
2. Double-referral. Due to the COVID-19 Pandemic and the unprecedented nature of the 2020 Legislative Session, all Senate Policy Committees are working under a compressed timeline. This timeline does not allow this bill to be referred and heard by more than one committee as a typical timeline would allow. The Senate Business, Professions, and Economic Development Committee continues to monitor this bill.

Related Legislation:

SB 5 (Beall, 2019) — would have created the Affordable Housing and Community Development Investment Program to fund affordable housing and housing-related infrastructure. This bill was vetoed by the Governor.

SB 3 (Beall, Chapter 365, Statutes of 2017) — enacted the Veterans and Affordable Housing Bond Act of 2018 and authorized the issuance of $4 billion in general obligation (GO) bonds for affordable housing programs and a veteran’s home ownership program, subject to approval by the voters in the November 6, 2018 election. The voters approved these bonds as Proposition 1.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

POSITIONS: (Communicated to the committee before noon on Wednesday,

May 20, 2020.)

SUPPORT:

Affordable Housing Network of Santa Clara County
All Home
Bay Area Council
Bill Wilson Center
California Community Builders
Catholic Charities of Santa Clara County
Chan Zuckerberg Initiative
First Community Housing
League of California Cities
LifeMoves
Los Angeles County Business Federation (BIZFED)
Orange County Council of Governments
San Francisco Foundation
San Jose/Silicon Valley NAACP
Silicon Valley Leadership Group
Working Partnerships USA

OPPOSITION

Associated Builders and Contractors Northern California Chapter

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