50840-50843.5

HEALTH AND SAFETY CODE
SECTION 50840-50843.5




50840.  (a) The Legislature hereby finds and declares all of the
following:
   (1) California is experiencing a severe housing shortage that
compounds itself further each year. While it is estimated that
250,000 new homes are needed each year to keep up with demand, only
140,000 building permits for new residential housing were issued in
1999. Moreover, the average number of residential building permits
issued over the last seven years is only 105,000 new units per year.
   (2) The shortage in housing supply has led to skyrocketing home
sale and rental prices, which have made housing unaffordable to many
Californians. Seven of the nation's 10 least affordable metropolitan
areas for housing are in California. More than 35 percent of renter
households experience an extreme housing cost burden, which has been
defined as paying more than 50 percent of their income for housing.
   (3) Long-term strategies are needed to address this ongoing
deficit in new home production and to meet the state's housing needs.
   (4) In addition to helping meet the immediate need for housing,
the state will always have a role to play in assisting in the
provision of housing for families unable to afford market-rate rents.
   (5) A permanent source of financing is needed to fulfill this
ongoing need for state housing assistance.
   (6) A housing trust fund would provide a permanent source of
financing to be used solely to fund housing programs that serve low-
and very low income households.
   (b) (1) It is the intent of the Legislature that the principal in
the California Housing Trust Fund shall not be spent, but rather
invested as an endowment, and that the return on this investment be
used to fund programs that meet the housing needs of lower and very
low income households.
   (2) It is the intent of the Legislature to make a significant
appropriation to the California Housing Trust Fund in the 2001-02
fiscal year to ensure that there are sufficient ongoing resources to
provide for the housing needs of lower income households.



50841.  (a) There is hereby created in the State Treasury the
California Housing Trust Fund. Notwithstanding Section 13340 of the
Government Code, all money in the fund is continuously appropriated
for the purposes of investment in a manner calculated to deliver the
greatest rate of return consistent with the requirements of Section
16430 of the Government Code.
   (b) All interest or other increment resulting from investment or
deposit of moneys in the fund shall be deposited in the fund,
notwithstanding Section 16305.7 of the Government Code. Except as
provided in Section 50842, no money in the fund shall be spent,
loaned, transferred, or otherwise removed from the fund.



50842.  (a) All interest or other increment resulting from any
investment of money in the California Housing Trust Fund may only be
expended, upon appropriation by the Legislature, after allocation to
the Treasurer of an amount not to exceed one-half of 1 percent of any
interest and other increment to cover the actual cost of
administering those investments, for housing programs or those
portions of housing programs authorized by law that serve lower and
very low income households, as defined in Sections 50079.5 and 50105,
respectively.
   (b) Not less than 20 percent of any interest or other increment
appropriated by the Legislature in any fiscal year from the
California Housing Trust Fund shall be expended in rural areas, as
defined by Section 50199.21.
   (c) Any interest or other increment not appropriated by the
Legislature for the purpose described in subdivision (a) in the
fiscal year succeeding its accrual shall be deposited in the
California Housing Trust Fund and shall no longer be deemed interest
or other increment for the purposes of this section.



50842.1.  The Legislature finds and declares all of the following:
   (a) Local housing trusts are locally developed responses to
regional housing needs and are responsive to local control.
   (b) Local housing trusts have an excellent record of
accomplishment of serving as efficient vehicles for disbursing
resources at the local level.
   (c) As of January 1, 2006, there were 21 city and nine county
housing trusts throughout California producing thousands of units of
affordable housing, through the utilization of millions of dollars of
locally generated funds, resulting in the leverage of millions more
for the development of affordable housing.
   (d) Housing trusts are local sources of revenue for affordable
housing and very often are a direct result of local constituencies
coming together around affordable housing. These relationships are
often long term and include a broad set of community players that go
beyond the traditional supporter of affordable housing.



50842.2.  There is hereby established the Local Housing Trust Fund
Matching Grant Program, to be administered by the department, for the
purpose of supporting local housing trust funds dedicated to the
creation or preservation of affordable housing as described in this
section. Local housing trust funds shall be derived on an ongoing
basis from private contributions or governmental sources that are not
otherwise restricted in use for housing programs.



50843.  (a) This section applies only to grants awarded pursuant to
this chapter from funds made available pursuant to Part 11
(commencing with Section 53500).
   (b) The department may make matching grants available to cities
and counties, or a city and county, that have created, funded, and
operated housing trust funds prior to January 1, 2003, and to
existing charitable nonprofit organizations described in Section 501
(c)(3) of the Internal Revenue Code that have created, funded, and
operated housing trust funds prior to January 1, 2003. These funds
shall be awarded through the issuance of a Notice of Funding
Availability (NOFA). The department may establish competitive
criteria consistent with the funding priorities used in the
Multifamily Housing Program (Chapter 6.7 (commencing with Section
50675)) to be used in the event that applications exceed the funds
available. Applicants that provide matching funds from a source or
sources other than impact fees on residential development shall
receive a priority for funding.
   (c) The department may make matching grants available to new local
housing trusts created by cities and counties, or a city and county,
and to fund new housing trusts created by charitable nonprofit
organizations described in Section 501(c)(3) of the Internal Revenue
Code that provide low-income housing assistance. As used in this
section, "new housing trust" means a housing trust that was not in
existence prior to January 1, 2003. The department may consider grant
applications, submitted pursuant to this subdivision, and determine
their eligibility for funding, in the order in which they are
received.
   (d) Housing trusts eligible for funding under this section shall
have the following characteristics:
   (1) They utilize a public or joint public and private fund
established by legislation, ordinance, resolution, or a
public-private partnership to receive specific revenue to address
local housing needs.
   (2) They receive ongoing revenues from dedicated sources of
funding such as taxes, fees, loan repayments, or private
contributions.
   (e) The minimum allocation to an applicant shall be one million
dollars ($1,000,000), and no applicant may receive an allocation in
excess of two million dollars ($2,000,000). All funds provided
pursuant to this section shall be matched on a dollar-for-dollar
basis. No application shall be considered unless the department has
received adequate documentation of the deposit in the local housing
trust fund of the local match and the identity of the source of
matching funds. Applicants shall be required to continue funding the
local housing trust fund from these identified local sources, and
continue the trust in operation, for a period of no less than five
years from the date of award. If the funding is not continued for a
five-year period, then (1) the amount of the department's grant to
the local housing trust fund, to the extent that the trust fund has
unencumbered funds available, shall be immediately repaid, and (2)
any payments from any projects funded by the local housing trust fund
that would have been paid to the local housing trust fund shall be
paid instead to the department and used to fund projects under the
Multifamily Housing Program, or its successor. The total amount paid
to the department pursuant to (1) and (2), combined, shall not exceed
the amount of the department's grant.
   (f) Funds shall be used to provide loans for the construction of
rental housing projects, or for construction of units within rental
housing projects, affordable to, and restricted for, very low income
persons and families earning less than 60 percent of the area median
income. All assisted units shall be restricted for not less than 55
years. Loan repayments shall accrue to the grantee housing trust, or
to the department if the trust is no longer in existence.
   (g) In order for a city, county, or city and county to be eligible
for funding, the applicant shall have, at the time of application,
an adopted housing element that the department has determined,
pursuant to Section 65585 of the Government Code, is in substantial
compliance with the requirements of Article 10.6 (commencing with
Section 65580) of Chapter 3 of Division 1 of Title 7 of the
Government Code. In order for a nonprofit organization applicant to
be eligible for funding, the applicant shall agree to utilize funds
provided under this chapter only for projects located in cities,
counties, or a city and county that have, at the time of application,
an adopted housing element that the department has determined,
pursuant to Section 65585 of the Government Code, to be in
substantial compliance with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of Title 7
of the Government Code. For the purposes of this section, eligible
local housing trust funds may not include any ongoing restricted fund
that is required to be established pursuant to federal or state law.
   (h) Recipients shall have held, or shall agree to hold, a public
hearing or hearings to discuss and describe the project or projects
that will be financed with funds provided pursuant to this section.
As a condition of receiving a grant pursuant to this section, any
nonprofit organization shall agree that it will hold one public
meeting a year to discuss the criteria that will be used to select
projects to be funded. That meeting shall be open to the public, and
public notice of this meeting shall be provided, except to the extent
that any similar meeting of a city or county would be permitted to
be held in closed session.
   (i) No more than 5 percent of the funds appropriated to the
department pursuant to subparagraph (C) of paragraph (1) of
subdivision (a) of Section 53533 shall be used to pay the costs of
administration of this section.
   (j) A local housing trust fund shall encumber funds provided
pursuant to this section no later than 54 months after receipt. Any
funds not encumbered within that period shall revert to the
department for use in the Multifamily Housing Program.
   (k) Recipients shall be required to file periodic reports with the
department regarding the use of funds provided pursuant to this
section. No later than December 31, 2005, the department shall
provide a report to the Legislature regarding the number of trust
funds created, a description of the projects supported, the number of
units assisted, and the amount of matching funds.
   (l) This program shall be operated under guidelines adopted by the
department and shall not be subject to the requirements of Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code.



50843.5.  (a) Subject to the availability of funding, the department
shall make matching grants available to cities, counties, city and
counties, and charitable nonprofit organizations organized under
Section 501(c)(3) of the Internal Revenue Code that have created and
are operating or will operate housing trust funds. These funds shall
be awarded through the issuance of a Notice of Funding Availability
(NOFA).
   (1) Applicants that provide matching funds from a source or
sources other than impact fees on residential development shall
receive a priority for funding.
   (2) The department shall set aside funding for new trusts, as
defined by the department in the NOFA.
   (b) Housing trusts eligible for funding under this section shall
have the following characteristics:
   (1) Utilization of a public or joint public and private fund
established by legislation, ordinance, resolution, or a
public-private partnership to receive specific revenue to address
local housing needs.
   (2) Receipt of ongoing revenues from dedicated sources of funding
such as taxes, fees, loan repayments, or private contributions.
   (c) The minimum allocation to an applicant that is a newly
established trust shall be five hundred thousand dollars ($500,000).
The minimum allocation for all other trusts shall be one million
dollars ($1,000,000). No applicant may receive an allocation in
excess of two million dollars ($2,000,000). All funds provided
pursuant to this section shall be matched on a dollar-for-dollar
basis with money that is not required by any state or federal law to
be spent on housing. No application for an existing housing trust
shall be considered unless the department has received adequate
documentation of the deposit in the local housing trust fund of the
local match and the identity of the source of matching funds. An
application for a new trust shall not be considered unless the
department has received adequate documentation, as determined by the
department, that an ordinance imposing or dedicating a tax or fee to
be deposited into the new trust has been enacted or the applicant has
adopted a legally binding commitment to deposit matching funds into
the new trust. Funds shall not be disbursed by the department to any
trust until all matching funds are on deposit and then funds may be
disbursed only in amounts necessary to fund projects identified to
receive a loan from the trust within a reasonable period of time, as
determined by the department. Applicants shall be required to
continue funding the local housing trust fund from these identified
local sources, and continue the trust in operation, for a period of
no less than five years from the date of award. If the funding is not
continued for a five-year period, then (1) the amount of the
department's grant to the local housing trust fund, to the extent
that the trust fund has unencumbered funds available, shall be
immediately repaid, and (2) any payments from any projects funded by
the local housing trust fund that would have been paid to the local
housing trust fund shall be paid instead to the department and used
for the program or its successor. The total amount paid to the
department pursuant to (1) and (2), combined, shall not exceed the
amount of the department's grant.
   (d) (1) Funds shall be used for the predevelopment costs,
acquisition, construction, or rehabilitation of the following types
of housing or projects:
   (A) Rental housing projects or units within rental housing
projects. The affordability of all assisted units shall be restricted
for not less than 55 years.
   (B) Emergency shelters, safe havens, and transitional housing, as
these terms are defined in Section 50801.
   (C) For sale housing projects or units within for sale housing
projects.
   (2) At least 30 percent of the total amount of the grant and the
match shall be expended on projects, units, or shelters that are
affordable to, and restricted for, extremely low-income persons and
families, as defined in Section 50106. No more than 20 percent of the
total amount of the grant and the match shall be expended on
projects or units affordable to, and restricted for, moderate-income
persons and families whose income does not exceed 120 percent of the
area median income. The remaining funds shall be used for projects,
units, or shelters that are affordable to, and restricted for, lower
income persons and families, as defined in Section 50079.5.
   (3) If funds are used for the acquisition, construction, or
rehabilitation of for sale housing projects or units within for sale
housing projects, the grantee shall record a deed restriction against
the property that will ensure compliance with one of the following
requirements upon resale of the for sale housing units, unless it is
in conflict with the requirements of another public funding source or
law:
   (A) If the property is sold within 30 years from the date that
trust funds are used to acquire, construct, or rehabilitate the
property, the owner or subsequent owner shall sell the home at an
affordable housing cost, as defined in Section 50025.5, to a
household that meets the relevant income qualifications.
   (B) The owner and grantee shall share the equity in the unit
pursuant to an equity-sharing agreement. The grantee shall reuse the
proceeds of the equity sharing agreement consistent with this
section. To the extent not in conflict with another public funding
source or law, all of the following shall apply to the equity-sharing
agreement provided for by the deed restriction:
   (i) Upon resale by an owner-occupant of the home, the
owner-occupant of the home shall retain the market value of any
improvements, the downpayment, and his or her proportionate share of
appreciation. The grantee shall recapture any initial subsidy and its
proportionate share of appreciation, which shall then be used to
make housing available to persons and families of the same income
category as the original grant and for any type of housing or shelter
specified in paragraph (1).
   (ii) For purposes of this subdivision, the initial subsidy shall
be equal to the fair market value of the home at the time of initial
sale to the owner-occupant minus the initial sale price to the
owner-occupant, plus the amount of any downpayment assistance or
mortgage assistance. If upon resale by the owner-occupant the market
value is lower than the initial market value, then the value at the
time of the resale shall be used as the initial market value.
   (iii) For purposes of this subdivision, the grantee's
proportionate share of appreciation shall be equal to the ratio of
the initial subsidy to the fair market value of the home at the time
of the initial sale.
   (e) Loan repayments shall accrue to the grantee housing trust for
use pursuant to this section. If the trust no longer exists, loan
repayments shall accrue to the department for use in the program or
its successor.
   (f) (1) In order for a city, county, or city and county to be
eligible for funding, the applicant shall, at the time of
application, meet both of the following requirements:
   (A) Have an adopted housing element that the department has
determined, pursuant to Section 65585 of the Government Code, is in
substantial compliance with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of Title 7
of the Government Code.
   (B) Have submitted to the department the annual progress report
required by Section 65400 of the Government Code within the preceding
12 months, if the department has adopted the forms and definitions
pursuant to subparagraph (B) of paragraph (2) of subdivision (a) of
Section 65400 of the Government Code.
   (2) In order for a nonprofit organization applicant to be eligible
for funding, the applicant shall agree to utilize funds provided
under this chapter only for projects located in cities, counties, or
a city and county that, at the time of application, meet both of the
following requirements:
   (A) Have an adopted housing element that the department has
determined, pursuant to Section 65585 of the Government Code, to be
in substantial compliance with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of Title 7
of the Government Code.
   (B) Have submitted to the department the annual progress report
required by Section 65400 of the Government Code within the preceding
12 months, if the department has adopted the forms and definitions
pursuant to subparagraph (B) of paragraph (2) of subdivision (a) of
Section 65400 of the Government Code.
   (g) Recipients shall have held, or shall agree to hold, a public
hearing or hearings to discuss and describe the project or projects
that will be financed with funds provided pursuant to this section.
As a condition of receiving a grant pursuant to this section, any
nonprofit organization shall agree that it will hold one public
meeting a year to discuss the criteria that will be used to select
projects to be funded. That meeting shall be open to the public, and
public notice of this meeting shall be provided, except to the extent
that any similar meeting of a city or county would be permitted to
be held in closed session.
   (h) No more than 5 percent of the funds appropriated to the
department for the purposes of this program shall be used to pay the
costs of administration of this section.
   (i) A local housing trust fund shall encumber funds provided
pursuant to this section no later than 36 months after receipt. Any
funds not encumbered within that period shall revert to the
department for use in the program or its successor.
   (j) Recipients shall be required to file periodic reports with the
department regarding the use of funds provided pursuant to this
section. No later than December 31 of each year in which funds are
awarded by the program, the department shall provide a report to the
Legislature regarding the number of trust funds created, a
description of the projects supported, the number of units assisted,
and the amount of matching funds received.