Effective Implementation of Affordable Housing Programs

Under current law, the division of housing (division) within the department of local affairs must submit an annual public report on the funding of affordable housing preservation and production (public report). The bill requires that the division include in the report specifics on uses of existing state and federal funds to provide best use of subsidies to maximize unit production and confirmation of rules and practices to ensure developments are not disqualified for funding support from the division if the development has previously received money from funds established by proposition 123. The bill further requires the division to add to the public report information on applications for affordable housing programs that the division administers, including the number of applications approved, denied, and pending, the amount of money awarded from approved applications, and the amount of money applied for but not awarded from denied applications. The bill also requires the division to add to the public report information regarding money in the housing development grant fund, including amounts in the fund and the use of the money in the preceding year, and information about the timing for drafting, delivering, and executing contracts that are required in connection with receiving money from the fund .

The bill also establishes procedures and timelines for the division to follow for affordable housing programs administered by the division. The bill requires that the division accept applications once a month or on a rolling basis quarter, with the cycle beginning at the start of a state fiscal year, and requires that the division review applications and issue any requests for additional information, forms, or questions to applicants within 10 calendar days of an application period closing. The division is required to publish the application schedule by May 1 for the upcoming cycle and update the schedule 60 days before the start of the next quarter; except that the division must publish the application schedule for the second half of the 2024-25 state fiscal year by November 1, 2024. If the division will not be accepting applications for any affordable housing program for an upcoming quarter, the division must publish notice of this with an explanation as to why applications won't be accepted for the program. The division must either issue final decisions on applications or submit applications to the board of housing for final decision within 45 days following the submission of completed applications. If applications are submitted to the state housing board, the state housing board must make a final decision on an application within 15 days of receiving the application at its next regularly scheduled meeting .

After a final decision approving an application, the division shall issue an award letter that includes information on the timeline for issuing money to the applicant, any terms for a loan or grant period, and any conditions that must be met before a contract in connection with the approval is executed. The division shall also provide a draft contract to the approved applicant within 30 days of the application being approved. Within 90 days of the division receiving a substantially complete post-award due diligence package from an approved applicant, the division shall execute any required contracts for the affordable housing program and send it to the approved applicant within 10 days of execution ; except that the 90 day period pauses for the period from when an approved applicant receives a preliminary draft contract from the division until the division receives the executed contract from the approved applicant .

The bill also amends existing grant, loan, or other affordable housing programs administered by the division to require the application process to be followed for any applications submitted under these programs and requires any programs that have adopted policies, procedures, or guidelines for the application process to be amended if they are inconsistent with the application process established by the bill.

Under current law, a local government or tribal government desiring to receive funding from the statewide affordable housing fund or desiring to make affordable housing projects within its territorial boundaries eligible for funding from the statewide affordable housing fund must establish a baseline number of affordable housing units within its territorial boundaries every 3 years, beginning in 2024, and commit to increasing affordable housing units by 3% each year over the baseline number within that 3-year period (affordable housing unit requirements). The bill allows a local government or tribal government to donate land to a community land trust or a nonprofit affordable homeownership developer for development as affordable homeownership property and receive a credit for the purposes of calculating whether the local government or the tribal government has met the affordable housing unit requirements for the year in which the land is donated. The credit is in the amount of one and one-half units per unit constructed on the donated land and is claimed when the building permits for the project have been approved by the applicable building authority. Additionally, a school district that donates land in the same manner may assign its credit to the local government or tribal government. The bill also modifies the "City Housing Law". The bill expands the term "housing project" to include the provision of dwelling accommodations to persons without regard to income as long as the housing project substantially benefits persons of low income. The bill clarifies that, in addition to the authority to construct a housing project, a city is authorized to acquire, own, or lease a housing project and that a city can manage, operate, and maintain, or contract for the management, operation, and maintenance of any housing project owned or leased by the city. Under current law, a city is required to deliver possession of a housing project to a housing authority within the city's boundaries. The bill creates 2 options that allow a city to either deliver possession of a housing project to a housing authority consistent with current law or to contract with a nonprofit or private entity to manage, maintain, and operate the housing project. The bill also allows a community land trust or nonprofit affordable housing homeownership developer or its authorized agent that is applying for a property tax exemption to only have to submit one application and one annual report if the property that the exemption is being applied for has been subdivided; however, the application and the report must be accompanied by payment not to exceed the aggregate amount of payments that would be required if individual applications or reports were filed for each parcel. However, once a subdivided parcel has been split into a separate taxable parcel from the improvements and is leased to the owner of the improvements, the developer or their designee must file an individual annual report for the subdivided parcel.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)