2005 California Health and Safety Code Sections 50840-50843 CHAPTER 13. HOUSING TRUST FUND

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.
50843.  (a) The Legislature finds and declares all of the following:
   (1) Local housing trusts are locally developed responses to
regional housing needs, and are responsive to local control.
   (2) Local housing trusts have an excellent record of
accomplishment of serving as efficient vehicles for disbursing
resources at the local level.
   (3) Currently there are 10 city and three county housing trusts
throughout California producing thousands of units of affordable
housing through the utilization of millions of dollars of locally
generated funds, resulting in the leverage of millions more for the
development of affordable housing.
   (4) Housing trusts are local sources of revenue for affordable
housing and very often are a direct result of local constituencies
coming together around affordable housing.  These relationships are
often long term and include a broad set of community players that go
beyond the traditional supporter of affordable housing.
   (b) There is hereby established the Local Housing Trust Fund
Matching Grant Program, to be administered by the department, for the
purpose of supporting local housing trust funds dedicated to the
creation or preservation of affordable housing as described in this
section.  Local housing trust funds shall be funded on an ongoing
basis from private contributions or governmental sources that are not
otherwise restricted in use for housing programs.
   (c) For the purposes of this program, the following provisions
shall apply:
   (1) The department may make matching grants available to cities
and counties, or a city and county, that have created, funded, and
operated housing trust funds prior to January 1, 2003, and to
existing charitable nonprofit organizations described in Section 501
(c)(3) of the Internal Revenue Code that have created, funded, and
operated housing trust funds prior to January 1, 2003.  These funds
shall be awarded through the issuance of a Notice of Funding
Availability (NOFA).  The department may establish competitive
criteria consistent with the funding priorities used in the
Multifamily Housing Program (Chapter 6.7 (commencing with Section
50675)) to be used in the event that applications exceed the funds
available.  Applicants that provide matching funds from a source or
sources other than impact fees on residential development shall
receive a priority for funding.
   (2) The department may make matching grants available to new local
housing trusts created by cities and counties, or a city and county,
and to fund new housing trusts created by charitable nonprofit
organizations described in Section 501(c)(3) of the Internal Revenue
Code that provide low-income housing assistance.  As used in this
section, "new housing trust" means a housing trust that was not in
existence prior to January 1, 2003.  The department may consider
grant applications, submitted pursuant to this paragraph, and
determine their eligibility for funding, in the order in which they
are received.
   (3) Housing trusts eligible for funding under this section shall
have the following characteristics:
   (A) They utilize a public or joint public and private fund
established by legislation, ordinance, resolution, or a
public-private partnership to receive specific revenue to address
local housing needs.
   (B) They receive ongoing revenues from dedicated sources of
funding such as taxes, fees, loan repayments, or private
contributions.
   (4) The minimum allocation under this subdivision to an applicant
shall be one million dollars ($1,000,000), and no applicant may
receive an allocation in excess of two million dollars ($2,000,000).
All funds provided pursuant to this section shall be matched on a
dollar-for-dollar basis.  No application shall be considered unless
the department has received adequate documentation of the deposit in
the local housing trust fund of the local match and the identity of
the source of matching funds.  Applicants shall be required to
continue funding the local housing trust fund from these identified
local sources, and continue the trust in operation, for a period of
no less than five years from the date of award.  If the funding is
not continued for a five-year period, then (A) the amount of the
department's grant to the local housing trust fund, to the extent
that the trust fund has encumbered funds available, shall be
immediately repaid, and (B) any payments from the project funded by
the local housing trust fund that would have been paid to the local
housing trust fund shall be paid instead to the department and used
to fund projects under the Multifamily Housing Program, or its
successor.  The total amount paid to the department pursuant to (A)
and (B), combined, shall not exceed the amount of the department's
grant.
   (5) Funds shall be used to provide loans for the construction of
rental housing projects, or for construction of units within rental
housing projects, affordable to, and restricted for, very low income
persons and families earning less than 60 percent of the area median
income.  All assisted units shall be restricted for not less than 55
years.  Projects receiving funds allocated pursuant to this section
shall not be eligible for funding through the Multifamily Housing
Program.  Loan repayments shall accrue to the grantee housing trust,
or to the department if the trust is no longer in existence, to
support the development of rental housing consistent with the
Multifamily Housing Program or a successor program.
   (6) In order for a city, county, or city and county to be eligible
for funding, the applicant shall have, at the time of application,
an adopted housing element that the department has determined,
pursuant to Section 65585 of the Government Code, is in substantial
compliance with the requirements of Article 10.6 (commencing with
Section 65580) of Chapter 3 of Division 1 of Title 7 of the
Government Code.  In order for a nonprofit organization applicant to
be eligible for funding, the applicant shall agree to utilize funds
provided under this chapter only for projects located in cities,
counties, or a city and county that have, at the time of application,
an adopted housing element that the department has determined,
pursuant to Section 65585 of the Government Code, to be in
substantial compliance with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of Title 7
of the Government Code.  For the purposes of this section, eligible
local housing trust funds may not include any ongoing restricted fund
that is required to be established pursuant to federal or state law.
   (7) Recipients shall have held, or shall agree to hold, a public
hearing or hearings to discuss and describe the project or projects
that will be financed with funds provided pursuant to this section.
As a condition of receiving a grant pursuant to this section, any
nonprofit organization shall agree that it will hold one public
meeting a year to discuss the criteria that will be used to select
projects to be funded.  That meeting shall be open to the public, and
public notice of this meeting shall be provided, except to the
extent that any similar meeting of a city or county would be
permitted to be held in closed session.
   (d) No more than 5 percent of the funds appropriated to the
department pursuant to subparagraph (C) of paragraph (1) of
subdivision (a) of Section 53533 shall be used to pay the costs of
administration of this section.
   (e) A local housing trust fund shall encumber funds provided
pursuant to this section no later than 30 months after receipt.  Any
funds not encumbered within that period shall revert to the
department for use in the Multifamily Housing Program.
   (f) Recipients shall be required to file periodic reports with the
department regarding the use of funds provided pursuant to this
section.  No later than December 31, 2005, the department shall
provide a report to the Legislature regarding the number of trust
funds created, a description of the projects supported, the number of
units assisted, and the amount of matching funds.
   (g) This program shall be operated under guidelines adopted by the
department and shall not be subject to the requirements of Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code.