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No Place Like Home Program Analysis

August 26, 2016
Gov. Jerry Brown on July 1 signed into law the No Place Like Home program (AB 1618, Chapter 43, Statutes of 2016).
 
This program will distribute $2 billion dollars among counties as deferred payment loans to finance capital costs of permanent supportive housing for persons who are eligible for services under Proposition 63 (2004) and are homeless, chronically homeless, or at risk of chronic homelessness. The Legislature intends that that the loans will not have to be repaid.

This funding program is critical to aid in the effort to end homelessness. California has an estimated affordable housing shortage of more than one million homes. Funding provided by the state for the development and preservation of affordable homes dropped by 79 percent, from approximately $1.7 billion annually to nearly nothing today. The No Place Like Home program marks the state’s first effort to reinvest dollars into housing for the homeless in recent history.
 
The Department of Housing and Community Development (HCD) will administer the program in consultation with an advisory committee, This committee comprises directors of various state departments including HCD and Health Care Services Department as well as county administrative officers, a representative of an affordable housing organization and an administrative officer of a city. The committee will assist and advise the department in the implementation of the program. It will also review and make recommendations on the department’s guidelines and review the department’s progress in distributing funds and lastly provide advice and guidance more broadly on statewide homelessness issues.
 
The funding will be divided into a competitive program ($1.8 billion) and a non-competitive program ($200 million) for counties. HCD will develop final guidelines, however, the bill includes requirements for the general outline of the programs as described below.
 
Competitive Program ($1.8 billion)
 
For the competitive loan program, counties will be grouped into four categories based on total population, within which they will compete for funding: Los Angeles County, large counties with a population greater than 750,000, medium counties with a population between 200,000 and 750,000, and small counties with a population less than 200,000. HCD will distribute funding among the groupings based on a calculation that includes the number of homeless persons residing within each county and considers minimum funding levels necessary for a permanent supportive housing development.
 
Criteria for the competitive program include:
  1. A county may apply as the sole applicant if it is the development sponsor or jointly with a separate entity as development sponsor.
  2. Funded developments must integrate the target population with the general public.
  3. Funded developments must utilize low barrier tenant selection practices that prioritize vulnerable populations and offer flexible, voluntary, and individualized supportive services.
  4. The guidelines can provide for alternative housing models, such as shared housing models of fewer than five units. Integration requirements may be modified in shared housing.
  5. Funds will be offered as deferred payment loans to finance capital costs including acquisition, design, construction, rehabilitation, or preservation, and to capitalize operating reserves of, permanent supportive housing for the target population.
  6. Guidelines adopted by HCD must include establishing income and rent standards.
The small county category is guaranteed access to at least 8 percent of the total funds. There is also the option of an “alternative process” for the counties with more than 5 percent of the statewide homeless population to access funding directly, but this option limits the amount of funding an alternative county may access to their proportionate share of the homeless count. If money is left over in any of the tiers, it reverts back to the overall fund and will be made available to other counties. AB 1618 requires a minimum of four competitive funding rounds which will occur over five years. If additional funding is available at the end of the four rounds, further rounds of funding may be provided. Additional rounds are not required to comply with the competitive groupings, small county set aside, or alternative process.
 
Non-Competitive Program ($200 million)
 
In order to jumpstart the program, HCD will distribute $200 million in initial “over the counter”, non-competitive, funding to finance construction, rehabilitation, or preservation, and to capitalize operating reserves, of permanent supportive housing for individuals in the target population with a priority for those with mental health supportive needs who are homeless or at risk of chronic homelessness. Funds will be made available to all counties within the state and are proportionate to the number of homeless persons residing within each county with a minimum funding level of $500,000. Funds not awarded within 18 months following the first allocation will revert to the competitive program.
 
Technical Assistance and Reporting Requirements
 
The proposal also includes $6.2 million for the department to provide technical and application preparation assistance to counties based on size and allows up to 5 percent of funds to be used for state administrative costs.
 
Counties receiving funds are required to provide an annual report to HCD including information on the funded supporting housing development. Additional reported information must include location of projects, number of units assisted, occupancy restrictions, number of individuals and households served, related income levels, and homeless, veteran and mental health status. The department also must report to the Legislature annually on the processes established for distributing funds, the distribution of funds among counties, and any recommendations as to modifications to the program for the purpose of improving efficiency or furthering the goals of the program. Lastly, the department is required to hire an outside contractor for overall program evaluation.
 
The Legislature also authorized a $1 million General Fund loan to support program implementation prior to the receipt of bond funds. Specifically, the loan is to allow the department to begin program activities, including, but not limited to, drafting program guidelines and regulations.
 
Bond Financing Cleanup Bill and Next Steps
 
While the Legislature has adopted the policy framework in AB 1618, an additional measure is pending (AB 1628, Committee on Budget) that outlines the bond financing and mechanics of how it will be taken from Prop. 63 revenues. This measure would facilitate and authorize the issuance of bonds by the California Health Facilities Financing Authority (CHFFA) for the purposes of establishing a loan program for counties to develop and administer permanent supported housing for homeless. The measure establishes a framework for the provision of housing through authorized service contract, address loans to be made by CHFFA for supportive housing, specifies the use for funds for projects across the state, and provides administrative structure for the program. Additionally, AB 1628 provides for direct funding from this program for the few cities that currently provide mental health services and are already eligible for Prop. 63 funding.
 
What Cities Need to Be Doing
 
Prop. 63 provides funding to counties and cities providing mental health services that were grandfathered into the Bronzan-McCorquodale Act. Therefore, the No Place Like Home program cannot provide direct funding to cities with a few exceptions. However, there is already some indication that the No Place Like Home program guidelines may reward counties that have an active partnership with their cities. In order to be best positioned for funding to be used in their jurisdiction, cities should be working with their county and other community based organizations now to provide for the development of supportive housing and services for the homeless.

 


 
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