Home > News > News Articles > 2019 > July > Housing and Homelessness Budget Trailer Bill Sent to the Governor
News Feed

Housing and Homelessness Budget Trailer Bill Sent to the Governor

July 8, 2019
On the heels of Gov. Gavin Newsom signing the main budget bill on July 5, the Legislature passed AB 101, a budget trailer bill that provides the details of the collaboration and compromise that took place over the last seven months between the Governor, the Legislature, and stakeholders.
 
The Governor will likely sign AB 101 in the coming days.
 
AB 101: 
  • Provides $2.5 billion in funding to address California’s housing and homelessness crisis;
  • Establishes incentives to encourage cities and counties to increase housing production;
  • Establishes a process for a court to determine that a city or county has complied with housing element law; and
  • Imposes penalties, as a last resort, if cities and counties disregard the direction of a court and continue not to fulfill their responsibilities under housing element law. 
The Budget Process
 
FY 2019–20 budget negotiations began in January when the Governor held a press conference unveiling his first budget proposal where he outlined his proposals related to housing and homelessness.

The January Budget was a mixed bag for local government in regards to housing. While historic levels of new funding was proposed to help address homelessness and affordable housing needs, the budget also included possible statutory changes that would undermine local land use authority, limit the ability to impose impact fees and jeopardize local transportation revenues. As part of the proposal, cities would receive additional housing-related investments, including $500 million to build homeless shelters, $500 million for affordable housing tax credits and $500 million for moderate housing production; however, the policy proposal would empower the California Department of Housing and Community Development (HCD) with top-down authority to dictate local land use policies and penalize local communities if new state quotas are not met by stripping local transportation dollars and other vital revenue was of paramount concern for cities.
 
The Governor’s May Revise was largely consistent with his January budget in respect to housing and homelessness; additiomally it did contain some minor increases in funding to assist renters and repurposed housing production incentives grants to provide infill infrastructure funding for housing projects. It also included an additional $150 million for homelessness services and resources, increasing the state’s homelessness funding to $1 billion. Unfortunately, the May Revise maintained the Governor’s commitment to link SB 1 transportation funding to compliance with housing element law, zoning and entitlements to meet the state’s housing goals.
 
After months of negotiations, the Governor signed FY 2019–20 State Budget, which allocates more than $2.4 billion, a historic level of new funding, to help address homelessness and affordable housing needs throughout the state. The final budget did not link SB 1 transportation funding to compliance with housing element law, zoning and entitlements to meet the state’s housing goals.
 
A Brief Summary of AB 101
 
Housing Element
 
AB 101 requires HCD to publish an annual list of cities that have failed to adopt a HCD certified housing element. If HCD puts a city on the list, the city has an opportunity for two meetings to discuss its housing element and HCD must provide city written findings supporting its determination. A city may also request de novo review of its last element. HCD must issue written findings in response to the de novo review. A city may challenge HCD’s findings in a court to determine whether a city’s housing element substantially complies with the law and that determination carries the same weight as HCD certification.
 
If the Attorney General sues a city, a court finds that its housing element does not substantially comply with state law, and the city fails to bring the housing element into compliance, a court may impose fines ranging from $10,000 to $600,000 per month with the generated revenue deposited into the Building Homes and Jobs Trust Fund. The State Controller may intercept state and local funds if the fines are not paid. Additionally, extra points and other preferences will be awarded for certain state funding programs for cities that have adopted undetermined “pro-housing” policies.
 
Local Government Planning Support Grants Program
 
AB 101 makes available $250 million to regions, cities and counties for planning activities to accelerate housing production and facilitate implementation of Regional Housing Needs Allocation (RHNA). $125 million will be available to councils of governments and other regional entities, with the remaining $125 million available to cities and counties. These dollars may be used for:
  • Rezoning and updating planning documents;
  • Completing environmental clearance to eliminate need for project-specific review;
  • Infrastructure planning; and
  • Developing or improving accessory dwelling unit ordinance. 
Infill Infrastructure Grant Program of 2019
 
AB 101 makes available $500 million for competitive funding for a “qualifying infill project” or “qualifying infill area.”  A qualifying infill project is a residential or mixed-use project located in an urbanized area in a city with an HCD-compliant housing element. Grant funds can be used for “capital improvement projects” to facilitate the development of a qualifying infill project or area such as:
  • Water, sewer, or other utility improvements;
  • Streets, roads, transit;
  • Project site preparation; and
  • Sidewalk or streetscape improvement. 
Homelessness: Funding and Programs
 
AB 101 makes $650 million available for one-time grants to cities, counties, and continuums of care to support regional coordination, expand or develop local capacity, and address immediate homelessness challenges. All awards will be based on the applicant’s proportionate share of the state’s total homeless population.
  • $275 million will be available to cities or a city and county that has a population of more than 300,000.
  • $175 million will be available to counties. 
  • $190 million will be available to continuums of care.
Low Barrier Navigation Centers
 
AB 101 would require a low barrier navigation center be permitted as a “use by right” if it meets specified requirements. Within 30 days of receiving an application for a center, a city must notify the applicant whether the application is complete. Within 60 days of a completed application, the city must act on the application.
 
State Low Income Housing Tax Credit
 
AB 101 also increases the state low income housing tax credit to $500 million for the 2020 calendar year.
 
Additional Resources
 
AB 101 Bill Text
AB 101 Full League Summary


 
© League of California Cities