Department of Housing and Community Development
State Housing Program Summary
December 2007

Housing Loan and Grant Programs

Loan and grant programs are administered by the Department of Housing and Community Development Financial Assistance Division (formerly known as Community Affairs) unless otherwise specified.

The new Affordable Housing Innovation Fund (AHIF) creates three programs to demonstrate innovative, cost-saving approaches to creating or preserving affordable housing: the California Affordable Housing Revolving Development and Acquisition Program, the Construction Liability Insurance Reform Pilot Program, and the Innovative Homeownership Program. This fund also provides funding to the existing Local Housing Trust Fund Program (see below). Because legislation was recently enacted, specific program design is in progress. Funding: $100 million from Proposition 1C.

The Building Equity and Growth in Neighborhoods Program (BEGIN) makes grants to cities and counties that reduce local regulatory barriers to affordable ownership housing. The grants are used to provide downpayment assistance loans to qualifying first-time low- and moderate-income buyers of homes in new single-family developments that have benefited from barrier reduction. Funding: $125 million from Proposition 1C.

The CalHome Program enables low- and very-low income households to become or remain homeowners. Grants are made to local public agencies and nonprofit developers to assist individual households with deferred-payment loans. Loans are made to local public agencies and nonprofit developers to develop multiple-unit ownership projects, including affordable single-family subdivisions. Funding: $290 million from Proposition 1C.

The CalHome Self-Help Technical Assistance Allocation (CHSHTAA) funds local government agencies and nonprofit organizations to provide training and construction supervision so low- and moderate-income families can build their homes with their own labor. The value of this "sweat-equity" reduces the cost of homeownership for these first-time homebuyers. Funding: $10 million from Proposition 1C.

The State Community Development Block Grant (CDBG) Program provides federal Community Development Block Grant (CDBG) program benefits to cities with a population of less than 50,000 and counties with a population of less than 200,000 that do not receive CDBG funds directly from the U.S. Department of Housing and Urban Development (HUD). At least 51 percent of the State CDBG funds must be used for housing or housing-related activities. Funding: $42 million annual allocation of federal funds. The four major components of the State CDBG program are:

• Planning and Technical Assistance Grants - 10 percent of total State CDBG funds are set aside for local planning and evaluation studies related to any CDBG-eligible activity.
• General, Native American and Colonias Allocations - The General Allocation is the largest program component. One and one-quarter percent of State CDBG funds is awarded to projects serving Native Americans who do not belong to a federally recognized tribe or rancheria. Five percent is awarded to non-entitlement California communities (colonias) located within 150 miles of the California/Mexico border. The bulk of this allocation funds housing, community, and economic development projects serving lower-income households in small, typically rural communities.
• Economic Development Allocation: Over-the-Counter Component - 30 percent of the Department of Housing and Urban Development's (HUD) total CDBG allocation to HCD is set aside for the creation and preservation of jobs for low- and very-low income persons in rural communities.
• Economic Development Allocation: California Community Economic Enterprise Fund Component - Capitalizes local business revolving loan funds that loan working capital or provide infrastructure assistance to businesses that create or preserve jobs for low- and very low-income persons.

The Emergency Housing and Assistance Program-Capital Development (EHAPCD) funds capital development activities for emergency shelters and transitional housing that provide shelter and supportive services for homeless individuals and families. Funding: $50 million from Proposition 1C.

The Emergency Housing and Assistance Program - Operating Facility Grants (EHAP) provides facility operating grants to local government agencies and nonprofit corporations for emergency shelters, transitional housing projects, and supportive services for homeless individuals and families. Funding: $4 million average annual appropriation from State General Fund. Amount available declines during periods of budget constraints.

The Federal Emergency Shelter Grant (FESG) Program provides grants to local government agencies and nonprofit organizations to provide emergency shelter and transitional housing for homeless individuals and families. Funding: $6 million average annual appropriation of federal funds.

The federal HOME Investment Partnerships Program (HOME) assists cities, counties and nonprofit community housing development organizations (CHDOs) to create and retain affordable housing. Eligible applicants include cities and counties that do not receive HOME funds directly from HUD, and community organizations in these localities. Eligible activities include new housing construction, rehabilitation, and acquisition and rehabilitation. Funding: $60 million average annual appropriation of federal funds.

Housing-Related Parks Program: Enabling legislation to establish this program is expected during the 2008 session. This program also does not directly fund housing, but is expected to incentivize development of housing, including affordable and infill housing as a condition of receiving funding for parks. Funding: $200 million from Proposition 1C.

The Infill Incentive Grant Program does not directly fund housing, but provides loans and grants for capital outlay for infrastructure that supports or facilitates infill housing development. Examples of projects that may be funded include water, sewer or other public infrastructure costs associated with infill housing development; transportation improvements and traffic mitigation projects related to infill housing development and parks related to infill housing development. Brownfield cleanup is also funded; the Brownfield component is administered by the Office of the State Treasurer. Funding: $850 million from Proposition 1C.

The Jobs/Housing Balance Improvement Program/Workforce Housing Reward Program does not directly fund housing development, but provides incentives to local governments for permitting additional housing supply and affordable housing. This program was administered by the Division of Housing Policy Development. Funding: These programs were funded at $100 million (total) by Proposition 46. There is no current funding.

The Joe Serna, Jr. Farmworker Housing Grant Program (JSJFWHG) finances the new construction, rehabilitation and acquisition of owner-occupied and rental units for agricultural workers, with a priority for lower-income households. Makes grants for any construction-related cost, including land acquisition, site development, construction, rehabilitation and mortgage write-downs. Eligible applicants include local government agencies, nonprofit corporations, and federally recognized Indian tribes. Funding: $135 million from Proposition 1C.

The Local Housing Trust Fund Matching Grant Program helps finance local housing trust funds dedicated to the creation or preservation of affordable housing. Funding: $35 million from Proposition 1C, as a set-aside from the Affordable Housing Innovation Fund.

The Mobilehome/Manufactured Home Park Resident Ownership Program (MPROP) finances the preservation of affordable mobilehome parks by conversion to resident ownership or control by resident organizations, nonprofit housing sponsors, or local public agencies. Funding: $1.5 million in fee revenues annually.

The Multifamily Housing Program (MHP) assists the new construction, rehabilitation and preservation of permanent and transitional rental housing for lower-income households. Makes 55-year, three percent simple-interest loans to local public entities, for-profit and nonprofit corporations, limited equity housing cooperatives, Indian reservations and rancherias, and some types of limited partnerships, to build, rehabilitate, or acquire and rehabilitate affordable rental housing, or convert nonresidential structures to housing. The MHP Program also includes the Multifamily Housing Program for Homeless Youths, the Governor's Homeless Initiative Multifamily Housing Program and the Multifamily Supportive Housing Program which provide funding for rental housing development in which partners provide services targeted to these special needs populations. Funding: $590 million from Proposition 1C.

The Office of Migrant Services (OMS) Program provides safe, decent and affordable seasonal rental housing to migrant farmworker families during the peak harvest season. The state grants funds for construction, expansion, rehabilitation, and operation of migrant centers, while counties and grower associations generally contribute the land. Funding: $5.2 million annual appropriation from State General Fund.

The Predevelopment Loan Program (PDLP) provides local government agencies and nonprofit organizations with three percent, short-term (up to two years) loans to finance the start of low-income housing projects. Predevelopment costs include, but are not limited to, site control and acquisition, engineering studies, architectural plans, application fees, legal services, permits, bonding and site preparation. Funding: $4 million annually from revolving loan special fund.

The Transit Oriented Development Program (TOD) provides loans and grants for the development of transit oriented housing development and infrastructure that supports the development of transit oriented housing. Funding: $300 million from Proposition 1C.

Note: Currently, the largest sources of state funds administered by HCD are General Obligation Bonds, Proposition 1C, and its predecessor Proposition 46. While bond funds are available, HCD and CalHFA have made $500 to $900 million in loans and grants available annually for affordable housing. With the exception of the Infill Incentive Grant Program, G.O. bond funding for the majority of the programs listed above is expected to be fully awarded by the end of 2009-10.

Other HCD Programs Supporting Development of Safe, Decent
and Affordable Housing for All Californians

Policy Planning and Review: The Department of Housing and Community Development's Division of Housing Policy Development (HPD) develops and reviews regional housing need determinations that are required to be used by local governments in updating the housing element of the local general plan. HPD also reviews local housing elements for compliance with law and provides housing element technical assistance to local governments, including workshops and written resource materials for the development and implementation of local housing elements. HPD provides technical assistance on local housing and land use programs, planning, zoning, and other regulatory options; and prepares mandated reports and technical assistance papers.

Research and Statistics: HPD also collects and analyzes data and reference materials on housing conditions in California. Research activities include preparation of data and analyses on housing costs, market conditions, construction trends, and the impact of such trends and conditions. The Division collaborates with other research entities including the University of California at Berkeley. Funding: $1.5 million annual appropriation from the State General Fund for both Policy, Planning, Review and Research Functions.

The State Housing Law (SHL) Program: Administered by the Division of Codes and Standards (C&S), the SHL Program (Health and Safety Code Division 13, Part 1.5, Section 17910 et seq.) helps ensure the health, safety and accessibility of Californians in their residences by setting technical standards for the design, construction, maintenance, and use of conventional homes, apartment buildings, motels and hotels. In carrying out its mission, C&S also considers the impact of building materials and green technologies on housing affordability. Funding: $598,000 annual appropriation from the State General Fund.

California Housing Finance Agency (CalHFA)
State Housing Program Summary
December 2007

The California Homebuyer's Downpayment Assistance Program (CHDAP) provides a deferred payment, simple-interest rate, junior loan of an amount up to three percent of the sales price or appraised value, whichever is less, to qualified low- and moderate-income first-time homebuyers. The junior loan may be used for downpayment or closing costs and may be combined with a CalHFA or non-CalHFA conventional or government first mortgage loan. Funding: $100 million from Proposition 1C.

The Extra Credit Teacher Program (ECTP) makes homeownership a possibility for eligible teachers, administrators, classified employees and staff members working in high priority schools throughout California. This Program combines a deferred payment junior loan of up to $15,000 for downpayment assistance, along with a CalHFA first mortgage at a low-interest rate. Interest on the junior loan may be forgiven if the borrower meets continued employment eligibility requirements. Funding: $25 million from Proposition 46.

The School Facility Fee Down Payment Assistance Program provides assistance to qualified homebuyers purchasing newly constructed homes in California. Eligible applicants receive a conditional grant, based on either a partial or full rebate of the school facility fees paid by the builder. The assistance can be used for downpayment, closing costs, or any costs associated with the buyer's first mortgage loan, subject to acceptance by the mortgage lender and the mortgage insurer. Funding: $50 million from Proposition 46.

CalHFA Habitat for Humanity Loan Purchase Program purchases affordable home mortgages that have been originated by California affiliates of Habitat for Humanity (HFH). The HFH affiliates will use the capital from the mortgage sales to reinvest in the development of additional affordable housing in California.

The Residential Development Loan Program (RDLP) is project-specific funding that offers a deferred, 3 percent interest rate loan with a maximum term of five years to local government agencies for financing site acquisition, predevelopment and construction costs to facilitate the development of affordable infill, owner-occupied housing projects. The Program also directly links RDLP-financed projects to CalHFA's California Homebuyer's Downpayment Assistance Program (CHDAP) to provide subordinate loans to eligible first-time homebuyers. Funding: $75 million from Proposition 46 and $100 million from Proposition 1C.

The Housing Enabled by Local Partnerships Program (HELP) provides a 3.5 percent interest rate loan that is deferred up to 10 years to local government housing agencies to assist them in meeting their unmet affordable housing needs and priorities in serving very-low to moderate-income households. Multifamily housing activities approved for funding under the program include rehabilitation and code enforcement programs, and revolving loan programs to assist with site acquisition, predevelopment and construction of projects or financing to support the development of a specific project (this housing category accommodates shelters, special needs that include group homes, etc.), single-family ownership housing rehabilitation, code enforcement programs, and subordinate loan programs for homebuyers. Housing activities permitted under HELP for single-family ownership housing include rehabilitation and code enforcement programs, and subordinate loan programs for homebuyers. Funding: $15 million annually from CalHFA Housing Assistance Trust (HAT) funds.

Other State and Federal Subsides Available for
New Affordable Housing Production in California

Additional sources of funding for affordable housing development total roughly $3.4 billion, annually, as follows:

• Federal and state tax credits for affordable housing: Funding: $1.310 billion, annually, in tax credits for investors in affordable housing.
• Federal Community Development Block Grant Program, although federal regulations limit the amount that may be used for new housing development. Funding: $456 million average, annually, in federal funds, statewide.
• Federal Home Investments Partnerships Program (HOME). HOME funds a wide variety of housing development and assistance programs. Funding: $236 million average, annually, in federal funds, statewide.
• Federal Housing for Persons with AIDS (HOPWA). Funding: $31 million, annually, in federal funds, statewide.
• Federal HUD Continuum of Care Programs (primarily rental assistance), with an estimated 20 percent used for housing development. Funding: Estimated $33.6 million in federal funds, annually, statewide.
• Federal HUD Section 202 Program: Funding: $78 million, annually, in federal funds, statewide.
• Rural Development 202 and 502 Programs: Funding: $61.5 million, annually, in federal funds.
• Redevelopment Agencies: Funding: $1.079 billion, minimum legal requirement, annually for low- and moderate-income housing funds.
• Mental Health Services Act housing funds provide housing with supportive services for the seriously mentally ill: Funding: $75 million, annually, for the next 10 years.
• Local Housing Trust Funds provide support for a variety of local affordable housing development and assistance programs. Funding: $85 million. Funding is total available based on HCD 2003 survey: Annual additions/expenditures from Local Housing Trust funds unknown.
• Locality Land Donations: Solid data not available. Funding: estimated at $20 million, annually.