An act to add Section 15463 to the Government Code, and to amend Sections 5849.1, 5849.2, 5849.3, 5849.4, 5849.5, 5849.7, 5849.8, 5849.9, 5849.11, 5849.14, 5890, and 5891 of, to add Section 5849.35 to, and to repeal and add Section 5849.13 of, the Welfare and Institutions Code, relating to mental health services, and making an appropriation therefor, to take effect immediately, bill related to the budget.

The people of the State of California do enact as follows:


SECTION 1.
Section 15463 is added to the Government Code, to read:
15463.
(a) For purposes of this section, the following definitions shall apply:
(1) “No Place Like Home Program” has the same meaning as “program” as defined in Section 5849.2 of the Welfare and Institutions Code.
(2) “No Place Like Home Fund” means the No Place Like Home Fund established pursuant to Section 5849.4 of the Welfare and Institutions Code.
(3) “Permanent supportive housing” has the same meaning as “supportive housing” as defined in Section 50675.14 of the Health and Safety Code, except that “permanent supportive housing” shall include associated facilities if used to provide services to housing residents.
(b) The authority may issue taxable or tax-exempt revenue bonds in an amount not to exceed two billion dollars ($2,000,000,000), exclusive of refunding bonds but including any net premium derived from the sale of the bonds, pursuant to Sections 15441 to 15450, inclusive, for the purpose of financing permanent supportive housing pursuant to the No Place Like Home Program and through loans under subdivision (d). The authority may also utilize bond proceeds to fund necessary reserves for principal and interest, capitalized interest, credit enhancement or liquidity costs, costs of issuance, administrative expenses under Section 5849.4 of the Welfare and Institutions Code, and to reimburse loans under Section 5849.14 of the Welfare and Institutions Code.
(c) The authority may provide for the issuance of bonds of the authority for the purpose of redeeming, refunding, or retiring any bonds or any series or issue of bonds then outstanding issued under subdivision (b), including the payment of any redemption premium thereon and any interest accrued or to accrue to the date of redemption, purchase, or maturity of the bonds. Subdivisions (b) and (c) of Section 15446 apply to, and in connection with, bonds issued under this subdivision. Sections 15441 to 15445, inclusive, and Sections 15447 to 15450, inclusive, apply to, and in connection with, bonds issued under this subdivision in the same manner and to the same extent as bonds issued under subdivision (b).
(d) The authority may make secured or unsecured loans to the Department of Housing and Community Development in connection with financing permanent supportive housing pursuant to the No Place Like Home Program or to refund bonds previously issued pursuant to this section, in accordance with an agreement between the authority and the Department of Housing and Community Development. Loan proceeds may also be used to fund reserves for principal and interest, capitalized interest, credit enhancement and liquidity costs, expenses of funding, financing, and refinancing, administrative expenses under Section 5849.4 of the Welfare and Institutions Code, and to reimburse loans under Section 5849.14 of the Welfare and Institutions Code.
(e) Each of the authority and the Department of Housing and Community Development may enter into any agreement for credit enhancement or liquidity, execute any instruments, and do any other acts it deems necessary, convenient, or desirable in connection with revenue bonds issued pursuant to this section or carry out any power expressly granted pursuant to this section.
(f) (1) This section provides a complete, additional, and alternative method for performing the acts authorized by this section and shall be construed as supplemental and additional to powers conferred by other laws; provided, however, that the issuance of the bonds and refunding bonds and the execution of any agreements under this section are not subject to, and need not comply with, the requirements of any other law applicable to the issuance of those bonds or refunding bonds and the execution of those agreements, including, but not limited to, the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
(2) Except as provided in paragraph (1), funding or financing under this section shall not exempt the permanent supportive housing from the requirements of any other law otherwise applicable to the permanent supportive housing.
SEC. 2.
Section 5849.1 of the Welfare and Institutions Code is amended to read:
5849.1.
(a) The Legislature finds and declares that this part is consistent with and furthers the purposes of the Mental Health Services Act, enacted by Proposition 63 at the November 2, 2004, statewide general election, within the meaning of Section 18 of that measure.
(b) The Legislature further finds and declares all of the following:
(1) Housing is a key factor for stabilization and recovery to occur and results in improved outcomes for individuals living with a mental illness.
(2) Untreated mental illness can increase the risk of homelessness, especially for single adults.
(3) California has the nation’s largest homeless population that is disproportionally comprised of women with children, veterans, and the chronically homeless.
(4) California has the largest number of homeless veterans in the United States at 24 percent of the total population in our nation. Fifty percent of California’s veterans live with serious mental illness and 70 percent have a substance use disorder.
(5) Fifty percent of mothers experiencing homelessness have experienced a major depressive episode since becoming homeless and 36 percent of these mothers live with post-traumatic stress disorder and 41 percent have a substance use disorder.
(6) Ninety-three percent of supportive housing tenants who live with mental illness and substance use disorders voluntarily participated in the services offered.
(7) Adults who receive 2 years of “whatever-it-takes,” or Full Service Partnership services, experience a 68 percent reduction in homelessness.
(8) For every dollar of bond funds invested in permanent supportive housing, the state and local governments can leverage a significant amount of additional dollars through tax credits, Medicaid health services funding, and other housing development funds.
(9) Tenants of permanent supportive housing reduced their visits to the emergency department by 56 percent, and their hospital admissions by 45 percent.
(10) The cost in public services for a chronically homeless Californian ranges from $60,000 to $100,000 annually. When housed, these costs are cut in half and some reports show reductions in cost of more than 70 percent, including potentially less involvement with the health and criminal justice systems.
(11) Californians have identified homelessness as their top tier priority; this measure seeks to address the needs of the most vulnerable people within this population.
(12) Having counties provide mental health programming and services is a benefit to the state.
(13) The Department of Housing and Community Development is the state entity with sufficient expertise to implement and oversee a grant or loan program for permanent supportive housing of the target population.
(14) The California Health Facilities Financing Authority is authorized by law to issue bonds and to consult with the Mental Health Services Oversight and Accountability Commission and the State Department of Health Care Services concerning the implementation of a grant or loan program for California counties to support the development of programs that increase access to, and capacity for, crisis mental health services. It is therefore appropriate for the authority to issue bonds and contract for services with the Department of Housing and Community Development to provide grants or loans to California counties for permanent supportive housing for the target population.
(15) Use of bond funding will accelerate the availability of funding for the grant or loan program to provide permanent supportive housing for the target population as compared to relying on annual allocations from the Mental Health Services Fund and better allow counties to provide permanent supportive housing for homeless individuals living with mental illness.
(16) The findings and declarations set forth in subdivision (c) of Section 5849.35 are hereby incorporated herein.
SEC. 3.
Section 5849.2 of the Welfare and Instiace Like Home Program Advisory Committee established pursuant to Section 5849.3.
(f) “County” includes, but is not limited to, a city and county, and a city receiving funds pursuant to Section 5701.5.
(g) “Department” means the Department of Housing and Community Development.
(h) “Development sponsor” has the same meaning as “sponsor” as defined in Section 50675.2 of the Health and Safety Code.
(i) “Fund” means the No Place Like Home Fund established pursuant to Section 5849.4.
(j) “Homeless” has the same meaning as defined in Section 578.3 of Title 24 of the Code of Federal Regulations, as that section read on May 1, 2016.
(k) “Permanent supportive housing” has the same meaning as “supportive housing,” as defined in Section 50675.14 of the Health and Safety Code, except that “permanent supportive housing” shall include associated facilities if used to provide services to housing residents.
(l) “Program” means the process for awarding funds and distributing moneys to applicants established in Sections 5849.7, 5849.8, and 5849.9 and the ongoing monitoring and enforcement of the applicants’ activities pursuant to Sections 5849.8, 5849.9, and 5849.11.
(1) “Competitive program” means that portion of the program established by Section 5849.8.
(2) “Distribution program” means that portion of the program described in Section 5849.9.
(m) “Target population” means individuals or households as provided in Section 5600.3 who are homeless, chronically homeless, or at risk of chronic homelessness.

Summary: (1) The Mental Health Services Act (MHSA), an initiative measure enacted by the voters as Proposition 63 at the November 2, 2004, statewide general election, imposes a 1% tax on that portion of a taxpayer’s taxable income that exceeds $1,000,000 and requires that the revenue from that tax be deposited in the Mental Health Services Fund to fund various county mental health programs. The MHSA authorizes the Legislature to amend its provisions by a
2/3
vote, provided that the amendment is consistent with and furthers the intent of the act.
Existing law, known as the No Place Like Home Program, requires the Department of Housing and Community Development to award $2,000,000,000 among counties to finance capital costs, including, but not limited to, acquisition, design, construction, rehabilitation, or preservation, and to capitalize operating reserves, of permanent supportive housing for the target population, as specified. Existing law requires the department to distribute $1,800,000,000 through a competitive program and to allocate $200,000,000 among all counties within this state on an “over-the-counter” population basis.
The bill would authorize the California Health Facilities Financing Authority and the department to, among other things, enter into contracts to provide services pursuant to the No Place Like Home Program related to permanent supportive housing. The bill would also authorize the authority to issue taxable or tax-exempt revenue bonds in an amount not to exceed $2,000,000,000 for these purposes and to make secured or unsecured loans to the department in connection with financing permanent supportive housing pursuant to the No Place Like Home Program. The bill would require that the dollar limit on amounts distributed under the No Place Like Home Program be based on the principal amount of bonds issued by the authority and loaned to the department.
The bill would additionally authorize the use of moneys in the Mental Health Services Fund for the purposes of the No Place Like Home Program. The bill would also establish and continuously appropriate the Supportive Housing Program Subaccount in the Mental Health Services Fund. The bill would require the Controller, no later than the last day of each month and prior to any transfer or expenditure from the fund for any other purpose for the following month, to transfer from the Mental Health Services Fund to the Supportive Housing Program Subaccount an amount necessary to cover the costs the authority is required to pay to the department pursuant to an above-described service contract, as determined by the authority but not to exceed an aggregate amount of $140,000,000 per year. The bill would prohibit moneys in the Supportive Housing Program Subaccount from being loaned to the General Fund pursuant to specified statutes.
The bill would exempt service contracts between the department and the authority pursuant to these provisions from specified public contracting laws. The bill would also exempt loan agreements between the department and the authority and revenue bonds issued by the authority from any other law applicable to the execution of those agreements or issuance of those bonds, including the California Environmental Quality Act.
(2) Existing law establishes the No Place Like Home Fund and continuously appropriates the moneys in this fund to the Department of Housing and Community Development for the purposes of the No Place Like Home Program. Existing law requires the deposit into the fund of, among other moneys, any proceeds from the issuance of bonds by the Treasurer.
This bill would instead require the department to deposit into the fund the proceeds of loans derived from the issuance of bonds under this bill by the California Health Facilities Financing Authority. The bill would additionally continuously appropriate moneys in the fund to the Treasurer and the authority for purposes of the No Place Like Home Program.
(3) Existing law requires counties to annually report specified information to the Department of Housing and Community Development on activities funded under the No Place Like Home Program, including information on the funded supportive housing development. Existing law also requires the department to report specified information on the program to the Legislature by December 31 of each year, commencing with the year after the first full year in which the program is in effect.
This bill would require the department to monitor county compliance with applicable program regulations, loan agreements and regulatory agreements and any agreements related to the program that designate the department as a 3rd party beneficiary, and enforce those agreements to the extent necessary and desirable in order to provide, to the greatest degree possible, the successful provision of permanent supportive housing. The bill would require the department to submit a report to the California Health Facilities Financing Authority by December 31 of each year, commencing with the year after the first full year in which the program is in effect, that contains specified information about the counties participating in the program and the services that have been provided pursuant to any service contracts between the department and the authority, as described above.
(4) Existing law establishes a procedure by which a public agency may bring an action in the superior court to determine the validity of any matter authorized by other law. Existing law authorizes an action under this procedure to determine the legality of any action by the Department of Housing and Community Development related to the No Place Like Home Program. Existing law requires the department to issue its first request for proposal for the competitive program no later than 180 days, and to make its first allocation of “over-the-counter” funds within 60 days, after the deadline for appeals under the validation procedure.
This bill would recast this authorization to instead authorize an action to determine the validity of any service contract or loan agreement between the department and the California Health Facilities Financing Authority, as described above, in accordance with specified provisions governing actions to determine the validity of bonds, warrants, contracts, obligations, or evidences of indebtedness. The bill would instead require the department to issue its first request for proposal no later than 180 days, and to make its first allocation of “over-the-counter” funds as soon as reasonably practical, but no later than 150 days, after the effective date of a final judgment with no further opportunity for appeals, in any court proceeding affirming the validity of the service contracts between the department and the authority and any bonds issued by the authority.
(5) Existing law authorizes the Department of Finance to authorize a loan from the General Fund to the No Place Like Home Fund for cashflow purposes in an amount not to exceed $1,000,000. Existing law requires that a loan comply with certain requirements, including that the purpose of the loan is to allow the department to begin implementation activities related to the No Place Like Home Program, including drafting program guidelines and regulations.
This bill would instead authorize the Department of Finance to authorize one or more loans from the General Fund to the No Place Like Home Fund in an aggregate amount not to exceed $2,000,000. The bill would additionally authorize loans for the purpose of allowing the Department of Housing and Community Development, the California Health Facilities Financing Authority, and the Treasurer to implement the above-described provisions pertaining to service contracts and loan agreements between the department and the authority and revenue bonds issued by the authority.
(6) Existing law makes various findings and declarations regarding the No Place Like Home Program.
This bill would make additional findings and declarations pertaining to the financing and implementation of the No Place Like Home Program. The bill would also make various technical and conforming changes to the No Place Like Home Program.
(7) This bill would declare that its provisions further the intent of the MHSA.
(8) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.