SB 1091 creates the Community Anti‑Displacement and Preservation Program (CAPP) in the Department of Housing and Community Development (HCD) to finance acquisition and rehabilitation of housing that is not currently deed‑restricted, with the goal of preventing displacement and preserving affordability. The bill establishes a statewide fund, authorizes loans and grants to qualified nonprofit and public stewardship entities, and requires long‑term recorded affordability restrictions tied to financed projects.
The statute builds an operational model around a state-selected nonprofit program manager to originate and service loans, while allowing HCD to delegate financing to local public entities. It also mandates tenant protections, monitoring, and a technical assistance program intended to help smaller stewards navigate acquisition, rehabilitation, and long‑term ownership models.
At a Glance
What It Does
HCD creates CAPP and a dedicated treasury fund, issues a request for qualifications to pick a nonprofit program manager, and provides loans or grants to eligible borrowers to buy and rehab unrestricted multifamily housing. Loans must be tied to recorded regulatory agreements or deed restrictions that preserve affordability for decades and include borrower monitoring and tenant protections.
Who It Affects
Eligible borrowers are nonprofits, limited‑equity cooperatives, community land trusts, and local public entities that operate affordable housing; nonprofit lenders are eligible to be the program manager; existing tenants of acquired properties gain new protections. Local governments that accept grants or loans from HCD will take on oversight responsibilities for projects in their jurisdictions.
Why It Matters
This bill targets the stock of naturally occurring affordable housing (unrestricted units) rather than new construction, aiming to preserve affordability where displacement pressures are highest. It combines capital (loans/grants), technical assistance, and tenant safeguards into a single program — a model that changes how preservation transactions are funded and stewarded in California.
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What This Bill Actually Does
SB 1091 focuses on converting privately held, unrestricted housing into long‑term affordable housing while protecting residents living there at the time of acquisition. HCD will run the program but will contract with a qualified nonprofit program manager to originate, underwrite, and service loans.
The program funds may be repaid into the CAPP fund for reuse; HCD can also issue grants or loans directly to local public entities to run local lending programs aligned with CAPP rules.
Eligible borrowers are organizations whose mission and track record center on affordable housing stewardship — examples include community land trusts, limited‑equity cooperatives, nonprofit developers, and public housing authorities. Loans may cover acquisition and rehabilitation costs, and HCD may specify underwriting standards, loan‑to‑value limits, and mixed repayment structures (a portion amortized; a department portion deferred interest).
HCD can prioritize projects by affordability level, borrower type, project type, or geography.When a property remains rental housing, the bill requires recorded regulatory agreements that keep units affordable to low‑income households for at least 55 years (longer if required by other financing). For ownership models, recorded restrictions must run at least 45 years, or a community land trust ground lease of 99 years may be used.
In some cases, HCD may convert deferred loan amounts into grants if the project meets department standards, creating flexibility in final capitalization.The law builds tenant protections into every financed project: tenants on site at acquisition cannot be evicted because of income or eligibility screening for deed‑restricted units, annual rent increase standards must be set in regulations, and just‑cause eviction protections must be included in leases regardless of statutory exemptions. HCD will also fund technical assistance and capacity building for borrowers, including resident engagement, due diligence, financing templates, and stewardship models, and may contract third‑party consultants to deliver those services.
The Five Things You Need to Know
The program caps department administrative expenses at 5% of deposited funds and allows up to an additional 5% to be used for technical assistance and capacity building.
Rental projects financed by CAPP must have recorded regulatory agreements keeping units affordable for at least 55 years; homeownership restrictions must run at least 45 years, or a community land trust lease may run 99 years.
HCD must select a nonprofit program manager via RFQ; eligible managers must have originated and serviced at least $30 million in affordable housing loans, including at least $10 million in acquisition financing, and will be contracted for five years (renewable).
Loans may cover acquisition plus rehabilitation costs; department funds in a loan can bear deferred interest while non‑program portions may require amortized payments, and HCD may set loan‑to‑value limits and priority set‑asides.
Tenants residing in a property at acquisition are protected from eviction based on income or eligibility for deed‑restricted units, and borrowers must incorporate just‑cause protections and HCD’s rent‑increase standards into leases.
Section-by-Section Breakdown
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Program establishment, definitions, and rulemaking carve‑out
This section creates CAPP, defines core terms (eligible borrower, low‑income households, unrestricted housing, rehabilitation), and makes the department responsible for regulations. Notably, HCD’s rulemaking for the program is exempted from the Administrative Procedure Act, which reduces formal rulemaking timelines and public comment processes. Practically, that means program details can be set faster but with fewer procedural safeguards than typical administrative rules.
Community Anti‑Displacement and Preservation Fund
The bill creates a dedicated treasury fund to receive appropriations, loan repayments, and other sources. It limits HCD administrative expenses to 5% of funds and permits another 5% for technical assistance. For managers and advocates, this sets a hard cap on state overhead and earmarks a steady revenue stream for TA, but it also constrains HCD’s capacity for oversight if the fund is large relative to those percentages.
Program manager selection and objectives
HCD must issue a request for qualifications to pick a private nonprofit lender or consortium to run origination and servicing for five years, with possible 5‑year extensions. The statute prescribes minimum experience thresholds, statewide coverage, and scoring criteria that prioritize long loan terms (up to 15 years), competitive pricing, timely closings, and the ability to work across stewardship models. This creates a hybrid public–private operating model where a nonprofit intermediary bears front‑line underwriting and servicing responsibilities under department oversight.
Loan mechanics, affordability terms, and conversion to grants
Loans are limited to acquisition plus rehab costs; HCD can set maximum loan‑to‑value ratios and underwriting guidelines. The law allows loan structures in which non‑program funds may amortize while the department’s share has deferred interest. For rental projects, a recorded regulatory agreement must preserve affordability for at least 55 years (or longer if other financing demands it). For ownership, recorded restrictions of 45 years or a 99‑year CLT ground lease apply. HCD may convert deferred loan portions into grants when projects meet departmental standards, a discretion that will drive final project capital stacks.
Local public entities: delegation, waivers, and reporting
HCD may issue grants or loans to local public entities to operate CAPP‑aligned lending in their jurisdictions. The department can waive certain program requirements for local use to facilitate integration with other local funds. Local entities that receive funds must monitor borrower compliance and file annual reports; loans issued by such local entities are not managed by the statewide program manager. This delegation route speeds local deployment but raises questions about consistent oversight and reporting standards across jurisdictions.
Tenant protections and lease requirements
The statute requires that all tenant protections under state law (other than rent stabilization) apply to CAPP projects, mandates standards for annual rent increases, and prohibits eviction or termination of tenancy for households present at acquisition on the basis of income or eligibility for deed‑restricted units. Borrowers must insert language implementing these protections into leases, and just‑cause provisions (Civil Code §1946.2) or more protective local rules must be included regardless of statutory exemptions. For property managers and lawyers, this creates non‑waivable lease obligations tied to financing documents.
Technical assistance, capacity building, and consulting
HCD must develop TA and capacity building to help eligible borrowers apply for and operate CAPP projects, and may contract third‑party consultants with expertise in resident engagement, due diligence, financing templates, construction and management, and stewardship models. The law explicitly includes racial equity capacity as a contract area and requires practical tools (training modules, proformas, best practices). TA is funded from the same fund under allowable uses and is meant to reduce barriers for smaller stewards and alternative ownership models.
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Explore Housing in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Existing tenants in acquired buildings — they receive explicit protections against eviction for income or eligibility reasons at acquisition, mandated just‑cause eviction language in leases, and regulation of rent increases intended to protect current occupants.
- Community land trusts, limited‑equity cooperatives, and nonprofit affordable housing owners — the program supplies acquisition and rehab capital tailored to preservation and supports stewardship models with technical assistance and potential grant conversion.
- Local public entities with capacity — jurisdictions that take grants or loans can deploy state resources locally and shape project priorities to local needs, while retaining responsibility for monitoring within their borders.
- Prospective low‑income homebuyers and long‑term residents seeking ownership — the statute enables shared‑equity and CLT models with long deed restrictions or ground leases to preserve affordability for decades.
Who Bears the Cost
- Eligible borrowers (nonprofits and public entities) — they must accept long‑term recorded restrictions, comply with monitoring and reporting requirements, and may face constrained capital stacks if deferred interest converts to grants only under narrow standards.
- The Department of Housing and Community Development — although administrative costs are capped, HCD assumes regulatory oversight, eligibility determinations, monitoring frameworks, and discretionary decisions (e.g., grant conversion, LTV rules).
- The nonprofit program manager — it takes on origination, underwriting, and servicing risks, must meet experience thresholds, and will be judged on timeliness and competitiveness under contract terms that prioritize long loan tenors.
- State taxpayers and appropriators — the program relies on legislative appropriations and allows conversion of deferred loans into grants, which reduces future repayments and increases the program’s net subsidy requirement.
Key Issues
The Core Tension
The central tension is between preserving existing housing and protecting residents now (which often requires substantial public subsidy and flexible credit terms) and minimizing public cost and market distortion (which pushes for strict underwriting, repayment expectations, and limited grant conversions). The law empowers HCD to navigate that trade‑off, but its discretionary tools — grant conversion, waivers, and expedited rulemaking — concentrate difficult allocation choices in administrative hands.
SB 1091 stitches together capital, stewardship, and tenant protections, but it leaves several operational tensions unsettled. The department’s discretion to convert deferred loan balances into grants creates a powerful tool to close deals, but without published conversion standards the policy risks subjective selection and inequitable subsidy levels across projects.
Likewise, the ability to waive requirements for local entities facilitates integration with local programs but could produce uneven tenant protections or monitoring rigor across jurisdictions.
The law exempts CAPP rulemaking from the Administrative Procedure Act, speeding implementation but reducing procedural transparency. That tradeoff raises practical questions: how will HCD calibrate underwriting standards, loan‑to‑value limits, and the department’s deferred‑interest approach under pressure to move quickly?
Monitoring long affordability covenants for 45–99 years is costly and administratively heavy; the bill assigns monitoring to HCD or delegated local entities but does not identify sustainable funding for perpetual compliance work. Finally, capturing unrestricted units generally involves negotiating with private owners in active markets; the program must balance paying fair market prices that secure deals against overpaying for assets and driving up local prices.
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