BILL ANALYSIS AB 1641 Page 1 Date of Hearing: May 5, 2010 ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT Norma Torres, Chair AB 1641 (Hall) - As Amended: April 5, 2010 SUBJECT : Redevelopment: City of Los Angeles public housing projects SUMMARY : Establishes a special process for the redevelopment agency of Los Angeles to facilitate the redevelopment of public housing projects that are 50 years or older. Specifically, this bill : 1)Defines a "public housing project" as a public housing project in the City of Los Angeles that is owned by the Housing Authority of the City of Los Angeles and was built prior to January 1, 1960. 2)Provides that a public housing project as defined above may constitute blight. 3)Adds the" redevelopment of public housing" to the meaning of "redevelopment." 4)Defines "redevelopment of public housing" as redevelopment that results in the removal or rehabilitation and replacement of existing public housing project buildings with master-planned, mixed-income, and mixed-use projects that do the following: a) Includes replacement on at least a one-to-one basis of all existing public housing units with publicly or privately owned units inside or outside the project area containing and equal or greater number of bedrooms as the replaced housing units; b) The replacement units must be occupied by very low and low income people at an affordable housing cost in the same or lower income level as the persons displaced from the public housing; c) It may include additional privately owned housing units that are available to and occupied by low and moderate income persons and families, including very-low income AB 1641 Page 2 families and individuals at an affordable housing cost; d) May include work force market rate housing units, retail services, commercial, industrial, educational, recreational, and other uses that are appropriate to serve the residents of the area; and e) Subjects the construction of privately owned components of the project to applicable community benefits requirements of the redevelopment agency and housing authority. EXISTING LAW : 1)Requires a redevelopment agency to prepare a relocation plan or method for families and individuals who are temporarily or permanently displaced by the removal of housing in a project area (Health & Safety Code 33411). 2)Provides no low or moderate income persons may be displaced by the removal of housing until the redevelopment agency has determined that there are suitable housing units that are ready and available to be occupancy at comparable rents (Health & Safety Code Section 33411.1). 3)Requires low and moderate income persons to be given the first right of refusal to purchase or rent new units produced in the project area. The redevelopment agency must create a list of low and moderate income residents that qualify for this right (Health & Safety Code Section 33411.3). 4)Requires permanent housing be available to displaced low and moderate income residents within three years of the time occupants are displaced and during the time that units are being made available, replacement housing at a comparable rent must be made available to displaced residents (Health & Safety Code Section 33412). 5)Requires the redevelopment agency to replace or cause to be replaced, an equal number of low and moderate income housing units, with an equal or greater number of bedrooms, as the number that are removed or destroyed in a project area. Housing units must be built inside the territorially jurisdiction of the redevelopment agency. Requires 100% of the housing units to be provided at the same income levels or AB 1641 Page 3 at lower income levels than the units destroyed or removed.(Health & Safety Code Section 33413). FISCAL EFFECT : None. COMMENTS : Background : Community Redevelopment Law (CRL) requires redevelopment agencies to insure that low and moderate income housing units are replaced, if they are destroyed or removed as part of the redevelopment of a project area. Units are required to be replaced on a one-to-one basis, with an equal or greater number of bedrooms as those removed from the project area. Redevelopment agencies are required to develop a relocation plan for displaced low and moderate income residents. Prior to destroying or removing low and moderate income units, the redevelopment agency must make sure that qualified residents are relocated to replacement units. Need for the bill : According to the sponsor, the Los Angeles County Redevelopment Agency (LACRA), LACRA is authorized under the state community redevelopment law to act in areas of the city that have been designated by the city council as being eligible for redevelopment. After making findings required by law and following the many required procedures, the LACRA and city council may adopt redevelopment plans for areas of the city that need revitalization. In order to justify the creation of these areas, LACRA must demonstrate that the conditions of the neighborhood, specifically the buildings (both residential and commercial), are blighted. Since units within these neighborhoods are considered federally funded public housing developments, the housing authority is obligated under its operating agreement with the U.S. Department of Housing and Urban Development (Public Housing Act of 1937) to maintain the units in decent, sanitary and safe conditions. By determining that the neighborhood and specifically the residential units are "blighted," LACRA would be making a determination that would call into question the housing authority's compliance with its operating agreements. This would be highly problematic and jeopardize the operating subsidy that the authority receives for these housing units and, thereby, endanger the housing for families living within public housing. When the federal government announced the closure of surplus AB 1641 Page 4 military bases in the 1990's and transferred ownership to local governments, the California Legislature amended the CRL to allow for the expedited adoption of redevelopment plans to provide for the accelerated conversion of these former military bases into productive civilian uses. The "Military Base Conversion Redevelopment Agencies" law made it possible for cities and counties in California to place these targeted areas back on the tax roles and authorized these areas into new commercial, industrial and residential uses, including affordable housing. A similar approach is needed for Los Angeles' older public housing projects. By seeking state legislation, that would apply the precedent of the military base conversion statute to the redevelopment of public housing sites, the LACRA and Housing Authority of the City of Los Angeles would be able to establish a test program in South Los Angeles where public housing projects such as Jordan Downs and Nickerson Gardens in Watts, which combined consist of 1,700 units of housing, may be converted into well-designed privately owned mixed-income communities, while ensuring the continued affordability of replacement housing at least equal in number to the existing housing in the project area. Arguments in opposition : The Western Center on Law & Poverty (WCLP) is opposed to this bill unless it is amended. In their letter, they state "we are at a loss to comprehend the need for AB 1641. We understand that there is concern that labeling a public housing development as blighted may have repercussions with the U.S. Department of Housing and Urban Development. But the bill (page 3, lines 20-21) simply flat out declares that public housing projects are "blighted." We do not see a blanket pronouncement in California statute that public housing is per se blighted as useful. Assuming that some other means of authorizing redevelopment agency financing and activity can be found for redeveloping public housing, we fail to understand why the standard redevelopment law cannot be applied." WCLP raises the following issues, which if addressed appropriately in the bill, would remove their opposition: 1) Provision providing for extremely low income replacement housing; 2) That replacement housing is available to, and priority for, all existing public housing authority residents; 3) That replacement housing is made by an equal bedroom AB 1641 Page 5 size per each unit lost (v. cumulative number of bedrooms in the development); 4) Replacement housing has a 55 year affordability restrictions; 5) On-site one for one replacement housing; and 6) Adequate relocation requirements. Staff comments : As proposed, the bill is unclear whether or not the City of Los Angeles must comply with the requirements of existing redevelopment law when removing and redeveloping low-income housing, including developing a relocation plan, requiring replacement of units be on a one-to-one basis, with an equal or greater number of bedrooms as those removed from the project area. The sponsor has indicated that it is their intent to comply with the existing requirements of CRL. The amendments below would make clear that the City of Los Angeles must comply with CRL including providing one-to-one replacement of units consistent with the income levels of existing tenants including extremely-low income units. The amendments would also require that the replacement housing be built and available to be occupied by displaced residents before the public housing is demolished or renovated. Committee amendments: 1)Delete the contents of the bill. 2)Add Health & Safety Code Section 33038 and amend as follows: Section 1. Section 33038 of the Health and Safety Code is amended to read: (a) It is found and declared that blighted areas may include housing areas constructed astemporarygovernment-ownedwartimehousing projects constructed prior to January 1, 1960, and that such areas may be characterized by one or more of the conditions enumerated in Sections 33031 to 33034, inclusive. (b) A redevelopment agency undertaking activities involving property described in subdivision (a) shall comply with all of the requirements of this part, except as specifically modified in subdivision (c). (c) In addition to the requirements specified in subdivision (b): (1) The project shall include the replacement, on at least a one-to-one basis, of all existing public housing units. The replacement dwelling units shall be made available to, and occupied by, extremely low, very low and low income households AB 1641 Page 6 at the same or lower income level as the household displaced from the public housing units, for at least 55 years. (2) The replacement dwelling units: (A) May be either publicly- or privately-owned. (B) Shall be located either inside the project area, or within a 5-mile radius of the parcel containing the public housing that is being replaced. (C) Shall have, for each income level described in paragraph (1), an equal or greater number of bedrooms as the destroyed or removed units. (3) No household shall be displaced under this section unless when being immediately relocated it is to a permanent replacement dwelling unit created pursuant to this section. This paragraph does not apply if the household, having been given priority for a replacement dwelling unit under this part, voluntarily chooses not to accept the replacement dwelling unit. (4) The project may include the development of additional privately-owned housing units that will be available to and occupied by persons and families of low and moderate income, including very low income households, at an affordable housing cost. (5) The project may also include workforce market-rate housing units, retail services, commercial, industrial, educational, recreational and other uses as may be appropriate to serve the residents of the area, and public improvements inside or adjacent to the project area. (6) The construction of any privately-owned components of the project shall be subject to such community benefits requirements as may be required by the redevelopment agency or the housing authority. REGISTERED SUPPORT / OPPOSITION : Support City of Los Angeles (sponsor) Opposition California Rural Legal Assistance Foundation (oppose, unless amended) Western Center on Law & Poverty (oppose, unless amended) AB 1641 Page 7 Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085