BILL ANALYSIS
AB 2406
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ASSEMBLY THIRD READING
AB 2406 (Blakeslee)
As Amended April 28, 2010
Majority vote
HOUSING 9-0
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|Ayes:|Torres, Arambula, Bradford, | | |
| |Eng, Gilmore, Knight, | | |
| |Saldana, Torlakson, Tran | | |
| | | | |
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SUMMARY : Allows redevelopment agencies in adjoining cities to
form a joint powers authority (JPA) for the purpose of pooling
their Low- and Moderate-Income Housing (L&M) Funds to construct,
rehabilitate and preserve extremely low-income affordable
housing units. Specifically, this bill :
1)Makes legislative findings including the benefits of pooling
funds for the purpose of providing affordable housing.
2)Allows redevelopment agencies in adjoining cities within a
single metropolitan statistical area (MSA) to create a JPA to
pool L&M funds for constructing, rehabilitating, or preserving
extremely low income affordable housing units.
3)Requires redevelopment agencies to make a finding based on
substantial evidence, and after a public meeting, the pooling
of funds will not exacerbate racial, ethic, or economic
segregation.
4)Allows redevelopment agencies to transfer a portion of their
housing funds to a JPA to do the following:
a) Determine the kinds of housing projects or activities to
be assisted;
b) Loan, grant or advance housing funds to a receiving
entity for an eligible housing development with in the
participating agencies jurisdiction; and,
c) Issue bonds and use pooled funds to leverage other funds
to assistance eligible developments including loans from
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private intuitions and assistance from governmental
agencies.
5)Requires each participating agency must have an adopted
up-to-date housing element that has been determined to be in
compliance by the Department of Housing & Community
Development (HCD).
6)Requires each participating agency to have met, in the current
or previous housing element cycle, 50% or more of its share of
the region's affordable housing needs in the very-low and
low-income categories.
7)Requires each participating agency to hold a public meeting 45
days prior to transferring funds to the JPA.
8)Prohibits the transfer of funds from a project area that has
indebtedness to its L&M fund.
9)Prohibits the transfer of funds from an agency that has not
met its need for replacement housing, unless the agency has
encumbered or contractually agreed to commit sufficient funds
to meet those requirements.
10)Requires pooled funds to be used within the participating
agencies jurisdictions.
11)Requires a JPA to ensure that the funds received comply with
the agreement.
12)Requires funds transferred to a JPA must be expended or
encumbered within two years of the transfer.
13)Provides funds that are transferred and that are not spent or
encumbered in two years will be returned to the original
agency and deemed excess surplus funds.
14)Prohibits the transfer of excess surplus funds to a JPA.
15)Requires a JPA to submit a report to HCD that includes the
amount of funds received and expended for housing assistance
activities.
16)Prohibits the use of housing funds for planning and
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administrative costs, offsite improvements, fees or exactions
levied solely for the development projects constructed,
substantially rehabilitated or preserved with pooled funds;
17)Requires pooled funds to be spent within the project area of
a participating agency
18)Sunsets the authority created by this bill on January 1,
2020.
FISCAL EFFECT : None
COMMENTS : Legislative findings declare that the fundamental
purpose of redevelopment is to expand the supply of low- and
moderate-income housing, employment opportunities and provide an
environment for social, economic and psychological growth and
well-being for all citizens.
Redevelopment agencies must annually set aside 20% of their
property tax increment revenues into an L&M fund for increasing,
improving and preserving affordable housing. Agencies are
required to spend these funds within three years and the money
must benefit low- and moderate- income families and individuals.
Redevelopment agencies generally spend their affordable housing
funds inside the project areas that generated the revenue.
Redevelopment agencies have relatively broad powers in expending
monies from L&M fund including acquiring land, donating the
land, acquiring and rehabilitating buildings, providing
subsidies in certain circumstances and maintaining the
community's supply of mobilehomes. They can spend the money
outside the project areas but still inside the city limits, if
they make a finding that the housing benefits the project area.
Redevelopment agencies' ability to use L&M funds for purposes
other than increasing, improving and preserving is limited.
Health & Safety Code Section 33334.3(d) states, it is the intent
of the Legislature, that to the maximum extent possible, L&M
funds be spent to defray the costs of production, improvement
and preservation of low- and moderate-income housing, and that
the amount spent on planning and general administrative
activities not be disproportionate to the amount spent on
production, improvement and preservation. Planning and
administrative activities that can be funded out of the L&M fund
are limited to the activities necessary to develop affordable
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housing and specifically to the salaries of agency's staff,
services of contractors and costs to a nonprofit corporation,
which are not directly associated with a specific project.
Redevelopment agencies are prohibited from paying for operation
and maintenance expenses for public buildings.
AB 2041 (Dutra), Chapter 552, Statutes of 2000, gave
redevelopment agencies in contiguous cities authority to pool
their L&M funds to build affordable housing in one of the city's
redevelopment project areas. The redevelopment agencies could
exercise this authority by creating a JPA, provided that the
agencies had met specified standards including that each city
must have met 50% of its regional housing needs for very-low and
low-income individuals and families, that the proposed use of
pooled funds would not exacerbate racial segregation, and that
each city had an up-to-date housing element. This authority
sunset on January 1, 2010.
This bill would reinstate the statute allowing cities to pool
L&M funds created by AB 2041 (Dutra). The only significant
change from the sunset statute is that pooled funds could only
be spent to construct or substantially rehabilitate
extremely-low income housing units versus very-low or low-income
units.
AB 2041 (Dutra) required redevelopment agencies to report to HCD
if they pooled funds. According to HCD, no cities submitted a
report indicating that they had used this authority.
The purpose of this bill : According to the author, the cities
of Arroyo Grande and Grover Beach are contiguous cities in San
Luis Obispo County that share many demographic similarities.
The cities are both small, with fewer within 20,000 residents at
the time of the last census, and they do not have adequate
funding to support the affordable housing projects they would
like to develop. AB 2406 will allow these cities flexibility to
pursue a qualified redevelopment project that will mutually
benefit each community with many appropriate safeguards,
including that each city are in compliance with their housing
requirements as determined by the HCD.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
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