BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2406|
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THIRD READING
Bill No: AB 2406
Author: Blakeslee (R)
Amended: 4/28/10 in Assembly
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE : 9-0, 6/29/10
AYES: Lowenthal, Huff, Ashburn, DeSaulnier, Harman, Kehoe,
Pavley, Simitian, Wolk
ASSEMBLY FLOOR : 74-0, 5/13/10 - See last page for vote
SUBJECT : Redevelopment: pooled housing funds
SOURCE : Author
DIGEST : This bill allows redevelopment agencies in
adjoining cities to pool their low and moderate income
housing funds to construct, rehabilitate, and preserve
housing for extremely low-income persons.
ANALYSIS : The Community Redevelopment Law allows local
governments to establish redevelopment areas and capture
all of the increase in property taxes that is generated
within the area (referred to as "tax increment"). The law
requires redevelopment agencies to deposit 20 percent of
tax increment funds into a Low & Moderate Income Housing
Fund (L&M Fund) to be used to increase, improve, and
preserve the community's supply of low and moderate income
housing at affordable housing cost.
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Existing law sets income limits for persons and families
(adjusted for family size) of low and moderate-income based
on countywide median incomes:
Moderate income < 120%
Low income < 80%
Very low income < 50%
Extremely low income< 30%
L&M funds can be spent on housing anywhere in the
jurisdiction (i.e., within the city limits) upon the agency
making a general finding of benefit to the project areas
within that jurisdiction, but not outside of the
jurisdiction.
AB 2041 (Dutra), Chapter 552, Statutes of 2000, gives
redevelopment agencies in contiguous cities authority,
until January 1, 2010, to pool their L&M funds to build
affordable housing for low- and very low-income households
in one of the city's redevelopment project areas. The
redevelopment agencies could exercise this authority by
creating a Joint Powers Authority (JPA), provided that the
agencies had met specified standards including that each
city must have met 50 percent of its regional housing needs
for very low and low income, that the proposed use of
pooled funds would not exacerbate racial segregation, and
that each city had an Department of Housing and Community
Development (HCD)-approved housing element.
AB 2041 requires redevelopment agencies that pooled funds
to report to HCD on how many housing units were produced.
According to HCD, no agencies submitted a report indicating
that they had used this authority.
This bill:
1. Finds that the transfer of L&M funds to a JPA and the
use of pooled L&M funds within the housing market area
of the participating redevelopment agencies are of
benefit to the redevelopment project area that produced
the tax increment.
2. Permits redevelopment agencies located within adjoining
cities within a single metropolitan statistical area to
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create and participate in a JPA to pool their L&M funds
for the direct costs of constructing, substantially
rehabilitating, and preserving the affordability of
housing units that are affordable to extremely low
income households. To participate:
A. An agency must make a finding based on
substantial evidence after a public hearing that
the aggregation will not cause or exacerbate
racial, ethnic or economic segregation.
B. An agency must have met its requirement to
replace housing units its redevelopment activities
have destroyed, have deposited 20 percent of its
tax increment funds into its L&M Fund, and held a
public hearing on the agreement to pool funds at
least 45 days before transferring L&M funds to the
JPA.
C. A JPA must spend or encumber the L&M funds it
receives within two years of receipt or return them
to the agency from which they came, which would
then face prescribed penalties.
D. A JPA must also make a finding that the pooled
funds will not exacerbate racial or economic
segregation.
E. A JPA must submit an annual report to HCD
documenting the amount of L&M funds its received
and expended for housing assistance.
3. Requires that participating communities have
HCD-certified housing elements and have met in the
previous housing element cycle at least 50 percent of
the region's needs in the low- and very low-income
categories.
4. Prohibits spending pooled funds to pay for planning and
administrative costs, offsite improvements, or
development fees. In addition, pooled funds may only be
spent within a project area.
5. Sunsets the authority to create a new project under its
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pooling authority on January 1, 2020.
Comments
The Legislature and Governor have several times authorized
the pooling of L&M funds among jurisdictions. The broadest
authorities for pooling included: (1) for seven years from
1993 to 2000, redevelopment agencies had the authority to
transfer L&M funds from one agency to another under certain
conditions. No redevelopment agencies took advantage of
this law. The one attempt to use the law was when the City
of Indian Wells offered to transfer some of its housing
funds to the City of Coachella. This transfer was
eventually rejected by the Coachella City Council, and (2)
from 2001 through 2010, under AB 2041 (Dutra), agencies had
the authority to pool their funds between adjoining cities
under essentially the same conditions as this bill
provides. Again, no cities took advantage of this law
either. Except for the one pair of cities for which the
author introduced this bill, it is unlikely that any cities
would take advantage of this law.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
ARGUMENTS IN SUPPORT : According to the author's office,
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.
This bill allows these cities flexibility to pursue a
qualified redevelopment project that will benefit both
communities with many appropriate safeguards, including
that each city is in compliance with the housing element
requirements in state law. The author's office believes
that enabling cities to pool funds for a regional project
allows the community to achieve a greater economy of scale
and increases the cities' ability to leverage capital from
other public and private sources both within and outside
the individual cities.
ASSEMBLY FLOOR :
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AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Tom Berryhill, Blakeslee, Block,
Blumenfield, Bradford, Brownley, Buchanan, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De
La Torre, De Leon, DeVore, Emmerson, Eng, Evans, Feuer,
Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,
Galgiani, Garrick, Gilmore, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,
Monning, Nava, Nestande, Niello, Nielsen, V. Manuel
Perez, Portantino, Ruskin, Salas, Saldana, Silva, Smyth,
Solorio, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, John A. Perez
NO VOTE RECORDED: Caballero, Hagman, Norby, Skinner, Audra
Strickland, Vacancy
JJA:do 7/2/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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