BILL NUMBER: AB 423 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 21, 2013
AMENDED IN SENATE AUGUST 13, 2013
AMENDED IN ASSEMBLY MAY 13, 2013
AMENDED IN ASSEMBLY APRIL 9, 2013
INTRODUCED BY Assembly Member Torres
FEBRUARY 15, 2013
An act to amend Section 34171 of, and to add Section 34176.6 to,
the Health and Safety Code, relating to housing , and declaring
the urgency thereof, to take effect immediately .
LEGISLATIVE COUNSEL'S DIGEST
AB 423, as amended, Torres. Multiphase affordable housing
projects: enforceable obligations.
The Community Redevelopment Law authorizes the establishment of
redevelopment agencies in communities to address the effects of
blight, as defined. Existing law dissolved redevelopment agencies and
community development agencies as of February 1, 2012, and provides
for the designation of successor agencies. Existing law imposes
various requirements on successor agencies and subjects successor
agency actions to the review of oversight boards. Existing law
requires each oversight board to direct the successor agency to,
among other things, cease performance in connection with and
terminate all existing agreements that do not qualify as enforceable
obligations, as defined.
This bill would authorize a successor agency of a former
redevelopment agency that commenced and completed construction of
portions of a multiphase affordable housing project in a county with
a population over 1.7 million or in a city with a population over
160,000 to enter into a new enforceable obligation to complete the
design and construction of a qualifying future phase, as specified,
of a project. The bill would require that any moneys from the former
redevelopment agency's Low and Moderate Income Housing Fund that have
not been remitted to the county auditor-controller, as specified, to
first be allocated to the implementing entity of the new enforceable
obligation to pay for the costs associated with specified
agreements. The bill would require, if the remaining balance of the
Low and Moderate Income Housing Fund is insufficient to pay for the
costs associated with the specified agreements, any remaining costs
to be included on Recognized Obligation Payment Schedules as
enforceable obligations and be funded with Redevelopment Property Tax
Trust Funds.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 34171 of the Health and Safety Code is amended
to read:
34171. The following terms shall have the following meanings:
(a) "Administrative budget" means the budget for administrative
costs of the successor agencies as provided in Section 34177.
(b) "Administrative cost allowance" means an amount that, subject
to the approval of the oversight board, is payable from property tax
revenues of up to 5 percent of the property tax allocated to the
successor agency on the Recognized Obligation Payment Schedule
covering the period January 1, 2012, through June 30, 2012, and up to
3 percent of the property tax allocated to the Redevelopment
Obligation Retirement Fund money that is allocated to the successor
agency for each fiscal year thereafter; provided, however, that the
amount shall not be less than two hundred fifty thousand dollars
($250,000), unless the oversight board reduces this amount, for any
fiscal year or such lesser amount as agreed to by the successor
agency. However, the allowance amount shall exclude, and shall not
apply to, any administrative costs that can be paid from bond
proceeds or from sources other than property tax. Administrative cost
allowances shall exclude any litigation expenses related to assets
or obligations, settlements and judgments, and the costs of
maintaining assets prior to disposition. Employee costs associated
with work on specific project implementation activities, including,
but not limited to, construction inspection, project management, or
actual construction, shall be considered project-specific costs and
shall not constitute administrative costs.
(c) "Designated local authority" shall mean a public entity formed
pursuant to subdivision (d) of Section 34173.
(d) (1) "Enforceable obligation" means any of the following:
(A) Bonds, as defined by Section 33602 and bonds issued pursuant
to Chapter 10.5 (commencing with Section 5850) of Division 6 of Title
1 of the Government Code, including the required debt service,
reserve set-asides, and any other payments required under the
indenture or similar documents governing the issuance of the
outstanding bonds of the former redevelopment agency. A reserve may
be held when required by the bond indenture or when the next property
tax allocation will be insufficient to pay all obligations due under
the provisions of the bond for the next payment due in the following
half of the calendar year.
(B) Loans of moneys borrowed by the redevelopment agency for a
lawful purpose, to the extent they are legally required to be repaid
pursuant to a required repayment schedule or other mandatory loan
terms.
(C) Payments required by the federal government, preexisting
obligations to the state or obligations imposed by state law, other
than passthrough payments that are made by the county
auditor-controller pursuant to Section 34183, or legally enforceable
payments required in connection with the agencies' employees,
including, but not limited to, pension payments, pension obligation
debt service, unemployment payments, or other obligations conferred
through a collective bargaining agreement. Costs incurred to fulfill
collective bargaining agreements for layoffs or terminations of city
employees who performed work directly on behalf of the former
redevelopment agency shall be considered enforceable obligations
payable from property tax funds. The obligations to employees
specified in this subparagraph shall remain enforceable obligations
payable from property tax funds for any employee to whom those
obligations apply if that employee is transferred to the entity
assuming the housing functions of the former redevelopment agency
pursuant to Section 34176. The successor agency or designated local
authority shall enter into an agreement with the housing entity to
reimburse it for any costs of the employee obligations.
(D) Judgments or settlements entered by a competent court of law
or binding arbitration decisions against the former redevelopment
agency, other than passthrough payments that are made by the county
auditor-controller pursuant to Section 34183. Along with the
successor agency, the oversight board shall have the authority and
standing to appeal any judgment or to set aside any settlement or
arbitration decision.
(E) Any legally binding and enforceable agreement or contract that
is not otherwise void as violating the debt limit or public policy.
However, nothing in this act shall prohibit either the successor
agency, with the approval or at the direction of the oversight board,
or the oversight board itself from terminating any existing
agreements or contracts and providing any necessary and required
compensation or remediation for such termination. Titles of or
headings used on or in a document shall not be relevant in
determining the existence of an enforceable obligation.
(F) Contracts or agreements necessary for the administration or
operation of the successor agency, in accordance with this part,
including, but not limited to, agreements concerning litigation
expenses related to assets or obligations, settlements and
judgements, and the costs of maintaining assets prior to disposition,
and agreements to purchase or rent office space, equipment and
supplies, and pay-related expenses pursuant to Section 33127 and for
carrying insurance pursuant to Section 33134.
(G) Amounts borrowed from, or payments owing to, the Low and
Moderate Income Housing Fund of a redevelopment agency, which had
been deferred as of the effective date of the act adding this part;
provided, however, that the repayment schedule is approved by the
oversight board. Repayments shall be transferred to the Low and
Moderate Income Housing Asset Fund established pursuant to
subdivision (d) of Section 34176 as a housing asset and shall be used
in a manner consistent with the affordable housing requirements of
the Community Redevelopment Law (Part 1 (commencing with Section
33000)).
(H) Any agreement necessary to complete the design and
construction of a qualifying future phase of a project pursuant to
subdivision (b) (a) of Section 34176.6.
(2) For purposes of this part, "enforceable obligation" does not
include any agreements, contracts, or arrangements between the city,
county, or city and county that created the redevelopment agency and
the former redevelopment agency. However, written agreements entered
into (A) at the time of issuance, but in no event later than December
31, 2010, of indebtedness obligations, and (B) solely for the
purpose of securing or repaying those indebtedness obligations may be
deemed enforceable obligations for purposes of this part.
Notwithstanding this paragraph, loan agreements entered into between
the redevelopment agency and the city, county, or city and county
that created it, within two years of the date of creation of the
redevelopment agency, may be deemed to be enforceable obligations.
(3) Contracts or agreements between the former redevelopment
agency and other public agencies, to perform services or provide
funding for governmental or private services or capital projects
outside of redevelopment project areas that do not provide benefit to
the redevelopment project and thus were not properly authorized
under Part 1 (commencing with Section 33000) shall be deemed void on
the effective date of this part; provided, however, that such
contracts or agreements for the provision of housing properly
authorized under Part 1 (commencing with Section 33000) shall not be
deemed void.
(e) "Indebtedness obligations" means bonds, notes, certificates of
participation, or other evidence of indebtedness, issued or
delivered by the redevelopment agency, or by a joint exercise of
powers authority created by the redevelopment agency, to third-party
investors or bondholders to finance or refinance redevelopment
projects undertaken by the redevelopment agency in compliance with
the Community Redevelopment Law (Part 1 (commencing with Section
33000)).
(f) "Oversight board" shall mean each entity established pursuant
to Section 34179.
(g) "Recognized obligation" means an obligation listed in the
Recognized Obligation Payment Schedule.
(h) "Recognized Obligation Payment Schedule" means the document
setting forth the minimum payment amounts and due dates of payments
required by enforceable obligations for each six-month fiscal period
as provided in subdivision (m) of Section 34177.
(i) "School entity" means any entity defined as such in
subdivision (f) of Section 95 of the Revenue and Taxation Code.
(j) "Successor agency" means the successor entity to the former
redevelopment agency as described in Section 34173.
(k) "Taxing entities" means cities, counties, a city and county,
special districts, and school entities, as defined in subdivision (f)
of Section 95 of the Revenue and Taxation Code, that receive
passthrough payments and distributions of property taxes pursuant to
the provisions of this part.
(l) "Property taxes" include all property tax revenues, including
those from unitary and supplemental and roll corrections applicable
to tax increment.
(m) "Department" means the Department of Finance unless the
context clearly refers to another state agency.
(n) "Sponsoring entity" means the city, county, or city and
county, or other entity that authorized the creation of each
redevelopment agency.
(o) "Final judicial determination" means a final judicial
determination made by any state court that is not appealed, or by a
court of appellate jurisdiction that is not further appealed, in an
action by any party.
SEC. 2. Section 34176.6 is added to the Health and Safety Code, to
read:
34176.6. (a) The Legislature finds and declares all of the
following:
(1) Former redevelopment agencies provided a crucial supply of
affordable housing to the residents of California since the inception
of redevelopment and tax increment financing. Many of these
affordable housing projects were multiphase developments spanning
over decades of land assembly, planning, implementation, and
construction, and provide vital housing for thousands of persons and
families of low or moderate income. Failure to complete the
multiphase affordable housing projects because of the dissolution of
redevelopment agencies would result in a deterioration of properties
and land use, and undue disruption to the health, safety, and
well-being of the residents of completed phases of these projects.
Failure to complete these affordable housing projects would
exacerbate the shortage of affordable housing for persons and
families of low or moderate income residing and working throughout
California.
(2) Many of these multiphase projects were underway at the time
the dissolution of redevelopment agencies was under consideration by
the Governor, Legislature, and the courts. Multiphase affordable
housing projects that were substantially completed but awaiting
approval of the final phase have been stymied by the dissolution of
redevelopment agencies. This is particularly true in larger
communities where land assembly and construction had been severely
impacted by the recent economic down turn and delayed the final
implementation of these projects.
(3) To avoid serious blight to the multiphase projects and to
ensure an adequate supply of housing for persons and families of low
or moderate income, it is necessary to enact this section. This
section shall apply only to counties with a population over 1.7
million and cities with a population over 160,000. In enacting this
section, it is the policy of the Legislature to assist these larger
communities who were negatively impacted by the recent economic
crisis and were unable to complete the final phase of large scale,
multiphase, planned, and partially implemented affordable housing
projects as a result of the dissolution of redevelopment agencies.
(b)
34176.6. (a) Notwithstanding Section
34177.3, or any other law, a successor agency of a former
redevelopment agency that commenced and completed construction of
portions of a multiphase affordable housing project in a county with
a population over 1.7 million or in a city with a population over
160,000 may enter into a new enforceable obligation, as defined in
paragraph (1) of subdivision (d) of Section 34171, to complete the
design and construction of a qualifying future phase of a project.
(c)
(b) Notwithstanding any other law, any moneys from the
former redevelopment agency's Low and Moderate Income Housing Fund
that have not been remitted to the county auditor-controller pursuant
to the due diligence review process in Sections 34179.5 and 34179.6
shall first be allocated to the implementing entity of the new
enforceable obligation to pay for the costs associated with any
agreement permitted by subdivision (b) (a)
. The implementing entity may be either the successor agency or
the housing successor entity, as designated pursuant to Section
34176. In the event that the remaining balance of the Low and
Moderate Income Housing Fund is insufficient to pay for the costs
associated with any agreements permitted by subdivision (b)
(a) , any remaining costs shall be included on
Recognized Obligation Payment Schedules as enforceable obligations
and shall be funded with the Redevelopment Property Tax Trust Fund.
(d)
(c) Any agreement permitted by subdivision (b)
(a) shall first be approved by the oversight
board pursuant to Section 34180.
(e)
(d) (1) "Qualifying future phase" shall mean a phase of
a planned and partially implemented project where the previously
planned phases have received a certificate of occupancy before
February 1, 2012, but construction contracts had not been entered
into for the final phase of the project before February 1, 2012.
(2) "Qualifying future phase" shall meet all of the following
criteria:
(A) The project is for the creation of affordable housing for
"persons and families of low or moderate income," as defined in
Section 50093. The project may include first floor commercial or
retail space.
(B) Upon completion of the residential units, the residential
units shall be subject to a declaration of covenants and restrictions
restricting the residential units to housing for a period in
compliance with the Community Redevelopment Law (Part 1 (commencing
with Section 33000)) and the maximum income and purchase price or
rent that may be charged. The declaration of covenants and
restrictions shall be recorded against the property.
(C) All public infrastructure including sewers, water lines, curb
cuts, streets, and other customary infrastructure is currently in
place for the future phase.
(D) At least one phase of the project had been identified as a
Catalyst Project for California Sustainable Strategies Pilot Program
and embodies the goals of the Sustainable Communities and Climate
Protection Act of 2008 (Chapter 728 of the Statutes of 2008).
SEC. 3. This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
In order to timely provide critical funding to increase the supply
of affordable housing, it is necessary that this act take effect
immediately.