Amended in Assembly June 10, 2013

Senate Bill No. 133

Introduced by Senator DeSaulnier

January 28, 2013

An act to amend begin delete Section 7073.1 of the Government Code, relating to economic development end delete begin insert Sections 33080, 33080.1, 33080.2, 33080.8, 33334.2, 33334.3, 33334.4, 33334.12, 33413, 33413.5, 33418, 33487, and 33490 of, to add Sections 33080.9, 33080.11, 33080.12, 33506, and 50464.5 to, to add Article 13 (commencing with Section 33460) to Chapter 4 of Part 1 of Division 24 of, and to repeal and add Section 33334.16 of, the Health and Safety Code, relating to redevelopment end insert .

LEGISLATIVE COUNSEL’S DIGEST

SB 133, as amended, DeSaulnier. begin delete Enterprise zones: applications. end delete begin insert Redevelopment. end insert

begin insert

(1) The Community Redevelopment Law requires that each redevelopment agency submit the final report of any audit undertaken by any other local, state, or federal government entity to its legislative body and to additionally present an annual report to the legislative body containing specified information.

end insert begin insert

This bill would require the agency to include additional information relating to any major audit violations, as defined, any corrections to those violations, and planning and general administrative expenses of the Low and Moderate Income Housing Fund. The bill would authorize the Controller to conduct quality control reviews of independent financial audit reports and require the Controller to publish the results of his or her reviews. The bill would require the Controller to comply with certain notification and referral provisions in the event that the audit was conducted in a manner that may constitute unprofessional conduct.

end insert begin insert

The bill would require the Department of Housing and Community Development to conduct audits of redevelopment agencies to ensure compliance with the housing provisions of the Community Redevelopment Law. The bill would require each agency to annually deposit 0.05% of any tax increment deposited into the Low and Moderate Income Housing Fund into the Redevelopment Agency Accountability Fund, which the bill would create, to fund the department audits.

end insert begin insert

(2) Existing law requires that funds used for purposes of increasing, improving, and preserving a community’s supply of low- and moderate-income housing be held in a separate Low and Moderate Income Housing Fund until used. Existing law limits the planning and general administrative costs which may be paid with moneys from the Low and Moderate Income Housing Fund.

end insert begin insert

The bill would revise the costs and expenses which may be considered planning and general administrative costs for the purposes of being paid from the Low and Moderate Income Housing Fund. Except as provided, the bill would prohibit an agency from expending more than 15% of the tax increment deposited in the fund for planning and general administrative costs. The bill would impose other reporting and accountability measures on agencies with respect to the use of moneys in the fund for planning and administrative purposes. The bill would revise various provisions governing an action to compel agency compliance with specified provisions.

end insert begin insert

(3) Existing law requires, except as specified, each agency to expend over each 10-year period of the implementation plan, the moneys in the Low and Moderate Income Housing Fund to assist housing for persons of moderate, low, and very low income according to specified calculations.

end insert begin insert

The bill would instead require that at least 75% of the agency’s expenditures from the fund directly assist the new construction, acquisition and substantial rehabilitation, or preservation of housing for persons of extremely low, very low, low, or moderate income, with at least 25% of the expenditures required to be directed towards housing for persons of extremely low income and at least 50% of the expenditures required to be directed towards housing for persons of very low income.

end insert begin insert

(4) Existing law authorizes a redevelopment agency to merge project areas under its jurisdiction, and requires that at least 20% of specified taxes allocated to the redevelopment agency be deposited into the Low and Moderate Income Housing Fund to assist in the construction or rehabilitation of housing units for very low, and low- and moderate-income households, as specified. Existing law requires that if those funds have not been committed for that purpose within 6 years, the agency shall offer the funds to the housing authority that operates within the jurisdiction of the agency, as specified.

end insert begin insert

This bill would delete the requirement that the funds be offered to the housing authority.

end insert begin insert

(5) Existing law requires an agency that has failed to expend or encumber excess surplus in the Low and Moderate Income Housing Fund within one year to disburse the surplus voluntarily to the appropriate county housing authority or another public agency or to expend or encumber the surplus within 2 additional years.

end insert begin insert

The bill would delete these provisions. The bill would modify the definition of the term “excess surplus.”

end insert begin insert

(6) Existing law provides that whenever low- or moderate-income housing dwelling units are destroyed or removed from the low- and moderate-income housing market as part of a redevelopment that is subject to a written agreement with the agency, or where financial assistance has been provided by the agency, the agency is required to provide replacement housing within 4 years of the destruction or removal.

end insert begin insert

The bill would modify the agency’s obligation to provide replacement housing to low- or moderate-income persons and families and would impose new requirements on the agency with respect to the replacement housing plan and housing specifications. If a court has found that an agency has failed to comply with these provisions, the bill would require the court, at a minimum, to issue an order temporarily prohibiting the agency from issuing any debt for any project area, except as specified.

end insert begin insert

(7) This bill would become operative contingent upon the enactment of SB 341 of the 2012-13 Regular Session.

end insert begin delete

The Enterprise Zone Act provides for the designation of enterprise zones by the Department of Housing and Community Development, based on the department’s approval of applications from a city, county, or city and county with a geographic area meeting certain criteria. The act, among other things, sets forth the application process.

end delete begin delete

This bill, for any application for an enterprise zone designation submitted on or after January 1, 2014, if any portion of the proposed zone is within, or was previously within, the boundaries of a previously designated zone, or if any portions of the proposed zone are within, or previously were within, the boundaries of 2 or more previously designated enterprise zones, would prohibit the proposed enterprise zone from exceeding a specified aggregate size.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 33080 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33080.  

(a)  Every redevelopment agency shall file with the
Controller within six months of the end of the agency’s fiscal year
a copy of the report required by Section 33080.1. In addition, each
redevelopment agency shall file with the department a copy of the
audit report required by subdivision (a) of Section 33080.1. The
reports shall be made in the time, format, and manner prescribed
by the Controller after consultation with the department.

(b)  The redevelopment agency shall provide a copy of the report
required by Section 33080.1, upon the written request of any person
or any taxing agency. If the report does not include detailed
information regarding administrative costs, professional services,
or other expenditures begin insert required under Section 33080.1 end insert , the person
or taxing agency may request, and the redevelopment agency shall
provide, that information begin delete . The person or taxing agency shall
reimburse the redevelopment agency for all actual and reasonable
costs incurred in connection with the provision of the requested
information end delete begin insert , upon payment of fees covering the direct costs of
duplication end insert .

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 33080.1 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33080.1.  

Every redevelopment agency shall submit the final
report of any audit undertaken by any other local, state, or federal
government entity to its legislative body within 30 days of receipt
of that audit report. In addition, every redevelopment agency shall
present an annual report to its legislative body begin insert at a public hearing
and make the report available on its Internet Web site, or if the
agency does not have an Internet Web site, on the community’s
Internet Web site, end insert within six months of the end of the agency’s
fiscal year. The annual report shall contain all of the following:

(a) (1) An independent financial audit report for the previous
fiscal year. “Audit report” means an examination of, and opinion
on, the financial statements of the agency which present the results
of the operations and financial position of the agency, including
all financial activities with moneys required to be held in a separate
Low and Moderate Income Housing Fund pursuant to Section
33334.3. This audit shall be conducted by a certified public
accountant or public accountant, licensed by the State of California,
in accordance with Government Auditing Standards adopted by
the Comptroller General of the United States. The audit report
shall meet, at a minimum, the audit guidelines prescribed by the
Controller’s office pursuant to Section 33080.3 and also include
a report on the agency’s compliance with laws, regulations, and
administrative requirements governing activities of the agency,
and a calculation of the excess surplus in the Low and Moderate
Income Housing Fund as defined in subdivision (g) of Section
33334.12. begin insert The audit report shall include a statement from the
auditor as to whether or not the agency has any major audit
violations, as defined in subdivision (j) of Section 33080.8. end insert

begin insert

(2) A statement describing each corrective measure taken in
that fiscal year to correct major audit violations identified during
or prior to that fiscal year by the agency, its auditor, or the
Department of Housing and Community Development.

end insert begin delete

(2)

end delete

begin insert (3) end insert  However, the legislative body may elect to omit from
inclusion in the audit report any distinct activity of the agency that
is funded exclusively by the federal government and that is subject
to audit by the federal government.

(b) A fiscal statement for the previous fiscal year that contains
the information required pursuant to Section 33080.5.

(c) A description of the agency’s activities in the previous fiscal
year affecting housing and displacement that contains the
information required by Sections 33080.4 and 33080.7.

(d) A description of the agency’s progress, including specific
actions and expenditures, in alleviating blight in the previous fiscal
year.

(e) A list of, and status report on, all loans made by the
redevelopment agency that are fifty thousand dollars ($50,000) or
more, that in the previous fiscal year were in default, or not in
compliance with the terms of the loan approved by the
redevelopment agency.

(f) A description of the total number and nature of the properties
that the agency owns and those properties the agency has acquired
in the previous fiscal year.

(g) A list of the fiscal years that the agency expects each of the
following time limits to expire:

(1) The time limit for the commencement for eminent domain
proceedings to acquire property within the project area.

(2) The time limit for the establishment of loans, advances, and
indebtedness to finance the redevelopment project.

(3) The time limit for the effectiveness of the redevelopment
plan.

(4) The time limit to repay indebtedness with the proceeds of
property taxes.

begin insert

(h) All of the following relating to the agency’s planning and
general administrative expenses for the most recently completed
fiscal year paid from the Low and Moderate Income Housing Fund:

end insert begin insert

(1) The amount and percentage of funds deposited into the Low
and Moderate Income Housing Fund, exclusive of debt proceeds,
expended for planning and general administrative costs described
in subparagraphs (A), (C), (D), and (E) of paragraph (1) of
subdivision (d) of Section 33334.3.

end insert begin insert

(2) The amount and percentage of funds deposited into the Low
and Moderate Income Housing Fund, exclusive of debt proceeds,
expended for planning and general administrative costs described
in subparagraph (B) of paragraph (1) of subdivision (d) of Section
33334.3.

end insert begin insert

(3) Consistent with the categories described in paragraph (1)
of subdivision (d) of Section 33334.3, an itemization of each
category of planning and general administration expenditures
from the Low and Moderate Income Housing Fund and an explicit
description of how the expenditures are necessary for the
production, improvement, or preservation of low- and
moderate-income housing.

end insert begin insert

(4) A list of the title of any agency, city, or county employees
for whom any portion of his or her salary, wages, benefits, or
nonpersonnel costs is paid from the Low and Moderate Income
Housing Fund, the nature of the employee’s activities eligible to
be paid from the Low and Moderate Income Housing Fund, the
percentage of time the employee spends on activities eligible to
be paid from the Low and Moderate Income Housing Fund, the
percentage of time the employee spends on activities that are
directly and necessarily associated with a specific eligible housing
development project or to the direct administration of programs,
and the percentage of the employee’s salary, wages, benefits, and
nonpersonnel costs paid from the Low and Moderate Income
Housing Fund.

end insert begin insert

(5) A list of any overhead costs that are paid directly or
indirectly from the Low and Moderate Income Housing Fund, an
identification by title and department of any other employees with
whom the overhead costs are shared, and a description of the total
cost of the shared overhead costs.

end insert begin insert

(i) A statement of the amount and percentage of funds deposited
into the Low and Moderate Income Housing Fund, exclusive of
debt proceeds, expended for planning and general administration
in each of the preceding five fiscal years that begin after December
31, 2011, broken down by the categories described in paragraph
(1) of subdivision (d) of Section 33334.3.

end insert begin insert

(j) A list of all real properties owned by the agency and
purchased with funds from the Low and Moderate Income Housing
Fund, the date of acquisition for each property, the agency’s
intended purpose for each property, a statement of the amount, if
any, of moneys from the Low and Moderate Income Housing Fund
used to acquire the property, and a statement of the amount, if
any, of moneys from the Low and Moderate Income Housing Fund
used to maintain the property.

end insert begin insert

(k) A list of the redevelopment projects that have caused a
replacement obligation pursuant to subdivision (a) of Section
33413, the respective number of units the agency is obligated to
replace as a result of each project, and the location and status of
the replacement units. This list shall cover each fiscal year from
the agency’s last adopted implementation plan.

end insert begin insert

(l) A separate list of the development projects that have caused
a production obligation pursuant to subdivision (b) of Section
33413, the respective number of units the agency is obligated to
produce as a result of each project, and the location and status of
the production units. This list shall cover each fiscal year from
the agency’s last adopted implementation plan.

end insert begin insert

(m) For each housing project for which the agency has
designated funds, encumbered funds, or amended an existing
designation or encumbrance of funds during the fiscal year, and
where the agency’s financing constitutes more than 50 percent of
the total cost of the low- and moderate-income housing units in
the project, the project name, location, number of affordable units,
affordability level, amount of agency financing, and the total cost
of the low- and moderate-income units.

end insert begin insert

(n) An agency that has deposited less than one hundred thousand
dollars ($100,000) into its Low and Moderate Income Housing
Fund during the fiscal year is not required to provide in its annual
report the information described in subdivisions (h) to (m),
inclusive.

end insert begin delete

(h)

end delete

begin insert (o) end insert  Any other information that the agency believes useful to
explain its programs, including, but not limited to, the number of
jobs created and lost in the previous fiscal year as a result of its
activities.

begin insert

begin insert SEC. end insert begin insert 3. end insert   

end insert

begin insert Section 33080.2 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33080.2.  

(a) When the agency presents the annual report to
the legislative body pursuant to Section 33080.1, the agency shall
inform the legislative body of any major audit violations of this
part based on the independent financial audit report begin insert or an audit
investigation conducted by the department end insert . The agency shall inform
the legislative body that the failure to correct a major audit
violation of this part may result in the filing of an action by the
Attorney General pursuant to Section 33080.8 begin insert in a form that
indicates whether a referral to the Attorney General has been
made end insert .

begin insert

(b) At the time the agency presents the annual report to the
legislative body pursuant to Section 33080.1, the legislative body
shall adopt a separate written resolution making a finding, based
on substantial evidence in the record, that the actual planning and
general administrative expenses for the most recently completed
fiscal year paid from the Low and Moderate Income Housing Fund
did not exceed the limits established in subparagraphs (A) and (B)
of paragraph (2) of subdivision (d) of Section 33334.3 or that the
exception in subparagraph (C) of paragraph (2) of subdivision (d)
of Section 33334.3 applies.

end insert begin delete

(b)

end delete

begin insert (c) end insert  The legislative body shall review any report submitted
pursuant to Section 33080.1 and take any action it deems
appropriate on that report no later than the first meeting of the
legislative body occurring more than 21 days from the receipt of
the report.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 33080.8 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33080.8.  

(a)  On or before April 1 of each year, the Controller
shall compile a list of agencies that appear to have major audit
violations as defined in this section, based on the independent
financial audit reports filed with the Controller pursuant to Section
33080 begin insert , and make the list available on the Controller’s Internet
Web site end insert .

(b)  On or before June 1 of each year, for each major audit
violation of each agency identified pursuant to subdivision (a), the
Controller shall determine if the agency has corrected the major
audit violation. Before making this determination, the Controller
shall consult with each affected agency begin insert and may consult with
affected local community groups end insert . In making this determination,
the Controller may request and shall receive the prompt assistance
of public officials and public agencies, including, but not limited
to, the affected agencies, counties, and cities. If the Controller
determines that an agency has not corrected the major audit
violation, the Controller shall send a list of those agencies, their
major violations, all relevant documents, and the affidavits required
pursuant to subdivision (d) to the Attorney General for action
pursuant to this section.

(c)  For each agency that the Controller refers to the Attorney
General pursuant to subdivision (b), the Controller shall notify the
agency and the legislative body that the agency was on the list sent
to the Attorney General. The Controller’s notice shall inform the
agency and the legislative body of the duties imposed by Section
33080.2.

(d)  Within 45 days of receiving the referral from the Controller
pursuant to subdivision (b), the Attorney General shall determine
whether to file an action to compel the agency’s compliance with
this part. Any action filed pursuant to this section shall be
commenced in the begin delete County of Sacramento end delete begin insert superior court of any
county in which the Attorney General has an office end insert . The time limit
for the Attorney General to make this determination is directory
and not mandatory. Any action shall be accompanied by an
affidavit or affidavits, to be provided by the Controller with the
referral, setting forth facts that demonstrate a likelihood of success
on the merits of the claim that the agency has a major audit
violation. The affidavit shall also certify that the agency and the
legislative body were informed not less than 10 days prior to the
date on which the action was filed. The agency shall file a response
to any action filed by the Attorney General pursuant to this section
within 15 days of service.

(e)  (1)  On the earliest day that the business of the court will
permit, but not later than 45 days after the filing of an action
pursuant to this section, the court shall conduct a hearing to
determine if good cause exists for believing that the agency has a
major audit violation and has not corrected that violation.

(2)  If the court determines that no good cause exists or that the
agency had a major audit violation but corrected the major audit
violation, the court shall dismiss the action.

(3)  If the court determines that there is good cause for believing
that the agency has a major audit violation and has not corrected
that major audit violation, the court shall immediately issue an
order that prohibits the agency from doing any of the following:

(A)  Encumbering any funds or expending any money derived
from any source except to pay the obligations designated in
subparagraphs (A) to begin delete (G), end delete begin insert (F), end insert inclusive, of paragraph (1) of
subdivision (e) of Section 33334.12 begin insert , or to pay amounts for the
operation and administration of the agency in accordance with
the agency’s most recently adopted budget end insert .

(B)  Adopting a redevelopment plan.

(C)  Amending a redevelopment plan except to correct the major
audit violation that is the subject of the action.

(D)  Issuing, selling, offering for sale, or delivering any bonds
or any other evidence of indebtedness begin insert , except to increase, improve,
preserve, or assist in the construction or rehabilitation of, housing
units that will be occupied by and affordable to persons or families
of extremely low, very low, low, or moderate income, in accordance
with this part end insert .

(E)  Incurring any indebtedness begin insert , except to increase, improve,
preserve, or assist in the construction or rehabilitation of, housing
units that will be occupied by and affordable to persons or families
of extremely low, very low, low, or moderate income, in accordance
with this part end insert .

begin insert

(F) Exercising the power of eminent domain.

end insert

(f)  In a case that is subject to paragraph (3) of subdivision (e),
the court shall also set a hearing on the matter within 60 days begin insert after
issuance of the order end insert .

(g)  If, on the basis of that subsequent hearing, the court
determines that the agency has a major audit violation and has not
corrected that violation, the court shall order the agency to comply
with this part within 30 days, and order the agency to forfeit to the
state begin delete no more than: end delete begin insert a monetary sanction commensurate with the
violation. The sanction shall not be paid from the agency’s Low
and Moderate Income Housing Fund or any other city, county, or
agency special fund related to housing. end insert

begin delete

(1)  Two thousand dollars ($2,000) in the case of a community
redevelopment agency with a total revenue, in the prior year, of
less than one hundred thousand dollars ($100,000) as reported in
the Controller’s annual financial reports.

(2)  Five thousand dollars ($5,000) in the case of a community
redevelopment agency with a total revenue, in the prior year, of
at least one hundred thousand dollars ($100,000) but less than two
hundred fifty thousand dollars ($250,000) as reported in the
Controller’s annual financial reports.

(3)  Ten thousand dollars ($10,000) in the case of a community
redevelopment agency with a total revenue, in the prior year, of
at least two hundred fifty thousand dollars ($250,000) as reported
in the Controller’s annual financial reports.

end delete

(h)  The order issued by the court pursuant to paragraph (3) of
subdivision (e) shall continue in effect until the court determines
that the agency has corrected the major audit violation. If the court
determines that the agency has corrected the major audit violation,
the court may dissolve its order issued pursuant to paragraph (3)
of subdivision (e) at any time.

(i)  An action filed pursuant to this section to compel an agency
to comply with this part is in addition to any other remedy, and is
not an exclusive means to compel compliance. begin insert This section shall
not be construed to preclude an action to compel compliance with
this article by any other interested party or resident of the
jurisdiction. end insert

(j)  As used in this section, “major audit violation” means that,
for the fiscal year in question, an agency did not:

(1)  File an independent financial audit report that substantially
conforms with the requirements of subdivision (a) of Section
33080.1.

(2)  File a fiscal statement that includes substantially all of the
information required by Section 33080.5.

(3)  Establish time limits, as required by Section 33333.6.

(4)  Deposit all required tax increment revenues begin insert and all other
funds required to be deposited into the fund end insert directly into the Low
and Moderate Income Housing Fund upon receipt, as required by
Section 33334.3, 33334.6, 33487, or 33492.16.

(5)  Establish a Low and Moderate Income Housing Fund, as
required by subdivision (a) of Section 33334.3 begin insert or Section 33487 end insert .

(6)  Accrue interest earned by the Low and Moderate Income
Housing Fund to that fund, as required by subdivision (b) of
Section 33334.3.

(7)   begin delete Determine that the planning and administrative costs
charged to end delete begin insert Comply with subdivisions (d) and (e) of Section 33334.3,
governing eligible expenditures for planning and general
administration from end insert the Low and Moderate Income Housing Fund
begin delete are necessary for the production, improvement, or preservation of
low- and moderate-income housing, as end delete begin insert and adopt the resolution end insert
required by subdivision begin delete (d) end delete begin insert (b) end insert of Section begin delete 33334.3 end delete begin insert 33080.2 end insert .

(8)  Initiate development of housing on real property acquired
using moneys from the Low and Moderate Income Housing Fund
or sell the property, as required by Section 33334.16.

(9)  Adopt an implementation plan, as required by Section
33490.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 33080.9 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 33080.9. end insert   

(a) (1) The department shall forward to the Attorney
General and the Controller a copy of any audit or investigation
of a redevelopment agency conducted pursuant to Section 50464.5.

(2) On or before April 1 of each year, the department shall
determine for all audits and investigations conducted the previous
year, including those audits and investigations conducted pursuant
to Section 50464.5, whether an audit or investigation contains
major audit violations, as defined in subdivision (j) of Section
33080.8. The department shall make the information available on
its Internet Web site.

(b) On or before June 1 of each year, the department shall
determine for each major audit violation identified pursuant to
subdivision (a) if the agency has corrected the major audit
violation. Before making this determination, the department shall
consult with each affected agency and may consult with affected
local community groups. In making this determination, the
department may request and shall receive the prompt assistance
of public officials and public agencies, including, but not limited
to, the affected agencies, counties, and cities. If the department
determines an agency has not corrected the major audit violation,
the department shall send a list of those agencies, their major audit
violations, all relevant documentation, and the affidavits required
pursuant to subdivision (e) to the Attorney General for any action
pursuant to this section.

(c) For each agency the department refers to the Attorney
General pursuant to subdivision (b), the department shall notify
the agency and its legislative body that the agency was on the list
sent to the Attorney General. The notice shall inform the agency
and its legislative body of the duties imposed pursuant to Section
33080.2.

(d) For each agency the department refers to the Attorney
General pursuant to subdivision (b), the provisions of subdivisions
(d) to (i), inclusive, of Section 33080.8 shall apply, except that
references to the Controller in those subdivisions shall be deemed
to refer to the department.

(e) Nothing in this section shall be construed to permit the
department to initiate or settle litigation, or to resolve any
departmental audit or investigation in a manner contrary to law.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 33080.11 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 33080.11. end insert   

(a) The Controller may conduct quality control
reviews of independent financial and compliance audit reports
required by Section 33080.1 to the extent it is feasible to do so
within existing budgetary resources. The Controller shall
communicate the results of his or her reviews to the independent
auditor and the agency for which the audit was conducted, and
shall review his or her findings with the independent auditor.

(b) If the quality control review specified in subdivision (a)
indicates the audit was conducted in a manner that may constitute
unprofessional conduct, as defined in Section 5100 of the Business
and Professions Code, including, but not limited to, gross
negligence resulting in a material misstatement in the audit or
failure to disclose noncompliant acts, the Controller shall refer
the case to the California Board of Accountancy. If the board
determines that the independent auditor conducted an audit in an
unprofessional manner, the independent auditor is prohibited from
performing any redevelopment agency audit for a period of three
years, in addition to any other penalties the board may impose.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 33080.12 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 33080.12. end insert   

(a) (1) Whenever the Controller determines through
two consecutive quality control reviews, pursuant to Section
33080.11, that audits performed by an independent auditor
pursuant to Section 33080.1 were not performed in substantial
conformity with provisions of the audit and report guidelines
adopted pursuant to Section 33080.3, the Controller shall notify
in writing the independent auditor and the California Board of
Accountancy.

(2) If the independent auditor does not file an appeal in writing
to the board within 30 calendar days after receipt of the
Controller’s notification, the Controller’s determination under
this section shall be final.

(3) If an appeal is filed with the California Board of
Accountancy, the board shall complete an investigation of the
appeal. On the basis of the investigation, the board may do either
of the following:

(A) Find the Controller’s determination should not be upheld
and has no effect.

(B) Schedule the appeal for a hearing.

(b) If the Controller’s determination pursuant to subdivision
(a) becomes final, the independent auditor shall be ineligible to
conduct audits pursuant to Section 33080.1 for a period of three
years, or, in the event of an appeal, for any period and subject to
conditions that may be ordered by the California Board of
Accountancy. No later than March 1 following the date on which
the Controller’s determination becomes final, the Controller shall
notify each agency of those independent auditors determined to
be ineligible under this section or Section 33080.11. Agencies shall
not use the audit services of an independent auditor ineligible
under this section.

(c) For the purposes of this section, “independent auditor” shall
mean any person or firm entering into a contract to conduct an
audit under Section 33080.1.

(d) This section shall not preclude the California Board of
Accountancy from taking any disciplinary action it deems
appropriate under any other provisions of law.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 33334.2 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33334.2.  

(a) Except as provided in subdivision (k), not less
than 20 percent of all taxes that are allocated to the agency pursuant
to Section 33670 shall be used by the agency for the purposes of
increasing, improving, and preserving the community’s supply of
low- and moderate-income housing available at affordable housing
cost, as defined by Section 50052.5, to persons and families of
low or moderate income, as defined in Section 50093, lower
income households, as defined by Section 50079.5, very low
income households, as defined in Section 50105, and extremely
low income households, as defined by Section 50106, that is
occupied by these persons and families, unless one of the following
findings is made annually by resolution:

(1) (A) That no need exists in the community to improve,
increase, or preserve the supply of low- and moderate-income
housing, including housing for very low income households in a
manner that would benefit the project area and that this finding is
consistent with the housing element of the community’s general
plan required by Article 10.6 (commencing with Section 65580)
of Chapter 3 of Division 1 of Title 7 of the Government Code,
including its share of the regional housing needs of very low
income households and persons and families of low or moderate
income.

(B) This finding shall only be made if the housing element of
the community’s general plan demonstrates that the community
does not have a need to improve, increase, or preserve the supply
of low- and moderate-income housing available at affordable
housing cost to persons and families of low or moderate income
and to very low income households. This finding shall only be
made if it is consistent with the planning agency’s annual report
to the legislative body on implementation of the housing element
required by subdivision (b) of Section 65400 of the Government
Code. No agency of a charter city shall make this finding unless
the planning agency submits the report pursuant to subdivision (b)
of Section 65400 of the Government Code. This finding shall not
take effect until the agency has complied with subdivision (b) of
this section.

(2) (A) That some stated percentage less than 20 percent of the
taxes that are allocated to the agency pursuant to Section 33670
is sufficient to meet the housing needs of the community, including
its share of the regional housing needs of persons and families of
low- or moderate-income and very low income households, and
that this finding is consistent with the housing element of the
community’s general plan required by Article 10.6 (commencing
with Section 65580) of Chapter 3 of Division 1 of Title 7 of the
Government Code.

(B) This finding shall only be made if the housing element of
the community’s general plan demonstrates that a percentage of
less than 20 percent will be sufficient to meet the community’s
need to improve, increase, or preserve the supply of low- and
moderate-income housing available at affordable housing cost to
persons and families of low or moderate income and to very low
income households. This finding shall only be made if it is
consistent with the planning agency’s annual report to the
legislative body on implementation of the housing element required
by subdivision (b) of Section 65400 of the Government Code. No
agency of a charter city shall make this finding unless the planning
agency submits the report pursuant to subdivision (b) of Section
65400 of the Government Code. This finding shall not take effect
until the agency has complied with subdivision (b) of this section.

(C) For purposes of making the findings specified in this
paragraph and paragraph (1), the housing element of the general
plan of a city, county, or city and county shall be current, and shall
have been determined by the department pursuant to Section 65585
to be in substantial compliance with Article 10.6 (commencing
with Section 65580) of Chapter 3 of Division 1 of Title 7 of the
Government Code.

(3) (A) That the community is making a substantial effort to
meet its existing and projected housing needs, including its share
of the regional housing needs, with respect to persons and families
of low and moderate income, particularly very low income
households, as identified in the housing element of the
community’s general plan required by Article 10.6 (commencing
with Section 65580) of Chapter 3 of Division 1 of Title 7 of the
Government Code, and that this effort, consisting of direct financial
contributions of local funds used to increase and improve the
supply of housing affordable to, and occupied by, persons and
families of low or moderate income and very low income
households is equivalent in impact to the funds otherwise required
to be set aside pursuant to this section. In addition to any other
local funds, these direct financial contributions may include federal
or state grants paid directly to a community and that the community
has the discretion of using for the purposes for which moneys in
the Low and Moderate Income Housing Fund may be used. The
legislative body shall consider the need that can be reasonably
foreseen because of displacement of persons and families of low
or moderate income or very low income households from within,
or adjacent to, the project area, because of increased employment
opportunities, or because of any other direct or indirect result of
implementation of the redevelopment plan. No finding under this
subdivision may be made until the community has provided or
ensured the availability of replacement dwelling units as defined
in Section 33411.2 and until it has complied with Article 9
(commencing with Section 33410).

(B) In making the determination that other financial
contributions are equivalent in impact pursuant to this subdivision,
the agency shall include only those financial contributions that are
directly related to programs or activities authorized under
subdivision (e).

(C) The authority for making the finding specified in this
paragraph shall expire on June 30, 1993, except that the expiration
shall not be deemed to impair contractual obligations to
bondholders or private entities incurred prior to May 1, 1991, and
made in reliance on the provisions of this paragraph. Agencies that
make this finding after June 30, 1993, shall show evidence that
the agency entered into the specific contractual obligation with
the specific intention of making a finding under this paragraph in
order to provide sufficient revenues to pay off the indebtedness.

(b) Within 10 days following the making of a finding under
either paragraph (1) or (2) of subdivision (a), the agency shall send
the Department of Housing and Community Development a copy
of the finding, including the factual information supporting the
finding and other factual information in the housing element that
demonstrates that either (1) the community does not need to
increase, improve, or preserve the supply of housing for low- and
moderate-income households, including very low income
households, or (2) a percentage less than 20 percent will be
sufficient to meet the community’s need to improve, increase, and
preserve the supply of housing for low- and moderate-income
households, including very low income households. Within 10
days following the making of a finding under paragraph (3) of
subdivision (a), the agency shall send the Department of Housing
and Community Development a copy of the finding, including the
factual information supporting the finding that the community is
making a substantial effort to meet its existing and projected
housing needs. Agencies that make this finding after June 30, 1993,
shall also submit evidence to the department of its contractual
obligations with bondholders or private entities incurred prior to
May 1, 1991, and made in reliance on this finding.

(c) In any litigation to challenge or attack a finding made under
paragraph (1), (2), or (3) of subdivision (a), the burden shall be
upon the agency to establish that the finding is supported by
substantial evidence in light of the entire record before the agency.
If an agency is determined by a court to have knowingly
misrepresented any material facts regarding the community’s share
of its regional housing need for low- and moderate-income housing,
including very low income households, or the community’s
production record in meeting its share of the regional housing need
pursuant to the report required by subdivision (b) of Section 65400
of the Government Code, the agency shall be liable for all court
costs and plaintiff’s attorney’s fees, and shall be required to allocate
not less than 25 percent of the agency’s tax increment revenues to
its Low and Moderate Income Housing Fund in each year
thereafter.

(d) Nothing in this section shall be construed as relieving any
other public entity or entity with the power of eminent domain of
any legal obligations for replacement or relocation housing arising
out of its activities.

(e) In carrying out the purposes of this section, the agency may
exercise any or all of its powers for the construction, rehabilitation,
or preservation of affordable housing for extremely low, very low,
low- begin insert , end insert and moderate-income persons or families, including the
following:

(1) Acquire real property or building sites subject to Section
33334.16.

(2) (A) Improve real property or building sites with onsite or
offsite improvements, but only if both (i) the improvements are
part of the new construction or rehabilitation of affordable housing
units for low- or moderate-income persons that are directly
benefited by the improvements, and are a reasonable and
fundamental component of the housing units, and (ii) the agency
requires that the units remain available at affordable housing cost
to, and occupied by, persons and families of extremely low, very
low, low, or moderate income for the same time period and in the
same manner as provided in subdivision (c) and paragraph (2) of
subdivision (f) of Section 33334.3.

(B) If the newly constructed or rehabilitated housing units are
part of a larger project and the agency improves or pays for onsite
or offsite improvements pursuant to the authority in this
subdivision, the agency shall pay only a portion of the total cost
of the onsite or offsite improvement. The maximum percentage
of the total cost of the improvement paid for by the agency shall
be determined by dividing the number of housing units that are
affordable to low- or moderate-income persons by the total number
of housing units, if the project is a housing project, or by dividing
the cost of the affordable housing units by the total cost of the
project, if the project is not a housing project.

(3) Donate real property to private or public persons or entities.

(4) Finance insurance premiums pursuant to Section 33136.

(5) Construct buildings or structures.

(6) Acquire buildings or structures.

(7) Rehabilitate buildings or structures.

(8) Provide subsidies to, or for the benefit of, extremely low
income households, as defined by Section 50106, very low income
households, as defined by Section 50105, lower income
households, as defined by Section 50079.5, or persons and families
of low or moderate income, as defined by Section 50093, to the
extent those households cannot obtain housing at affordable costs
on the open market. Housing units available on the open market
are those units developed without direct government subsidies.

(9) Develop plans, pay principal and interest on bonds, loans,
advances, or other indebtedness, or pay financing or carrying
charges.

(10) Maintain the community’s supply of mobilehomes.

(11) Preserve the availability to lower income households of
affordable housing units in housing developments that are assisted
or subsidized by public entities and that are threatened with
imminent conversion to market rates.

(f) The agency may use these funds to meet, in whole or in part,
the replacement housing provisions in Section 33413. However,
nothing in this section shall be construed as limiting in any way
the requirements of that section.

(g) (1) The agency may use these funds inside or outside the
project area. The agency may only use these funds outside the
project area upon a resolution of the agency and the legislative
body that the use will be of benefit to the project. The
determination by the agency and the legislative body shall be final
and conclusive as to the issue of benefit to the project area. The
Legislature finds and declares that the provision of replacement
housing pursuant to Section 33413 is always of benefit to a project.
Unless the legislative body finds, before the redevelopment plan
is adopted, that the provision of low- and moderate-income housing
outside the project area will be of benefit to the project, the project
area shall include property suitable for low- and moderate-income
housing.

(2) (A) The Contra Costa County Redevelopment Agency may
use these funds anywhere within the unincorporated territory, or
within the incorporated limits of the City of Walnut Creek on sites
contiguous to the Pleasant Hill BART Station Area Redevelopment
Project area. The agency may only use these funds outside the
project area upon a resolution of the agency and board of
supervisors determining that the use will be of benefit to the project
area. In addition, the agency may use these funds within the
incorporated limits of the City of Walnut Creek only if the agency
and the board of supervisors find all of the following:

(i) Both the County of Contra Costa and the City of Walnut
Creek have adopted and are implementing complete and current
housing elements of their general plans that the Department of
Housing and Community Development has determined to be in
compliance with the requirements of Article 10.6 (commencing
with Section 65580) of Chapter 3 of Division 1 of Title 7 of the
Government Code.

(ii) The development to be funded shall not result in any
residential displacement from the site where the development is
to be built.

(iii) The development to be funded shall not be constructed in
an area that currently has more than 50 percent of its population
comprised of racial minorities or low-income families.

(iv) The development to be funded shall allow construction of
affordable housing closer to a rapid transit station than could be
constructed in the unincorporated territory outside the Pleasant
Hill BART Station Area Redevelopment Project.

(B) If the agency uses these funds within the incorporated limits
of the City of Walnut Creek, all of the following requirements
shall apply:

(i) The funds shall be used only for the acquisition of land for,
and the design and construction of, the development of housing
containing units affordable to, and occupied by, low- and
moderate-income persons.

(ii) If less than all the units in the development are affordable
to, and occupied by, low- or moderate-income persons, any agency
assistance shall not exceed the amount needed to make the housing
affordable to, and occupied by, low- or moderate-income persons.

(iii) The units in the development that are affordable to, and
occupied by, low- or moderate-income persons shall remain
affordable for a period of at least 55 years.

(iv) The agency and the City of Walnut Creek shall determine,
if applicable, whether Article XXXIV of the California Constitution
permits the development.

(h) The Legislature finds and declares that expenditures or
obligations incurred by the agency pursuant to this section shall
constitute an indebtedness of the project.

(i) This section shall only apply to taxes allocated to a
redevelopment agency for which a final redevelopment plan is
adopted on or after January 1, 1977, or for any area that is added
to a project by an amendment to a redevelopment plan, which
amendment is adopted on or after the effective date of this section.
An agency may, by resolution, elect to make all or part of the
requirements of this section applicable to any redevelopment
project for which a redevelopment plan was adopted prior to
January 1, 1977, subject to any indebtedness incurred prior to the
election.

(j) (1) (A) An action to compel compliance with the
requirement of Section 33334.3 to deposit not less than 20 percent
of all taxes that are allocated to the agency pursuant to Section
33670 begin insert or other revenue end insert in the Low and Moderate Income Housing
Fund shall be commenced within 10 years of the alleged violation.
A cause of action for a violation accrues on the last day of the
fiscal year in which the funds were required to be deposited in the
Low and Moderate Income Housing Fund.

(B) An action to compel compliance with the requirement of
this section or Section 33334.6 that money deposited in the Low
and Moderate Income Housing Fund be used by the agency for
purposes of increasing, improving, and preserving the community’s
supply of low- and moderate-income housing available at
affordable housing cost shall be commenced within 10 years of
the alleged violation. A cause of action for a violation accrues on
the date of the actual expenditure of the funds.

(C) An agency found to have deposited less into the Low and
Moderate Income Housing Fund than mandated by Section 33334.3
or to have spent money from the Low and Moderate Income
Housing Fund for purposes other than increasing, improving, and
preserving the community’s supply of low- and moderate-income
housing, as mandated, by this section or Section 33334.6 shall
repay the funds with interest begin insert , plus an additional 50 percent of that
amount and interest, end insert in one lump sum pursuant to Section 970.4
or 970.5 of the Government Code or may do either of the
following:

(i) Petition the court under Section 970.6 for repayment in
installments.

(ii) Repay the portion of the judgment due to the Low and
Moderate Income Housing Fund in equal installments over a period
of five years following the judgment.

begin insert

(D) An action to compel compliance with the requirements of
Section 33487 shall be commenced within 10 years of the alleged
violation. A cause of action accrues on the last day of the fiscal
year in which the funds were required to be deposited in the Low
and Moderate Income Housing Fund or the date of the actual
expenditure of the funds, as applicable. In the event the deposits
to the Low and Moderate Income Housing Fund are less than the
amounts required pursuant to Section 33487, or the expenditures
from the Low and Moderate Income Housing Fund are not
consistent with Section 33487, the repayment required by
subparagraph (C) is applicable. This subparagraph applies to
actions filed on or after January 1, 2012.

end insert

(2) Repayment shall not be made from the funds required to be
set aside or used for low- and moderate-income housing pursuant
to this begin delete section end delete begin insert part, or any other funds designated for affordable
housing end insert .

(3) Notwithstanding clauses (i) and (ii) of subparagraph (C) begin insert or
subparagraph (D) end insert of paragraph (1), all costs, including reasonable
attorney’s fees if included in the judgment, are due and shall be
paid upon entry of judgment or order.

(4) Except as otherwise provided in this subdivision, Chapter
2 (commencing with Section 970) of Part 5 of Division 3.6 of Title
1 of the Government Code for the enforcement of a judgment
against a local public entity applies to a judgment against a local
public entity that violates this section.

(5)  begin delete This end delete begin insert Except as provided in subparagraph (D) of paragraph
(1), this end insert subdivision applies to actions filed on and after January
1, 2006.

(6) The limitations period specified in subparagraphs (A) begin insert , (B), end insert
and begin delete (B) end delete begin insert (D) end insert of paragraph (1) does not apply to a cause of action
brought pursuant to Chapter 9 (commencing with Section 860) of
Title 10 of Part 2 of the Code of Civil Procedure.

(k) (1) From July 1, 2009, to June 30, 2010, inclusive, an agency
may suspend all or part of its required allocation to the Low and
Moderate Income Housing Fund from taxes that are allocated to
that agency pursuant to Section 33670.

(2) An agency that suspends revenue pursuant to paragraph (1)
shall pay back to its low- and moderate-income housing fund the
amount of revenue that was suspended in the 2009-10 fiscal year
pursuant to this subdivision from July 1, 2010, to June 30, 2015,
inclusive.

(3) An agency that suspends revenue pursuant to paragraph (1)
and fails to repay or have repaid on its behalf the amount of revenue
suspended pursuant to paragraph (2) shall, commencing July 1,
2015, be required to allocate an additional 5 percent of all taxes
that are allocated to that agency pursuant to Section 33670 for low-
and moderate-income housing for the remainder of the time that
the agency receives allocations of tax revenue pursuant to Section
33670.

(4) An agency that fails to pay or have paid on its behalf the
full amount calculated pursuant to subparagraph (J) of paragraph
(2) of subdivision (a) of Section 33690, or subparagraph (J) of
paragraph (2) of subdivision (a) of Section 33690.5, as the case
may be, shall, commencing July 1, 2010, or July 1, 2011, as
applicable, be required to allocate an additional 5 percent of all
taxes that are allocated to that agency pursuant to Section 33670
for low- and moderate-income housing for the remainder of the
time that the agency receives allocations of tax revenue pursuant
to Section 33670.

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 33334.3 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33334.3.  

(a) The funds that are required by Section 33334.2
or 33334.6 to be used for the purposes of increasing, improving,
and preserving the community’s supply of low- and
moderate-income housing shall be held in a separate Low and
Moderate Income Housing Fund until used.

(b) Any interest earned by the Low and Moderate Income
Housing Fund and any repayments or other income to the agency
for loans, advances, or grants, of any kind from the Low and
Moderate Income Housing Fund, shall accrue to and be deposited
in, the fund and may only be used in the manner prescribed for the
Low and Moderate Income Housing Fund.

(c) The moneys in the Low and Moderate Income Housing Fund
shall be used to increase, improve, and preserve the supply of low-
and moderate-income housing within the territorial jurisdiction of
the agency.

(d)  begin insert (1) end insert begin insert   end insert It is the intent of the Legislature that the Low and
Moderate Income Housing Fund be used to the maximum extent
possible to defray the begin delete costs of production, improvement, and
preservation of end delete begin insert actual cost of producing, improving, or preserving end insert
low- and moderate-income housing and begin delete that end delete begin insert to restrict end insert the begin delete amount
of money spent end delete begin insert use of Low and Moderate Income Housing Fund
moneys end insert for planning and general administrative begin delete activities associated
with the development, improvement, and preservation of that
housing not be disproportionate to the amount actually spent for
the costs of production, improvement, or preservation of that
housing. The agency shall determine annually that the planning
and administrative expenses are necessary for the production,
improvement, or preservation of low- and moderate-income
housing. end delete begin insert costs to those which are necessary for and directly related
to lawful use of the Low and Moderate Income Housing Fund. All
of the following categories of costs paid from the Low and
Moderate Income Housing Fund shall be considered planning and
general administrative costs that are subject to the restrictions set
forth in paragraph (2): end insert

begin insert

(A) Employee compensation costs, including salaries, wages,
and benefits, and related nonpersonnel costs, including, but not
limited to, travel, training, publications, and conferences, paid to
or on behalf of any agency, city, or county employee whose duties
include activities authorized under subdivision (e) of Section
33334.2, except for those activities that are necessary for and
directly related to the development of a specific eligible housing
development project or the deliverance of eligible programs serving
low- and moderate-income households. If the employee spends
any time on matters other than those authorized under subdivision
(e) of Section 33334.2, Low and Moderate Income Housing Fund
moneys may only be used to pay for employee compensation and
related nonpersonnel costs in proportion to the actual time that
the employee spends on activities authorized under subdivision
(e) of Section 33334.2.

end insert begin insert

(B) Employee compensation costs, including salaries, wages,
and benefits, and related nonpersonnel costs, including, but not
limited to, travel, training, publications, and conferences, paid to
or on behalf of any agency, city, or county employee for activities
authorized under subdivision (e) of Section 33334.2 that are
necessary for and directly related to the development of a specific
eligible housing development project or the deliverance of eligible
programs that serve low- and moderate-income households. Those
activities shall include negotiation and project management of
disposition and development agreements, land leases, loan
agreements, and similar affordable housing agreements;
redevelopment agency work on entitlements for eligible affordable
housing developments; loan processing and servicing; inspection
of new and rehabilitated units; construction monitoring of an
eligible housing development; and monitoring of affordable
housing units. If the employee spends any time on matters other
than those authorized under subdivision (e) of Section 33334.2,
Low and Moderate Income Housing Fund moneys may only be
used to pay for employee compensation and related nonpersonnel
costs in proportion to the actual time that the employee spends on
activities authorized under subdivision (e) of Section 33334.2.

end insert begin insert

(C) Employee compensation costs, including salaries, wages,
and benefits, paid to or on behalf of any agency, city, or county
employee who supervises or manages the work of an employee or
employees specified in subparagraph (A) or (B) or who provides
general administrative services, including, but not limited to,
finance, legal, human resources, information technology, and other
administrative services, that indirectly support activities authorized
under subdivision (e) of Section 33334.2 and nonpersonnel costs,
including, but not limited to, travel, training, publications, and
conferences, for those employees that are directly related to those
activities. Employee compensation costs shall (i) be justified by
an independent cost allocation study no more than six years old,
and (ii) not represent a greater proportion of the employee’s total
compensation than the proportion of employees working directly
and exclusively on activities authorized under subdivision (e) of
Section 33334.2 in comparison to the total number of employees
supervised, managed, or indirectly supported by that employee.

end insert begin insert

(D) Overhead costs, including, but not limited to, rent or
mortgage payments, equipment, and office supplies. If the overhead
costs are shared with departments or employees whose duties
include activities other than those authorized under subdivision
(e) of Section 33334.2, the proportion of the overhead costs paid
from the Low and Moderate Income Housing Fund shall not exceed
the proportion of employees working directly and exclusively on
activities authorized under subdivision (e) of Section 33334.2
represented in comparison to the total number of employees
sharing the space, equipment, or office supplies.

end insert begin insert

(E) The total value of any contracts for agency planning or
administrative services that are related to activities authorized
under subdivision (e) of Section 33334.2.

end insert begin insert

(F) Any other costs for planning and general administrative
activities that are related to activities authorized under subdivision
(e) of Section 33334.2.

end insert begin insert

(2) (A) Except as provided in subparagraph (C), an agency in
any fiscal year shall not expend more than 10 percent of the money
deposited into the Low and Moderate Income Housing Fund,
exclusive of debt proceeds, for planning and general administrative
costs described in subparagraphs (A), (C), (D), (E), and (F) of
paragraph (1).

end insert begin insert

(B) Except as provided in subparagraph (C), an agency in any
fiscal year shall not expend more than 10 percent of the money
deposited into the Low and Moderate Income Housing Fund,
exclusive of debt proceeds, for planning and general administrative
costs described in subparagraph (B) of paragraph (1), except that
an agency may additionally expend for these purposes any
difference between the cap described in subparagraph (A) and
actual expenditures for those planning and general administrative
costs.

end insert begin insert

(C) Subparagraphs (A) and (B) shall not apply to a project
area-specific Low and Moderate Income Housing Fund during
the first five fiscal years after adoption of that specific project
area. Subparagraphs (A) and (B) shall apply to a new or amended
project area if tax increment for that new or amended project area
is deposited into an aggregate Low and Moderate Income Housing
Fund covering more than one project area.

end insert begin insert

(3) In a challenge related to the proportionality of costs, as
required by subparagraphs (A), (B), (C), and (D) of paragraph
(1), the agency shall bear the burden of proof to demonstrate that
the costs are proportionate. In a challenge related to compliance
with the requirements of paragraph (2), the agency shall bear the
burden of proof to demonstrate that costs are appropriately
allocated to subparagraph (B) of paragraph (1).

end insert

(e) (1)  begin delete Planning and general administrative costs which may
be paid with end delete begin insert Notwithstanding paragraph (1) of subdivision (d),
the agency shall not expend end insert moneys from the Low and Moderate
Income Housing Fund begin delete are those expenses incurred by the agency
which are directly related to the programs and activities authorized
under subdivision (e) of Section 33334.2 and are limited to end delete begin insert for any
of end insert the following begin insert purposes end insert :

begin delete

(A) Costs incurred for salaries, wages, and related costs of the
agency’s staff or for services provided through interagency
agreements, and agreements with contractors, including usual
indirect costs related thereto.

end delete begin delete

(B) Costs incurred by a nonprofit corporation which are not
directly attributable to a specific project.

end delete begin delete

(2) Legal, architectural, and engineering costs and other salaries,
wages, and costs directly related to the planning and execution of
a specific project that are authorized under subdivision (e) of
Section 33334.2 and that are incurred by a nonprofit housing
sponsor are not planning and administrative costs for the purposes
of this section, but are instead project costs.

end delete begin insert

(A) Land use planning or related activities of a planning
department, including development or revision of the general plan
housing element, except for the payment of normal project-related
planning fees applicable to all similar development projects. This
limitation shall not preclude an agency from expending moneys
from the Low and Moderate Income Housing Fund toward the
cost of agency staff participation in the development of the general
plan housing element provided that those costs are counted towards
the cap described in subparagraph (A) of paragraph (2) of
subdivision (d).

end insert begin insert

(B) Lobbying. The Legislature finds and declares that this
subparagraph is declaratory of existing law.

end insert begin insert

(C) Administration of nonredevelopment activities unrelated to
activities allowed pursuant to this section, and Sections 33334.2,
33334.6, and 33487.

end insert begin insert

(2) An agency may expend up to 2 percent of the moneys
deposited into the Low and Moderate Income Housing Fund,
exclusive of debt proceeds, for code enforcement activities within
a project area that improve the housing opportunities of low- or
moderate-income households. However, if code enforcement
activities result, directly or indirectly, in the displacement of
tenants or the removal from the market of units affordable to or
occupied by low- or moderate-income households, the agency shall
be subject to the relocation and replacement obligations imposed
by this part and the requirements of Chapter 16 (commencing with
Section 7260) of Division 7 of Title 1 of the Government Code,
except that Section 7265.3 of the Government Code shall not apply.

end insert

(f) (1) The requirements of this subdivision apply to all new or
substantially rehabilitated housing units developed or otherwise
assisted with moneys from the Low and Moderate Income Housing
Fund, pursuant to an agreement approved by an agency on or after
January 1, 1988. Except to the extent that a longer period of time
may be required by other provisions of law, the agency shall require
that housing units subject to this subdivision shall remain available
at affordable housing cost to, and occupied by, persons and families
of low or moderate income and very low income and extremely
low income households for the longest feasible time, but for not
less than the following periods of time:

(A) Fifty-five years for rental units. However, the agency may
replace rental units with equally affordable and comparable rental
units in another location within the community if (i) the
replacement units are available for occupancy prior to the
displacement of any persons and families of low or moderate
income residing in the units to be replaced and (ii) the comparable
replacement units are not developed with moneys from the Low
and Moderate Income Housing Fund.

(B) Forty-five years for owner-occupied units. However, the
agency may permit sales of owner-occupied units prior to the
expiration of the 45-year period for a price in excess of that
otherwise permitted under this subdivision pursuant to an adopted
program which protects the agency’s investment of moneys from
the Low and Moderate Income Housing Fund, including, but not
limited to, an equity sharing program which establishes a schedule
of equity sharing that permits retention by the seller of a portion
of those excess proceeds based on the length of occupancy. The
remainder of the excess proceeds of the sale shall be allocated to
the agency and deposited in the Low and Moderate Income
Housing Fund. Only the units originally assisted by the agency
shall be counted towards the agency’s obligations under Section
33413.

(C) Fifteen years for mutual self-help housing units that are
occupied by and affordable to very low and low-income
households. However, the agency may permit sales of mutual
self-help housing units prior to expiration of the 15-year period
for a price in excess of that otherwise permitted under this
subdivision pursuant to an adopted program that (i) protects the
agency’s investment of moneys from the Low and Moderate
Income Housing Fund, including, but not limited to, an equity
sharing program that establishes a schedule of equity sharing that
permits retention by the seller of a portion of those excess proceeds
based on the length of occupancy; and (ii) ensures through a
recorded regulatory agreement, deed of trust, or similar recorded
instrument that if a mutual self-help housing unit is sold at any
time after expiration of the 15-year period and prior to 45 years
after the date of recording of the covenants or restrictions required
pursuant to paragraph (2), the agency recovers, at a minimum, its
original principal from the Low and Moderate Income Housing
Fund from the proceeds of the sale and deposits those funds into
the Low and Moderate Income Housing Fund. The remainder of
the excess proceeds of the sale not retained by the seller shall be
allocated to the agency and deposited in the Low and Moderate
Income Housing Fund. For the purposes of this subparagraph,
“mutual self-help housing unit” means an owner-occupied housing
unit for which persons and families of very low and low income
contribute no fewer than 500 hours of their own labor in individual
or group efforts to provide a decent, safe, and sanitary ownership
housing unit for themselves, their families, and others authorized
to occupy that unit. Nothing in this subparagraph precludes the
agency and the developer of the mutual self-help housing units
from agreeing to 45-year deed restrictions.

(2) If land on which those dwelling units are located is deleted
from the project area, the agency shall continue to require that
those units remain affordable as specified in this subdivision.

(3) The agency shall require the recording in the office of the
county recorder of the following documents:

(A) The covenants or restrictions implementing this subdivision
for each parcel or unit of real property subject to this subdivision.
The agency shall obtain and maintain a copy of the recorded
covenants or restrictions for not less than the life of the covenant
or restriction.

(B) For all new or substantially rehabilitated units developed
or otherwise assisted with moneys from the Low and Moderate
Income Housing Fund on or after January 1, 2008, a separate
document called “Notice of Affordability Restrictions on Transfer
of Property,” set forth in 14-point type or larger. This document
shall contain all of the following information:

(i) A recitation of the affordability covenants or restrictions. If
the document recorded under this subparagraph is recorded
concurrently with the covenants or restrictions recorded under
subparagraph (A), the recitation of the affordability covenants or
restrictions shall also reference the concurrently recorded
document. If the document recorded under this subparagraph is
not recorded concurrently with the covenants or restrictions
recorded under subparagraph (A), the recitation of the affordability
covenants or restrictions shall also reference the recorder’s
identification number of the document recorded under subparagraph
(A).

(ii) The date the covenants or restrictions expire.

(iii) The street address of the property, including, if applicable,
the unit number, unless the property is used to confidentially house
victims of domestic violence.

(iv) The assessor’s parcel number for the property.

(v) The legal description of the property.

(4) The agency shall require the recording of the document
required under subparagraph (B) of paragraph (3) not more than
30 days after the date of recordation of the covenants or restrictions
required under subparagraph (A) of paragraph (3).

(5) The county recorder shall index the documents required to
be recorded under paragraph (3) by the agency and current owner.

(6) Notwithstanding Section 27383 of the Government Code,
a county recorder may charge all authorized recording fees to any
party, including a public agency, for recording the document
specified in subparagraph (B) of paragraph (3).

(7) Notwithstanding any other provision of law, the covenants
or restrictions implementing this subdivision shall run with the
land and shall be enforceable against any owner who violates a
covenant or restriction and each successor in interest who continues
the violation, by any of the following:

(A) The agency.

(B) The community, as defined in Section 33002.

(C) A resident of a unit subject to this subdivision.

(D) A residents’ association with members who reside in units
subject to this subdivision.

(E) A former resident of a unit subject to this subdivision who
last resided in that unit.

(F) An applicant seeking to enforce the covenants or restrictions
for a particular unit that is subject to this subdivision, if the
applicant conforms to all of the following:

(i) Is of low or moderate income, as defined in Section 50093.

(ii) Is able and willing to occupy that particular unit.

(iii) Was denied occupancy of that particular unit due to an
alleged breach of a covenant or restriction implementing this
subdivision.

(G) A person on an affordable housing waiting list who is of
low or moderate income, as defined in Section 50093, and who is
able and willing to occupy a unit subject to this subdivision.

(8) A dwelling unit shall not be counted as satisfying the
affordable housing requirements of this part, unless covenants for
that dwelling unit are recorded in compliance with subparagraph
(A) of paragraph (3).

(9) Failure to comply with the requirements of subparagraph
(B) of paragraph (3) shall not invalidate any covenants or
restrictions recorded pursuant to subparagraph (A) of paragraph
(3).

(g) “Housing,” as used in this section, includes residential hotels,
as defined in subdivision (k) of Section 37912. The definitions of
“lower income households,” “very low income households,” and
“extremely low income households” in Sections 50079.5, 50105,
and 50106 shall apply to this section. “Longest feasible time,” as
used in this section, includes, but is not limited to, unlimited
duration.

(h) “Increasing, improving, and preserving the community’s
supply of low- and moderate-income housing,” as used in this
section and in Section 33334.2, includes the preservation of rental
housing units assisted by federal, state, or local government on the
condition that units remain affordable to, and occupied by, low-
and moderate-income households, including extremely low and
very low income households, for the longest feasible time, but not
less than 55 years, beyond the date the subsidies and use restrictions
could be terminated and the assisted housing units converted to
market rate rentals. In preserving these units the agency shall
require that the units remain affordable to, and occupied by, persons
and families of low- and moderate-income and extremely low and
very low income households for the longest feasible time but not
less than 55 years. However, the agency may replace rental units
with equally affordable and comparable rental units in another
location within the community if (1) the replacement units in
another location are available for occupancy prior to the
displacement of any persons and families of low or moderate
income residing in the units to be replaced and (2) the comparable
replacement units are not developed with moneys from the Low
and Moderate Income Housing Fund.

(i) Agencies that have more than one project area may satisfy
the requirements of Sections 33334.2 and 33334.6 and of this
section by allocating, in any fiscal year, less than 20 percent in
one project area, if the difference between the amount allocated
and the 20 percent required is instead allocated, in that same fiscal
year, to the Low and Moderate Income Housing Fund from tax
increment revenues from other project areas. Prior to allocating
funds pursuant to this subdivision, the agency shall make the
finding required by subdivision (g) of Section 33334.2.

(j) Funds from the Low and Moderate Income Housing Fund
shall not be used to the extent that other reasonable means of
begin delete private end delete begin insert public, private, end insert or commercial financing begin delete of end delete begin insert for end insert the new or
begin delete substantially rehabilitated end delete begin insert end insert begin insert construction, acquisition, or substantial
rehabilitation of end insert units at the same level of affordability and quantity
are reasonably available to the agency or to the owner of the units.
Prior to the expenditure of funds from the Low and Moderate
Income Housing Fund for begin insert the end insert new begin delete or substantially rehabilitated end delete
begin insert construction, acquisition, or substantial rehabilitation of end insert housing
units, where those funds will exceed 50 percent of the cost of
producing the units, the agency shall find, based on substantial
evidence, that the use of the funds is necessary because the agency
or owner of the units has made a good faith attempt but been unable
to obtain begin delete commercial or private means of end delete begin insert other public, private, or
commercial end insert financing begin insert of end insert the units at the same level of affordability
and quantity.

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 33334.4 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33334.4.  

(a)  begin insert (1) end insert begin insert   end insert begin delete Except as specified in subdivision (d), each
agency shall expend over each 10-year period of the
implementation plan, end delete begin insert Over each 10-year implementation planning
period, end insert as specified in clause (iii) of subparagraph (A) of paragraph
(2) of subdivision (a) of Section 33490, the moneys in the Low
and Moderate Income Housing Fund to assist housing for persons
of low income and housing for persons of very low income in at
least the same proportion as the total number of housing units
needed for each of those income groups bears to the total number
of units needed for persons of moderate, low, and very low income
within the community, as those needs have been determined for
the community pursuant to Section 65584 of the Government Code.
begin delete In determining compliance with this obligation, the agency may
adjust the proportion by subtracting from the need identified for
each income category, the number of units for persons of that
income category that are newly constructed over the duration of
the implementation plan with other locally controlled government
assistance and without agency assistance and that are required to
be affordable to, and occupied by, persons of the income category
for at least 55 years for rental housing and 45 years for ownership
housing, except that in making an adjustment the agency may not
subtract units developed pursuant to a replacement housing
obligation under state or federal law. end delete

begin insert

(2) Following the last 10-year implementation planning period
referenced in paragraph (1), all of the following shall apply:

end insert begin insert

(A) At least 75 percent of each agency’s expenditures from the
Low and Moderate Income Housing Fund exclusive of debt service
payments shall directly assist the new construction, acquisition
and substantial rehabilitation, or preservation of housing for
persons of extremely low, very low, or low income.

end insert begin insert

(B) At least 50 percent of each agency’s expenditures from the
Low and Moderate Income Housing Fund exclusive of debt service
payments shall directly assist the new construction, acquisition
and substantial rehabilitation, or preservation of housing for
persons of extremely low or very low income.

end insert begin insert

(C) At least 25 percent of each agency’s expenditures from the
Low and Moderate Income Housing Fund exclusive of debt service
payments shall directly assist the new construction, acquisition
and substantial rehabilitation, or preservation of housing for
persons of extremely low income.

end insert begin insert

(3) The expenditures for extremely low income housing, pursuant
to subparagraph (C) of paragraph (2), shall count towards the
requirements of subparagraphs (A) and (B) of paragraph (2), and
the expenditures for very low and extremely low-income housing
pursuant to subparagraphs (B) and (C) of paragraph (2) shall
count towards the requirements of subparagraph (A) of paragraph
(2).

end insert begin insert

(4) An agency shall satisfy the requirements of paragraph (2)
by demonstrating in each implementation plan that as of the end
of the immediately preceding 5-year implementation planning
period, the agency’s aggregate expenditures from the Low and
Moderate Income Housing Fund, exclusive of debt service
payments, between the end of the last 10-year implementation
period referenced in paragraph (1) and the end of the immediately
preceding 5-year implementation planning period satisfy the
proportionality requirements set forth in paragraph (2).

end insert begin insert

(5) (A) For purposes of this subdivision, “preservation” means
preserving the affordability of an assisted housing development
that is eligible for prepayment or termination or for which within
the expiration of rental restrictions is scheduled to occur within
five years, as those terms are defined in Section 65863.10 of the
Government Code.

end insert begin insert

(B) For purposes of this section, “housing for persons of
extremely low income” shall mean housing that is available at an
affordable rent or affordable housing cost to, and occupied by,
households earning 30 percent of the area median income or 30
percent of the statewide median income, whichever is greater.

end insert

(b) Each agency shall expend over the duration of each
redevelopment implementation plan, the moneys in the Low and
Moderate Income Housing Fund to assist housing that is available
to all persons regardless of age in at least the same proportion as
the number of low-income households with a member under age
65 years bears to the total number of low-income households of
the community as reported in the most recent census of the United
States Census Bureau.

begin insert

(c) (1) An agency that has deposited an aggregate amount that
is less than two million dollars ($2,000,000) in the Low and
Moderate Income Housing Fund over the first five-year
implementation planning period following the last 10-year
implementation planning period referenced in paragraph (1) of
subdivision (a) shall have 10 years following the last 10-year
implementation planning period referenced in paragraph (1) of
subdivision (a) to meet the requirements of paragraph (2) of
subdivision (a).

end insert begin delete

(c)

end delete

begin insert (2) end insert  An agency that has deposited in the Low and Moderate
Income Housing Fund over the first five years of the period of an
implementation plan an aggregate that is less than two million
dollars ($2,000,000) shall have an extra five years to meet the
requirements of this section.

(d) For the purposes of this section begin delete , “locally controlled” means
government assistance where the community or other local
government entity has the discretion and the authority to determine
the recipient and the amount of the assistance, whether or not the
source of the funds or other assistance is from the state or federal
government. Examples of locally controlled government assistance
include, but are not limited to, Community Development Block
Grant Program (42 U.S.C. Sec. 5301 and following) funds allocated
to a city or county, Home Investment Partnership Program (42
U.S.C. Sec. 12721 and following) funds allocated to a city or
county, fees or funds received by a city or county pursuant to a
city or county authorized program, and the waiver or deferral of
city or other charges end delete begin insert only, funds may be deemed expended if the
agency has contractually obligated the funds to an entity that is
independent of the agency or its community for the development
of a specific eligible housing development, provided that if the
contract is terminated prior to expenditure of the funds, the funds
shall be discounted from the calculations required in subdivisions
(a) and (b) and the provisions of subdivision (e) shall apply end insert .

begin insert

(e) (1) If an agency fails to comply with subdivision (a) within
the required time period, it shall not expend any moneys from the
Low and Moderate Income Housing Fund to assist households
whose incomes exceed 50 percent of the area median income until
the agency has expended the funds that it should have expended
for extremely low, very low, and low-income housing, respectively,
in previous implementation plan periods.

end insert begin insert

(2) If an agency fails to comply with subdivision (b) within the
required time period, it shall not expend any moneys from the Low
and Moderate Income Housing Fund to assist senior households
until the agency has expended the funds that it should have
expended for housing available to all persons regardless of age
in previous implementation plan periods.

end insert begin insert

(f) Agencies are encouraged to expend moneys in the Low and
Moderate Income Housing Fund to assist special housing needs
identified in the community’s housing element pursuant to
paragraph (7) of subdivision (a) of Section 65583 of the
Government Code.

end insert

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 33334.12 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

begin delete

33334.12.  

(a)  (1)  Upon failure of the agency to expend or
encumber excess surplus in the Low and Moderate Income Housing
Fund within one year from the date the moneys become excess
surplus, as defined in paragraph (1) of subdivision (g), the agency
shall do either of the following:

(A)  Disburse voluntarily its excess surplus to the county housing
authority or to another public agency exercising housing
development powers within the territorial jurisdiction of the agency
in accordance with subdivision (b).

(B)  Expend or encumber its excess surplus within two additional
years.

(2)

end delete

begin insert

begin insert 33334.12. end insert   

end insert

begin insert (a) end insert   begin insert Agencies shall expend moneys from the Low
and Moderate Income Housing Fund in a manner that does not
accrue an excess surplus, as defined in paragraph (1) of
subdivision (c). end insert If an agency, after three years has elapsed from
the date that the moneys become excess surplus, has not expended
or encumbered its excess surplus, the agency shall be subject to
sanctions pursuant to subdivision (e), until the agency has expended
or encumbered its excess surplus plus an additional amount, equal
to 50 percent of the amount of the excess surplus that remains at
the end of the three-year period. The additional expenditure shall
not be from the agency’s Low and Moderate Income Housing
Fund, begin insert or any other city, county, or agency special fund related to
housing, end insert but shall be used in a manner that meets all requirements
for expenditures from that fund.

(b)   begin delete The end delete begin insert For disbursements or expenditures of excess surplus
made prior to January 1, 2012, the end insert housing authority or other
public agency to which the money is transferred shall utilize the
moneys for the purposes of, and subject to the same restrictions
that are applicable to, the redevelopment agency under this part,
and for that purpose may exercise all of the powers of a housing
authority under Part 2 (commencing with Section 34200) to an
extent not inconsistent with these limitations.

(c)   begin delete Notwithstanding end delete begin insert For disbursements or expenditures of
excess surplus made prior to January 1, 2012, notwithstanding end insert
Section 34209 or any other begin delete provision of end delete law, for the purpose of
accepting a transfer of, and using, moneys pursuant to this section,
the housing authority of a county or other public agency may
exercise its powers within the territorial jurisdiction of a city
redevelopment agency located in that county.

(d)   begin delete The end delete begin insert For disbursements or expenditures of excess surplus
made prior to January 1, 2012, the end insert amount of excess surplus that
shall be transferred to the housing authority or other public agency
because of a failure of the redevelopment agency to expend or
encumber excess surplus within one year shall be the amount of
the excess surplus that is not so expended or encumbered. The
housing authority or other public agency to which the moneys are
transferred shall expend or encumber these moneys for authorized
purposes not later than three years after the date these moneys
were transferred from the Low and Moderate Income Housing
Fund.

(e)  (1)  Until a time when the agency has expended or
encumbered excess surplus moneys pursuant to subdivision (a),
the agency shall be prohibited from encumbering any funds or
expending any moneys derived from any source, except that the
agency may encumber funds and expend moneys to pay the
following obligations, if any, that were incurred by the agency
prior to three years from the date the moneys became excess
surplus:

(A)  Bonds, notes, interim certificates, debentures, or other
obligations issued by an agency, whether funded, refunded,
assumed, or otherwise, pursuant to Article 5 (commencing with
Section 33640).

(B)  Loans or moneys advanced to the agency, including, but
not limited to, loans from federal, state, or local agencies, or a
private entity.

(C)  Contractual obligations which, if breached, could subject
the agency to damages or other liabilities or remedies.

(D)  Obligations incurred pursuant to Section 33445.

(E)  Indebtedness incurred pursuant to Section 33334.2 or
33334.6.

(F)  Obligations incurred pursuant to Section 33401.

(G)  An amount, to be expended for the operation and
administration of the agency, that may not exceed 75 percent of
the amount spent for those purposes in the preceding fiscal year.

(2)  This subdivision shall not be construed to prohibit the
expenditure of excess surplus funds or other funds to meet the
requirement in paragraph (2) of subdivision (a) that the agency
spend or encumber excess surplus funds, plus an amount equal to
50 percent of excess surplus, prior to spending or encumbering
funds for any other purpose.

begin delete

(f)  Nothing in this section shall be construed to limit any
authority a redevelopment agency may have under other provisions
of this part to contract with a housing authority for increasing or
improving the community’s supply of low- and moderate-income
housing.

end delete begin delete

(g)

end delete

begin insert (f) end insert  For purposes of this section:

(1)  “Excess surplus” means any unexpended and unencumbered
amount in an agency’s Low and Moderate Income Housing Fund
that exceeds the greater of one million dollars ($1,000,000) or the
aggregate amount deposited into the Low and Moderate Income
Housing Fund pursuant to Sections 33334.2 and 33334.6 during
the agency’s preceding four fiscal years. The first fiscal year to be
included in this computation is the 1989-90 fiscal year, and the
first date on which an excess surplus may exist is July 1, 1994.

(2)  Moneys shall be deemed encumbered if committed pursuant
to a legally enforceable contract or agreement for expenditure for
purposes specified in Section 33334.2 or 33334.3.

(3)  (A)  For purposes of determining whether an excess surplus
exists, it is the intent of the Legislature to give credit to agencies
which convey land for less than fair market value, on which low-
and moderate-income housing is built or is to be built if at least
49 percent of the units developed on the land are available at
affordable housing cost to lower income households for at least
the time specified in subdivision (e) of Section 33334.3, and
otherwise comply with all of the provisions of this division
applicable to expenditures of moneys from a low- and
moderate-income housing fund established pursuant to Section
33334.3. Therefore, for the sole purpose of determining the amount,
if any, of an excess surplus, an agency may make the following
calculation: if an agency sells, leases, or grants land acquired with
moneys from the Low and Moderate Income Housing Fund,
established pursuant to Section 33334.3, for an amount which is
below fair market value, and if at least 49 percent of the units
constructed or rehabilitated on the land are affordable to lower
income households, as defined in Section 50079.5, the difference
between the fair market value of the land and the amount the
agency receives may be subtracted from the amount of moneys in
an agency’s Low and Moderate Income Housing Fund.

(B)  If taxes that are deposited in the Low and Moderate Income
Housing Fund are used as security for bonds or other indebtedness,
the proceeds of the bonds or other indebtedness, and income and
expenditures related to those proceeds, shall not be counted in
determining whether an excess surplus exists. The unspent portion
of the proceeds of bonds or other indebtedness, and income related
thereto, shall be excluded from the calculation of the unexpended
and unencumbered amount in the Low and Moderate Income
Housing Fund when determining whether an excess surplus exists.

(C)  Nothing in this subdivision shall be construed to restrict
the authority of an agency provided in any other provision of this
part to expend funds from the Low and Moderate Income Housing
Fund.

(D)  The department shall develop and periodically revise the
methodology to be used in the calculation of excess surplus as
required by this section. The director shall appoint an advisory
committee to advise in the development of this methodology. The
advisory committee shall include department staff, affordable
housing advocates, and representatives of the California
Redevelopment Association, the California Society of Certified
Public Accountants, the Controller, and any other authorities or
persons interested in the field that the director deems necessary
and appropriate.

begin delete

(h)

end delete

begin insert (g) end insert  Communities in which an agency has disbursed excess
surplus funds pursuant to this section shall not disapprove a low-
or moderate-income housing project funded in whole or in part by
the excess surplus funds if the project is consistent with applicable
building codes and the land use designation specified in any
element of the general plan as it existed on the date the application
was deemed complete. A local agency may require compliance
with local development standards and policies appropriate to and
consistent with meeting the quantified objectives relative to the
development of housing, as required in housing elements of the
community pursuant to subdivision (b) of Section 65583 of the
Government Code.

begin delete

(i)

end delete

begin insert (h) end insert  Notwithstanding subdivision (a), any agency that has funds
that become excess surplus on July 1, 1994, shall have, pursuant
to subdivision (a), until January 1, 1995, to decide to transfer the
funds to a housing authority or other public agency, or until January
1, 1997, to expend or encumber those funds, or face sanctions
pursuant to subdivision (e).

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert Section 33334.16 of the end insert begin insert Health and Safety Code end insert begin insert is
repealed. end insert

begin delete

33334.16.  

For each interest in real property acquired using
moneys from the Low and Moderate Income Housing Fund, the
agency shall, within five years from the date it first acquires the
property interest for the development of housing affordable to
persons and families of low and moderate income, initiate activities
consistent with the development of the property for that purpose.
These activities may include, but are not limited to, zoning changes
or agreements entered into for the development and disposition of
the property. If these activities have not been initiated within this
period, the legislative body may, by resolution, extend the period
during which the agency may retain the property for one additional
period not to exceed five years. The resolution of extension shall
affirm the intention of the legislative body that the property be
used for the development of housing affordable to persons and
families of low and moderate income. In the event that physical
development of the property for this purpose has not begun by the
end of the extended period, or if the agency does not comply with
this requirement, the property shall be sold and the moneys from
the sale, less reimbursement to the agency for the cost of the sale,
shall be deposited in the agency’s Low and Moderate Income
Housing Fund.

end delete

begin insert

begin insert SEC. 13. end insert   

end insert

begin insert Section 33334.16 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 33334.16. end insert   

(a) (1) For each interest in real property acquired
using moneys from the Low and Moderate Income Housing Fund,
the agency shall, within five years from the date of acquisition,
complete at least one of the following activities:

(A) Enter into a disposition and development agreement or a
land lease with a third party for the development of housing
affordable to persons and families of low and moderate income.

(B) Obtain final land use entitlements and secure full financing
for agency development of housing affordable to persons and
families of low and moderate income.

(C) Submit a remedial action plan for the real property to the
appropriate oversight agency, including, but not limited to, the
Department of Toxic Substances Control, a California regional
water quality control board, or the Office of Human Health Risk
Assessment, for the cleanup of contamination.

(2) On or after January 1, 2013, if none of the activities
described in paragraph (1) has been completed within five years,
or if less than 10 percent of the dwelling units or floor area of a
project is developed within 10 years from the date the agency
originally acquired the property, the agency shall reimburse the
Low and Moderate Income Housing Fund 150 percent of the
amount expended to acquire and maintain the property or of the
current fair market value of the property, whichever amount is
greater.

(3) If the agency owns two or more adjacent parcels of real
property that comprise a single redevelopment project for which
the parcels are described in the implementation plan, the date of
acquisition for all such parcels shall be the date of acquisition of
the last acquired parcel, provided that this date shall not be later
than 5 years after the acquisition of the first parcel.

(4) An agency may adopt a resolution to petition the department
for, and the department may grant, a single extension for up to
five years of the deadlines established in paragraphs (1) and (2)
if the department makes a finding that the failure to complete the
required activities is due to circumstances beyond the agency’s
or community’s control and that the agency has a feasible plan
for the development of housing affordable to persons and families
of low and moderate income on the real property within the period
of the extension. The agency shall provide information supporting
the need for the extension and a plan for development of the
property. The department shall solicit comments from known or
expected parties interested in the petition and consider comments
from these and any other parties. The department shall establish
a schedule of fees to cover but not exceed its costs under this
subparagraph, and at the time the petition is submitted the agency
shall pay the fees with funds other than those required to be set
aside or used for low- and moderate-income housing pursuant to
this part or otherwise designated for affordable housing.

(b) At any time, in addition to proceeds from the sale or transfer,
the agency shall deposit into the Low and Moderate Income
Housing Fund from agency revenues other than those required to
be deposited in the Low and Moderate Income Housing Fund an
amount equal to 50 percent of the fair market value of the property
at the time it is sold or transferred or, if the property is not sold
or transferred, of the fair market value of the land at the time a
building permit is issued for the property. This subdivision shall
apply only under either of the following conditions:

(1) A real property acquired using moneys from the Low and
Moderate Income Housing Fund is sold or transferred for a
purpose other than housing affordable to persons and families of
low and moderate income.

(2) A real property acquired using moneys from the Low and
Moderate Income Housing Fund is developed such that less than
50 percent of the floor area, or a percentage of the floor area equal
to the proportion that moneys from the Low and Moderate Income
Housing Fund represent to the total acquisition cost, whichever
is less, is housing affordable to persons and families of low and
moderate income.

end insert

begin insert

begin insert SEC. 14. end insert   

end insert

begin insert Section 33413 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33413.  

(a) Whenever dwelling units begin delete housing end delete begin insert affordable to or
occupied by end insert persons and families of low or moderate income are
destroyed or removed from the low- and moderate-income housing
market as part of a redevelopment project that is subject to a written
agreement with the agency or where financial assistance has been
provided by the agency, the agency shall, within four years of the
destruction or removal, begin delete rehabilitate, develop, or end delete construct, or cause
to begin delete be rehabilitated, developed, or end delete constructed, for rental or sale to
persons and families of low or moderate income, an equal number
of replacement dwelling units that have an equal or greater number
of bedrooms as those destroyed or removed units at affordable
housing costs within the territorial jurisdiction of the begin delete agency. When
dwelling units are destroyed or removed after September 1, 1989,
75 percent of the replacement dwelling units shall replace dwelling
units available at affordable housing cost in the same or a lower
income level of very low income households, lower income
households, and persons and families of low and moderate income,
as the persons displaced from those destroyed or removed units.
When dwelling units are destroyed or removed on or after January
1, 2002, 100 percent of the replacement dwelling units shall be
available at affordable housing cost to persons in the same or a
lower income category (low, very low, or moderate), as the persons
displaced from those destroyed or removed units end delete begin insert agency, provided
that if the units are provided outside the project area the agency
shall provide two units for each unit the agency is obligated to
replace. The replacement obligation shall apply to all units
affordable to low- or moderate-income persons or families at the
time of initiation of negotiations of a written agreement with or
financial assistance from the agency. For purposes of this section,
the inclusion of residential units in the rehabilitation of an existing
nonresidential structure shall constitute construction end insert .

begin insert

(1) When dwelling units are destroyed or removed after
September 1, 1989, 75 percent of the replacement dwelling units
shall be available at affordable housing cost to, and occupied by,
persons and families in the same or a lower income level of very
low income households, lower income households, and persons
and families of low and moderate income, as the persons and
families displaced from those destroyed or removed units.

end insert begin insert

(2) When dwelling units are destroyed or removed on or after
January 1, 2002, 100 percent of the replacement dwelling units
shall be available at affordable housing cost to, and occupied by,
persons and families in the same or a lower income category
(extremely low, very low, low, or moderate), as the persons and
families displaced from those destroyed or removed units. This
paragraph is declaratory of existing law.

end insert begin insert

(3) On or after January 1, 2012, in the case where the agency
is obligated to replace vacant units, those replacement units shall
be available at affordable housing costs to, and occupied by,
persons and families in the same or lower income category
(extremely low, very low, low, or moderate) in the same proportion
as the units occupied or last occupied by low- and
moderate-income households in the property.

end insert begin insert

(4) Up to 25 percent of the replacement obligation incurred
during a five-year implementation plan may be satisfied in either
of the following ways:

end insert begin insert

(A) With units that have been rehabilitated such that
after-rehabilitation value is increased by 50 percent or more of
the pre-rehabilitation value, as evidenced by pre and post
rehabilitation appraisals and, the rehabilitated units were, at the
time the dwelling units to be replaced were destroyed or removed
were either of the following:

end insert begin insert

(i) At risk of demolition or closure due to substandard conditions
and occupied by extremely low or very low income households.

end insert begin insert

(ii) Vacant due to substandard conditions as defined in Section
1941.1 of the Civil Code.

end insert begin insert

(B) With substantially rehabilitated multifamily rental dwelling
units, as defined in paragraph (2) of subdivision (b) and evidenced
by pre and post rehabilitation appraisals, provided that the agency
shall substantially rehabilitate within the project area, two units
for each unit the agency is obligated to replace, or outside of the
project area, three units for each unit the agency is obligated to
replace.

end insert begin insert

(5) For each project containing rehabilitated replacement units,
the agency shall adopt a separate written resolution, after public
hearing and based on substantial evidence, that the rehabilitation
of the replacement dwelling units complies with this subdivision.

end insert

(b) (1) Prior to the time limit on the effectiveness of the
redevelopment plan established pursuant to Sections 33333.2,
33333.6, and 33333.10 at least 30 percent of all new and
substantially rehabilitated dwelling units developed by an agency
shall be available at affordable housing cost to, and occupied by,
persons and families of low or moderate income. Not less than 50
percent of the dwelling units required to be available at affordable
housing cost to, and occupied by, persons and families of low or
moderate income shall be available at affordable housing cost to,
and occupied by, very low income households.

(2) (A) (i) Prior to the time limit on the effectiveness of the
redevelopment plan established pursuant to Sections 33333.2,
33333.6, and 33333.10 at least 15 percent of all new and
substantially rehabilitated dwelling units developed within a project
area under the jurisdiction of an agency by public or private entities
or persons other than the agency shall be available at affordable
housing cost to, and occupied by, persons and families of low or
moderate income. Not less than 40 percent of the dwelling units
required to be available at affordable housing cost to, and occupied
by, persons and families of low or moderate income shall be
available at affordable housing cost to, and occupied by, very low
income households.

(ii) To satisfy this paragraph, in whole or in part, the agency
may cause, by regulation or agreement, to be available, at
affordable housing cost, to, and occupied by, persons and families
of low or moderate income or to very low income households, as
applicable, two units outside a project area for each unit that
otherwise would have been required to be available inside a project
area.

(iii) On or after January 1, 2002, as used in this paragraph and
in paragraph (1), “substantially rehabilitated dwelling units” means
all units substantially rehabilitated, with agency assistance. Prior
to January 1, 2002, “substantially rehabilitated dwelling units”
shall mean substantially rehabilitated multifamily rented dwelling
units with three or more units regardless of whether there is agency
assistance, or substantially rehabilitated, with agency assistance,
single-family dwelling units with one or two units.

(iv) As used in this paragraph and in paragraph (1), “substantial
rehabilitation” means rehabilitation, the value of which constitutes
25 percent of the begin delete after rehabilitation end delete begin insert after-rehabilitation end insert value of
the dwelling, inclusive of the land value.

(v) To satisfy this paragraph, the agency may aggregate new or
substantially rehabilitated dwelling units in one or more project
areas, if the agency finds, based on substantial evidence, after a
public hearing, that the aggregation will not cause or exacerbate
racial, ethnic, or economic segregation.

(B) To satisfy the requirements of paragraph (1) and
subparagraph (A), the agency may purchase, or otherwise acquire
or cause by regulation or agreement the purchase or other
acquisition of, long-term affordability covenants on multifamily
units that restrict the cost of renting or purchasing those units that
either: (i) are not presently available at affordable housing cost to
persons and families of low or very low income households, as
applicable; or (ii) are units that are presently available at affordable
housing cost to this same group of persons or families, but are
units that the agency finds, based upon substantial evidence, after
a public hearing, cannot reasonably be expected to remain
affordable to this same group of persons or families.

(C) To satisfy the requirements of paragraph (1) and
subparagraph (A), the long-term affordability covenants purchased
or otherwise acquired pursuant to subparagraph (B) shall be
required to be maintained on dwelling units at affordable housing
cost to, and occupied by, persons and families of low or very low
income, for the longest feasible time but not less than 55 years for
rental units and 45 years for owner-occupied units. Not more than
50 percent of the units made available pursuant to paragraph (1)
and subparagraph (A) may be assisted through the purchase or
acquisition of long-term affordability covenants pursuant to
subparagraph (B). Not less than 50 percent of the units made
available through the purchase or acquisition of long-term
affordability covenants pursuant to subparagraph (B) shall be
available at affordable housing cost to, and occupied by, very low
income households.

(D) To satisfy the requirements of paragraph (1) and
subparagraph (A), each mutual self-help housing unit, as defined
in subparagraph (C) of paragraph (1) of subdivision (f) of Section
33334.3, that is subject to a 15-year deed restriction shall count as
one-third of a unit.

(3) The requirements of this subdivision shall apply
independently of the requirements of subdivision (a). The
requirements of this subdivision shall apply, in the aggregate, to
housing made available pursuant to paragraphs (1) and (2),
respectively, and not to each individual case of rehabilitation,
development, or construction of dwelling units, unless an agency
determines otherwise.

(4) Each redevelopment agency, as part of the implementation
plan required by Section 33490, shall adopt a plan to comply with
the requirements of this subdivision for each project area. The plan
shall be consistent with, and may be included within, the
community’s housing element. The plan shall be reviewed and, if
necessary, amended at least every five years in conjunction with
begin delete either the housing element cycle or end delete the plan implementation cycle.
The plan shall ensure that the requirements of this subdivision are
met every 10 years. If the requirements of this subdivision are not
met by the end of each 10-year period, the agency shall meet these
goals on an annual basis until the requirements for the 10-year
period are met. If the agency has exceeded the requirements within
the 10-year period, the agency may count the units that exceed the
requirement in order to meet the requirements during the next
10-year period. The plan shall contain the contents required by
paragraphs (2), (3), and (4) of subdivision (a) of Section 33490.

(c) (1) The agency shall require that the aggregate number of
replacement dwelling units and other dwelling units rehabilitated,
developed, constructed, or price restricted pursuant to subdivision
(a) or (b) remain available at affordable housing cost to, and
occupied by, persons and families of begin delete low-income,
moderate-income, and very low income households end delete begin insert extremely low
income, very low income, low income, and moderate income end insert ,
respectively, for the longest feasible time, but for not less than 55
years for rental units, 45 years for home ownership units, and 15
years for mutual self-help housing units, as defined in subparagraph
(C) of paragraph (1) of subdivision (f) of Section 33334.3, except
as set forth in paragraph (2). Nothing in this paragraph precludes
the agency and the developer of the mutual self-help housing units
from agreeing to 45-year deed restrictions.

(2) Notwithstanding paragraph (1), the agency may permit sales
of owner-occupied units prior to the expiration of the 45-year
period, and mutual self-help housing units prior to the expiration
of the 15-year period, established by the agency for a price in
excess of that otherwise permitted under this subdivision pursuant
to an adopted program that protects the agency’s investment of
moneys from the Low and Moderate Income Housing Fund,
including, but not limited to, an equity sharing program that
establishes a schedule of equity sharing that permits retention by
the seller of a portion of those excess proceeds, based on the length
of occupancy. The remainder of the excess proceeds of the sale
shall be allocated to the agency, and deposited into the Low and
Moderate Income Housing Fund. The agency shall, within three
years from the date of sale pursuant to this paragraph of each home
ownership or mutual self-help housing unit subject to a 45-year
deed restriction, and every third mutual self-help housing unit
subject to a 15-year deed restriction, expend funds to make
affordable an equal number of units at the same or lowest income
level as the unit or units sold pursuant to this paragraph, for a
period not less than the duration of the original deed restrictions.
Only the units originally assisted by the agency shall be counted
towards the agency’s obligations under Section 33413.

(3) The requirements of this section shall be made enforceable
in the same manner as provided in paragraph (7) of subdivision
(f) of Section 33334.3.

(4) If land on which the dwelling units required by this section
are located is deleted from the project area, the agency shall
continue to require that those units remain affordable as specified
in this subdivision.

(5) For each unit counted towards the requirements of
begin delete subdivisions end delete begin insert subdivision end insert (a) begin delete and end delete begin insert or end insert (b), the agency shall require
the recording in the office of the county recorder of covenants or
restrictions that ensure compliance with this subdivision. With
respect to covenants or restrictions that are recorded on or after
January 1, 2008, the agency shall comply with the requirements
of paragraphs (3) and (4) of subdivision (f) of Section 33334.3.

(d) (1) This section applies only to redevelopment projects for
which a final redevelopment plan is adopted pursuant to Article 5
(commencing with Section 33360) on or after January 1, 1976,
and to areas that are added to a project area by amendment to a
final redevelopment plan adopted on or after January 1, 1976. In
addition, subdivision (a) shall apply to any other redevelopment
project with respect to dwelling units destroyed or removed from
the low- and moderate-income housing market on or after January
1, 1996, irrespective of the date of adoption of a final
redevelopment plan or an amendment to a final redevelopment
plan adding areas to a project area. Additionally, any agency may,
by resolution, elect to make all or part of the requirements of this
section applicable to any redevelopment project of the agency for
which the final redevelopment plan was adopted prior to January
1, 1976. In addition, subdivision (b) shall apply to redevelopment
plans adopted prior to January 1, 1976, for which an amendment
is adopted pursuant to Section 33333.10, except that subdivision
(b) shall apply to those redevelopment plans prospectively only
so that the requirements of subdivision (b) shall apply only to new
and substantially rehabilitated dwelling units for which the building
permits are issued on or after the date that the ordinance adopting
the amendment pursuant to Section 33333.10 becomes effective.

(2) An agency may, by resolution, elect to require that whenever
dwelling units housing persons or families of low or moderate
income are destroyed or removed from the low- and
moderate-income housing market as part of a redevelopment
project, the agency shall replace each dwelling unit with up to
three replacement dwelling units pursuant to subdivision (a).

(e) Except as otherwise authorized by law, this section does not
authorize an agency to operate a rental housing development
beyond the period reasonably necessary to sell or lease the housing
development.

(f) Notwithstanding subdivision (a), the agency may replace
destroyed or removed dwelling units with a fewer number of
replacement dwelling units if the replacement dwelling units meet
both of the following criteria:

(1) The total number of bedrooms in the replacement dwelling
units equals or exceeds the number of bedrooms in the destroyed
or removed units. Destroyed or removed units having one or no
bedroom are deemed for this purpose to have one bedroom.

(2) The replacement units are affordable to and occupied by the
same income level of households as the destroyed or removed
units.

(g) “Longest feasible time,” as used in this section, includes,
but is not limited to, unlimited duration.

begin insert

(h) If a court finds that an agency has failed to comply with the
requirements of this section, the court, at a minimum, shall issue
an order that prohibits the agency from issuing any debt for any
project area, except debt from which all the proceeds will be
deposited into the Low and Moderate Income Housing Fund or
otherwise used to comply with the requirements of this section,
until such time as the court finds that the agency has fully complied
with the requirements of this section.

end insert

begin insert

begin insert SEC. 15. end insert   

end insert

begin insert Section 33413.5 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33413.5.  

Not less than 30 days prior to the execution of an
agreement for acquisition of real property, begin delete or end delete the execution of an
agreement for the disposition and development of property, begin delete or end delete the
execution of an owner participation agreement, begin delete which end delete begin insert or other end insert
agreement begin insert or assistance that end insert would lead to the destruction or
removal of dwelling units from the low- and moderate-income
housing market, the agency shall adopt by resolution a replacement
housing plan. For a reasonable time prior to adopting a replacement
housing plan by resolution, the agency shall make available a draft
of the proposed replacement housing plan for review and comment
by the project area committee, other public agencies, and the
general public.

The replacement housing plan shall include (1) the general
location of housing to be begin delete rehabilitated, developed, end delete begin insert rehabilitated end insert
or constructed pursuant to Section 33413, (2) begin insert a description of the
occupancy and affordability restrictions to be imposed on the
replacement dwelling units, (3) substantial evidence supporting a
finding that the replacement dwelling units will meet the needs of
households in the income categories of the households displaced
from the dwelling units that the replacement units are intended to
replace, (4) a declaration of whether the agency intends to
rehabilitate existing dwelling units pursuant to paragraph (5) of
subdivision (a) of Section 33413, (5) end insert an adequate means of
financing such begin delete rehabilitation, development, end delete begin insert rehabilitation end insert or
construction, begin delete (3) end delete begin insert (6) end insert a finding that the replacement housing does
not require the approval of the voters pursuant to Article XXXIV
of the California Constitution, or that such approval has been
obtained, begin delete (4) end delete begin insert (7) end insert the number of dwelling units housing persons
and families of low or moderate income planned for construction
or rehabilitation, and begin delete (5) end delete begin insert (8) end insert the timetable for meeting the plan’s
relocation, rehabilitation, and replacement housing objectives. A
dwelling unit whose replacement is required by Section 33413 but
for which no replacement housing plan has been prepared, shall
not be destroyed or removed from the low- and moderate-income
housing market until the agency has by resolution adopted a
replacement housing plan.

Nothing in this section shall prevent an agency from destroying
or removing from the low- and moderate-income housing market
a dwelling unit which the agency owns and which is an immediate
danger to health and safety. The agency shall, as soon as
practicable, adopt by resolution a replacement housing plan with
respect to such dwelling unit.

begin insert

begin insert SEC. 16. end insert   

end insert

begin insert Section 33418 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33418.  

(a) An agency shall monitor, on an ongoing basis, any
housing affordable to persons and families of low or moderate
income developed or otherwise made available pursuant to any
provisions of this part. As part of this monitoring, an agency shall
require owners or managers of the housing to submit an annual
report to the agency. The annual reports shall include for each
rental unit the rental rate and the income and family size of the
occupants, and for each owner-occupied unit whether there was a
change in ownership from the prior year and, if so, the income and
family size of the new owners. The income information required
by this section shall be supplied by the tenant in a certified
statement on a form provided by the agency.

(b) The data specified in subdivision (a) shall be obtained by
the agency from owners and managers of the housing specified
therein and current data shall be included in any reports required
by law to be submitted to the Department of Housing and
Community Development or the Controller. The information on
income and family size that is required to be reported by the owner
or manager shall be supplied by the tenant and shall be the only
information on income or family size that the owner or manager
shall be required to submit on his or her annual report to the
agency.

(c) (1) The agency shall compile and maintain a database of
existing, new and substantially rehabilitated, housing units
developed or otherwise assisted with moneys from the Low and
Moderate Income Housing Fund, or otherwise counted towards
the requirements of subdivision (a) or (b) of Section 33413. The
database shall be made available to the public on the Internet and
updated on an annual basis and shall include the date the database
was last updated. The database shall require all of the following
information for each owner-occupied unit or rental unit, or for
each group of units, if more than one unit is subject to the same
covenant:

(A) The street address and assessor’s parcel number of the
property.

(B) The size of each unit, measured by the number of bedrooms.

(C) The year in which the construction or substantial
rehabilitation of the unit was completed.

(D) The date of recordation and document number of the
affordability covenants or restrictions required under subdivision
(f) of Section 33334.3.

(E) The date on which the covenants or restrictions expire.

(F) For owner-occupied units that have changed ownership
during the reporting year, as described in subdivision (a), the date
and document number of the new affordability covenants or other
documents recorded to begin delete assure end delete begin insert ensure end insert that the affordability
restriction is enforceable and continues to run with the land.

(G) Whether occupancy in the unit or units is restricted to any
special population, including senior citizens.

begin insert

(H) The affordability level of each unit.

end insert begin insert

(I) Whether the unit is a rental or ownership unit.

end insert begin insert

(J) Whether the unit is being counted towards a replacement
obligation pursuant to subdivision (a) of Section 33413 or towards
a production obligation pursuant to subdivision (b) of Section
33413.

end insert begin insert

(K) The project type, including, but not limited to, new
construction, substantial rehabilitation, preservation, or the
purchase of long-term affordability covenants.

end insert

(2) Notwithstanding subparagraphs (A) and (D) of paragraph
(1), the database shall omit any property used to confidentially
house victims of domestic violence.

(3) Upon establishment of a database under this section, the
agency shall provide reasonable notice to the community regarding
the existence of the database.

(d) The agency shall adequately fund its monitoring activities
as needed to insure compliance of applicable laws and agreements
in relation to affordable units. For purposes of defraying the cost
of complying with the requirements of this section and the changes
in reporting requirements of Section 33080.4 enacted by the act
enacting this section, an agency may establish and impose fees
upon owners of properties monitored pursuant to this section.

begin insert

(e) The agency shall continue to monitor and enforce the
covenants covered by this section for the entire period of the
covenant. In the event the agency ceases its activities prior to the
entire period of the covenants, then its designated successor agency
shall monitor and enforce the covenants for the remaining period
of the covenant. If a successor agency is not designated at the time
the agency ceases its activities, then the community shall monitor
and enforce the covenants for the remaining period of the covenant.

end insert

begin insert

begin insert SEC. 17. end insert   

end insert

begin insert Article 13 (commencing with Section 33460) is added
to Chapter 4 of Part 1 of Division 24 of the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 13. end insert   Accountability Audits

 

begin insert 33460. end insert   

(a) The Legislature hereby finds and declares both of
the following:

(1) Past department audits of redevelopment agencies have
uncovered errors, omissions, and violations that have resulted in
significant repayments to agencies’ Low and Moderate Income
Housing Fund, thereby providing additional resources for
increasing, improving, and preserving the supply of low- and
moderate-income housing available at affordable housing cost.

(2) Providing funding for future department audits of
redevelopment agencies will ensure that tax increment, interest,
and debt proceeds are appropriately deposited into the Low and
Moderate Income Housing Fund and that agencies make only legal
expenditures from the fund, thereby providing additional resources
for increasing, improving, and preserving the supply of low- and
moderate-income housing available at affordable housing cost.
As a result, the deposits required by this section are permissible
pursuant to paragraph (7) of subdivision (a) of Section 25.5 of
Article XIII of the California Constitution.

(b) Immediately upon receipt, each agency shall annually
deposit one-half of one-tenth (.0005) percent of any tax increment
deposited into the Low and Moderate Income Housing Fund into
the Redevelopment Agency Accountability Fund created pursuant
to Section 50464.5 to be used solely for the purpose described in
subdivision (b) of that section.

end insert

begin insert

begin insert SEC. 18. end insert   

end insert

begin insert Section 33487 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33487.  

(a)  Subject to subdivisions (a) and (b) of Section
33486, not less than 20 percent of all taxes that are allocated to
the redevelopment agency pursuant to Section 33670 for
redevelopment projects merged pursuant to this article, irrespective
of the date of adoption of the final redevelopment plans, shall be
deposited by the agency in the Low and Moderate Income Housing
Fund established pursuant to Section 33334.3, or which shall be
established for purposes of this section. The agency shall use the
moneys in this fund to assist in the construction or rehabilitation
of housing units that will be available to, or occupied by, persons
and families of low or moderate income, as defined in Section
50093, and very low income households, as defined in Section
50105, for the longest feasible time period but not less than 55
years for rental units and 45 years for owner-occupied units. For
the purposes of this subdivision, “construction and rehabilitation”
shall include acquisition of land, improvements to land; the
acquisition, rehabilitation, or construction of structures; or the
provision of subsidies necessary to provide housing for persons
and families of low or moderate income, as defined in Section
50093, and very low income households, as defined in Section
50105.

(b)  The agency may use the funds set aside by subdivision (a)
inside or outside the project area. However, the agency may only
use these funds outside the project area upon a resolution of the
agency and the legislative body that the use will be of benefit to
the project. This determination by the agency and the legislative
body shall be final and conclusive as to the issue of benefit to the
project area. The Legislature finds and declares that the provision
of replacement housing pursuant to Section 33413 is of benefit to
a project.

The Legislature finds and declares that expenditures or
obligations incurred by the agency pursuant to this section shall
constitute an indebtedness of the project.

begin delete

(c)  If moneys deposited in the Low and Moderate Income
Housing Fund pursuant to this section have not been committed
for the purposes specified in subdivisions (a) and (b) for a period
of six years following deposit in that fund, the agency shall offer
these moneys to the housing authority that operates within the
jurisdiction of the agency, if activated pursuant to Section 34240,
for the purpose of constructing or rehabilitating housing as
provided in subdivisions (a) and (b). However, if no housing
authority operates within the jurisdiction of the agency, the agency
may retain these moneys for use pursuant to this section.

end delete begin delete

(d)

end delete

begin insert (c) end insert  If the agency deposits less than 20 percent of taxes allocated
pursuant to Section 33670, due to the provisions of subdivisions
(a) and (b) of Section 33486, in any fiscal year, a deficit shall be
created in the Low and Moderate Income Housing Fund in an
amount equal to the difference between 20 percent of the taxes
allocated pursuant to Section 33670 and the amount deposited in
that year. The deficit, if any, created pursuant to this section
constitutes an indebtedness of the project. The agency shall
eliminate the deficit by expending taxes allocated in years
subsequent to creation of the deficit and, until the time when that
deficit has been eliminated, an agency shall not incur new
obligations for purposes other than those set forth in Section 33487,
except to comply with the terms of any resolution or other
agreement pledging taxes allocated pursuant to Section 33670 that
existed on the date of merger pursuant to this article.

begin delete

(e)

end delete

begin insert (d) end insert  Notwithstanding subdivision (d) of Section 33413, any
agency that merges its redevelopment project areas pursuant to
this article shall be subject to subdivisions (a) and (c) of Section
33413.

begin insert

begin insert SEC. 19. end insert   

end insert

begin insert Section 33490 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

33490.  

(a) (1) (A) On or before December 31, 1994, and each
five years thereafter, each agency that has adopted a redevelopment
plan prior to December 31, 1993, shall adopt, after a public hearing,
an implementation plan that shall contain the specific goals and
objectives of the agency for the project area, the specific programs,
including potential projects, and estimated expenditures proposed
to be made during the next five years, and an explanation of how
the goals and objectives, programs, and expenditures will eliminate
blight within the project area and implement the requirements of
Section 33333.10, if applicable, and Sections 33334.2, 33334.4,
33334.6, begin delete and end delete 33413 begin insert , and 33487 end insert . After adoption of the first
implementation plan, the parts of the implementation plan that
address Section 33333.10, if applicable, and Sections 33334.2,
33334.4, 33334.6, begin delete and end delete 33413 begin insert , and 33487 end insert shall be adopted every
five years begin delete either end delete in conjunction with the begin delete housing element cycle or
the end delete implementation plan cycle and shall be made available to the
public on the Internet. The agency may amend the implementation
plan after conducting a public hearing on the proposed amendment.
If an action attacking the adoption, approval, or validity of a
redevelopment plan adopted prior to January 1, 1994, has been
brought pursuant to Chapter 5 (commencing with Section 33500),
the first implementation plan required pursuant to this section shall
be adopted within six months after a final judgment or order has
been entered. Subsequent implementation plans required pursuant
to this section shall be adopted pursuant to the terms of this section,
and as if the first implementation plan had been adopted on or
before December 31, 1994.

(B) Adoption of an implementation plan shall not constitute an
approval of any specific program, project, or expenditure and shall
not change the need to obtain any required approval of a specific
program, project, or expenditure from the agency or community.
The adoption of an implementation plan shall not constitute a
project within the meaning of Section 21000 of the Public
Resources Code. However, the inclusion of a specific program,
potential project, or expenditure in an implementation plan
prepared pursuant to subdivision (c) of Section 33352 in
conjunction with a redevelopment plan adoption shall not eliminate
analysis of those programs, potential projects, and expenditures
in the environmental impact report prepared pursuant to subdivision
(k) of Section 33352 to the extent that it would be otherwise
required. In addition, the inclusion of programs, potential projects,
and expenditures in an implementation plan shall not eliminate
review pursuant to the California Environmental Quality Act
(Division 13 (commencing with Section 21000) of the Public
Resources Code), at the time of the approval of the program,
project, or expenditure, to the extent that it would be otherwise
required.

(2) (A) A portion of the implementation plan shall address the
agency housing responsibilities and shall contain a section
addressing Section 33333.10, if applicable, and Sections 33334.2,
33334.4, and 33334.6, the Low and Moderate Income Housing
Fund, and, if subdivision (b) of Section 33413 applies, a section
addressing agency developed and project area housing. The section
addressing the Low and Moderate Income Housing Fund shall
contain:

(i) The amount available in the Low and Moderate Income
Housing Fund and the estimated amounts which will be deposited
in the Low and Moderate Income Housing Fund during each of
the next five years.

(ii) A housing program with estimates of the number of new,
rehabilitated, or price restricted units to be assisted during each of
the five years and estimates of the expenditures of moneys from
the Low and Moderate Income Housing Fund during each of the
five years.

(iii) A description of how the housing program will implement
the requirement for expenditures of moneys in the Low and
Moderate Income Housing Fund over a 10-year period begin insert or 5-year
period, as applicable, end insert for various groups as required by Section
33334.4. For project areas to which subdivision (b) of Section
33413 applies, the 10-year period within which begin insert subdivision (b) of end insert
Section begin delete 33334.4 end delete begin insert 33413 end insert is required to be implemented shall begin delete be end delete
begin insert coincide with end insert the begin delete same end delete 10-year period begin delete within which subdivision
(b) of Section 33413 end delete begin insert or within two end insert begin insert 5-year periods, as applicable,
within which Section 33334.4 end insert is required to be implemented.
Notwithstanding the first sentence of Section 33334.4 and the first
sentence of this clause, in order to allow these two 10-year time
periods to coincide for the first time period, the time to implement
the requirements of Section 33334.4 shall be extended two years,
and project areas in existence on December 31, 1993, shall
implement the requirements of Section 33334.4 on or before
December 31, 2014, begin delete and each 10 years thereafter end delete rather than
December 31, 2012. For project areas to which subdivision (b) of
Section 33413 does not apply, the requirements of Section 33334.4
shall be implemented on or before December 31, begin delete 2014, and each
10 years thereafter end delete begin insert 2014 end insert .

(iv) This requirement to include a description of how the housing
program will implement Section 33334.4 in the implementation
plan shall apply to implementation plans adopted pursuant to
subdivision (a) on or after December 31, 2002.

(B) For each project area to which subdivision (b) of Section
33413 applies, the section addressing the agency developed and
project area housing shall contain:

(i) Estimates of the number of new, substantially rehabilitated
or price restricted residential units to be developed or purchased
within one or more project areas, both over the life of the plan and
during the next 10 years.

(ii) Estimates of the number of units of very low, low-, and
moderate-income households required to be developed within one
or more project areas in order to meet the requirements of
paragraph (2) of subdivision (b) of Section 33413, both over the
life of the plan and during the next 10 years.

(iii) The begin insert statement of the end insert number of units of very low, low-, and
moderate-income households which have been developed begin insert over the
life of the plan end insert within one or more project areas which meet the
requirements of begin delete paragraph (2) of end delete subdivision (b) of Section 33413.

(iv) Estimates of the number of agency developed residential
units which will be developed during the next five years, if any,
which will be governed by paragraph (1) of subdivision (b) of
Section 33413.

(v) Estimates of the number of agency developed units for very
low, low-, and moderate-income households which will be
developed by the agency during the next five years to meet the
requirements of paragraph (1) of subdivision (b) of Section 33413.

(C) The section addressing Section 33333.10, if applicable, and
Section 33334.4 shall contain all of the following:

(i) The begin delete number of housing units needed for very low income
persons, low-income persons, and moderate-income persons as
each of those needs have been identified in the most recent
determination pursuant to Section 65584 of the Government Code,
and the proposed amount of expenditures from the Low and
Moderate Income Housing Fund for each income group end delete begin insert end insert begin insert proposed
amount of expenditures from the Low and Moderate Income
Housing Fund for the new construction, acquisition and substantial
rehabilitation, or preservation of housing for persons of extremely
low, very low, or low income end insert during each year of the
implementation plan period.

(ii) The total population of the community and the population
under 65 years of age as reported in the most recent census of the
United States Census Bureau.

(iii) A housing program that provides a detailed schedule of
actions the agency is undertaking or intends to undertake to ensure
expenditure of the Low and Moderate Income Housing Fund in
the proportions required by Section 33333.10, if applicable, and
Section 33334.4.

(iv) For the previous implementation plan period, the begin delete amounts
of Low and Moderate Income Housing Fund moneys utilized to
assist units affordable to, and occupied by, extremely low income
households, very low income households, and low-income
households; the end delete number, the location, and level of affordability of
units newly constructed begin delete with other locally controlled government
assistance and end delete without agency assistance and that are required to
be affordable to, and occupied by, persons of low, very low, or
extremely low income for at least 55 years for rental housing or
45 years for begin delete homeownership end delete begin insert home ownership end insert housing, and the
amount of Low and Moderate Income Housing Fund moneys
utilized to assist housing units available to families with children,
and the number, location, and level of affordability of those units.

begin insert

(v) A demonstration, based on substantial evidence in the plan,
that as of the end of the immediately preceding 5-year
implementation planning period, the agency’s aggregate
expenditures from the Low and Moderate Income Housing Fund,
exclusive of debt service payments, between the end of the last
10-year implementation period referenced in paragraph (1) of
subdivision (a) of Section 33334.4 and the end of the immediately
preceding 5-year implementation planning period satisfy the
proportionality requirements set forth in paragraph (2) of
subdivision (a) of Section 33334.4.

end insert

(3) If the implementation plan contains a project that will result
in the destruction or removal of dwelling units that will have to
be replaced pursuant to subdivision (a) of Section 33413, the
implementation plan shall identify proposed locations suitable for
those replacement dwelling units.

begin insert

If the implementation plan contains a project that has resulted
in the destruction or removal of dwelling units that must be
replaced pursuant to subdivision (a) of Section 33413, the
implementation plan shall identify either of the following:

end insert begin insert

(A) The replacement dwelling units that satisfy each replacement
housing obligation.

end insert begin insert

(B) In the case where dwelling units have been destroyed or
removed, but replacement units are not yet complete, the proposed
location of the replacement dwelling units.

end insert begin insert

(4) The implementation plan shall include a complete accounting
for compliance with the agency’s affordable housing obligations
over the life of the plan, including the total number of units the
agency is obligated to replace pursuant to subdivision (a) of
Section 33413, the number of units the agency is obligated to
produce pursuant to subdivision (b) of Section 33413, and the
number of dwelling units that satisfy these obligations.

end insert begin insert

(A) For each owner-occupied unit or rental unit counted towards
meeting the agency obligations under subdivision (a) or (b) of
Section 33413 and required to be included in the database required
pursuant to subdivision (c) of Section 33418, or for each group of
such units, if more than one unit is subject to the same covenant,
the implementation plan shall identify all of the following:

end insert begin insert

(i) The street address and assessor’s parcel number of the
property and, for properties where units are listed as a group, the
number of units.

end insert begin insert

(ii) The size of each unit, measured by the number of bedrooms.

end insert begin insert

(iii) The affordability level of each unit, according to the
categories required by Section 33413.

end insert begin insert

(iv) The year in which the construction or substantial
rehabilitation of the unit was completed.

end insert begin insert

(v) The date of recordation and document number of the
affordability covenants or restrictions required under subdivision
(f) of Section 33334.3 or subdivision (c) of Section 33413.

end insert begin insert

(vi) The date on which the covenants or restrictions expire.

end insert begin insert

(vii) For the projects developed prior to January 1, 2002, a
statement of the effective period of the land use controls established
in the plan at the time each unit was developed, in order to
demonstrate that the duration of the covenants or restrictions
extends for a period not less than the applicable period of land
use controls, in accordance with then applicable law.

end insert begin insert

(viii) For owner-occupied units that have changed ownership
during the previous implementation plan period, the date and
document number of the new affordability covenants or other
documents recorded to ensure that the affordability restriction is
enforceable and continues to run with the land.

end insert begin insert

(ix) Whether the unit counts towards a replacement obligation
pursuant to subdivision (a) of Section 33413 or towards a
production obligation pursuant to subdivision (b) of Section 33413.
Units counted towards a replacement obligation shall reference
the destroyed units they are replacing.

end insert begin insert

(B) For each owner-occupied unit or rental unit counted towards
meeting the agency obligations under subdivision (a) or (b) of
Section 33413 and not required to be included in the database
required pursuant to subdivision (c) of Section 33418, or for each
group of such units, if more than one unit is subject to the same
covenant, the implementation plan shall identify all of the
following:

end insert begin insert

(i) The street address and, if available, assessor’s parcel number
of the property.

end insert begin insert

(ii) For properties where units are listed as a group, the number
of units.

end insert begin insert

(iii) The affordability level of each unit, according to the
categories required by Section 33413.

end insert begin insert

(iv) The year in which the construction or substantial
rehabilitation of the unit was completed.

end insert begin insert

(v) The date of recordation and document number of the
affordability covenants or restrictions required under subdivision
(f) of Section 33334.3 or subdivision (c) of Section 33413.

end insert begin insert

(vi) The date on which the covenants or restrictions expired.

end insert begin insert

(vii) Whether the unit counts towards a replacement obligation
pursuant to subdivision (a) of Section 33413 or towards a
production obligation pursuant to subdivision (b) of Section 33413.
Units counted towards a replacement obligation shall reference
the destroyed units they are replacing.

end insert begin insert

(5) Notwithstanding subparagraphs (A) and (E) of paragraph
(4), the implementation plan shall omit any property used to
confidentially house victims of domestic violence.

end insert begin delete

(4)

end delete

begin insert (6) end insert  For a project area that is within six years of the time limit
on the effectiveness of the redevelopment plan established pursuant
to Section 33333.2, 33333.6, 33333.7, or 33333.10, the portion of
the implementation plan addressing the housing responsibilities
shall specifically address the ability of the agency to comply, prior
to the time limit on the effectiveness of the redevelopment plan,
with subdivision (a) of Section 33333.8, subdivision (a) of Section
33413 with respect to replacement dwelling units, subdivision (b)
of Section 33413 with respect to project area housing, and the
disposition of the remaining moneys in the Low and Moderate
Income Housing Fund.

begin delete

(5)

end delete

begin insert (7) end insert  The implementation plan shall identify the fiscal year that
the agency expects each of the following time limits to expire:

(A) The time limit for the commencement for eminent domain
proceedings to acquire property within the project area.

(B) The time limit for the establishment of loans, advances, and
indebtedness to finance the redevelopment project.

(C) The time limit for the effectiveness of the redevelopment
plan.

(D) The time limit to repay indebtedness with the proceeds of
property taxes.

(b) For a project area for which a redevelopment plan is adopted
on or after January 1, 1994, the implementation plan prepared
pursuant to subdivision (c) of Section 33352 shall constitute the
initial implementation plan and thereafter the agency after a public
hearing shall adopt an implementation plan every five years
commencing with the fifth year after the plan has been adopted.
Agencies may adopt implementation plans that include more than
one project area.

(c) Every agency, at least once within the five-year term of the
plan, shall conduct a public hearing and hear testimony of all
interested parties for the purpose of reviewing the redevelopment
plan and the corresponding implementation plan for each
redevelopment project within the jurisdiction and evaluating the
progress of the redevelopment project. The hearing required by
this subdivision shall take place no earlier than two years and no
later than three years after the adoption of the implementation plan.
For a project area that is within three years of the time limit on the
effectiveness of the redevelopment plan established pursuant to
Section 33333.2, 33333.6, 33333.7, or 33333.10, the review shall
specifically address those items in paragraph (4) of subdivision
(a). An agency may hold one hearing for two or more project areas
if those project areas are included within the same implementation
plan.

(d) Notice of public hearings conducted pursuant to this section
shall be published pursuant to Section 6063 of the Government
Code, mailed at least three weeks in advance to all persons and
agencies that have requested notice, and posted in at least four
permanent places within the project area for a period of three
weeks. Publication, mailing, and posting shall be completed not
less than 10 days prior to the date set for hearing.

begin insert

begin insert SEC. 20. end insert   

end insert

begin insert Section 33506 is added to the end insert begin insert Health and Safety Code end insert begin insert ,
to read: end insert

begin insert

begin insert 33506. end insert   

(a) A failure to meet any of the following obligations
shall be an ongoing violation until the agency has fully met the
obligation:

(1) The obligation to eliminate project deficits pursuant to
Sections 33334.6, 33487, 33492.16, and other similar and related
provisions of law.

(2) The obligation to expend or encumber excess surplus funds
pursuant to Section 33334.12 and other similar and related
provisions of law.

(3) The obligation to provide relocation assistance pursuant to
Article 9 (commencing with Section 33410), Section 7260 of the
Government Code, or other applicable relocation laws.

(4) The obligation to provide replacement housing pursuant to
subdivision (a) of Section 33413, Article 9 (commencing with
Section 33410), and other similar and related provisions of law.

(5) The obligation to provide housing pursuant to subdivision
(b) of Section 33413 and other similar and related provisions of
law.

(6) The obligation to monitor and enforce affordability
covenants required pursuant to Section 33418.

(7) The obligation to continue the project past the effectiveness
date of the redevelopment plan pursuant to Section 33333.8.

(8) The obligation to expend funds proportionately to assist
housing for persons of extremely low, very low, or low income or
to assist housing available to all persons regardless of age
pursuant to Section 33334.4.

(9) The obligations to record covenants that run with the land
pursuant to subdivision (f) of Section 33334.3 and subdivision (c)
of Section 33413(c).

(b) This section is declaratory of existing law.

end insert

begin insert

begin insert SEC. 21. end insert   

end insert

begin insert Section 50464.5 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 50464.5. end insert   

(a) The Redevelopment Agency Accountability Fund
is hereby created in the State Treasury and is available, upon
appropriation, to the department for the purposes of subdivision
(b). Notwithstanding Section 16305.7 of the Government Code,
any moneys received by the department pursuant to Section 33460,
and any other sources, repayments, interest, or new appropriations,
shall be deposited in the fund. Moneys in the fund shall not be
subject to transfer to any other fund pursuant to any provision of
Part 2 (commencing with Section 16300) of Division 4 of Title 2
of the Government Code, except the Surplus Money Investment
Fund. The department may require the transfer of moneys in the
fund to the Surplus Money Investment Fund for investment pursuant
to Article 4 (commencing with Section 16470) of Chapter 3 of Part
2 of Division 4 of Title 2 of the Government Code. Notwithstanding
Section 16305.7 of the Government Code, all interest, dividends,
and pecuniary gains from the investments shall accrue to the fund.

(b) With funds made available pursuant to subdivision (a), the
department shall conduct audits of redevelopment agencies to
ensure compliance with the housing provisions of the Community
Redevelopment Law. The department shall include in the audits a
review of agency compliance with production and replacement
housing obligations, recording and monitoring of affordability
covenants, provision of relocation assistance, propriety of deposits
to and expenditures from the Low and Moderate Income Housing
Fund, compliance with the debt limit of the agency, adoption of a
legally sufficient implementation plan, each of the major audit
violations pursuant to subdivision (j) of Section 33080.8, and any
other accounting practice or provision of the Community
Redevelopment Law in the discretion of the department. The
department shall require that each agency take action to correct
the audit violations. If the department determines that an agency
has not corrected the audit violations within 180 days of a final
audit report, it shall forward all relevant documents to the Attorney
General for action pursuant to Section 33080.9. The department
shall make available on its Internet Web site the final audit reports,
a statement of any resolution of audit reports, or if not resolved,
the date audit reports were forwarded to the Attorney General.

end insert

begin insert

begin insert SEC. 22. end insert   

end insert

begin insert This act shall become operative only if Senate Bill
341 of the 2012-13 Regular Session is enacted and becomes
operative. end insert

begin delete

SECTION 1.  

Section 7073.1 of the Government Code is
amended to read:

7073.1.  

(a) Any city, county, or city and county with an eligible
area within its jurisdiction may complete a preliminary application
for designation as an enterprise zone. The applying entity shall
establish definitive boundaries for the proposed enterprise zone
and the targeted employment area. An entity may propose zones
in areas with noncontiguous boundaries, and the department may
designate those areas as zones if the director determines both of
the following:

(1) The noncontiguous area is needed to implement the
applicant’s economic development strategy.

(2) The excluded area between the proposed zone boundaries
would not, based on the proposed economic strategy, also benefit
from the zone designation.

(b) (1) In designating enterprise zones, the department shall
select from the applications submitted those proposed enterprise
zones that, upon a comparison of all of the applications submitted,
indicate that they propose the most appropriate economic
development strategy and implementation plan utilizing state and
local programs and incentives to create jobs, attract private sector
investment, and improve the economic conditions within the zone
proposed. The department shall prescribe a format that promotes
succinct and focused strategies and plans, and set minimum
standards for the strategies and plans. For the purposes of this
subdivision, important elements of a strategy or plan may include,
but are not limited to, all of the following:

(A) An assessment of current financial and community
development strengths, needs, and opportunities.

(B) A framework for investment of time, action, and money.

(C) Clear articulation of goals.

(D) Measurable objectives, including targets.

(E) Proposed implementation activities and tasks, including
timeframes, and a framework for evaluating performance, including
qualitative and quantitative benchmarks.

(2) For purposes of this subdivision, local incentives may
include, but are not limited to, all of the following:

(A) The suspension or relaxation of locally originated or
modified building codes, zoning laws, general development plans,
or rent controls.

(B) The elimination or reduction of fees for applications,
permits, and local government services.

(C) The establishment of a streamlined permit process.

(D) Elimination or reduction of construction taxes or business
license taxes.

(E) The provision or expansion of infrastructure.

(F) The targeting of federal block grant moneys, including small
cities, education, and health and welfare block grants.

(G) The targeting of economic development grants and loan
moneys, including grant and loan moneys provided by the United
States Department of Housing and Urban Development.

(H) The targeting of state and federal job disadvantaged and
vocational education grant moneys, including moneys provided
by the federal Workforce Investment Act of 1998 (Public Law
105-220), or its successor.

(I) The targeting of federal or state transportation grant moneys.

(J) The targeting of federal or state low-income housing and
rental assistance moneys.

(K) The use of tax allocation bonds, special assessment bonds,
bonds under the Mello-Roos Community Facilities Act of 1982
(Chapter 2.5 (commencing with Section 53311) of Part 1 of
Division 2 of Title 5), industrial development bonds, revenue
bonds, private activity bonds, housing bonds, bonds issued pursuant
to the Marks-Roos Local Bond Pooling Act of 1985 (Article 4
(commencing with Section 6584) of Chapter 5), certificates of
participation, hospital bonds, redevelopment bonds, school bonds,
and all special provisions provided for under federal tax law for
enterprise community or empowerment zone bonds.

(3) When designating new enterprise zones, the department
shall take into consideration the location of existing zones and
make every effort to locate new zones in a manner that will not
adversely affect any existing zones.

(4) When reviewing and ranking new enterprise zone
applications, the department shall give bonus points to applications
from jurisdictions that meet minimum threshold points and at least
two of the following criteria:

(A) The percentage of households within the census tracts of
the proposed enterprise zone area, the income of which is below
the poverty level, is at least 17.5 percent.

(B) The average unemployment rate for the census tracts of the
proposed enterprise zone area was not less than five percentage
points above the statewide average for the most recent calendar
year as determined by the Employment Development Department.

(C) The applicant jurisdiction has, and can document that it has,
a unique distress factor affecting long-term economic development,
including, but not limited to, resource depletion, plant closure,
industry recession, natural disaster, or military base closure.

(5) Except as modified pursuant to paragraph (4), applications
shall be ranked by the appropriateness of the economic
development strategy and implementation plan, including all of
the following:

(A) The extent the strategy clearly identifies the local resources,
incentives, and programs that will be made available to the zone
for meeting its goals and objectives.

(B) The extent the strategy provides for attracting private sector
investment.

(C) The extent the strategy includes related regional and
community-based partnerships for achieving the goals and
objectives in the strategy.

(D) The extent the strategy fits within the jurisdiction’s overall
economic development strategy, including the extent the strategy
and implementation plan is appropriate for the local community.

(E) The extent the strategy addresses the hiring and retention
of unemployed or underemployed residents or low-income
individuals in the proposed zone and surrounding areas.

(F) The extent the strategy sets reasonable and measurable
benchmarks, goals, and objectives.

(G) The extent the strategy sets forth an appropriate funding
schedule for management, oversight, and program delivery within
the zone relative to the benchmarks, goals, and objectives in the
strategy.

(H) The extent that the economic development strategy has a
comprehensive incentive package for attracting private investment
to the enterprise zone.

(c) For any application for an enterprise zone designation
submitted on or after January 1, 2014, both of the following shall
apply:

(1) If any portion of the proposed zone is within, or previously
was within, the boundaries of a previously designated enterprise
zone, the aggregate size of the proposed enterprise zone shall not
exceed the size of the previously designated enterprise zone by
more than 15 percent.

(2) If any portions of the proposed zone are within, or previously
were within, the boundaries of two or more previously designated
enterprise zones, the aggregate size of the proposed enterprise zone
shall not exceed the size of the largest single previously designated
enterprise zone by more than 15 percent.

(d) In evaluating applications for designation, the department
shall ensure that applications are not disqualified solely because
of technical deficiencies, and shall provide applicants with an
opportunity to correct the deficiencies. Applications shall be
disqualified if the deficiencies are not corrected within two weeks.

(e) Except upon dedesignation pursuant to subdivision (c) of
Section 7076.1, Section 7076.2, or Section 7085.1, a designation
made by the department shall be binding for a period of 15 years
from the date of the original designation.

(f) This section shall apply only to enterprise zone applications
for which the department has issued a solicitation for new
enterprise zone designations on or after January 1, 2007.

end delete