BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 133
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          Date of Hearing:  August 14, 2013

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
                           K.H. "Katcho" Achadjian, Chair
                  SB 133 (DeSaulnier) - As Amended:  August 6, 2013

          SENATE VOTE  :  Not relevant
           
          SUBJECT  :  Redevelopment.

           SUMMARY  :  Requires, for a new agency or authority that is  
          required to comply with provisions of the Community  
          Redevelopment Law, various reforms to the activities of that  
          agency or authority to increase, preserve and improve low- and  
          moderate-income housing.  Specifically,  this bill  :   

          1)States that the bill's provisions shall only apply to an  
            agency or authority created on or after January 1, 2014, that  
            is required to comply with, or is defined as an agency  
            pursuant to, the Community Redevelopment Law, and shall not  
            apply to an agency that has assumed the housing assets and  
            functions of a former redevelopment agency (RDA).

          2)Requires the RDA to present its annual report to its  
            legislative body at a public hearing and make the report  
            available on its Internet Web site, or if the agency does not  
            have a web site, on the community's Internet Web site.

          3)Places new requirements on an RDA to include in an annual  
            report, the following: 

             a)   The percentage of funds from the Low and Moderate Income  
               Housing Fund (L&M fund) used for planning and general  
               administration costs;

             b)   An itemized list of planning and general administration  
               expenditures from the L&M fund and an explicit description  
               of how the expenditures are necessary for the production,  
               improvement or preservation of low- and moderate-income  
               housing; 

             c)   Information describing the employees that are paid from  
               the L&M fund including the title, salary, wages, benefits,  
               and the nature of the employee's activities eligible to be  
               paid out of the L&M fund;








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             d)   A list of the overhead costs that are paid directly or  
               indirectly from the L&M fund;

             e)   A statement of the amount and percentage of funds  
               deposited into the L&M fund exclusive of debt proceeds  
               expended for planning and administration in each of the  
               preceding five fiscal years that begin after December 31,  
               2011; 

             f)   A list of all the properties owned by an RDA purchased  
               with L&M funds, the date of acquisition for each property,  
               an RDA's intended purpose for the property, and the amount  
               if any of L&M funds used to acquire and maintain the  
               property; 

             g)   For each fiscal year since the agency's last adopted  
               implementation plan, a list of the replacement housing  
               obligations of the RDA including the number of units that  
               must be replaced, location, and status of the replacement  
               and production units; and,

             h)   For each housing project for which an RDA designates  
               encumbered funds, or amends an existing designation or  
               encumbrance during the fiscal year and where the RDA's  
               financing constitutes more than 50% of the total cost of  
               the housing project, requires the project name, location,  
               number of affordable units, affordability level, amount of  
               agency financing and total cost of the low- and  
               moderate-income units.  

          1)Provides an agency that has deposited less than $100,000 in  
            the L&M fund is exempt from providing the information required  
            by a) through h) above. 

          2)Requires the legislative body to adopt a separate written  
            resolution finding that based on the annual report the actual  
            planning and general administrative expenses do not exceed the  
            limits allowed. 

          3)Requires the Controller, on or before April 1 of each year, to  
            post on its Web site a list of RDAs with major audit  
            violations. 

          4)Allows the Controller to consult with locally affected  








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            community groups as part of determining if an agency has  
            corrected a major audit violation. 

          5)Allows an RDA that is subject to a court order as a result of  
            a major audit violation to continue to issue, sell, or deliver  
            bonds or incur debt to increase, improve, preserve, or assist  
            in the construction, or rehabilitation of housing units for  
            extremely low-, very low-, low-, or moderate-income housing.  

          6)In the 60 day window between a court's initial finding of a  
            major audit violation and a final ruling, allows an RDA to pay  
            the budgeted operation and administration of the agency, as  
            opposed to only 75% of the budgeted amount. 

          7)Prohibits an RDA that is subject to a court order as result of  
            a major audit violation to exercise the power of eminent  
            domain. 

          8)Removes the statutory caps on the amount of a monetary  
            sanction that a court can order an RDA to pay for a major  
            audit violation and permits the court to determine a sanction  
            that is commensurate with the violation. 

          9)Prohibits an RDA from paying a court sanction from the L&M  
            fund or any other special fund related to housing.

          10)Provides that an action filed by a court to compel an RDA to  
            correct a major audit violation does not preclude an action by  
            any other interested party or a resident of the jurisdiction.

          11)Makes failure to comply with the restrictions regarding  
            eligible expenditures for planning and general administration  
            from the L&M fund a "major audit violation."

          12)Requires the Department of Housing and Community Development  
            (HCD) to conduct audits of RDAs to ensure compliance with the  
            housing provisions of the Community Redevelopment Law (CRL).

          13)Requires HCD to review all of the following in audits of  
            RDAs:

             a)   Agency compliance with production and replacement of  
               housing obligations;

             b)   Recording and monitoring of affordability covenants;








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             c)   Provision of relocation assistance;

             d)   Propriety of deposits to and expenditures from the L&M  
               fund;

             e)   Compliance with the debt limit of the agency;

             f)   Adoption of a legally sufficient implementation plan;

             g)   Major audit violations as defined in the Health and  
               Safety Code Section 33080.8; and, 

             h)   Accounting practice or provision of the CRL in the  
               discretion of the department.

          14)Requires RDAs to annually remit .05% of the L&M tax increment  
            to HCD to conduct redevelopment audits. 

          15)Requires HCD to determine, on or before April 1 of each year,  
            whether an audit or investigation from the previous year,  
            contains a major audit violation and post those on the HCD  
            Internet Web site.   

          16)Requires on or before June 1 of each year, HCD to determine  
            if a major audit violation has been corrected by consulting  
            with each affected agency and locally affected community  
            groups.

          17)Requires HCD to direct RDAs to take action to correct audit  
            violations.

          18)Provides that if HCD determines that an RDA has not taken  
            action within 180 days to correct an audit violation, it must  
            forward all relevant documents to the Attorney General (AG)  
            for action.   

          19)Requires HCD to forward a copy of any audit or investigation  
            of an RDA to the AG and the Controller. 

          20)Requires HCD to notify an RDA and its legislative body when  
            it sends an audit violation to the AG. 

          21)Prohibits HCD from initiating or settling any litigation or  
            to resolve any audit or investigation in a manner contrary to  








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            law. 

          22)Allows the Controller to conduct quality control reviews of  
            RDA audits to the extent feasible within existing resources  
            and to communicate the results of the review to the RDA and  
            the independent auditor. 

          23)Requires that if the Controller finds that an audit was  
            conducted in an unprofessional manner, to refer the case to  
            the California Board of Accountancy (Board).

          24)Provides that if the Board determines that the independent  
            auditor conducted the audit in an unprofessional manner then  
            the auditor is prohibited from performing any RDA audits for  
            three years and the Board may impose additional penalties. 

          25)Provides that whenever the Controller determines through two  
            consecutive quality control reviews that an audit was not  
            performed in substantial conformity with guidelines in state  
            law, the Controller will notify the auditor and the Board in  
            writing.

          26)Gives the auditor 30 days after receiving the Controller's  
            notice to file an appeal or the Controller's determination is  
            final. 

          27)Provides that if the auditor files an appeal, the Board will  
            investigate and may find that the Controller's determination  
            will not be upheld and has no effect or schedule an appeal for  
            hearing. 

          28)Provides that if the Controller's determination becomes  
            final, the auditor is prohibited from conducting audits for  
            three years and is subject to any additional conditions  
            ordered by the Board.   

          29)Provides that no later than March 1, following the date at  
            which the Controller's determination becomes final, the  
            Controller will notify each RDA of the auditors that are  
            ineligible as a result of misconduct. 

          30)Allows the Board to take any disciplinary action against an  
            auditor that it deems appropriate under the law. 

          31)Requires an RDA that is found to have deposited less into the  








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            L&M fund than required by law or to have spent money from the  
            L&M fund for purposes other than increasing, improving, and  
            preserving the community's supply of affordable housing, to  
            repay the funds with interest, plus an additional 50% of that  
            amount and interest. 

          32)Applies the 10-year statute of limitations for failure to  
            deposit or expend L&M funds correctly to merged redevelopment  
            project areas and to any other moneys that any agency must  
            deposit in the L&M fund in addition to tax increment. 

          33)Prohibits repayment of any L&M funds required to meet the  
            set-a-side requirements to come from any other funds  
            designated for affordable housing. 

          34)Establishes a double cap on the amount of L&M funds that an  
            RDA can spend on planning and general administrative costs.

          35)Places a 10% cap on the amount of L&M funds that an RDA can  
            spend on general administrative costs including:

             a)   Employee compensation costs and related non-personnel  
               costs, such as travel and training, paid to or on behalf of  
               any agency, city, or county employee whose duties include  
               permissible L&M housing activities other than direct  
               program and project administration (i.e., line staff);

             b)   Employee compensation costs and related non-personnel  
               costs paid to or on behalf of any agency, city, or county  
               employee who supervises or manages line staff or who  
               provides general administrative services, such as finance,  
               legal, and human resources that indirectly support  
               permissible L&M housing activities; 

             c)   Overhead costs, such as rent, equipment, and supplies;  
               and,

             d)   The total value of any contracts for agency planning or  
               administrative services that are related to permissible  
               housing activities and that are not associated with a  
               specific development project.

          36)Places a 10% cap on the amount of L&M funds that an RDA can  
            spend on program and project staff costs, including employee  
            compensation costs and related non-personnel costs that are  








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            directly and necessarily associated with development of a  
            specific housing development project including, 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 for new  
            rehabilitation units, construction monitory and monitoring  
            affordable housing units.   

          37)Allows an RDA to spend up to 2% of their L&M fund on code  
            enforcement provided that the RDA complies with relocation and  
            replacement rules if tenants are displaced or homes are  
            destroyed as a result of code enforcement activities. 

          38)Allows an RDA to spend any difference between the cap on  
            "general administrative and planning" (employee compensation  
            for executive management cost and overhead costs) and actual  
            administrative expenditures on "program and project staff  
            costs." 

          39)Requires employee compensation for executive and management  
            staff, to be justified by an independent cost allocation study  
            that is no more than six years old and not represent a greater  
            proportion of the employees total compensation than the  
            proportion of employees working directly and exclusively on  
            activities required for the L&M fund in comparison to the  
            total number of employees supervised, managed and directly  
            supported by the employee.   

          40)Provides that the limitations planning and administrative  
            costs do not apply to a specific project area during the first  
            five years.

          41)Provides that the planning and administrative costs apply to  
            project areas where the project area is amended or if the tax  
            increment of a new or amended project area is deposited into  
            an L&M fund covering more than one project area. 

          42)Prohibits an RDA from spending L&M funds on any of the  
            following:

             a)   Code enforcement;

             b)   Land use planning or development of or revision of the  








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               housing element except for the payment of normal  
               project-related planning fees that is applicable to similar  
               development projects, except that an RDA may spend L&M  
               funds on the cost of staff participation in the development  
               of the housing element provided that those costs are  
               counted toward the 10% cap on planning and administration  
               costs;

             c)   Lobbying; and, 

             d)   Administration of non-redevelopment activities that are  
               not related to the activities required under the L&M fund.   


          43)Provides that the completion of the current 10-year  
            implementation plan for an RDA (provided the 10-year period  
            began before January 1, 2010), the proportionality  
            requirements dictated by regional housing needs assessment  
            (RHNA) no longer apply, and funds must be expended from the  
            L&M fund as follows:

             a)   Requires at least 75% of each RDA's expenditures from  
               the L&M fund shall directly assist the new construction,  
               acquisition, and substantial rehabilitation or preservation  
               of housing for persons of extremely low-, very low-, or  
               low-income;

             b)   Requires at least 50% of each RDA's expenditures from  
               the L&M fund shall directly assist the new construction,  
               acquisition, and substantial rehabilitation or preservation  
               of housing for persons of extremely low- or very  
               low-income; and,

             c)   Requires that at least 25% of each RDA's expenditures  
               from the L&M fund shall directly assist the new  
               construction, acquisition, and substantial rehabilitation  
               or preservation of housing for persons of extremely low  
               income.

          44)Allows an RDA to count expenditures for extremely low-income  
            housing toward the percentages required for very low-income  
            and to count expenditures for extremely low- and very  
            low-income toward the percentages required for low-income. 

          45)Deletes the ability of an agency to adjust the  








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            proportionality requirement for units constructed with  
            non-redevelopment funds. 

          46)Requires an RDA to demonstrate in each implementation plan at  
            the end of five years that the agency's aggregate expenditures  
            from the L&M fund exclusive of debt service payments from the  
            onset of the new proportionality requirements satisfy the  
            requirements.

          47)Defines "preservation" as preserving affordability of an  
            assisted housing development that is eligible for prepayment  
            or termination or the rental restrictions may expire within  
            five years. 

          48)Defines "housing for persons of extremely low income" as  
            housing that is available at a rent or housing cost that is  
            affordable to households earning 30% of the area median income  
            or 30% of the statewide median income, whichever is greater.  
           49)Provides that if an RDA has deposited less than $2 million  
             in the L&M fund in the first five years after the onset of  
             the new proportionality requirements, the RDA has 10 years to  
             fulfill the requirements to spend the L&M funds in the  
             percentages described above for extremely low-, very low- and  
             low-income housing for the first time. 

          50)Allows, for purposes of the proportionality requirements, an  
            agency to count contractually obligated funds as expended  
            funds, provided that the contract is with an entity that is  
            independent of the agency or the community for the development  
            for a specific eligible housing development.

          51)Provides that if a contract to expend funds from the L&M fund  
            for a specific eligible housing development is terminated, the  
            funds may no longer be counted towards meeting the  
            proportionality requirements. 

          52)Provides that if an RDA fails to meet the proportionality  
            requirements, they may not expend any money from the L&M fund  
            for households whose incomes exceed 50% of median income until  
            they have expended funds for extremely low-, very low- and  
            low-income housing that should have been spent in previous  
            implementation plan periods.

          53)Provides that if an RDA fails to spend L&M funds in same  
            proportion as the number of persons in all age groups, they  








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            may not expend any money from the L&M fund for senior  
            households until they have expended funds for all-age housing  
            that should have been spent in previous implementation plan  
            periods.

          54)Deletes the authority of an agency to disburse excess surplus  
            funds to the local housing authority.  

          55)Requires for each interest in real property acquired using  
            money from the L&M fund, an RDA within five years of acquiring  
            the property, must do one of the following:

             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 for housing that is  
               affordable to persons and families of low- and  
               moderate-income; and,

             c)   Submit a remedial action plan for the property to the  
               appropriate oversight agency including, but not limited to,  
               the Department of Toxic Substances Control, the Regional  
               Water Quality Control Board or the Office of Human Health  
               Risk Assessment for the cleanup of contamination.     

          56)Provides that if an RDA has not completed one of the above  
            within five years, or if less than 10% 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 must reimburse the L&M fund 150% of the amount expended  
            to acquire and maintain the property or 150% the current fair  
            market value of the property whichever is more.  

          57)Provides that if an RDA owns two or more adjacent properties  
            that make up a single redevelopment project the date of  
            acquisition will be the date of acquisition for the last  
            acquired property provided that the date is not later than  
            five years after the acquisition of the first property.  

          58)Provides that an RDA may adopt a resolution to petition HCD  
            for an extension of the five- year deadline and the department  
            may grant a single extension of up to five years if the  








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            department makes a finding that the failure to complete the  
            required activities is beyond the agency's control and that  
            the agency has a feasible plan for development. 

          59)Requires HCD to solicit comments from known or expected  
            parties interested in an extension petition.

          60)Requires HCD to establish a schedule of fees to cover the  
            cost of reviewing the petition and to charge the RDA from  
            funds other than those designated for affordable housing. 

          61)Provides that an RDA must deposit 150% 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 for the fair market  
            value of the land at the time a building permit is issued for  
            the property if either of the following conditions exist:  

             a)   A property acquired using moneys from the L&M fund is  
               sold or transferred for purpose other than housing that is  
               affordable to persons and families of low- and moderate-  
               income; or,

             b)   A property that is acquired using money from the L&M  
               fund is developed such that less than 50% of the floor area  
               or a percentage of the floor area equal to the amount of  
               L&M moneys that were used to acquire the property whichever  
               is less, is housing for persons and families of low- and  
               moderate-income.

          62)Requires that for units destroyed within the project area on  
            or after January 1, 2012, an RDA is required to replace vacant  
                                        units such that the replacement units are available at  
            affordable housing costs and occupied by persons and families  
            in the same or lower income category in the same proportion as  
            the units occupied or last occupied by low and moderate income  
            households in the property.

          63) Requires generally an RDA to replace destroyed units with  
            new construction.

          64)Provides that up to 25% of the replacement obligation  
            incurred during a five-year implementation plan may be  
            fulfilled by either of the following:

             a)   With units that have been rehabilitated such that the  








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               after-rehabilitation values increased by 50% or more of the  
               pre-rehabilitation value and the units being replaced were  
               either:

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

               ii)    Vacant due to substandard conditions.

             b)   With substantially rehabilitated multi-family units that  
               the agency has substantially rehabilitated within the  
               project area, two units for each unit the agency is  
               obligated to replace, or outside the project area three  
               units for each unit the agency is obligated to replace. 

          65)Requires an RDA to adopt a separate written resolution after  
            a public hearing that based on substantial evidence that the  
            rehabilitation of the replacement dwelling units complies with  
            the replacement unit requirements.  

          66)Provides that if a court finds that an RDA has failed to  
            comply with replacement housing requirements, the court shall  
            prohibit the agency from issuing any debt for any project  
            areas except debt from which all proceeds will be deposited in  
            the L&M fund until the court determines that the RDA has  
            complied with this section. 

          67)Adds the following to the information an RDA is required to  
            include in a replacement housing plan:

             a)   A description of the occupancy and affordability  
               restrictions to be imposed on replacement dwelling units;

             b)   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; and,

             c)   A declaration of whether the RDA intends to rehabilitate  
               existing dwelling units.

          68)Provides that if an RDA ceases its activities prior to the  
            end of an affordability covenant, then it will designate a  








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            successor agency that will monitor and enforce the covenants  
            for the remaining period of the covenant.  

          69)Provides that if no successor agency is designated at the  
            time an RDA ceases its activities then the community must  
            monitor and enforce the covenants for the remaining period of  
            the covenant. 

          70)Includes intent language regarding the need for greater  
            accountability and more auditing of RDAs. 

          71)Deletes the authority given to RDAs to offer money in the L&M  
            fund of a merged project area to the housing authority for the  
            purpose of constructing or rehabilitating affordable housing  
            if the funds have been deposited in the L&M fund for six years  
            but have not been spent.

          72)Adds the following to the list of required information the  
            implementation plan for an RDA must include: 

             a)   The proposed amount of expenditure for the L&M fund for  
               new construction, acquisition and substantial  
               rehabilitation or preservation for housing for persons of  
               extremely low-, very low- or low-income during each year of  
               the implementation plan; 

             b)   The replacement units that satisfy each replacement  
               housing obligation;

             c)   In the case when replacement units have been destroyed  
               or removed, but units are not yet complete, the proposed  
               location of the replacement units that are not yet  
               complete; and,

             d)   A complete accounting for compliance with the RDA's  
               affordable housing obligation over the life of the plan  
               including the total number of units the RDA is obligated to  
               replace and the total number of units required to be  
               constructed before the end for the project area life.

          73)Includes the following information for all affordable housing  
            units that are replaced, constructed, rehabilitated or have  
            covenants attached to them and are included in the database  
            required by existing law:









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             a)   The street address and assessor's parcel number of the  
               property and for properties that are listed as a group, the  
               number of units;

             b)   The size of each unit based on the number of bedrooms;

             c)   The affordability level of each unit;

             d)   The year in which the construction or substantial  
               rehabilitation of the unit was complete;

             e)   The date of recordation and document number of the  
               affordability covenants or restrictions;

             f)   The date on which the covenants or restrictions expire;

             g)   For 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 the unit was developed;

             h)   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  
               document recorded to ensure that the affordability  
               restrictions run with the land; and,

             i)   Whether units count toward replacement units and the  
               units they are replacing;

          74)Requires the following information as part of the  
            implementation plan for owner-occupied and rental units that  
            are required to replace units, are counted toward the RDA's  
            housing obligation and are not included in the database  
            required by existing law:

             a)   The street address and if available assessor's parcel  
               number of the property;

             b)   For properties where units are listed as a group, the  
               number of units;

             c)   The affordability level of each unit;

             d)   The date of recordation and document number or  
               restrictions; and, 








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             e)   Whether the units count toward the replacement  
               obligation and reference the destroyed units they are  
               replacing.

          75)Permits the implementation plan to omit any property that is  
            used to confidentially house victims of domestic violence  

          76)Provides that failure to meet any of the following  
            obligations will be an ongoing violation until the RDA has  
            fulfilled the obligation: 

             a)   The deposit and expenditure requirements for the L&M  
               fund;

             b)   The obligation to eliminate project deficits to the L&M  
               fund;

             c)   The obligation to expend or encumber excess surplus  
               funds;

             d)   The obligation to provide relocation assistance;

             e)   Replacement and production housing obligations;

             f)   The obligation to monitor and enforce affordability  
               covenants; and, 

             g)   The obligation to continue the project past the  
               effectiveness date of the redevelopment plan in order to  
               meet unfulfilled housing requirements.

           FISCAL EFFECT  :   This bill is keyed fiscal.

           COMMENTS  :   

          1)This bill enacts a number of reforms for specified agencies or  
            authorities to increase, preserve and improve low- and  
            moderate-income housing.  The bill's provisions state that the  
            reforms only apply to an agency or authority created on or  
            after January 1, 2014, that is required to comply with, or is  
            defined as an agency pursuant to, the CRL.  This bill  
            explicitly exempts from its provisions any agency that has  
            assumed the housing assets and functions of a former RDA.

          2)The bill is substantially similar (with the exception of  








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            applying the reform provisions to those agencies or  
            authorities created after January 1, 2014) to SB 450  
            (Lowenthal) of 2011, which was passed by the Assembly by a  
            vote of 74-0.  The veto message is below:

                 This measure contains significant legal changes that will  
            affect Low and Moderate                                      
            Income Housing funds managed by redevelopment agencies, but  
            this bill is a little ahead                                 of  
            its time.  The California Supreme Court has indicated that it  
            will rule on California                                      
            Redevelopment Agency v. Matosantos by January 15, 2012, and I  
            believe it would be
                 premature to enact such substantive reforms before that  
            time.

          3)As evidence for the need to reform the CRL, the author points  
            to a 2010 report by the Senate Office of Oversight and  
            Outcomes (SOOO) that looked at the housing expenditures from  
            twelve redevelopment agencies, seven of which had showed  
            consistently high planning and administration expenditures and  
            five chosen at random.   As a result of its studies, SOOO made  
            seven findings, including the following:

              a)   No assurance  .  Current laws and oversight give the  
               Legislature and public no assurance that redevelopment  
               agencies are using at least 20% of revenues to efficiently  
               create affordable housing.

              b)   Lax records  .  Many redevelopment agencies use their low-  
               and moderate-income housing fund to cover costs in other  
               city departments - such as public works, finance, and  
               personnel - without documenting that the resources are  
               directly related to an affordable housing project.  At the  
               Hercules Redevelopment Agency, for example, the finance  
               director said she did not know the terms or formula by  
               which the agency paid $16,666 a month from the low- and  
               moderate-income housing fund for city employee salaries.

              c)   Loose law  .  Each year redevelopment agencies must  
               "determine" the need to spend any housing set-aside money  
               on planning and administration. In an unpublished portion  
               of its opinion, an appellate court found that the law  
               limiting planning and administrative costs gives so much  
               discretion to redevelopment agencies that they are largely  








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               shielded from lawsuits - even those agencies that make  
               assertions unsupported by facts. Furthermore, many  
               redevelopment agency officials do not know about the law,  
               ignore it, or comply by passing a pro forma resolution.

              d)   Questionable spending  .  Some redevelopment agencies use  
               their housing set-aside funds in what appear to be  
               impermissible ways, such as hiring a Sacramento lobbyist,  
               funding a public relations campaign, and paying a  
               non-profit housing rights center to offer residents legal  
               advice.

              e)   Unreliable audits  .  Each redevelopment agency must get  
               an annual independent financial audit, yet these audits are  
               of inconsistent quality.  Many Certified Public Accountants  
               fail to test or make note of compliance with housing  
               set-aside fund laws.

              f)   Code enforcement  .  Some redevelopment agencies use their  
               housing set-aside funds to pay for code enforcement, which  
               is permitted only when the code enforcement work is  
               directly linked to efforts to develop, improve, or preserve  
               affordable housing.

            The author also notes that "in October 2010, the Los Angeles  
            Times also reported a number of irregularities in the spending  
            of L&M funds.  The article cited examples of agencies that  
            spent "most of their affordable housing money over the decade  
            on 'planning and administration' - but never built a single  
            unit."  The article also cited examples of agencies that used  
            L&M funds to buy properties that were never used for  
            affordable housing."

            According to the author, "Given the abuses of the past, it is  
            critical to put reforms into place before redevelopment is  
            reborn so that they do not recur."

          4)Several bills heard by this Committee in the 2013 year would  
            be captured under the provisions of this bill, with respect to  
            the creation of a new authority or agency post-January 1,  
            2014.  SB 1 (Steinberg) would create a new entity, the  
            Sustainable Communities Investment Authority, which could  
            capture tax increment and spend it on SB 375 [(Steinberg),  
            Chapter 728, Statutes of 2008], type developments.   SB 1  
            would authorize the use of tax increment as well as other  








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            funding sources to finance some of the projects-small walkable  
            communities, transit priority areas and clean energy  
            manufacturing-that would be part of the SCS.  AB 1080 (Alejo)  
            would allow local governments to establish a Community  
            Revitalization and Investment Authority in a disadvantaged  
            community to fund specified activities and allows the  
            authority to collect tax increment.  These new entities are  
            required to comply with most of the provisions of the CRL.    
            In addition to these two bills, some infrastructure financing  
            district (IFD) bills, such as SB 628 (Beall), reference  
            redevelopment law when describing IFD housing obligations.  

            This bill would implement reforms to the CRL and as a result,  
            any agency or authority created after January 1, 2014 that is  
            vested with the rights, powers, and duties of RDAs would be  
            required to comply with these reforms.

           5)Support arguments  :  This bill would implement necessary  
            reforms and rectify past abuses for those new agencies created  
            in the future.

             Opposition arguments  :  None on file.

          6)This bill was heard in the Assembly Housing and Community  
            Development Committee on July 3, 2013 and passed on a 7-0  
            vote.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          None on file
           
            Opposition 
           
          Marin County Council of Mayors and Councilmembers (June 10,  
          2013, version of bill)

           Analysis Prepared by  :    Debbie Michel / L. GOV. / (916)  
          319-3958