BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 341
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: desaulnier
VERSION: 4/1/13
Analysis by: Mark Stivers FISCAL: yes
Hearing date: April 16, 2013
SUBJECT:
Redevelopment housing successors
DESCRIPTION:
This bill revises rules governing the activities and
expenditures of housing successors.
ANALYSIS:
The Community Redevelopment Law (CRL) allows a local government
to establish a redevelopment area and capture all of the
increase in property taxes generated within the area (referred
to as "tax increment") over a period of decades. The law
requires redevelopment agencies to deposit 20 percent of tax
increment into a Low and Moderate Income Housing Fund to be used
to increase, improve, and preserve the community's supply of low
and moderate income housing available at an affordable housing
cost.
In 2011, the Legislature enacted AB 26X (Blumenfield), Chapter 5
of the First Extraordinary Session. AB 26X eliminated
redevelopment agencies and established procedures for winding
down the agencies, paying off enforceable obligations, and
disposing of agency assets. AB 26X provided for "housing
successors" to assume the housing rights, powers, duties,
obligations, and physical assets of the former redevelopment
agencies. In most cases, the city or county that hosted the
redevelopment agency became the housing successor. If the host
jurisdiction opted not to take on the responsibility, the local
housing authority became the housing successor. Where a city or
county declined to become the housing successor and no housing
authority exists, the Department of Housing Community
Development (HCD) became the housing successor.
Housing successors are subject to all of the housing-related
provisions of the Community Redevelopment Law (CRL), including,
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among other things, the following:
Agencies must expend funds for the purposes of increasing,
improving, and preserving the community's supply of housing
available at affordable housing cost to persons and families
of low- or moderate-income. Agencies may not expend funds on
services.
Over the ten-year period of its implementation plan, an agency
must expend funds for units in the low-income and very
low-income categories at least in proportion to the percentage
that these income categories represent of the community's
total housing element need for moderate-, low-, and very
low-income housing units.
Over the ten-year period of its implementation plan, an agency
must assist housing that is available to all ages 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. This is referred to as the senior housing
limitation.
Agencies annually must make findings that their planning and
administrative expenses are necessary for the production of
affordable housing. These expenditures should not be
disproportionate to expenditures for the actual production of
housing.
Agencies may generally expend housing funds outside of a
redevelopment project area and anywhere within the host
jurisdiction's boundaries with a finding of benefit to the
project area. Until January 1, 2020, and subject to various
conditions, contiguous agencies located within a single
metropolitan statistical area may also create and participate
in a joint powers authority for the purpose of pooling their
housing funds for the direct costs of constructing,
substantially rehabilitating, or preserving the affordability
of housing units affordable to extremely low-income
households. Among other things, the conditions require that
each entity have an HCD-approved housing element, that each
participating agency have met in its current or previous
housing element cycle 50 percent or more of its very low- and
low-income housing needs, that a transferring agency have no
unmet replacement housing obligations, that the pooling will
not cause or exacerbate racial, ethnic, or economic
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segregation, and that pooled funds be encumbered within two
years.
Agencies that have an "excess surplus," defined as those funds
in excess of the greater of
$1 million or four years' worth of income, must expend the
excess surplus within three years. An agency that fails to do
so may not enter into any new obligations except to spend the
excess surplus on affordable housing.
Agencies must initiate development on a parcel of real
property purchased with housing funds within five years. The
agency may extend this deadline once for up to an additional
five years, then must sell the property. This is referred to
as the time limit on development.
Annually, agencies must conduct an independent financial audit
and report specified information to their governing boards,
HCD, and the State Controller's Office.
This bill retains the housing provisions of the CRL as the basic
law governing housing successors but alters the law for housing
successors in the following ways:
Replaces the current provisions relating to planning and
administrative costs and income targeting with provisions:
Allowing housing successors to expend available funds
first for the purpose of monitoring and preserving the
long-term affordability of units in its portfolio and for
administering its activities, up to an annual cap of 2% of
its portfolio value or an inflation-adjusted level starting
at $200,000, whichever is greater.
Allowing housing successors that have fulfilled any
outstanding housing replacement and production requirements
of the redevelopment agency to expend up to $250,000 per
year for homeless prevention and rapid rehousing services
to individuals and families who are homeless or at risk of
homelessness.
Applying income targeting requirements only to funds
left after allowed monitoring and administration
expenditures and homeless prevention services and altering
them such that housing successors must spend all remaining
funds on the development of housing affordable to
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lower-income households (less than 80% of the area median
income (AMI), with at least 30% for rental housing for
extremely-low income households (less than 30% of AMI), and
no more than 20% for households earning between 60-80% of
AMI. Every five years, the housing successor must report
on its compliance with these requirements based on
expenditures from January 1, 2014, through the end of the
reporting year.
Provides that if a housing successor fails to demonstrate
compliance in any five-year report with the requirement for
extremely low-income housing, then the successor must ensure
that at least 50 percent of its housing expenditures in each
subsequent fiscal year support housing for extremely
low-income households until it is in compliance. Likewise, if
a five-year report shows that a housing successor has exceeded
the limit on expenditures for housing serving households
between 60-80% of AMI, then the housing successor may not
spend funds for housing in this income range until it is in
compliance.
Relaxes the current senior housing limitation, allowing no
more than 50% of housing financed by the jurisdiction
(including units supported by the housing successor and its
host jurisdiction) over a ten-year period to be limited to
seniors. If the 50% limit has been exceeded, then the housing
successor may not expend funds on senior housing until
compliance has been achieved.
Provides that program income a housing successor receives
shall not be associated with a project area and may be
expended outside of a project area without a finding of
benefit to a project area.
Allows housing successors to transfer funds among themselves
for the purpose of developing affordable units in transit
priority projects, permanent supportive housing, farmworker
housing, or special needs housing subject to the following
conditions:
Each participating housing successor has made a finding
that the agreement to transfer funds will not cause or
exacerbate racial, ethnic, or economic segregation.
The development to be funded is not located in a census
tract where more than 50 percent of its population is very
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low income, unless the development is within one-half mile
of a major transit stop or high-quality transit corridor.
The completed development will not result in a reduction
in the number of housing units or a reduction in the
affordability of housing units on the site.
A transferring housing successor shall not have any
outstanding housing production or replacement obligations
of the redevelopment agency.
No housing successor may transfer more than $1 million
per fiscal year.
The jurisdictions of the transferring and receiving
housing successors each must have an HCD-approved housing
element and have submitted its annual housing element
progress report to HCD within the preceding 12 months.
Transferred funds may only assist rental units
affordable to households earning 60 percent or less of the
area median income.
Transferred funds not encumbered within two years must
be transferred to HCD for expenditure pursuant to the
Multifamily Housing Program or the Joe Serna, Jr.
Farmworker Housing Grant Program.
Require that a housing successor that has not expended excess
surplus within three years to transfer the surplus to HCD for
expenditure pursuant to the Multifamily Housing Program or the
Joe Serna, Jr. Farmworker Housing Grant Program.
With respect to the time limit on development, resets the
ten-year clock on the development of properties purchased by
the former redevelopment agency and eliminates the time limit
on developing newly purchased properties.
Eliminates the requirement for a housing successor to report
annually to the State Controller, allows a housing successor
to combine its annual independent financial audit with that of
its host jurisdiction, and replaces the current provisions
requiring reporting to HCD and the agency's governing body
with a requirement for the housing successor to include
specified information in its annual housing element progress
report to HCD.
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COMMENTS:
1.Purpose of the bill . According to the author, current CRL was
written for a context in which redevelopment agencies received
at least 20% of all redevelopment tax increment, more than $1
billion per year in aggregate. Housing successors anticipate
significantly reduced resources and income that may be
sporadic and somewhat unpredictable. This bill is intended to
fit the CRL's housing provisions to the new context. The bill
is also intended to streamline administrative requirements for
housing successors while ensuring accountability, to provide
additional flexibility, and to target scarce available
resources to the greatest needs.
2.Creating additional flexibility . This bill gives housing
successors greater flexibility than the CRL in a number of
areas. For example, it allows housing successors to spend
funds for homeless prevention and rapid rehousing services, to
spend a greater proportion of funds on senior housing, to
transfer funds more easily among neighboring jurisdictions,
allows program income to be spent outside of a project area
without a finding of benefit, and grants an additional ten
years to develop current properties and an unlimited time to
develop newly acquired properties.
3.Focusing first on preserving existing affordable housing .
Over the last few decades, redevelopment housing funds helped
create thousands of units of affordable housing. These units
are subject to affordability covenants that last for 45 years
in the homeownership context and 55 years in the rental
housing context. Ensuring their continued affordability,
however, requires on-going monitoring. This bill places a
first call on the funds housing successors receive on
monitoring and preserving these existing units to ensure
long-term affordability.
4.Targeting the remaining funds . This bill targets those funds
remaining after monitoring and general administrative costs to
the development of housing for lower-income households,
including 30% of the funds for extremely low-income
households. Given the greatly reduced amount of funding
available, proponents argue that it is important to target
these scarce funds to the greatest needs.
5.Product of a working group . Over the past fall, committee
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staff convened a small working group comprised of housing
successor representatives and legal service housing advocates
to work through the question of how best to tailor the CRL to
housing successors. This bill is the consensus product of
that working group.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 10,
2013.)
SUPPORT: California Housing Consortium
City of San José
County of Sonoma
Non-Profit Housing Association of Northern
California
OPPOSED: None received.