BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 341 (DeSaulnier) - Redevelopment: assumption of housing
functions.
Amended: April 1, 2013 Policy Vote: T&H 10-0
Urgency: No Mandate: No
Hearing Date: April 29, 2013
Consultant: Mark McKenzie
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 341 would make numerous changes to the powers
and duties of entities assuming the housing functions of former
redevelopment agencies (housing successors).
Fiscal Impact:
Minor and absorbable costs to the Department of Housing and
Community Development (HCD) to make annual adjustments to the
cap on monitoring and administrative costs based on
inflationary factors (General Fund).
Potential shift of housing successor revenues among local
agencies, and shifts in local expenditures from activities
authorized under current law to the priorities identified in
the bill (Local- Low and Moderate Income Housing Asset Funds).
Unknown, likely minor state revenue gains, to the extent that
housing successors fail to encumber excess surplus or
specified transferred funds within the allotted timeframes.
Any funds that accrue to HCD as a result of these transfers
must be programmed for expenditure in the Multifamily Housing
Program or the Joe Serna, Jr. Farmworker Housing Program.
Minor costs to HCD to administer the expenditure of any
transferred funds, as specified above.
Background: Prior to 2011, the Community Redevelopment Law (CRL)
authorized cities and counties to establish redevelopment
agencies (RDAs) and capture any increase in property taxes
generated within a project area (referred to as "tax increment")
over a period of decades for expenditures to eliminate blight.
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State law required 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 ABx1 26 (Blumenfield), Chapter
5 of the First Extraordinary Session. ABx1 26 eliminated
redevelopment agencies and established procedures for winding
down RDA affairs, paying off enforceable obligations, and
disposing of agency assets. ABx1 26 provided for "housing
successors" to assume the housing rights, powers, duties,
obligations, and physical assets of the former redevelopment
agencies, as specified in the CRL. In most cases, the city or
county that authorized the creation of the RDA became the
housing successor. If the host jurisdiction opted not to take
on the responsibility, the local housing authority became the
housing successor. If there is no local housing authority in
the jurisdiction of the former RDA, the Department of Housing
Community Development became the housing successor. To date,
HCD has not assumed the duties as housing successor for any
former RDAs.
Proposed Law: SB 341 would specify that funds in a housing
successor's Low and Moderate Income Housing Asset Fund are
generally subject to expenditure requirements of the housing
provisions of the CRL, with revisions to the general
requirements in the following ways:
Deletes current CRL provisions relating to planning and
administrative costs and specified income targeting
requirements.
Authorize a housing successor to spend up to 2% of its annual
portfolio value, or $200,000, whichever is greater, for the
purpose of monitoring and preserving the long-term
affordability of units in its portfolio and for administering
its activities.
Authorize housing successors to spend up to $250,000 annually
for homeless prevention and rapid rehousing services to
individuals and families who are homeless or at risk of
homelessness, as long as outstanding housing replacement and
production requirements of the RDA have been fulfilled.
Apply income targeting requirements only to funds left after
expenditures for authorized monitoring and administration and
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provision of homeless prevention services.
Require new reporting every five years on expenditures related
to targeted populations, and restricts future expenditures if
specified goals are not met.
Provide 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.
Allow 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 specified
conditions.
Require any funds that are transferred among housing
successors to be transferred to HCD for expenditure in 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 in those existing programs for multifamily housing
or farmworker housing.
Eliminate the requirement for a housing successor to report
annually to the State Controller, and instead allow a
successor to combine its annual independent financial audit
with that of its host jurisdiction. Also 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.
Staff Comments: This bill would revise the general requirements
for a housing successor's expenditure of funds available in a
local Low and Moderate Income Housing Asset Fund, which includes
real property and other physical assets, funds related to
housing enforceable obligations, loan and grant receivables,
rents and other payments from housing tenants or operators, and
repayments of loans or deferrals, as specified in existing law.
The changes in the bill are intended to provide increased
flexibility, streamline administrative requirements, and target
resources to expenditures that have been deemed the greatest
needs by interested parties.
The California Constitution prohibits the state from redirecting
redevelopment property tax revenues, and generally prohibits the
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state from shifting property taxes revenues from cities,
counties, and special districts (Section 25.5 of Article XIII).
It is unclear whether the transfers of unencumbered "excess"
housing asset funds, or those transferred among housing
successors, to HCD, as specified in the bill, would violate the
constitutional protections related to local property tax
revenues. It seems unlikely, however, that there would be a
legal challenge to any such transfer. Since there are be
significant demands on available housing asset revenues, it
seems unlikely that there would be any transfers to HCD, and if
there ever were in the future, such transfers would likely be
rare and the amounts involved would be fairly small. In
addition, housing asset funds are not narrowly defined as
property tax revenues. Rather, the funds are either the rents
derived from, or proceeds from the sale of, property that was
purchased, partially at least, with property tax increment
revenues, or repayment of loans of former housing asset funds,
which are repaid from property tax revenue reallocated to a
successor agency. At this time, staff is uncertain whether
there is a legal case to be made that housing asset funds are
property tax revenues that are subject to constitutional
restrictions.