BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 341|
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THIRD READING
Bill No: SB 341
Author: DeSaulnier (D)
Amended: 4/1/13
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 10-0, 4/16/13
AYES: DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,
Lara, Liu, Roth, Wyland
NO VOTE RECORDED: Pavley
SENATE APPROPRIATIONS COMMITTEE : 7-0, 4/29/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Redevelopment
SOURCE : Author
DIGEST : 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% 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.
CONTINUED
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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 CRL.
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:
1.Replaces the current provisions relating to planning and
administrative costs and income targeting with provisions:
A. 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.
B. 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.
C. 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
lower-income households (less than 80% of the area median
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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.
1.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% 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.
2.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.
3.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.
4.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:
A. Each participating housing successor has made a finding
that the agreement to transfer funds will not cause or
exacerbate racial, ethnic, or economic segregation.
B. The development to be funded is not located in a census
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tract where more than 50% of its population is very low
income, unless the development is within one-half mile of a
major transit stop or high-quality transit corridor.
C. 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.
D. A transferring housing successor shall not have any
outstanding housing production or replacement obligations
of the redevelopment agency.
E. No housing successor may transfer more than $1 million
per fiscal year.
F. 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.
G. Transferred funds may only assist rental units
affordable to households earning 60% or less of AMI.
H. 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.
1.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.
2.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.
3.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
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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.
Comments
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Minor and absorbable costs to 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.
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Minor costs to HCD to administer the expenditure of any
transferred funds, as specified above.
SUPPORT : (Verified 4/29/13)
California Housing Consortium
City of San Jose
County of Sonoma
Non-Profit Housing Association of Northern California
JJA:nl 4/30/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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