BILL ANALYSIS Ó
SB 341
Page 1
Date of Hearing: June 19, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
SB 341 (DeSaulnier) - As Amended: May 30, 2013
SENATE VOTE : 34-0
SUBJECT : Redevelopment
SUMMARY : Revises the activities required for entities that
assumed the housing functions of a former redevelopment agency.
Specifically, this bill :
1)Defines "housing successor" to mean the entity that assumed
the housing functions of a former redevelopment agency.
2)Defines "statutory value of real property" as the value of the
properties formerly held by the redevelopment agency listed on
the housing asset transfer form, the value of properties
transferred to the housing successor, and the purchase price
of properties purchased by the housing successor.
3)Defines "development" as new construction, acquisition, and
substantial rehabilitation of housing; acquisition of
long-term affordability covenants on multifamily units; or the
preservation of assisted housing developments that are
eligible for prepayment or for which the rental restrictions
are set to expire within five years.
4)Defines "excess surplus" as either an unencumbered amount in
the Low- and Moderate- Income Housing Asset Fund (the Fund)
that exceeds the greater of either $1 million or the aggregate
amount deposited into the account during the preceding four
fiscal years, whichever is greater.
5)Requires the housing successor to comply with the Community
Redevelopment Law (CRL) when administering the funds in the
Fund except as specified.
6)Allows the housing successor each fiscal year, to spend up to
2% of the statutory value of real property owned by the
housing successor and of loans and grants receivable,
including real property, on administrative costs of monitoring
and preserving the long-term affordability of units and other
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activities as specified. If this amount is less than $200,000,
allows the housing successor to spend up to $200,000 for that
fiscal year on monitoring and preserving the affordability of
housing units.
7)Allows the housing successor, once it has fulfilled its
monitoring obligations and its obligations to replace low- and
moderate-income housing that has been removed or destroyed, to
spend up to $250,000 on homeless prevention and rapid
rehousing activities for families and individuals.
8)Requires the housing successor to spend any funds remaining,
after 5) and 6) are accomplished, on the development of
housing affordable to and occupied by households earning 80%
or less of area median income (AMI) of which at least 30% must
be spent for rental housing affordable to households earning
30% or less of AMI and no more than 20% may be spent on
housing affordable to and occupied households earning between
60% and 80% of AMI.
9)Requires a housing successor to complete a report in 2019, and
every five years after, which demonstrates that it has spent
funds on the specified income categories from January 1, 2014
through the end of the latest fiscal year.
10)Requires a housing successor that fails to spend the required
amount of funds on extremely low-income housing to set aside
50% of remaining funds, expended in each fiscal year following
the latest fiscal year, on extremely low-income housing until
the housing successor is in compliance.
11)Requires a housing successor that exceeds the expenditure
limit allowed for housing for households earning between 60%
and 80% of AMI, as evidenced by the five year report, to cease
expending funds on those households until the housing
successor demonstrates compliance with the limit in an annual
report.
12)Provides that if the aggregate number of deed-restricted
rental housing provided to seniors in the last ten years by
the housing successor, former redevelopment agency, or host
jurisdiction exceeds 50% of the aggregate number of units of
deed restricted housing within the same time period, then the
housing successor must not expend any funds to assist
additional senior housing until construction begins on units
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available to all persons regardless of age that is equal to
50% of the aggregate number of total deed restricted rental
units within the previous ten years.
13)Provides that program income does not have to be spent in a
project area but can be spent anywhere in the jurisdiction it
was collected or can be transferred to another jurisdiction
without a finding of benefit.
14)Allows two or more housing successors in a county or in a
single metropolitan statistical area, within 15 miles of each
other, or that are contiguous jurisdictions, to enter into an
agreement to transfer funds, without making a finding of
benefit to the project area, with following conditions:
a) The funds are used for the following purposes:
transit-oriented development, permanent supportive housing,
farmworker housing, or special-needs housing;
b) The participating housing successors make a finding that
the transfer will not exacerbate racial, ethnic, and
economic segregation.
c) The development is not in a census tract where more than
50% of the population is very low income unless it is
within one-half mile of a major transit stop or high
quality transit corridor;
d) Neither housing successor has any outstanding
obligations to replace removed or destroyed low-income
housing;
e) The completed development will not result in a reduction
in the number of housing units or a reduction in the
affordability of housing units;
f) No housing successor is allowed to transfer more than $1
million;
g) The jurisdictions of the housing successor agencies that
are transferring funds have an adopted and substantially
compliant housing element and have submitted an annual
progress report within the preceding 12 months.
h) Transferred funds can only be used for housing that is
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affordable to households earning 60% of AMI; and
i) If transferred funds are not encumbered within two years
then they must be transferred to the Department of Housing
& Community Development (HCD) and deposited in the
Multifamily Housing Program (MHP) or Joe Serna Jr.
Farmworker Housing Program.
1)Requires a housing successor with an excess surplus to either
encumber the funds for the development of affordable housing
or transfer the funds to another qualifying successor agency
within three fiscal years. If a successor agency fails to do
either of these it must transfer the excess surplus to HCD to
be spent under the MHP or Joe Serna Jr. Farmworker Housing
Program.
2)Eliminates the requirement for a housing successor to report
annually to the State Controller or to HCD.
3)Requires a housing successor, to conduct an independent
financial audit of the Low- and Moderate-Income Housing Asset
Fund within six months of the end of each fiscal year.
4)Requires a housing successor that is a city or county to
include the following in its housing element annual report and
post it on its website or if the housing successor is not a
city or county to provide the following to the governing body
and post it on its Internet Web site:
a) The amount deposited into the Fund, distinguishing the
amounts for enforceable obligations on the ROPS and other
amounts;
b) A statement of the balance of the funds at the close of
the fiscal year, which distinguishes any amounts held for
items on the ROPS from other amounts;
c) A description of expenditures from the Fund by category;
d) The statutory value of real property owned by the
housing successor, the value of loans and grants
receivable, and the sum of the two amounts;
e) A description of any amounts transferred to another
housing successor in the previous fiscal year, any amounts
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that are still unencumbered from an earlier fiscal years,
and an update on the status of the project for which funds
were transferred;
f) A description and status of any project that the housing
successor receives tax revenue as part of the ROPs;
g) A description of any outstanding obligations to replace
destroyed or removed housing that remained and were
transferred to the housing successor on February 1, 2012,
the plan for accomplishing that obligation, and a copy of
the implementation plan of the former redevelopment agency;
h) Compliance with expenditures required for housing for
extremely low-income households;
i) The percentage of deed restricted rental units for
seniors assisted within the previous 10 years as compared
to the aggregate number of units assisted in
deed-restricted rental housing; and
j) The amount of excess surplus, the amount of time that
the successor agency has had the excess surplus, and the
housing successor's plan for eliminating the excess
surplus.
EXISTING LAW
1)Limits planning and general administrative expenditures from
the Low- and Moderate-Income Housing Fund to the following
costs which are directly related to permissible housing
activities:
a. Salaries, wages and related costs of the agency's staff
or the costs for services provided through interagency or
outside agreements; and
b. Costs incurred by a nonprofit corporation that are
directly attributable to a specific project.
1)States that legal, architectural and engineering costs and
other salaries wages and costs directly related to the
planning and execution of a specific project are not planning
and administrate cost for that purpose of this section but
instead project costs.
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2)Requires redevelopment agencies to expend funds to increase,
preserve, and improve the community's supply of low- and
moderate-income housing.
3)Defines "excess surplus" as any unexpended and unencumbered
amount in an agency's Low- and Moderate-Income Housing Fund
that is greater than $1 million or the sum of the last four
years' worth of tax increment.
4)Requires a redevelopment agency to disburse excess surplus
funds to the housing authority or a local housing development
agency within one year or expend the funds itself in three
years.
5)Requires a redevelopment agency within five years of acquiring
a property to initiate activities consistent with the
development of the property including but not limited to
zoning changes, disposition and development agreements.
6)Provides that a redevelopment agency may, by resolution,
extend the deadline by up to five years to initiate activities
consisted with development of a property.
7)Requires that each redevelopment agency, over each 10-year
period of the agency's redevelopment implementation plan,
expend the moneys in the Low- and Moderate-Income Housing Fund
to assist housing for persons of very low and low income in at
least the same proportion as those income categories represent
within the total number of very low-, low-, and
moderate-income housing units assigned to the jurisdiction as
part of the regional housing needs assessment under housing
element law.
8)Requires a redevelopment agency, within four years of
destroying or removing dwelling units that house low-or
moderate-income households to replace the units by
rehabilitating, developing, constructing an equal number of
replacement units at the same affordability level within the
territory of the redevelopment agency.
9)Requires a redevelopment agency to ensure that 30% of all new
substantially rehabilitated housing units developed by the
redevelopment agency and 15% of all new and substantially
rehabilitated housing units developed with in the project area
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are affordable to low and moderate income households.
10)Requires a redevelopment agency to hire impendent auditors
each year to review their financial statements.
11)Requires a redevelopment agency to submit their audits to the
Controller by April 1 of each year who must compile a list of
agencies for which an independent auditor identified major
audit violations.
12)Requires the Controller by June 1 of each year to determine
if the listed agencies have corrected the major audit
violation and if not refer the violations to the Attorney
General for action.
FISCAL EFFECT : Unknown.
COMMENTS :
In 2011, facing a severe budget shortfall, the Governor proposed
eliminating redevelopment agencies in order to deliver more
property taxes to other local agencies. Redevelopment
redirected 12% of property taxes statewide away from schools and
other local taxing entities and into community development and
affordable housing. Ultimately, the Legislature approved and
the Governor signed two measures, ABX1 26 and ABX1 27 that
together dissolved redevelopment agencies as they existed at the
time and created a voluntary redevelopment program on a smaller
scale. In response, the California Redevelopment Association
(CRA), the League of California Cities, along with other
parties, filed suit challenging the two measures. The Supreme
Court denied the petition for peremptory writ of mandate with
respect to ABX1 26. However, the Court did grant CRA's petition
with respect to ABX1 27. As a result, all redevelopment
agencies were required to dissolve as of February 1, 2012.
As part of the dissolution process, local jurisdictions were
required to set up a housing successor to assume the housing
functions of the former redevelopment agency. The city or
county that created the redevelopment agency could opt to become
the housing successor but if they chose not to the
responsibility was transferred to a housing authority in the
jurisdiction of the former redevelopment agency. If there was no
housing authority in the jurisdiction then the housing functions
were be transferred to HCD. Housing successors are required to
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maintain any funds generated from housing assets in the Low- and
Moderate-Income Housing Asset Fund and use them in accordance
with the housing related provisions of the Community
Redevelopment Law (CRL). The Low and Moderate Income Housing
Asset Fund includes real property and other physical assets,
funds encumbered for enforceable obligations, any loan or grant
receivable, any funds revised from rents or operation of
properties, rents or other payments from housing tenants or
operators, and repayment of loans or deferrals owed to the Low-
and Moderate-Income Housing Fund. Funding available to a
housing successor in the post-redevelopment world are limited to
program dollars repaid from loans or investments made by the
former redevelopment agency. This is a much smaller amount than
was generated by redevelopment agency which produced more than
$1 billion in tax increment for housing activities statewide
each year.
Purpose of this bill : According to the author, "this bill
revises the rules governing the activities and expenditures of
housing successors to streamline administrative requirements
while ensuring accountability, provide additional flexibility,
and target scarce available resources to the greatest needs."
SB 341 retains the housing provisions of the CRL as the basic
law governing housing successors but alters the law for housing
successor in the following ways:
Allows 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 $200,000 whichever is greater.
Allows housing successors 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.
Alters the income targeting requirements and applies
them only to funds left after allowed monitoring and
administration expenditures and homeless prevention
services.
Relaxes the limitations on senior housing allowing no
more than 50% of housing financed by the jurisdiction over
a ten-year period to be limited to seniors.
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Allows housing successors to transfer funds among
themselves under certain conditions for the purpose of
developing affordable units in transit priority projects,
permanent supportive housing, farmworker housing, or
special needs housing.
Changes from CRL: SB 341 attempts to target the more limited
financial resources of housing successor toward core functions.
Redevelopment agencies were required to expend funds to improve,
increase, or preserve housing affordable to low- and
moderate-income families. Housing successor's will have far
less money than redevelopment agencies so this bill would
prioritize that limited funding toward monitoring and
maintaining the housing assets that were created of financed by
the former redevelopment agency. This bill would also allow
housing successors to use funds in the Low- and Moderate-Income
Housing Asset Fund toward services to prevent homelessness and
rapidly rehousing people. Under existing law, the CRL did not
permit redevelopment agencies to spend funds on services. This
bill also targets limited funds that are available after
monitoring and preserving the existing housing assets toward
housing for low- and extremely- low income housing . This is
different the CRL which required money to be expended for low-
and very-low income housing in proportion to the communities
housing element need for those populations.
Excess Surplus : If a housing successor allows an excess surplus
of funds to accumulate, any amounts over $1 million over a three
year period without spending it on developing housing or
transferring it to another housing successor then it must
transfer those funds to HCD. HCD is required to expend those
funds through the MHP or Joe Serna Jr. Farmworker Housing Grant
Program. HCD is not required to award these funds to projects
in the jurisdictions where were generated. It is probable that
the amount of money transferred, if any will be small, but the
committee may wish to consider amending the bill to encourage
HCD to award this funding to projects in the jurisdiction that
generated it.
Committee amendment:
Page 13, line 3, after "Program." insert "The Department of
Housing and Community Development is encouraged whenever
possible to expend funds collected under this section in the
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jurisdiction where they were generated."
Related Legislation : The author has a companion measure to this
bill, SB 133 (DeSaulnier) that is contingent upon the enactment
of this bill. SB 133 makes reforms to the CRL that would apply
to any future entities that are created and vested with the same
statutory powers and duties of redevelopment agencies.
Double referred : If SB 341 passes this committee, the bill will
be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION :
Support
California Housing Consortium
City of San Jose
City of Sonoma
Housing California
Nonprofit Housing Association of Northern California
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085