BILL ANALYSIS Ó
SB 341
Page 1
Date of Hearing: June 26, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, 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 function of a former redevelopment agency, and
replaces the phrase "the entity assuming the housing functions
of the former redevelopment agency" with the term "housing
successor" in existing law.
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
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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
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
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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
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 the 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
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progress report within the preceding 12 months;
h) Transferred funds can only be used for housing that is
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;
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e) A description of any amounts transferred to another
housing successor in the previous fiscal year, any amounts
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.
2)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
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and administrate cost for that purpose of this section but
instead project costs.
3)Requires redevelopment agencies to expend funds to increase,
preserve, and improve the community's supply of low- and
moderate-income housing.
4)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.
5)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.
6)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.
7)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.
8)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.
9)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, or constructing an equal number of
replacement units at the same affordability level within the
territory of the redevelopment agency.
10)Requires a redevelopment agency to ensure that 30% of all new
substantially rehabilitated housing units developed by the
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redevelopment agency and 15% of all new and substantially
rehabilitated housing units developed within the project area
are affordable to low- and moderate-income households.
11)Requires a redevelopment agency to hire impendent auditors
each year to review their financial statements.
12)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.
13)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 : This bill is keyed fiscal.
COMMENTS :
1)This bill revises 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. This bill is
author-sponsored.
According to the author, "After the dissolution of
redevelopment agencies, 'housing successors' assumed 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. Housing successors are subject to all
of the housing-related provisions of the Community
Redevelopment Law. This law was written, however, 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.
"Given this new context, the staff of the Senate
Transportation and Housing Committee convened a small working
group to develop a revised set of rules to govern the
activities and expenditures of housing successors'
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redevelopment-related funds. The goals of the working group
were to streamline administrative requirements while ensuring
accountability, provide additional flexibility, and target
scarce available resources to the greatest needs. This bill
represents the group's consensus."
2)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 to be transferred to HCD. Housing successors
are required to 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 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 is limited
to program dollars repaid from loans or investments made by
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the former redevelopment agency. This is a much smaller amount
than was generated by a redevelopment agency which produced
more than $1 billion in tax increment for housing activities
statewide each year.
3)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:
a) 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;
b) 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;
c) Alters the income targeting requirements and applies
them only to funds left after allowed monitoring and
administration expenditures and homeless prevention
services;
d) 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; and,
e) 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.
1)Given the current ongoing process to unwind redevelopment, the
Committee may wish to consider whether it is prudent to pass
legislation that creates new rules for housing successors this
year, or whether it may be more appropriate to continue with
the unwinding and numerous lawsuits and revisit this issue in
future years, once the dust settles.
The Committee may also wish to ask the author to talk about
the small working group that assisted with the contents of
this bill. Who was included? How many meetings did the group
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have? Was this bill met with consensus from all those
involved, or are there still concerns? Were local government
associations consulted?
2)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. SB 133
is pending in both the Assembly Housing and Community
Development Committee and this Committee.
3)Support arguments : Supporters argue that this bill revises
rules governing the activities and expenditures of housing
successors to streamline administrative requirements while
ensuring accountability, additional flexibility, and the
ability to target scare available resources to the greatest
needs.
Opposition arguments : None on file
4)This bill was heard by the Assembly Housing and Community
Development Committee on June 19, 2013 and passed on a 7-0
vote.
REGISTERED SUPPORT / OPPOSITION :
Support Opposition
California Housing Consortium None on file
City of San Jose
County of Sonoma
Housing California
The Non-Profit Housing Association of Northern California
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958