Amended in Assembly June 12, 2014

Amended in Senate May 6, 2014

Amended in Senate April 23, 2014

Amended in Senate April 7, 2014

Senate Bill No. 1404

Introduced by Senator Leno

February 21, 2014

An act to amend Sections 33333.7 and 34180 of the Health and Safety Code, relating to redevelopment.

LEGISLATIVE COUNSEL’S DIGEST

SB 1404, as amended, Leno. San Francisco redevelopment: successor agencies: housing.

The Community Redevelopment Law authorizes the establishment of redevelopment agencies in communities to address the effects of blight, as defined. Existing law dissolved redevelopment agencies as of February 1, 2012, and provides for the designation of successor agencies that are required to wind down the affairs of the dissolved redevelopment agencies and to, among other things, make payments due for enforceable obligations. Existing law provides that the city, county, or city and county that authorized the creation of a redevelopment agency may elect to retain the housing assets and functions previously performed by the redevelopment agency. Existing law requires the entity assuming the housing functions of the former redevelopment agency to perform various functions.

Existing law authorized the former Redevelopment Agency of the City and County of San Francisco, subject to the approval of the board of supervisors of that city and county, to incur indebtedness exclusively for specified Low and Moderate Income Housing Fund activities until January 1, 2014, or until the agency replaced all of the housing units demolished prior to the enactment of the replacement housing obligations, and to receive tax increment revenues to repay indebtedness incurred for those activities until no later than January 1, 2044, as specified.

This bill would state findings and declarations relating to the obligation of the successor agency to the former Redevelopment Agency of the City and County of San Francisco to replace specified affordable housing units, and the necessity of a special statute.

This bill would instead authorize the successor agency of the City and County of San Francisco, subject to the approval of the oversight board of the City and County of San Francisco, to continue to receive property tax increment from specified redevelopment project areas, and to incur indebtedness pursuant to specified amended redevelopment plans, to fulfill the obligation to replace specified affordable housing units.

begin insert

This bill would incorporate additional changes to Section 34180 of the Health and Safety Code proposed by SB 1129 that would become operative if this bill and SB 1129 are both enacted and this bill is enacted last.

end insert

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) Under the authority granted by the Legislature in Senate Bill
No. 2113 (Chapter 661 of the Statutes of 2000), the former
Redevelopment Agency of the City and County of San Francisco
sought, prior to its dissolution, to redress the demolition of a
substantial number of residential dwelling units affordable to very
low, low-, and moderate-income households during the agency’s
earlier urban renewal efforts. In 2003, the California Department
of Housing and Community Development determined that the
former Redevelopment Agency must replace a net loss of 6,709
affordable units.

(b) Prior to its dissolution, the Redevelopment Agency of the
City and County of San Francisco sought and received state and
local authorization to assume the replacement housing obligations
acknowledged in Senate Bill No. 2113 (Chapter 661 of the Statutes
of 2000). Between 2005 and 2009, the Board of Supervisors of
the City and County of San Francisco amended six redevelopment
plans to extend the time for the receipt and expenditure of tax
increment for the sole purpose of funding the replacement housing
obligations. San Francisco Ordinance No. 256-09 (December 18,
2009), amending Yerba Buena Center Redevelopment Plan, San
Francisco Ordinance No. 316-08 (December 19, 2008), amending
Western Addition A-2 Redevelopment Plan, San Francisco
Ordinance No. 115-07 (May 18, 2007), amending Rincon
Point-South Beach Redevelopment Plan, and San Francisco
Ordinance No. 15-05 (January 21, 2005), amending the
Embarcadero-Lower Market (Golden Gateway) Redevelopment
Plan, the Hunters Point Redevelopment Plan, and the India Basin
Redevelopment Plan. Under these redevelopment plan
amendments, the Redevelopment Agency was able to finance the
construction of 867 affordable units.

(c) It is the intent of the Legislature to confirm that the
replacement of the remaining 5842 units that the former
Redevelopment Agency of the City and County of San Francisco
destroyed and did not replace is a statutory obligation that remains
under Assembly Bill No. 26 (Chapter 5 of the First Extraordinary
Session of the Statutes of 2011), as amended by Assembly Bill
No. 1484 (Chapter 26 of the Statutes of 2012). Furthermore, the
Legislature finds that the ability of the Successor Agency to the
Redevelopment Agency of the City and County of San Francisco
to fulfill this replacement housing obligation is dependent on its
ability to incur indebtedness for the purpose of financing the
remaining unbuilt units.

(d) Authorizing the Successor Agency to the Redevelopment
Agency of the City and County of San Francisco to continue to
receive property tax revenues under the formulas of Senate Bill
No. 2113, which ensure that school entities receive their full share
of property tax revenues as if the redevelopment plans had expired,
will not have a fiscal impact on the state.

(e) San Francisco’s housing situation is unique, in that median
rents and sales prices are among the highest in the state even though
it exceeded the housing production goals of the Community
Redevelopment Law and used local funds beyond redevelopment
funding to assist affordable housing development. Nonetheless,
San Francisco’s early redevelopment activities, including the
removal of previously existing dwelling units serving a lower
income population, have compounded the effects of the private
market that have led to the city’s current affordable housing crisis.
Because of the unique circumstances relating to the replacement
of affordable housing demolished by the former Redevelopment
Agency of the City and County of San Francisco, a special law is
necessary and a general law cannot be made applicable within the
meaning of Section 16 of Article IV of the California Constitution.

(f) After dissolution of the redevelopment agency, the oversight
board for the City and County of San Francisco acknowledged the
unfulfilled replacement housing obligations of the redevelopment
agency and approved the successor agency’s expenditures of funds
to fulfill those obligations (see Oversight Board Resolution
No. 5-2012 at pp. 5-6 (April 10, 2012)). Subsequently, the
oversight board approved expenditures for the replacement housing
obligations on each of the recognized obligation payment schedules
required under Redevelopment Dissolution Law and submitted to
the Department of Finance.

SEC. 2.  

Section 33333.7 of the Health and Safety Code is
amended to read:

33333.7.  

(a) The successor agency to the Redevelopment
Agency of the City and County of San Francisco may, subject to
the approval of the oversight board of the City and County of San
Francisco, replace all of the housing units demolished prior to the
enactment of the replacement housing obligations in Chapter 970
of the Statutes of 1975 and further described in Section 33333.7
of the Health and Safety Code, as added by Chapter 661 of the
Statutes of 2000. The successor agency shall not use more than
six redevelopment project areas under redevelopment plans that
were amended for this purpose prior to enactment of the law
dissolving redevelopment agencies, and that may be merged,
subject to approval by the oversight board pursuant to subdivision
(d) of Section 34180, to fulfill these replacement housing
obligations.

(b) In addition to the powers granted to each successor agency,
and notwithstanding anything in Part 1.8 (commencing with
Section 34161) and Part 1.85 (commencing with Section 34170),
including, but not limited to, Sections 34162 and 34189, the
successor agency to the former redevelopment agency of the City
and County of San Francisco shall have the authority, rights, and
powers of the Redevelopment Agency of the City and County of
San Francisco to incur indebtedness, backed by property tax
revenues from the six project areas referenced in subdivision (a)
exclusively for the purpose of fulfilling the replacement housing
obligations. The standards for issuance of bonds specified in
subdivisions (c) to (h), inclusive, of Section 34177.5, as that section
read on December 31, 2014, shall apply to the sale of those bonds
and shall include review and approval by the oversight board and
the Department of Finance under subdivision (b) of Section 34180
and subdivision (h) of Section 34179, respectively. The successor
agency, in seeking approval for issuance of bonds by the oversight
board and the Department of Finance, shall report on the number
of replacement units that it has funded and completed since
enactment of Chapter 661 of the Statutes of 2000. Bonds issued
pursuant to this subdivision may be sold pursuant to either a
negotiated or competitive sale. Any time limit on incurring debt
or receiving property tax revenues to repay that debt, pursuant to
this subdivision, shall not apply until the successor agency replaces
all of the units demolished prior to the enactment of the
replacement housing obligations in Chapter 970 of the Statutes of
1975. The successor agency may issue new bonds or other
obligations on a parity basis with outstanding bonds or other
obligations of the successor agency relating to the six project areas
referenced in subdivision (a) and may pledge the revenues pledged
to those outstanding bonds or other obligations to a new issuance
of bonds or other obligation, and that pledge, when made in
connection with the issuance of those bonds or other obligations
shall have the same lien priority as the pledge of outstanding bonds
or other obligations, and shall be valid, binding, and enforceable
in accordance with its terms.

(c) Annual revenues authorized under this section shall not
exceed the amount necessary to fund the activities of the successor
agency in fulfilling these replacement housing obligations. The
agency shall neither collect nor spend more than 10 percent for
the planning and administrative costs authorized pursuant to
subdivision (e) of Section 33334.3. Property tax revenues allocated
to the successor agency pursuant to this section shall be distributed
from the funds that are begin insert otherwise end insert available for distribution to
begin delete nonschool entities end delete begin insert the City and County of San Francisco, as a
taxing entity, end insert from the Redevelopment Property Tax Trust Fund,
created pursuant to Section 34170.5, after all preexisting legal
commitments and statutory obligations funded from that revenue,
excluding replacement housing obligations described in this
section, are made pursuant to Part 1.85 (commencing with Section
34170) of Division 24. Property tax revenues allocated to the
successor agency pursuant to this section shall not include any
moneys that, notwithstanding the replacement housing obligations
described in this section, are payable to begin insert local agencies other than
the City and County of San Francisco, end insert a school district that
maintains kindergarten and grades 1 to 12, inclusive, community
college districts, or to the Educational Revenue Augmentation
Fund, pursuant to paragraph (4) of subdivision (a) of Section
34183.

(d) The activities conducted with revenues received under this
section shall be consistent with the affordable housing requirements
of this part and the policies and objectives of the community’s
housing element, and shall address the unmet housing needs of
very low, low- and moderate-income households. The activities
shall also be consistent with the community’s most recently
approved consolidated and annual action plans submitted to the
United States Department of Housing and Urban Development.
No less than 50 percent of the revenues received shall be devoted
to assisting in the development of housing that is affordable to
very low income households.

SEC. 3.  

Section 34180 of the Health and Safety Code is
amended to read:

34180.  

All of the following successor agency actions shall first
be approved by the oversight board:

(a) The establishment of new repayment terms for outstanding
loans where the terms have not been specified prior to the date of
this part. An oversight board shall not have the authority to
reestablish loan agreements between the successor agency and the
city, county, or city and county that formed the redevelopment
agency except as provided in Chapter 9 (commencing with Section
34191.1).

(b) The issuance of bonds or other indebtedness or the pledge
or agreement for the pledge of property tax revenues (formerly tax
increment prior to the effective date of this part) pursuant to Section
33333.7 and subdivision (a) of Section 34177.5.

(c) Setting aside of amounts in reserves as required by
indentures, trust indentures, or similar documents governing the
issuance of outstanding redevelopment agency bonds.

(d) Merging of project areas.

(e) Continuing the acceptance of federal or state grants, or other
forms of financial assistance from either public or private sources,
if that assistance is conditioned upon the provision of matching
funds, by the successor entity as successor to the former
redevelopment agency, in an amount greater than 5 percent.

(f) (1) If a city, county, or city and county wishes to retain any
properties or other assets for future redevelopment activities,
funded from its own funds and under its own auspices, it must
reach a compensation agreement with the other taxing entities to
provide payments to them in proportion to their shares of the base
property tax, as determined pursuant to Section 34188, for the
value of the property retained.

(2) If no other agreement is reached on valuation of the retained
assets, the value will be the fair market value as of the 2011
property tax lien date as determined by an independent appraiser
approved by the oversight board.

(g) Establishment of the Recognized Obligation Payment
Schedule.

(h) A request by the successor agency to enter into an agreement
with the city, county, or city and county that formed the
redevelopment agency that it is succeeding. An oversight board
shall not have the authority to reestablish loan agreements between
the successor agency and the city, county, or city and county that
formed the redevelopment agency except as provided in Chapter
9 (commencing with Section 34191.1). Any actions to reestablish
any other agreements that are in furtherance of enforceable
obligations, with the city, county, or city and county that formed
the redevelopment agency are invalid until they are included in an
approved and valid Recognized Obligation Payment Schedule.

(i) A request by a successor agency or taxing entity to pledge,
or to enter into an agreement for the pledge of, property tax
revenues pursuant to subdivision (b) of Section 34178.

(j) Any document submitted by a successor agency to an
oversight board for approval by any provision of this part shall
also be submitted to the county administrative officer, the county
auditor-controller, and the Department of Finance at the same time
that the successor agency submits the document to the oversight
board.

begin insert

begin insert SEC. 3.5. end insert   

end insert

begin insert Section 34180 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

34180.  

All of the following successor agency actions shall first
be approved by the oversight board:

(a) The establishment of new repayment terms for outstanding
loans where the terms have not been specified prior to the date of
this part. An oversight board shall not have the authority to
reestablish loan agreements between the successor agency and the
city, county, or city and county that formed the redevelopment
agency except as provided in Chapter 9 (commencing with Section
34191.1).

(b) The issuance of bonds or other indebtedness or the pledge
or agreement for the pledge of property tax revenues (formerly tax
increment prior to the effective date of this part) pursuant to begin insert Section
33333.7 and end insert subdivision (a) of Section 34177.5.

(c) Setting aside of amounts in reserves as required by
indentures, trust indentures, or similar documents governing the
issuance of outstanding redevelopment agency bonds.

(d) Merging of project areas.

(e) Continuing the acceptance of federal or state grants, or other
forms of financial assistance from either public or private sources,
if that assistance is conditioned upon the provision of matching
funds, by the successor entity as successor to the former
redevelopment agency, in an amount greater than 5 percent.

(f) (1) If a city, county, or city and county wishes to retain any
properties or other assets for future redevelopment activities,
funded from its own funds and under its own auspices, it must
reach a compensation agreement with the other taxing entities to
provide payments to them in proportion to their shares of the base
property tax, as determined pursuant to Section 34188, for the
value of the property retained.

(2) If no other agreement is reached on valuation of the retained
assets, the value will be the fair market value as of the 2011
property tax lien date as determined by an independent appraiser
approved by the oversight board.

begin insert

(3) This subdivision does not apply to the disposition of
properties pursuant to a long-range property management plan.

end insert

(g) Establishment of the Recognized Obligation Payment
Schedule.

(h) A request by the successor agency to enter into an agreement
with the city, county, or city and county that formed the
redevelopment agency that it is succeeding. An oversight board
shall not have the authority to reestablish loan agreements between
the successor agency and the city, county, or city and county that
formed the redevelopment agency except as provided in Chapter
9 (commencing with Section 34191.1). Any actions to reestablish
any other agreements that are in furtherance of enforceable
obligations, with the city, county, or city and county that formed
the redevelopment agency are invalid until they are included in an
approved and valid Recognized Obligation Payment Schedule.

(i) A request by a successor agency or taxing entity to pledge,
or to enter into an agreement for the pledge of, property tax
revenues pursuant to subdivision (b) of Section 34178.

(j) Any document submitted by a successor agency to an
oversight board for approval by any provision of this part shall
also be submitted to the county administrative officer, the county
auditor-controller, and the Department of Finance at the same time
that the successor agency submits the document to the oversight
board.

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

Section 3.5 of this bill incorporates amendments to
Section 34180 of the Health and Safety Code proposed by both
this bill and Senate Bill 1129. It shall only become operative if (1)
both bills are enacted and become effective on or before January
1, 2015, (2) each bill amends Section 34180 of the Health and
Safety Code, and (3) this bill is enacted after Senate Bill 1129, in
which case Section 3 of this bill shall not become operative.

end insert