BILL ANALYSIS Ó
AB 2697
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2697
(Bonilla) - As Introduced February 19, 2016
SUBJECT: Redevelopment dissolution: successor agencies:
disposal of assets and properties
SUMMARY: Requires a successor agency when disposing of land
that was previously owned by a redevelopment agency to offer and
prioritize sale to entities that agree to construct housing
affordable to low- and moderate-income households. Specifically,
this bill:
1)Requires the successor agency to a former redevelopment agency
to send to any "local public entity," within whose
jurisdictions the land is located, a written offer to sell
land belonging to the former redevelopment agency for the
purpose of developing the land into low -and moderate-income
housing.
2)Requires the successor agency to send "housing sponsors," upon
written request, a written offer to sell land for the purpose
of developing low and moderate-income housing.
3)Requires all notices to be sent by first class mail and to
include the location and description of the property.
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4)Requires priority to be given to offers to purchase the land
by entities that agree to development affordable housing for
lower income households.
5)Requires preference will be given to an entity that proposes
to make at least 25% of the units affordable, by sale or rent,
to lower income households and that agrees to record an
affordability covenant restricting the property for a period
of at least 55 years.
6)Provides that if the successor agency receives more than one
offer for the land that priority be given to the entity that
proposes the greatest number of units at the highest level of
affordability.
7)Provides that if land is not sold to an entity that agrees to
include affordable housing on site but is sold for a
residential use that includes at least 10 units than at least
15% of the units must be provided at an affordable housing
cost to low income households. Rental units must remain
affordable and occupied by eligible households for 55 years.
Ownership units must be subject to an equity sharing
agreement. These requirements must be recorded against the
property and are enforceable by the local government or
eligible residents.
8)Defines a "local public entity" to mean any county, city, city
and county, Indian reservation or rancheria, redevelopment
agency, housing authority, state agency, public district or
other political subdivision of the state that is authorized to
engage in or assist in the development or operation of housing
for persons or families of low or moderate income.
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9)Defines "housing sponsor" to mean an individual, joint
venture, partnership, limited partnership, trust, corporation,
limited equity housing cooperative, cooperative, local public
entity, duly constituted governing body of an Indian
reservation or rancheria, or other legal entity, certified by
the agency pursuant to rules and regulations of the agency as
qualified to either own, construct, acquire or rehabilitate a
housing development, whether for profit, nonprofit, or
organized for limited profit, and subject to the regulatory
powers of the agency pursuant to rules and regulations of the
agency and other terms and conditions set forth in this
division.
EXISTING LAW:
1)Requires an oversight board to direct the successor agency to
a redevelopment agency to dispose of all assets and properties
of the former redevelopment agency expeditiously and in a
manner that maximizes value.
2)Defines "local agency" for purposes of the surplus land
disposal procedures as every city, whether organized under
general law or by charter, county, city and county, and
district, including school districts of any kind or class,
empowered to acquire and hold real property.
3)Defines "housing sponsor" to mean an individual, joint
venture, partnership, limited partnership, trust, corporation,
limited equity housing cooperative, cooperative, local public
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entity, duly constituted governing body of an Indian
reservation or rancheria, or other legal entity, certified by
the agency pursuant to rules and regulations of the agency as
qualified to either own, construct, acquire or rehabilitate a
housing development, whether for profit, nonprofit, or
organized for limited profit, and subject to the regulatory
powers of the agency pursuant to rules and regulations of the
agency and other terms and conditions set forth in this
division. (Health and Safety Code Section 50074)
4)Defines "surplus land" as land owned by any local agency that
is determined to be no longer necessary for the agency's use,
except property being held by the agency for the purpose of
exchange or property meeting other exemptions.
5)Requires that a local agency must provide a written offer to
sell or lease surplus land for the purpose of developing low-
or moderate-income housing to "housing sponsors" upon written
request, as well as any local public entity within the
jurisdiction where the surplus land is located.
6)Provides that a local agency wishing to dispose of surplus
land must also provide a written offer to additional entities,
depending on the type of proposed usage, for park and
recreational purposes, school facilities construction or use
by a school district for open space purposes, enterprise
purposes, and infill opportunity zones or transit village
plans.
7)Provides that, if a notified entity desires to purchase or
lease the surplus land, it must notify the local agency of its
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intent within 60 days after receipt of the agency's intent to
sell or lease the land.
8)Provides that, if a local agency receives notice from an
entity provided with a written offer desiring to purchase or
lease the land, the local agency and the entity must enter
into good faith negotiations. If the price or terms cannot be
agreed upon after a period of not less than 60 days, the land
may be disposed of without further regard to the disposal
procedures.
9)Provides that any public agency selling surplus land to a
notified entity for park or recreation purposes, for
open-space purposes, for school purposes, or for low- and
moderate- income housing purposes may provide for a payment
period of up to 20 years in any contract of sale or sale by
trust deed.
10)Provides that nothing in the disposal procedure limits the
power of any local agency to sell or lease surplus land at
fair market value or at less than fair market value, and
nothing shall be interpreted to empower any local agency to
sell or lease surplus land at less than fair market value.
11)Provides that, with respect to any offer to purchase or lease
from a notified entity for the purpose of low- or
moderate-income housing development, priority shall be given
to development of the land for affordable housing for lower
income, elderly, or disabled persons or households, and other
lower-income households.
AB 2697
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12)Specifies that, in the event that a local agency receives
multiple offers for the purchase or lease of surplus land from
more than one of the notified entities, the local agency shall
give first priority to the entity that agrees to use the site
for housing for persons and families of low- or
moderate-income, except that first priority shall be given to
an entity that agrees to use the site for park or recreational
purposes if the land being offered is already being used and
will continue to be used for park or recreational purposes, or
if the land is designated for park and recreational use in the
local general plan and will be developed for that purpose.
FISCAL EFFECT: Unknown.
COMMENTS:
In 2011, facing a severe budget shortfall, the Governor proposed
eliminating RDAs in order to deliver more property taxes to
other local agencies. Statewide, redevelopment redirected 12% of
property taxes 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 (Blumenfield), Chapter 5 and ABX1 27
(Blumenfield), Chapter 6 that together dissolved RDAs as they
existed at the time and created a voluntary redevelopment
program on a smaller scale. In response the California
Redevelopment Association (CRA) and 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
RDAs were required to dissolve as of February 1, 2012
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As part of the dissolution of redevelopment, successor agencies
were created to dispose of the redevelopment agencies assets and
wind down their affairs. The activities of successor agencies
are overseen by oversight boards made up of representatives of
the local taxing entities and others. Part of the function of
the successor agencies is to transfer the housing assets of a
former redevelopment agency to the housing successor which was
either the local housing authority or the city or county in
which the redevelopment agency was located. Housing assets
transferred to the housing successor entity were to be used for
affordable housing activities, while disallowed assets would go
to the successor agency for disposal or retention pursuant to an
approved property management plan.
Successor agencies were also directed to dispose of non-housing
assets and properties of the former redevelopment agency.
Successor agencies are authorized to either, transfer property
to the city for governmental use at no cost to the city, sell
the property on the open market, with the proceeds distributed
among the affected taxing entities, use the property to fulfill
an enforceable obligation of the former redevelopment agency, or
a city can purchase a property for future development, with the
city negotiating the purchase price with the affected taxing
entities.
The successor agency is directed to dispose of all assets
expeditiously and at maximum value.
This bill would require a successor agency to notify a local
agency, including a housing authority, and housing developers
that they are selling property previously owned by the
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redevelopment agency. The sale of the properties would be
subject to the same process as state surplus property. Priority
would be given to a developer that proposes to make at least 25%
of the units in a rental or for-sale development affordable to
lower income households and agrees to restrict the units to
affordable levels for 55 years. If a successor agency receives
more than one offer for the property, priority would be given to
the development that proposes the most affordable units at the
most affordable level. If a property is not sold to a buyer who
agrees to include affordable units but is sold for residential
use with at least 10 units on the site, then 15% of the units
must be provided at an affordable cost to low income households.
As part of the dissolution process, successor agencies were
required to provide DOF Long Range Property Management Plans
(LRPMPs) that detail the properties owned by former
redevelopment agencies and the plans for disposal of those
properties. Almost all of the over 380 former redevelopment
agencies have approved LRPMPs which are published on DOF's
website. LRPMPs are hundreds of page long so it is difficult to
determine how many properties are going to be sold on the open
market and to which this bill would apply.
Successor agencies are required to dispose of former
redevelopment agency properties expeditiously and to maximize
the amount for the property. This bill does not specify that a
successor agency can sell a property at market rate if it is
sold to a developer including affordable units. The committee
may wish to clarify this by cross referencing the code section
in the state surplus land statute that states that the intent is
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not to limit a local government's power to sell or lease surplus
land at fair market value.
Purpose of this bill : According to the author, "California has
a lack of housing which has spurred increased housing prices
across the state. A key issue with supply is lack of easily
identifiable and affordable sites on which to build new
structures. Although local governments are obligated to
identify housing sites in their housing elements on which
residential housing can be constructed, these identified sites
often are inadequate- they do not shift from prior uses to
residential uses, their cost is prohibitive, or they are dually
zoned to accommodate commercial and residential use, with the
commercial use winning out. Housing developers also have a hard
time identifying sites on which to build. Affordable housing
developers are at a special disadvantage because they cannot
compete with market developers when it comes to buying land.
Land is one of the most costly parts of a project, especially in
California. AB 2697 will allow affordable housing developers to
have first right of refusal to purchase any properties currently
in possession of redevelopment successor agencies. This small
step will give these developers a leg up in the process to
locate and acquire properties on which to build affordable
housing."
Arguments in support : According to supporters, rents in the
state have skyrocketed while at the same time, state and federal
investment in affordable home production dropped sixty-six
percent. The housing crisis is affecting Californians at nearly
every income level. Prior to 2012, redevelopment agencies were
required to set aside 20% of the tax increment collected in a
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project is to fund, creation, preservation, or rehabilitation of
affordable housing. AB 2867 would require successor agencies to
adhere to some provisions of the State Surplus Land Act
including offering affordable housing developers the right of
first refusal and if the land is purchased for market rate
residential development, require 15% of the units to be low
income.
Arguments in opposition: The League of California Cities is
opposed to this bill because it is coming late in the
dissolution process. "Imposing new procedural and substantive
requirements for the dissolution of former RDA properties at
this time would no doubt complicate and delay the wind down
process. Additionally, it would work to the disadvantage of the
local taxing entities which have an interest in obtaining
maximum value for the properties to be sold and or get the
benefit of increasing valuations from properties that are to be
used for economic development."
Committee amendment:
To make clear that a successor agency is not required to sell a
property at less than fair market rate to a developer that
agrees to include units affordable to lower income households,
the committee may wish to consider the following amendment:
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(ii) The sale of any land of the former redevelopment agency
shall be subject to Sections 54222.5, 54227, 54226, and 54233
of the Government Code.
Double referred: If AB 2697 passes this committee, the bill will
be referred to the Committee on Local Government
REGISTERED SUPPORT / OPPOSITION:
Support
California Housing Consortium
Opposition
City of Lakeport
City of Torrance
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League of California Cities
Analysis Prepared by:Lisa Engel / H. & C.D. / (961) 319-2085,
Lisa Engel / H. & C.D. / (916) 319-2085