BILL NUMBER: AB 2734 AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 17, 2016 INTRODUCED BY Assembly Member Atkins FEBRUARY 19, 2016 An act to add Chapter 10 (commencing with Section 34191.10) to Part 1.85 of Division 24 of the Health and Safety Code, relating to housing. LEGISLATIVE COUNSEL'S DIGEST AB 2734, as amended, Atkins. Local Control Affordable Housing Act. Existing law, effective February 1, 2012, dissolved all redevelopment agencies and community development agencies and provides for the designation of successor agencies, as specified. Existing law requires successor agencies to service the enforceable obligations of the dissolved agencies and otherwise wind down the affairs of the dissolved agencies. This bill would establish the Local Control Affordable Housing Act to require the Department of Finance, on or before ____ and on or before the same date each year thereafter, to determine the state General Fund savings for the fiscal year as a result of the dissolution of redevelopment agencies. The bill would provide that, upon appropriation, 50% of that
amountamount or $1,000,000,000, whichever is greater, be allocated to the Department of Housing and Community Development to provide funding to local agencies for housing purposes.purposes, except as specified . The bill would require the Department of Housing and Community Development to create an equitable funding formula, which shall be geographically balanced and shall take into account factors of need including, but not limited to, poverty rates and lack of supply of affordable housing for persons of low and moderate incomes in local jurisdictions. The bill would also specify the housing purposes for which those funds may be used. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. (a) The Legislature finds and declares that having a healthy housing market that provides an adequate supply of homes affordable to Californians at all income levels is critical to the economic prosperity and quality of life in the state. (b) The Legislature further finds and declares all of the following: (1) Funding approved by the state's voters in 2002 and 2006, as of June 2014, has financed the construction, rehabilitation, and preservation of over 14,000 shelter spaces and 149,000 affordable homes. These numbers include thousands of supportive homes for people experiencing homelessness. In addition, these funds have helped tens of thousands of families become or remain homeowners. Nearly all of the voter-approved funding for affordable housing was awarded by the beginning of 2016. (2) The requirement in the Community Redevelopment Law that redevelopment agencies set aside 20 percent of tax increment for affordable housing generated roughly $1 billion per year. With the elimination of redevelopment agencies, this funding stream has disappeared. (3) In 2014, the Legislature committed 10 percent of ongoing cap-and-trade funds for affordable housing that reduces greenhouse gas emissions and dedicated $100 million in one-time funding for affordable multifamily and permanent supportive housing. In addition, the people of California thoughtfully approved the repurposing of $600 million in already committed bond funds for the creation of affordable rental and permanent supportive housing for veterans through the passage of Proposition 41. (4) Despite these investments, the need in the State of California greatly exceeds the available resources, with recent data showing 36.2 percent of mortgaged homeowners and 47.7 percent of all renters are spending more than 35 percent of their household incomes on housing. (5) California has 12 percent of the United States population, but 20 percent of its homeless population. California has the highest percentage of unsheltered homeless in the nation, with 63 percent of homeless Californians not having shelter. California has 24 percent of the nation's homeless veteran's population and one-third of the nations' chronically homeless population. California also has the largest populations of unaccompanied homeless children and youth, with 30 percent of the national total. (6) Furthermore, four of the top 10 metropolitan areas in the country with the highest rate of homelessness are in the following metropolitan areas in California: San Jose-Sunnyvale-Santa Clara, Los Angeles-Long Beach-Santa Ana, Fresno, and Stockton. (7) California continues to have the second lowest homeownership rate in the nation, and the Los Angeles metropolitan area is now a majority renter area. In fact, five of the eight lowest homeownership rates are in metropolitan areas in California. (8) Los Angeles and Orange Counties have been identified as the epicenter of overcrowded housing, and numerous studies have shown that children in crowded homes have poorer health, worse scores on mathematics and reading tests, and higher rates of depression and behavioral problems--even when poverty is taken into account. (9) Millions of Californians are affected by the state's chronic housing shortage, including seniors, veterans, people experiencing chronic homelessness, working families, people with mental, physical, or developmental disabilities, agricultural workers, people exiting jails, prisons, and other state institutions, survivors of domestic violence, and former foster and transition-aged youth. (10) Eight of the top 10 hardest hit cities by the foreclosure crisis in the nation were in California. They include the Cities of Stockton, Modesto, Vallejo, Riverside, San Bernardino, Merced, Bakersfield, and Sacramento. (11) California's workforce continues to experience longer commute times as persons in the workforce seek affordable housing outside the areas in which they work. If California is unable to support the construction of affordable housing in these areas, congestion problems will strain the state's transportation system and exacerbate greenhouse gas emissions. (12) Many economists agree that the state's higher than average unemployment rate is due in large part to massive shrinkage in the construction industry from 2005 to 2009, inclusive, including losses of nearly 700,000 construction-related jobs, a 60-percent decline in construction spending, and an 83-percent reduction in residential permits. Restoration of a healthy construction sector will significantly reduce the state's unemployment rate. (13) The lack of sufficient housing impedes economic growth and development by making it difficult for California employers to attract and retain employees. SEC. 2. Chapter 10 (commencing with Section 34191.10) is added to Part 1.85 of Division 24 of the Health and Safety Code, to read: CHAPTER 10. LOCAL CONTROL AFFORDABLE HOUSING ACT 34191.10. (a) On or before ____, and on or before the same date each year thereafter, the Department of Finance shall determine the amount of General Fund savings for the fiscal year as a result of the dissolution of redevelopment agencies pursuant to this part. (b) (1) Upon appropriation, 50 percent of the savings computed pursuant to subdivision (a)(a) or one billion dollars ($1,000,000,000), whichever is greater, in each fiscal year shall be allocated to the Department of Housing and Community Development to provide funding to local agencies for housing purposes pursuant to subdivision (c). (2) An appropriation described in paragraph (1) shall be suspended for any fiscal year in which the transfer of General Fund revenues to the Budget Stabilization Account is suspended or reduced or funds are returned to the General Fund from the Budget Stabilization Account pursuant to Section 22 of Article XVI of the California Constitution. (c) The Department of Housing and Community Development shall create an equitable funding formula, which shall be geographically balanced and shall take into account factors of need including, but not limited to, poverty rates and lack of supply of affordable housing for persons of low and moderate incomes in local jurisdictions. (d) (1) A local agency that has received funds pursuant to this chapter shall only use the funds for any of the following purposes: (A) The development, acquisition, rehabilitation, and preservation or provision of rental housing and homeownership opportunities that are affordable to extremely low, very low, low-, and moderate-income households, including necessary capitalized reserves for operating and rental subsidies and resident services. (B) Capitalized reserves for capitalized operating costs, rental subsidies, and resident services connected to the creation of new permanent supportive housing, including, but not limited to, developments funded through the Veterans Housing and Homelessness Prevention Program. (C) Modifications to homes to increase accessibility and visitability, in conjunction with the construction, acquisition, and rehabilitation or preservation of homes affordable to lower income households. (D) The acquisition and rehabilitation and reuse of foreclosed and vacant homes. (E) Infrastructure related to affordable infill housing development and other related infill development infrastructure. (F) The acquisition of land necessary for the development of affordable housing as part of an overall development strategy. (G) Rapid rehousing of homeless individuals and families. (2) At least 25 percent of the expenditures shall be directed towards housing for persons of extremely low income and at least 50 percent of the expenditures shall be directed towards housing for persons of very low income. (3) Any housing built with funds received pursuant to this chapter shall require, by recorded covenants or restrictions, that housing units built shall remain available at affordable housing costs to, and occupied by, persons and families of very low, low-, or moderate-income households for the longest feasible time, but for not less than 55 years for rental units and 45 years for owner-occupied units. (4) Any local agency that will receive funds pursuant to this chapter shall provide the Department of Housing and Community Development a plan for a no net loss of housing as a result of destruction of any affordable housing units. (5) No more than 5 percent of funds received pursuant to these provisions may be used for administrative costs. (6) Any local agency that receives funds pursuant to these provisions shall provide an annual report to the Department of Housing and Community Development on the expenditures of the funds. (e) If a local agency that receives funds does not expend those funds in full within five years, the local agency shall return those funds to the Department of Housing and Community Development, and the department may award those funds to another qualifying local agency. (f) For the purposes of this chapter the following terms have the following meanings: (1) "Extremely low income households" has the same meaning as used in Section 50106. (2) "Low-income households" has the same meaning as the term "lower income households" as defined in Section 50079.5. (3) "Moderate income"Moderate- income households" has the same meaning as the term "persons and families of moderate income" as defined in Section 50093. (4) "Very low income households" has the same meaning as used in Section 50105.