BILL ANALYSIS Ó
AB 2734
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Date of Hearing: March 30, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2734
(Atkins) - As Amended March 17, 2016
SUBJECT: Local Control Affordable Housing Act
SUMMARY: Requires that state savings realized from the
dissolution of redevelopment agencies (RDA) be distributed to
local agencies for housing purposes. Specifically, this bill:
1) Includes the following definitions:
a. "Extremely low income households" means
persons and families whose incomes do not exceed 30%
of median area income.
b. "Very low-income households" means persons and
families whose incomes do not exceed 50% of median
area income.
c. "Low-income households" means persons and
families whose income does not 80% of median area
income.
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d. "Moderate-income households" means persons
and families of low or moderate income whose income
exceeds the income limit for lower income households.
2) Requires the Department of Finance to annually,
beginning on an unspecified date and each year thereafter,
determine the General Fund savings resulting from of the
dissolution of RDAs.
3) Provides that, upon appropriation, 50% of the savings
calculated in each fiscal year, or one billion dollars,
whichever is greater, be allocated to the Department of
Housing and Community Development (HCD).
4) Provides that the appropriation shall be suspended for
any fiscal year in which the transfer of General Fund
revenues to the Budget Stabilization Account is suspended,
reduced, or funds are returned to the General Fund from the
Budget Stabilization Account.
5) Requires HCD to create an equitable formula for
allocating the funds to local agencies for housing purposes
that is geographically balanced and takes into account
factors of need, as specified.
6) Requires at least 25% of expenditures be directed
towards housing for extremely low-income persons, and at
least 50% towards housing persons with very low-income.
7) Requires housing units built with these funds to remain
affordable for at least 55 years for rental units and 45
years for owner-occupied units.
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8) Requires that local agencies receiving funds only use
the funds for any of the following purposes:
a. The development, acquisition, rehabilitation,
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, rehabilitation, or
preservation of homes affordable to lower income
households.
d. The acquisition, 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.
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g. Rapid rehousing of homeless individuals and
families.
9) Makes other findings and declarations.
EXISTING LAW:
1) Dissolved all redevelopment agencies and community
development agencies, effective February 1, 2012.
2) Provides for the designation of successor agencies, as
specified.
3) Establishes a number of programs at HCD and California
Housing Finance Agency (CalHFA) to make housing more
affordable to California families and individuals,
including the following main programs:
a) The Multifamily Housing Program, to fund the new
construction, rehabilitation, and preservation of
permanent and transitional rental homes for lower-income
households through loans to local governments, non-profit
developers, and for-profit developers.
b) The Joe Serna, Jr., Farmworker Housing Program, to
fund the development of ownership or rental homes for
agricultural workers through grants to local governments
and non-profit organizations.
c) The Emergency Housing and Assistance Program, to
fund emergency shelters and transitional homes for
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homeless individuals and families through grants to
counties and non-profit entities for rehabilitation,
renovation, expansion, site acquisition, and equipment.
d) The CalHome Program, to fund down payment
assistance, home rehabilitation, counseling, self-help
mortgage assistance, and technical assistance for
self-help and shared housing through grants and loans.
e) The California Homebuyer Downpayment Assistance
Program, to aid first-time homebuyers with downpayments
and/or closing costs.
FISCAL EFFECT: Unknown
COMMENTS:
Previous state funding for housing : Historically, the state has
invested in low- and moderate-income housing primarily by
providing funding for construction. Because of the high cost of
land and construction and the subsidy needed to keep housing
affordable to residents, affordable housing is expensive to
build. Developers typically use multiple sources of financing,
including voter-approved housing bonds, state and federal
low-income housing tax credits, private bank financing, and
local matching dollars.
Voter-approved bonds have been an important source of funding to
support the construction of affordable housing. Proposition 46
of 2002 and Proposition 1C of 2006 together provided $4.95
billion for affordable housing. These funds financed the
construction, rehabilitation, and preservation of 57,220
affordable apartments, including 2,500 supportive homes for
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people experiencing homelessness, and over 11,600 shelter
spaces. In addition, these funds have helped 57,290 families
become or remain homeowners. Nearly all of these funds have been
awarded.
In 1945, the Legislature authorized local agencies to create
RDAs to address urban blight in local communities. Several years
later, voters approved a redevelopment financing program
referred to as "tax increment financing." Under this process, a
city or county could declare an area to be blighted and in need
of urban renewal. After this declaration, most of the growth in
property tax revenue from the "project area" was distributed to
the city or county's RDA as "tax increment revenues" instead of
being distributed as general purpose revenues to other local
agencies serving the area. SB 90 (Dills), Chapter 1406, Statutes
of 1972, created a system of school "revenue limits," whereby
the state guarantees each school district an overall level of
funding from local property taxes and state resources combined.
Thus, if a district's local property tax revenues did not
grow-due to redevelopment or for other reasons-the state
provided additional state funds to ensure that the district had
sufficient funds to meet its revenue limit.
By 2008, redevelopment was redirecting 12% of property taxes
statewide away from schools and other local taxing entities and
into community development and affordable housing. In fiscal
year 2009-10, redevelopment agencies collectively deposited
$1.075 billion of property tax increment revenues into their
low- and moderate-income housing funds.
In 2011, facing a severe budget shortfall, the Governor proposed
eliminating RDAs in order to deliver more property taxes to
other local agencies. Ultimately, the Legislature approved and
the Governor signed two measures, AB 26 X1 (Blumenfield),
Chapter 5, Statutes of 2011-12 First Extraordinary Session, and
AB 27 X1 (Blumenfield), Chapter 6, Statutes of 2011-12 First
Extraordinary Session, that together dissolved RDAs as they
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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 AB 26 X1. However, the Court
did grant the petition with respect to AB 27 X1. As a result,
all RDAs were required to dissolve as of February 1, 2012,
saving the state approximately $1 billion dollars annually.
California has reduced its funding for the development and
preservation of affordable homes by 79% - from approximately
$1.7 billion a year to nearly nothing. According to the
California Housing Consortium, California has a shortfall of 1.5
million affordable units for extremely low- and very-low income
renter households. The Public Policy Institute of California
reports that 31.5% of mortgaged homeowners and 47.4% of renters
spend more than one-third of their total household income on
housing and that while California has 12% of the nation's
population, it has 20% of the nation's homeless.
Related legislation: A number of bills have sought to establish
more regular and permanent funding for affordable housing since
the dissolution of redevelopment. For example, AB 1335 (Atkins)
sought to do so through the increase of a document recording fee
for real estate related transactions (excluding home sales).
That bill advanced to the Assembly Floor in 2015 but was not
taken up for a vote. Other bills have recreated tools for local
governments after the dissolution of redevelopment without
touching the schools' share of tax increment. For example, SB
628 (Beall), Chapter 785, Statutes of 2014, established enhanced
infrastructure finance districts which allowed the financing of
infrastructure projects (that could include affordable housing)
by establishing a process to use tax increment financing in a
more limited way than existed in redevelopment. Similarly, AB 2
(Alejo), Chapter 319, Statutes of 2015, allowed for the creation
of Community Revitalization Authorities which allow for a more
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limited use of tax increment financing for infrastructure that
includes affordable housing.
Purpose of this bill: According to the author: "Increasing the
construction and availability of affordable housing is good for
our economy, the state budget, job creation, and families.
Affordable housing saves money - on average, a single homeless
Californian incurs $2,897 per month in county costs for
emergency room visits and in-patient hospital stays as well as
the costs of arrests and incarceration. Roughly 79% of these
costs are cut when that person has an affordable home.
Development creates jobs - an estimated 29,000 jobs are created
for every $500 million spent on affordable housing. Affordable
housing alleviates poverty - California households with the
lowest 25% of incomes spend 67% of their income on housing,
leaving little left over for other essential needs."
Staff comments : The elimination of RDAs may have reduced staff
at the local level, thereby reducing the current capacity of
local agencies to quickly and efficiently utilize new funding.
The state has a robust portfolio of housing programs that
support the construction of affordable housing, homeownership,
and reduction of homelessness. New resources could potentially
be allocated quickly through existing state programs. Thus, it
may be prudent for the Committee to consider an alternative
model that allocates half of the funds to local agencies and
half to existing state programs, such as those administered by
HCD and/or CalHFA.
Support
American Planning Association, California Chapter
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Association of Regional Center Agencies
League of California Cities
National Association of Social Workers, California Chapter
Opposition
None on file
Analysis Prepared by:Ken Spence / H. & C.D. / (916) 319-2085