BILL NUMBER: SB 441 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 6, 2015
INTRODUCED BY Senator Leno
FEBRUARY 25, 2015
An act to amend Section 33333.7 of add
Section 34177.7 to the Health and Safety Code, relating to
redevelopment.
LEGISLATIVE COUNSEL'S DIGEST
SB 441, as amended, Leno. San Francisco redevelopment: 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 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.
Existing law prohibits dissolved redevelopment
agencies from issuing bonds or incurring other indebtedness on or
after June 29, 2011. Existing law authorizes successor agencies to,
among other things, issue bonds or incur indebtedness after that date
to refund the bonds or indebtedness of a former redevelopment agency
or to finance debt service spikes, as specified. The issuance of
bonds or incurrence of other indebtedness by a successor agency is
subject to the approval of the oversight board of the successor
agency.
This bill would make a technical, nonsubstantive change to the
provision authorizing the former Redevelopment Agency of the City and
County of San Francisco to incur indebtedness exclusively for
specified Low and Moderate Income Housing Fund activities.
This bill would authorize the successor agency to the
Redevelopment Agency of the City and County of San Francisco to issue
bonds or incur other indebtedness to finance the construction of
affordable housing and infrastructure required by specified
enforceable obligations, subject to the approval of the oversight
board. The bill would provide that bonds or other indebtedness
authorized by its provisions would be considered indebtedness
incurred by the dissolved redevelopment agency, would be listed on
the Recognized Obligation Payment Schedule, and would be secured by a
pledge of moneys deposited into the Redevelopment Property Tax Trust
Fund. The bill would authorize the successor agency to require
affected taxing entities to make certain determinations as to the
related subordination of revenues, and would thereby impose a
state-mandated local program. The bill would also require the
successor agency to make diligent efforts to obtain the lowest
long-term cost financing and to make use of an independent financial
advisor in developing financing proposals.
This bill would make legislative findings and declarations as to
the necessity of a special statute for the City and County of San
Francisco.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature hereby finds and
declares all of the following:
(a) The Department of Finance has provided written confirmation to
the successor agency to the Redevelopment Agency of the City and
County of San Francisco (successor agency) that the following
projects are finally and conclusively approved as enforceable
obligations:
(1) The Mission Bay North Owner Participation Agreement.
(2) The Mission Bay South Owner Participation Agreement.
(3) The Disposition and Development Agreement for Hunters Point
Shipyard Phase 1.
(4) The Candlestick Point-Hunters Point Shipyard Phase 2
Disposition and Development Agreement.
(5) The Transbay Implementation Agreement.
(b) The enforceable obligations described in subdivision (a)
require the successor agency to fund and develop affordable housing,
including 1,200 units in Transbay, 1,445 units in Mission Bay North
and Mission Bay South, and 1,358 units in Candlestick Point-Hunters
Point Shipyard Phases 1 and 2. In addition, the successor agency is
required to fund and develop public infrastructure in the Transbay
Redevelopment Project Area pursuant to the Transbay Implementation
Agreement, which is necessary to improve the area surrounding the
Transbay Transit Center.
(c) Due to insufficient property tax revenues in the Redevelopment
Property Tax Trust Fund, of the total number of affordable housing
units that the successor agency is obligated to fund and develop
under the enforceable obligations described in subdivision (a), the
successor agency has been able to finance the construction of only
642 units. Additionally, the successor agency has not been able to
fulfill its public infrastructure obligation under the Transbay
Implementation Agreement.
(d) The successor agency can more expeditiously construct the
3,361 additional units of required affordable housing and the
necessary infrastructure improvements if it is able to issue bonds or
incur other indebtedness secured by property tax revenues available
in the Redevelopment Property Tax Trust Fund to finance these
obligations.
(e) It is the intent of the Legislature to authorize the successor
agency to issue bonds or incur other indebtedness for the purpose of
financing the construction of affordable housing and infrastructure
required under the enforceable obligations described in subdivision
(a). These bonds or other indebtedness may be secured by property tax
revenues available in the successor agency's Redevelopment Property
Tax Trust Fund from those project areas that generated tax increment
for the Redevelopment Agency of the City and County of San Francisco
upon its dissolution, if the revenues are not otherwise obligated.
(f) Authorizing the successor agency to issue bonds or incur other
indebtedness to finance the enforceable obligations described in
subdivision (a) will financially benefit the affected taxing
entities, insofar as it will ensure that funds which would otherwise
flow to those entities as "residual" payments pursuant to paragraph
(4) of subdivision (a) of Section 34183 of the Health and Safety Code
will not be redirected to fund these enforceable obligations.
Instead, the enforceable obligations will be funded with the proceeds
of the bonds or debt issuances.
(g) The housing situation in the City and County of San Francisco
is unique, in that median rents and sales prices are among the
highest in the state. Because of this, the City and County of San
Francisco is currently facing an affordable housing crisis.
SEC. 2. Section 34177.7 is added to the
Health and Safety Code , to read:
34177.7. (a) (1) In addition to the powers granted to each
successor agency, and notwithstanding any other provision of this
division, including, but not limited to, Sections 34162 and 34189,
the successor agency to the Redevelopment Agency of the City and
County of San Francisco may issue bonds or incur other indebtedness
to finance all of the following:
(A) The affordable housing requirements of the following
enforceable obligations:
(i) The Mission Bay North Owner Participation Agreement.
(ii) The Mission Bay South Owner Participation Agreement.
(iii) The Disposition and Development Agreement for Hunters Point
Shipyard Phase 1.
(iv) The Candlestick Point-Hunters Point Shipyard Phase 2
Disposition and Development Agreement.
(v) The Transbay Implementation Agreement.
(B) The infrastructure requirements of the Transbay Implementation
Agreement.
(2) The successor agency to the Redevelopment Agency of the City
and County of San Francisco may pledge to the bonds or other
indebtedness incurred pursuant to this section any property tax
revenues available in the Redevelopment Property Tax Trust Fund that
are not otherwise obligated.
(b) Bonds issued pursuant to this section may be sold at either a
negotiated or a competitive sale. The bonds issued or other
indebtedness incurred pursuant to this section may be issued or
incurred on a parity basis with outstanding bonds or other
indebtedness obligations of the successor agency to the Redevelopment
Agency of the City and County of San Francisco, and the successor
agency may pledge the revenues pledged to those outstanding bonds or
other indebtedness obligations to the issuance of bonds or other
indebtedness incurred pursuant to this section. The pledge, when made
in connection with the issuance of bonds or other indebtedness
obligations under this section, shall have the same lien priority as
the pledge of outstanding bonds or other indebtedness, and shall be
valid, binding, and enforceable in accordance with its terms.
(c) (1) Prior to incurring any bonds or other indebtedness
pursuant to this section, the successor agency to the Redevelopment
Agency of the City and County of San Francisco may subordinate to the
bonds or other indebtedness the amount required to be paid to an
affected taxing entity pursuant to paragraph (1) of subdivision (a)
of Section 34183, provided that the affected taxing entity has
approved the subordinations pursuant to this subdivision.
(2) At the time the successor agency requests an affected taxing
entity to subordinate the amount to be paid to it, the successor
agency shall provide the affected taxing entity with substantial
evidence that sufficient funds will be available to pay both the debt
service on the bonds or other indebtedness and the payments required
by paragraph (1) of subdivision (a) of Section 34183, when due.
(3) Within 45 days after receipt of the agency's request, the
affected taxing entity shall approve or disapprove the request for
subordination. An affected taxing entity may disapprove a request for
subordination only if it finds, based upon substantial evidence,
that the successor agency will not be able to pay the debt service
payments and the amount required to be paid to the affected taxing
entity. If the affected taxing entity does not act within 45 days
after receipt of the agency's request, the request to subordinate
shall be deemed approved and shall be final and conclusive.
(d) An action may be brought pursuant to Chapter 9 (commencing
with Section 860) of Title 10 of Part 2 of the Code of Civil
Procedure to determine the validity of bonds or other obligations
authorized by this section, the pledge of revenues to those bonds or
other obligations authorized by this section, the legality and
validity of all proceedings theretofore taken and, as provided in the
resolution of the legislative body of the successor agency to the
Redevelopment Agency of the City and County of San Francisco
authorizing the bonds or other obligations authorized by this
section, proposed to be taken for the authorization, execution,
issuance, sale, and delivery of the bonds or other obligations
authorized by this section, and for the payment of debt service on
the bonds or the payment of amounts under other obligations
authorized by this section. Subdivision (c) of Section 33501 does not
apply to any such action. The Department of Finance shall be
notified of the filing of any action as an affected party.
(e) Notwithstanding any other law, including, but not limited to,
Section 33501, an action to challenge the issuance of bonds or the
incurrence of indebtedness by the successor agency to the
Redevelopment Agency of the City and County of San Francisco shall be
brought within 30 days after the date on which the oversight board
approves the resolution of the successor agency approving the
issuance of bonds or the incurrence of indebtedness authorized under
this section.
(f) The actions authorized in this section shall be subject to the
approval of the oversight board, as provided in Section 34180.
Additionally, an oversight board may direct the successor agency to
the Redevelopment Agency of the City and County of San Francisco to
commence any of the transactions described in subdivision (a) so long
as the successor agency is able to recover its related costs in
connection with the transaction. After a successor agency, with
approval of the oversight board, issues any bonds, incurs any
indebtedness, or executes an amended enforceable obligation pursuant
to subdivision (a), the oversight board shall not unilaterally
approve any amendments to or early termination of the bonds,
indebtedness, or enforceable obligation. If, under the authority
granted to it by subdivision (h) of Section 34179, the Department of
Finance either reviews and approves or fails to request review within
five business days of an oversight board approval of an action
authorized by this section, the scheduled payments on the bonds or
other indebtedness shall be listed in the Recognized Obligation
Payment Schedule and shall not be subject to further review and
approval by the department or the Controller. The department may
extend its review time to 60 days for actions authorized in this
section and may seek the assistance of the Treasurer in evaluating
proposed actions under this section.
(g) Any bonds, indebtedness, or amended enforceable obligation
authorized by this section shall be considered indebtedness incurred
by the dissolved redevelopment agency, with the same legal effect as
if the bonds, indebtedness, financing agreement, or amended
enforceable obligation had been issued, incurred, or entered into
prior to June 29, 2011, in full conformity with the applicable
provisions of the Community Redevelopment Law that existed prior to
that date, shall be included in the successor agency to the
Redevelopment Agency of the City and County of San Francisco's
Recognized Obligation Payment Schedule, and shall be secured by a
pledge of, and lien on, and shall be repaid from moneys deposited
from time to time in the Redevelopment Property Tax Trust Fund
established pursuant to subdivision (c) of Section 34172, as provided
in paragraph (2) of subdivision (a) of Section 34183. Property tax
revenues pledged to any bonds, indebtedness, or amended enforceable
obligations authorized by this section are taxes allocated to the
successor agency pursuant to subdivision (b) of Section 33670 and
Section 16 of Article XVI of the California Constitution.
(h) The successor agency to the Redevelopment Agency of the City
and County of San Francisco shall make diligent efforts to ensure
that the lowest long-term cost financing is obtained. The financing
shall not provide for any bullets or spikes and shall not use
variable rates. The successor agency shall make use of an independent
financial advisor in developing financing proposals and shall make
the work products of the financial advisor available to the
Department of Finance at its request.
SEC. 3. The Legislature finds and declares that a
special law is necessary and that a general law cannot be made
applicable within the meaning of Section 16 of Article IV of the
California Constitution because of the unique circumstances relating
to affordable housing in the City and County of San Francisco in
conjunction with the affordable housing and infrastructure
requirements of the enforceable obligations specified in this act.
SEC. 4. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district are the result of a program for which
legislative authority was requested by that local agency or school
district, within the meaning of Section 17556 of the Government Code
and Section 6 of Article XIII B of the California Constitution.
SECTION 1. Section 33333.7 of the Health and
Safety Code is amended to read:
33333.7. (a) Notwithstanding the time limits set forth in
paragraph (1) of subdivision (a) of Section 33333.6, as that
paragraph (1) read on December 31, 2001, the Redevelopment Agency of
the City and County of San Francisco may, subject to the approval of
the Board of Supervisors of the City and County of San Francisco,
retain its ability to incur indebtedness exclusively for Low and
Moderate Income Housing Fund activities eligible under Sections
33334.2 and 33334.3 until January 1, 2014, or until the agency
replaces all of the housing units demolished prior to the enactment
of the replacement housing obligations in Chapter 970 of the Statutes
of 1975, whichever occurs earlier. The ability of the agency to
receive tax increment revenues to repay indebtedness incurred for
these Low and Moderate Income Housing Fund activities may be extended
until no later than January 1, 2044. Nothing in this paragraph shall
be construed to extend a plan's effectiveness, except to incur
additional indebtedness for Low and Moderate Income Housing Fund
activities, to pay previously incurred indebtedness, and to enforce
existing covenants, contracts, or other obligations.
(b) Annual revenues shall not exceed the amount necessary to fund
the Low and Moderate Income Housing Fund activities of the agency.
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. Revenues received under this
paragraph shall not exceed the amount of tax increment received and
allocated to the agency pursuant to the plan, as it has been amended,
less the amount necessary to pay prior outstanding indebtedness, and
less the amount of the project area's property tax revenue that
school entities are entitled to receive pursuant to Chapter 3
(commencing with Section 75) and Chapter 6 (commencing with Section
95) of Part 0.5 of Division 1 of the Revenue and Taxation Code if the
plan had not been amended. Additionally, revenues collected under
this paragraph are subject to the payments to affected taxing
entities pursuant to Section 33607.
(c) The activities conducted with revenues received under this
paragraph shall be consistent with the policies and objectives of the
community's housing element, as reviewed and approved by the
department, 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, and if the director deems it
necessary, the annual action plans shall be submitted to the
department on an annual basis. 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.
(d) The agency shall not incur any indebtedness pursuant to this
paragraph until the director certifies, after consulting with the
agency, the net difference between the number of housing units
affordable to persons and families of low and moderate income that
the agency destroyed or removed prior to January 1, 1976, and the
number of housing units affordable to persons and families of low and
moderate income that the agency rehabilitated, developed, or
constructed, or caused to be rehabilitated, developed, or constructed
within the project areas adopted prior to January 1, 1976.
(e) The agency shall not incur any indebtedness pursuant to this
paragraph unless the director of the department certifies annually,
prior to the creation of indebtedness, all of the following:
(1) The community has a current housing element that
substantially complies with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of Title 7
of the Government Code.
(2) The community's housing element indicates an unmet need for
Low and Moderate Income Housing Fund activities.
(3) The agency's most recent independent financial audit report
prepared pursuant to Section 33080.1 reports acceptable findings and
no major violations of this part.
(4) The agency has complied with subdivision (a) of Section
33334.2.
(5) The agency has met the requirements of this part with respect
to the provision of dwelling units for persons and families of low
or moderate income, including, but not limited to, the requirements
of Section 33413.