BILL NUMBER: AB 2041 CHAPTERED 09/20/00 CHAPTER 552 FILED WITH SECRETARY OF STATE SEPTEMBER 20, 2000 APPROVED BY GOVERNOR SEPTEMBER 18, 2000 PASSED THE ASSEMBLY AUGUST 25, 2000 PASSED THE SENATE AUGUST 24, 2000 AMENDED IN SENATE AUGUST 14, 2000 AMENDED IN SENATE AUGUST 7, 2000 AMENDED IN ASSEMBLY APRIL 27, 2000 INTRODUCED BY Assembly Member Dutra FEBRUARY 18, 2000 An act to add and repeal Section 33334.25 of the Health and Safety Code, relating to redevelopment. LEGISLATIVE COUNSEL'S DIGEST AB 2041, Dutra. Redevelopment: affordable housing. Under the Community Redevelopment Law, one of the fundamental purposes of redevelopment is to expand the supply of low- and moderate-income housing. Existing law also authorizes the Department of Housing and Community Development to make grants to nonprofit housing sponsors and local public entities in constructing, rehabilitating, and operating assisted housing for low- and moderate-income households. This bill would authorize contiguous agencies located within adjoining cities in a Metropolitan Statistical Area to create and participate in a joint powers authority in order to pool their housing funds to pay for the direct costs of constructing, substantially rehabilitating, or preserving the affordability of housing units that are affordable to very low or low income households. The bill would also require that specified conditions be met and described in a mutually binding contract between the joint powers authority and each participating agency and a receiving entity for the use and transfer of pooled housing funds, and that the conditions include, among other things, a determination by the department that the community of each participating agency has adopted housing elements that are in compliance with existing law and that the proposed use of pooled funds by the receiving entity for these purposes is in compliance with these provisions. The bill would, on or after January 1, 2008, prohibit a participating agency from creating a new joint powers authority or transferring funds to an existing joint powers authority unless a later enacted statute deletes or extends that date. This bill would repeal these provisions on January 1, 2010. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 33334.25 is added to the Health and Safety Code, to read: 33334.25. (a) The Legislature finds and declares all of the following: (1) The transfer of funds to a joint powers authority and the use of pooled funds within the housing market area of the participating agencies for the purpose of providing affordable housing is of benefit to the project area producing the tax increment. (2) The cost and availability of land, geophysical and environmental limitations, community patterns, and the lack of financing make the availability of affordable housing more difficult in some communities. (3) The cooperation of local agencies and the use of pooled funds will result in more resources than would otherwise be available for affordable housing. (b) Notwithstanding any other provision of law, contiguous agencies located within adjoining cities within a single Metropolitan Statistical Area (MSA) may create and participate in a joint powers authority for the purpose of pooling their low- and moderate-income housing funds for affordable housing uses. Agencies may transfer a portion of their housing funds to a joint powers authority for use by the joint powers authority pursuant to this section. The joint powers authority may determine the kinds of housing projects or activities to be assisted, consistent with this section. The joint powers authority may loan, grant, or advance transferred housing funds from participating agencies to a receiving entity for any eligible housing development within the participating agency's jurisdiction, subject to the requirements of this section. In addition, the agreement may authorize the joint powers authority to issue bonds and to use the pooled funds to leverage other funds to assist eligible developments, including loans from private institutions and assistance provided by other governmental agencies. (c) Each of the following conditions shall be met and described in a mutually binding agreement between the joint powers authority and each participating agency: (1) The community of each participating agency shall have adopted up-to-date housing elements pursuant to Article 10.6 (commencing with Section 65580) of Division 1 of Title 7 of the Government Code, and the housing elements have been determined to be in compliance with the law by the Department of Housing and Community Development. (2) The community of each participating agency shall have met, in its current or previous housing element cycle, 50 percent or more of its share of the region's affordable housing needs, as defined in Section 65584 of the Government Code, in the very low and lower income categories of income groups defined in Section 50025.5. (3) Each participating agency shall hold, at least 45 days prior to the transfer of funds to the joint powers authority, a public hearing, after providing notice pursuant to Section 6062 of the Government Code to solicit public comments on the draft agreement. (4) No housing funds shall be transferred from a project area that has an indebtedness to its low- and moderate-income housing fund pursuant to Section 33334.6. (5) No housing funds shall be transferred from an agency that has not met its need for replacement housing pursuant to Section 33413, unless the agency has encumbered and contractually committed sufficient funds to meet those requirements. (6) Pooled funds shall be used within the participating agencies' jurisdictions. (7) The agreement shall require compliance by the joint powers authority with the provisions of this section. (8) The joint powers authority shall ensure that the funds it receives are used in accordance with the requirements of this section. (9) Funds transferred by an agency to a joint powers authority pursuant to this section shall be expended or encumbered by the joint powers authority for the purposes of this section within two years of the transfer. Transferred funds not so expended or encumbered by the joint powers authority within two years after the transfer shall be returned to the original agency and shall be deemed excess surplus funds as provided in, and subject to, the requirements of Sections 33334.10 and 33334.12. Excess surplus funds held by an agency may not be transferred to a joint powers authority. (10) The joint powers authority shall prepare and submit an annual report to the department that documents the amount of housing funds received and expended or allocated for specific housing assistance activities consistent with Sections 33080.4. (d) Each of the following conditions shall be met and described in a mutually binding contract between the joint powers authority and a receiving entity: (1) Pooled housing funds may only be used to pay for the direct costs of constructing, substantially rehabilitating, or preserving the affordability of housing units that are affordable to very low or low income households. Units assisted with pooled funds shall remain available at affordable housing costs in accordance with subdivision (f) of Section 33334.3. (2) Except as provided in this section, pooled housing funds may not be used in any way that is inconsistent with the requirements of Section 33334.3. Pooled housing funds may not be used to pay for planning and administrative costs, offsite improvements associated with a housing project, or fees or exactions levied solely for development projects constructed, substantially rehabilitated, or preserved with pooled funds. The receiving entity shall be subject to the same replacement requirements provided in Section 33413 and any relocation requirements applicable pursuant to Section 7260 of the Government Code. (3) The joint powers authority shall make findings, based on substantial evidence on the record, that each proposed use of pooled funds will not exacerbate racial or economic segregation. (4) The Department of Housing and Community Development has evaluated each proposed use of pooled funds to construct, substantially rehabilitate, or preserve the affordability of housing and determined that the proposed use is in compliance with this section. In considering whether a proposed use of funds will exacerbate racial or economic segregation, the department shall consider all of the following: (A) The record of participating jurisdictions in meeting their share of the regional need for low and very low income households allocated to the jurisdiction pursuant to Section 65584 of the Government Code. (B) The distance of the proposed housing from a redevelopment area from which pooled funds originated. (C) The income and ethnicity of the residents of the census tract from which the pooled funds originated and in which the housing will be located. (D) The housing need and availability of sufficient site for housing within jurisdictions from which pooled funds originated. (e) As used in this section, the following terms shall apply: (1) "Housing funds" mean funds in or from the low- and moderate-income housing fund established by an agency pursuant to Section 33334.3. (2) "Joint powers authority" means a joint powers authority created pursuant to Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of the Government Code for the purposes of receiving and using housing funds pursuant to this section. (3) "Receiving entity" means any person, partnership, joint venture, corporation, governmental body, or other organization receiving housing funds from a joint powers authority for the purpose of providing housing pursuant to this section. (f) On or after January 1, 2008, no participating agency shall create a new joint powers authority or transfer funds to an existing joint powers authority pursuant to this section, unless a later enacted statute, which is enacted before January 1, 2008, deletes or extends that date. (g) This section shall remain in effect only until January 1, 2010, and as of that date is repealed, unless a later enacted statute, that is enacted on or before January 1, 2010, deletes or extends that date.