BILL ANALYSIS
AB 269
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Date of Hearing: January 14, 2004
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Alan Lowenthal, Chair
AB 269 (Mullin) - As Amended: January 7, 2004
SUBJECT : Redevelopment low- and moderate-income housing fund
SUMMARY : Adds San Mateo County to the list of authorized
jurisdictions that may form joint powers authorities for the
purpose of pooling their low- and moderate- income housing fund
for affordable housing.
EXISTING LAW :
1)Requires redevelopment agencies to set aside 20 percent of
their property tax increment revenues for "increasing,
improving, and preserving" affordable housing.
[Health and Safety Code Section 33334.2 (a)]
2)Requires the 20 percent "set aside" to be deposited into a Low
and Moderate Income Housing Fund (L&M Fund). (Health and
Safety Code Section 33334.3)
3)Provides that tax increment, which accrues to a redevelopment
agency, must be used to pay indebtedness to finance the
"redevelopment project."
(Article XVI, Section 16 of the California Constitution)
4)Allows contiguous redevelopment agencies, located within a
single Metropolitan Statistical Area (MSA), to establish a
joint powers authority (JPA) for the purpose of pooling L&M
Fund. (Health and Safety Code Section 33334.25)
5)Provides the following list of conditions on the expenditure
of JPA funds on a particular development:
a) No funds shall be transferred to JPA from a
participating agency that has fulfilled less than 50
percent of its share of the regional housing need for very
low and low-income households;
b) The cities of the participating agencies shall have
up-to-date housing elements determined by the Department of
Housing and Community Development (HCD) to be in compliance
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with housing element law; and,
c) JPA shall make a finding that the proposed use of pooled
funds will not exacerbate racial or economic segregation.
6)Provides that HCD shall review each proposed use of pooled
funds and determine that the use is in compliance with this
bill.
7)Provides that in considering whether or not the use will
exacerbate racial and economic segregation, HCD shall consider
the following:
a) The record of the participating cities in meeting their
very low and low-income housing needs;
b) The distance of the proposed use from a redevelopment
area from which pooled funds originated;
c) The income and ethnicity of residents of the
redevelopment project area from which pooled funds
originated and of the census tract where the new housing
will be built;
d) The housing need and availability of sufficient sites
for housing within jurisdictions from which pooled funds
originated.
(Health and Safety Code Section 33334.25)
8)Provides specific authority for the Contra Costa County
Redevelopment Agency to spend its L&M Fund in the City of
Walnut Creek at sites contiguous to the Pleasant Hill BART
Station Area Redevelopment Project Area. (Health and
Safety Code Section 33334.2)
9)Allows the Orange County Redevelopment Agency (OCRA) to spend
funds, set aside for low- and moderate-income households,
within the city limits of cities located within the county.
(Health and Safety Code Section 33334.2a)
FISCAL EFFECT : Unknown.
COMMENTS :
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Background
Redevelopment agencies' L&M funds are one of the largest sources
of affordable housing money in California. Redevelopment
agencies are required by California state law to deposit 20
percent of their annual tax increment revenues into a L&M Fund,
and spend the money to increase, improve and preserve the
community's supply of low- and moderate-income housing.
Statewide, in 2000-01, this set-aside requirement resulted in
the deposit of $225 million in property tax increment revenues
into the agencies' L&M Funds. An additional $337 million came
from accrued interest, transfers, and bond proceeds.
Redevelopment officials spend their L&M Funds for a variety of
housing activities, including land acquisition, financing for
the acquisition, rehabilitation, or new construction of
multifamily housing developments, on- or off-site improvements,
first-time homebuyer assistance, and home rehabilitation loans.
A redevelopment agency that accumulates large unencumbered
balances in its L&M Fund must spend the funds within a certain
time period or face sanctions. Funds are defined as excess
surplus if they exceed $1 million or the combined amount of tax
increment revenue deposited in the L&M Fund during the previous
four fiscal years. An agency must spend its excess surplus
within three years or transfer the funds to the local housing
authority after one year. If officials do not spend the funds
by the three year deadline, the agency cannot encumber or spend
money, except for debt service, until the agency encumbers 150
percent of its excess surplus.
Except as noted below, redevelopment agencies do not have
authority to spend monies, including L&M Funds, outside the
community which established the agency. Since some agencies do
not want to assist low- and moderate-income housing and others
would welcome increased revenues to do so, and because neither
the housing nor the job market is restricted by community
boundaries, it has been suggested that agencies should be
authorized to transfer monies from their L&M Fund to nearby
communities or agencies that are willing to use them.
State law specifically allows for L&M Funds to be spent inside
or outside a project area, but within the territorial
jurisdiction of the agency, upon a finding that the use will be
of benefit to the project.
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In most years since 1992, legislation has been considered that
would allow agencies greater flexibility in spending housing
funds outside the community. In 2000, two bills were enacted in
this area. First, resulting from extraordinary factual
conditions, amendments were made to Section 33334.2 allowing the
redevelopment agency of the County of Contra Costa to use its
housing funds outside the unincorporated areas of the county,
but only on parcels adjacent to a specific project area of the
agency that are within city limits [AB 1855 (Lowenthal) Chapter
756)]. (In 2001, this authority was extended to Orange County
[AB 661 (Correa), Chapter 626].)
Second, in 2000 Section 33334.25 [AB 2041 (Dutra), Chapter 552]
was added to allow contiguous agencies within adjoining cities
that are within a single MSA to create a JPA in order to pool
their housing funds. The legislation contains a number of
limitations. The most important are: each participating
community must have met in its current or previous housing
element cycle 50 percent or more of its share of the regions
affordable housing needs; the pooled funds must be encumbered
within two years; the funds may not be used for planning and
administrative costs, offsite improvements, or fees; and HCD
must determine that each project is in compliance with the
statute.
Argument in Support
According to the author, the vision for building along the
CalTrain right-of-way is transit oriented, smart growth in-fill
development. The purpose of this legislation is to authorize
local agencies to pool funds, primarily redevelopment housing
set aside, to finance housing and mixed-use development projects
on the transit corridor. This bill, according to the author,
builds on the recognition that unlike other communities, San
Mateo County has a unique level of countywide cooperation and
collaboration in planning efforts.
Argument in Opposition
Low-income housing advocates note that they have always opposed
the transfer of redevelopment dollars from project areas that
both produced the tax dollars for affordable housing and assumed
the responsibility for the affordable housing as a condition of
creating redevelopment project benefits. They note that they
have worked with communities in the past with specific
circumstances to allow for exceptions. In this case, the
sponsor of this legislation has not suggested any specific
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circumstances indicating the necessity for an exception.
Staff Comments
The Committee may wish to ask: why is existing law, which allows
jurisdictions to enter into joint powers agreements (created to
specifically address the issues raised by the supporters of this
bill) not sufficient.
The language of this bill provides that in addition to the
authority already granted to agencies located within a single
MSA, San Mateo County may also create and participate in a JPA
for the purpose of pooling L&M Funds. The Committee may wish to
inquire: why does San Mateo County not already qualify? Why
does San Mateo County need special recognition to participate in
what is already provided under existing law.
Given the special authority granted to Contra Costa and Orange
County and the specific circumstances provided by those
jurisdictions at the time that that legislation was passed,
should San Mateo also provide specific articulated factors as to
the need for special legislation.
Last year San Mateo County asked for similar authority to
transfer L&M Funds [see AB 1358 (Simitian)]. This committee
expressed concerns at that time that no specific factors were
provided as to why an exception was needed. Specific factors as
to why San Mateo is differently situated have not been provided
in this instance either.
REGISTERED SUPPORT / OPPOSITION :
Support
San Mateo County (Sponsor)
Opposition
Western Center on Law and Poverty
Analysis Prepared by : Hubert Bower / H. & C.D. / (916)
319-2085