BILL ANALYSIS
AB 269
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 269 (Mullin)
As Amended July 13, 2004
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |78-0 |(January 29, |SENATE: |28-6 |(August 25, |
| | |2004) | | |2004) |
-----------------------------------------------------------------
Original Committee Reference: H. & C.D.
SUMMARY : Allows any redevelopment agency within San Mateo
County to participate in a joint powers authority for the
purpose of pooling low- and moderate-income housing fund (L&M
fund) for affordable housing.
The Senate amendments recast the Assembly version of the bill as
follows:
1)Allow any redevelopment agency within San Mateo County to
participate in a joint powers authority for the purpose of
pooling L&M funds subject to the following conditions:
Eligibility to Participate
1)Require the host jurisdiction of the agency have a housing
element that is current and that has been certified by the
California Department of Housing and Community Development
(HCD).
2)Require the host jurisdiction has met 40% `of its regional
housing need for low- and very low-income households in the
current or previous housing element cycle.
3)Require that the agency must not owe money to its L&M fund.
4)Require the agency have met its replacement housing obligation
or contractually committed funds to meet those obligations.
Transfer of Funds
1)Provide that no more than 25% of the agency's L&M funds may be
transferred to the JPA.
AB 269
Page 2
2)Require each participating agency must hold a public hearing
at least 45 days prior to the transfer of L&M funds to the
JPA.
Expenditure of Funds by the JPA
1)Require funds be used within the territorial jurisdiction of a
participating agency in San Mateo County on property within
one-half mile of the San Mateo County Transit District, the
San Mateo County Transportation Authority or the Peninsula
Corridor Joint Powers Authority right-of-way.
2)Require funds be used for the direct costs constructing,
substantially rehabilitating, or preserving the affordability
of low- and very- low income housing.
3)Prohibit funds from being used for planning and administrative
costs, offsite improvements, or fees or exactions levied
solely on funded project.
4)Prohibit funds from being used to construct a development in a
census tract that has more than 50% of its population
comprised of racial minorities or low-income families.
5)Require HCD verify each proposed use of funds to ensure
compliance with the provisions of this bill.
6)Require that the JPA expend or encumber and transferred within
two years. If not, the funds are returned to the donor agency
and deemed excess surplus.
7)Require that the JPA submit an annual report to HCD
documenting funds received and funds allocated or expended.
8)Require that the JPA is subject to the replacement housing
requirements, relocation requirements, and all other
provisions that would otherwise apply to the use of L&M funds
by the agency directly.
9)Provides that no new JPA may be created nor additional funds
received by an existing JPA after January 2009. This bill
sunsets on January 1, 2010.
AS PASSED BY THE ASSEMBLY , this bill allowed redevelopment
agencies within San Mateo County to use their L&M funds anywhere
AB 269
Page 3
within the unincorporated territory or within the incorporated
limits of any city within San Mateo County. Specifically, this
bill :
1)Provided that the redevelopment agencies within San Mateo
County may only use L&M funds outside their project area upon
a resolution of the agency and Board of Supervisors that the
use will benefit the project area. L&M funds may be
transferred to a city if the agency and Board of Supervisors
find all of the following:
a) Both the county and city have housing elements that
comply with the law;
b) The development receiving funds does not result in any
residential displacement;
c) The development receiving funds shall be rental,
providing affordable units to low-and very low-income
households;
d) The development is in an area with a need for additional
affordable housing;
e) That Article XXXIV, if applicable, (Public Housing
Project Law) permits the development; and,
f) The city has certified that its redevelopment agency (if
one exists) is not in violation for failure to spend excess
surplus housing funds.
2)Provided that if San Mateo County L&M funds are used within a
city all of the following must apply:
a) The funds shall be used only for the design and
construction of housing that contains units affordable to
low- and moderate-income persons and located on property
that has been turned over by the San Mateo County Transit
Authority along the El Camino Real Transit Corridor in San
Mateo County;
b) If less than all the units are affordable to low- and
moderate-income households, any agency assistance shall not
exceed the amount needed to make housing affordable to
such households;
AB 269
Page 4
c) The units in the development affordable to low- and
moderate-income households shall remain affordable for a
period of at least 55 years with covenants and restrictions
that run with the land;
d) That developments will not be located in a census tract
where more than 50% of its population is very low income;
e) That assisted developments be located on sites suitable
for multi-family housing near transportation;
f) That developed units can not be treated as meeting the
regional housing needs allocation under both the city's and
county's housing element;
g) The city receiving funds has approved the development;
and,
h) That the aggregate of units assisted by the county over
each five year period shall include at least 10% that are
affordable to households earning 30% or less of area median
income, and at least 40% that are affordable to very
low-income households;
3)Stated that unique circumstances exist in San Mateo County
that justify the enactment of this legislation.
4)Stated, among other things, that San Mateo County has high
housing costs and has a transit corridor for the CalTrain that
is ideal for affordable transit oriented development.
FISCAL EFFECT : Unknown
COMMENTS : 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% 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.
AB 269
Page 5
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%
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 area.
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 local
conditions, amendments were made to Health and Safety Code
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].)
AB 269
Page 6
Second, in 2000 Health and Safety Code Section 33334.25 [AB 2041
(Dutra), Chapter 552] was added to allow contiguous agencies
within adjoining cities that are within a single Metropolitan
Statistical Area to create a joint powers authority 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% 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.
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
the San Mateo County Redevelopment Agency to transfer L & M
funds out of a project area from which it was derived to be used
for low- or moderate-income housing projects along the CalTrain
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.
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.
Included in the language of this bill is a statement regarding
the high housing cost in San Mateo County. This bill also
states that San Mateo County has a transit corridor for the
CalTrain that is ideal for affordable transit oriented
development.
Analysis Prepared by : Hubert Bower / H. & C.D. / (916)
319-2085
AB 269
Page 7
FN: 0008851