BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 288
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Nestande
VERSION: 5/18/10
Analysis by: Carrie Cornwell FISCAL: no
Hearing date: June 29, 2010
SUBJECT:
Redevelopment: pooled housing funds for homeless shelters
DESCRIPTION:
This bill allows a redevelopment agency to use its low- and
moderate-income housing funds to pay for homeless shelters and
to pool those funds with another agency for these purposes.
ANALYSIS:
The Community Redevelopment Law allows local governments to
establish redevelopment areas and capture all of the increase in
property taxes that is generated within the area (referred to as
"tax increment"). The law requires redevelopment agencies to
deposit 20 percent of tax increment funds into a Low & Moderate
Income Housing Fund (L&M Fund) to be used to increase, improve,
and preserve the community's supply of low and moderate income
housing at affordable housing cost.
Existing law sets income limits for persons and families
(adjusted for family size) of low and moderate-income based on
countywide median incomes:
Moderate income < 120%
Low income < 80%
Very low income < 50%
Extremely low income< 30%
L&M funds can be spent on housing anywhere in the jurisdiction
(i.e., within the city limits) upon the agency making a general
finding of benefit to the project areas within that
jurisdiction, but not outside of the jurisdiction.
AB 288 (NESTANDE) Page 2
Existing law also requires that 30 percent of all new and
substantially rehabilitated housing units developed by the
agency and 15 percent of all other new and substantially
rehabilitated housing units developed within the project area be
affordable to low- and moderate-income households (referred to
as the "housing production requirement").
AB 2041 (Dutra), Chapter 552, Statutes of 2000, gave
redevelopment agencies in contiguous cities authority, until
January 1, 2010, to pool their L&M funds to build affordable
housing for low- and very low-income households in one of the
city's redevelopment project areas. The redevelopment agencies
could exercise this authority by creating a Joint Powers
Authority (JPA), provided that the agencies had met specified
standards including that each city must have met 50 percent of
its regional housing needs for very low and low income, that the
proposed use of pooled funds would not exacerbate racial
segregation, and that each city had an HCD-approved housing
element. No agencies ever exercised this pooling authority.
This bill :
1.Expands the definition of redevelopment to include improving,
increasing, or preserving emergency shelters for homeless
persons or households and transitional housing units located
with or outside of a project area.
2.Defines "emergency shelter for homeless persons" as a facility
with minimal supportive services for homeless persons that is
limited to occupancy of six months or less by a homeless
person or household and "transitional housing" as housing with
supportive services for up to 24 months that is exclusively
designated and targeted for recently homeless persons.
3.Prescribes a process for redevelopment agencies within a
"housing region" to create and participate in a JPA to pool up
to five percent of each agencies' L&M Fund to develop and
rehabilitate emergency shelters for homeless persons or
transitional housing. To participate a JPA must spend or
encumber the L&M funds it receives within five years of
receipt or return them to the agency from which they came,
which would then face prescribed penalties. The agencies may
extend this five-year period by another five years through
mutual agreement.
AB 288 (NESTANDE) Page 3
4.Deems these emergency shelters and transitional housing units
to be housing that must remain affordable to and occupied by
persons and families of very low income and extremely low
income for 55 years.
5.Provides that every two beds in a homeless shelter and every
unit of transitional housing constructed from pooled funds
counts as a housing unit for purposes of the housing
production requirement a redevelopment agency must achieve.
These production credits shall accrue to each agency pooling
funds based on the proportion of the total pooled funds that
an agency contributed to the project.
6.Requires that any transitional housing constructed shall have
a transitional services program in place, be on the same
parcel or a parcel within a quarter mile as a homeless
shelter, and be managed by the same provider as the homeless
shelter.
7.Relieves the agencies pooling funds from the requirement that
they provide replacement housing or relocation benefits.
COMMENTS:
1. Purpose . The author notes that the homeless problem,
including families with children, is well-known and
well-documented. The Legislature and governor have enacted
bills that study the homeless problem, that require state
agencies to seek funding, such as federal funds, for
shelters and transitional housing, and that provide state
bond funds for shelters and transitional housing. These
bond funds will soon be depleted and what is lacking is a
permanent funding source that would lead to the actual
construction of shelters and transitional housing units.
The author introduced this bill to address the deficiency
in funding. This bill proposes funding by allowing
redevelopment agencies to use up to 5% of their accumulated
low and moderate income housing funds to construct homeless
shelters and transitional housing units outside their own
community-but within their own region-by pooling those
resources. Shelters and transitional housing units that
serve a wider area than just one community will be more
viable from a land use and economic perspective.
2. A service, not housing . Homeless shelters typically
accept someone for a few nights or a few months, but are
AB 288 (NESTANDE) Page 4
not permanent housing. They are a service provided to those
who would otherwise spend a night outside or in a vehicle.
When the Legislature required that 20% of redevelopment tax
increment funds be set aside in L&M funds and used for
housing, it was to address the impact redeveloping a
neighborhood can have on the stock of affordable housing in
that neighborhood. For this reason, existing law permits
L&M funds to be used to increase, improve, and preserve the
supply of affordable housing in a community. While homeless
shelters are a very worthy endeavor so are many other
social service programs, including child care, senior day
care, and assistance to the unemployed, but none are
appropriately funded with redevelopment housing moneys. If
this bill were to become law, it would be the first allowed
use of L&M funds for something other than housing.
In this vein, the bill's opponents note that the primary
objective of the L&M fund is to provide permanent
affordable housing to replace the housing razed as a result
of redevelopment, and to increase, preserve and protect the
supply of affordable housing, so that families are not
pushed out of their communities as a result of
redevelopment gentrification. While applauding the author's
efforts to facilitate homeless shelter construction,
renovation, and expansion, the opponents argue that this
bill's proposed use of redevelopment housing funds is an
unacceptable resource to accomplish this purpose.
3. Previous legislation . In 2008, this committee considered
AB 2097 (Coto), which would have allowed a redevelopment
agency until 2014 to use a portion of its L&M fund to pay
for supportive services to address chronic homelessness.
The committee passed that bill only after the author
amended it to apply as a pilot project only to
redevelopment agencies in Santa Clara County. The governor,
however, vetoed the bill in part because it would have
reduced "the available funding for actual housing
production, which undermines state and local efforts to
increase affordable housing opportunities for families with
low and moderate incomes."
4. Numerous drafting problems . Because this bill is a gut
and amend in the Senate, it has not benefited from a
previous policy committee hearing. Should this bill pass
this committee, the author or the committee may want to
address several drafting issues with the bill:
AB 288 (NESTANDE) Page 5
This bill relieves any redevelopment agency that
participates in a scheme to pool funds under its authority
from the requirement that it provide replacement housing
for housing it destroys through its redevelopment
activities. It is conceivable that an agency would
participate simply to be relieved of its replacement
housing obligations. Should this bill move forward, the
committee or author may wish to strike this provision.
This bill deems homeless shelter beds to be housing
"units". Under housing element law, cities and counties get
credit for the construction of housing units but not for
shelter beds, because beds are not units. While this bill
does not alter housing element law in any way, this
provision may cause unnecessary confusion. If this bill
moves forward, the committee or author should clarify that
while the funds used must provide shelters for 55 years,
these beds are not housing "units" for other statutory
purposes.
This bill provides that every two beds in a homeless
shelter is the equivalent of a housing unit for purposes of
a redevelopment agency's housing production requirement. It
is inappropriate to count beds in a homeless shelter toward
either an agency's production requirement or its
replacement requirement. Should this bill move forward, the
committee or author should strike this provision.
This bill requires that any transitional housing
provided be very near to a homeless shelter that is under
the same management. This seems an unneeded restriction on
the use of funds pooled under the bill. Should this bill
move forward, the committee or author may wish to strike
this provision.
RELATED LEGISLATION
AB 2759 (Nestande), a nearly identical bill, would have allowed
a redevelopment agency to transfer up to five percent of its L&M
fund to another agency to be used to develop emergency shelters
or transitional housing. Referred to Assembly Housing and
Community Development Committee, but never heard there.
Assembly Votes are not relevant.
AB 288 (NESTANDE) Page 6
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 23, 2010)
SUPPORT: American Planning Association, California Chapter
Cathedral City
City of Indian Wells
City of Indio
City of La Quinta
City of Palm Desert
City of Palm Springs
City of Rancho Mirage
Coachella Valley Association of Governments
Coachella Valley Regional Housing Trust
Corporation
Coachella Valley Rescue Mission
County of Riverside
15 individuals
OPPOSED: Aging Services of California
California Department of Housing and Community
Development
California Rural Legal Assistance Foundation
Western Center on Law and Poverty