BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1641
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: hall
VERSION: 5/11/10
Analysis by: Carrie Cornwell FISCAL: no
Hearing date: June 22, 2010
SUBJECT:
Redevelopment and public housing
DESCRIPTION:
This bill makes a finding that public housing units over 50
years old may be blighted for purposes of undertaking a
redevelopment project.
ANALYSIS:
The Community Redevelopment Law allows local governments to
establish redevelopment project areas and capture all of the
increase in property taxes that is generated within a project
area (referred to as "tax increment") in order to address
conditions of blight within the project area.
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. The other 80 percent of tax increment
funds, known as economic development funds, are to be used to
eradicate blight. Since 1994, existing law has defined blight
for redevelopment purposes as an area that is predominately
urbanized and characterized by one or more specified conditions
of physical blight and one or more conditions of economic
blight.
When a redevelopment project results in housing units being
demolished or removed from the market, existing law requires
that the redevelopment agency replace those units that housed
low- or moderate-income households within four years with units
AB 1641 (HALL) Page 2
affordable to those displaced. The replacement units may be
anywhere within the jurisdiction of the redevelopment agency
(i.e., within the city limits), and they must remain affordable
for 55 years for rental units and 45 years for ownership units.
In addition, those actually displaced must be given priority in
renting or buying the replacement housing.
This bill :
1.Makes a legislative finding that blighted areas may include
housing areas constructed prior to 1960 as government-owned
housing projects and that these areas may be characterized by
one or more conditions of either physical or economic blight.
2.Requires a redevelopment project area described by the above
finding to include the replacement, on at least a one-to-one
basis, of all existing public housing units. These replacement
units shall be:
For at least 55 years, affordable to and occupied by
extremely low, very low, and lower income households at the
same or lower income level as the households displaced from
the public housing units.
Affordable to those actually displaced.
Located either in the project area or within five miles
of the parcel containing the public housing that is being
replaced.
Households displaced shall be given priority for a permanent
replacement dwelling at the initial time of relocation, unless
the household members have decided voluntarily not to accept
the replacement unit.
1.Permits a redevelopment project area undertaken at a public
housing site to also include market-rate housing, retail,
commercial, industrial, educational, recreational, and other
uses appropriate to serve the residents of the area plus
public improvements inside or adjacent to the project area.
COMMENTS:
1.Purpose . The author introduced this bill at the request of the
City of Los Angeles, which wants to declare at least two of it
public housing complexes to be redevelopment project areas.
AB 1641 (HALL) Page 3
Built over 50 years ago, these housing projects include on a
single large site thousands of housing units, typically
bungalows, that are on city-owned land. Some of these housing
projects have suffered from decades of disrepair and neglect.
Through the redevelopment project or projects, the city would
replace all of the housing in each project with a mixed-use
development that includes affordable and market rate housing,
retail and commercial facilities, and public amenities.
2.What changes ? Existing law requires local officials to
document that blight exists in an area before creating a new
project area or expanding an old one to cover the area. This
bill makes a legislative finding that older public housing may
constitute blight. It does not, however, change the statutory
definition of blight and therefore does not change the
requirements that any project must meet to qualify for
redevelopment. Representatives of the City of Los Angeles
indicate that the housing projects the city wants to redevelop
do not meet the current definition of blight and because this
bill does not change the definition, it is unclear how this
bill helps them achieve their objectives to redevelop public
housing sites in that city.
Most of the Community Redevelopment Law, including the
definition of blight, is within the purview of the Senate
Local Government Committee, whereas the portions of that law
relating to affordable housing fall within this committee's
jurisdiction. As noted below, this bill has a second referral
to the Senate Rules Committee. Rules Committee may then refer
this bill to another policy committee to examine issues
outside of the jurisdiction of this committee. The section of
this bill that refers to the definition of blight for
redevelopment purposes would benefit from a hearing in the
Senate Local Government Committee.
3.Protecting displaced residents . This bill ensures that should
a city or county, including Los Angeles, turn one of its
public housing sites into a redevelopment project area, the
residents of the housing will have a place to live. The bill
ensures that each household will have an opportunity to live
nearby and in a housing unit that is generally affordable to
the same income category of the household. These are similar
to protections in existing law for redevelopment projects
generally. This bill, however, does not keep these residents
in public housing, which is even more affordable to the
residents than privately-owned housing that includes a 55-year
AB 1641 (HALL) Page 4
affordability covenant. Because the premise of this bill is
the removal of a public housing site, the author or committee
may wish to consider an amendment to ensure that each
household displaced from public housing be offered the option
of a replacement unit at a rent or other cost affordable
specifically to that household rather than generally to that
household's income category.
4.Tax increment . Because the housing projects are on city-owned
land, the property tax on these properties is currently zero.
Thus, under this bill, if a city or county declares a
government-owned housing project to be redevelopment project
area, then essentially any and all of the property tax from
that property for the next several decades will accrue to that
city's redevelopment agency as tax increment. In the
redevelopment process, much of this property would likely be
sold into private ownership, so the amount of property tax
over time could be large. The state General Fund subsidizes
half of redevelopment agency's tax increment by backfilling
the loss of property tax revenues to local schools. The
committee may, therefore, wish to consider if it is more
appropriate that Los Angeles declare these areas
infrastructure financing districts, which it could and which
capture all tax increment except that due to the schools.
5.Technical amendment . On page 3, line 4, after "and" insert
"shall".
6.Double-referral . The Rules Committee referred this bill to
both the Transportation and Housing Committee and to the Rules
Committee. Therefore, if this bill passes this committee, it
will be referred to the Committee on Rules.
Assembly Votes:
Floor: 46 - 26
H&CD: 6 - 3
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 16, 2010)
SUPPORT: City of Los Angeles (sponsor)
OPPOSED: None received.