BILL NUMBER: AB 2337 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 22, 2010
AMENDED IN ASSEMBLY MAY 28, 2010
AMENDED IN ASSEMBLY MAY 6, 2010
AMENDED IN ASSEMBLY APRIL 22, 2010
INTRODUCED BY Assembly Member Ammiano
FEBRUARY 19, 2010
An act to add Section 7513.75 to the Government Code, relating to
investments.
LEGISLATIVE COUNSEL'S DIGEST
AB 2337, as amended, Ammiano. Public retirement system:
investments: predatory investment practices.
The California Constitution provides that the Legislature may by
statute prohibit retirement board investments if it is in the public
interest to do so, and providing that the prohibition satisfies
specified fiduciary standards.
Existing law prohibits the boards of the Public Employees'
Retirement System and the State Teachers' Retirement System from
investing public employee retirement funds in a company with active
business operations in Sudan and Iran, as specified. Existing law
also requires the boards of these retirement systems to sell or
transfer any investments in a company with business operations in
Sudan. Existing law requires the boards of these retirement systems
to submit an annual report to the Legislature regarding any
investments in a company with business operations in Sudan and the
sale or transfer of those investments. Existing law requires the
state to indemnify, from the General Fund, and hold harmless the
present, former, and future board members, officers, and employees
of, and investment managers under contract with, these retirement
systems by reason of any decision to restrict, reduce, or eliminate
investments in Sudan, as specified.
This bill would additionally prohibit the boards of public pension
or retirement systems, as defined, from investing public employee
retirement funds in a company with business operations engaged in
predatory investment practices, as defined, that rely on, or result
in, the displacement of persons residing in rent-regulated housing,
converting rent-regulated housing units to market rate units, or
raising rents above regulated levels as determined by the appropriate
governing authority, in order to generate profits to investors and
would require the boards to establish a policy in regard to investing
in rent-regulated housing, as specified. This bill would make
related legislative findings and declarations.
Existing law provides that a statute that imposes a requirement
that a state agency submit a periodic report to the Legislature is
inoperative on a date 4 years after the date the first report is due.
This bill would, notwithstanding that requirement, require these
boards to report annually to the Legislature regarding implementation
and compliance of the above-described provisions and regarding
compliance with the provisions of the rent-regulated housing
investment policy. The bill would also require these boards to
develop and implement, on or before June 30, 2011, and thereafter
maintain, a policy that prohibits the investment of public employee
retirement funds in predatory investment practices, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The
Legislature finds and declares that investments by public retirement
boards in companies that engage in predatory investment practices,
which rely on, or result in, the displacement of persons residing in
rent-regulated housing in order to generate profits to investors, are
not only harmful to the persons displaced by these practices but
also to the entire community in which those persons reside.
(b) The Legislature further finds and declares that it is in the
public's interest to enact legislation to prohibit the investment of
retirement funds in companies engaged in, or investing in companies
engaged in, predatory investment practices that result in excessive
rent increases imposed upon, or the eviction or displacement of,
persons residing in rent-regulated housing.
SEC. 2. Section 7513.75 is added to the Government Code, to read:
7513.75. (a) As used in this section, the following definitions
shall apply:
(1) "Board" means the retirement board of a public pension or
retirement system, as defined in subdivision (h) of Section 17 of
Article XVI of the California Constitution.
(2) (A) "Predatory investment practices" means private real estate
investments that rely on, or result in, the displacement of persons
residing in rent-regulated housing, converting rent-regulated housing
units to market rate units, or raising rents above regulated levels
as determined by the appropriate governing authority, in order to
generate profits to investors. "Predatory investment practices" shall
not include investment in strategies that create new, or redevelop
existing, rent-regulated housing units, including strategies that
include demolition of existing rent-regulated housing units, provided
that the following minimum criteria are met:
(i) Any rent-regulated housing units that are demolished as part
of the investment or project are replaced with new rent-regulated
housing units.
(ii) Any person lawfully residing in rent-regulated units who is
displaced as a result of such strategies receives relocation benefits
in accordance with relocation requirements as mandated by the local
housing authority or by state or federal laws, if applicable.
(B) "Predatory investment practices" shall not include the
exercise of the power of sale granted under Section 2924 of the Civil
Code.
(C) For purposes of this paragraph "private real estate
investments" shall not include real estate investment trusts or other
similar securities that are publicly traded.
(b) The board shall develop and implement, on or before June 30,
2011, and thereafter maintain, a policy that prohibits the investment
of public employee retirement funds in predatory investment
practices. The policy shall include, but not be limited to, the
following requirements:
(1) A prohibition on the investment of public employee retirement
funds in predatory investment practices.
(2) Principles that are consistent with the Principles for
Responsible Investment, as set forth by the United Nations, to the
extent those principles relate to responsible real property
investing.
(3) A statement that requires an annual report to the board if a
private real estate investment is materially inconsistent with the
objectives of the policy, regardless of whether the investment was
made prior to or after the effective date of the policy. The report
shall describe the investment, including the impacts and anticipated
impacts of those investments on tenants living in rent-regulated
housing units, as well as any impacts on investment performance.
(4) A statement that requires any investment manager that enters
into an investment agreement with the board, or its agents, that
involves the acquisition of occupied rent-regulated housing to agree,
in writing, to abide by the board's policy on real estate investment
strategies impacting rent-regulated housing units.
(5) If, after the effective date of the policy, an investment
manager makes investments that are materially inconsistent with this
section, the board shall not use that manager for any new
investments.
(c) Notwithstanding Section 10231.5, the board shall provide an
annual report regarding implementation and compliance with this
section, and any policy adopted pursuant to this section, to the
Legislature. Any report filed pursuant to this subdivision shall
comply with Section 9795.
(d) Nothing in this section shall require the board to take action
as described in this section unless the board determines, in good
faith, that the action described in this section is consistent with
the fiduciary responsibilities of the board as described in Section
17 of Article XVI of the California Constitution.