BILL ANALYSIS
AB 2759
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Date of Hearing: April 14, 2010
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 2759 (Nestande) - As Amended: April 5, 2010
SUBJECT : Redevelopment pooled housing funds: emergency
shelters and transitional housing
SUMMARY : Allows redevelopment agencies to transfer up to 5% of
their Low- and Moderate-Income Housing (L&M) Fund to another
agency to be used to develop emergency shelters or transitional
housing outside of the project area where the tax increment is
collected. Specifically, this bill :
1)Makes legislative findings regarding the severity of the
homeless population in California and the need for cooperation
among local redevelopment agencies and the use of pooled funds
to build emergency shelters.
2)Provides for the following definitions:
a) "Emergency shelter" means 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.
b) "Transitional housing" means housing with supportive
services for up to 24 months that is exclusively designated
and targeted for recently homeless persons and may include
self-sufficient development services.
c) "Donor agency" means an agency that funds emergency
shelters or transitional housing.
d) "Housing region" means the region consisting of a donor
agency's community and all of the communities whose nearest
border to the border of the donor agency's community is not
greater than 40 miles.
e) "Interagency agreement" means an agreement between two
or more agencies providing for the pooling of housing funds
for the purpose of funding an emergency shelter or
transitional housing.
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f) "Joint powers authority" means a joint power authority
as defined by Government Code 6500 created for the purpose
of receiving and using housing funds to fund emergency
shelters and transitional housing units.
g) "Permitted portion of housing funds" means in any fiscal
year not more than 5% of a donor agency's accumulated
housing funds.
h) "Provider entity" means any person, partnership, joint
venture, corporation, government body or other organization
receiving housing funds from a donor agency or a joint
powers authority for the purpose of providing housing for
homeless person or households or persons eligible for
transitional housing.
i) "Receiving agency" means an agency that receives housing
funds from a donor agency.
3)Adds improving, increasing, or preserving emergency shelters
for homeless persons or transitional housing as an allowable
use of tax increment funds.
4)Allows L&M Funds to be used outside of the project area in
which it was collected to fund emergency shelters and
transitional housing units.
5)Allows L&M Funds to be transferred to another redevelopment
agency for emergency shelter or transitional housing to be
used for planning and general administrative costs.
6)Requires emergency shelters and transitional housing units to
remain available to extremely low income people for 55 years
with the following conditions:
a) That covenants and restrictions require if an emergency
shelter or transitional housing unit is converted to
another use prior to the end of the 55 years the
redevelopment agency shall receive its original expenditure
plus an equity sharing amount; and
b) Requires any funds that are returned to the
redevelopment agency be deposited into the L&M Fund.
7)Permits the transfer of up to 5% of the L&M Funds from a donor
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agency to a joint powers authority; a donor agency to a
receiving agency pursuant to an interagency agreement (MOU),
or to a provider directly by a donor agency for the
development or rehabilitation of emergency shelters or
transitional housing in another community within 40 miles of
the donor agency's housing region
8)Permits a joint powers authority or a receiving agency of an
MOU to issue loans, grants or advance transferred housing
funds received from the donor agencies to a provider entity
for any eligible emergency shelter or transitional housing
project with in the territorial jurisdiction of the
participating agencies.
9)Permits a joint powers authority or the receiving agency of an
MOU to issue bonds and use the pooled funds to leverage other
funds to assist eligible emergency shelter or transitional
housing developments including loans from private institutions
and by other governmental agencies.
10)Requires the joint powers authority or the receiving agency
to enter into a mutually binding agreement that requires the
following:
a) Each participating agency must hold a public hearing at
least 45 days prior to entering into an agreement with the
joint powers authority or entering into an MOU;
b) Requires the funds transferred to a joint powers
authority or a receiving agency must be encumbered within
five years of the transfer;
c) If the funds are not expended within five years they
must be transferred back to the donor agency and deposited
in the L&M Fund; and
d) A donor agency and a joint power authority or a donor
agency and a receiving agency may adopt a resolution
extending the period for an additional five years.
11)Requires if a donor agency enters into an agreement with a
provider entity directly, the donor agency must meet all of
the following requirements:
a) Donor agency must provide not less than 60 days prior
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written notice to the city manager and city clerk of the
other community of the donor agency's intent to enter into
an agreement with the provider entity;
b) A donor agency cannot enter into an agreement to
transfer funds to a provider entity directly if within the
60 days described above the community receiving the funds
objects; and
c) Provides that the land use requirements of the community
in which the development is proposed to be located shall
control and that community must process all land use
applications and California Environmental Quality Act
determinations in a timely manner.
12)The donor agency, the receiving agency, the joint powers
authority, the participating agency and the provider are not
subject to replacement housing requirements.
13)Requires transitional housing projects created through pooled
funds meet all of the following requirements:
a) Have a transitional housing services program;
b) Be located on the same parcel, an adjoining parcel, or
not more than one-quarter mile of an emergency shelter; and
c) The housing and service program are managed by the same
provider as the emergency shelter.
14)Provides donor agencies will receive credit for emergency
shelters and transitional housing built in the receiving
community as follows:
a) In portion to the as the percentage each donor agency
contributed to the project funding provide by all donor
agencies;
b) Credit for one-half of a unit for each emergency shelter
bed that has a 55-year deed restriction; and
c) Credit for one-full unit for each transitional housing
unit that has a 55-year deed restriction.
EXISTING LAW
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1)States it is the intent of the Legislature that the L&M Fund
be used to the maximum extent possible to defray the costs of
production, improvement, and preservation of low- and
moderate-income housing and the amount spent on planning and
administrative activities not be disproportionate to the
amount actually spent on production, improvement and
preservation of housing [Health & Safety Code Section
33334.3(d)].
2)Defines "targeted population" as adults with low incomes
having one or more disabilities, including mental health
illness, HIV or AIDS, substance abuse, or other chronic health
conditions that are eligible for services under the
Disabilities Services Act, families with children, elderly
persons, young adults aging out of foster care, individuals in
existing institutional settings, veterans, or homeless people
(Health & Safety Code Section 53260).
3)Requires 20% of all tax increment funds allocated to agency
must be used for the purpose of increasing, improving and
preserving the community's supply of extremely low, very low,
low- and moderate-income housing unless the agency makes
findings that the housing is not needed (Health & Safety Code
Section 33334.2).
4)Allows agencies to exercise any or all of its powers to
construction, rehabilitate or preserve affordable housing for
low- and moderate-income persons including: donate real
property, finance insurance premiums, construct buildings or
structures, acquire buildings or structures, rehabilitate
buildings or structures, provide subsidies to low- and
moderate-income persons, and maintain the community's supply
of mobilehomes (Health & Safety Code Section 33334.2).
5)Declares that "blighted areas" are physical and economic
liabilities that require redevelopment in the interest of the
health, safety, and general welfare of community and state
residents (Health & Safety Code Section 33030).
6)Provides that whenever housing units for persons and families
of low or moderate income are destroyed or removed from the
low- and moderate income housing market as part of a
redevelopment project the agency must rehabilitate, construct
or develop enough housing units with an equal or greater
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number of bedrooms than those destroyed, with in the project
area and within four years. (Health & Safety Code Section
33413)
7)Allows a redevelopment agency to fulfill the requirement to
replace low- and moderate-income housing units that are
destroyed by causing two units for every one unit that would
otherwise have been required inside a project area (Health &
Safety Code Section 334713).
FISCAL EFFECT : None.
COMMENTS :
Background :
Legislative findings declare that the fundamental purpose of
redevelopment is to "expand the supply of low- and moderate
income housing, employment opportunities and provide an
environment for social, economic and psychological growth and
well-being for all citizens."
Redevelopment agencies must annually set aside 20% of their
property tax increment revenues into an L&M Fund for
"increasing, improving and preserving" affordable housing.
Agencies are required to spend these funds within three years
and the money must benefit low- and moderate- income families
and individuals. Redevelopment agencies generally spend their
affordable housing funds inside the project areas that generated
the revenue. Redevelopment agencies have relatively broad powers
in expending monies from L&M Fund including acquiring land,
donating the land, acquiring and rehabilitating buildings,
providing subsidies in certain circumstances and maintaining the
community's supply of mobilehomes. They can spend the money
outside the project areas but still inside the city limits if
they make a finding that the housing benefits the project area.
Redevelopment agencies are required to replace any low- or
moderate-income housing units that are destroyed as part of the
redevelopment project with in four years. The units must be
replaced with an equal number of units that have an equal or
greater number of bedrooms as those destroyed or removed from
the project area. Redevelopment agencies are permitted to build
replacement units outside the project area but they must provide
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two units for each one unit required inside the project area.
Redevelopment agencies' ability to use L&M Funds for purposes
other than "increasing, improving and preserving" is limited.
Health & Safety Code Section 33334.3(d) states, it is the intent
of the Legislature that to the maximum extent possible L&M Funds
be spent to defray the costs of production, improvement and
preservation of low- and moderate-income housing and that the
amount spent on planning and general administrative activities
not be disproportionate to the amount spent on production,
improvement and preservation.
In a limited case funding a homeless shelter may be an approved
activity for a redevelopment agency. Due to the significant
homeless population in the City and County of San Francisco, an
exception was made to existing law to allow using non-housing
redevelopment funds for shelters inside or outside the project
area.
This bill would allow a redevelopment agency to transfer up to
5% of funds from their L&M Fund each year to a redevelopment
agency or to a housing provider outside of the project area in
which the funds were collected for the construction of emergency
or transitional housing. The funds could be used on an
emergency shelter or transitional housing development with in 40
miles of the donor agencies' community.
Purpose of this bill : According to the author, the homeless
problem including families with children is well known and
documented. State bond funds for shelters and transitional
housing will be depleted by the end of 2010, according to the
testimony of Lynn Jacobs, Director of the Department of Housing
and Community Development (HCD) at the informational hearing on
homelessness held by this committee on February 9, 2010. What
is lacking is a permanent source of funding that would lead to
the construction of homeless shelters and transitional housing
units. AB 2759 attempts to address that deficiency by proposing
a alternative method of funding by allowing redevelopment
agencies, each fiscal year to use up to five percent of their
accumulated L&M Funds to construct homeless shelters and
transitional housing units outside their own community, but
within their region, by pooling these resources.
Arguments in support : According to the City of La Quinta, the
sponsor of this bill, approximately 45 % of Riverside County's
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homeless populations are located in the Coachella Valley, which
saw its homelessness rate increase 16% from 2007 to 2009.
Recognizing the seriousness of this situation in June 2006, the
Coachella Valley Association of Governments formed a valley wide
taskforce on homelessness. Despite the fact that the city of La
Quinta has not experienced a high, chronic homelessness problem,
the sponsor, recognizes homelessness as a regional issue. AB
2759 seeks to create a long-term funding opportunity for
communities to deal with homelessness by constructing shelters
and transitional housing.
Arguments in opposition : According to Western Center on Law &
Poverty (WCLP), the general rule is that redevelopment housing
funds shall be expended in the project area that generated the
tax dollars. This rule is sound for a number of reasons. It
minimizes the disruption caused by redevelopment; it fosters and
ends discriminatory housing projects as people of color are able
to remain in project area where the area might otherwise be
gentrified. L&M Funds are intended to create permanent housing
solutions, especially for those displaced by redevelopment.
Redevelopment housing funds prevent homelessness for families
who cannot afford increased rents. WCLP argues it is better to
produce housing to reduce homelessness rather than deal with the
problem further downstream.
Staff comments : The committee may wish to consider that HCD
recently announced the release of a Notice of Funding
Availability for the Emergency Shelter Assistance Program, which
provides funding for the construction or renovation of emergency
shelters. There is approximately $39 million available for the
program.
Double referred : The Assembly Committee on Rules referred AB
2759 to the Committee on Housing and Community Development and
Local Government. If AB 2759 passes this committee, the bill
must be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION :
Support
City of La Quinta (sponsor)
American Planning Association, California Chapter
City of Cathedral City
City of Indian Wells
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City of Palm Desert
City of Rancho Mirage
Coachella Valley Regional Housing Trust
Coachella Valley Rescue Mission
KDI Elements, Palm Desert
La Quinta Chamber of Commerce
Peterson, Slater & Osborne Accountancy Corporation, La Quinta
The Retirement Coach, Palm Desert
Sunrise Company, Palm Desert
Eight individual letters (Indian Wells, Indio, Indio Hills, La
Quinta, and Palm Springs
Opposition
Aging Services of California
California Rural Legal Assistance Foundation
Western Center on Law & Poverty
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085