BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
194 (Florez)
Hearing Date: 05/28/2009 Amended: 05/18/2009
Consultant: Mark McKenzie Policy Vote: Loc Gov 3-2
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BILL SUMMARY: SB 194 would enact the Community Equity
Investment Act of 2009, which provides specified incentives to
local governments to encourage planning decisions that account
for disadvantaged unincorporated communities.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Increased bond allocations bond cost pressures of perhaps
$1,800 Bond*
CDBG program potentially significant impact on
smallerFederal
cities and counties (see staff comments)
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* The Safe Drinking Water, Water Quality and Supply, Flood
Control, River and Coastal Protection Fund of 2006
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STAFF COMMENTS: SUSPENSE FILE.
Proposition 84, approved by voters in November of 2006, enacted
The Safe Drinking Water, Water Quality and Supply, Flood
Control, River and Coastal Protection Bond Act of 2006, which
authorized the sale of $5.4 billion in general obligation bonds,
including $90 million for "urban greening projects" and $90
million for "planning grants and incentives." The Strategic
Growth Council, established by SB 732 (Steinberg), Chapter 729
of 2008, administers the programs that allocate these funds.
SB 194 would require the Strategic Growth Council, when awarding
funds for urban greening projects and planning grants and
incentives, to give priority to applicants that incorporate the
following general plan amendments into proposed planning
activities:
Identification, description, and mapping of each
"disadvantaged unincorporated community," defined as a fringe,
island, or legacy community in which the median household
income is 80 percent or less than the statewide median.
Quantification and analysis of six specified conditions
regarding deficient services, facilities, and housing
conditions.
Statement of quantified goals, policies, and objectives for
mitigating or eliminating those deficiencies, including an
analysis of the feasibility of annexation and expanding
services and infrastructure for specified unincorporated
communities.
A program of actions to achieve these goals, including the
activities, timelines, and identification of available
resources.
The bill would also require the Strategic Growth Council to
provide additional funding, as appropriate, to applicants that
incorporate these general plan amendments into their proposed
planning activities. Staff notes that this provision would
create bond cost
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SB 194 (Florez)
pressures of $1.8 million to the extent that the Council awarded
an additional one percent of the $180 million in available bond
funds to cities and counties that account for disadvantaged
unincorporated communities in their application.
In awarding financial assistance for the planning and
development of sustainable communities, SB 194 would also
require the Council to give priority to an applicant that
includes an assessment of island and fringe communities and how
community investments would assist in meeting regional
greenhouse gas reduction targets.
Community Development Block Grants
The Community Development Block Grant (CDBG) program was
established by the federal Housing and Community Development Act
of 1974 and is administered at the federal level by the U.S.
Department of Housing and Urban Development (HUD). The primary
objective of the CDBG program is the development of viable urban
communities by providing decent housing and a suitable living
environment and by expanding economic opportunities for
households of low and moderate income. HUD allocates money
directly to large cities and metropolitan areas (CDBG
entitlement funds). The state CDBG program, which is
administered by the Department of Housing and Community
Development (HCD), provides federal funds to cities with a
population of less than 50,000 and counties with a population in
unincorporated areas of less than 200,000 (CDBG non-entitlement
funds). In order to be eligible for non-entitlement CDBG funds,
a nonmetropolitan city or county must submit its housing element
to HCD.
SB 194 would condition the eligibility for non-entitlement CDBG
funds on the certification that a city or county applicant has
updated its general plan by January 1, 2013 to include the
specified provisions noted above that identify and plan for
disadvantaged unincorporated communities. Staff notes that the
additional identification and mapping, quantification and
analysis of deficiencies, and formulation of strategies to
address the problems facing these disadvantaged communities
would come at a substantial cost to local agencies. By
requiring applicants for non-entitlement CDBG funds to dedicate
resources to expanding the general plan as a condition for
funding, this bill may impose restrictions that prevent poor
smaller local communities from accessing these federal funds.
This could create a substantial burden for many small cities and
rural counties in the Central Valley, where disadvantaged
unincorporated communities are most common. In order to
administer the state CDBG program, HCD would presumably ensure
that a city or county has certified that it has complied with
the specified general plan update prior to considering an
application. HCD costs are unknown, but likely in the range of
$25,000 annually. If the intent is for HCD to perform the
actual certification that a city or county has amended its
general plan, these administrative costs could be substantially
higher.
SB 194 would also require a city or county that is eligible for
CDBG entitlement funds to spend the funds within each existing
supervisorial or city council district based on the percentage
of low and moderate-income persons in each district. The bill
requires that at least 75% of all funds provide a benefit to
targeted income groups. It is unclear whether the state has any
authority to impose conditions on funds that cities and counties
receive directly from the federal government.