BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 477|
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THIRD READING
Bill No: SB 477
Author: Florez (D)
Amended: As introduced
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 7-3, 4/21/09
AYES: Lowenthal, DeSaulnier, Hollingsworth, Kehoe,
Oropeza, Pavley, Simitian
NOES: Huff, Ashburn, Harman
NO VOTE RECORDED: Wolk
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Low- and moderate-income housing: agency powers
SOURCE : Author
DIGEST : This bill clarifies that a redevelopment agency
may use its low- and moderate-income housing
funds to finance the purchase of low-income housing tax
credits.
ANALYSIS :
Low-Income Housing Tax Credits
The Low-Income Housing Tax Credit Program supports the
development, rehabilitation, and preservation of affordable
rental housing that is affordable to very-low and
extremely-low income households. The California Tax Credit
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Allocation Committee awards these tax credits to individual
developments through a competitive process. Because the
developers who receive credits generally have little or no
tax liability of their own, they invite corporations to buy
in to their projects in order to take advantage of the tax
credits. These equity investments can cover up to 60
percent of a project's total development cost.
The amount of federal credits available to California each
year is equal to $1.95 per capita, or roughly $71 million.
Because investors can take the credit each year for a
10-year period, the actual up-front value of the annual
federal credits is 10 times this amount, or $710 million.
Redevelopment Low and Moderate Income Housing Funds
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. In carrying out these
responsibilities, a redevelopment agency may exercise any
of all of its powers for the construction, rehabilitation,
and preservation of affordable housing, including the
following:
1. Acquire real property or building sites.
2. Improve real property or building sites with onsite or
offsite improvements.
3. Donate real property to public or private persons or
entities.
4. Finance insurance premiums.
5. Construct buildings or structures.
6. Acquire buildings or structures.
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7. Rehabilitate buildings or structures.
8. Provide subsidies to income-qualified households to the
extent they cannot obtain housing at affordable costs on
the open market.
9. Develop plans, pay principal and interest on
indebtedness, or pay financing charges.
10.Maintain a community's supply of mobilehomes.
11.Preserve affordable housing units that are threatened
with imminent conversion to market rates.
This bill clarifies that a redevelopment agency may loan,
grant, or otherwise contribute or pledge funds to an
authorized purchaser of low-income housing tax credits for
the construction of low-income rental housing located
within the agency's jurisdiction. This bill defines an
authorized purchaser as a joint powers entity that consists
of no less than 100 local agencies.
Background
Last year, California Tax Credit Allocation Committee
awarded tax credit allocations of more than a billion
dollars in order to assist over 15,000 units of affordable
rental housing. Proponents estimate that 50 percent or more
of these tax credits will go unused, as developers are
unable to secure equity investors with the tax liability to
make use of the tax credits. Thus, developers will be
unable to proceed with construction of the affordable
housing units, costing California both these affordable
housing units and the related construction jobs. This bill
seeks to use L&M funds of redevelopment agencies as a
source of financing to serve as a substitute for the lack
of tax credit equity investors throughout California and to
stimulate the economy by way of creating immediate jobs in
the construction arena.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/4/09)
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California Redevelopment Association
JJA:mw 5/4/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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