BILL ANALYSIS �
AB 345
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 345 (Torres)
As Amended August 21, 2012
Majority vote
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|ASSEMBLY: | |(May 16, 2011) |SENATE: |28-4 |(August 23, |
| | | | | |2012) |
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(vote not relevant)
Original Committee Reference: TRANS.
SUMMARY: Reforms, beginning January 1, 2018, how redevelopment
agencies (RDA) spend their Low and Moderate Income Housing Funds.
The Senate amendments delete the Assembly version of this bill, and
instead:
1)Requires RDAs to post a copy of their annual report on the
agency's or the community's Internet Web site.
2)Requires RDAs to include the following information as part of the
annual report:
a) The percentage of funds from the Low and Moderate Income
Housing Fund (L&M fund) used for planning and general
administration costs;
b) An itemized list of planning and general administration
expenditures from the L&M fund and an explicit description of
how the expenditures are necessary for the production,
improvement or preservation of low- and moderate-income
housing;
c) Information describing the employees that are paid from the
L&M fund including the title, salary, wages, benefits, and the
nature of the employee's activities eligible to be paid out of
the L&M fund;
d) A list of the overhead costs that are paid directly or
indirectly from the L&M fund;
e) A statement of the amount and percentage of funds deposited
into the L&M fund exclusive of debt proceeds expended for
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planning and administration in each of the preceding five
fiscal years that begin after December 31, 2011;
f) A list of all the properties owned by a RDA purchased with
L&M funds, the date of acquisition for each property, a RDA's
intended purpose for the property, and the amount if any of L&M
funds used to acquire and maintain the property;
g) For each fiscal year since the agency's last adopted
implementation plan, a list of the replacement housing
obligations of the RDA including the number of units that must
be replaced, location, and status of the replacement and
production units; and,
h) For each housing project for which a RDA designates
encumbered funds, or amends an existing designation or
encumbrance during the fiscal year and where the RDA's
financing constitutes more than 50% of the total cost of the
housing project provide the project name, location, number of
affordable units, affordability level, amount of agency
financing and total cost of the low- and moderate-income units.
3)Provides an agency that has deposited less than $100,000 in the
L&M Fund is exempt from providing the information required by a)
through h) above.
4)Requires the legislative body to adopt a separate written
resolution finding that based on the annual report the actual
planning and general administrative expenses do not exceed the
limits allowed.
5)Requires the Controller, on or before April 1 of each year, to
post on its Web site a list of RDAs with major audit violations.
6)Allows the Controller to consult with locally affected community
groups as part of determining if an agency has corrected a major
audit violation.
7)Allows a RDA that is subject to a court order as a result of a
major audit violation to continue to issue, sell, or deliver bonds
or incur debt to increase, improve, preserve, or assist in the
construction, or rehabilitation of housing units for extremely
low, very low, low, or moderate income housing.
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8)In the 60 day window between a court's initial finding of a major
audit violation and a final ruling, allows a RDA to pay the
budgeted operation and administration of the agency, as opposed to
only 75% of the budgeted amount.
9)Prohibits a RDA that is subject to a court order as result of a
major audit violation to exercise the power of eminent domain.
10)Removes the statutory caps on the amount of a monetary sanction
that a court can order a RDA to pay for a major audit violation
and permits the court to determine a sanction that is commensurate
with the violation.
11)Prohibits a RDA from paying a court sanction from the L&M fund or
any other special fund related to housing.
12)Provides that an action filed by a court to compel a RDA to
correct a major audit violation does not preclude an action by any
other interested party or a resident of the jurisdiction.
13)Makes failure to comply with the restrictions regarding eligible
expenditures for planning and general administration from the L&M
fund a "major audit violation."
14)Requires the Department of Housing and Community Development
(HCD) to conduct audits of RDAs to ensure compliance with the
housing provisions of the Community Redevelopment Law (CRL).
15)Requires HCD to review all of the following in audits of RDAs:
a) Agency compliance with production and replacement of housing
obligations;
b) Recording and monitoring of affordability covenants;
c) Provision of relocation assistance;
d) Propriety of deposits to and expenditures from the L&M fund;
e) Compliance with the debt limit of the agency;
f) Adoption of a legally sufficient implementation plan;
g) Major audit violations as defined in the Health and Safety
Code Section 33080.8; and,
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h) Accounting practice or provision of the CRL in the
discretion of the department.
16)Requires RDAs to annually remit .05% of the L&M tax increment to
HCD to conduct redevelopment audits.
17)Requires HCD to determine, on or before April 1 of each year,
whether an audit or investigation from the previous year, contains
a major audit violation and post those on the HCD Internet Web
site.
18)Requires on or before June 1 of each year, HCD to determine if a
major audit violation has been corrected by consulting with each
affected agency and locally affected community groups.
19)Requires HCD to direct RDAs to take action to correct audit
violations.
20)Provides that if HCD determines that an RDA has not taken action
within 180 days to correct an audit violation, it must forward all
relevant documents to the Attorney General (AG) for action.
21)Requires HCD to forward a copy of any audit or investigation of a
RDA to the AG and the Controller.
22)Requires HCD to notify a RDA and its legislative body when it
sends an audit violation to the AG.
23)Prohibits HCD from initiating or settling any litigation or to
resolve any audit or investigation in a manner contrary to law.
24)Allows the Controller to conduct quality control reviews of RDA
audits to the extent feasible within existing resources and to
communicate the results of the review to the RDA and the
independent auditor.
25)Requires that if the Controller finds that an audit was conducted
in an unprofessional manner, to refer the case to the California
Board of Accountancy (Board).
26)Provides that if the Board determines that the independent
auditor conducted the audit in an unprofessional manner then the
auditor is prohibited from performing any RDA audits for three
years and the Board may impose additional penalties.
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27)Provides that whenever the Controller determines through two
consecutive quality control reviews that an audit was not
performed in substantial conformity with guidelines in state law,
the Controller will notify the auditor and the Board in writing.
28)Gives the auditor 30 days after receiving the Controller's notice
to file an appeal or the Controller's determination is final.
29)Provides that if the auditor files an appeal, the Board will
investigate and may find that the Controller's determination will
not be upheld and has no effect or schedule an appeal for hearing.
30)Provides that if the Controller's determination becomes final,
the auditor is prohibited from conducting audits for three years
and is subject to any additional conditions ordered by the Board.
31)Provides that no later than March 1, following the date at which
the Controller's determination becomes final, the Controller will
notify each RDA of the auditors that are ineligible as a result of
misconduct.
32)Allows the Board to take any disciplinary action against an
auditor that it deems appropriate under the law.
33)Requires a RDA that is found to have deposited less into the L&M
fund than required by law or to have spent money from the L&M Fund
for purposes other than increasing, improving, and preserving the
community's supply of affordable housing, to repay the funds with
interest, plus an additional 50% of that amount and interest.
34)Applies the 10-year statute of limitations for failure to deposit
or expend L&M funds correctly to merged redevelopment project
areas and to any other moneys that any agency must deposit in the
L&M fund in addition to tax increment.
35)Prohibits repayment of any L&M funds required to meet the
set-a-side requirements to come from any other funds designated
for affordable housing.
36)Establishes a double cap on the amount of L&M funds that an RDA
can spend on planning and general administrative costs.
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37)Places a 10% cap on the amount of L&M funds that a RDA can spend
on general administrative costs including:
a) Employee compensation costs and related non-personnel costs,
such as travel and training, paid to or on behalf of any
agency, city, or county employee whose duties include
permissible L&M housing activities other than direct program
and project administration (i.e., line staff);
b) Employee compensation costs and related non-personnel costs
paid to or on behalf of any agency, city, or county employee
who supervises or manages line staff or who provides general
administrative services, such as finance, legal, and human
resources that indirectly support permissible L&M housing
activities;
c) Overhead costs, such as rent, equipment, and supplies; and,
d) The total value of any contracts for agency planning or
administrative services that are related to permissible housing
activities and that are not associated with a specific
development project.
38)Places a 10% cap on the amount of L&M funds that a RDA can spend
on program and project staff costs, including employee
compensation costs and related non-personnel costs that are
directly and necessarily associated with development of a specific
housing development project including, negotiation and project
management of disposition and development agreements, land leases,
loan agreements and similar affordable housing agreements,
redevelopment agency work on entitlements for eligible affordable
housing developments, loan processing, and servicing, inspection
for new rehabilitation units, construction monitory and monitoring
affordable housing units.
39)Allows a RDA to spend up to 2% of their L&M fund on code
enforcement provided that the RDA complies with relocation and
replacement rules if tenants are displaced or homes are destroyed
as a result of code enforcement activities.
40)Allows a RDA to spend any difference between the cap on "general
administrative and planning" (employee compensation for executive
management cost and overhead costs) and actual administrative
expenditures on "program and project staff costs."
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41)Requires employee compensation for executive and management
staff, to be justified by an independent cost allocation study
that is no more than six years old and not represent a greater
proportion of the employees total compensation than the proportion
of employees working directly and exclusively on activities
required for the L&M fund in comparison to the total number of
employees supervised, managed and directly supported by the
employee.
42)Provides that the limitations planning and administrative costs
do not apply to a specific project area during the first five
years.
43)Provides that the planning and administrative costs apply to
project areas where the project area is amended or if the tax
increment of a new or amended project area is deposited into an
L&M fund covering more than one project area.
44)Prohibits a RDA from spending L&M funds on any of the following:
a) Code enforcement;
b) Land use planning or development of or revision of the
housing element except for the payment of normal
project-related planning fees that is applicable to similar
development projects, except that a RDA may spend L&M funds on
the cost of staff participation in the development of the
housing element provided that those costs are counted toward
the 10% cap on planning and administration costs;
c) Lobbying; and,
d) Administration of non-redevelopment activities that are not
related to the activities required under the L&M fund.
45)Provides that the completion of the current 10-year
implementation plan for a RDA (provided the 10-year period began
before January 1, 2010), the proportionality requirements dictated
by regional housing needs assessment (RHNA) no longer apply, and
funds must be expended from the L&M fund as follows:
a) Requires at least 75% of each RDA's expenditures from the
L&M fund shall directly assist the new construction,
acquisition, and substantial rehabilitation or preservation of
housing for persons of extremely low, very low, or low income;
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b) Requires at least 50% of each RDA's expenditures from the
L&M fund shall directly assist the new construction,
acquisition, and substantial rehabilitation or preservation of
housing for persons of extremely low or very low income; and,
c) Requires that at least 25% of each RDA's expenditures from
the L&M fund shall directly assist the new construction,
acquisition, and substantial rehabilitation or preservation of
housing for persons of extremely low income.
46)Allows a RDA to count expenditures for extremely low-income
housing toward the percentages required for very low-income and to
count expenditures for extremely low- and very low-income toward
the percentages required for low-income.
47)Deletes the ability of an agency to adjust the proportionality
requirement for units constructed with non-redevelopment funds.
48)Requires a RDA to demonstrate in each implementation plan at the
end of five years that the agency's aggregate expenditures from
the L&M fund exclusive of debt service payments from the onset of
the new proportionality requirements satisfy the requirements.
49)Defines "preservation" as preserving affordability of an assisted
housing development that is eligible for prepayment or termination
or the rental restrictions may expire within five years.
50)Defines "housing for persons of extremely low income" as housing
that is available at a rent or housing cost that is affordable to
households earning 30% of the area median income or 30% of the
statewide median income, whichever is greater.
51)Provides that if a RDA has deposited less than $2 million in the
L&M fund in the first five years after the onset of the new
proportionality requirements, the RDA has 10 years to fulfill the
requirements to spend the L&M funds in the percentages described
above for extremely low, very low and low income housing for the
first time.
52)Allows, for purposes of the proportionality requirements, an
agency to count contractually obligated funds as expended funds,
provided that the contract is with an entity that is independent
of the agency or the community for the development for a specific
eligible housing development.
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53)Provides that if a contract to expend funds from the L&M fund for
a specific eligible housing development is terminated, the funds
may no longer be counted towards meeting the proportionality
requirements.
54)Provides that if a RDA fails to meet the proportionality
requirements, they may not expend any money from the L&M fund for
households whose incomes exceed 50% of median income until they
have expended funds for extremely low, very low and low income
housing that should have been spent in previous implementation
plan periods.
55)Provides that if a RDA fails to spend L&M funds in same
proportion as the number of persons in all age groups, they may
not expend any money from the L&M fund for senior households until
they have expended funds for all-age housing that should have been
spent in previous implementation plan periods.
56)Deletes the authority of an agency to disburse excess surplus
funds to the local housing authority.
57)Requires for each interest in real property acquired using money
from the L&M fund, a RDA within five years of acquiring the
property, must do one of the following:
a) Enter into a disposition and development agreement or a land
lease with a third party for the development of housing
affordable to persons and families of low and moderate income;
b) Obtain final land use entitlements and secure full financing
for agency development for housing that is affordable to
persons and families of low and moderate income; and,
c) Submit a remedial action plan for the property to the
appropriate oversight agency including, but not limited to, the
Department of Toxic Substances Control, the Regional Water
Quality Control Board or the Office of Human Health Risk
Assessment for the cleanup of contamination.
58)Provides that if a RDA has not completed one of the above within
five years, or if less than 10% of the dwelling units or floor
area of a project is developed within 10 years from the date the
agency originally acquired the property, the agency must reimburse
the L&M fund 150% of the amount expended to acquire and maintain
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the property or 150% the current fair market value of the property
whichever is more.
59)Provides that if a RDA owns two or more adjacent properties that
make up a single redevelopment project the date of acquisition
will be the date of acquisition for the last acquired property
provided that the date is not later than five years after the
acquisition of the first property.
60)Provides that a RDA may adopt a resolution to petition HCD for an
extension of the five year deadline and the department may grant a
single extension of up to five years if the department makes a
finding that the failure to complete the required activities is
beyond the agency's control and that the agency has a feasible
plan for development.
61)Requires HCD to solicit comments from known or expected parties
interested in an extension petition.
62)Requires HCD to establish a schedule of fees to cover the cost of
reviewing the petition and to charge the RDA from funds other than
those designated for affordable housing.
63)Provides that a RDA must deposit 150% of the fair market value of
the property at the time it is sold or transferred or if the
property is not sold or transferred for the fair market value of
the land at the time a building permit is issued for the property
if either of the following conditions exist:
a) A property acquired using moneys from the L&M fund is sold
or transferred for purpose other than housing that is
affordable to persons and families of low and moderate income;
or,
b) A property that is acquired using money from the L&M fund is
developed such that less than 50% of the floor area or a
percentage of the floor area equal to the amount of L&M moneys
that were used to acquire the property whichever is less, is
housing for persons and families of low and moderate income.
64)Requires that for units destroyed within the project area on or
after January 1, 2012, a RDA is required to replace vacant units
such that the replacement units are available at affordable
housing costs and occupied by persons and families in the same or
lower income category in the same proportion as the units occupied
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or last occupied by low and moderate income households in the
property.
65) Requires generally a RDA to replace destroyed units with new
construction.
66)Provides that up to 25% of the replacement obligation incurred
during a five-year implementation plan may be fulfilled by either
of the following:
a) With units that have been rehabilitated such that the
after-rehabilitation values increased by 50% or more of the
pre-rehabilitation value and the units being replaced were
either:
i) At risk of demolition or closure due to substandard
conditions and occupied by extremely low or very low income
households; and,
ii) Vacant due to substandard conditions.
b) With substantially rehabilitated multi-family units that the
agency has substantially rehabilitated within the project area,
two units for each unit the agency is obligated to replace, or
outside the project area three units for each unit the agency
is obligated to replace.
67)Requires a RDA to adopt a separate written resolution after a
public hearing that based on substantial evidence that the
rehabilitation of the replacement dwelling units complies with the
replacement unit requirements.
68)Provides that if a court finds that a RDA has failed to comply
with replacement housing requirements, the court shall prohibit
the agency from issuing any debt for any project areas except debt
from which all proceeds will be deposited in the L&M fund until
the court determines that the RDA has complied with this section.
69)Adds the following to the information a RDA is required to
include in a replacement housing plan:
a) A description of the occupancy and affordability
restrictions to be imposed on replacement dwelling units;
b) Substantial evidence supporting a finding that the
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replacement dwelling units will meet the needs of households in
the income categories of the households displaced from the
dwelling units that the replacement units are intended to
replace; and,
c) A declaration of whether the RDA intends to rehabilitate
existing dwelling units.
70)Provides that if a RDA ceases its activities prior to the end of
an affordability covenant, then it will designate a successor
agency that will monitor and enforce the covenants for the
remaining period of the covenant.
71)Provides that if no successor agency is designated at the time a
RDA ceases its activities then the community must monitor and
enforce the covenants for the remaining period of the covenant.
72)Includes intent language regarding the need for greater
accountability and more auditing of RDAs.
73)Deletes the authority given to RDAs to offer money in the L&M
fund of a merged project area to the housing authority for the
purpose of constructing or rehabilitating affordable housing if
the funds have been deposited in the L&M fund for six years but
have not been spent.
74)Adds the following to the list of required information the
implementation plan for an RDA must include:
a) The proposed amount of expenditure for the L&M fund for new
construction, acquisition and substantial rehabilitation or
preservation for housing for persons of extremely low, very low
or low income during each year of the implementation plan;
b) The replacement units that satisfy each replacement housing
obligation;
c) In the case when replacement units have been destroyed or
removed, but units are not yet complete, the proposed location
of the replacement units that are not yet complete; and,
d) A complete accounting for compliance with the RDA's
affordable housing obligation over the life of the plan
including the total number of units the RDA is obligated to
replace and the total number of units required to be
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constructed before the end for the project area life.
75)Includes the following information for all affordable housing
units that are replaced, constructed, rehabilitated or have
covenants attached to them and are included in the database
required by existing law:
a) The street address and assessor's parcel number of the
property and for properties that are listed as a group, the
number of units;
b) The size of each unit based on the number of bedrooms;
c) The affordability level of each unit;
d) The year in which the construction or substantial
rehabilitation of the unit was complete;
e) The date of recordation and document number of the
affordability covenants or restrictions;
f) The date on which the covenants or restrictions expire;
g) For projects developed prior to January 1, 2002, a statement
of the effective period of the land use controls established in
the plan at the time the unit was developed;
h) For owner-occupied units that have changed ownership during
the previous implementation plan period the date and document
number of the new affordability covenants or other document
recorded to ensure that the affordability restrictions run with
the land; and,
i) Whether units count toward replacement units and the units
they are replacing;
76)Requires the following information as part of the implementation
plan for owner-occupied and rental units that are required to
replace units, are counted toward the RDA's housing obligation and
are not included in the database required by existing law:
a) The street address and if available assessor's parcel number
of the property;
b) For properties where units are listed as a group, the number
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of units;
c) The affordability level of each unit;
d) The date of recordation and document number or restrictions;
and,
e) Whether the units count toward the replacement obligation
and reference the destroyed units they are replacing.
77)Permits the implementation plan to omit any property that is used
to confidentially house victims of domestic violence
78)Provides that failure to meet any of the following obligations
will be an ongoing violation until the RDA has fulfilled the
obligation:
a) The deposit and expenditure requirements for the L&M fund;
b) The obligation to eliminate project deficits to the L&M
fund;
c) The obligation to expend or encumber excess surplus funds;
d) The obligation to provide relocation assistance;
e) Replacement and production housing obligations;
f) The obligation to monitor and enforce affordability
covenants; and,
g) The obligation to continue the project past the
effectiveness date of the redevelopment plan in order to meet
unfulfilled housing requirements.
AS PASSED BY THE ASSEMBLY , required the California Department of
Transportation (Caltrans) to add representatives from non-motorized
interest groups to the California Traffic Control Devices Committee
(CTCDC). Specifically, this bill :
1)Added groups representing users of streets, roads, and highways to
the list of entities that Caltrans must consult with before
adopting rules and regulations prescribing uniform standards and
specifications for official traffic control devices, as specified.
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2)Specified that Caltrans shall ensure that the CTCDC includes
representatives of non-motorized user groups.
3)Defined, for the purposes of this section, "users of streets,
roads, and highways" to mean bicyclists, children, persons with
disabilities, motorists, movers of commercial goods, pedestrians,
users of public transportation, and seniors.
4)Made related, clarifying amendments.
FISCAL EFFECT : Unknown
COMMENTS : In 2011, the Legislature passed SB 450 (Lowenthal) which
reformed the process by which redevelopment agencies were required
to spend the 20% set-a-side including, limiting the amount that
could be spent on planning and administration costs, targeting L&M
funds to extremely low income units, and creating penalties for RDAs
that did not spend their housing funds in a timely manner.
Although RDAs were dissolved in 2011 by AB 26 X1 (Blumenfield),
Chapter 5, Statutes of 2011-12 First Extraordinary Session, and AB
27 X1 (Blumenfield), Chapter 6, Statutes of 2011-12 First
Extraordinary Session, SB 1156 (Steinberg) creates a new entity, the
Sustainable Communities Investment Authorities, which can capture
use tax increment and spend it on SB 375 (Steinberg), Chapter 728,
Statutes of 2008, type developments. Under SB 1156, sustainable
communities investment authorities are deemed to be redevelopment
agencies with same rights, responsibilities and obligations of
former redevelopment agencies.
SB 375 created a new procedure for land use planning that would
require local governments to plan in a way that would accomplish the
greenhouse gas reduction goals of AB 32 (Nu�ez and Pavley), Chapter
488, Statutes of 2006: The California Global Greenhouse Gas
Reduction Act of 2006. SB 375 required metropolitan planning
organizations to adopt sustainable community strategies (SCS) in
their regional transportation plans for the purpose of reducing
greenhouse gas emissions, aligning planning for transportation and
housing, and creating specified incentives for the implementation of
those strategies. SB 1156 would authorize the use of tax increment
as well as other funding sources to finance some of the
projects-small walkable communities, transit priority areas and
clean energy manufacturing-that would be part of the SCS.
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These new entities are required to comply with most of the
provisions of the CRL including the requirement to set-a-side 20% of
any tax increment collected in a community sustainable investment
area for the creation, preservation and rehabilitation of low and
moderate-income housing. Sustainable Communities Investment
Authorities also have the authority under CRL to declare an area
within a sustainable community investment area blighted and to use
the tool of eminent domain.
This bill would implement the SB 450 (Lowenthal) reforms to the CRL
with a delayed implementation of five years in an effort to insure
that the newly formed Sustainable Communities Investment Authorities
are maximizing the use of property taxes that are collected for
community redevelopment as proscribed by this bill to create
affordable housing.
According to the author, the five year delayed implementation is
necessary to avoid conflicts with the existing process of winding
down redevelopment agencies. It is unlikely that the new
Sustainable Communities Investment Authorities will collect any or
significant tax increment in the next five years, as property taxes
will go to pay for the remaining enforceable obligations of former
redevelopment agencies. Additionally, the five year delayed
implementation allows for a review of the CRL to determine what
provisions should continue to apply to successor agencies and
successor housing agencies and which should be phased out.
Related legislation: This bill is the same as SB 450 (Lowenthal)
which was passed by the Assembly by a vote of 74-0. SB 450
(Lowenthal) was vetoed by the Governor because the court challenge
to AB 26 X1 and AB 27 X1 was pending.
I am returning Senate Bill 450 without my signature.
This measure contains significant legal changes that will
affect Low
and Moderate Income Housing funds managed by redevelopment
agencies,
but this bill is a little ahead of its time. The California
Supreme
Court has indicated that it will rule on California
Redevelopment
Agency v. Matosantos by January 15, 2012, and I believe it
would be
premature to enact such substantive reforms before that time.
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Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319- 2085
FN: 0005519