BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1585 (J. Perez) - Community development.
Amended: August 6, 2012 Policy Vote: T&H 8-1
Urgency: No Mandate: No
Hearing Date: August 16, 2012
Consultant: Mark McKenzie
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: AB 1585 would appropriate $50 million in
disencumbered Proposition 1C bond funds for the Infill
Infrastructure Program and the Transit-Oriented Development
(TOD) Program. The bill would also transfer the responsibility
to perform housing functions of a former redevelopment agency
(RDA) to the Department of Housing and Community Development
(HCD) under specified circumstances.
Fiscal Impact:
Appropriation of $25 million from the Regional Planning,
Housing, and Infill Incentive Account to HCD (bond funds).
Appropriation of $25 million from the Transit-Oriented
Development Implementation Fund to HCD (bond funds).
Unknown, potentially significant HCD administrative costs
to perform the housing functions of a former RDA in those
circumstances in which the responsibility is relinquished by
local housing authorities. Actual costs would depend upon
the number of jurisdictions that transfer responsibility to
HCD, and the composition of the housing assets and resources
that are transferred. All HCD costs would be recoverable
from housing assets and resources.
Background: Proposition 1C, The Housing and Emergency Shelter
Trust Fund Act of 2006, includes a provision to deposit $850
million in general obligation bond funds in the Regional
Planning, Housing, and Infill Incentive Account for specified
infill incentive grants and brownfield cleanup that promotes
infill development, upon appropriation by the Legislature.
Proposition 1C also includes a provision to deposit $300 million
in the Transit-Oriented Development Account for expenditure on
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the TOD Program, upon appropriation by the Legislature.
Under the Infill Infrastructure Grant (IIG) Program, HCD offers
gap financing grants to cover the costs of infrastructure
improvements necessary for the development of infill housing.
Under the TOD Program, HCD provides grants to cities, counties,
cities and counties, or transit agencies for the provision of
infrastructure necessary for the development of higher density
uses within close proximity to a transit station, or to
facilitate connections between that development and the station.
Citing a significant State General Fund deficit, Governor
Brown's 2011-12 budget proposed eliminating RDAs and returning
billions of dollars of property tax revenues to schools, cities,
and counties to fund core services. Among the statutory changes
that the Legislature adopted to implement the 2011-12 budget, AB
X1 26 (Blumenfield) Chap 5/2011 dissolved all RDAs and
established procedures for winding down RDA activity. Existing
law requires successor agencies to dispose of former RDAs'
assets and properties, at an oversight board's direction, in an
expeditious manner aimed at maximizing value. Successor
agencies are required to make any payments related to
enforceable obligations, as specified in an adopted recognized
obligation payment schedule, and remit unencumbered balances of
RDA funds and proceeds from asset sales to the county
auditor-controller for distribution to local taxing entities in
the county.
As part of the dissolution process, existing law allows a city
or county that authorized the creation of an RDA to retain the
housing functions previously performed by the RDA, including all
rights, powers, duties, obligations, and housing assets,
excluding any amounts on deposit in a Low and Moderate Income
Housing Fund and enforceable obligations retained by the
successor agency. If a city or county decides not to retain
responsibility for housing functions, the obligation can be
transferred to either a local housing authority or to HCD if
there is no local housing authority in the territorial
jurisdiction of a former RDA.
Proposed Law: AB 1585 would appropriate $50 million to HCD as
follows: $25 million for the purpose of funding infill incentive
grants under the IIG Program, and $25 million for the purpose of
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funding transit-oriented grants and loans under the TOD Program.
The bill would also transfer all rights, powers, assets, duties,
and obligations associated with the housing activities of a
former RDA to HCD under the following circumstances:
If a local housing authority designated by a city or
county to perform the former RDA's housing functions
refuses to accept the responsibility.
If a local housing authority designated to perform the
former RDA's housing functions initially accepts the
responsibility, but later determines it will cause a
financial hardship, and resolves by a super majority vote
of its commission to no longer perform the housing
functions.
Any funds transferred to HCD in conjunction with the transfer of
responsibility for performance of a former RDA's housing
functions would be deposited into a new State Low and Moderate
Income Housing Fund. These funds would be continuously
appropriated to HCD for the purpose of increasing the supply of
low- and moderate-income housing and awarded on a competitive
basis. Priority would be given to eligible extremely low, very
low, and low-income projects.
Staff Comments: The Legislature has appropriated all available
Proposition 1C funds for the IIG and TOD Programs, but some
projects have since become infeasible and the funding has been
disencumbered. HCD indicates that it currently has $25 million
available in disencumbered funds from the IIG Program and
another $25 million in disencumbered funds from the TOD Program,
but the department cannot allocate disencumbered funds without a
legislative appropriation. Additional amounts may yet fail to
be encumbered within specified deadlines. This bill would
re-appropriate funds that were not encumbered within specified
timeframes for both the IIG and TOD Programs. Staff notes that
bond funds are typically appropriated in the budget.
Existing law does not allow a local housing authority to refuse
the responsibility to perform the housing functions of a former
RDA. Some smaller housing authorities may not be equipped to
effectively manage these resources, and others may suffer a
financial hardship if they take on that responsibility. This
bill would authorize local housing authorities to pass on the
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responsibility to perform a former RDA's housing functions to
HCD under specified circumstances. Staff notes that HCD may
also be ill-equipped to manage these resources in some cases.
It is likely that HCD would need to hire additional staff with
expertise to handle these functions and administer local housing
assets. Costs are unknown, but potentially significant, and
would depend upon the number of jurisdictions that opt to
transfer responsibility to HCD, the number and size of various
housing assets that are transferred to HCD, and available
resources that are transferred with those assets.
Proposed amendments would do the following:
Require HCD, with respect to re-appropriations under the
IIG Program, to provide first priority to projects that
previously qualified for a grant and received a partial
grant.
Authorize HCD to reallocate any funds that are
disencumbered under the TOD and IIG programs through the
2012-13 fiscal year, and require HCD to report to the
Legislature on the amounts of additional disencumbered
funds that HCD receives by March 13, 2013.
Authorize HCD and local housing authorities to recover
administrative costs to manage the housing functions of
former RDAs.
Clarify circumstances under which a local housing
authority may opt-out of management responsibilities, and
prescribe notice requirements to HCD from those entities
that transfer housing responsibilities.