BILL ANALYSIS �
AB 1793
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Date of Hearing: March 26, 2014
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
AB 1793 (Chau) - As Introduced: February 18, 2014
SUBJECT : Housing Successor Agencies
SUMMARY : Authorizes housing successors to transfer the
responsibility of enforcing the affordability deed restrictions
of below market-rate (BMR) homeownership units of former
redevelopment agencies (RDAs) to qualified nonprofit
organizations. Specifically, this bill :
1)Provides housing successors with the authority, by ordinance
or resolution adopted at a noticed public meeting, to transfer
the responsibility of enforcing the affordability deed
restrictions of BMR homeownership units to qualified nonprofit
organizations.
2)Directs California Housing Finance Agency (CalHFA) to issue a
request for proposal (RFP) on or before July 1, 2015 to
identify up to six qualified nonprofit organizations that
would serve this role.
3)Requires all selected nonprofit organizations to conduct a
yearly audit of the BMR units, and to provide this information
to the donating housing successor.
4) Requires the donating housing successor to publish the audit
on its Web Site.
EXISTING LAW :
1)Requires RDAs to dissolve effective February 1, 2012, pursuant
to the California Supreme Court's decision in CRA v.
Matosantos (2011).
2)Establishes successor agencies to RDAs that would, except in
certain situations, be the city, county, or city and county in
the territorial jurisdiction of the former RDA. If no local
agency elects to be the successor agency, a designated local
authority is to be formed with three members appointed by the
Governor.
AB 1793
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3)Requires successor agencies to make payments on legally
enforceable obligations using property tax revenues when no
other funding source is available, or when payment from
property tax revenues is required by an enforceable
obligation.
4)Defines enforceable obligations for successor agencies to
include, but not be limited to:
a) Bonds, including debt service, reserves, or other
required payments;
b) Loans borrowed by the RDA for a lawful purpose including
loans from the Low- and Moderate- Income (L&M) Housing
Fund;
c) Payments required by the federal government;
d) Pre-existing obligations to the state or obligations
imposed by state law;
e) Legally enforceable payments required in connection with
the RDAs' employees, including pension obligations;
f) Judgments and settlements entered into by a court or
binding arbitration decisions, retaining appeal rights;
g) Legally binding contracts that do not violate the debt
limit or public policy; and,
h) Contracts necessary for administration of the RDA, such
as for office space, equipment, and supplies, to the extent
permitted.
1)Requires successor agencies to transfer a former RDA's housing
assets and functions to "housing successors." Housing
successors retain the housing assets, functions, and powers
previously performed by an RDA, excluding any enforceable
obligations retained by the successor agency.
2)Provides that the city, county, or city and county within the
territorial jurisdiction of the former RDA may elect to act as
the housing successor. If they do not elect to act as the
housing successor, then the local housing authority is
required to act as the housing successor. If there is no
AB 1793
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local housing authority, then the Department of Housing and
Community Development (HCD) acts as the housing successor.
3)Provides that housing successors may, amongst other things,
enforce affordability covenants and perform related activities
pursuant to applicable provisions of Community Redevelopment
Law (CRL).
FISCAL EFFECT : Unknown
COMMENTS :
Background : In 2011, as a result of serious budget shortfalls,
the Governor proposed eliminating RDAs and creating a Voluntary
Alternative Redevelopment Program (VARP) to replace them. Two
pieces of budget trailer legislation, AB1X 26 (Chapter 5,
Statutes of 2011-12 First Extraordinary Session) and AB1X 27
(Chapter 6, Statutes of 2011-12 First Extraordinary Session),
were enacted to achieve this goal. AB1X 26 provided for the
dissolution of RDAs and for the winding up of their obligations
by successor agencies. AB1X 27 established VARP, which would
have allowed RDAs to continue operations if their local city or
county made voluntary annual payments benefitting schools, for
the purpose of offsetting state education costs. In CRA v.
Matosantos (2011), the California Supreme Court upheld the
constitutionality of AB1X 26, but invalidated AB1X 27. This had
the effect of dissolving RDAs without giving them the option of
continuing operations by offsetting state education costs.
When RDAs were dissolved, successor agencies were established to
wind up the RDAs' obligations. Successor agencies were required
to effectuate the transfer of an RDA's housing functions and
assets to a "housing successor." Cities and counties were given
the option of acting as housing successors and taking over the
housing assets of their jurisdiction's RDA. If they did not
wish to take on this role, the local housing authority was
required to act as housing successor. If there was no local
housing authority, HCD was required to act as housing successor.
RDAs produced, amongst other things, tens of thousands of BMR
homeownership units. BMR units are affordable due to deed
restrictions or equity-sharing agreements that must be monitored
and enforced to recapture or retain affordability.
Housing successors to RDAs are currently tasked with enforcing
the affordability deed restrictions on BMR homeownership units.
AB 1793
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According to a recent survey of housing successors, a majority
of responding agencies lost a significant amount of their
designated funding for managing these units, and have laid off
over half of their staff responsible for managing or monitoring
affordable housing programs. One-third of responding agencies
have seen affordable housing lost to foreclosure since the
elimination of RDAs, and two-thirds expect it to happen.
Purpose of this Bill : AB 1793 would give housing successors the
authority, by ordinance or resolution adopted at a noticed
public meeting, to transfer the responsibility associated with
enforcing the affordable deed restrictions of BMR homeownership
units to qualified nonprofit organizations. On or before July
1, 2015, CalHFA would issue a RFP to identify up to six
qualified nonprofit organizations that would serve this role.
Nonprofit organizations selected to enforce BMR units'
affordable deed restrictions would be required to conduct a
yearly audit of the BMR units, and to provide the audit to the
donating housing successor. The donating housing successor must
publish the audit on its Web Site.
Double referred : If AB 1793 passes out of this committee, the
bill will be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Rebecca Rabovsky / H. & C.D. / (916)
319-2085