BILL ANALYSIS �
AB 1793
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Date of Hearing: April 30, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 1793 (Chau) - As Introduced: February 18, 2014
SUBJECT : Community development: affordable housing.
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 the 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, and requires the audit to
include the number of units that have been sold to new owners,
and any return on equity sharing.
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.
2)Requires a successor agency to be established, and allows the
successor agency to be the city, county, or city and county,
in the territorial jurisdiction of the former RDA, and
requires that if no local agency elects to be the successor
agency, a designated local authority shall be formed with
three members appointed by the Governor.
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3)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.
4)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
local housing authority, then the Department of Housing and
Community Development (HCD) acts as the housing successor.
5)Provides that housing successors may, amongst other things,
enforce affordability covenants and perform related activities
pursuant to applicable provisions of Community Redevelopment
Law (CRL).
6)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.
7)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;
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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.
FISCAL EFFECT : This bill is keyed fiscal.
COMMENTS :
1)Purpose of this bill . AB 1793 gives 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. The
bill requires, on or before July 1, 2015, CalHFA to issue an
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 bill
requires the donating housing successor to publish the audit
on its Web Site.
This bill is sponsored by Housing California.
2)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.
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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. 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.
3)Author's statement . According to the author, "When
redevelopment agencies were dissolved, cities and counties
were given the option of taking over the housing assets of
their jurisdiction's redevelopment agency. If they did not
wish to take these assets, the local Housing Authority was
required to accept them. Redevelopment agencies produced,
amongst other things, tens of thousands of below market rate
(BMR) homeownership units. BMR units are affordable due to
deed restrictions or equity-sharing agreements that must be
monitored and enforced by housing successor agencies to
recapture or retain affordability.
"Housing successor agencies (cities, counties, cities and
counties, or housing authorities) to former redevelopment
agencies are currently tasked with enforcing the affordability
deed restrictions on BMR homeownership units. According to a
recent survey of housing successor agencies, a majority of
responding agencies lost a significant amount of their
AB 1793
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designated funding for managing these units, and have laid off
over half of their staff responsible for managing or
monitoring affordable housing programs. Without sufficient
staffing or funding, the affordability of these units could be
lost. One-third of responding agencies have seen affordable
housing lost to foreclosure since the elimination of
redevelopment agencies, and two-thirds expect it to happen."
4)League of Cities concerns . According to the League of Cities,
"AB 1793 does nothing to address the financial difficulties
[of finding a monetary solution to administer housing
successor responsibilities]. We appreciate that the bill does
not require cities and counties to turn over the housing
successor responsibilities, but there is nothing under
existing law that would prevent jurisdictions from contracting
out their responsibilities to nonprofits. Finally, the
current draft of AB 1793 complicates the picture of who does
what with regard to liabilities and reporting requirements.
We look forward to working with the author and his staff to
address these concerns."
5)Arguments in support . Housing California argues that
"stewardship of scattered site affordable homeownership units
is particularly challenging. Surveys have shown that the
affordability restrictions of affordable homeownership units
created by RDAs are currently being lost" and that "a number
of California nonprofits are in an excellent position to
provide stewardship for the homes created by RDAs."
6)Arguments in opposition . None on file.
7)Double-referral . This bill was heard by the Housing and
Community Development Committee on April 9, 2014, and passed
with a 7-0 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
Housing California [SPONSOR]
Opposition
None on file
AB 1793
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Concerns
League of California Cities
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958