CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1487

Author:(Chiu)

As Amended Ver:August 28, 2019

Majority vote

SUMMARY:

Establishes the San Francisco Bay Regional Housing Finance Act and enables the Bay Area voters to raise money for affordable housing.

The Senate Amendments:

1. Change the governance structure from a new regional entity with membership comprised of members of the Association of Bay Area Governments (ABAG) Executive Board and the Metropolitan Transportation Commission (MTC) to shared governance by both the ABAG Executive Board and MTC, with ABAG serving as the lead agency.
2. Change the name of the governance structure from the Housing Alliance for the Bay Area to the Bay Area Housing Finance Authority (BAHFA).
3. Remove the ability for the regional entities to utilize a sales tax to raise revenue for affordable housing.
4. Increase the allocation of revenues that must be returned directly to counties of origin from 75% to "at least" 80%, except that in the case of a business tax at least 50 percent must go to the region.
5. Provide for a direct allocation to the three largest cities in the region as well as any other city whose share of their county's regional housing needs allocation (RHNA) exceeds 30%.
6. Revise the expenditure of revenues for the region, counties, and cities receiving direct allocation as follows:
   1. Reduce the minimum amount that must be expended on the production of affordable housing from 60% to 52%;
   2. Remove the maximum expenditure towards preservation of affordable housing of 20%;
   3. Remove the maximum expenditure on tenant protections of 10%; and
   4. Removed the minimum expenditure on incentives and technical assistance of 5%.

COMMENTS:

Although the Bay Area has substantial resources to fund the production, preservation, and protection of affordable housing, there remains a $2.5 billion funding gap annually between existing resources and the need. This bill proposes to address $1.5 billion of this deficit with regional and local self-help measures.

This bill establishes the Bay Area Housing Alliance for the Bay Area (BAHFA). The entity's purpose is to increase affordable housing in the San Francisco Bay Area by providing for enhanced funding and technical assistance at a regional level for new affordable housing production, affordable housing preservation, and tenant protection. The stated intent of BAHFA is to complement existing efforts by cities, counties, districts, and other local, regional, and state entities. BAHFA would create a new district with jurisdiction extending throughout the Bay Area, including the counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma and the City and County of San Francisco.

This bill provides joint decision-making authority to the Executive Board of ABAG, the region's council of governments, and MTC (acting as BAHFA), the region's metropolitan planning organization, with oversight provided by an advisory board with expertise in affordable housing. The choice of what revenue options to pursue and which projects to fund would be subject to the approval of both boards, with ABAG acting first. The bill also specifically states that BAHFA may not regulate or enforce local land use decisions, or acquire property by eminent domain. The bill specifies that BAHFA may raise new revenue by authorizing the entity to place on the ballot in all or a subset of the nine counties in the San Francisco Bay area.

The bill also establishes that at least 75% of the revenue received must return to the county of origin, except a tax on employees, of which at least 50% would be allocated to the region. Counties would need to specify the proposed use of the revenues, and have minimum targets of 52% for affordable housing production, 15% towards affordable housing preservation, and 5 percent towards tenant protection. Direct allocation of funds would be given to the three largest cities in the region as well as any other city whose share of their county's regional housing needs allocation (RHNA) exceeds 30%.

In addition to the bill, the author has submitted a Letter to the Journal clarifying the following intent of the author:

1. That, before any ballot measure is placed on the ballot, ABAG and MTC facilitate a robust process involving a wide range of stakeholders to facilitate input on the measure and its proposed expenditure.
2. That revenue measures would not, on balance, make it more difficult to build housing in the Bay Area. It is also not the intent of this legislation that these revenue measures be targeted at or inordinately burden housing developers.
3. That counties should work collaboratively with cities and other stakeholders in the development of their expenditure plans.

According to the Author:

According to the author, "Housing is a regional issue that requires policy and funding coordination across jurisdictions. This bill would create a vital, new option to address the lack of affordable housing in the San Francisco Bay Area. Specifically, the bill would provide the ABAG and MTC – acting as the BAHFA – with new tools to raise billions of dollars to fund the production, preservation, and protection of affordable housing. It would enable the region to support local jurisdictions by providing additional funding to address infrastructure and other needs associated with new residents. This bill was generated in partnership with the Bay Area's local elected leaders and other regional leaders so that, collectively, we can ensure that the entire Bay Area is on track to provide affordable housing efficiently and effectively to all residents."

Arguments in Support:

According to the Association of Bay Area Governments, "AB 1487 offers the hope of substantial additional resources, some of which can be used across jurisdictional boundaries, to help protect existing residents from displacement, preserve affordable housing and build many more affordable units so that our growing region can house residents of all income levels. AB 1487 empowers our agencies to ask local voters to step forward and tax themselves to help solve a challenge impacting our entire region."

Arguments in Opposition:

CalTax writes that "imposing an additional tax on Bay Area residents will increase their cost of living, make housing more expensive, and thus make home ownership and renting more difficult" and that this bill would "increase the fiscal challenges many middle-class families already face.

FISCAL COMMENTS:

According to the Assembly Committee on Appropriations, state-mandated local costs, likely significant, to the local agency or agencies who undertake the initial governance and duties of the new housing entity. These initial costs are potentially reimbursable by the state, depending on a determination by the Commission on State Mandates. Not all local entities, perhaps including MTC, qualify for state reimbursement, but many, including cities and counties, generally do.

VOTES:

ASM HOUSING AND COMMUNITY DEVELOPMENT: 5-2-1

YES: Chiu, Gabriel, Gloria, Limón, Maienschein

NO: Kiley, Quirk-Silva

ABS, ABST OR NV: Diep

ASM LOCAL GOVERNMENT: 5-2-1

YES: Aguiar-Curry, Bloom, Ramos, Luz Rivas, Robert Rivas

NO: Lackey, Voepel

ABS, ABST OR NV: Boerner Horvath

ASM APPROPRIATIONS: 12-5-1

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Maienschein, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong, Obernolte

ABS, ABST OR NV: Petrie-Norris

ASSEMBLY FLOOR: 45-21-14

YES: Aguiar-Curry, Arambula, Berman, Bloom, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Cooper, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Holden, Jones-Sawyer, Kalra, Kamlager-Dove, Limón, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Santiago, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NO: Bigelow, Brough, Cervantes, Chen, Choi, Cunningham, Dahle, Flora, Fong, Gallagher, Irwin, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Petrie-Norris, Salas, Voepel, Waldron

ABS, ABST OR NV: Bauer-Kahan, Boerner Horvath, Cooley, Daly, Diep, Frazier, Eduardo Garcia, Grayson, Levine, Mayes, Muratsuchi, Quirk-Silva, Blanca Rubio, Smith

SENATE FLOOR: 26-13-1

YES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Durazo, Galgiani, Lena Gonzalez, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Wieckowski, Wiener

NO: Bates, Borgeas, Chang, Dahle, Glazer, Grove, Jones, Moorlach, Morrell, Nielsen, Stone, Umberg, Wilk

ABS, ABST OR NV: Dodd

UPDATED:

VERSION: August 28, 2019

CONSULTANT: Steve Wertheim / H. & C.D. / (916) 319-2085 FN: 0002394

 THIRD READING  

Bill No: AB 1487

Author: Chiu (D), et al.

Amended: 8/28/19 in Senate

Vote: 21

SENATE HOUSING COMMITTEE: 6-2, 6/18/19

AYES: Wiener, Caballero, Durazo, Roth, Skinner, Wieckowski

NOES: Morrell, Bates

NO VOTE RECORDED: McGuire, Moorlach, Umberg

SENATE GOVERNANCE & FIN. COMMITTEE: 4-1, 7/10/19

AYES: McGuire, Beall, Hertzberg, Wiener

NOES: Nielsen

NO VOTE RECORDED: Moorlach, Hurtado

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE HOUSING COMMITTEE: 7-1, 9/4/19 (Pursuant to Senate Rule 29.10)

AYES: Wiener, Caballero, Durazo, McGuire, Roth, Skinner, Wieckowski

NOES: Bates

NO VOTE RECORDED: Morrell, Moorlach, Umberg

SENATE GOVERNANCE & FIN. COMMITTEE: 5-0, 9/6/19 (Pursuant to Senate Rule 29.10)

AYES: McGuire, Beall, Hertzberg, Hurtado, Wiener

NO VOTE RECORDED: Moorlach, Nielsen

ASSEMBLY FLOOR: 45-21, 5/24/19 - See last page for vote

SUBJECT: San Francisco Bay area: housing development: financing

SOURCE: Enterprise Community Partners, Inc.

Non-Profit Housing Association of Northern California

DIGEST:

1. This bill establishes the Bay Area Housing Finance Authority (BAHFA or “the authority”) throughout the San Francisco Bay Area and sets forth the governing structure and powers of the BAHFA Board, allowable financing activities, and allowable expenditures of the revenues generated.

ANALYSIS:

Existing law:

1. Establishes the Metropolitan Transportation Commission (MTC) as the transportation planning, coordinating, and financing agency for the nine-county San Francisco Bay Area, and specifies its governance structure, duties, and powers.
2. Establishes a number of housing assistance programs for affordable housing.
3. Defines “lower income households” as below 80% area median income (AMI).
4. Defines “persons and families of low- or moderate- income” as persons and families whose income does not exceed 120% AMI.

This bill establishes the authority throughout the San Francisco Bay Area. This bill sets forth the governing structure and powers of the board, allowable financing activities, and allowable expenditures of the revenues generated. Specifically, this bill:

BAHFA Governing Board

1. Defines “board” as the governing board of BAHFA, which is governed by the same board that governs MTC, and “executive board” as the executive board of Association of Bay Area Governments (ABAG).
2. States that the purpose of the authority is to raise, administer, and allocate funding and provide technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production.
3. Requires the executive board and the authority board to form an advisory committee of nine members with knowledge and experience in the areas of affordable housing finance and development, tenant protection, and housing preservation. The advisory board shall provide consultation and make recommendations to the executive board and the authority board.
4. Requires the board to set meetings as necessary. Requires the authority to be subject to the Brown Act, the California Public Records Act, and the Political Reform Act of 1974. Additionally, BAHFA shall engage in public participation processes, as specified.
5. Authorizes the board to make and enforce rules and regulations necessary for governing the authority, the preservation of order, and the transaction of business.

BAHFA Powers

1. Authorizes the authority to do the following:
   1. Subject to the approval of the executive board, place a measure on the ballot to raise revenue and allocate funds throughout the San Francisco Bay Area.
   2. Apply for and receive grants or loans from public and private entities.
   3. Solicit and accept gifts, fees, loans, and other allocations from public and private entities.
   4. Deposit or invest moneys of the authority in banks or financial institutions including money that was not required for the immediate necessities of the authority.
   5. Sue and be sued; engage counsel and other professional services; and enter into and perform necessary contracts.
   6. Hire staff and utilize staff employed by MTC.
   7. Allocate and deploy capital and generated fees or income in the form of grants, loans, equity, interest rate subsidies, and other financing tools to the cities, counties and other public agencies within the San Francisco Bay Area, and private affordable housing developers to finance affordable housing development, preserve and enhance existing affordable housing, and fund tenant protection programs.
   8. Establish and modify the terms of potential capital investments deployed by the authority.
   9. Collect data on housing production and monitor progress on meeting regional and state housing goals.
   10. Provide support and technical assistance to local governments related to affordable housing production and preservation, and tenant protection.
   11. Provide public information regarding the authority’s housing programs and policies.
   12. Incur and issue bonds and other indebtedness.
   13. Purchase, lease, sell, rent, transfer, assign, and otherwise acquire or dispose of property, including real property.
   14. Any other express or implied powers necessary to carry out the intent and purposes of this title.
2. Provides that, subject to approval by the executive board, if the authority proposes a measure that will generate revenues and that requires voter approval, the board of supervisors of the county or counties in which the authority has determined to place the measure on the ballot shall call a special election on the measure.
3. Requires each county included in the ballot measure to include, among other things, a summary of an expenditure plan provided by the authority for inclusion in the ballot pamphlet, as specified.
4. Provides that if 2/3 of all voters voting on a question at the special election vote affirmatively, the measure shall take effect in the counties in which the measure appeared on the ballot.
5. Prohibits the executive board and the authority from regulating or enforcing local land use decisions and acquiring property by eminent domain.
6. Requires the authority to provide for regular audits of the authority’s accounts and records and maintain accounting records, as specified.

BAHFA Financing Activities

1. Authorizes the authority, subject to prior approval by the executive board, to raise and allocate new revenue through the following:
   1. Special taxes, subject to voter approval, including a parcel tax, gross receipts business license taxes (gross receipts tax), and a special business tax (head tax).
   2. Commercial linkage fees.
2. Provides that any funding mechanism or combination of funding mechanisms that requires voter approval may be placed on the ballot in all or a subset of the nine counties in the San Francisco Bay Area, but in no case shall it be placed on the ballot in fewer than four counties.
3. States the Legislature’s intent for the funds to distribute the responsibility for addressing the affordable housing needs of the region across commercial developers, business above a certain size, taxpayers, and property owners within the region.

Expenditures

1. Requires revenue to be used for the construction of new affordable housing, affordable housing preservation, tenant protection programs, planning and technical assistance related to affordable housing, and infrastructure to support housing, and those purposes detailed in 17)-20) below.
2. Requires the allocation of regional housing revenues to be first approved by the executive board and subsequently by the authority. The funds shall be distributed in the form of a grant, loan, or other financing tool in a manner that achieves minimum shares over five-year periods after the revenue is approved by voters, as follows:
   1. A minimum of 2/3 for production and preservation of affordable housing, as follows:
      1. A minimum of 52% for the production of rental housing that is deed restricted to be affordable to lower income households for at least 55 years.
      2. A minimum of 15% for preservation of housing that is deed restricted to be affordable to low- or moderate-income households for 55 years. Funding shall be subject to both of the following conditions:
         1. Existing residents of buildings acquired for the purpose of affordable housing preservation shall not be displaced.
         2. Buildings required for the purpose of affordable housing shall achieve 100% occupancy by low- or moderate-income households over time throughout unit turnover.
      3. Provides that funding shall be subject to the following in the event that demolition or rehabilitation of housing units is required:
         1. If the housing units are occupied at the date of acquisition, the housing development shall provide at least the same number of units of equivalent number of bedrooms to be made available at affordable rent or affordable to lower-income households.
         2. If existing residents must be relocated due to demolition or rehabilitation needs, the developer must provide relocation benefits to the occupants of those housing rental units.
         3. If existing residents must be relocated due to demolition or rehabilitation needs, the developer shall provide a right of first refusal for a comparable unit available in the new or rehabilitated housing development that is affordable to the household at an affordable rent or an affordable housing cost.
   2. A minimum of 5% for tenant protection programs for low- and moderate-income households. Funds may only be spent on the following:
      1. Pre-eviction and eviction legal services, counselling, advice and consultation, training, renter education, and representation, and services to improve habitability that protect against displacement of tenants.
      2. Providing emergency rental assistance for lower income households, as specified.
      3. Providing relocation assistance for lower income households beyond what is legally required of landlords according to local or state law.
      4. Collection and tracking of information related to displacement and displacement risks, rents, and evictions in the region.
   3. A minimum of 10% for a grant program for local governments that qualify based on criteria funding guidelines established by the executive board and the authority in consultation with the advisory committee. Eligible expenditures must support housing and related uses, and include, but not be limited to, grants for the following:
      1. Technical assistance, preparation and adoption of planning documents, and process improvements to accelerate and support housing production, preservation, and tenant protections.
      2. Infrastructure needs associated with increased housing production, including but not limited to, transportation, schools, and parks.
      3. One-time uses that address homelessness, including, but not limited to, homeless shelters.
      4. Programs to enable low- or moderate-income households to become or remain homeowners.
      5. Tenant protection programs.
3. Requires the authority to distribute the revenue derived from a commercial linkage fee to each city or county in a manner that is consistent with a regional nexus study adopted by the executive board and the authority. These revenues shall be used exclusively for the production of housing units necessitated by a commercial development project on which the fee was imposed and as determined by the executive board and the authority board.
4. Requires the authority to distribute parcel and gross receipt taxes as follows:
   1. At least 80% of the revenue shall be allocated to the county of origin for expenditure in that county, consistent with the expenditure plan in 21)-23) below.
   2. Up to 20% shall be collected by the authority for expenditures consistent with the purposes set for in 16) above and eligible to be used in any county in which the measure is in effect.
5. Requires the authority to distribute funds received through the head tax as follows:
   1. At least 50% of the revenue shall be allocated to the county of origin for expenditure in the county, consistent with the expenditure plan in 21)-23) below.
   2. Up to 50% shall be collected by the authority for expenditures consistent with the purposes set for in 16) above and eligible to be used in any county in which the measure is in effect.
6. Requires the executive board and the authority to, in consultation with the advisory committee, adopt a regional expenditure plan for the uses of housing revenue by July 1 of each year. The expenditure plan shall set forth: (a) the share of revenue and estimated funding amount to be spent in each of the categories established in 17) above, (b) indicate the household income levels to be served within each category of expenditures, and (c) estimate the number of affordable housing units to be built or preserved and the number of tenants to be protected.
7. Requires, to the extent feasible, the expenditure plan to include a description of projects to be funded, location, amount of funding, and anticipated outcomes. Beginning in year two, the authority shall include a report in the regional expenditure plan that provides the allocations and expenditures of projects and projects funded.
8. Requires the regional housing plan to contain specified information for any specific project that has received an allocation of regional housing revenue during the prior year, including whether the project proponent has requested or been eligible to receive a building permit and whether the project proponent has obtained approval or certification that the development is habitable.
9. Requires each county to adopt an expenditure plan applicable to county housing revenue that specifies the proposed allocation of funds and demonstrates how the funds will meet the minimum allocations in 20) above, as specified.
10. Requires the executive board and the authority to monitor expenditures in coordination with the local jurisdictions.
11. Requires the authority to submit an annual report to the Legislature on allocations and expenditures under its control, as specified.

Comments

1. Purpose of the bill. According to the author, “the Bay Area is facing the most significant housing crisis in the region’s history, as countless residents are facing insurmountable housing costs, spend hours driving every day, are one paycheck away from an eviction, or experience homelessness. Housing is a regional issue that requires policy and funding coordination across jurisdictions. This bill would create a vital, new option to address the lack of affordable housing in the San Francisco Bay Area. Specifically, the bill would provide the ABAG and MTC – acting as the BAHFA – with new tools to raise billions of dollars to fund the production, preservation, and protection of affordable housing. It would enable the region to support local jurisdictions by providing additional funding to address infrastructure and other needs associated with new residents. This bill was generated in partnership with the Bay Area’s local elected leaders and other regional leaders so that, collectively, we can ensure that the entire Bay Area is on track to provide affordable housing efficiently and effectively to all residents.”

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

SUPPORT: (Verified 9/6/19)

Enterprise Community Partners, Inc. (co-source)

Non-Profit Housing Association of Northern California (co-source)

Alameda County Transportation Commission

Alliance of Californians for Community Empowerment Action

Association of Bay Area Governments

Bay Area Council

Bay Area Housing Advocacy Coalition 

Burbank Housing Development Corporation

California Community Builders

California YIMBY

Chan Zuckerberg Initiative

City of San Leandro

Community Housing Development Corporation

Community Legal Services in East Palo Alto

Corporation For Supportive Housing

EAH Housing

East Bay Asian Local Development Corp

East Bay Housing Organizations

Eden Housing

Ensuring Opportunity Campaign to End Poverty in Contra Costa County

Greenbelt Alliance

Habitat for Humanity East Bay/Silicon Valley

Hamilton Families

London Breed, Mayor of San Francisco

Mercy Housing

Metropolitan Transportation Commission

Midpen Housing Corporation

Non-Profit Housing Association of Northern California

North Bay Leadership Council

Pico California

Related California

Rise Together

Salesforce

San Francisco Foundation

San Francisco Housing Action Coalition

Save the Bay

Silicon Valley at Home

Silicon Valley Community Foundation

Spur

Techequity Collaborative

TMG Partners

Transform

Urban Displacement Project, University of California, Berkeley

Working Partnerships USA

One individual

OPPOSITION: (Verified 9/6/19)

California Building Industry Association
California Taxpayers Association
City of Clayton

City of Lafayette
City of San Mateo Coalition for San Francisco Neighborhoods
Delta 6 - East County Mayors and Supervisors
Howard Jarvis Taxpayers Association
San Francisco Tenants Union

ASSEMBLY FLOOR: 45-21, 5/24/19

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Cooper, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Holden, Jones-Sawyer, Kalra, Kamlager-Dove, Limón, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Santiago, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Cervantes, Chen, Choi, Cunningham, Dahle, Flora, Fong, Gallagher, Irwin, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Petrie-Norris, Salas, Voepel, Waldron

NO VOTE RECORDED: Bauer-Kahan, Boerner Horvath, Cooley, Daly, Diep, Frazier, Eduardo Garcia, Grayson, Levine, Mayes, Muratsuchi, Quirk-Silva, Blanca Rubio, Smith

Prepared by: Alison Hughes / HOUSING / (916) 651-4124

9/6/19 13:28:37

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2019 - 2020 Regular

San Francisco Bay area: housing development: financing

PURSUANT TO SENATE RULE 29.10(b)

Enacts the San Francisco Bay Area Regional Housing Finance Act, which creates the Bay Area Housing Finance Authority, and grants it the authority to impose specified taxes and fees, subject to voter approval.

Background

Local agencies use various tools to finance affordable housing production and preservation, as well as to protect tenants currently living in those affordable housing units. These include special taxes, commercial linkage fees, and bonds.

Special taxes. The California Constitution states that taxes levied by local governments are either general taxes, subject to majority approval of its voters, or special taxes, subject to 2/3 vote (Article XIII C), which the state or local agencies use for specified purposes. Proposition 13 (1978) required a 2/3 vote of each house of the Legislature for state tax increases, and 2/3 vote of local voters for local special taxes. Proposition 62 (1986) prohibited local agencies from imposing general taxes without majority approval of local voters, and a 2/3 vote for special taxes. Proposition 218 (1996) extended those vote thresholds to charter cities and limited local agencies’ powers to levy new assessments, fees, and taxes. The Constitution further bars school districts from imposing general taxes. Additionally, the California Constitution has historically required a 2/3 vote for issuing bonds since 1879, but voters subsequently allowed school districts, community college districts, and county offices of education to issue bonded indebtedness for school facilities with 55% approval when complying with specified requirements (Proposition 39, 2000).

One of the most common forms of a special tax is a parcel tax. Parcel taxes are not ad valorem or assessed based on the value of a property; instead they are generally a flat rate assessed per parcel regardless of its size, or on a per square foot rate. Agencies can use revenues in almost any way that serves local needs, such as ongoing expenses, programs, or buildings. Counties collect parcel taxes with property taxes, and then remit funds to the agency imposing the tax. Property tax law generally guides parcel tax collection.

Other local agencies levy special taxes on businesses to raise funds for housing and other community needs. Since 2012, San Francisco has levied a gross receipts tax, which requires businesses operating in the city to pay taxes for the privilege of operating a business within the City based on the total amount of revenue that they receive. In 2018, voters in the City of Mountain View approved a tax on the number of employees a business employs, also known as a “head tax,” starting $75 for single proprietor with an additional $150 for each employee over 5,000.

Commercial linkage fees. Local agencies can also impose fees on specific developments to account for the impact of that specific development on the local community, also known as a commercial linkage fee. When imposing a fee as a condition of approving a development project, current law requires local officials to determine a reasonable relationship between the fee's amount and the cost of the public facility. In its 1987 Nollan decision, the U.S. Supreme Court said that there must be an "essential nexus" between a project's impacts and the conditions for approval. In the 1994 Dolan decision, the U.S. Supreme Court said that conditions on development must have a "rough proportionality" to a project's impacts. To impose a commercial linkage fee, the local agency must first conduct a study showing the nexus between the fee’s use and the type of commercial development project paying the fee. The nexus study must show there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the local agency imposes the fee. For example, if the local agency’s commercial linkage fee ordinance directs proceeds to support affordable housing, the nexus study would have to demonstrate that the commercial development increases the community’s affordable housing needs.

Bonds. When public agencies issue bonds, they borrow money from investors, who provide cash in exchange for the agencies’ commitment to repay the principal amount of the bond plus interest. Bonds are usually either revenue bonds, which repay investors out of revenue generated from the project the agency buys with bond proceeds, or general obligation bonds, which the public agency pays out of general revenues and the agency guarantees with its full faith and credit. Since bonds produce interest costs, they are generally used for financing projects with useful lives that correspond to the bond’s term, such as an affordable housing project. They generally are not used to provide services, such as providing legal services. Generally, issuing bonds requires a 2/3 voter approval. However, some types of revenue bonds do not require a 2/3 vote, or any vote at all. For example, the Revenue Bond Law of 1941 requires majority voter approval.

Bay area housing challenges. California is in the midst of a serious housing crisis. California is home to 21 of the 30 most expensive rental housing markets in the country, which has had a disproportionate impact on the middle class and the working poor. Housing units affordable to low-income earners, if available, are often in serious states of disrepair. The Department of Housing and Community Development (HCD) estimates that approximately 2.7 million lower-income households are rent-burdened (meaning they spend at least 30 percent of their income on rent), and 1.7 million of which are severely rent-burdened (spending at least 50 percent of their income on rent). According to a 2015 study by the California Housing Partnership Corporation, California has a shortfall of 1.5 million affordable homes and 13 of the 14 least affordable metropolitan areas in the country.

While the housing crisis is felt statewide, the challenges are particularly acute in the nine bay area counties: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma. Two governmental entities provide region-wide housing planning and support to help address these challenges: the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG).

MTC. MTC provides regional transportation planning for the Bay Area. A 21-member board governs MTC comprising:

• Two county supervisors each from Contra Costa, San Francisco, and San Mateo counties;
• Three county supervisors each from Alameda and Santa Clara counties;
• One county supervisor each from Marin, Napa, Solano, and Sonoma counties;
• One representative each from the Association of Bay Area Governments (ABAG) and the San Francisco Bay Conservation and Development Commission (BCDC);
• One nonvoting representative the state Department of Transportation appoints; and
• One nonvoting member each from the United States Department of Transportation and the U.S. Department of Housing and Urban Development.

ABAG. ABAG serves as the comprehensive regional planning agency and council of governments for the nine counties and 101 cities and towns in the region. Local government leaders formed ABAG to address common regional issues relating to land use, environmental stewardship, energy efficiency, and water resource protection. The ABAG Executive Board (Executive Board) governs the organization with the general assembly that helps determine policy and adopts the organization’s annual budget and work program. The Executive Board comprises 35 county supervisors or city council members, four representatives from BCDC, and one from MTC.

The author wants to create a regional financing agency to produce, preserve, and protect affordable housing in the Bay Area.

Proposed Law

Assembly Bill 1487 enacts the Act to raise, administer, allocate funding, and provide technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production. The Act:

• Creates the Bay Area Housing Finance Authority (BAHFA);
• Establishes BAHFA’s governance structure;
• Gives BAHFA certain powers;
• Allows BAHFA to place measures on the ballot;
• Outlines BAHFA’s revenue generating tools;
• Establishes how BAHFA spends money; and
• Includes certain accountability provisions.

Governance structure. AB 1487 sets BAHFA’s governing board as the same governing board that governs MTC, but as a separate legal entity from MTC. Before the BAHFA makes most decisions, the Executive Board approves most actions of BAHFA, such as reviewing and approving projects prior to BAHFA review and allocation. AB 1487 also states that the Legislature’s intent is to transfer governing powers to a new regional agency if MTC and ABAG merge, or if a new regional agency takes their place, but the bill does not require the two organizations to merge. The bill allows existing MTC staff to alo staff BAHFA, but acknowledges that additional staff with affordable housing finance expertise may be necessary to administer the Act. Members can receive a $100 per diem for each meeting the member attends up to two meetings per month. The BAHFA board can make necessary regulations and enact resolutions necessary to govern the authority, the conduct of meetings, and the transaction of business.

AB 1487 also creates an advisory committee of members with knowledge and experience in affordable housing finance and development, tenant protection, and housing preservation to provide consultation and make recommendations to the BAHFA board and the Executive Board.

BAHFA powers. AB 1487 provides BAHFA with the power to:

• Place a measure on the ballot to raise revenue;
• Apply for and receive grants from federal and state agencies;
• Solicit and accept gifts, fees, grants, and allocations from public and private entities;
• Deposit or invest moneys of the authority in banks or financial institutions;
• Sue or be sued;
• Engage counsel and other professional services;
• Enter into and perform all necessary contracts;
• Enter into a joint powers agreement;
• Hire staff, define their qualifications and duties, and provide a schedule of compensation;
• Use MTC staff;
• Collect data on housing production and monitor progress on meeting regional and state housing goals;
• Provide support and technical assistance to local governments in relation to producing and preserving affordable housing;
• Provide public information about BAHFA’s housing programs and policies;
• Perform other powers necessary to carry out the intent and purposes of the Act;
• Incur debt and issue bonds; and
• Engage in public participation processes.

AB 1487 also prohibits BAHFA from regulating or enforcing local land use decisions and acquiring property by eminent domain.

Placing measures on ballot. Subject to the approval first by the Executive Board then the BAHFA, BAHFA can propose a measure to be included in next regularly scheduled statewide election. For the purposes of elections, the bill defines BAHFA as a district and allows BAHFA to place measures on the ballot in as many as all nine, and as few as four, Bay Area counties. AB 1487 sets BAHFA’s appropriations limit based on receipts from the initial measure that would generate revenue. The legal counsel prepares an impartial analysis of the measure, which is subject to review by the county counsel of the largest county in the region. Each county then uses the exact ballot language the authority provides for the ballot. BAHFA must also prepare, and submit to voters, a summary of how it plans to spend funds it raises, which must include specific information such as an estimate of the number of affordable housing units to be built or preserved, and a description of any specific projects planned to be funded. BAHFA must reimburse counties for the incremental costs associated with placing a measure on the ballot.

Generating revenue. AB 1487 provides BAHFA the authority to raise revenue from (1) special taxes, (2) commercial linkage fees, and (3) bonds.

Special taxes. AB 1487 allows BAHFA to levy the following types of special taxes, including:

• Parcel tax. BAHFA can levy a parcel tax upon each parcel of real property at a rate that is determined without regard to that property’s value and applies uniformly to all taxpayers within the jurisdiction.
• Gross receipts tax. BAHFA can levy a tax on the gross receipts of a business for the privilege of engaging in lawful business within the area. It allows for variable rates and exemptions for small businesses and nonprofit organizations.
• Head tax. BAHFA can levy a tax on employers based on the number of employees that employer employs in the Bay Area.

AB 1487 specifies that various nonprofit organizations are exempt from special taxes except for the parcel tax, which applies uniformly across all parcels. The bill provides counties with the responsibility to administer taxes. Counties collect and enforce the parcel tax in the same manner they collect other property taxes. For the gross receipts and head taxes, the bill requires counties to prepare a tax return, create policies and procedures to collect tax revenue, ensure enforcement of taxes, and provide for the opportunity to appeal. Counties must create a separate fund to deposit revenue and remit the appropriate regional share to BAHFA as promptly as feasible. The county may deduct incremental costs associated with collecting tax revenue from the regional share.

Commercial linkage fee. AB 1487 allows the Executive Board to impose a commercial linkage fee, not to exceed $10 per square foot, with BAHFA board approval, on projects involving the issuance of a permit by an underlying land use jurisdiction within the Bay Area. BAHFA would charge the fee to an applicant in connection with the approval of a commercial development project. Before BAHFA can levy the commercial linkage fee, 2/3 of the region’s voters must approve either a parcel tax or a general obligation bond. The Executive Board must also prepare a nexus study to support the necessity and amount of the fee, as well as make findings that the commercial linkage fee would concentrate jobs near transit, would neither exacerbate imbalances between jobs created and housing units built, nor negatively impact commercial or mixed-use development. If the applicant already pays a commercial linkage fee in their jurisdiction, AB 1487 also requires BAHFA to reduce the fee commensurately. The underlying land use jurisdictions must collect the fee and can deduct administrative costs from the revenue collected. The bill limits fee expenditures to affordable housing production and preservation, and tenant protection. If the San Francisco Bay Area experiences two consecutive quarters of negative gross domestic product growth, BAHFA and the Executive Board must suspend the fee.

Before adopting a resolution to impose a commercial linkage fee, the Executive Board must conduct a public hearing to consider the fee. AB 1487 allows taxpayers to protest the fee within 90 days after the imposition of the fee. Any party who protests can file an action to not pay the fee within 60 days after delivery of notice of the fee. The burden of proof to show the fee is appropriate falls on BAHFA, not the taxpayer. If the court invalidates the fee, BAHFA must refund the unlawful amount charged plus interest. If an individual protests the fee on the grounds of whether it is considered a fee or a tax for the purposes of requiring a vote of the people, BAHFA must demonstrate the appropriateness of the fee. A party protesting on these grounds may only do so if the fee was directly imposed upon them and that party requests a copy of all documents related to the fee’s appropriateness. Any person may request an audit from BAHFA demonstrating the fee to be appropriate, but BAHFA may charge for the preparation of associated materials. If the audit deems the fee is not appropriate, BAHFA must adjust the fee.

Bonds. AB 1487 allows the BAHFA board to submit two different types of bonds: general obligation bonds and revenue bonds. To issue general obligation bonds secured by ad valorem property taxes for the acquisition or improvement of real property, the BAHFA board must adopt a resolution, but only after the Executive Board has adopted a resolution in support of the issuance. After adopting a resolution and noticing the bonds in newspapers, the decision whether to issue bonds is placed before voters. If 2/3 of voters approve bond issuances, BAHFA can proceed to issue bonds. Second, BAHFA may issue revenue bonds secured by revenues from the special taxes or fees the bill authorizes the BAHFA board and Executive Board to submit to voters. To issue revenue bonds, the special tax revenue measure submitted to voters must explain BAHFA’s intention to use revenue bonds. If the revenue measure is successful, both the BAHFA board and the Executive Board must approve a resolution describing the terms of the bonds it intends to issue. The bill states that such bonds are to be considered debt of BAHFA, not MTC, ABAG, or their member agencies. Every two years after the issuance of bonds, the authority must contract for an independent financial and performance audit conducted according to guidelines the State Controller establishes. BAHFA must submit the audit to the State Controller, the Department of Finance, and the Joint Legislative Budget Committee. The Bureau of State Audits can also conduct a financial and performance audit of BAHFA.

Expending funds. Of the revenue generated by a parcel tax or gross receipts tax, at least 80% must remain in the county that generated the revenue. The remaining 20% goes to BAHFA for regional projects. Of the revenue generated by a head tax, 50% must remain in the county that generated the revenue. The remaining 50% goes to BAHFA for regional projects. The Commercial Linkage fee is not subject to these percentages. Instead, BAHFA must distribute revenues consistent with the fee the authority imposed based on the results of the nexus study. BAHFA can distribute funds directly to a city, county, public entity, or private project sponsor, but the Executive Board must first approve the allocation, and approve of any changes made by the BAHFA board. For special taxes, counties must provide a direct allocation to a city if it is one of the three largest cities in the nine-county region and the option for direct allocation to a city allocated at least 30% of that county’s regional affordable housing need allocation. These direct allocations should be proportional to the city’s regional affordable housing need allocations.

BAHFA must distribute funds, except for those it generates from a commercial linkage fee, over a five-year period starting after voters approve a tool to raise revenue in a way that ensures the following:

• At least 2/3 to support the production or preservation of affordable housing, as follows:
  • At least 52% to support the production of housing units affordable to lower income households, which includes financing projects and acquiring land for those projects;
  • At least 15% to support the preservation of housing affordable to low- or moderate- income households, including acquiring, rehabilitating, and preserving existing affordable housing units, and conversion of market rate units to affordable housing;
• At least 5% to support tenant protection programs, including legal aid, emergency rental assistance, and providing relocation assistance; and
• A maximum of 10%to support a grant program to local governments that meets BAHFA and Executive Board funding guidelines for supporting housing and related uses, including technical assistance, infrastructure, and homelessness programs.

Excluding the local government grant program, counties and cities receiving direct allocations must also allocate those funds in a manner that ensures the same distribution of funds.

AB 1487 also requires that BAHFA replace housing units occupied at the date of acquisition with an equivalent number of affordable housing units and provide relocation assistance to residents displaced by a BAHFA project.

No earlier than five years after approval of a funding measure, and only after consulting with the advisory committee, BAHFA can change these percentages with a 2/3 vote of BAHFA’s board and the Executive Board in a public meeting.

BAHFA and the Executive Board must submit an annual regional expenditure plan that describes how they intend to spend regional funds, including the portion of funds dedicated to each household income category the funding will serve, and beginning in the second year, information regarding project progress. Each county, and each city receiving direct allocation, must also submit an annual expenditure plan with the same information to BAHFA and the Executive Board for review. The plan can include a finding that the minimum funding categories are not feasible or the best use of funds to meet the county’s regional housing needs, which is subject to a 2/3 vote of each board. Beginning in the second year of funding, each county must also include a report on its allocations and expenditures based on the minimum funding categories. If BAHFA determines that a county did not submit a complete expenditure plan, it may withhold funds until the county submits a complete plan. BAHFA must post the expenditure plans to its website.

Counties can request that BAHFA administer its share of the funds. If BAHFA agrees, it must adopt an annual expenditure plan approved by BAHFA and the Executive Board.

Once a county commits funds to a specific project, the county has three years to spend the funds. BAHFA may authorize expenditures after three years pursuant to guidelines BAHFA must adopt with the Executive Board. A city that receives funds must commit those funds to a specific project within five years, and must expend those funds within an additional five years. If a city receiving direct allocation does not spend funds committed to a project within five years, it can receive an extension of 24 months if it shows that adequate progress, defined as entitling at least 75% of the project, has been made. If the city cannot demonstrate adequate progress toward completing the project, then funds are transferred to the county to hold until the city submits a plan the county finds satisfactory. The bill also limits BAHFA, each county, and each city receiving direct allocation to no more than 5% of their respective funds for administrative costs.

Accountability provisions. AB 1487 requires BAHFA to provide an annual report on allocations and expenditures under its control. Five years after voters approve a BAHFA ballot measure, BAHFA and the Executive Board must review its implementation. This review must include an analysis of expenditures, the number of affordable housing units produced, and information on the tenant protection services provided. As part of this review, BAHFA and the Executive Board may elect to transfer certain responsibilities between the two entities, or a new regional entity should the two organizations’ functions merge.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “AB 1487 empowers the Bay Area to help address its affordable housing needs by enabling the region to raise new revenue and support local jurisdictions, and thereby ensure that the entire Bay Area is on track to end the housing crisis by providing affordable housing efficiently and effectively to all residents.”

2. Who decides? AB 1487 allows MTC and ABAG to create BAHFA and gives it regional taxing powers. Voters would ultimately decide whether the entity could impose taxes, but they would not decide whether BAHFA should have these powers in the first place. The one exception is the commercial linkage fee, which does not require voter approval. While asking voters whether to approve the entity in one election and the revenue mechanism in a different election could delay when a revenue mechanism appears on the ballot, it is also possible BAHFA could submit both questions to voters simultaneously on the November 2020, ballot. Given the broad taxing powers this legislation gives BAHFA, the Committee may wish to consider whether voters have sufficient opportunities to weigh in on the entity’s creation.

3. Who pays? AB 1487 enables MTC and ABAG to propose various tax and fees to Bay Area voters. In some cases, like the commercial linkage fee, commercial property would pay for the increased fees. However, developers only pay the fee if voters first approve a parcel tax or general obligation bond, which both residential and commercial property owners pay. ABAG and MTC will have to determine the appropriate balance between taxing residential property owners and commercial property owners. On the one hand, will additional taxes and fees on residential property do not make constructing housing prohibitively expensive? On the other hand, will taxing commercial properties or businesses impact where businesses decide to locate or the number of employees they hire? Finally, will imposing these taxes and fees result in a net improvement in housing production? AB 1487 places these decisions in the hands of the local governments represented by MTC and ABAG and Bay Area voters.

4. Taking some off the top. Depending on the type of tax imposed, AB 1487 requires a portion of funds to go to BAHFA for regional priorities. This means that BAHFA could use tax dollars raised in Solano County on projects in Santa Clara County. For special taxes, 80% would remain within the county of origin and 20% would go to BAHFA for regional priorities. For head taxes, 50% would remain within the county of origin and 50% would go to BAHFA for regional priorities. BAHFA and the Executive Board determine which regional projects to pursue outside of direct allocation. There is no guarantee that BAHFA will distribute regional funding equitably across the region.

5. Necessary? Some of the revenue tools that AB 1487 provides BAHFA at the regional level are tools that some local agencies already have at the local level. For example, nearly 71% of San Francisco voters approved a gross receipts tax in 2012, shifting their business tax away from a flat payroll tax. However, not every jurisdiction in the Bay Area has 2/3 of voters willing to impose a new tax on property or businesses within their jurisdiction. By shifting the tax questions to a regional level, AB 1487 puts the question whether to raise taxes in the hands of voters in up to nine counties collectively, where the counties with over 800,000 residents make up 73% of population. On the one hand, counties with larger populations would have more voting power than smaller counties, which could result in some cities and counties paying taxes they would not have approved if left up to their own devices. On the other hand, cities and counties have had the ability to use these tools to raise revenue for affordable housing, but the region still has serious housing challenges. Leaving decisions up to individual jurisdictions may lengthen the time it takes to solve the regional housing challenges the Bay Area faces. The Committee may wish to consider whether a regional entity with broad taxing powers is the best way to address regional housing challenges.

6. Commercial linkage fee mechanics. The commercial linkage fee is the only financing mechanism in the bill that does not require voter approval. However, the bill first requires voters to approve a parcel tax or general obligation bond issuance before imposing the fee. In other words, voters must first approve a tax that applies to all properties before BAHFA can impose a fee specific to commercial properties. If the nexus study cannot effectively show there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the local agency imposes the fee, then it may be subject to protests and legal challenges. Generally, regional entities, like BAHFA, do not impose commercial linkage fees, but rather the underlying land use jurisdictions that permits the commercial development imposes the fee. It is unclear whether a regional entity has ever imposed a commercial linkage fee for local agencies to administer. However, in 2016 San Francisco Bay Area residents did approve a regional parcel tax to finance shoreline projects for habitat preservation.

7. Related legislation. Legislators have introduced bills to create new infrastructure financing tools for local agencies to replace the revenue local agencies lost after the state dissolved RDAs. SB 5 (Beall) allows local agencies to reduce contributions of local property tax revenue to schools to build affordable housing and related infrastructure. The State General Fund would backfill these reductions. This Committee approved SB 5 on a 6-0 vote, and the bill is now waiting to be taken up on the Assembly Floor. AB 11 (Chiu) created Affordable Housing and Infrastructure Agencies, which allows local agencies to freeze property tax revenue in an area. The bill also allocates any additional property tax revenue to the agency for various uses and sets aside funds for affordable housing. The Assembly Appropriations Committee held this bill.

8. Special legislation. The California Constitution prohibits special legislation when a general law can apply (Section 16 of Article IV). AB 1487 contains findings and declarations explaining the need for legislation that applies only to the Bay Area Housing Finance Authority.

9. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 1487 imposes additional duties on local agencies, Legislative Counsel says that it imposes a new state mandate. AB 1487 says that if the Commission on State Mandates determines that it creates a state-mandated local program, the state must reimburse local agencies by following the existing statutory process for mandate claims.

10. 29.10 (b). As approved by the Committee at its July 10^th meeting, AB 1487 contained provisions creating BAHFA, but did not specify any specific powers for the newly created authority. Under Senate Rule 29.10 (b), the Senate Rules Committee referred the bill to the Senate Housing Committee when the author amended it on the Senate Floor to include provisions outlining BAHFA’s specific powers based on additional feedback solicited from the region since its initial committee hearings. The Senate Housing Committee voted 7-1 to refer the bill back to the Senate Floor. Under Senate Rule 29.10 (b), the Senate Rules Committee subsequently referred the bill back to this Committee. The Committee has three choices at its September 6^th hearing: (1) hold the bill, (2) return the bill as approved to the Senate Floor, or (3) refer the bill to the Appropriations Committee.

Assembly Actions

Assembly Housing and Community Development Committee: 5-2

Assembly Local Government Committee: 5-2

Assembly Appropriations Committee: 12-5

Assembly Floor: 45-21

Support and Opposition

(9/5/19)

Support: Enterprise Community Partners, Inc. (co-sponsor); Non-Profit Housing Association Of Northern California (co-sponsor); Alameda County Transportation Commission; Alliance of Californians for Community Empowerment (ACCE) Action; Association of Bay Area Governments; Bay Area Council; Bay Area Housing Advocacy Coalition; Burbank Housing Development Corporation; California Community Builders; California YIMBY; Chan Zuckerberg Initiative; City of Berkeley; City of Fremont; Community Housing Development Corporation; Community Legal Services In East Palo Alto; Corporation For Supportive Housing; EAH Housing; East Bay Asian Local Development Corporation; Eden Housing; Ensuring Opportunity Campaign to End Poverty in Contra Costa County; Greenbelt Alliance; Habitat for Humanity East Bay/Silicon Valley; Hamilton Families; Jesse Arreguin, Mayor of Berkeley; Libby Schaaf, Mayor of Oakland; London Breed, Mayor Of San Francisco; Mercy Housing; Metropolitan Transportation Commission; Midpen Housing; North Bay Leadership Council; Pico California; Related California; Rise Together; Salesforce; San Francisco Foundation; San Francisco Housing Action Coalition; Save The Bay; Silicon Valley At Home (Sv@Home); Silicon Valley Community Foundation; SPUR; Techequity Collaborative; TMG Partners; Transform; Urban Displacement Project, UC Berkeley; Working Partnerships USA

Opposition: 12 Individuals; California Building Industry Association; California Taxpayers Association; City of Campbell; City of Clayton; City of Concord; City of Lafayette; City of Los Altos; City Of Orinda; City of Pleasanton; City of San Mateo; Coalition For San Francisco Neighborhoods (CSFN); Cow Hollow Association; Delta 6 – East County Mayors and Supervisors; Dolores Heights Improvement Club; Howard Jarvis Taxpayers Association; Marin County Council of Mayors and Council Members; Michael Barnes, Albany City Council; Livable California; Nicholas Waranoff Orinda, CA; San Francisco Tenants Union; Sunset-Parkside Education and Action Committee (SPEAK); Sustainable Tamalmonte; Town of Danville.

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SENATE COMMITTEE ON HOUSING

Senator Scott Wiener, Chair

2019 - 2020 Regular

Bill No: AB 1487 Hearing Date: 9/4/2019

SUBJECT: San Francisco Bay area: housing development: financing

DIGEST: This bill establishes the Bay Area Housing Finance Authority (BAHFA or “the authority”) throughout the San Francisco Bay Area and sets forth the governing structure and powers of the BAHFA Board, allowable financing activities, and allowable expenditures of the revenues generated.

ANALYSIS:

Existing law:

1. Establishes the Metropolitan Transportation Commission (MTC) as the transportation planning, coordinating, and financing agency for the nine-county San Francisco Bay Area, and specifies its governance structure, duties, and powers.
2. Establishes a number of housing assistance programs for affordable housing.
3. Defines “lower income households” as below 80% area median income (AMI).
4. Defines “persons and families of low- or moderate- income” as persons and families whose income does not exceed 120% AMI.

This bill establishes the authority throughout the San Francisco Bay Area. This bill sets forth the governing structure and powers of the board, allowable financing activities, and allowable expenditures of the revenues generated.

BAHFA Governing Board

1. Defines “board” as the governing board of BAHFA, which is governed by the same board that governs MTC, and “executive board” as the executive board of Association of Bay Area Governments (ABAG).
2. States that the purpose of the authority is to raise, administer, and allocate funding and provide technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production.
3. Requires the executive board and the authority board to form an advisory committee of nine members with knowledge and experience in the areas of affordable housing finance and development, tenant protection, and housing preservation. The advisory board shall provide consultation and make recommendations to the executive board and the authority board.
4. Requires the board to set meetings as necessary. Requires the authority to be subject to the Brown Act, the California Public Records Act, and the Political Reform Act of 1974. Additionally, BAHFA shall engage in public participation processes, as specified.
5. Authorizes the board to make and enforce rules and regulations necessary for governing the authority, the preservation of order, and the transaction of business.

BAHFA Powers

1. Authorizes the authority to do the following:
2. Subject to the approval of the executive board, place a measure on the ballot to raise revenue and allocate funds throughout the San Francisco Bay Area.
3. Apply for and receive grants or loans from public and private entities.
4. Solicit and accept gifts, fees, loans, and other allocations from public and private entities.
5. Deposit or invest moneys of the authority in banks or financial institutions including money that was not required for the immediate necessities of the authority.
6. Sue and be sued; engage counsel and other professional services; and enter into and perform necessary contracts.
7. Hire staff and utilize staff employed by MTC.
8. Allocate and deploy capital and generated fees or income in the form of grants, loans, equity, interest rate subsidies, and other financing tools to the cities, counties and other public agencies within the San Francisco Bay Area, and private affordable housing developers to finance affordable housing development, preserve and enhance existing affordable housing, and fund tenant protection programs.
9. Establish and modify the terms of potential capital investments deployed by the authority.
10. Collect data on housing production and monitor progress on meeting regional and state housing goals.
11. Provide support and technical assistance to local governments related to affordable housing production and preservation, and tenant protection.
12. Provide public information regarding the authority’s housing programs and policies.
13. Incur and issue bonds and other indebtedness.
14. Purchase, lease, sell, rent, transfer, assign, and otherwise acquire or dispose of property, including real property.
15. Any other express or implied powers necessary to carry out the intent and purposes of this title.
16. Provides that, subject to approval by the executive board, if the authority proposes a measure that will generate revenues and that requires voter approval, the board of supervisors of the county or counties in which the authority has determined to place the measure on the ballot shall call a special election on the measure.
17. Requires each county included in the ballot measure to include, among other things, a summary of an expenditure plan provided by the authority for inclusion in the ballot pamphlet, as specified.
18. Provides that if 2/3 of all voters voting on a question at the special election vote affirmatively, the measure shall take effect in the counties in which the measure appeared on the ballot.
19. Prohibits the executive board and the authority from regulating or enforcing local land use decisions and acquiring property by eminent domain.
20. Requires the authority to provide for regular audits of the authority’s accounts and records and maintain accounting records, as specified.

BAHFA Financing Activities

1. Authorizes the authority, subject to prior approval by the executive board, to raise and allocate new revenue through the following:
   1. Special taxes, subject to voter approval, including a parcel tax, gross receipts business license taxes (gross receipts tax), and a special business tax (head tax).
   2. Commercial linkage fees.
2. Any funding mechanism or combination of funding mechanisms that requires voter approval may be placed on the ballot in all or a subset of the nine counties in the San Francisco Bay Area, but in no case shall it be placed on the ballot in fewer than four counties.
3. States the Legislature’s intent for the funds to distribute the responsibility for addressing the affordable housing needs of the region across commercial developers, business above a certain size, taxpayers, and property owners within the region.

Expenditures

1. Requires revenue to be used for the construction of new affordable housing, affordable housing preservation, tenant protection programs, planning and technical assistance related to affordable housing, and infrastructure to support housing, and those purposes detailed in (17-20) below.
2. Requires the allocation of regional housing revenues to be first approved by the executive board and subsequently by the authority. The funds shall be distributed in the form of a grant, loan, or other financing tool in a manner that achieves minimum shares over five-year periods after the revenue is approved by voters, as follows:
3. A minimum of 2/3 for production and preservation of affordable housing, as follows:
   • 1. A minimum of 52% for the production of rental housing that is deed restricted to be affordable to lower income households for at least 55 years.
     2. A minimum of 15% for preservation of housing that is deed restricted to be affordable to low- or moderate-income households for 55 years. Funding shall be subject to both of the following conditions:
   1. Existing residents of buildings acquired for the purpose of affordable housing preservation shall not be displaced.
   2. Buildings required for the purpose of affordable housing shall achieve 100% occupancy by low- or moderate-income households over time throughout unit turnover.
      1. Provides that funding shall be subject to the following in the event that demolition or rehabilitation of housing units is required:
4. If the housing units are occupied at the date of acquisition, the housing development shall provide at least the same number of units of equivalent number of bedrooms to be made available at affordable rent or affordable to lower-income households.
5. If existing residents must be relocated due to demolition or rehabilitation needs, the developer must provide relocation benefits to the occupants of those housing rental units.
6. If existing residents must be relocated due to demolition or rehabilitation needs, the developer shall provide a right of first refusal for a comparable unit available in the new or rehabilitated housing development that is affordable to the household at an affordable rent or an affordable housing cost.
7. A minimum of 5% for tenant protection programs for low- and moderate-income households. Funds may only be spent on the following:

Pre-eviction and eviction legal services, counselling, advice and consultation, training, renter education, and representation, and services to improve habitability that protect against displacement of tenants.

Providing emergency rental assistance for lower income households, as specified.

Providing relocation assistance for lower income households beyond what is legally required of landlords according to local or state law.

• • 1. Collection and tracking of information related to displacement and displacement risks, rents, and evictions in the region.

1. A minimum of 10% for a grant program for local governments that qualify based on criteria funding guidelines established by the executive board and the authority in consultation with the advisory committee. Eligible expenditures must support housing and related uses, and include, but not be limited to, grants for the following:

Technical assistance, preparation and adoption of planning documents, and process improvements to accelerate and support housing production, preservation, and tenant protections.

Infrastructure needs associated with increased housing production, including but not limited to, transportation, schools, and parks.

One-time uses that address homelessness, including, but not limited to, homeless shelters.

Programs to enable low- or moderate-income households to become or remain homeowners.

• • 1. Tenant protection programs.

1. Requires the authority to distribute the revenue derived from a commercial linkage fee to each city or county in a manner that is consistent with a regional nexus study adopted by the executive board and the authority. These revenues shall be used exclusively for the production of housing units necessitated by a commercial development project on which the fee was imposed and as determined by the executive board and the authority board.
2. Requires the authority to distribute parcel and gross receipt taxes as follows:
   1. At least 80% of the revenue shall be allocated to the county of origin for expenditure in that county, consistent with the expenditure plan in (21-23) below.
   2. Up to 20% shall be collected by the authority for expenditures consistent with the purposes set for in (16) above and eligible to be used in any county in which the measure is in effect.
3. Requires the authority to distribute funds received through the head tax as follows:
4. At least 50% of the revenue shall be allocated to the county of origin for expenditure in the county, consistent with the expenditure plan in (21-23) below.
5. Up to 50% shall be collected by the authority for expenditures consistent with the purposes set for in (16) above and eligible to be used in any county in which the measure is in effect.
6. Requires the executive board and the authority to, in consultation with the advisory committee, adopt a regional expenditure plan for the uses of housing revenue by July 1 of each year. The expenditure plan shall set forth: (a) the share of revenue and estimated funding amount to be spent in each of the categories established in (17) above, (b) indicate the household income levels to be served within each category of expenditures, and (c) estimate the number of affordable housing units to be built or preserved and the number of tenants to be protected.
7. Requires, to the extent feasible, the expenditure plan to include a description of projects to be funded, location, amount of funding, and anticipated outcomes. Beginning in year two, the authority shall include a report in the regional expenditure plan that provides the allocations and expenditures of projects and projects funded.
8. Requires the regional housing plan to contain specified information for any specific project that has received an allocation of regional housing revenue during the prior year, including whether the project proponent has requested or been eligible to receive a building permit and whether the project proponent has obtained approval or certification that the development is habitable.
9. Requires each county to adopt an expenditure plan applicable to county housing revenue that specifies the proposed allocation of funds and demonstrates how the funds will meet the minimum allocations in (20) above, as specified.
10. Requires the executive board and the authority to monitor expenditures in coordination with the local jurisdictions.
11. Requires the authority to submit an annual report to the Legislature on allocations and expenditures under its control, as specified.

COMMENTS

1. Purpose of the bill. According to the author, “the Bay Area is facing the most significant housing crisis in the region’s history, as countless residents are facing insurmountable housing costs, spend hours driving every day, are one paycheck away from an eviction, or experience homelessness. Housing is a regional issue that requires policy and funding coordination across jurisdictions. This bill would create a vital, new option to address the lack of affordable housing in the San Francisco Bay Area. Specifically, the bill would provide the ABAG and MTC – acting as the BAHFA – with new tools to raise billions of dollars to fund the production, preservation, and protection of affordable housing. It would enable the region to support local jurisdictions by providing additional funding to address infrastructure and other needs associated with new residents. This bill was generated in partnership with the Bay Area’s local elected leaders and other regional leaders so that, collectively, we can ensure that the entire Bay Area is on track to provide affordable housing efficiently and effectively to all residents.”
2. Existing Bay Area regional governance. Federal law requires any urbanized area with a population greater than 50,000 to establish a metropolitan planning organization (MPO) that, among other things, is responsible to ensure that regional transportation planning is cohesive across local jurisdictions. State law requires each of California’s 18 MPOs and 26 regional transportation planning agencies (RTPAs) to prepare a 20-year regional transportation plan.  State law requires each MPO to prepare a sustainable communities strategy as part of its regional transportation plan. MTC is the Bay Area’s RTPA and MPO. COGs are formed (voluntarily) under the state’s joint powers authority’s statute. COGs are required to allocate regional housing need allocation (RHNA) shares within their jurisdictions. ABAG is the Bay Area’s COG. In 2017, MTC and ABAG consolidated their staff into one integrated team to promote enhanced regional collaboration and cooperation.
3. A regional housing financing entity in the Bay Area. This bill establishes the BAHFA throughout the San Francisco Bay Area and sets forth the governing structure and powers of the board, allowable financing activities, and allowable uses of the revenues generated. Its purpose is to raise, administer, and allocate funding and provide technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production. This bill establishes MTC as the board of the authority, and ABAG as the executive board, making ABAG the lead agency.
4. Agreement among the Bay Area stakeholders. Several key provisions were removed in the Senate Governance and Finance Committee to allow interested stakeholders, local leaders, and the author time to negotiate the appropriate financing activities and allowable uses of revenues generated by the authority. Earlier this year, the MTC and ABAG Legislation Committees recommended the formation of an ad hoc committee consisting of local leaders to suggest amendments to AB 1487. In July, ABAG and MTC voted to support the bill if amended with the ad hoc committees’ recommended amendments, as well as additional changes. The amendments made in the Senate on 8/28/19 reflect those recommendations, with the additional changes requested by MTC and ABAG.
5. Summary of recent amendments. Several major amendments were made to the bill since it was seen in the Senate Housing Committee, including changes to the distribution of the funds to various housing purposes. Specifically, production and preservation are combined to represent 2/3 of the expenditures, at least 5% is reserved for tenant protections, and at least 10% for a grant program to locals. Amendments also increased the percentage of funds that return to their home county from 75% to 80%, except that the head tax is split evenly between the county of origin and the authority. Additionally, as noted above, the amendments clarify that ABAG is the lead agency. This bill also makes a number of changes related to the financing mechanisms the authority is authorized to use for housing, and to the governance structure of the authority.
6. Can’t they form a JPA on their own? Local agencies do not need legislative authority to form a JPA unless it requires powers not common to all its members, or when statutory certainty and specificity is preferable to the agreement’s details. In this instance, the authority needs specified authority to generate certain revenues. This bill also provides the authority to shift tax questions to the voters at the regional level, rather than at the individual county level.
7. 29.10(b). As noted above in Comment (4), several key provisions heard in Senate Housing at the June 18th hearing were removed in the Senate Governance and Finance Committee. Because the bill was rewritten, the Senate Rules Committee referred the amended bill under Senate Rule 29.10(b) for a hearing on the Floor amendments. Under this rule, the Committee can hold the bill, or return it to the Senate Floor.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local: Yes

POSITIONS: (Communicated to the committee before noon on Friday,

August 30, 2019.)

SUPPORT

Enterprise Community Partners, Inc. (Co-Sponsor)
Non-Profit Housing Association Of Northern California (Co-Sponsor)
Alameda County Transportation Commission
Alliance of Californians for Community Empowerment Action
Bay Area Housing Advocacy Coalition 
Burbank Housing Development Corporation
California Community Builders
California YIMBY
Chan Zuckerberg Initiative
Community Housing Development Corporation
Community Legal Services in East Palo Alto
Corporation For Supportive Housing
EAH Housing
East Bay Asian Local Development Corp
East Bay Housing Organizations
Eden Housing
Ensuring Opportunity Campaign To End Poverty In Contra Costa County
Greenbelt Alliance
Habitat For Humanity East Bay/Silicon Valley
Hamilton Families
London Breed, Mayor of San Francisco
Mercy Housing
MidPen Housing
Non-Profit Housing Association Of Northern California
North Bay Leadership Council
Pico California
Related California
Rise Together
Salesforce
San Francisco Foundation
San Francisco Housing Action Coalition
Save the Bay
Silicon Valley at Home
Silicon Valley Community Foundation
SPUR
TechEquity Collaborative
TMG Partners
Transform
Urban Displacement Project, UC-Berkeley
Working Partnerships USA
1 Individual

OPPOSITION

California Taxpayers Association
Clayton; City of
Coalition For San Francisco Neighborhoods
Delta 6 - East County Mayors and Supervisors
Howard Jarvis Taxpayers Association
San Francisco Tenants Union
San Mateo; City Of

-- END --

 THIRD READING  

Bill No: AB 1487

Author: Chiu (D), et al.

Amended: 8/28/19 in Senate

Vote: 21

SENATE HOUSING COMMITTEE: 6-2, 6/18/19

AYES: Wiener, Caballero, Durazo, Roth, Skinner, Wieckowski

NOES: Morrell, Bates

NO VOTE RECORDED: McGuire, Moorlach, Umberg

SENATE GOVERNANCE & FIN. COMMITTEE: 4-1, 7/10/19

AYES: McGuire, Beall, Hertzberg, Wiener

NOES: Nielsen

NO VOTE RECORDED: Moorlach, Hurtado

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 45-21, 5/24/19 - See last page for vote

SUBJECT: San Francisco Bay area: housing development: financing

SOURCE: Enterprise Community Partners, Inc.

Non-Profit Housing Association of Northern California

DIGEST:

1. This bill establishes the Bay Area Housing Finance Authority (BAHFA or “the authority”) throughout the San Francisco Bay Area and sets forth the governing structure and powers of the BAHFA Board, allowable financing activities, and allowable expenditures of the revenues generated.

Senate Floor Amendments of 8/28/19 make changes to the governing structure and powers of the BAHFA Board, and provide specificity to the allowable financing activities and allowable expenditures of the revenues generated.

ANALYSIS:

Existing law:

1. Establishes the Metropolitan Transportation Commission (MTC) as the transportation planning, coordinating, and financing agency for the nine-county San Francisco Bay Area, and specifies its governance structure, duties, and powers.
2. Establishes a number of housing assistance programs for affordable housing.
3. Defines “lower income households” as below 80% area median income (AMI).
4. Defines “persons and families of low- or moderate- income” as persons and families whose income does not exceed 120% AMI.

This bill establishes the authority throughout the San Francisco Bay Area. This bill sets forth the governing structure and powers of the board, allowable financing activities, and allowable expenditures of the revenues generated. Specifically, this bill:

BAHFA Governing Board

1. Defines “board” as the governing board of BAHFA, which is governed by the same board that governs MTC, and “executive board” as the executive board of Association of Bay Area Governments (ABAG).
2. States that the purpose of the authority is to raise, administer, and allocate funding and provide technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production.
3. Requires the executive board and the authority board to form an advisory committee of nine members with knowledge and experience in the areas of affordable housing finance and development, tenant protection, and housing preservation. The advisory board shall provide consultation and make recommendations to the executive board and the authority board.
4. Requires the board to set meetings as necessary. Requires the authority to be subject to the Brown Act, the California Public Records Act, and the Political Reform Act of 1974. Additionally, BAHFA shall engage in public participation processes, as specified.
5. Authorizes the board to make and enforce rules and regulations necessary for governing the authority, the preservation of order, and the transaction of business.

BAHFA Powers

1. Authorizes the authority to do the following:
   1. Subject to the approval of the executive board, place a measure on the ballot to raise revenue and allocate funds throughout the San Francisco Bay Area.
   2. Apply for and receive grants or loans from public and private entities.
   3. Solicit and accept gifts, fees, loans, and other allocations from public and private entities.
   4. Deposit or invest moneys of the authority in banks or financial institutions including money that was not required for the immediate necessities of the authority.
   5. Sue and be sued; engage counsel and other professional services; and enter into and perform necessary contracts.
   6. Hire staff and utilize staff employed by MTC.
   7. Allocate and deploy capital and generated fees or income in the form of grants, loans, equity, interest rate subsidies, and other financing tools to the cities, counties and other public agencies within the San Francisco Bay Area, and private affordable housing developers to finance affordable housing development, preserve and enhance existing affordable housing, and fund tenant protection programs.
   8. Establish and modify the terms of potential capital investments deployed by the authority.
   9. Collect data on housing production and monitor progress on meeting regional and state housing goals.
   10. Provide support and technical assistance to local governments related to affordable housing production and preservation, and tenant protection.
   11. Provide public information regarding the authority’s housing programs and policies.
   12. Incur and issue bonds and other indebtedness.
   13. Purchase, lease, sell, rent, transfer, assign, and otherwise acquire or dispose of property, including real property.
   14. Any other express or implied powers necessary to carry out the intent and purposes of this title.
2. Provides that, subject to approval by the executive board, if the authority proposes a measure that will generate revenues and that requires voter approval, the board of supervisors of the county or counties in which the authority has determined to place the measure on the ballot shall call a special election on the measure.
3. Requires each county included in the ballot measure to include, among other things, a summary of an expenditure plan provided by the authority for inclusion in the ballot pamphlet, as specified.
4. Provides that if 2/3 of all voters voting on a question at the special election vote affirmatively, the measure shall take effect in the counties in which the measure appeared on the ballot.
5. Prohibits the executive board and the authority from regulating or enforcing local land use decisions and acquiring property by eminent domain.
6. Requires the authority to provide for regular audits of the authority’s accounts and records and maintain accounting records, as specified.

BAHFA Financing Activities

1. Authorizes the authority, subject to prior approval by the executive board, to raise and allocate new revenue through the following:
   1. Special taxes, subject to voter approval, including a parcel tax, gross receipts business license taxes (gross receipts tax), and a special business tax (head tax).
   2. Commercial linkage fees.
2. Provides that any funding mechanism or combination of funding mechanisms that requires voter approval may be placed on the ballot in all or a subset of the nine counties in the San Francisco Bay Area, but in no case shall it be placed on the ballot in fewer than four counties.
3. States the Legislature’s intent for the funds to distribute the responsibility for addressing the affordable housing needs of the region across commercial developers, business above a certain size, taxpayers, and property owners within the region.

Expenditures

1. Requires revenue to be used for the construction of new affordable housing, affordable housing preservation, tenant protection programs, planning and technical assistance related to affordable housing, and infrastructure to support housing, and those purposes detailed in 17)-20) below.
2. Requires the allocation of regional housing revenues to be first approved by the executive board and subsequently by the authority. The funds shall be distributed in the form of a grant, loan, or other financing tool in a manner that achieves minimum shares over five-year periods after the revenue is approved by voters, as follows:
   1. A minimum of 2/3 for production and preservation of affordable housing, as follows:
      1. A minimum of 52% for the production of rental housing that is deed restricted to be affordable to lower income households for at least 55 years.
      2. A minimum of 15% for preservation of housing that is deed restricted to be affordable to low- or moderate-income households for 55 years. Funding shall be subject to both of the following conditions:
         1. Existing residents of buildings acquired for the purpose of affordable housing preservation shall not be displaced.
         2. Buildings required for the purpose of affordable housing shall achieve 100% occupancy by low- or moderate-income households over time throughout unit turnover.
      3. Provides that funding shall be subject to the following in the event that demolition or rehabilitation of housing units is required:
         1. If the housing units are occupied at the date of acquisition, the housing development shall provide at least the same number of units of equivalent number of bedrooms to be made available at affordable rent or affordable to lower-income households.
         2. If existing residents must be relocated due to demolition or rehabilitation needs, the developer must provide relocation benefits to the occupants of those housing rental units.
         3. If existing residents must be relocated due to demolition or rehabilitation needs, the developer shall provide a right of first refusal for a comparable unit available in the new or rehabilitated housing development that is affordable to the household at an affordable rent or an affordable housing cost.
   2. A minimum of 5% for tenant protection programs for low- and moderate-income households. Funds may only be spent on the following:
      1. Pre-eviction and eviction legal services, counselling, advice and consultation, training, renter education, and representation, and services to improve habitability that protect against displacement of tenants.
      2. Providing emergency rental assistance for lower income households, as specified.
      3. Providing relocation assistance for lower income households beyond what is legally required of landlords according to local or state law.
      4. Collection and tracking of information related to displacement and displacement risks, rents, and evictions in the region.
   3. A minimum of 10% for a grant program for local governments that qualify based on criteria funding guidelines established by the executive board and the authority in consultation with the advisory committee. Eligible expenditures must support housing and related uses, and include, but not be limited to, grants for the following:
      1. Technical assistance, preparation and adoption of planning documents, and process improvements to accelerate and support housing production, preservation, and tenant protections.
      2. Infrastructure needs associated with increased housing production, including but not limited to, transportation, schools, and parks.
      3. One-time uses that address homelessness, including, but not limited to, homeless shelters.
      4. Programs to enable low- or moderate-income households to become or remain homeowners.
      5. Tenant protection programs.
3. Requires the authority to distribute the revenue derived from a commercial linkage fee to each city or county in a manner that is consistent with a regional nexus study adopted by the executive board and the authority. These revenues shall be used exclusively for the production of housing units necessitated by a commercial development project on which the fee was imposed and as determined by the executive board and the authority board.
4. Requires the authority to distribute parcel and gross receipt taxes as follows:
   1. At least 80% of the revenue shall be allocated to the county of origin for expenditure in that county, consistent with the expenditure plan in 21)-23) below.
   2. Up to 20% shall be collected by the authority for expenditures consistent with the purposes set for in 16) above and eligible to be used in any county in which the measure is in effect.
5. Requires the authority to distribute funds received through the head tax as follows:
   1. At least 50% of the revenue shall be allocated to the county of origin for expenditure in the county, consistent with the expenditure plan in 21)-23) below.
   2. Up to 50% shall be collected by the authority for expenditures consistent with the purposes set for in 16) above and eligible to be used in any county in which the measure is in effect.
6. Requires the executive board and the authority to, in consultation with the advisory committee, adopt a regional expenditure plan for the uses of housing revenue by July 1 of each year. The expenditure plan shall set forth: (a) the share of revenue and estimated funding amount to be spent in each of the categories established in 17) above, (b) indicate the household income levels to be served within each category of expenditures, and (c) estimate the number of affordable housing units to be built or preserved and the number of tenants to be protected.
7. Requires, to the extent feasible, the expenditure plan to include a description of projects to be funded, location, amount of funding, and anticipated outcomes. Beginning in year two, the authority shall include a report in the regional expenditure plan that provides the allocations and expenditures of projects and projects funded.
8. Requires the regional housing plan to contain specified information for any specific project that has received an allocation of regional housing revenue during the prior year, including whether the project proponent has requested or been eligible to receive a building permit and whether the project proponent has obtained approval or certification that the development is habitable.
9. Requires each county to adopt an expenditure plan applicable to county housing revenue that specifies the proposed allocation of funds and demonstrates how the funds will meet the minimum allocations in 20) above, as specified.
10. Requires the executive board and the authority to monitor expenditures in coordination with the local jurisdictions.
11. Requires the authority to submit an annual report to the Legislature on allocations and expenditures under its control, as specified.

Comments

1. Purpose of the bill. According to the author, “the Bay Area is facing the most significant housing crisis in the region’s history, as countless residents are facing insurmountable housing costs, spend hours driving every day, are one paycheck away from an eviction, or experience homelessness. Housing is a regional issue that requires policy and funding coordination across jurisdictions. This bill would create a vital, new option to address the lack of affordable housing in the San Francisco Bay Area. Specifically, the bill would provide the ABAG and MTC – acting as the BAHFA – with new tools to raise billions of dollars to fund the production, preservation, and protection of affordable housing. It would enable the region to support local jurisdictions by providing additional funding to address infrastructure and other needs associated with new residents. This bill was generated in partnership with the Bay Area’s local elected leaders and other regional leaders so that, collectively, we can ensure that the entire Bay Area is on track to provide affordable housing efficiently and effectively to all residents.”

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

SUPPORT: (Verified 8/28/19)

Enterprise Community Partners, Inc. (co-source)
Non-Profit Housing Association of Northern California (co-source)
Alameda County Transportation Commission
Alliance of Californians for Community Empowerment Action
Bay Area Housing Advocacy Coalition 
Burbank Housing Development Corporation
California Community Builders
California YIMBY
Chan Zuckerberg Initiative
Community Housing Development Corporation
Community Legal Services in East Palo Alto
Corporation for Supportive Housing
EAH Housing
East Bay Asian Local Development Corp
East Bay Housing Organizations
Eden Housing
Ensuring Opportunity Campaign to End Poverty in Contra Costa County
Greenbelt Alliance
Habitat for Humanity East Bay/Silicon Valley
Hamilton Families
London Breed, Mayor of San Francisco
Mercy Housing
MidPen Housing
Non-Profit Housing Association of Northern California
North Bay Leadership Council
Pico California
Related California
Rise Together
Salesforce
San Francisco Foundation
San Francisco Housing Action Coalition
Save the Bay
Silicon Valley at Home
Silicon Valley Community Foundation
Spur
TechEquity Collaborative
TMG Partners
Transform
Urban Displacement Project, University of California, Berkeley
Working Partnerships USA

One individual

OPPOSITION: (Verified 8/28/19)

California Taxpayers Association
City of Clayton
City of San Mateo

Coalition for San Francisco Neighborhoods
Howard Jarvis Taxpayers Association
Two individuals

ASSEMBLY FLOOR: 45-21, 5/24/19

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Cooper, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Holden, Jones-Sawyer, Kalra, Kamlager-Dove, Limón, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Santiago, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Cervantes, Chen, Choi, Cunningham, Dahle, Flora, Fong, Gallagher, Irwin, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Petrie-Norris, Salas, Voepel, Waldron

NO VOTE RECORDED: Bauer-Kahan, Boerner Horvath, Cooley, Daly, Diep, Frazier, Eduardo Garcia, Grayson, Levine, Mayes, Muratsuchi, Quirk-Silva, Blanca Rubio, Smith

Prepared by: Alison Hughes / HOUSING / (916) 651-4124

8/29/19 14:53:43

**** END ****

 THIRD READING  

Bill No: AB 1487

Author: Chiu (D), et al.

Amended: 7/11/19 in Senate

Vote: 21

SENATE HOUSING COMMITTEE: 6-2, 6/18/19

AYES: Wiener, Caballero, Durazo, Roth, Skinner, Wieckowski

NOES: Morrell, Bates

NO VOTE RECORDED: McGuire, Moorlach, Umberg

SENATE GOVERNANCE & FIN. COMMITTEE: 4-1, 7/10/19

AYES: McGuire, Beall, Hertzberg, Wiener

NOES: Nielsen

NO VOTE RECORDED: Moorlach, Hurtado

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 45-21, 5/24/19 - See last page for vote

SUBJECT: San Francisco Bay area: housing development: financing

SOURCE: Enterprise Community Partners, Inc.

Non-Profit Housing Association of Northern California

DIGEST:

1. This bill establishes the Bay Area Housing Finance Authority (BAHFA) throughout the San Francisco Bay Area and sets forth the basic structure of the governing board.

ANALYSIS:

Existing law:

1. Establishes the Metropolitan Transportation Commission (MTC) as the transportation planning, coordinating, and financing agency for the nine-county San Francisco Bay Area, and specifies its governance structure, duties, and powers.
2. Establishes a number of housing assistance programs for affordable housing.
3. Defines “lower income households” as below 80% area median income (AMI).
4. Defines “persons and families of low- or moderate- income” as persons and families whose income does not exceed 120% AMI.

This bill:

1. Defines “board” as the governing board of BAHFA.
2. Defines “executive board” as the executive board of Association of Bay Area Governments (ABAG).
3. Defines “San Francisco Bay Area” as the entire area within the territorial boundaries of the Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma, and the City and County of San Francisco.
4. Defines “low- or moderate-income households” as the same meaning as “persons and families of low- or moderate-income.”
5. Establishes the BAHFA throughout the San Francisco Bay Area. This bill sets forth the basic structure of the governing board.

BAHFA Governing Board

1. States that the purpose of BAHFA is to raise, administer, and allocate funding and provide technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production. BAHFA shall be staffed by the existing staff at MTC with the understanding that additional staff with expertise in affordable housing finance will be needed to administer the funding.
2. Requires BAHFA to be governed by the same board that governs MTC.

8) Requires the executive board to form an advisory committee of nine members with knowledge and experience in the areas of affordable housing finance and development, tenant protection, and housing preservation. The board shall select a chair and vice-chair, as specified.

9) Requires the board to set meetings as necessary. Requires BAHFA to be subject to the Brown Act, the California Public Records Act, and the Political Reform Act of 1974.

10) Provides that the time and place of the first meeting of the board shall be at a time and place within the San Francisco Bay Area fixed by the chair.

11) Authorizes the board to make and enforce rules and regulations necessary for governing the authority, the preservation of order, and the transaction of business.

Comments

1. Purpose of the bill. According to the author, this bill “empowers the Bay Area to help address its affordable housing needs by enabling the region to raise new revenue and support local jurisdictions, and thereby ensure that the entire Bay Area is on track to end the housing crisis by providing affordable housing efficiently and effectively to all residents.”
2. CASA Process. From the middle of 2017 to the end of 2018, MTC and ABAG convened a series of structured discussions with certain local government officials, developers, major employers, labor interests, housing and policy experts, social equity advocates and non-profit housing providers. This group was deemed the Committee to House the Bay Area, and nicknamed CASA. CASA identified that, to make housing in the region more affordable, 35,000 new housing units would need to be built annually, including 14,000 new subsidized affordable housing units. Additionally, the region has 30,000 units at risk of losing their affordability, and 300,000 lower-income households who are paying more than 50% of their income in rent. CASA’s analysis found that there is still a $2.5 billion funding gap annually between existing resources and what is needed. CASA proposes to meet $1.5 billion of this deficit with regional and local self-help measures, with the remainder being funded from additional state and federal sources.
3. A regional housing financing entity in the Bay Area. This bill establishes the BAHFA throughout the San Francisco Bay Area and sets forth the basic structure of the governing board. Its purpose is purpose is to raise, administer, and allocate funding and provide technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production.

4) Ongoing regional discussions. Several key provisions were removed in the Senate Governance and Finance Committee to allow interested stakeholders, local leaders, and the author time to negotiate the appropriate financing activities and allowable uses of revenues generated by BAHFA. The author intends to amend agreed-upon provisions into this bill before the end of this legislative session.

5) Opposition. The Alameda County Transportation Commission was previously opposed unless amended to provide equity in representation and investment of revenue. They were asking to have ABAG as the governing entity to administer the funds. They also wanted the funds to be based on a jobs/housing imbalance ratio, for funds to come from a jobs/housing imbalance fee that rewards more balanced jurisdictions, and no less than 50% of the revenue be allocated to regional programs. The California Taxpayers Association is opposed to additional taxes imposed bay area residents, which will increase their cost of living and make housing more expensive. New taxes would place additional burdens on working families and the middle class. Howard Jarvis Taxpayers Association writes that the Legislature should instead lower impact fees, reform inclusionary zoning, remove costly mandates on new development in including rent control and solar panels and remove regulatory burdens to encourage more housing to be built.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

SUPPORT: (Verified 8/20/19)

Enterprise Community Partners, Inc. (co-source)
Non-Profit Housing Association of Northern California (co-source)
Alameda County Transportation Commission
Alliance of Californians for Community Empowerment Action

Bay Area Council
Bay Area Housing Advocacy Coalition
Burbank Housing Development Corporation
California Community Builders
California YIMBY
Chan Zuckerberg Initiative
City of Berkeley 
Community Housing Development Corporation
Community Legal Services in East Palo Alto
Corporation for Supportive Housing
EAH Housing
East Bay Asian Local Development Corporation

East Bay Housing Organization

Eden Housing
Ensuring Opportunity Campaign to End Poverty in Contra Costa County
Greenbelt Alliance
Habitat for Humanity East Bay/Silicon Valley
Hamilton Families

London Breed, Mayor of San Francisco

Mercy Housing

MidPen Housing
Non-Profit Housing Association of Northern California
North Bay Leadership Council
Pico California

Related California

Rise Together

Salesforce

San Francisco Foundation

San Francisco Housing Action Coalition

Save the Bay
Silicon Valley at Home
Silicon Valley Community Foundation
Spur
TechEquity Collaborative
TMG Partners

TransForm
Urban Displacement Project, University of California, Berkeley
Working Partnerships USA
One individual

OPPOSITION: (Verified 8/20/19)

California Taxpayers Association
City of Clayton
City of San Mateo

Coalition for San Francisco Neighborhoods
Howard Jarvis Taxpayers Association

Two individuals

ASSEMBLY FLOOR: 45-21, 5/24/19

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Cooper, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Holden, Jones-Sawyer, Kalra, Kamlager-Dove, Limón, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Santiago, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Cervantes, Chen, Choi, Cunningham, Dahle, Flora, Fong, Gallagher, Irwin, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Petrie-Norris, Salas, Voepel, Waldron

NO VOTE RECORDED: Bauer-Kahan, Boerner Horvath, Cooley, Daly, Diep, Frazier, Eduardo Garcia, Grayson, Levine, Mayes, Muratsuchi, Quirk-Silva, Blanca Rubio, Smith

Prepared by: Alison Hughes / HOUSING / (916) 651-4124

8/21/19 9:55:10

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2019 - 2020 Regular

San Francisco Bay area: housing development: financing

Creates the Bay Area Housing Finance Authority.

Background

Local agencies use various tools to finance affordable housing production and preservation, as well as to protect tenants currently living in those affordable housing units. These include special taxes, commercial linkage fees, and bonds.

Special taxes. The California Constitution states that taxes levied by local governments are either general taxes, subject to majority approval of its voters, or special taxes, subject to 2/3 vote (Article XIII C), which the state or local agencies use for specified purposes. Proposition 13 (1978) required a 2/3 vote of each house of the Legislature for state tax increases, and 2/3 vote of local voters for local special taxes. Proposition 62 (1986) prohibited local agencies from imposing general taxes without majority approval of local voters, and a 2/3 vote for special taxes. Proposition 218 (1996) extended those vote thresholds to charter cities and limited local agencies’ powers to levy new assessments, fees, and taxes. The Constitution further bars school districts from imposing general taxes. Additionally, the California Constitution has historically required a 2/3 vote for issuing bonds since 1879, but voters subsequently allowed school districts, community college districts, and county offices of education to issue bonded indebtedness for school facilities with 55% approval when complying with specified requirements (Proposition 39, 2000).

One of the most common forms of special tax is a parcel tax. Parcel taxes are not ad valorem or assessed based on the value of a property; instead they are generally a flat rate assessed per parcel regardless of its size, or on a per square foot rate. Agencies can use revenues in almost any way that serves local needs, such as ongoing expenses, programs, or buildings. Counties collect parcel taxes with property taxes, and then remit funds to the agency imposing the tax. Property tax law generally guides parcel tax collection.

Other local agencies levy special taxes on businesses to raise funds for housing and other community needs. Since 2012, San Francisco has levied a gross receipts tax, which requires businesses operating in the city to pay taxes for the privilege of operating a business within the City based on the total amount of revenue received including, but not limited to, amounts derived from sales, services, dealings in property, interest, rent, royalties, dividends, licensing fees, other fees, commissions and distributed amounts from other business entities. In 2018, voters in the City of Mountain View approved a tax on the number of employees a business employs, also known as a head tax.

Commercial linkage fees. Local agencies can also impose fees on specific developments to account for the impact of that specific development on the local community, also known as a commercial linkage fee. To impose a commercial linkage fee, the local agency must first conduct a study showing the nexus between the fee’s use and the type of commercial development project paying the fee. The nexus study must show there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the local agency imposes the fee. For example, if the commercial linkage fee went to support affordable housing, the nexus study would have to demonstrate that the commercial development increases the community’s affordable housing needs.

Bonds. When public agencies issue bonds, they borrow money from investors, who provide cash in exchange for the agencies’ commitment to repay the principal amount of the bond plus interest. Bonds are usually either revenue bonds, which repay investors out of revenue generated from the project the agency buys with bond proceeds, or general obligation bonds, which the public agency pays out of general revenues and are guaranteed by its full faith and credit. Since bonds include interest, they are generally used for financing projects or investments that have significant upfront costs, such as the development of an affordable housing project. They generally are not used to provide services that do not require an initial capital investment, such as providing legal services. Generally, issuing bonds requires a 2/3 vote of the people.

Bay area housing challenges. California is in the midst of a serious housing crisis. California is home to 21 of the 30 most expensive rental housing markets in the country, which has had a disproportionate impact on the middle class and the working poor. Housing units affordable to low-income earners, if available, are often in serious states of disrepair. The Department of Housing and Community Development (HCD) estimates that approximately 2.7 million lower-income households are rent-burdened (meaning they spend at least 30 percent of their income on rent), and 1.7 million of which are severely rent-burdened (spending at least 50 percent of their income on rent). According to a 2015 study by the California Housing Partnership Corporation, California has a shortfall of 1.5 million affordable homes and 13 of the 14 least affordable metropolitan areas in the country.

While the housing crisis is felt statewide, the challenges are particularly acute in the nine bay area counties: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma. Two governmental entities provide region-wide housing planning and support to help address these challenges: the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG).

MTC. MTC provides regional transportation planning for the Bay Area. A 21-member board governs MTC with:

• Two county supervisors each from Contra Costa, San Francisco, and San Mateo counties;
• Three county supervisors each from Alameda and Santa Clara counties;
• One county supervisor each from Marin, Napa, Solano, and Sonoma counties;
• One representative each from the Association of Bay Area Governments (ABAG) and the San Francisco Bay Conservation and Development Commission (BCDC);
• One nonvoting representative the state Department of Transportation appoints; and
• One nonvoting member each from the United States Department of Transportation and the U.S. Department of Housing and Urban Development.

ABAG. ABAG serves as the comprehensive regional planning agency and council of governments for the nine counties and 101 cities and towns in the region. Local government leaders formed ABAG to address common regional issues relating to land use, environmental stewardship, energy efficiency, and water resource protection. The ABAG Executive Board (Executive Board) governs the organization with the general assembly that helps determine policy and adopts the organization’s annual budget and work program. The Executive Board comprises 35 county supervisors or city council members, four representatives from BCDC, and one from MTC.

From the middle of 2017 to the end of 2018, MTC and ABAG convened a series of discussions with local government officials, developers, employers, labor interests, housing and policy experts, social equity advocates, and nonprofit housing providers under the moniker of the Committee to House the Bay Area, known as CASA. This group concluded that to make Bay Area housing more affordable, the region would have to build 35,000 new housing units annually, including 14,000 new subsidized affordable housing units. Additionally, the region has 30,000 units at risk of losing their affordability, and 300,000 lower-income households who are paying more than half their income in rent. CASA’s analysis concluded that there is a $2.5 billion funding gap annually between existing resources and the level of resources needed to meet these benchmarks. CASA proposed to meet $1.5 billion of this deficit with regional and local financial measures, with the remainder coming from state and federal sources.

The author wants to create a regional financing agency to produce, preserve, and protect affordable housing in the Bay Area.

Proposed Law

Assembly Bill 1487 enacts the San Francisco Bay Area Regional Housing Finance Act (the Act) to raise, administer, and allocate funding and provide technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production. The Act:

• Creates the Bay Area Housing Finance Authority (BAHFA);
• Establishes BAHFA’s governance structure;
• Gives BAHFA certain powers;
• Allows BAHFA to place measures on the ballot;
• Outlines BAHFA’s revenue generating tools;
• Establishes how BAHFA spends money;
• Includes certain accountability provisions.

Governance structure. BAHFA’s governing board is the same governing board that governs MTC, but BAHFA is a separate legal entity from MTC. Existing MTC staff will also staff BAHFA. The Act acknowledges that additional staff with affordable housing finance expertise may be necessary to administer the Act. The BAHFA board selects a chair and vice chair to preside over meetings, and members receive a $100 per diem for each meeting the member attends up to two meetings per month. The BAHFA board can make necessary regulations and enact resolutions necessary to govern the authority, the conduct of meetings, and the transaction of business. AB 1487 also creates an advisory committee of members with knowledge and experience in affordable housing finance and development, tenant protection, and housing preservation to assist in developing guidelines for BAHFA.

The Executive Board approves most actions of BAHFA, such as reviewing and approving projects prior to BAHFA review, approval, and allocation. AB 1487 also states that the Legislature’s intent is to transfer governing powers to a new regional agency if MTC and ABAG merge, but the bill does not require the two organizations to merge as part of the Act.

BAHFA powers. AB 1487 provides BAHFA with the power to:

• Place a measure on the ballot to raise revenue;
• Apply for and receive grants from federal and state agencies;
• Solicit and accept gifts, fees, grants, and allocations from public and private entities;
• Deposit or invest moneys of the authority in banks or financial institutions;
• Sue or be sued;
• Engage counsel and other professional services;
• Enter into and perform all necessary contracts;
• Enter into a joint powers agreement;
• Hire staff, define their qualifications and duties, and provide a schedule of compensation;
• Use MTC staff;
• Collect data on housing production and monitor progress on meeting regional and state housing goals;
• Provide support and technical assistance to local governments in relation to producing and preserving affordable housing;
• Provide public information about BAHFA’s housing programs and policies; and
• Perform other powers necessary to carry out the intent and purposes of the Act.

AB 1487 also prohibits BAHFA from regulating or enforcing local land use decisions and acquiring property by eminent domain.

Placing measures on ballot. Subject to the approval of the Executive Board, BAHFA can propose a measure to be included in next regularly scheduled statewide election. For the purposes of elections, the bill defines BAHFA as a district and allows BAHFA to place measures on the ballot in as many as all nine, and as few as four, Bay Area counties. AB 1487 sets BAHFA’s appropriations limit based on receipts from the initial measure that would generate revenue. The legal counsel prepares an impartial analysis of the measure, which is subject to review by the county counsel of the largest county in the region. Each county then uses the exact ballot language the authority provides for the ballot. BAHFA must reimburse counties for the incremental costs associated with placing a measure on the ballot. If 2/3 vote affirmatively, the measure must take effect in the timeframe provided by the measure.

Generating revenue. AB 1487 provides BAHFA the authority to raise revenue from (1) special taxes, (2) commercial linkage fees, and (3) bonds.

Special taxes. AB 1487 allows BAHFA to levy the following types of special taxes, including:

• Parcel taxes. BAHFA can levy a parcel tax upon each parcel of real property at a rate that is determined without regard to that property’s value and applies uniformly to all taxpayers within the jurisdiction.
• Gross receipts. BAHFA can levy a tax on the gross receipts of a business for the privilege of engaging in lawful business within the area. It allows for variable rates and exemptions for small businesses and nonprofit organizations.
• Head tax. BAHFA can levy a tax on employers based on the number of employees that employer employs in the Bay Area.

AB 1487 specifies that various nonprofit organizations are exempt from special taxes BAHFA imposes.

Commercial linkage fee. AB 1487 allows the Executive Board to impose a commercial linkage fee, with BAHFA board approval, on projects involving the issuance of a permit by an underlying land use jurisdiction within the Bay Area. BAHFA would charge the fee to an applicant in connection with the approval of a commercial development project. Before establishing the fee, the Executive Board must prepare a nexus study to support the necessity and amount of the fee. BAHFA can either charge a variable rate fee or a flat fee. Under the variable fee, areas creating more housing units than jobs pay less than areas that created more jobs than housing units. AB 1487 also requires BAHFA to reduce the fee if the applicant already pays a commercial linkage fee in their jurisdiction. The underlying land use jurisdictions must collect the fee and can deduct administrative costs from the revenue collected.

Before adopting a resolution to impose a commercial linkage fee, the Executive Board must conduct a public hearing to consider the fee. AB 1487 allows taxpayers to protest the fee within 90 days after the imposition of the fee. Any party who protests can file an action to not pay the fee within 60 days after delivery of notice of the fee. The burden of proof to show the fee is appropriate falls on BAHFA, not the taxpayer. If the court invalidates the fee, BAHFA must refund the unlawful amount charged plus interest. If an individual protests the fee on the grounds of whether it is considered a fee or a tax for the purposes of requiring a vote of the people, BAHFA must demonstrate the appropriateness of the fee. A party protesting on these grounds may only do so if the fee was directly imposed upon them and that party requests a copy of all documents related to the fee’s appropriateness. Any person may request an audit from BAHFA demonstrating the fee to be appropriate. If the audit deems the fee is not appropriate, BAHFA must adjust the fee.

Bonds. AB 1487 allows the BAHFA board to submit a bond issuance to the voters with a majority vote of the board. The resolution to issue bonds must include: (1) a description of the projects that will be financed; (2) the cost of those facilities and bond administration; (3) the maximum interest rate on the bonds; (4) the date of the election; (5) the amount of tax revenue available to pay off the principal and interest on the bonds; and (6) include a finding that the cost of paying off the principal and interest on the bonds is less than the tax revenue available. After adopting a resolution and noticing the bonds in newspapers, the decision whether to issue bonds is placed before voters. If two-thirds of voters approve bond issuances, BAHFA can proceed to issue bonds. If voters do not approve the issuance, then BAHFA must wait one year before submitting another bond issuance before voters. Every two years after issuing bonds, BAHFA must contract for an independent financial and performance audit of its bonds. AB 1487 allows BAHFA to refund bonds it issues if terms are favorable and holds that neither BAHFA, nor its personnel, is liable for the bonds, and the bonds issued are only considered debts of BAHFA, not member agencies or the State.

Expending funds. Depending on the revenue source, BAHFA distributes a portion of revenue to local agencies and keeps the remainder for use on regional projects. Of the revenue generated by a parcel tax or gross receipts tax, at least 75% must remain in the county that generated the revenue. The remaining 25% goes to BAHFA for regional projects. Of the revenue generated by a head tax, 50% must remain in the county that generated the revenue. The remaining 50% goes to BAHFA for regional projects. The Commercial Linkage fee and bond proceeds are not subject to these percentages. BAHFA can distribute funds directly to a city, county, public entity, or private project sponsor. However, for special taxes, counties must provide a direct allocation to a city if it is one of the three largest cities in the nine-county region based on the city’s share of the county’s regional housing needs.

BAHFA must distribute funds, except for those it generates from a commercial linkage fee, over a five-year period starting after voters approve a tool to raise revenue in a way that ensures the following:

• At least 50% for the production of housing units affordable to lower income households, which includes financing projects and acquiring land for those projects;
• At least 15% for the preservation of housing affordable to low- or moderate- income households, including acquiring, rehabilitating, and preserving existing affordable housing units;
• At least 5% for tenant protection programs, including legal aid, emergency rental assistance, and providing relocation assistance. BAHFA must prioritize non-bond funds for this category;
• At least 5%, but no more than 10%, for local governments that meet BAHFA and Executive Board housing benchmarks. Local governments can use these funds on anything, including but not limited to, staffing costs, infrastructure needs, and homeless shelters.

After consulting with the advisory committee, BAHFA can change these percentages with a 55% vote of BAHFA’s board and the Executive Board in a public meeting.

For commercial linkage fees, BAHFA must distribute revenues consistent with the fee the authority imposed based on the results of the nexus study.

BAHFA and the Executive Board must submit an annual regional expenditure plan that describes how they intend to spend regional funds, including the portion of funds dedicated to each category and the household income levels the funding will serve. Each county also must submit an annual expenditure plan with the same information to BAHFA and the Executive Board for approval. The plan can include a finding that the minimum funding categories are not feasible or the best use of funds to meet the county’s regional housing needs. Beginning in the second year of funding, each county must also include a report on its allocations and expenditures based on the minimum funding categories. If BAHFA determines that a county did not submit a complete expenditure plan, it may withhold funds until the county submits a complete plan. BAHFA must post the regional and county plans to its website.

Counties can request that BAHFA administer its share of the funds. If BAHFA agrees, it must adopt an annual expenditure plan approved by BAHFA and the Executive Board.

Once a county commits funds to a specific project, the county has three years to spend the funds. BAHFA may authorize expenditures after three years pursuant to guidelines BAHFA must adopt with the Executive Board. A city that receives funds must commit those funds to a specific project within five years, and must expend those funds within an additional three years. If city funds are not committed to a specific project within three years, then BAHFA transfers funds for regional uses. The bill also limits BAHFA and each county to using no more than 3% of their respective funds on administrative costs.

Accountability provisions. AB 1487 requires BAHFA to provide an annual report on allocations and expenditures under its control. Five years after voters approve a BAHFA ballot measure, BAHFA and the Executive Board must review its implementation. This review must include an analysis of expenditures, the number of affordable housing units produced, and information on the tenant protection services provided. As part of this review, BAHFA and the Executive Board may elect to transfer certain responsibilities between the two entities.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “AB 1487 empowers the Bay Area to help address its affordable housing needs by enabling the region to raise new revenue and support local jurisdictions, and thereby ensure that the entire Bay Area is on track to end the housing crisis by providing affordable housing efficiently and effectively to all residents.”

2. Who decides? AB 1487 allows MTC and ABAG to create BAHFA and gives it regional taxing powers. Voters would ultimately decide whether to the entity could raises taxes, but they would not decide whether BAHFA should have these powers in the first place. The one exception is the commercial linkage fee which does not require voter approval. While asking voters whether to approve the entity in one election and the revenue mechanism in a different election could delay when a revenue mechanism appears on the ballot, it is also possible BAHFA could submit both questions to voters simultaneously, and still make the November 2020, ballot. Given the broad taxing powers this legislation gives BAHFA, the Committee may wish to consider whether voters should also weigh in on its creation, not just individual revenue measures.

3. Taking some off the top. Depending on the type of tax imposed, AB 1487 requires a portion of funds to go to BAHFA for regional priorities. This means that BAHFA could use tax dollars raised in Solano County on projects in Santa Clara County. For special taxes, 75% would remain within the county of origin and 25% would go to BAHFA for regional priorities. For head taxes, 50% would remain within the county of origin and 50% would go to BAHFA for regional priorities. BAHFA and the Executive Board determine which regional projects to pursue. There is no guarantee that BAHFA will distribute regional funding equitably across the region. The Committee may wish to consider providing BAHFA more direction regarding how it uses regional funds, or whether the particular breakdowns are appropriate.

4. Necessary? All of the powers that AB 1487 provides BAHFA at the regional level are tools that local agencies already have at the local level. For example, nearly 71% of San Francisco voters approved a gross receipts tax in 2012, shifting their business tax away from a flat payroll tax. However, not every jurisdiction in the Bay Area has two-thirds of voters willing to impose a new tax on property or businesses within their jurisdiction. By shifting the tax questions to a regional level, AB 1487 puts the question whether to raise taxes in the hands of voters across the nine counties collectively, where the counties with over 800,000 residents make up 73% of population. On the one hand, counties with larger populations would have more voting power than smaller counties, which could result in some cities and counties paying taxes they would not approve if left up to their own devices. On the other hand, cities and counties have had the ability to use these tools to raise revenue for affordable housing, but the region still has serious housing challenges. Leaving decisions up to individual jurisdictions may lengthen the time it takes to solve the regional housing challenges the Bay Area faces. The Committee may wish to consider whether a regional entity with broad taxing powers is the best way to address regional housing challenges.

5. More needed? State law authorizes cities and counties to create a variety of entities and corporations to perform specified services, such as municipal or public utilities, community energy authorities, and infrastructure financing districts, among others. These laws generally set forth the powers and duties of these entities and corporations, such as the authority to contract, acquire and own property, as well as levy and collect taxes. AB 1487 describes the financial mechanisms BAHFA can use, but does not provide much structure as to how BAHFA will administer the taxes and fees it levies or the bonds it issues. This is particularly important in the case of AB 1487 because of the range of revenue tools it could use. If it decides to levy a parcel tax, counties could collect the tax along with other property tax revenue. However, if that is how BAHFA collects the parcel tax, the bill does not provide clear instructions for transferring regional funds back to BAHFA. If voters approve a gross receipts tax, BAHFA would have to set up a system for businesses to pay the tax, establish a process for distributing tax revenue, create an appeals process, and provide enforcement to ensure businesses comply with the tax. The bill could benefit from more clarity regarding how the costs to administer these funds would be counted against the 3% administrative cost limits for BAHFA and local agencies. AB 1487 would likely benefit from provisions clarifying the powers and duties of this new regional authority.

6. Commercial linkage fee mechanics. The commercial linkage fee is the only financing mechanism in the bill that does not require voter approval. Since the bill does not currently require voter approval to form the entity, BAHFA could impose a commercial linkage fee without ever receiving input from voters. In addition, the bill includes provisions requiring BAHFA to assess the commercial linkage fee based on commercial developments’ regional impacts, meaning how the underlying land use jurisdiction has contributed to the regional imbalance between jobs and housing units produced. If the nexus study cannot effectively show there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the local agency imposes the fee, then it may be subject to protests and legal challenges. Generally, regional entities, like BAHFA, do not impose commercial linkage fees, but rather the underlying land use jurisdictions that permits the commercial development imposes the fee. It is unclear whether a regional entity has ever imposed a commercial linkage fee for local agencies to administer. Given the challenges involved in establishing a commercial linkage fee that addresses these challenges, the Committee may wish to consider whether the commercial linkage fee should be included in the Act.

7. Practical considerations. AB 1487 raises several operational concerns, outlined below:

• AB 1487 provides that BAHFA must prioritize non-bond funds for tenant protection programs, but leaves open the possibility that it could use bond funds to pay for services, staffing, and other ongoing costs, which is inconsistent with how public agencies generally use bonds, which is to pay off initial capital investments over time. The bill also does state the type of bonds BAHFA can issue. This means BAHFA could issue general obligation bonds, revenue bonds, or other types of bonds, so long as voters approved the issuance. Further specification on the types of bonds BAHFA can issue may help clarify how bond proceeds can be spent.
• AB 1487 requires between 5% and 10% of funds go to local governments as an incentive to meet BAHFA and Executive Board benchmarks. It is unclear whether these benchmarks align with other state and regional housing need benchmarks or whether BAHFA and the Executive board will create new benchmarks. Since funds for this incentive may come from regional funds, taxpayers in one jurisdiction may end up funding general services in other jurisdictions that are not housing-related.
• AB 1487 does not provide detailed instructions for how BAHFA collects and distributes funds. For example, the bill does not require that cities or counties maintain BAHFA funds in a separate fund only used for this purpose, which would help delineate funds for this program from other city and county resources. Without such clear delineation of funds, BAHFA may have a harder time monitoring how cities and counties use funds.

8. Technicals.

• Page 30, Line 8, replace “64512” with “64612.”

9. Related legislation. Legislators have introduced bills to create new infrastructure financing tools for local agencies to replace the revenue local agencies lost after the state dissolved RDAs. SB 5 (Beall) allows local agencies to reduce contributions of local property tax revenue to schools to build affordable housing and related infrastructure. The State General Fund would backfill these reductions. This Committee approved SB 5 on a 6-0 vote, and the bill is now awaiting a hearing in Assembly Local Government Committee. AB 11 (Chiu) created Affordable Housing and Infrastructure Agencies, which allows local agencies to freeze property tax revenue in an area. The bill also allocates any additional property tax revenue to the agency for various uses and sets aside funds for affordable housing. The Assembly Appropriations Committee held this bill.

10. Special legislation. The California Constitution prohibits special legislation when a general law can apply (Section 16 of Article IV). AB 1487 contains findings and declarations explaining the need for legislation that applies only to the Bay Area Housing Finance Authority.

11. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 1487 imposes additional duties on local agencies, Legislative Counsel says that it imposes a new state mandate. AB 1487 says that if the Commission on State Mandates determines that it creates a state-mandated local program, the state must reimburse local agencies by following the existing statutory process for mandate claims.

12. Incoming! The Senate Housing Committee approved AB 1487 at its June 18^th meeting on a vote of 6-2. The Senate Governance and Finance Committee is hearing it as the committee of second reference.

Assembly Actions

Assembly Housing and Community Development Committee: 5-2

Assembly Local Government Committee: 5-2

Assembly Appropriations Committee: 12-5

Assembly Floor: 45-21

Support and Opposition

(7/5/19)

Support: Bay Area Council; California Community Builders; Chan Zuckerberg Initiative; City of Berkeley; Community Legal Services In East Palo Alto; Corporation For Supportive Housing; Eah Housing; Eden Housing; Enterprise Community Partners, Inc.; Hamilton Families; London Breed, Mayor Of San Francisco; Non-Profit Housing Association Of Northern California (Nph); North Bay Leadership Council; Pico California; Related California; Salesforce.Com; Save The Bay; Silicon Valley At Home (Sv@Home); Spur; Tmg Partners; Townsend Public Affairs; Working Partnerships USA

Opposition: City Of Orinda; Coalition For San Francisco Neighborhoods (CSFN); Delta 6 – East County Mayors and Supervisors; Howard Jarvis Taxpayers Association; Marin County Council Of Mayors And Council Members; Michael Barnes, Albany City Council; Nicholas Waranoff Orinda, CA; San Francisco Bay Area Housing; Sustainable Tamalmonte

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SENATE COMMITTEE ON HOUSING

Senator Scott Wiener, Chair

2019 - 2020 Regular

Bill No: AB 1487 Hearing Date: 6/18/2019

SUBJECT: San Francisco Bay Area: housing development: financing

DIGEST: This bill establishes the Housing Alliance for the Bay Area (HABA) throughout the San Francisco Bay Area. This bill sets forth the governing structure and powers of the HABA Board (Board), allowable financing activities, and allowable uses of the revenues generated.

ANALYSIS:

Existing law:

1. Establishes the Metropolitan Transportation Commission (MTC) as the transportation planning, coordinating, and financing agency for the nine-county San Francisco Bay Area, and specifies its governance structure, duties, and powers.
2. Establishes a number of housing assistance programs for affordable housing.
3. Defines “lower income households” as below 80% area median income (AMI).
4. Defines “persons and families of low- or moderate- income” as persons and families whose income does not exceed 120% AMI.

This bill:

General

1. Defines “San Francisco Bay Area” as the entire area within the territorial boundaries of the Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma, and the City and County of San Francisco.
2. Defines “low- or moderate-income households” as the same meaning as “persons and families of low- or moderate-income.”
3. Establishes the HABA throughout the San Francisco Bay Area. This bill sets forth the governing structure and powers of the Board, allowable financing activities, and allowable uses of the revenues generated.

HABA Governing Board and Powers

1. States that the purpose of HABA is to increase affordable housing in the San Francisco Bay Area by providing for enhanced funding and technical assistance at the regional level for tenant protection, affordable housing preservation, and new affordable housing production. States Legislative intent that HABA complement existing efforts by cities, counties, districts, and other local, regional, and state entities, related to addressing the goals of this bill.
2. Requires HABA to be governed by the Board, staffed by existing staff from the MTC and the Association of Bay Area Governments (ABAG). The Board shall contain members from the MTC and the ABAG Executive Board, appointed by MTC and ABAG, respectively.
3. Requires HABA to form an advisory committee of nine members with knowledge and experience in the areas of affordable housing finance and development, tenant protection, resident service provision, and housing preservation.
4. Requires the Board to set meetings as necessary. Requires HABA to be subject to the Brown Act, the California Public Records Act, and the Political Reform Act of 1974.
5. Permits HABA to do the following:
   1. Raise revenue.
   2. Apply for and receive grants from federal and state agencies.
   3. Solicit and accept gifts, fees, grants, and allocations from public and private entities.
   4. Deposit or invest money in banks and financial institutions of the state.
   5. Sue and be sued.
   6. Engage counsel and other professional services,
   7. Enter into joint powers agreements.
   8. Enter into and perform all necessary contracts.
   9. Hire staff, define their qualifications and duties, and provide a schedule of compensation for the performance of their duties.
   10. Use staff provided by MTC and ABAG.
   11. Assemble parcels and lease or acquire land for affordable housing development.
   12. Collect data on housing production and monitor progress on meeting regional and state housing goals.
   13. Provide support and technical assistance to local governments in relation to producing and preserving affordable housing.
   14. Provide public information about the entity’s housing programs and policies.
   15. Any other expenses or implied power necessary to carry out the intent and purposes of this title.
6. Prohibits HABA from regulating or enforcing local land use decisions and acquiring property by eminent domain.
7. Requires the Board to provide for regular audits of the accounts and records and to maintain accounting records and report accounting transactions in accordance with generally accepted accounting principles. Annual financial reports shall be available to the public.

HABA Financing Activities

1. Authorizes HABA to do all of the following:
   1. Raise revenues through special taxes, a parcel tax, a gross receipts tax, a special business tax, a transactions and use tax, a commercial linkage fee, and bonds, as specified.
   2. Permits any funding mechanism identified in (a) that requires voter approval to be placed on the ballot in all or a subset of the nine counties in the San Francisco Bay Area. A measure placed on the ballot in a subset of the nine counties shall apply only to those counties in which the measure was submitted to the voters.
   3. Provides that it is the intent of the Legislature that the funding measures authorized distribute the responsibility of addressing the affordable housing needs of the region across developers, businesses above a certain size, taxpayers, and property owners within the region.
   4. Incur and issue indebtedness and assess fees on any debt issuance and loan products for reinvestment of fees and loan payments in affordable housing production and preservation.
   5. Allocate funds to the various cities, counties, and other public agencies and affordable housing projects within its jurisdiction to finance affordable housing development, preserve and enhance existing affordable housing, and fund tenant protection programs.
2. Permits MTC to propose a measure that will generate revenues and that requires voter approval on the November 3, 2020 statewide general election, as specified.

Expenditures

1. Requires revenue generated under the provisions of this bill to be used as follows:
   1. Requires HABA to distribute the revenues derived from any special tax and the proceeds of bonds for the region over a five-year period once approved by the voters as follows:
      1. A minimum of 60% for production of housing units affordable to lower-income households.
      2. 5 -10% for tenant protection programs. HABA shall prioritize flexible funding resources for tenant protection programs. Funding may be used for any of the following:
         1. Legal aid, including representation in eviction proceedings, mediation between landlords and tenants, pre-eviction legal services, and legal education and awareness for communities.
         2. Emergency rental assistance for lower-income households. Rental assistance shall not exceed 48 months for each assisted household and rent payments shall not exceed two time the current fair market rent for the local area.
         3. Relocation assistance for lower income households.
         4. Collection and tracking of information related to displacement risk and evictions in the region.
      3. 15-20% for preservation of housing affordable to low- or moderate-income households.
      4. 5-10% for general funds awarded to a local government that achieves affordable housing benchmarks established by the entity. Subject to limitations on the funding source, eligible expenditures include but are not limited to infrastructure needs associated with increased housing production, such as transportation, schools, and parks.
   2. Permits HABA to change the allocations under (a) if it adopts a finding that the regions needs differ from those requirements. The finding shall be placed on a meeting agenda for discussion at least 30 days before the entity adopts the finding.
   3. Requires HABA to distribute the revenues derived from a commercial linkage fee established, increased, or imposed to each city or county in proportion to the amount of fee collected and remitted by each city and county. A city or county that receives commercial linkage fee revenues shall use that revenue solely for the production of housing units necessitated by a commercial development on which the fee was imposed and shall submit an expenditure plan, as specified. These fees shall be distributed as follows:
      1. 75% shall be expended in the county of origin.
      2. 25% shall be collected by HABA for expenditures consistent with the purposes in (a). These funds can also be leveraged and grown for reinvestment in affordable housing. HABA shall adopt an expenditure plan for the use of the funds by July 1 of each year, beginning in 2021.
   4. Allows HABA to allocate funds directly to a city, a county, a public entity, or a private project sponsor, except as provided in (c).

COMMENTS

1. Purpose of the bill. According to the author, this bill “empowers the Bay Area to help address its affordable housing needs by enabling the region to raise new revenue and support local jurisdictions, and thereby ensure that the entire Bay Area is on track to end the housing crisis by providing affordable housing efficiently and effectively to all residents.”
2. CASA Process. From the middle of 2017 to the end of 2018, MTC and ABAG convened a series of structured discussions with certain local government officials, developers, major employers, labor interests, housing and policy experts, social equity advocates and non-profit housing providers. This group was deemed the Committee to House the Bay Area, and nicknamed CASA. CASA identified that, to make housing in the region more affordable, 35,000 new housing units would need to be built annually, including 14,000 new subsidized affordable housing units. Additionally, the region has 30,000 units at risk of losing their affordability, and 300,000 lower-income households who are paying more than 50% of their income in rent. CASA’s analysis found that there is still a $2.5 billion funding gap annually between existing resources and what is needed. CASA proposes to meet $1.5 billion of this deficit with regional and local self-help measures, with the remainder being funded from additional state and federal sources.
3. Regional housing financing entity in the Bay Area. This bill establishes the HABA throughout the San Francisco Bay Area. Any revenues generated must be used for the production of new affordable housing, affordable housing preservation, tenant protection programs, and general funds made available to local governments as an incentive to achieve affordable housing benchmarks. Specifically, of any special tax generated or bond funds expended, at least 60% must be expended to produce housing affordable to lower-income households; 5-10% must be expended for tenant protection programs, such as legal aid, rental assistance, and data collection related to displacement risk and evictions; 15-20% must be expended for preservation of housing affordable to low- or moderate-income households; and 5-10% must be expended for general funds awarded to local governments that achieve affordable housing benchmarks established by the entity. A city or county that receives commercial linkage fee revenues shall use that revenue solely for the production of housing units necessitated by a commercial development on which the fee was imposed. Of the commercial linkage fees generated, 75% shall return to the city or county of origin. The remaining 25% may be expended for housing construction, preservation, tenant protections, or data collection.
4. Opposition. The Alameda County Transportation Commission is opposed unless amended to provide equity in representation and investment of revenue. They are asking to have ABAG as the governing entity to administer the funds. They also want the funds to be based on a jobs/housing imbalance ratio, for funds to come from a jobs/housing imbalance fee that rewards more balanced jurisdictions, and no less than 50% of the revenue be allocated to regional programs. CalTax is opposed to additional taxes imposed bay area residents, which will increase their cost of living and make housing more expensive. New taxes would place additional burdens on working families and the middle class. Howard Jarvis writes that the Legislature should instead lower impact fees, reform inclusionary zoning, remove costly mandates on new development in including rent control and solar panels and remove regulatory burdens to encourage more housing to be built
5. Double Referral. This bill is double-referred to the Governance and Finance Committee.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

POSITIONS: (Communicated to the committee before noon on Wednesday,

June 12, 2019.)

Support

Enterprise Community Partners, Inc. (Co-Sponsor)
Non-Profit Housing Association Of Northern California (Co-Sponsor)
Bay Area Council
Bay Area Housing Advocacy Coalition 
Burbank Housing Development Corporation
California Community Builders
California YIMBY
Chan Zuckerberg Initiative
Community Housing Development Corporation
Ensuring Opportunity Campaign To End Poverty In Contra Costa County
Greenbelt Alliance
Habitat For Humanity East Bay/Silicon Valley
Hamilton Families
Pico California
Silicon Valley At Home
Silicon Valley Community Foundation
SPUR
TechEquity Collaborative
TMG Partners
Urban Displacement Project, UC-Berkeley

Opposition

Alameda County Transportation Commission
California Taxpayers Association
Coalition For San Francisco Neighborhoods
Howard Jarvis Taxpayers Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1487

Author:(Chiu)

As Amended Ver:May 16, 2019

Majority vote

SUMMARY:

Establishes the San Francisco Bay Regional Housing Finance Act and creates a regional housing agency for the San Francisco Bay area

Major Provisions

1. Establishes the Housing Alliance for the Bay Area (entity) as follows:
   1. The entity has jurisdiction extending throughout the San Francisco Bay area, including the entire area within the territorial boundaries of the Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma and the City and County of San Francisco;
   2. The entity's purpose is to increase affordable housing in the San Francisco Bay area by providing for enhanced funding and technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production;
   3. It is the intent of the Legislature that the entity complement existing efforts by cities, counties, districts, and other local, regional, and state entities, related to addressing the goals described in this title; and,
   4. It is the intent of the Legislature that the entity be staffed by the existing staff of the Metropolitan Transportation Commission (MTC) and Association of Bay Area Governments (ABAG), or any successor agency, with the understanding that additional staff with expertise in affordable housing finance and other aspects of the entity's work will be needed.
2. Establishes that the entity will be governed by a board consisting of commissioners of MTC and members of the ABAG Executive Board. MTC and the ABAG Executive Board will serve as the appointing authority and appoint members to the entity board.
3. Establishes the powers of the entity such that it may:
   1. Raise and allocate new revenue by authorizing the entity to place on the ballot in all or a subset of the nine counties in the San Francisco Bay area various funding measures that distribute the responsibility across commercial developers, businesses above a certain size, taxpayers, and property owners within its jurisdiction.
   2. Specifies that these funding measures may include a parcel tax, a commercial linkage fee, a gross receipts tax, a business tax based upon the number of employees, a sales tax, a general obligation bond, and a revenue bond.
   3. Incur and issue indebtedness and assess fees on any debt issuance and loan products for reinvestment of fees and loan repayments in affordable housing production and preservation;
   4. Allocate funds to the various cities, counties, and other public agencies and affordable housing projects within its jurisdiction to finance affordable housing development, preserve and enhance existing affordable housing, and fund tenant protection programs, pursuant to this title, in accordance with applicable constitutional requirements;
   5. Assemble parcels and lease or acquire land for affordable housing development;
   6. Collect data on housing production and monitor progress on meeting regional and state housing goals;
   7. Provide support and technical assistance to local governments in relation to producing and preserving affordable housing;
4. Enables MTC to place funding measures on the November 2020 ballot.
5. Specifies the limitations of the powers of the entity in that it may not:
   1. Regulate or enforce local land use decisions; or
   2. Acquire property by eminent domain.
6. Enables for the expenditure funding revenues as follows:
   1. The entity must distribute the total funds for the region over a five-year period commencing after revenue is approved by voters as follows:
      1. A minimum of 60 percent for production of housing units affordable to lower income households.
      2. A minimum of 5 percent and a maximum of 10 percent for tenant protection programs.
      3. A minimum of 15 percent and a maximum of 20 percent for preservation of housing affordable to low- or moderate-income households.
      4. A minimum of 5 percent and a maximum of 10 percent for general funds awarded to a local government that achieves affordable housing benchmarks established by the entity.
   2. The entity must change these distribution amounts if it adopts a finding that the region's needs differ from these requirements.
   3. The entity must allocate all commercial linkage fees directly to the city or county of origin.
   4. The entity may allocate funds directly to a city, a county, a public entity, or a private project sponsor.
   5. The entity must distribute funds so that an amount equal to or greater than 75 percent of the revenue received from a county over a five-year period through authorized funding expended in the county, as follows:
      1. Each county must submit an expenditure plan by July 1 of each year;
      2. The expenditure plan must specify the proposed allocation of funds for the next 12 months;
      3. The plan must include a minimum allocation of 40 percent towards construction of new affordable housing, 5 percent towards affordable housing preservation, and 5 percent towards tenant protection programs, unless the county adopts a finding and the entity concurs that those minimum targets are inconsistent or are otherwise not feasible;
      4. The plan shall include a description of any specific project or program proposed to receive funding, including the location, amount of funding, and anticipated outcomes;
      5. A county may request to administer all or a portion of the funds required to be expended in the county.
      6. If the entity determines, by a vote of its board, that a county has not submitted a complete expenditure plan pursuant to the requirements of subparagraph (B) of paragraph (2), the entity may, by a vote of its board, withhold allocation of revenues to a county until the county submits a complete expenditure plan.
      7. If funds provided to a county for administration pursuant are not committed within three years of collection, the county shall return the funds to the entity.
      8. The entity may expend up to 3 percent of funds for program administration.
7. Requires that, for any election at which the entity proposes a measure that would generate revenues, the entity shall reimburse each county in which that measure appears on the ballot only for the incremental costs incurred by the county elections official related to submitting the measure to the voters with any eligible funds transferred to the entity from ABAG or MTC.

COMMENTS:

The Bay Area already has substantial resources to fund the production, preservation, and protection of affordable housing. However, there is still a $2.5 billion funding gap annually between existing resources and what is needed. This bill proposes to meet up to $1.5 billion of this deficit with regional and local self-help measures, with the remainder being funded from additional state and federal sources.

This bill establishes the Housing Alliance for the Bay Area (HABA). The entity's purpose is to increase affordable housing in the San Francisco Bay Area by providing for enhanced funding and technical assistance at a regional level for new affordable housing production, affordable housing preservation, and tenant protection. The stated intent of HABA is to complement existing efforts by cities, counties, districts, and other local, regional, and state entities. HABA would create a new district with jurisdiction extending throughout the Bay Area, including the counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma and the City and County of San Francisco.

The bill specifies the governance process for HABA would be determined by MTC and ABAG's Executive Board, and that the governing board would consist of members from these bodies. The entity must also form an advisory body comprised of nine representatives with knowledge and experience in the areas of affordable housing finance and development, tenant protection, resident service provision, and housing preservation. It would be staffed by MTC staff, recognizing that the agency would need additional staff with expertise in affordable housing finance and other related skills.

The bill also specifically states that HABA may not regulate or enforce local land use decisions, or acquire property by eminent domain. The bill specifies that HABA may raise new revenue by authorizing the entity to place on the ballot in all or a subset of the nine counties in the San Francisco Bay area.

If HABA proposes a ballot measure that will generate revenues, the board of supervisors of the county or counties in which the entity has determined to place the measure on the ballot must call a special election on the measure, consolidated with the next regularly scheduled statewide election. HABA would reimburse the counties for the incremental cost of the election. The bill enables MTC to place revenue measures on the November 2020 ballot.

The bill also establishes that at least 75% of the revenue received must return to the county of origin. Counties would need to specify the proposed use of the revenues, and have minimum targets of 40% for affordable housing production, 5% towards affordable housing preservation, and 5% towards tenant protection. A county may choose to administer all or a portion its funds directly. HABA may also allocate funds directly to a city, a public entity, or a private project sponsor.

According to the Author:

Housing is a regional issue that requires policy and funding coordination across jurisdictions. AB 1487 creates the Housing Alliance for the Bay Area, the first public entity focused entirely on the region's housing needs. This bill empowers the Bay Area to help address its affordable housing needs by enabling the region to raise new revenue and support local jurisdictions, and thereby ensure that the entire Bay Area is on track to end the housing crisis by providing affordable housing efficiently and effectively to all residents.

Arguments in Support:

Transform argues that "local jurisdictions cannot tackle this challenge on their own….the Bay Area's housing market is regional, and AB 1487 offers the regional approach we need by creating cross-county tools, programs, and funding to offer relief to our California families, low income communities of color, and long-time residents."

Arguments in Opposition:

CalTax writes that "imposing an additional tax on Bay Area residents will increase their cost of living, make housing more expensive, and thus make home ownership and renting more difficult" and that this bill would "increase the fiscal challenges many middle-class families already face

FISCAL COMMENTS:

According to the Assembly Committee on Appropriations, State-mandated local costs, likely significant, to the local agency or agencies who undertake the initial governance and duties of the new housing entity. These initial costs are potentially reimbursable by the state, depending on a determination by the Commission on State Mandates. Not all local entities, perhaps including MTC, qualify for state reimbursement, but many, including cities and counties, generally do.

VOTES:

ASM HOUSING AND COMMUNITY DEVELOPMENT: 5-2-1

YES: Chiu, Gabriel, Gloria, Limón, Maienschein

NO: Kiley, Quirk-Silva

ABS, ABST OR NV: Diep

ASM LOCAL GOVERNMENT: 5-2-1

YES: Aguiar-Curry, Bloom, Ramos, Luz Rivas, Robert Rivas

NO: Lackey, Voepel

ABS, ABST OR NV: Boerner Horvath

ASM APPROPRIATIONS: 12-5-1

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Maienschein, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong, Obernolte

ABS, ABST OR NV: Petrie-Norris

UPDATED:

VERSION: May 16, 2019

CONSULTANT: Steve Wertheim / H. & C.D. / (916) 319-2085 FN: 0000937

Date of Hearing: May 8, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1487

Author:(Chiu) – As Amended Ver:April 29, 2019

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY:

This bill establishes the San Francisco Bay Area Regional Housing Finance Act and creates the Housing Alliance for the Bay Area, a regional housing agency for the nine-county San Francisco Bay Area. The bill provides for the powers and duties, governance, financing, and elections provisions for a potential regional tax measure and specifies how revenues can be spent.

FISCAL EFFECT:

State-mandated local costs, likely significant, to the local agency or agencies who undertake the initial governance and duties of the new housing entity. The bill states intent that the entity be staffed by existing staff of the Metropolitan Transportation Commission (MTC), but the bill as written does not specify staffing or other initial governance. These initial costs are potentially reimbursable by the state, depending on a determination by the Commission on State Mandates. Not all local entities, perhaps including MTC, qualify for state reimbursement, but many, including cities and counties, generally do.

COMMENTS:

1. Purpose. According to the author:

AB 1487 empowers the Bay Area to help address its affordable housing needs by enabling the region to raise new revenue and support local jurisdictions, and thereby ensure that the entire Bay Area is on track to end the housing crisis by providing affordable housing efficiently and effectively to all residents.

1. Background. Bay Area housing prices are among the highest in the state and the nation. Since 2010, the Bay Area has added seven times as many jobs as housing units. Average rents are $2,400 (an increase of 60% since 2010) and average home prices are $790,000 (also an increase of 60% since 2010).

In 2017 and 2018, the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG) convened a series of structured discussions with local government officials, developers, major employers, labor interests, housing and policy experts, social equity advocates and non-profit housing providers. This group was deemed the Committee to House the Bay Area, and nicknamed CASA. CASA identified, to make housing in the region more affordable, 35,000 new housing units need to be built annually, including 14,000 new subsidized affordable housing units. Additionally, the region has 30,000 units at risk of losing their affordability and 300,000 lower-income households who are paying more than 50% of their income in rent.

The Bay Area has substantial resources to fund the production, preservation and protection of affordable housing; however, CASA’s analysis indicates there remains a $2.5 billion annual funding gap between existing resources and what is needed. CASA proposes to meet $1.5 billion of this deficit with regional and local self-help measures, with the remainder being funded from additional state and federal sources.

This bill is modeled after several other regional entities, including the San Francisco Bay Restoration Authority (SFBRA), which was created by AB 2954 (Lieber), Chapter 690, Statutes of 2008. SFBRA was charged with raising and allocating resources for the restoration, enhancement, protection and enjoyment of wetlands and wildlife habitat in the San Francisco Bay and along its shoreline. SFBRA’s mission was to formulate a strategy for raising local revenues to help restore 36,000 acres of publicly owned Bay shoreline into tidal wetlands. The estimated cost of this effort is about $1.43 billion over 50 years.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 24, 2019

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

ABPCA Bill Id:AB 1487 (

Author:Chiu) – As Amended Ver:April 4, 2019

SUBJECT: San Francisco Bay area: housing development: financing.

SUMMARY: Creates the Housing Alliance for the Bay Area (HABA), a regional entity in the San Francisco Bay area, to help address housing issues. Specifically, this bill:

1. Establishes the San Francisco Bay Area Regional Housing Finance Act, and defines the following terms for purposes of the bill:
   1. “Board” to mean the governing board of HABA;
   2. “Entity” to mean HABA;
   3. “San Francisco Bay area” to mean the entire area within the territorial boundaries of the Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma, and the City and County of San Francisco;
   4. “Lower income households” to have the same meaning as that term is defined in Section 50079.5 of the Health and Safety Code; and,
   5. “Low or moderate income households” to have the same meaning as “persons and families of low or moderate income,” as defined in Section 50093 of the Health and Safety Code.
2. Establishes HABA with jurisdiction extending throughout the San Francisco Bay area. States that the formation and jurisdictional boundaries of the entity are not subject to the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000.
3. Provides that HABA’s purpose is to increase affordable housing in the San Francisco Bay area by providing for enhanced funding and technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production.
4. Declares that it is the intent of the Legislature that HABA complement existing efforts by cities, counties, districts, and other local, regional, and state entities, related to addressing the goals described in the bill. Declares the intent of the Legislature that HABA be staffed by the existing staff of the Metropolitan Transportation Commission (MTC), or any successor agency, with the understanding that additional staff with expertise in affordable housing finance and other aspects of the entity’s work will be needed.
5. Provides that the governing board structure will include 18 voting members, including nine (9) from the MTC and nine (9) from the Association of Bay Area Governments (ABAG). Requires HABA to form an advisory committee comprised of nine representatives with knowledge and experience in the areas of affordable housing finance and development, tenant protection, resident service provision, and housing preservation. Specifies the following for the governing board:
   1. Each member shall serve at the pleasure of the appointing authority; and,
   2. The appointing authority shall fill any vacancy on the board within 90 days from the date of the vacancy;
6. Provides that the board shall select from its members a chair, who shall preside over meetings of the board, and a vice chair from its members, who shall preside in the absence of the chair.
7. Allows a member to receive per diem from each board meeting that the member attends, and provides that the board shall set the amount of per diem, not to exceed one hundred dollars ($100) per meeting. Prohibits a member from receiving a payment for more than two meetings in a calendar month. Allows a member to waive per diem.
8. Specifies that members of the board are subject to requirements for ethics training, and that HABA shall be subject to the Ralph M. Brown Act, the Public Records Act, and the Political Reform Act of 1974.
9. Requires a member to exercise independent judgment on behalf of the interests of the residents, the property owners, and the public as a whole in furthering the intent and purposes of this title.
10. Requires the time and place of the first meeting of the board to be at a time and place within the San Francisco Bay area fixed by the chair of the board. Requires, after the first meeting, the board to hold meetings at times and places determined by the board.
11. Allows the board to make and enforce rules and regulations necessary for the government of the board, the preservation of order, and the transaction of business. Allows the powers and duties of the board to be either by ordinance or resolution.
12. Allows the board to:
    1. Raise revenue and allocate funds throughout the San Francisco Bay area, as provided in 23), below;
    2. Apply for and receive grants from federal and state agencies;
    3. Solicit and accept gifts, fees, grants, and allocations from public and private entities;
    4. Deposit or invest moneys of the entity in banks or financial institutions in the state, as provided;
    5. Sue and be sued, except as otherwise provided by law, in all actions and proceedings, in all courts and tribunals of competent jurisdiction;
    6. Engage counsel and other professional services;
    7. Enter into and perform all necessary contracts;
    8. Enter into joint power agreements pursuant to the Joint Exercise of Powers Act;
    9. Hire staff, define their qualifications and duties, and provide a schedule of compensation for the performance of their duties;
    10. Use staff provided by MTC, as specified;
    11. Assemble parcels and lease or acquire land for affordable housing development;
    12. Collect data on housing production and monitor progress on meeting regional and state housing goals;
    13. Provide support and technical assistance to local governments in relation to producing and preserving affordable housing;
    14. Provide public information about the entity’s housing programs and policies; and,
    15. Any other express or implied power necessary to carry out the intent and purposes of this title.
13. Requires, if HABA proposes a measure pursuant to 12), above, the board of supervisors of the county or counties in which HABA has determined to place the measure on the ballot to call a special election on the measure. Requires the election to be consolidated with the next regularly scheduled statewide election and to be submitted to the voters in the appropriate counties, consistent with the requirements of Article XIIIA, XIIIC, and XIIID of the California Constitution, as applicable.
14. Requires a measure proposed by HABA that requires voter approval to be submitted to the voters of the entity in accordance with specified provisions of the Elections Code.
15. Specifies that because HABA has no revenues as of the effective date of this section, the appropriations limit for the entity shall be originally established based on receipts from the initial measure that would generate revenues for the entity, and that establishment of an appropriations limit shall not be deemed a change in an appropriations limit for purposes of Section 4 of Article XIIIB of the California Constitution.
16. Requires HABA to file a resolution of the entity requesting consolidation and setting forth the exact form of the ballot question, in accordance with specified provisions of the Elections Code, with the board of supervisors of each county in which the measure shall appear on the ballot.
17. Requires the legal counsel for HABA to prepare an impartial analysis of the measure, which shall be subject to review and revision by the county counsel of the county that contains the largest population, as specified.
18. Requires each county included in the measure to use the exact ballot question, impartial analysis, and ballot language provided by the entity. Requires if two or more counties included in the measure are required to prepare a translation of ballot materials into the same language other than English, the county that contains the largest population, as specified, among those counties that are required to prepare a translation shall prepare the translation, or authorize the entity to prepare the translation, and that translation shall be used by other counties. Requires the elections officials, if a measure proposed by the entity is submitted to the voters in two or more counties, to mutually agree to use the same letter designation for the measure.
19. Requires the county clerk to report the results of the election. Requires HABA to reimburse each county in which that measure appears on the ballot only for the incremental costs incurred by the county elections official related to submitting the measure to the voters with any eligible funds transferred to HABA from ABAG or MTC. Defines “incremental costs” to include all of the following:
    1. The cost to prepare, review, and revise the impartial analysis of the measure;
    2. The cost to prepare a translation of ballot materials;
    3. The additional costs that exceed the costs incurred for other election races or ballot measures, if any, appearing on the same ballot in each county in which the measure appears on the ballot, including both of the following:
       1. The printing and mailing of ballot materials; and,
       2. The canvass of the vote, as specified.
20. Prohibits HABA from regulating or enforcing local land use decisions and from acquiring property by eminent domain.
21. Requires the board to provide for regular audits of the entity’s accounts and records and to maintain accounting records, to report accounting transactions in accordance with generally accepted accounting principles (GAAP), as specified, for both public reporting purposes and for reporting of activities to the Controller.
22. Requires the board to provide for annual financial reports, which shall be made public.
23. Allows HABA to do all of the following:
    1. Raise and allocate new revenue by placing on the ballot in all or a subset of the nine counties in the San Francisco Bay area various funding measures, including through the following funding mechanisms:
       1. A parcel tax;
       2. A commercial linkage fee that is either of the following:
          1. A variable rate fee assessed on new construction, providing a credit for a project in a local jurisdiction with an existing linkage fee program;
          2. A flat rate fee assessed on new construction;
       3. A gross receipts tax with variable rates according to business sector with an exemption for small businesses;
       4. A business tax based upon the number of employees assessed at a variable rate with an exemption for small businesses;
       5. One-half of one cent ($0.005) increase in sales tax;
       6. A general obligation (GO) bond to be funded by an ad valorem tax on the assessed value of local properties; and,
       7. A revenue bond.
    2. Incur and issue indebtedness and assess fees on any debt issuance and loan products for reinvestment of fees and loan repayments in affordable housing production and preservation;
    3. Allocate funds to the various cities, counties and other public agencies and affordable housing projects within its jurisdiction to finance affordable housing development, preserve and enhance existing affordable housing, and fund tenant protection programs, in accordance with applicable constitutional requirements; and,
    4. Declares the intent of the Legislature that the funding measures authorized in 23a), distribute the responsibility of addressing the affordable housing needs of the region across commercial developers, businesses above a certain size, taxpayers, and property owners within the region.
24. Provides that revenue generated pursuant to 23), above, shall be used for the construction of new affordable housing, affordable housing preservation, tenant protection programs, and general funds made available to local jurisdictions as an incentive to achieve affordable housing benchmarks to be established by HABA. Requires, subject to funding eligibility and subject to adjustment pursuant to 25), below, HABA to distribute the total funds for the region over a five-year period commencing after revenue is approved by voters as follows:
    1. A minimum of 60% for production of housing units affordable to lower income households;
    2. A minimum of 5% and a maximum of 10% for tenant protection programs. Requires HABA to give priority to tenant protection programs that have flexibility funding sources, which can be used for any of the following:
       1. Providing access to counsel for tenants facing eviction;
       2. Providing emergency rental assistance to lower income households;
       3. Providing relocation assistance for lower income households; and,
       4. Collection and tracking of information related to displacement risk and evictions in the region.
    3. A minimum of 15% and a maximum of 20% for preservation of housing affordable to low- or moderate-income households;
    4. A minimum of 5% and a maximum of 10% for general funds awarded to a local government that achieves affordable housing benchmarks established by HABA.
25. Allows HBA to lower the minimum distribution contained in 24), above, if it adopts a finding that the minimum funding amount exceeds the region’s needs. Requires the finding to be placed on a meeting agency for discussion at least 30 days before HABA adopts the finding.
26. Allows HABA to allocate funds directly to a city, a county, a public entity, or a private project sponsor.
27. Requires HABA to distribute funds so that an amount equal to or greater than 75% of the revenue received from a county over a five-year period through funding measures authorized by 23a), above, is expended in the county, as specified in 28), below.
28. Allows a county to request to administer all or a portion of the funds required to be expended in the county pursuant to 27), above. Allows HABA to approve, deny, or conditionally approve the request based on factors, including, but not limited to, whether the county has a demonstrated track record of successfully administering funds for the purposes listed in 23a), above, and has sufficient staffing capacity to conduct the work effectively.
29. Requires HABA to distribute funds to a county based on an expenditure plan submitted by the county and approved by HABA. Allows a county’s proposed expenditure plan to contain funding amounts different than those listed above in 24). Allows HABA, in approving a county’s expenditure plan and allocating funds, to adjust the funding amounts to ensure compliance with 24), above.
30. Requires funds provided to a county that are not committed within three years of collection to be returned to HABA.
31. Finds and declares that providing a regional financing mechanism for affordable housing development and preservation in the San Francisco Bay area, is a matter of statewide concern and is not a municipal affair, thereby applying the bill’s provisions to all cities, including charter cities.

EXISTING LAW:

1. Establishes MTC as the transportation planning, coordinating, and financing agency for the nine-county San Francisco Bay area, and specifies its governance structure, duties, and powers.
2. Creates the Bay Area Toll Authority (BATA) as a separate entity governed by the same governing board as the MTC and makes BATA responsible for the programming, administration, and allocation of toll revenues from the state-owned toll bridges in the Bay Area.
3. Established the San Francisco Bay Restoration Authority and specifies its governance structure, duties, and powers. These powers include the ability to place revenue measures on the ballot in all of the Bay area counties and to issue bonds based on the proceeds of the revenue measure.

FISCAL EFFECT: This bill is keyed fiscal and contains a state-mandated local program.

COMMENTS:

1. Bill Summary. This bill establishes HABA and provides for the powers and duties, financing, elections provisions for a potential regional tax measure, and specifies how the revenues raised can be spent.

Pursuant to the bill’s provisions, HABA can:

• 1. Raise new revenue;
     
  2. Allocate funds to the various cities, counties, and other public agencies and affordable housing projects within its jurisdiction;
     
  3. Provide support and technical assistance to local governments in relation to producing and preserving affordable housing;
     
  4. Assemble parcels and lease or acquire land for affordable housing development;
     
  5. Collect data on housing production and monitoring progress on meeting regional and state housing goals; and,
     
  6. Provide public information about the entity’s housing programs and policies.

The bill also specifically states that HABA may not regulate or enforce local land use decisions, or acquire property by eminent domain.

HABA may raise new revenue by authorizing the entity to place a measure on the ballot in all or a subset of the nine counties in the San Francisco Bay area. The bill lists the following as potential funding options:

• 1. A parcel tax;
     
  2. A commercial linkage fee that is either of the following:
     
     1. A variable rate fee assessed on new construction, providing a credit for a project in a local jurisdiction with an existing linkage fee program; or,
        
     2. A flat rate fee assessed on new construction;
        
  3. A gross receipts tax with variable rates according to business sector with an exemption for small businesses;
     
  4. A business tax based upon the number of employees assessed at a variable rate with an exemption for small businesses;
     
  5. One-half of one cent increase in sales tax;
     
  6. A general obligation bond to be funded by an ad valorem tax on the assessed value of local properties; and,
     
  7. A revenue bond.

Should HABA propose a ballot measure that will generate revenues, the board of supervisors of the county or counties in which the entity has determined to place the measure on the ballot must call a special election on the measure, consolidated with the next regularly scheduled statewide election. HABA would reimburse the counties for the incremental cost of the election.

The bill establishes the targets for expenditure of any revenues received through these fundraising measures, as follows, and allows HABA to expend up to 3% of funds for program administration:

• 1. At least 60% must go towards production of housing units affordable to lower income households;
     
  2. From 15-20% for preservation of housing affordable to low- or moderate-income households;
     
  3. From 5-10% for tenant protection programs; and,
     
  4. From 5-10% for general funds awarded to a local government that achieves affordable housing benchmarks established by the entity.

At least 75% of the revenue received must return to the county of origin. Counties must submit expenditure plans to HABA for approval. Based on county’s plan, capacity, and track record, HABA may allow a county to administer all or a portion its funds directly. HABA may also allocate funds directly to a city, a public entity, or a private project sponsor.

This bill is sponsored by the Non-Profit Housing Association of Northern California and Enterprise Community Partners.

1. Author’s Statement. According to the author, “AB 1487 empowers the Bay Area to help address its affordable housing needs by enabling the region to raise new revenue and support local jurisdictions, and thereby ensure that the entire Bay Area is on track to end the housing crisis by providing affordable housing efficiently and effectively to all residents.”
2. Background. This bill is modeled after several other regional entities, including the San Francisco Bay Restoration Authority (SFBRA), which was created by AB 2954 (Lieber), Chapter 690, Statutes of 2008. SFBRA was charged with raising and allocating resources for the restoration, enhancement, protection, and enjoyment of wetlands and wildlife habitat in the San Francisco Bay and along its shoreline. SFBRA’s mission was to formulate a strategy for raising local revenues to help restore 36,000 acres of publicly owned Bay shoreline into tidal wetlands. The estimated cost of such an endeavor is about $1.43 billion over 50 years.

The Legislature granted SFBRA the ability to utilize several financial tools to raise revenue, including levying a benefit assessment, special tax, or property-related fee, subject to constitutional requirements. Proposition 218 (1996) established that a tax levied by a special-purpose authority is a special tax which requires two-thirds voter approval. Additionally, the Authority can issue revenue bonds under the Revenue Bond Law of 1941 and incur bond indebtedness, subject to specified requirements.

As a regional government agency, SFBRA spans across nine counties. AB 2103 (Hill), Chapter 373, Statutes of 2010, prescribed the method of how SFBRA places a proposal to levy a special tax before the voters. The Authority's officials wanted to specify the procedures for conducting a special election on a special tax proposed by the Authority and to clarify their existing statutory authority to levy special taxes.

AB 1656 (Fong), Chapter 535, Statutes of 2012, made membership and project eligibility changes, but also contained a provision to extend the sunset date for the Authority from 2029 to 2036. At the time, the Authority wanted the extension to ensure that they would be able to administer revenues from a regional ballot measure they planned to submit to voters. The sunset date extension was removed from AB 1656 following policy concerns raised over the lack of information about the timing of a proposed ballot measure. Most recently, SB 279 (Hancock), Chapter 514, Statutes of 2013, specified procedures for conducting a multi-county election to approve a special tax measure proposed by the Authority. On June 7, 2016, residents of the nine-county region voted with 70% majority to pass a $12 parcel tax, which is estimated to raise approximately $25 million annually, or $500 million over 20 years, to fund shoreline projects that will protect and restore the Bay.

1. CASA. From the middle of 2017 to the end of 2018, MTC and ABAG convened a series of structured discussions with certain local government officials, developers, major employers, labor interests, housing and policy experts, social equity advocates and non-profit housing providers. This group was deemed the Committee to House the Bay Area, and nicknamed CASA. CASA identified that, to make housing in the region more affordable, 35,000 new housing units would need to be built annually, including 14,000 new subsidized affordable housing units. Additionally, the region has 30,000 units at risk of losing their affordability, and 300,000 lower-income households who are paying more than 50% of their income in rent.

The Bay Area already has substantial resources to fund the production, preservation, and protection of affordable housing; however, CASA’s analysis is that there is still a $2.5 billion funding gap annually between existing resources and what is needed. CASA proposes to meet $1.5 billion of this deficit with regional and local self-help measures, with the remainder being funded from additional state and federal sources.

1. Policy Considerations. The Committee may wish to consider the following:
   1. New Entity? This bill creates an entirely new regional entity, when several Bay area entities already exist, like ABAG or MTC. The Committee may wish to consider whether either of those entities could be given this new role, rather than creation of a new entity.
   2. Board Makeup of HABA. The Committee may wish to consider what the makeup of the board should look like to best represent the cities and counties in the Bay area region, and whether the board members should be elected officials of those jurisdictions, thereby creating accountability to their voters. The Committee may wish to ask the author work on this issue to refine the board makeup, if the outcome is to create an entirely new entity.
   3. Inequitable Distribution of Funds? Opponents of the CASA Compact have raised the issue that the establishment of a regional entity to collect and distribute funds may result in an inequitable distribution of such funds, and may create more regional bureaucracy without accountability for local decisions.
   4. No End Date. Unlike SFBRA, which has a statutory end date of December 31, 2048, this bill contains no end date for HABA. The Committee may wish to consider whether the actions of HABA should cease after a period of time or whether HABA should continue to exist into perpetuity, and whether a date also needs to be specified for when bonds must be paid off, and other collection of revenue must be terminated, and the winding down of HABA should occur.
   5. Funding. This bill allows HABA to raise and allocate new revenue by placing on the ballot various funding measures, including a parcel tax, sales tax, general obligation bonds and a revenue bonds, in addition to other specified fees. These funding mechanisms are missing cross-references to the relevant statutes. The Committee may also wish to consider:
      1. Sales Tax. The author and sponsor may wish to clarify that it is a transactions and use tax (instead of a sales tax) that HABA has the authority to impose, in accordance with the procedures and requirements set forth in the Transactions and Use Tax Law, similar to the authority that the Bay Area Rapid Transit District has. The author may also wish to consider whether to insert language allowing the combined rate of all transactions and use taxes imposed in accordance with the law in the counties in the Bay Area region to exceed the 2% statutory cap.
      2. Revenue Bond. Revenue bonds are supported by the revenue from a specific project, such as a toll bridge, highway, or local stadium. This also includes bonds backed by revenue received from an enterprise function, like the collection, treatment, and disposal of garbage of sewage. The bill allows HABA to use a revenue bond as a financing mechanism. The Committee may wish to consider what enterprise function HABA is providing that produces revenue to back these types of bonds.
2. Committee Amendments. In order to address the governance issues raised above in 5a) and 5b), the Committee may wish to consider deleting language related to the board makeup and instead ask the author to work with cities, counties, MTC and ABAG to try to seek consensus on what HABA’s board structure should look like.
3. Arguments in Support. Transform argues that “local jurisdictions cannot tackle this challenge on their own….the Bay Area’s housing market is regional, and AB 1487 offers the regional approach we need by creating cross-county tools, programs, and funding to offer relief to our California families, low income communities of color, and long-time residents.”
4. Arguments in Opposition. CalTax writes that “imposing an additional tax on Bay Area residents will increase their cost of living, make housing more expensive, and thus make home ownership and renting more difficult” and that this bill would “increase the fiscal challenges many middle-class families already face.”
5. Double-Referral. This bill was heard by the Housing and Community Development Committee on April 10, 2019, and passed with a 5-2 vote.

REGISTERED SUPPORT / OPPOSITION:

Support

Non-Profit Housing Association of Northern California [SPONSOR]

Enterprise Community Partners, Inc. [SPONSOR]

Bay Area Council
Burbank Housing Development Corporation
California Community Builders
California YIMBY
Chan Zuckerberg Initiative

City of Vallejo

Community Legal Services in East Palo Alto (if amended)

Genesis (if amended)
Greenbelt Alliance
Habitat For Humanity East Bay/Silicon Valley
Hamilton Families

Monument Impact (if amended)
Pico California

Public Advocates Inc. (if amended)

San Francisco Foundation
Silicon Valley At Home (Sv@Home)
TMG Partners
Transform

Oppose

Alameda County Transportation Committee (unless amended)

California Taxpayers Association
Howard Jarvis Taxpayers Association

Livable California
Regional-Video

3 Individual Letters

Analysis Prepared by: Debbie Michel / L. GOV. / (916) 319-3958

Date of Hearing: April 10, 2019

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

ABPCA Bill Id:AB 1487 (

Author:Chiu) – As Amended Ver:April 4, 2019

SUBJECT: San Francisco Bay area: housing development: financing

SUMMARY: Establishes the San Francisco Bay Regional Housing Finance Act and creates a regional housing agency for the San Francisco Bay area. Specifically, this bill:

1. Includes the following declarations from the Legislature:
2. The San Francisco Bay area is facing the most significant housing crisis in the region’s history, as countless residents are contemplating moving, spend hours driving every day, are one paycheck away from an eviction, or homelessness;
3. The San Francisco Bay area faces this crisis because, as a region, it has failed to produce enough housing at all income levels, preserve affordable housing, protect existing residents from displacement, and address the housing issue regionally;
4. The housing crisis in the San Francisco Bay area is regional in nature and too great to be addressed individually by the region’s 101 cities and 9 counties;
5. However, the current process is anything but regional; instead each city and county is responsible for their own decisions around housing;
6. The San Francisco Bay area faces an annual funding shortfall of $2,500,000,000 in its efforts to address the affordable housing crisis; and
7. A regional entity is necessary to help address the housing crisis in the San Francisco Bay area by delivering resources and technical assistance at a regional scale, including:
   1. Providing critically funding to affordable housing projects across the San Francisco Bay area;
   2. Providing staff support to local jurisdictions that require capacity or technical assistance to expedite the preservation and production of housing;
   3. Funding tenant services, such as emergency rental assistance and access to counsel, thereby relieving local jurisdictions of this cost and responsibility;
   4. Assembling parcels and acquiring land for the purpose of building affordable housing; and
   5. Monitoring and reporting on progress at a regional scale.
8. Establishes the Housing Alliance for the Bay Area (entity) as follows:
9. The entity has jurisdiction extending throughout the San Francisco Bay area, including the entire area within the territorial boundaries of the Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma and the City and County of San Francisco;
10. The formation and jurisdictional boundaries of the entity are not subject to the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000;
11. The entity’s purpose is to increase affordable housing in the San Francisco Bay area by providing for enhanced funding and technical assistance at a regional level for tenant protection, affordable housing preservation, and new affordable housing production;
12. It is the intent of the Legislature that the entity complement existing efforts by cities, counties, districts, and other local, regional, and state entities, related to addressing the goals described in this title; and,
13. It is the intent of the Legislature that the entity be staffed by the existing staff of the Metropolitan Transportation Commission (MTC), or any successor agency, with the understanding that additional staff with expertise in affordable housing finance and other aspects of the entity’s work will be needed.
14. Establishes the governing board for the entity as follows:
15. The entity shall be governed by a board composed of 18 voting members, including nine from MTC and nine from the Association of Bay Area Governments (ABAG);
16. The entity shall form an advisory body comprised of nine representatives with knowledge and experience in the areas of affordable housing finance and development, tenant protection, resident service provision, and housing preservation;
17. Each member of the board shall serve at the pleasure of the appointing authority;
18. The appointing authority shall fill any vacancy on the board within 90 days from the date on which the vacancy occurs;
19. The board shall select from its members a chair, who shall preside over meetings of the board, and a vice chair from its members, who shall preside in the absence of the chair;
20. A member appointed may receive a per diem for each board meeting that the member attends. The board shall set the amount of that per diem for a member’s attendance, but that amount shall not exceed one hundred dollars ($100) per meeting. A member shall not receive a payment for more than two meetings in a calendar month. A member may waive a payment of this per diem;
21. Members of the board are subject to Article 2.4 of Chapter 2 of Part 1 of Division 2 of Title 5;
22. The entity shall be subject to the Ralph M. Brown Act, the California Public Records Act, and the Political Reform Act of 1974;
23. Members of the board member shall exercise independent judgment on behalf of the interests of the residents, the property owners, and the public as a whole in furthering the intent and purposes of this title;
24. The time and place of the first meeting of the board shall be at a time and place within the San Francisco Bay area fixed by the chair of the board. After the first meeting, the board shall hold meetings at times and places determined by the board;
25. The board may make and enforce rules and regulations necessary for the governance of the board, the preservation of order, and the transaction of business; and
26. In exercising the powers and duties conferred on the entity by this title, the board may act either by ordinance or resolution.
27. Establishes the powers of the entity such that it may:
    1. Raise and allocate new revenue by authorizing the entity to place on the ballot in all or a subset of the nine counties in the San Francisco Bay area various funding measures that distribute the responsibility across commercial developers, businesses above a certain size, taxpayers, and property owners within its jurisdiction. These funding measures may include:
       1. A parcel tax;
       2. A commercial linkage fee that is either of the following:
          1. A variable rate fee assessed on new construction, providing a credit for a project in a local jurisdiction with an existing linkage fee program; or
          2. A flat rate fee assessed on new construction.
       3. A gross receipts tax with variable rates according to business sector with an exemption for small businesses;
       4. A business tax based upon the number of employees assessed at a variable rate with an exemption for small businesses;
       5. One-half of one cent ($0.005) increase in sales tax;
       6. A general obligation bond to be funded by an ad valorem tax on the assessed value of local properties; and
       7. A revenue bond.
    2. Incur and issue indebtedness and assess fees on any debt issuance and loan products for reinvestment of fees and loan repayments in affordable housing production and preservation;
    3. Allocate funds to the various cities, counties, and other public agencies and affordable housing projects within its jurisdiction to finance affordable housing development, preserve and enhance existing affordable housing, and fund tenant protection programs, pursuant to this title, in accordance with applicable constitutional requirements;
    4. Apply for and receive grants from federal and state agencies;
    5. Solicit and accept gifts, fees, grants, and allocations from public and private entities;
    6. Deposit or invest moneys of the entity in banks or financial institutions in the state;
    7. Sue and be sued, except as otherwise provided by law, in all actions and proceedings, in all courts and tribunals of competent jurisdiction;
    8. Engage counsel and other professional services;
    9. Enter into and perform all necessary contracts;
    10. Enter into joint powers agreements pursuant to the Joint Exercise of Powers Act;
    11. Hire staff, define their qualifications and duties, and provide a schedule of compensation for the performance of their duties;
    12. Use staff provided by MTC. A person who performs duties as interim or temporary staff pursuant to this subdivision shall not be considered an employee of the entity;
    13. Assemble parcels and lease or acquire land for affordable housing development;
    14. Collect data on housing production and monitor progress on meeting regional and state housing goals;
    15. Provide support and technical assistance to local governments in relation to producing and preserving affordable housing;
    16. Provide public information about the entity’s housing programs and policies;
    17. Any other express or implied power necessary to carry out the intent and purposes of this title.
28. Specifies the limitations of the powers of the entity in that it may not:
    1. Regulate or enforce local land use decisions; or
    2. Acquire property by eminent domain.
29. Enables for the expenditure funding revenues as follows:
    1. The entity must distribute the total funds for the region over a five-year period commencing after revenue is approved by voters as follows:
       1. A minimum of 60 percent for production of housing units affordable to lower income households.
       2. A minimum of 5 percent and a maximum of 10 percent for tenant protection programs. The entity shall give priority to tenant protection programs that have flexible funding sources. Funding for tenant protection programs may be used for any of the following:
          1. Providing access to counsel for tenants facing eviction.
          2. Providing emergency rental assistance for lower income households.
          3. Providing relocation assistance for lower income households.
          4. Collection and tracking of information related to displacement risk and evictions in the region.
       3. A minimum of 15 percent and a maximum of 20 percent for preservation of housing affordable to low- or moderate-income households.
       4. A minimum of 5 percent and a maximum of 10 percent for general funds awarded to a local government that achieves affordable housing benchmarks established by the entity.
    2. The entity may lower these minimum distribution amounts if it adopts a finding that the minimum funding amount exceeds the region’s needs. The finding must be placed on a meeting agenda for discussion at least 30 days before the entity adopts the finding.
    3. The entity may allocate funds directly to a city, a county, a public entity, or a private project sponsor.
    4. The entity must distribute funds so that an amount equal to or greater than 75 percent of the revenue received from a county over a five-year period through authorized funding expended in the county, as follows:
       1. A county may request to administer all or a portion of the funds required to be expended in the county.
       2. The entity shall approve, deny, or conditionally approve the request based on factors, including, but not limited to, whether the county has a demonstrated track record of successfully administering funds for the listed purposes and has sufficient staffing capacity to conduct the work effectively; and
       3. The entity shall distribute funds to a county based on an expenditure plan submitted by the county and approved by the entity. A county’s proposed expenditure plan may contain funding amounts different than those listed above. In approving a county’s expenditure plan and allocating funds, the entity may adjust the funding amounts to ensure compliance with the overall allocation requirements.
    5. If funds provided to a county for administration pursuant are not committed within three years of collection, the county shall return the funds to the entity.
    6. The entity may expend up to 3 percent of funds for program administration.
30. Establishes requirements and procedures for ballot measures necessary to generate funding revenues, as follows:
    1. The entity is a district, as defined in Section 317 of the Elections Code.
    2. If the entity proposes a measure that will generate revenues, the board of supervisors of the county or counties in which the entity has determined to place the measure on the ballot shall call a special election on the measure. The special election shall be consolidated with the next regularly scheduled statewide election and the measure shall be submitted to the voters in the appropriate counties.
    3. A measure proposed by the entity that requires voter approval shall be submitted to the voters of the entity in accordance with the provisions of the Elections Code applicable to districts.
    4. The entity shall file with the board of supervisors of each county in which the measure shall appear on the ballot a resolution of the entity requesting consolidation, and setting forth the exact form of the ballot question.
    5. The legal counsel for the entity shall prepare an impartial analysis of the measure. The impartial analysis prepared by the legal counsel for the entity shall be subject to review and revision by the county counsel of the county that contains the largest population, as determined by the most recent federal decennial census, among those counties in which the measure will be submitted to the voters.
    6. Each county included in the measure shall use the exact ballot question, impartial analysis, and ballot language provided by the entity. If two or more counties included in the measure are required to prepare a translation of ballot materials into the same language other than English, the county that contains the largest population, as determined by the most recent federal decennial census, among those counties that are required to prepare a translation of ballot materials into the same language other than English shall prepare the translation, or authorize the entity to prepare the translation, and that translation shall be used by the other county or counties, as applicable.
    7. If a measure proposed by the entity pursuant to this title is submitted to the voters of the entity in two or more counties, the elections officials of those counties shall mutually agree to use the same letter designation for the measure.
    8. The county clerk of each county shall report the results of the special election to the entity.
    9. For any election at which the entity proposes a measure that would generate revenues, the entity shall reimburse each county in which that measure appears on the ballot only for the incremental costs incurred by the county elections official related to submitting the measure to the voters with any eligible funds transferred to the entity from ABAG or MTC. These “incremental costs” include the cost to prepare, review, and revise the impartial analysis of the measure that is required by subdivision; the cost to prepare a translation of ballot materials into a language other than English by any county; and the additional costs that exceed the costs incurred for other election races or ballot measures, if any, appearing on the same ballot in each county in which the measure appears on the ballot, including the printing and mailing of ballot materials and the canvass of the vote regarding the measure.
    10. Because the entity has no revenues as of the effective date of this section, the appropriations limit for the entity shall be originally established based on receipts from the initial measure that would generate revenues for the entity.
31. Requires financial oversight of the entity as follows:
    1. The board shall provide for regular audits of the entity’s accounts and records and shall maintain accounting records and shall report accounting transactions in accordance with generally accepted accounting principles adopted by the Governmental Accounting Standards Board of the Financial Accounting Foundation for both public reporting purposes and for reporting of activities to the Controller.
    2. The board shall provide for annual financial reports. The board shall make copies of the annual financial reports available to the public.
32. The Legislature finds and declares that providing a regional financing mechanism for affordable housing development and preservation in the San Francisco Bay Area, as described in this section and Section 64501, is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this title applies to all cities within the San Francisco Bay area, including charter cities.
33. The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the uniquely severe shortage of available funding and resources for the development and preservation of affordable housing and the particularly acute nature of the housing crisis within the nine counties of the San Francisco Bay area region.
34.  If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.

EXISTING LAW:

1. Establishes the MTC as the transportation planning, coordinating, and financing agency for the nine-county San Francisco Bay Area, and specifies its governance structure, duties, and powers (Government Code Title 7.1). 
2. Creates the Bay Area Toll Authority (BATA) as a separate entity governed by the same governing board as the MTC and makes BATA responsible for the programming, administration, and allocation of toll revenues from the state-owned toll bridges in the Bay Area (Streets and Highway Code Section 30950-309050.4).
3. Authorizes BATA to increase the toll rates for certain purposes, including to meet its bond obligations, provide funding for certain costs associated with the Bay Area state-owned toll bridges, including for the seismic retrofit of those bridges, and provide funding to meet the requirements of certain voter-approved regional measures (Streets and Highway Code Section 30914.7).
4. Established the San Francisco Bay Restoration Authority and specifies its governance structure, duties, and powers. These powers include the ability to place revenue measures on the ballot in all of the Bay Area counties and to issue bonds based on the proceeds of the revenue measures (Government Code Title 7.25).

FISCAL EFFECT: Unknown

COMMENTS:

Purpose of the Bill: According to the author, “Housing is a regional issue that requires policy and funding coordination across jurisdictions. AB 1487 creates the Housing Alliance for the Bay Area, the first public entity focused entirely on the region’s housing needs. This bill empowers the Bay Area to help address its affordable housing needs by enabling the region to raise new revenue and support local jurisdictions, and thereby ensure that the entire Bay Area is on track to end the housing crisis by providing affordable housing efficiently and effectively to all residents.

Background: Bay Area housing prices have long exceeded that of the state and county. This situation has been exacerbated during the economic expansion since the Great Recession ended in 2010, as the Bay Area has added seven times as many jobs as housing units. The mismatch of supply and demand has resulted in an increase in housing prices such that average rents are $2,400 (an increase of 60% since 2010) and average home prices are $790,000 (also an increase of 60% since 2010).

From the middle of 2017 to the end of 2018, the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG) convened a series of structured discussions with local government officials, developers, major employers, labor interests, housing and policy experts, social equity advocates and non-profit housing providers. This group was deemed the Committee to House the Bay Area, and nicknamed CASA. CASA identified that, to make housing in the region more affordable, 35,000 new housing units would need to be built annually, including 14,000 new subsidized affordable housing units. Additionally, the region has 30,000 units at risk of losing their affordability, and 300,000 lower-income households who are paying more than 50% of their income in rent.

The Bay Area already has substantial resources to fund the production, preservation, and protection of affordable housing; however, CASA’s analysis is that there is still a $2.5 billion funding gap annually between existing resources and what is needed. CASA proposes to meet $1.5 billion of this deficit with regional and local self-help measures, with the remainder being funded from additional state and federal sources.

The Housing Alliance for the Bay Area: This bill establishes the Housing Alliance for the Bay Area (HABA). The entity’s purpose is to increase affordable housing in the San Francisco Bay Area by providing for enhanced funding and technical assistance at a regional level for new affordable housing production, affordable housing preservation, and tenant protection. The stated intent of HABA is to complement existing efforts by cities, counties, districts, and other local, regional, and state entities. HABA would create a new district with jurisdiction extending throughout the Bay Area, including the counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma and the City and County of San Francisco.

The bill specifies the governance process for HABA, including that it would be governed by a board composed of 18 voting members, including nine from MTC and nine from ABAG. The entity must also form an advisory body comprised of nine representatives with knowledge and experience in the areas of affordable housing finance and development, tenant protection, resident service provision, and housing preservation. It would be staffed by MTC staff, recognizing that the agency would need additional staff with expertise in affordable housing finance and other related skills.

Powers and Limitations of HABA: The bill establishes HABA’s powers, including that it may:

• Raise new revenue;
• Allocate funds to the various cities, counties, and other public agencies and affordable housing projects within its jurisdiction;
• Provide support and technical assistance to local governments in relation to producing and preserving affordable housing;
• Assemble parcels and lease or acquire land for affordable housing development;
• Collect data on housing production and monitoring progress on meeting regional and state housing goals; and
• Provide public information about the entity’s housing programs and policies.

The bill also specifically states that HABA may not regulate or enforce local land use decisions, or acquire property by eminent domain.

Sources of potential revenue: The bill specifies that HABA may raise new revenue by authorizing the entity to place on the ballot in all or a subset of the nine counties in the San Francisco Bay area. The bill lists the following as potential funding strategies:

• A parcel tax;
• A commercial linkage fee that is either of the following:
• A variable rate fee assessed on new construction, providing a credit for a project in a local jurisdiction with an existing linkage fee program; or
• A flat rate fee assessed on new construction.
• A gross receipts tax with variable rates according to business sector with an exemption for small businesses;
• A business tax based upon the number of employees assessed at a variable rate with an exemption for small businesses;
• One-half of one cent increase in sales tax;
• A general obligation bond to be funded by an ad valorem tax on the assessed value of local properties; and
• A revenue bond.

If HABA proposes a ballot measure that will generate revenues, the board of supervisors of the county or counties in which the entity has determined to place the measure on the ballot must call a special election on the measure, consolidated with the next regularly scheduled statewide election. HABA would reimburse the counties for the incremental cost of the election.

Distribution of funding: The bill establishes the targets for expenditure of any revenues received through these fundraising measures, as follows:

• At least 60% must go towards production of housing units affordable to lower income households;
• From 15-20% for preservation of housing affordable to low- or moderate-income households;
• From 5-10% for tenant protection programs; and
• From 5-10% for general funds awarded to a local government that achieves affordable housing benchmarks established by the entity.
• The entity may expend up to 3% of funds for program administration.

The bill also establishes that at least 75% of the revenue received must return to the county of origin. The counties must submit expenditure plans to HABA for its approval. Based on county’s plan, capacity, and track record, HABA may allow a county to administer all or a portion its funds directly. HABA may also allocate funds directly to a city, a public entity, or a private project sponsor.

Double referred: This bill was also referred to the Assembly Committee on Local Government where it will be heard should it pass out of this committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Bay Area Council
Burbank Housing
California Community Builders

California YIMBY
Chan Zuckerberg Initiative
Enterprise Community Partners
Greenbelt Alliance
Habitat for Humanity East Bay/Silicon Valley
Non-Profit Housing Association of Northern California
PICO California
SV@Home
TMG Partners

Support If Amended

Community Legal Services in East Palo Alto
Genesis
Monument Impact
Public Advocates
San Francisco Foundation

Opposition

California Taxpayers Association (as amended on 4/4/19)

Howard Jarvis Taxpayers Association

Analysis Prepared by: Steve Wertheim / H. & C.D. / (916) 319-2085