SB 593: Redevelopment: successor agency debt: City and County of San Francisco.
- Session Year: 2023-2024
- House: Senate
- Latest Version Date: 2023-10-11
Current Status:
Passed
(2023-10-11: Chaptered by Secretary of State. Chapter 782, Statutes of 2023.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
This bill lets the successor agency to San Francisco’s former redevelopment agency issue bonds or borrow money to finance up to 5,842 affordable housing units (and certain Mission Bay, Hunters Point, Candlestick Point, and Transbay projects), including their development, repair, renovation, or reconstruction, that must remain affordable to and occupied by extremely low‑, very low‑, low‑, or moderate‑income households for at least 55 years for rentals and 45 years for owner‑occupied units. Those bonds or loans may be secured by property tax revenues in the city’s Redevelopment Property Tax Trust Fund, limited to the portion that would have been distributed to San Francisco, and the agency may enter related contracts and obligations paid from those revenues.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to, among other things, wind down the affairs of the dissolved redevelopment agencies and make payments due for enforceable obligations. Existing law, among other powers granted to successor agencies generally, additionally vests the successor agency to the former Redevelopment Agency of the City and County of San Francisco with the authority, rights, and powers of that former redevelopment agency solely for the purpose of issuing bonds or incurring other indebtedness, subject to the approval of the oversight board of the successor agency, to finance the construction of affordable housing and infrastructure required by specified development agreements. Under existing law, these bonds and indebtedness are considered indebtedness incurred by the dissolved redevelopment agency secured by moneys deposited in the Redevelopment Property Tax Trust Fund established for that agency.
This bill would expand this authority to include bonds issued and other indebtedness incurred to finance the development, construction, repair, renovation, or reconstruction of affordable housing units that are or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for at least 55 years for rental units and 45 years for owner-occupied units, subject to specified conditions and authorizations. The bill would specify the security requirements for the bonds issued or other indebtedness incurred to finance the development, construction, repair, renovation, or reconstruction of affordable housing units.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City and County of San Francisco.
This bill would incorporate additional changes to Section 34177.7 of the Health and Safety Code proposed by AB 143 and SB 143 to be operative only if this bill and either of those bills are enacted and this bill is enacted last.
Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to, among other things, wind down the affairs of the dissolved redevelopment agencies and make payments due for enforceable obligations. Existing law, among other powers granted to successor agencies generally, additionally vests the successor agency to the former Redevelopment Agency of the City and County of San Francisco with the authority, rights, and powers of that former redevelopment agency solely for the purpose of issuing bonds or incurring other indebtedness, subject to the approval of the oversight board of the successor agency, to finance the construction of affordable housing and infrastructure required by specified development agreements. Under existing law, these bonds and indebtedness are considered indebtedness incurred by the dissolved redevelopment agency secured by moneys deposited in the Redevelopment Property Tax Trust Fund established for that agency.
This bill would expand this authority to include bonds issued and other indebtedness incurred to finance the development, construction, repair, renovation, or reconstruction of affordable housing units that are or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for at least 55 years for rental units and 45 years for owner-occupied units, subject to specified conditions and authorizations. The bill would specify the security requirements for the bonds issued or other indebtedness incurred to finance the development, construction, repair, renovation, or reconstruction of affordable housing units.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City and County of San Francisco.
This bill would incorporate additional changes to Section 34177.7 of the Health and Safety Code proposed by AB 143 and SB 143 to be operative only if this bill and either of those bills are enacted and this bill is enacted last.
Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to, among other things, wind down the affairs of the dissolved redevelopment agencies and make payments due for enforceable obligations. Existing law, among other powers granted to successor agencies generally, additionally vests the successor agency to the former Redevelopment Agency of the City and County of San Francisco with the authority, rights, and powers of that former redevelopment agency solely for the purpose of issuing bonds or incurring other indebtedness, subject to the approval of the oversight board of the successor agency, to finance the construction of affordable housing and infrastructure required by specified development agreements. Under existing law, these bonds and indebtedness are considered indebtedness incurred by the dissolved redevelopment agency secured by moneys deposited in the Redevelopment Property Tax Trust Fund established for that agency.
This bill would expand this authority to include bonds issued and other indebtedness incurred to finance the replacement of certain development, construction, repair, renovation, or reconstruction of affordable housing units, subject to specified conditions, including that the assisted units units that are or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for at least 55 years for rental units and 45 years for owner-occupied units. units, subject to specified conditions and authorizations. The bill would also specify the security requirements for the bonds issued or other indebtedness incurred to finance the replacement of the development, construction, repair, renovation, or reconstruction of affordable housing units.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City and County of San Francisco.
This bill would incorporate additional changes to Section 34177.7 of the Health and Safety Code proposed by AB 143 and SB 143 to be operative only if this bill and either of those bills are enacted and this bill is enacted last.
Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to, among other things, wind down the affairs of the dissolved redevelopment agencies and make payments due for enforceable obligations. Existing law, among other powers granted to successor agencies generally, additionally vests the successor agency to the former Redevelopment Agency of the City and County of San Francisco with the authority, rights, and powers of that former redevelopment agency solely for the purpose of issuing bonds or incurring other indebtedness, subject to the approval of the oversight board of the successor agency, to finance the construction of affordable housing and infrastructure required by specified development agreements. Under existing law, these bonds and indebtedness are considered indebtedness incurred by the dissolved redevelopment agency secured by moneys deposited in the Redevelopment Property Tax Trust Fund established for that agency.
This bill would expand this authority to include bonds issued and other indebtedness incurred to finance the replacement of certain affordable housing units, subject to specified conditions, including that the assisted units remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for at least 55 years for rental units and 45 years for owner-occupied units. The bill would also specify the security requirements for the bonds issued or other indebtedness incurred to finance the replacement of the affordable housing units.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City and County of San Francisco.
Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to, among other things, wind down the affairs of the dissolved redevelopment agencies and make payments due for enforceable obligations. Existing law, among other powers granted to successor agencies generally, additionally vests the successor agency to the former Redevelopment Agency of the City and County of San Francisco with the authority, rights, and powers of that former redevelopment agency solely for the purpose of issuing bonds or incurring other indebtedness, subject to the approval of the oversight board of the successor agency, to finance the construction of affordable housing and infrastructure required by specified development agreements. Under existing law, these bonds and indebtedness are considered indebtedness incurred by the dissolved redevelopment agency secured by moneys deposited in the Redevelopment Property Tax Trust Fund established for that agency.
This bill would expand this authority to include bonds issued and other indebtedness incurred to finance the replacement of certain demolished affordable housing units, subject to specified conditions, including that the assisted units remain affordable to, and occupied by, persons and families of low- and moderate-income and extremely low low-, moderate-, extremely low, and very low income households for at least 55 years for rental units and 45 years for owner-occupied units. The bill would also specify the security requirements for the bonds issued or other indebtedness incurred to finance the replacement of the affordable housing units.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City and County of San Francisco.
Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to, among other things, wind down the affairs of the dissolved redevelopment agencies and make payments due for enforceable obligations. Existing law, among other powers granted to successor agencies generally, additionally vests the successor agency to the former Redevelopment Agency of the City and County of San Francisco with the authority, rights, and powers of that former redevelopment agency solely for the purpose of issuing bonds or incurring other indebtedness, subject to the approval of the oversight board of the successor agency, to finance the construction of affordable housing and infrastructure required by specified development agreements. Under existing law, these bonds and indebtedness are considered indebtedness incurred by the dissolved redevelopment agency secured by moneys deposited in the Redevelopment Property Tax Trust Fund established for that agency.
This bill would expand this authority to include bonds issued and other indebtedness incurred to finance the replacement of certain demolished affordable housing units, subject to specified conditions, including that the assisted units remain affordable to, and occupied by, persons and families of low- and moderate-income and extremely low and very low income households for at least 55 years for rental units and 45 years for owner-occupied units.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City and County of San Francisco.
The Legislature finds and declares all of the following:
(a)Under the authority granted by the Legislature in Senate Bill No. 2113 (Chapter 661 of the Statutes of 2000) and Senate Bill No. 701 (Section 3 of Chapter 782 of the Statutes of 2002), the former Redevelopment Agency of the City and County of San Francisco (hereafter former redevelopment agency) sought, prior to its dissolution, to redress the demolition of a substantial number of residential dwelling units affordable to very low, low-, and moderate-income households during the agencys earlier urban renewal efforts.
(b)In 2003, the Department of Housing and Community Development determined that the former redevelopment agency had an unmet affordable housing replacement need resulting from its demolition of 14,207 units and replacement of only 7,498 units in pre-1976 project areas. The department certified a net loss of 6,709 units the Agency must replace.
(c)In authorizing the former redevelopment agencys replacement of units, the Legislature found that San Franciscos early redevelopment activities, including the removal of previously existing dwelling units serving a lower income population, compounded the effects of the private market that have led to the citys housing crisis (Section 1 of Chapter 661 of the Statutes of 2000).
(d)Prior to its dissolution, the former redevelopment agency exceeded the housing production goals of the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) and developed over 12,000 units of affordable housing. Nonetheless, it was only able to approve and develop 867 replacement units out of the total 6,709 units that the Department of Housing and Community Development had certified. When the Legislature dissolved redevelopment agencies by enactment of Chapter 5 of the First Extraordinary Session of the Statutes of 2011, the former redevelopment agency had an outstanding balance of 5,842 affordable units that needed to be replaced.
(e)After dissolution of the former redevelopment agency, the Oversight Board for the City and County of San Francisco confirmed, by Resolution No. 5-2012 (April 10, 2012), the unfulfilled replacement housing obligations of the former redevelopment agency and approved the successor agencys expenditures of funds to fulfill those obligations, but the Department of Finance disapproved those expenditures on the grounds they were inconsistent with the wind down of redevelopment agencies.
(f)In 2015, the Legislature authorized the successor agency to the former redevelopment agency to issue bonds and incur other indebtedness secured by the property tax revenues available in the Redevelopment Property Tax Trust Fund to finance certain enforceable obligations that the Department of Finance had approved, but this legislation did not include authorization for funding of the replacement housing obligation (Sections 9 and 27 of Chapter 325 of the Statutes of 2015).
(g)San Francisco faces a continuing shortage of affordable housing for low- and moderate-income households. The San Francisco Planning Department reports that San Francisco and the Bay Area are currently in the midst of a housing affordability crisis unprecedented in their history. Increases in housing prices and displacement pressures have been a long-term trend, driven by policy decisions first established decades ago and amplified by regional and national economic trends. Over the last 5 years, the crisis has intensified as the regions high-wage employment base has grown while regional housing production has not kept pace (San Francisco Housing Needs and Trends Report (July 2018)).
(h)The San Francisco residential real estate market is one of the most expensive in the United States. In September 2022, RealtyHop reported that the median-priced home in San Francisco was $1,388,500. A household earning the citys median household income of $126,117 would have to spend almost 67 percent of its yearly income to afford the median priced home. While the national home ownership rate is approximately 64 percent, only approximately 36 percent of San Franciscans own their own home. The majority of market-rate homes for sale in San Francisco are priced out of the reach of low- and moderate-income households. In 2022, the average rent was $3,340, which is affordable to households earning over $133,600. The Black population of San Francisco, with a median household income of less than $35,000 has little chance of being able to purchase or rent a home in the city. These factors contribute to a heavy demand for affordable housing in the city that the private market cannot meet.
(i)The San Francisco Planning Housing Element 2022 update states that the City and County of San Francisco has an unmet housing need at every income level and mandates the creation of more than 82,000 units within the city. Approximately 46,000 of these units are targeted to households with extremely low to moderate incomes. To meet these affordability targets will require a substantial increase in public funding to cover the gap between the cost of development and operations and the reduced revenue due to lower rents and prices. The San Francisco Planning Housing Element 2022 update estimates that meeting the regional housing needs allocation goals will require a range of additional investments for affordable housing from $1,300,000,000 in 2023 to $2,500,000,000 in 2031.
(j)Some of the 7,498 affordable units constructed to replace the units removed as a result of urban renewal are no longer available at affordable housing cost to low- and moderate-income households because the income restrictions have expired. In addition, some of these units are in need of substantial rehabilitation or replacement if they are to continue to provide decent and safe affordable housing and address the housing needs of those displaced by urban renewal. For example, Freedom West Homes is a 382 unit housing cooperative constructed in 1974 to replace a portion of the housing units removed from the Western Addition Redevelopment Project Area. It suffers from deterioration and its affordability restrictions have expired.
(k)The removal of units as a result of urban renewal contributed to the significant decline in the Black population in San Francisco from a high of 13 percent of the population prior to the urban renewal project to the current 5.3 percent. Urban renewal destroyed a disproportionate amount of affordable housing in and near Japantown and the South of Market area where large numbers of Filipino Americans had resided. The continued lack of affordable housing in the city further exacerbates urban renewals impact on communities of color.
(l)San Franciscos housing situation is unique, in that median rents and sales prices are among the highest in the United States even though it has committed a significant amount of local funds to assist affordable housing development. A special law is necessary and a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances relating to the replacement of affordable housing demolished by the former redevelopment agency.
(m)It is the intent of the Legislature to authorize, subject to compliance with redevelopment dissolution law (Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code), the successor agency to the former redevelopment agency to issue bonds or incur other indebtedness for the purpose of financing the construction of replacement affordable housing units demolished and not replaced by the former redevelopment agency and the replacement of the obsolete replacement units that were constructed previously. The procedures and standards in the redevelopment dissolution law, as amended, will govern the issuance of bonds or incurrence of other indebtedness by the successor agency and will supersede those provisions in Chapter 661 of the Statutes of 2000 requiring approval of the Department of Housing and Community Development. These bonds or other indebtedness may be secured by property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund from those project areas that generated tax increments for the former redevelopment agency upon its dissolution, as described in subdivision (e) of Section 27 of Chapter 325 of the Statutes of 2015, to the extent the revenues represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 of the Health and Safety Code.
(n)It is further the intent of the Legislature that the successor agency to the former redevelopment agency, to the greatest extent feasible, replace the amount of lost units, as previously certified by the Department of Housing and Community Development, according to the formulas in Section 33413 of the Health and Safety Code.
SEC. 2.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)(i)The development, construction, repair, renovation, or reconstruction of up to 5,842 units of affordable housing by or on behalf of the City and County of San Francisco that shall be or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(ii)For purposes of this subparagraph, and notwithstanding Section 34177.3, the successor agency to the Redevelopment Agency of the City and County of San Francisco may create enforceable obligations that are related to the issuance of bonds or incurrence of other indebtedness and may enter into any contracts or arrangements that are related to the development, construction, repair, renovation, or reconstruction of the units of affordable housing, so long as the expenses of any of those arrangements are paid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(iii)The successor agency to the Redevelopment Agency of the City and County of San Francisco may enter into arrangements with the City and County of San Francisco for the purpose of providing the proceeds from the issuance of bonds or the incurrence of debt under this subparagraph to the City and County of San Francisco for development, construction, repair, renovation, or reconstruction of the units of affordable housing described in this subparagraph and to facilitate compliance with any obligations of the successor agency resulting from the issuance of bonds or incurrence of debt.
(iv)Any costs related to the issuance and administration of bonds issued or debt incurred that are not paid with the proceeds from the sale of those bonds or incurrence of debt shall be repaid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(2)(A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.
(B)For purposes of financing the development, construction, repair, renovation, or reconstruction of the units of affordable housing described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the Redevelopment Agency of the City and County of San Francisco the property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the development, construction, repair, renovation, or reconstruction of the units of affordable housing shall not include any moneys that are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (A) or (B) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (C) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to the City and County of San Francisco pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the City and County of San Francisco has approved the subordinations.
(e)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(f)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(g)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(h)(1)A bond or indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(2)Notwithstanding paragraph (1), a bond or other indebtedness issued, incurred, or entered into pursuant to subparagraph (C) of paragraph (1) of subdivision (a) shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the Redevelopment Property Tax Trust Fund, established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183 only to the extent the moneys represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this paragraph are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(i)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
SEC. 2.5.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)(i)The development, construction, repair, renovation, or reconstruction of up to 5,842 units of affordable housing by or on behalf of the City and County of San Francisco that shall be or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(ii)For purposes of this subparagraph, and notwithstanding Section 34177.3, the successor agency to the Redevelopment Agency of the City and County of San Francisco may create enforceable obligations that are related to the issuance of bonds or incurrence of other indebtedness and may enter into any contracts or arrangements that are related to the development, construction, repair, renovation, or reconstruction of the units of affordable housing, so long as the expenses of any of those arrangements are paid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(iii)The successor agency to the Redevelopment Agency of the City and County of San Francisco may enter into arrangements with the City and County of San Francisco for the purpose of providing the proceeds from the issuance of bonds or the incurrence of debt under this subparagraph to the City and County of San Francisco for development, construction, repair, renovation, or reconstruction of the units of affordable housing described in this subparagraph and to facilitate compliance with any obligations of the successor agency resulting from the issuance of bonds or incurrence of debt.
(iv)Any costs related to the issuance and administration of bonds issued or debt incurred that are not paid with the proceeds from the sale of those bonds or incurrence of debt shall be repaid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(2)(A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.(B)For purposes of financing the development, construction, repair, renovation, or reconstruction of the units of affordable housing described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the Redevelopment Agency of the City and County of San Francisco the property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the development, construction, repair, renovation, or reconstruction of the units of affordable housing shall not include any moneys that are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (A) or (B) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (C) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to the City and County of San Francisco pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the City and County of San Francisco has approved the subordinations.
(e)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(f)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(g)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(h)(1)A bond or indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(2)Notwithstanding paragraph (1), a bond or other indebtedness issued, incurred, or entered into pursuant to subparagraph (C) of paragraph (1) of subdivision (a) shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the Redevelopment Property Tax Trust Fund, established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183 only to the extent the moneys represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this paragraph are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(i)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
(j)(1)(A)For the development of the project described in the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, the limitations relating to time for establishing loans, advances, and indebtedness, the effectiveness of the redevelopment plans, the time to repay indebtedness, the time for applying tax increment, the number of tax dollars, or any other matters set forth in Section 33333.2 and Section 33492.13 shall not apply.
(B)The Candlestick Point-Hunters Point Shipyard Phase 2 project agreements shall establish the applicable limitations relating to time for establishing loans, advances, and indebtedness, the effectiveness of the redevelopment plans, the time to repay indebtedness, the time for applying tax increment, number of tax dollars, or any other matters set forth in Section 33333.2 and Section 33492.13. Any amendments to Candlestick Point-Hunters Point Shipyard Phase 2 project agreements to establish or change those time limits shall be approved by the oversight board, and shall be subject to department approval, as described in this part.
(2)This part shall not be construed to limit the receipt and use of property tax revenues generated from the Hunters Point Redevelopment Plan project area or Zone 1 of the Bayview Hunters Point Redevelopment Plan project area for the project described in the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement.
SEC. 3.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 unique circumstances relating to the replacement of affordable housing demolished by the former Redevelopment Agency of the City and County of San Francisco, as described in Section 1 of this act.
SEC. 4.(a)Section 2.5 of this bill incorporates amendments to Section 34177.7 of the Health and Safety Code proposed by this bill and Senate Bill 143. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2024, (2) each bill amends Section 34177.7 of the Health and Safety Code, and (3) this bill is enacted after Senate Bill 143, in which case Section 34177.7 of the Health and Safety Code, as amended by Senate Bill 143, shall remain operative only until the operative date of this bill, at which time Section 2.5 of this bill shall become operative, and Section 2 of this bill shall not become operative.
(b)Section 2.5 of this bill incorporates amendments to Section 34177.7 of the Health and Safety Code proposed by this bill and Assembly Bill 143. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2024, (2) each bill amends Section 34177.7 of the Health and Safety Code, and (3) this bill is enacted after Assembly Bill 143, in which case Section 34177.7 of the Health and Safety Code, as amended by Assembly Bill 143, shall remain operative only until the operative date of this bill, at which time Section 2.5 of this bill shall become operative, and Section 2 of this bill shall not become operative.
The Legislature finds and declares all of the following:
(a)Under the authority granted by the Legislature in Senate Bill No. 2113 (Chapter 661 of the Statutes of 2000) and Senate Bill No. 701 (Section 3 of Chapter 782 of the Statutes of 2002), the former Redevelopment Agency of the City and County of San Francisco (hereafter former redevelopment agency) sought, prior to its dissolution, to redress the demolition of a substantial number of residential dwelling units affordable to very low, low-, and moderate-income households during the agencys earlier urban renewal efforts.
(b)In 2003, the Department of Housing and Community Development determined that the former redevelopment agency had an unmet affordable housing replacement need resulting from its demolition of 14,207 units and replacement of only 7,498 units in pre-1976 project areas. The department certified a net loss of 6,709 units the Agency must replace.
(c)In authorizing the former redevelopment agencys replacement of units, the Legislature found that San Franciscos early redevelopment activities, including the removal of previously existing dwelling units serving a lower income population, compounded the effects of the private market that have led to the citys housing crisis (Section 1 of Chapter 661 of the Statutes of 2000).
(d)Prior to its dissolution, the former redevelopment agency exceeded the housing production goals of the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) and developed over 12,000 units of affordable housing. Nonetheless, it was only able to approve and develop 867 replacement units out of the total 6,709 units that the Department of Housing and Community Development had certified. When the Legislature dissolved redevelopment agencies by enactment of Chapter 5 of the First Extraordinary Session of the Statutes of 2011, the former redevelopment agency had an outstanding balance of 5,842 affordable units that needed to be replaced.
(e)After dissolution of the former redevelopment agency, the Oversight Board for the City and County of San Francisco confirmed, by Resolution No. 5-2012 (April 10, 2012), the unfulfilled replacement housing obligations of the former redevelopment agency and approved the successor agencys expenditures of funds to fulfill those obligations, but the Department of Finance disapproved those expenditures on the grounds they were inconsistent with the wind down of redevelopment agencies.
(f)In 2015, the Legislature authorized the successor agency to the former redevelopment agency to issue bonds and incur other indebtedness secured by the property tax revenues available in the Redevelopment Property Tax Trust Fund to finance certain enforceable obligations that the Department of Finance had approved, but this legislation did not include authorization for funding of the replacement housing obligation (Sections 9 and 27 of Chapter 325 of the Statutes of 2015).
(g)San Francisco faces a continuing shortage of affordable housing for low- and moderate-income households. The San Francisco Planning Department reports that San Francisco and the Bay Area are currently in the midst of a housing affordability crisis unprecedented in their history. Increases in housing prices and displacement pressures have been a long-term trend, driven by policy decisions first established decades ago and amplified by regional and national economic trends. Over the last 5 years, the crisis has intensified as the regions high-wage employment base has grown while regional housing production has not kept pace (San Francisco Housing Needs and Trends Report (July 2018)).
(h)The San Francisco residential real estate market is one of the most expensive in the United States. In September 2022, RealtyHop reported that the median-priced home in San Francisco was $1,388,500. A household earning the citys median household income of $126,117 would have to spend almost 67 percent of its yearly income to afford the median priced home. While the national home ownership rate is approximately 64 percent, only approximately 36 percent of San Franciscans own their own home. The majority of market-rate homes for sale in San Francisco are priced out of the reach of low- and moderate-income households. In 2022, the average rent was $3,340, which is affordable to households earning over $133,600. The Black population of San Francisco, with a median household income of less than $35,000 has little chance of being able to purchase or rent a home in the city. These factors contribute to a heavy demand for affordable housing in the city that the private market cannot meet.
(i)The San Francisco Planning Housing Element 2022 update states that the City and County of San Francisco has an unmet housing need at every income level and mandates the creation of more than 82,000 units within the city. Approximately 46,000 of these units are targeted to households with extremely low to moderate incomes. To meet these affordability targets will require a substantial increase in public funding to cover the gap between the cost of development and operations and the reduced revenue due to lower rents and prices. The San Francisco Planning Housing Element 2022 update estimates that meeting the regional housing needs allocation goals will require a range of additional investments for affordable housing from $1,300,000,000 in 2023 to $2,500,000,000 in 2031.
(j)Some of the 7,498 affordable units constructed to replace the units removed as a result of urban renewal are no longer available at affordable housing cost to low- and moderate-income households because the income restrictions have expired. In addition, some of these units are in need of substantial rehabilitation or replacement if they are to continue to provide decent and safe affordable housing and address the housing needs of those displaced by urban renewal. For example, Freedom West Homes is a 382 unit housing cooperative constructed in 1974 to replace a portion of the housing units removed from the Western Addition Redevelopment Project Area. It suffers from deterioration and its affordability restrictions have expired.
(k)The removal of units as a result of urban renewal contributed to the significant decline in the Black population in San Francisco from a high of 13 percent of the population prior to the urban renewal project to the current 5.3 percent. Urban renewal destroyed a disproportionate amount of affordable housing in and near Japantown and the South of Market area where large numbers of Filipino Americans had resided. The continued lack of affordable housing in the city further exacerbates urban renewals impact on communities of color.
(l)San Franciscos housing situation is unique, in that median rents and sales prices are among the highest in the United States even though it has committed a significant amount of local funds to assist affordable housing development. A special law is necessary and a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances relating to the replacement of affordable housing demolished by the former redevelopment agency.
(m)It is the intent of the Legislature to authorize, subject to compliance with redevelopment dissolution law (Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code), the successor agency to the former redevelopment agency to issue bonds or incur other indebtedness for the purpose of financing the construction of replacement affordable housing units demolished and not replaced by the former redevelopment agency and the replacement of the obsolete replacement units that were constructed previously. The procedures and standards in the redevelopment dissolution law, as amended, will govern the issuance of bonds or incurrence of other indebtedness by the successor agency and will supersede those provisions in Chapter 661 of the Statutes of 2000 requiring approval of the Department of Housing and Community Development. These bonds or other indebtedness may be secured by property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund from those project areas that generated tax increments for the former redevelopment agency upon its dissolution, as described in subdivision (e) of Section 27 of Chapter 325 of the Statutes of 2015, to the extent the revenues represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 of the Health and Safety Code.
(n)It is further the intent of the Legislature that the successor agency to the former redevelopment agency, to the greatest extent feasible, replace the amount of lost units, as previously certified by the Department of Housing and Community Development, according to the formulas in Section 33413 of the Health and Safety Code.
SEC. 2.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)(i)The development, construction, repair, renovation, or reconstruction of up to 5,842 units of affordable housing by or on behalf of the City and County of San Francisco that shall be or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(ii)For purposes of this subparagraph, and notwithstanding Section 34177.3, the successor agency to the Redevelopment Agency of the City and County of San Francisco may create enforceable obligations that are related to the issuance of bonds or incurrence of other indebtedness and may enter into any contracts or arrangements that are related to the development, construction, repair, renovation, or reconstruction of the units of affordable housing, so long as the expenses of any of those arrangements are paid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(iii)The successor agency to the Redevelopment Agency of the City and County of San Francisco may enter into arrangements with the City and County of San Francisco for the purpose of providing the proceeds from the issuance of bonds or the incurrence of debt under this subparagraph to the City and County of San Francisco for development, construction, repair, renovation, or reconstruction of the units of affordable housing described in this subparagraph and to facilitate compliance with any obligations of the successor agency resulting from the issuance of bonds or incurrence of debt.
(iv)Any costs related to the issuance and administration of bonds issued or debt incurred that are not paid with the proceeds from the sale of those bonds or incurrence of debt shall be repaid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(2)(A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.
(B)For purposes of financing the development, construction, repair, renovation, or reconstruction of the units of affordable housing described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the Redevelopment Agency of the City and County of San Francisco the property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the development, construction, repair, renovation, or reconstruction of the units of affordable housing shall not include any moneys that are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (A) or (B) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (C) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to the City and County of San Francisco pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the City and County of San Francisco has approved the subordinations.
(e)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(f)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(g)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(h)(1)A bond or indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(2)Notwithstanding paragraph (1), a bond or other indebtedness issued, incurred, or entered into pursuant to subparagraph (C) of paragraph (1) of subdivision (a) shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the Redevelopment Property Tax Trust Fund, established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183 only to the extent the moneys represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this paragraph are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(i)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
SEC. 2.5.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)(i)The development, construction, repair, renovation, or reconstruction of up to 5,842 units of affordable housing by or on behalf of the City and County of San Francisco that shall be or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(ii)For purposes of this subparagraph, and notwithstanding Section 34177.3, the successor agency to the Redevelopment Agency of the City and County of San Francisco may create enforceable obligations that are related to the issuance of bonds or incurrence of other indebtedness and may enter into any contracts or arrangements that are related to the development, construction, repair, renovation, or reconstruction of the units of affordable housing, so long as the expenses of any of those arrangements are paid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(iii)The successor agency to the Redevelopment Agency of the City and County of San Francisco may enter into arrangements with the City and County of San Francisco for the purpose of providing the proceeds from the issuance of bonds or the incurrence of debt under this subparagraph to the City and County of San Francisco for development, construction, repair, renovation, or reconstruction of the units of affordable housing described in this subparagraph and to facilitate compliance with any obligations of the successor agency resulting from the issuance of bonds or incurrence of debt.
(iv)Any costs related to the issuance and administration of bonds issued or debt incurred that are not paid with the proceeds from the sale of those bonds or incurrence of debt shall be repaid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(2)(A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.(B)For purposes of financing the development, construction, repair, renovation, or reconstruction of the units of affordable housing described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the Redevelopment Agency of the City and County of San Francisco the property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the development, construction, repair, renovation, or reconstruction of the units of affordable housing shall not include any moneys that are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (A) or (B) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (C) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to the City and County of San Francisco pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the City and County of San Francisco has approved the subordinations.
(e)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(f)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(g)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(h)(1)A bond or indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(2)Notwithstanding paragraph (1), a bond or other indebtedness issued, incurred, or entered into pursuant to subparagraph (C) of paragraph (1) of subdivision (a) shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the Redevelopment Property Tax Trust Fund, established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183 only to the extent the moneys represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this paragraph are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(i)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
(j)(1)(A)For the development of the project described in the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, the limitations relating to time for establishing loans, advances, and indebtedness, the effectiveness of the redevelopment plans, the time to repay indebtedness, the time for applying tax increment, the number of tax dollars, or any other matters set forth in Section 33333.2 and Section 33492.13 shall not apply.
(B)The Candlestick Point-Hunters Point Shipyard Phase 2 project agreements shall establish the applicable limitations relating to time for establishing loans, advances, and indebtedness, the effectiveness of the redevelopment plans, the time to repay indebtedness, the time for applying tax increment, number of tax dollars, or any other matters set forth in Section 33333.2 and Section 33492.13. Any amendments to Candlestick Point-Hunters Point Shipyard Phase 2 project agreements to establish or change those time limits shall be approved by the oversight board, and shall be subject to department approval, as described in this part.
(2)This part shall not be construed to limit the receipt and use of property tax revenues generated from the Hunters Point Redevelopment Plan project area or Zone 1 of the Bayview Hunters Point Redevelopment Plan project area for the project described in the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement.
SEC. 3.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 unique circumstances relating to the replacement of affordable housing demolished by the former Redevelopment Agency of the City and County of San Francisco, as described in Section 1 of this act.
SEC. 4.(a)Section 2.5 of this bill incorporates amendments to Section 34177.7 of the Health and Safety Code proposed by this bill and Senate Bill 143. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2024, (2) each bill amends Section 34177.7 of the Health and Safety Code, and (3) this bill is enacted after Senate Bill 143, in which case Section 34177.7 of the Health and Safety Code, as amended by Senate Bill 143, shall remain operative only until the operative date of this bill, at which time Section 2.5 of this bill shall become operative, and Section 2 of this bill shall not become operative.
(b)Section 2.5 of this bill incorporates amendments to Section 34177.7 of the Health and Safety Code proposed by this bill and Assembly Bill 143. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2024, (2) each bill amends Section 34177.7 of the Health and Safety Code, and (3) this bill is enacted after Assembly Bill 143, in which case Section 34177.7 of the Health and Safety Code, as amended by Assembly Bill 143, shall remain operative only until the operative date of this bill, at which time Section 2.5 of this bill shall become operative, and Section 2 of this bill shall not become operative.
The Legislature finds and declares all of the following:
(a)Under the authority granted by the Legislature in Senate Bill No. 2113 (Chapter 661 of the Statutes of 2000) and Senate Bill No. 701 (Section 3 of Chapter 782 of the Statutes of 2002), the former Redevelopment Agency of the City and County of San Francisco (hereafter former redevelopment agency) sought, prior to its dissolution, to redress the demolition of a substantial number of residential dwelling units affordable to very low, low-, and moderate-income households during the agencys earlier urban renewal efforts.
(b)In 2003, the Department of Housing and Community Development determined that the former redevelopment agency had an unmet affordable housing replacement need resulting from its demolition of 14,207 units and replacement of only 7,498 units in pre-1976 project areas. The department certified a net loss of 6,709 units the Agency must replace.
(c)In authorizing the former redevelopment agencys replacement of units, the Legislature found that San Franciscos early redevelopment activities, including the removal of previously existing dwelling units serving a lower income population, compounded the effects of the private market that have led to the citys housing crisis (Section 1 of Chapter 661 of the Statutes of 2000).
(d)Prior to its dissolution, the former redevelopment agency exceeded the housing production goals of the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) and developed over 12,000 units of affordable housing. Nonetheless, it was only able to approve and develop 867 replacement units out of the total 6,709 units that the Department of Housing and Community Development had certified. When the Legislature dissolved redevelopment agencies by enactment of Chapter 5 of the First Extraordinary Session of the Statutes of 2011, the former redevelopment agency had an outstanding balance of 5,842 affordable units that needed to be replaced.
(e)After dissolution of the former redevelopment agency, the Oversight Board for the City and County of San Francisco confirmed, by Resolution No. 5-2012 (April 10, 2012), the unfulfilled replacement housing obligations of the former redevelopment agency and approved the successor agencys expenditures of funds to fulfill those obligations, but the Department of Finance disapproved those expenditures on the grounds they were inconsistent with the wind down of redevelopment agencies.
(f)In 2015, the Legislature authorized the successor agency to the former redevelopment agency to issue bonds and incur other indebtedness secured by the property tax revenues available in the Redevelopment Property Tax Trust Fund to finance certain enforceable obligations that the Department of Finance had approved, but this legislation did not include authorization for funding of the replacement housing obligation (Sections 9 and 27 of Chapter 325 of the Statutes of 2015).
(g)San Francisco faces a continuing shortage of affordable housing for low- and moderate-income households. The San Francisco Planning Department reports that San Francisco and the Bay Area are currently in the midst of a housing affordability crisis unprecedented in their history. Increases in housing prices and displacement pressures have been a long-term trend, driven by policy decisions first established decades ago and amplified by regional and national economic trends. Over the last 5 years, the crisis has intensified as the regions high-wage employment base has grown while regional housing production has not kept pace (San Francisco Housing Needs and Trends Report (July 2018)).
(h)The San Francisco residential real estate market is one of the most expensive in the United States. In September 2022, RealtyHop reported that the median-priced home in San Francisco was $1,388,500. A household earning the citys median household income of $126,117 would have to spend almost 67 percent of its yearly income to afford the median priced home. While the national home ownership rate is approximately 64 percent, only approximately 36 percent of San Franciscans own their own home. The majority of market-rate homes for sale in San Francisco are priced out of the reach of low- and moderate-income households. In 2022, the average rent was $3,340, which is affordable to households earning over $133,600. The Black population of San Francisco, with a median household income of less than $35,000 has little chance of being able to purchase or rent a home in the city. These factors contribute to a heavy demand for affordable housing in the city that the private market cannot meet.
(i)The San Francisco Planning Housing Element 2022 update states that the City and County of San Francisco has an unmet housing need at every income level and mandates the creation of more than 82,000 units within the city. Approximately 46,000 of these units are targeted to households with extremely low to moderate incomes. To meet these affordability targets will require a substantial increase in public funding to cover the gap between the cost of development and operations and the reduced revenue due to lower rents and prices. The San Francisco Planning Housing Element 2022 update estimates that meeting the regional housing needs allocation goals will require a range of additional investments for affordable housing from $1,300,000,000 in 2023 to $2,500,000,000 in 2031.
(j)Some of the 7,498 affordable units constructed to replace the units removed as a result of urban renewal are no longer available at affordable housing cost to low- and moderate-income households because the income restrictions have expired. In addition, some of these units are in need of substantial rehabilitation or replacement if they are to continue to provide decent and safe affordable housing and address the housing needs of those displaced by urban renewal. For example, Freedom West Homes is a 382 unit housing cooperative constructed in 1974 to replace a portion of the housing units removed from the Western Addition Redevelopment Project Area. It suffers from deterioration and its affordability restrictions have expired.
(k)The removal of units as a result of urban renewal contributed to the significant decline in the Black population in San Francisco from a high of 13 percent of the population prior to the urban renewal project to the current 5.3 percent. Urban renewal destroyed a disproportionate amount of affordable housing in and near Japantown and the South of Market area where large numbers of Filipino Americans had resided. The continued lack of affordable housing in the city further exacerbates this decline. urban renewals impact on communities of color.
(l)San Franciscos housing situation is unique, in that median rents and sales prices are among the highest in the United States even though it has committed a significant amount of local funds to assist affordable housing development. A special law is necessary and a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances relating to the replacement of affordable housing demolished by the former redevelopment agency.
(m)It is the intent of the Legislature to authorize, subject to compliance with redevelopment dissolution law (Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code), the successor agency to the former redevelopment agency to issue bonds or incur other indebtedness for the purpose of financing the construction of replacement affordable housing units demolished and not replaced by the former redevelopment agency and the replacement of the obsolete replacement units that were constructed previously. The procedures and standards in the redevelopment dissolution law, as amended, will govern the issuance of bonds or incurrence of other indebtedness by the successor agency and will supersede those provisions in Chapter 661 of the Statutes of 2000 requiring approval of the Department of Housing and Community Development. These bonds or other indebtedness may be secured by property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund from those project areas that generated tax increments for the former redevelopment agency upon its dissolution, as described in subdivision (e) of Section 27 of Chapter 325 of the Statutes of 2015, to the extent the revenues represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 of the Health and Safety Code.
(n)It is further the intent of the Legislature that the successor agency to the former redevelopment agency, to the greatest extent feasible, replace the amount of lost units, as previously certified by the Department of Housing and Community Development, according to the formulas in Section 33413 of the Health and Safety Code.
SEC. 2.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)The replacement (i)The development, construction, repair, renovation, or reconstruction of up to 5,842 units of affordable housing to satisfy the replacement housing obligation of the Redevelopment Agency of the City and County of San Francisco described in Chapter 661 of the Statutes of 2000 and subsequently certified by the Department of Housing and Community Development. To satisfy this replacement housing obligation and reduce the outstanding balance of units to be replaced, the successor agency may assist housing projects previously assisted by the Redevelopment Agency of the City and County of San Francisco where the projects affordability restrictions have expired, or are at risk of expiration, provided that any successor agency assistance shall be conditioned on the requirement that the assisted units by or on behalf of the City and County of San Francisco that shall be or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(ii)For purposes of this subparagraph, and notwithstanding Section 34177.3, the successor agency to the Redevelopment Agency of the City and County of San Francisco may create enforceable obligations that are related to the issuance of bonds or incurrence of other indebtedness and may enter into any contracts or arrangements that are related to the development, construction, repair, renovation, or reconstruction of the units of affordable housing, so long as the expenses of any of those arrangements are paid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(iii)The successor agency to the Redevelopment Agency of the City and County of San Francisco may enter into arrangements with the City and County of San Francisco for the purpose of providing the proceeds from the issuance of bonds or the incurrence of debt under this subparagraph to the City and County of San Francisco for development, construction, repair, renovation, or reconstruction of the units of affordable housing described in this subparagraph and to facilitate compliance with any obligations of the successor agency resulting from the issuance of bonds or incurrence of debt.
(iv)Any costs related to the issuance and administration of bonds issued or debt incurred that are not paid with the proceeds from the sale of those bonds or incurrence of debt shall be repaid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(2)(A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.
(B)For purposes of financing the replacement housing obligation development, construction, repair, renovation, or reconstruction of the units of affordable housing described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the Redevelopment Agency of the City and County of San Francisco the property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the replacement housing obligation development, construction, repair, renovation, or reconstruction of the units of affordable housing shall not include any moneys that, notwithstanding the replacemnt housing obligation described in this secetion, that are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (A) or (B) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (C) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to the City and County of San Francisco pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the City and County of San Francisco has approved the subordinations.
(e)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(f)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(g)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(h)(1)A bond or indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(2)Notwithstanding paragraph (1), a bond or other indebtedness issued, incurred, or entered into pursuant to subparagraph (C) of paragraph (1) of subdivision (a) shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the Redevelopment Property Tax Trust Fund, established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183 only to the extent the moneys represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this paragraph are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(i)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
SEC. 2.5.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)(i)The development, construction, repair, renovation, or reconstruction of up to 5,842 units of affordable housing by or on behalf of the City and County of San Francisco that shall be or remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(ii)For purposes of this subparagraph, and notwithstanding Section 34177.3, the successor agency to the Redevelopment Agency of the City and County of San Francisco may create enforceable obligations that are related to the issuance of bonds or incurrence of other indebtedness and may enter into any contracts or arrangements that are related to the development, construction, repair, renovation, or reconstruction of the units of affordable housing, so long as the expenses of any of those arrangements are paid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(iii)The successor agency to the Redevelopment Agency of the City and County of San Francisco may enter into arrangements with the City and County of San Francisco for the purpose of providing the proceeds from the issuance of bonds or the incurrence of debt under this subparagraph to the City and County of San Francisco for development, construction, repair, renovation, or reconstruction of the units of affordable housing described in this subparagraph and to facilitate compliance with any obligations of the successor agency resulting from the issuance of bonds or incurrence of debt.
(iv)Any costs related to the issuance and administration of bonds issued or debt incurred that are not paid with the proceeds from the sale of those bonds or incurrence of debt shall be repaid solely from property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 remaining after the payment of debt service on the bonds or debt for the applicable fiscal year.
(2)The (A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.(B)For purposes of financing the development, construction, repair, renovation, or reconstruction of the units of affordable housing described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the Redevelopment Agency of the City and County of San Francisco the property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the development, construction, repair, renovation, or reconstruction of the units of affordable housing shall not include any moneys that are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to this section, subparagraph (A) or (B) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (C) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to the City and County of San Francisco pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the City and County of San Francisco has approved the subordinations.
(d)(e)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(e)(f)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(f)(g)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(g)Any bonds(h)(1)A bond or other indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) (b) of Section 34172, 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(2)Notwithstanding paragraph (1), a bond or other indebtedness issued, incurred, or entered into pursuant to subparagraph (C) of paragraph (1) of subdivision (a) shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the Redevelopment Property Tax Trust Fund, established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183 only to the extent the moneys represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this paragraph are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(h)(i)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
(j)(1)(A)For the development of the project described in the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, the limitations relating to time for establishing loans, advances, and indebtedness, the effectiveness of the redevelopment plans, the time to repay indebtedness, the time for applying tax increment, the number of tax dollars, or any other matters set forth in Section 33333.2 and Section 33492.13 shall not apply.
(B)The Candlestick Point-Hunters Point Shipyard Phase 2 project agreements shall establish the applicable limitations relating to time for establishing loans, advances, and indebtedness, the effectiveness of the redevelopment plans, the time to repay indebtedness, the time for applying tax increment, number of tax dollars, or any other matters set forth in Section 33333.2 and Section 33492.13. Any amendments to Candlestick Point-Hunters Point Shipyard Phase 2 project agreements to establish or change those time limits shall be approved by the oversight board, and shall be subject to department approval, as described in this part.
(2)This part shall not be construed to limit the receipt and use of property tax revenues generated from the Hunters Point Redevelopment Plan project area or Zone 1 of the Bayview Hunters Point Redevelopment Plan project area for the project described in the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement.
SEC. 3.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 unique circumstances relating to the replacement of affordable housing demolished by the former Redevelopment Agency of the City and County of San Francisco, as described in Section 1 of this act.
SEC. 4.(a)Section 2.5 of this bill incorporates amendments to Section 34177.7 of the Health and Safety Code proposed by this bill and Senate Bill 143. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2024, (2) each bill amends Section 34177.7 of the Health and Safety Code, and (3) this bill is enacted after Senate Bill 143, in which case Section 34177.7 of the Health and Safety Code, as amended by Senate Bill 143, shall remain operative only until the operative date of this bill, at which time Section 2.5 of this bill shall become operative, and Section 2 of this bill shall not become operative.
(b)Section 2.5 of this bill incorporates amendments to Section 34177.7 of the Health and Safety Code proposed by this bill and Assembly Bill 143. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2024, (2) each bill amends Section 34177.7 of the Health and Safety Code, and (3) this bill is enacted after Assembly Bill 143, in which case Section 34177.7 of the Health and Safety Code, as amended by Assembly Bill 143, shall remain operative only until the operative date of this bill, at which time Section 2.5 of this bill shall become operative, and Section 2 of this bill shall not become operative.
CORRECTIONS: TextPage 14.The Legislature finds and declares all of the following:
(a)Under the authority granted by the Legislature in Senate Bill No. 2113 (Chapter 661 of the Statutes of 2000) and Senate Bill No. 701 (Section 3 of Chapter 782 of the Statutes of 2002), the former Redevelopment Agency of the City and County of San Francisco (hereafter former redevelopment agency) sought, prior to its dissolution, to redress the demolition of a substantial number of residential dwelling units affordable to very low, low-, and moderate-income households during the agencys earlier urban renewal efforts.
(b)In 2003, the Department of Housing and Community Development determined that the former redevelopment agency had an unmet affordable housing replacement need resulting from its demolition of 14,207 units and replacement of only 7,498 units in pre-1976 project areas. The department certified a net loss of 6,709 units the Agency must replace.
(c)In authorizing the former redevelopment agencys replacement of units, the Legislature found that San Franciscos early redevelopment activities, including the removal of previously existing dwelling units serving a lower income population, compounded the effects of the private market that have led to the citys housing crisis (Section 1 of Chapter 661 of the Statutes of 2000).
(d)Prior to its dissolution, the former redevelopment agency exceeded the housing production goals of the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) and developed over 12,000 units of affordable housing. Nonetheless, it was only able to approve and develop 867 replacement units out of the total 6,709 units that the Department of Housing and Community Development had certified. When the Legislature dissolved redevelopment agencies by enactment of Chapter 5 of the First Extraordinary Session of the Statutes of 2011, the former redevelopment agency had an outstanding balance of 5,842 affordable units that needed to be replaced.
(e)After dissolution of the former redevelopment agency, the Oversight Board for the City and County of San Francisco confirmed, by Resolution No. 5-2012 (April 10, 2012), the unfulfilled replacement housing obligations of the former redevelopment agency and approved the successor agencys expenditures of funds to fulfill those obligations, but the Department of Finance disapproved those expenditures on the grounds they were inconsistent with the wind down of redevelopment agencies.
(f)In 2015, the Legislature authorized the successor agency to the former redevelopment agency to issue bonds and incur other indebtedness secured by the property tax revenues available in the Redevelopment Property Tax Trust Fund to finance certain enforceable obligations that the Department of Finance had approved, but this legislation did not include authorization for funding of the replacement housing obligation (Sections 9 and 27 of Chapter 325 of the Statutes of 2015).
(g)San Francisco faces a continuing shortage of affordable housing for low- and moderate-income households. The San Francisco Planning Department reports that San Francisco and the Bay Area are currently in the midst of a housing affordability crisis unprecedented in their history. Increases in housing prices and displacement pressures have been a long-term trend, driven by policy decisions first established decades ago and amplified by regional and national economic trends. Over the last 5 years, the crisis has intensified as the regions high-wage employment base has grown while regional housing production has not kept pace (San Francisco Housing Needs and Trends Report (July 2018)).
(h)The San Francisco residential real estate market is one of the most expensive in the United States. In September 2022, RealtyHop reported that the median-priced home in San Francisco was $1,388,500. A household earning the citys median household income of $126,117 would have to spend almost 67 percent of its yearly income to afford the median priced home. While the national home ownership rate is approximately 64 percent, only approximately 36 percent of San Franciscans own their own home. The majority of market-rate homes for sale in San Francisco are priced out of the reach of low- and moderate-income households. In 2022, the average rent was $3,340, which is affordable to households earning over $133,600. The Black population of San Francisco, with a median household income of less than $35,000 has little chance of being able to purchase or rent a home in the city. These factors contribute to a heavy demand for affordable housing in the city that the private market cannot meet.
(i)The 2022 Update to the Housing Element of San Francisco San Francisco Planning Housing Element 2022 update states that the City and County of San Francisco has an unmet housing need at every income level and mandates the creation of more than 82,000 units within the city. Approximately 46,000 of these units are targeted to households with extremely low to moderate incomes. To meet these affordability targets will require a substantial increase in public funding to cover the gap between the cost of development and operations and the reduced revenue due to lower rents and prices. The 2022 Update to the Housing Element of San Francisco San Francisco Planning Housing Element 2022 update estimates that meeting the regional housing needs allocation goals will require a range of additional investments for affordable housing from $1,300,000,000 in 2023 to $2,500,000,000 in 2031.
(j)Some of the 7,498 affordable units constructed to replace the units removed as a result of urban renewal are no longer available at affordable housing cost to low- and moderate-income households because the income restrictions have expired. In addition, some of these units are in need of substantial rehabilitation or replacement if they are to continue to provide decent and safe affordable housing and address the housing needs of those displaced by urban renewal. For example, Freedom West Homes is a 382 unit housing cooperative constructed in 1974 to replace a portion of the housing units removed from the Western Addition Redevelopment Project Area. It suffers from deterioration and its affordability restrictions have expired.
(k)The removal of units as a result of urban renewal contributed to the significant decline in the Black population in San Francisco from a high of 13 percent of the population prior to the urban renewal project to the current 5.3 percent. The continued lack of affordable housing in the city further exacerbates this decline.
(l)San Franciscos housing situation is unique, in that median rents and sales prices are among the highest in the United States even though it has committed a significant amount of local funds to assist affordable housing development. A special law is necessary and a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances relating to the replacement of affordable housing demolished by the former redevelopment agency.
(m)It is the intent of the Legislature to authorize, subject to compliance with redevelopment dissolution law (Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code), the successor agency to the former redevelopment agency to issue bonds or incur other indebtedness for the purpose of financing the construction of replacement affordable housing units demolished and not replaced by the former redevelopment agency and the replacement of the obsolete replacement units that were constructed previously. The procedures and standards in the redevelopment dissolution law, as amended, will govern the issuance of bonds or incurrence of other indebtedness by the successor agency and will supersede those provisions in Chapter 661 of the Statutes of 2000 requiring approval of the Department of Housing and Community Development. These bonds or other indebtedness may be secured by property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund from those project areas that generated tax increments for the former redevelopment agency upon its dissolution, as described in subdivision (e) of Section 27 of Chapter 325 of the Statutes of 2015, to the extent the revenues represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 of the Health and Safety Code.
(n)It is further the intent of the Legislature that the successor agency to the former redevelopment agency, to the greatest extent feasible, replace the amount of lost units, as previously certified by the Department of Housing and Community Development, according to the formulas in Section 33413 of the Health and Safety Code.
SEC. 2.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)The replacement of up to 5,842 units of affordable housing to satisfy the replacement housing obligation of the Redevelopment Agency of the City and County of San Francisco described in Chapter 661 of the Statutes of 2000 and subsequently certified by the Department of Housing and Community Development. To satisfy this replacement housing obligation and reduce the outstanding balance of units to be replaced, the successor agency may assist housing projects previously assisted by the Redevelopment Agency of the City and County of San Francisco where the projects affordability restrictions have expired, or are at risk of expiration, provided that any successor agency assistance shall be conditioned on the requirement that the assisted units remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(2)(A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.
(B)For purposes of financing the replacement housing obligation described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the Redevelopment Agency of the City and County of San Francisco the property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the replacement housing obligation shall not include any moneys that, notwithstanding the replacement housing obligation described in this section, are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (A) or (B) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (C) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to the City and County of San Francisco pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the City and County of San Francisco has approved the subordinations.
(d)(e)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(e)(f)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(f)(g)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(g)(h)(1)A bond or indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(2)Notwithstanding paragraph (1), a bond or other indebtedness issued, incurred, or entered into pursuant to subparagraph (C) of paragraph (1) of subdivision (a) shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the Redevelopment Property Tax Trust Fund, established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183 only to the extent the moneys represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this paragraph are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(h)(i)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
SEC. 3.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 unique circumstances relating to the replacement of affordable housing demolished by the former Redevelopment Agency of the City and County of San Francisco, as described in Section 1 of this act.
The Legislature finds and declares all of the following:
(a)Under the authority granted by the Legislature in Senate Bill No. 2113 (Chapter 661 of the Statutes of 2000) and Senate Bill No. 701 (Section 3 of Chapter 782 of the Statutes of 2002), the former Redevelopment Agency of the City and County of San Francisco (hereafter former redevelopment agency) sought, prior to its dissolution, to redress the demolition of a substantial number of residential dwelling units affordable to very low, low-, and moderate-income households during the agencys earlier urban renewal efforts.
(b)In 2003, the Department of Housing and Community Development determined that the former redevelopment agency had an unmet affordable housing replacement need resulting from its demolition of 14,207 units and replacement of only 7,498 units in pre-1976 project areas. The department certified a net loss of 6,709 units the Agency must replace.
(c)In authorizing the former redevelopment agencys replacement of units, the Legislature found that San Franciscos early redevelopment activities, including the removal of previously existing dwelling units serving a lower income population, compounded the effects of the private market that have led to the citys housing crisis (Section 1 of Chapter 661 of the Statutes of 2000).
(d)Prior to its dissolution, the former redevelopment agency exceeded the housing production goals of the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) and developed over 12,000 units of affordable housing. Nonetheless, it was only able to approve and develop 867 replacement units out of the total 6,709 units that the Department of Housing and Community Development had certified. When the Legislature dissolved redevelopment agencies by enactment of Chapter 5 of the First Extraordinary Session of the Statutes of 2011, the former redevelopment agency had an outstanding balance of 5,842 affordable units that needed to be replaced.
(e)After dissolution of the former redevelopment agency, the Oversight Board for the City and County of San Francisco confirmed, by Resolution No. 5-2012 (April 10, 2012), the unfulfilled replacement housing obligations of the former redevelopment agency and approved the successor agencys expenditures of funds to fulfill those obligations, but the Department of Finance disapproved those expenditures on the grounds they were inconsistent with the wind down of redevelopment agencies.
(f)In 2015, the Legislature authorized the successor agency to the former redevelopment agency to issue bonds and incur other indebtedness secured by the property tax revenues available in the Redevelopment Property Tax Trust Fund to finance certain enforceable obligations that the Department of Finance had approved, but this legislation did not include authorization for funding of the replacement housing obligation (Sections 9 and 27 of Chapter 325 of the Statutes of 2015).
(g)San Francisco faces a continuing shortage of affordable housing for low- and moderate-income households. The San Francisco Planning Department reports that San Francisco and the Bay Area are currently in the midst of a housing affordability crisis unprecedented in their history. Increases in housing prices and displacement pressures have been a long-term trend, driven by policy decisions first established decades ago and amplified by regional and national economic trends. Over the last 5 years, the crisis has intensified as the regions high-wage employment base has grown while regional housing production has not kept pace (San Francisco Housing Needs and Trends Report (July 2018)).
(h)The San Francisco residential real estate market is one of the most expensive in the United States. In September 2022, RealtyHop reported that the median-priced home in San Francisco was $1,388,500. A household earning the citys median household income of $126,117 would have to spend almost 67% 67 percent of its yearly income to afford the median priced home. While the national home ownership rate is approximately 64 percent, only approximately 36 percent of San Franciscans own their own home. The majority of market-rate homes for sale in San Francisco are priced out of the reach of low- and moderate-income households. In 2022, the average rent was $3,340, which is affordable to households earning over $133,600. The Black population of San Francisco, with a median household income of less than $35,000 has little chance of being able to purchase or rent a home in the city. These factors contribute to a heavy demand for affordable housing in the city that the private market cannot meet.
(i)The 2022 Update to the Housing Element of San Francisco states that the City and County of San Francisco has an unmet housing need at every income level and mandates the creation of more than 82,000 units within the city. Approximately 46,000 of these units are targeted to households with extremely low to moderate incomes. To meet these affordability targets will require a substantial increase in public funding to cover the gap between the cost of development and operations and the reduced revenue due to lower rents and prices. The 2022 Update to the Housing Element of San Francisco estimates that meeting the regional housing needs allocation goals will require a range of additional investments for affordable housing from $1,300,000,000 in 2023 to $2,500,000,000 in 2031.
(i)(j)Some of the 7,498 affordable units constructed to replace the units removed as a result of urban renewal are no longer available at affordable housing cost to low- and moderate- income moderate-income households because the income restrictions have expired. In addition, some of these units are in need of substantial rehabilitation or replacement if they are to continue to provide decent and safe affordable housing and address the housing needs of those displaced by urban renewal. For example, Freedom West Homes is a 382 unit housing cooperative constructed in 1974 to replace a portion of the housing units removed from the Western Addition Redevelopment Project Area. It suffers from deterioration and its affordability restrictions have expired.
(j)(k)The removal of units as a result of urban renewal contributed to the significant decline in the Black population in San Francisco from a high of 13% 13 percent of the population prior to the urban renewal project to the current 5.3%. 5.3 percent. The continued lack of affordable housing in the city further exacerbates this decline.
(k)(l)San Franciscos housing situation is unique, in that median rents and sales prices are among the highest in the United States even though it has committed a significant amount of local funds to assist affordable housing development. A special law is necessary and a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances relating to the replacement of affordable housing demolished by the former redevelopment agency.
(l)(m)It is the intent of the Legislature to authorize, subject to compliance with redevelopment dissolution law (Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code), the successor agency to the former redevelopment agency to issue bonds or incur other indebtedness for the purpose of financing the construction of replacement affordable housing units demolished and not replaced by the former redevelopment agency and the replacement of the obsolete replacement units that were constructed previously. The procedures and standards in the redevelopment dissolution law, as amended, will govern the issuance of bonds or incurrence of other indebtedness by the successor agency and will supersede those provisions in Chapter 661 of the Statutes of 2000 requiring approval of the Department of Housing and Community Development. These bonds or other indebtedness may be secured by property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund from those project areas that generated tax increments for the former redevelopment agency upon its dissolution, if the revenues are not otherwise obligated. as described in subdivision (e) of Section 27 of Chapter 325 of the Statutes of 2015, to the extent the revenues represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183 of the Health and Safety Code.
(m)(n)It is further the intent of the Legislature that the successor agency to the former redevelopment agency, to the greatest extent feasible, replace the amount of lost units, as previously certified by the Department of Housing and Community Development, according to the formulas in Section 33413 of the Health and Safety Code.
SEC. 2.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)The replacement of the remaining up to 5,842 units of demolished affordable housing that were initially included in the total to satisfy the replacement housing obligation of the Redevelopment Agency of the City and County of San Francisco described in Chapter 661 of the Statutes of 2000 and subsequently certified by the Department of Housing and Community Development. To satisfy this replacement housing obligation and reduce the outstanding balance of units to be replaced, the successor agency may assist housing projects previously assisted by the Redevelopment Agency of the City and County of San Francisco but with expired, or threatened expiration of, where the projects affordability restrictions, restrictions have expired, or are at risk of expiration, provided that any successor agency assistance shall be conditioned on the requirement that the assisted units remain affordable to, and occupied by, persons and families of low- and moderate-income and extremely low low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(2)(A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1),the (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.
(B)For purposes of financing the replacement housing obligation described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues that remain available for distribution to the City and County of San Francisco, as a taxing entity, from the Redevelopment Property Tax Trust Fund, after all preexisting legal commitments and statutory obligations funded from that revenue, excluding the replacement housing obligation described in this section, are made pursuant to Part 1.85 (commencing with Section 34170) of Division 24. issued, incurred, or entered into by the successor agency to the Redevelopment Agency of the City and County of San Francisco the property tax revenues available in the Redevelopment Property Tax Trust Fund to the extent the property tax revenues represent the amount of revenues on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the replacement housing obligation shall not include any moneys that, notwithstanding the replacement housing obligation described in this section, are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to this section, subparagraph (A) or (B) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(e)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(f)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(g)Any bonds or other indebtedness (1)A bond or indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) of Section 34172, subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(2)Notwithstanding paragraph (1), a bond or other indebtedness issued, incurred, or entered into pursuant to subparagraph (C) of paragraph (1) of subdivision (a) shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the Redevelopment Property Tax Trust Fund, established pursuant to subdivision (b) of Section 34170.5, as provided in paragraph (2) of subdivision (a) of Section 34183 only to the extent the moneys represent the amount of moneys on deposit in the Redevelopment Property Tax Trust Fund that otherwise would have been distributed to the City and County of San Francisco pursuant to paragraph (4) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this paragraph are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(h)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
SEC. 3.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 unique circumstances relating to the replacement of affordable housing demolished by the former Redevelopment Agency of the City and County of San Francisco, as described in Section 1 of this act.
The Legislature finds and declares all of the following:
(a)Under the authority granted by the Legislature in Senate Bill No. 2113 (Chapter 661 of the Statutes of 2000) and Senate Bill No. 701 (Section 3 of Chapter 782 of the Statutes of 2002), the former Redevelopment Agency of the City and County of San Francisco (hereafter former redevelopment agency) sought, prior to its dissolution, to redress the demolition of a substantial number of residential dwelling units affordable to very low, low-, and moderate-income households during the agencys earlier urban renewal efforts.
(b)In 2003, the Department of Housing and Community Development determined that the former redevelopment agency had an unmet affordable housing replacement need resulting from its demolition of 14,207 units and replacement of only 7,498 units in pre-1976 project areas. The department certified a net loss of 6,709 units the Agency must replace.
(c)In authorizing the former redevelopment agencys replacement of units, the Legislature found that San Franciscos early redevelopment activities, including the removal of previously existing dwelling units serving a lower income population, compounded the effects of the private market that have led to the citys housing crisis (Section 1 of Chapter 661 of the Statutes of 2000).
(d)Prior to its dissolution, the former redevelopment agency exceeded the housing production goals of the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) and developed over 12,000 units of affordable housing. Nonetheless, it was only able to approve and develop 867 replacement units out of the total 6,709 units that the Department of Housing and Community Development had certified. When the Legislature dissolved redevelopment agencies by enactment of Chapter 5 of the First Extraordinary Session of the Statutes of 2011, the former redevelopment agency had an outstanding balance of 5,842 affordable units that needed to be replaced.
(e)After dissolution of the former redevelopment agency, the Oversight Board for the City and County of San Francisco confirmed, by Resolution No. 5-2012 (April 10, 2012), the unfulfilled replacement housing obligations of the former redevelopment agency and approved the successor agencys expenditures of funds to fulfill those obligations, but the Department of Finance disapproved those expenditures on the grounds they were inconsistent with the wind down of redevelopment agencies.
(f)In 2015, the Legislature authorized the successor agency to the former redevelopment agency to issue bonds and incur other indebtedness secured by the property tax revenues available in the Redevelopment Property Tax Trust Fund to finance certain enforceable obligations that the Department of Finance had approved, but this legislation did not include authorization for funding of the replacement housing obligation (Sections 9 and 27 of Chapter 325 of the Statutes of 2015).
(g)San Francisco faces a continuing shortage of affordable housing for low- and moderate-income households. The San Francisco Planning Department reports that San Francisco and the Bay Area are currently in the midst of a housing affordability crisis unprecedented in their history. Increases in housing prices and displacement pressures have been a long-term trend, driven by policy decisions first established decades ago and amplified by regional and national economic trends. Over the last 5 years, the crisis has intensified as the regions high-wage employment base has grown while regional housing production has not kept pace (San Francisco Housing Needs and Trends Report (July 2018)).
(h)The San Francisco residential real estate market is one of the most expensive in the United States. In September 2022, RealtyHop reported that the median-priced home in San Francisco was $1,388,500. A household earning the citys median household income of $126,117 would have to spend almost 67% of its yearly income to afford the median priced home. While the national home ownership rate is approximately 64 percent, only approximately 36 percent of San Franciscans own their own home. The majority of market-rate homes for sale in San Francisco are priced out of the reach of low- and moderate-income households. In 2022, the average rent was $3,340, which is affordable to households earning over $133,600. The Black population of San Francisco, with a median household income of less than $35,000 has little chance of being able to purchase or rent a home in the city. These factors contribute to a heavy demand for affordable housing in the city that the private market cannot meet.
(i)Some of the 7,498 affordable units constructed to replace the units removed as a result of urban renewal are no longer available at affordable housing cost to low- and moderate- income households because the income restrictions have expired. In addition, some of these units are in need of substantial rehabilitation or replacement if they are to continue to provide decent and safe affordable housing and address the housing needs of those displaced by urban renewal. For example, Freedom West Homes is a 382 unit housing cooperative constructed in 1974 to replace a portion of the housing units removed from the Western Addition Redevelopment Project Area. It suffers from deterioration and its affordability restrictions have expired.
(j)The removal of units as a result of urban renewal contributed to the significant decline in the Black population in San Francisco from a high of 13% of the population prior to the urban renewal project to the current 5.3%. The continued lack of affordable housing in the city further exacerbates this decline.
(k)San Franciscos housing situation is unique, in that median rents and sales prices are among the highest in the United States even though it has committed a significant amount of local funds to assist affordable housing development. A special law is necessary and a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances relating to the replacement of affordable housing demolished by the former redevelopment agency.
(l)It is the intent of the Legislature to authorize, subject to compliance with redevelopment dissolution law (Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code), the successor agency to the former redevelopment agency to issue bonds or incur other indebtedness for the purpose of financing the construction of replacement affordable housing units demolished and not replaced by the former redevelopment agency and the replacement of the obsolete replacement units that were constructed previously. The procedures and standards in the redevelopment dissolution law, as amended, will govern the issuance of bonds or incurrence of other indebtedness by the successor agency and will supersede those provisions in Chapter 661 of the Statutes of 2000 requiring approval of the Department of Housing and Community Development. These bonds or other indebtedness may be secured by property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund from those project areas that generated tax increments for the former redevelopment agency upon its dissolution, if the revenues are not otherwise obligated.
(m)It is further the intent of the Legislature that the successor agency to the former redevelopment agency, to the greatest extent feasible, replace the amount of lost units, as previously certified by the Department of Housing and Community Development, according to the formulas in Section 33413 of the Health and Safety Code.
SEC. 2.Section 34177.7 of the Health and Safety Code is amended to read:34177.7.(a)(1)In addition to the powers granted to each successor agency, and notwithstanding anything in the act adding this part, including, but not limited to, Sections 34162 and 34189, the successor agency to the Redevelopment Agency of the City and County of San Francisco shall have the authority, rights, and powers of the Redevelopment Agency to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance:
(A)The affordable housing required by the Mission Bay North Owner Participation Agreement, the Mission Bay South Owner Participation Agreement, the Disposition and Development Agreement for Hunters Point Shipyard Phase 1, the Candlestick Point-Hunters Point Shipyard Phase 2 Disposition and Development Agreement, and the Transbay Implementation Agreement.
(B)The infrastructure required by the Transbay Implementation Agreement.
(C)The replacement of the remaining 5,842 units of demolished affordable housing that were initially included in the total replacement housing obligation described in Chapter 661 of the Statutes of 2000 and subsequently certified by the Department of Housing and Community Development. To satisfy this replacement housing obligation and reduce the outstanding balance of units to be replaced, the successor agency may assist housing projects previously assisted by the Redevelopment Agency of the City and County of San Francisco but with expired, or threatened expiration of, affordability restrictions, provided that any successor agency assistance shall be conditioned on the requirement that the assisted units remain affordable to, and occupied by, persons and families of low- and moderate-income and extremely low and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
(2)The(2)(A)For purposes of financing the obligations described in subparagraphs (A) and (B) of paragraph (1),the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues available in the successor agencys Redevelopment Property Tax Trust Fund that are not otherwise obligated.
(B)For purposes of financing the replacement housing obligation described in subparagraph (C) of paragraph (1), the successor agency to the Redevelopment Agency of the City and County of San Francisco may pledge to the bonds or other indebtedness the property tax revenues that remain available for distribution to the City and County of San Francisco, as a taxing entity, from the Redevelopment Property Tax Trust Fund, after all preexisting legal commitments and statutory obligations funded from that revenue, excluding the replacement housing obligation described in this section, are made pursuant to Part 1.85 (commencing with Section 34170) of Division 24. Property tax revenues allocated to the successor agency pursuant to this subparagraph for the replacement housing obligation shall not include any moneys that, notwithstanding the replacement housing obligation described in this section, are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183.
(b)Bonds issued pursuant to this section may be sold pursuant to either a negotiated or a competitive sale. The bonds issued or other indebtedness obligations incurred pursuant to this section may be issued or incurred on a parity basis with outstanding bonds or other indebtedness obligations of the successor agency to the Redevelopment Agency of the City and County of San Francisco and may pledge the revenues pledged to those outstanding bonds or other indebtedness obligations to the issuance of bonds or other obligations pursuant to this section. The pledge, when made in connection with the issuance of bonds or other indebtedness obligations under this section, shall have the same lien priority as the pledge of outstanding bonds or other indebtedness obligations, and shall be valid, binding, and enforceable in accordance with its terms.
(c)(1)Prior to issuing any bonds or incurring other indebtedness pursuant to this section, the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to an affected taxing entity pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the affected taxing entity has approved the subordinations pursuant to this subdivision.
(2)At the time the agency requests an affected taxing entity to subordinate the amount to be paid to it, the agency shall provide the affected taxing entity with substantial evidence that sufficient funds will be available to pay both the debt service on the bonds or other indebtedness and the payments required by paragraph (1) of subdivision (a) of Section 34183, when due.
(3)Within 45 days after receipt of the agencys request, the affected taxing entity shall approve or disapprove the request for subordination. An affected taxing entity may disapprove a request for subordination only if it finds, based upon substantial evidence, that the successor agency will not be able to pay the debt service payments and the amount required to be paid to the affected taxing entity. If the affected taxing entity does not act within 45 days after receipt of the agencys request, the request to subordinate shall be deemed approved and shall be final and conclusive.
(d)An action may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine the validity of bonds or other obligations authorized by this section, the pledge of revenues to those bonds or other obligations authorized by this section, the legality and validity of all proceedings theretofore taken and, as provided in the resolution of the legislative body of the successor agency to the Redevelopment Agency of the City and County of San Francisco authorizing the bonds or other indebtedness obligations authorized by this section, proposed to be taken for the authorization, execution, issuance, sale, and delivery of the bonds or other obligations authorized by this section, and for the payment of debt service on the bonds or the payment of amounts under other obligations authorized by this section. Subdivision (c) of Section 33501 shall not apply to any such action. The department shall be notified of the filing of any action as an affected party.
(e)Notwithstanding any other law, including, but not limited to, Section 33501, an action to challenge the issuance of bonds or the incurrence of indebtedness by the successor agency to the Redevelopment Agency of the City and County of San Francisco shall be brought within 30 days after the date on which the oversight board approves the resolution of the agency approving the issuance of bonds or the incurrence of indebtedness under this section.
(f)The actions authorized in this section shall be subject to the approval of the oversight board, as provided in Section 34180. Additionally, the oversight board may direct the successor agency to the Redevelopment Agency of the City and County of San Francisco to commence any of the transactions described in subdivision (a) so long as the agency is able to recover its related costs in connection with the transaction. After the agency, with approval of the oversight board, issues any bonds or incurs any indebtedness pursuant to subdivision (a), the oversight board shall not unilaterally approve any amendments to or early termination of the bonds or indebtedness. If, under the authority granted to it by subdivision (h) of Section 34179, the department either reviews and approves or fails to request review within five business days of an oversight board approval of an action authorized by this section, the scheduled payments on the bonds or other indebtedness shall be listed in the Recognized Obligation Payment Schedule and shall not be subject to further review and approval by the department or the Controller. The department may extend its review time to 60 days for actions authorized in this section and may seek the assistance of the Treasurer in evaluating proposed actions under this section.
(g)Any bonds or other indebtedness authorized by this section shall be considered indebtedness incurred by the dissolved redevelopment agency, with the same legal effect as if the bonds or other indebtedness had been issued, incurred, or entered into prior to June 28, 2011, in full conformity with the applicable provisions of the Community Redevelopment Law that existed prior to that date, shall be included in the successor agency to the Redevelopment Agency of the City and County of San Franciscos Recognized Obligation Payment Schedule, and shall be secured by a pledge of, and lien on, and shall be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) of Section 34172, as provided in paragraph (2) of subdivision (a) of Section 34183. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this section are taxes allocated to the successor agency pursuant to subdivision (b) of Section 33670 and Section 16 of Article XVI of the California Constitution.
(h)The successor agency to the Redevelopment Agency of the City and County of San Francisco shall make diligent efforts to ensure that the lowest long-term cost financing is obtained. The financing shall not provide for any bullets or spikes and shall not use variable rates. The agency shall make use of an independent financial advisor in developing financing proposals and shall make the work products of the financial advisor available to the department at its request.
SEC. 3.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 unique circumstances relating to the replacement of affordable housing demolished by the former Redevelopment Agency of the City and County of San Francisco, as described in Section 1 of this act.
|
Date
|
Status
|
|---|---|
| Oct 11, 2023 | Chaptered by Secretary of State. Chapter 782, Statutes of 2023. |
| Oct 11, 2023 | Approved by the Governor. |
| Sep 20, 2023 | Enrolled and presented to the Governor at 4:30 p.m. |
| Sep 12, 2023 | Assembly amendments concurred in. (Ayes 34. Noes 0. Page 2678.) Ordered to engrossing and enrolling. |
| Sep 11, 2023 | In Senate. Concurrence in Assembly amendments pending. |
| Sep 11, 2023 | (Corrected September 12). |
| Sep 11, 2023 | Read third time. Passed. (Ayes 61. Noes 13. Page 3138.) Ordered to the Senate. |
| Sep 7, 2023 | Read third time and amended. |
| Sep 7, 2023 | Ordered to third reading. |
| Sep 7, 2023 | Assembly Rule 69 suspended. |
| Jul 3, 2023 | Read second time. Ordered to third reading. |
| Jun 30, 2023 | Read second time and amended. Ordered to second reading. |
| Jun 29, 2023 | From committee: Do pass as amended. (Ayes 6. Noes 0.) (June 28). |
| Jun 21, 2023 | From committee: Do pass and re-refer to Com. on H. & C.D. (Ayes 7. Noes 1.) (June 21). Re-referred to Com. on H. & C.D. |
| May 18, 2023 | Referred to Coms. on L. GOV. and H. & C.D. |
| May 11, 2023 | In Assembly. Read first time. Held at Desk. |
| May 11, 2023 | Read third time. Passed. (Ayes 35. Noes 2. Page 1052.) Ordered to the Assembly. |
| May 4, 2023 | Read second time. Ordered to third reading. |
| May 3, 2023 | Withdrawn from committee. |
| May 3, 2023 | Ordered to second reading. |
| May 2, 2023 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 10. Noes 0. Page 981.) (May 2). Re-referred to Com. on APPR. |
| Apr 11, 2023 | Set for hearing May 2. |
| Mar 29, 2023 | From committee: Do pass and re-refer to Com. on HOUSING. (Ayes 7. Noes 0. Page 573.) (March 29). Re-referred to Com. on HOUSING. |
| Mar 21, 2023 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on GOV. & F. |
| Mar 14, 2023 | Set for hearing March 29. |
| Feb 22, 2023 | Referred to Coms. on GOV. & F., HOUSING, and APPR. |
| Feb 16, 2023 | From printer. May be acted upon on or after March 18. |
| Feb 15, 2023 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 12, 2023 | Unfinished Business SB593 Wiener et al. Concurrence | Senate Floor |
Passed |
|
| Sep 11, 2023 | SB 593 Wiener Senate Third Reading By Ting | Assembly Floor |
Passed |
|
| Jun 28, 2023 | Do pass as amended. | Assembly Standing Committee on Housing and Community Development |
Passed |
|
| Jun 21, 2023 | Do pass and be re-referred to the Committee on [Housing and Community Development] | Assembly Standing Committee on Local Government |
Passed |
|
| May 11, 2023 | Senate 3rd Reading SB593 Wiener et al. | Senate Floor |
Passed |
|
| May 2, 2023 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Housing |
Passed |
|
| Mar 29, 2023 | Do pass, but first be re-referred to the Committee on [Housing] | Senate Standing Committee on Governance and Finance |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Bethel African Methodist Episcopal Church | ** Support | |
| Bethel AME Church | * Support | Jun 21, 2023 |
| Bethel AME Church | * Support | Jun 28, 2023 |
| Bethel AME Church | * Support | Mar 29, 2023 |
| Bethel AME Church | * Support | May 2, 2023 |
| Board of Supervisors for the City and County of San Francisco | ** Support | |
| California African American Chamber Of Commerce | ** Support | |
| California Association Of Realtors | ** Against | |
| California Housing Partnership Corporation | ** Support | |
| City and County of San Francisco | ** Support | |
| City of San Francisco | * Support | Jun 21, 2023 |
| Council of Community Housing Organizations | ** Support | |
| Council of Community Housing Organizations, San Francisco | ** Support | |
| Freedom West Homes Corporation | ** Support | |
| Freedom West Housing Cooperative | * Support | Jun 21, 2023 |
| Grow the Richmond | ** Support | |
| Housing Action Coalition | ** Support | |
| Howard Jarvis Taxpayers Association | ** Against | |
| Hunters Point Shipyard Citizens Advisory Committee | * Support | May 2, 2023 |
| Hunters Point Shipyard Citizens Advisory Committee | * Support | Mar 29, 2023 |
| Livable California | ** Support | |
| Local Initiatives Support Corporation Bay Area | ** Support | |
| London N. Breed, Mayor, City and County of San Francisco | ** Support | |
| Low Income Investment Fund | ** Support | |
| Mercy Housing California | ** Support | |
| Minnie and Lovey Board Community Recreation Council | * Support | May 2, 2023 |
| mission housing development corporation | ** Support | |
| NAACP San Francisco Branch | ** Support | |
| Non-Profit Housing Association of Northern California | ** Support | |
| Nonprofit Housing Association Northern California | * Support | Jun 21, 2023 |
| Northern Neighbors Sf | ** Support | |
| Office of Community Investment and Infrastructure | * Support | Mar 29, 2023 |
| Office of Community Investment and Infrastructure | * Support | Mar 29, 2023 |
| Office of Community Investment and Infrastructure | * Support | Jun 21, 2023 |
| Pacific Region of Sigma Pi Phi Fraternity | ** Support | |
| Pacific Region Sire Archon | ** Support | |
| Progress Noe Valley | ** Support | |
| San Francisco Foundation | ** Support | |
| Sf Yimby | ** Support | |
| Sigma Pi Phi Fraternity | ** Support | |
| Southside Forward | ** Support | |
| The Richmond Housing Action Coalition | * Support | Jun 21, 2023 |
| The San Francisco Foundation | ** Support | |
| The San Francisco Housing Accelerator Fund | ** Support | |
| Third Baptist Church of San Francisco | ** Support | |
| Young Community Developers, INC. | ** Support |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 593 |
UNFINISHED BUSINESS
Bill No: SB 593
Author: Wiener (D), et al.
Amended: 9/7/23
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 3/29/23
AYES: Caballero, Seyarto, Blakespear, Durazo, Glazer, Skinner, Wiener
NO VOTE RECORDED: Dahle
SENATE HOUSING COMMITTEE: 10-0, 5/2/23
AYES: Wiener, Ochoa Bogh, Caballero, Cortese, McGuire, Padilla, Seyarto, Skinner, Umberg, Wahab
NO VOTE RECORDED: Blakespear
SENATE FLOOR: 35-2, 5/11/23
AYES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
NOES: Jones, Nguyen
NO VOTE RECORDED: Alvarado-Gil, Dahle, Grove
ASSEMBLY FLOOR: 61-13, 9/11/23 - See last page for vote
SUBJECT: Redevelopment: successor agency debt: City and County of San Francisco
SOURCE: City and County of San Francisco
Freedom West Homes Corporation
DIGEST:
This bill allows San Francisco’s redevelopment successor agency to finance certain affordable housing projects using the successor agency’s property tax revenue.
Assembly Amendments
(1) clarify the authority for San Francisco’s redevelopment successor agency to issue bonds, use proceeds, and enter into agreements; (2) address chaptering conflicts with SB 143 (Committee on Budget and Fiscal Review), and (3) make other technical changes.
ANALYSIS:
Existing law:
- Establishes the Community Redevelopment Law (CRL), which governs the authority to establish a redevelopment agency (RDA) and the authority for a RDA to function as an agency and to adopt and implement a redevelopment plan.
- Provides that RDA plans adopted on or before December 31, 1993, had to terminate no more than 40 years from their adoption or January 1, 2009, whichever is later. After this point, the RDA had no authority to act pursuant to the redevelopment plan except to pay previously incurred indebtedness, comply with affordable housing production requirements, and enforce existing covenants, contracts, or other obligations.
- Requires each RDA to make deposits into a Low and Moderate Income Housing Fund (Housing Fund) the agency maintained to increase, improve, and preserve the community’s supply of low- and moderate-income housing, generally not less than 20% of all taxes allocated to the agency.
- Requires RDAs to replace low- or moderate-income housing units destroyed or removed as part of their previous projects.
- Dissolves redevelopment agencies as of February 1, 2012.
- Establishes successor agencies to manage the process of unwinding former redevelopment agencies’ (RDAs) affairs, and oversight boards to approve successor agency decisions.
- Allows the Department of Finance (DOF) to review and request reconsideration of an oversight board’s decision.
- Requires the successor agency to submit specified information on its outstanding assets and obligations, also known as a Recognized Obligation Payment Schedule (ROPS).
- Allows DOF to issue a finding of completion to a successor agency acknowledging their progress towards paying off their obligations provided that its Final ROPS contains specified information.
- Allows a successor agency to make payments for the enforceable obligations RDAs entered into listed on the ROPS. These payments are supported by property tax revenues that would have gone to RDAs, but are instead deposited in a Redevelopment Property Tax Trust Fund (RPTTF). Enforceable obligations include bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, and other legally binding and enforceable agreements or contracts
This bill:
- Adds the development, construction, repair, renovation, or reconstruction of up to 5,842 affordable housing units by or on behalf of the City and County of San Francisco to the list of projects for which the successor agency can issue bonds or incur other indebtedness outside of the normal RDA dissolution process. These units must be remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
- Allows the San Francisco successor agency, for purposes of 1) to:
- Create enforceable obligations related to the issuance of bonds or other debt, and enter into any contracts or arrangements related to 1), so long as the expenses of any of those arrangements are paid solely from RPTTF that otherwise would have been distributed to the City and County of San Francisco after paying for other dissolution obligations.
- Enter into arrangements with the City and County of San Francisco to provide bond proceeds to the City and County of San Francisco for the purposes of 1) and to facilitate compliance with any obligations of the successor agency resulting from bond issuance or debt incurrence.
- Repay any costs related to the issuance and administration of bonds or other debt that are not paid with from their proceeds solely with the property tax revenues available in the RPTTF that otherwise would have been distributed to the City and County of San Francisco after paying for other dissolution obligations.
- Pledge to the bonds or other indebtedness the successor agency issues for purposes of 1) the property tax revenues available in the RPTTF that otherwise would have been distributed to the City and County of San Francisco after paying for other dissolution obligations.
- Create enforceable obligations related to the issuance of bonds or other debt, and enter into any contracts or arrangements related to 1), so long as the expenses of any of those arrangements are paid solely from RPTTF that otherwise would have been distributed to the City and County of San Francisco after paying for other dissolution obligations.
- Prevents the San Francisco successor agency from using moneys that are payable to the other taxing entities in the city and county for these projects.
Background
Redevelopment agencies. Citing a significant State General Fund deficit, Governor Brown’s 2011-12 budget proposed eliminating RDAs and returning billions of dollars of property tax revenues to schools, cities, and counties to fund core services. Among the statutory changes that the Legislature adopted to implement the 2011-12 budget, AB X1 26 (Blumenfield, Chapter 5, Statutes of 2011, First Extraordinary Session) dissolved all RDAs. The California Supreme Court's 2011 ruling in California Redevelopment Association v. Matosantos upheld AB X1 26, but invalidated AB X1 27 (Blumenfield, Chapter 6, Statutes of 2011, First Extraordinary Session 2011), which would have allowed most RDAs to avoid dissolution. In response, the California Redevelopment Association (CRA) challenged the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to AB X1 26, but granted it with respect to AB X1 27. As a result, all RDAs dissolved as of February 1, 2012. At the time of dissolution, over 400 RDAs statewide were diverting 12% of property taxes, over $5.6 billion yearly.
RDAs’ dissolution deprived many local agencies of the primary tool they used to eliminate physical and economic blight, finance new construction, improve public infrastructure, rehabilitate existing buildings, and increase the supply of affordable housing. At the time the state dissolved RDAs, the Controller estimated that statewide, the requirement to set aside 20% of funding generated in a project area for low- and moderate-income housing obligated RDAs to spend $1 billion on affordable housing.
City and County of San Francisco. In 2003, the Department of Housing and Community Development (HCD) determined that San Francisco’s RDA demolished 14,207 affordable housing units and replaced only 7,498 units, certifying a net loss of 6,709 units. Under AB 1018 (Sieroty, Chapter 970, Statutes of 1975), the City had to replace the remaining units. However, RDA law limited the effectiveness to 40 years after the redevelopment plan’s adoption or 2009, whichever is later. As such, the City could not incur new debt to finance this replacement housing obligation. SB 2113 (Burton, Chapter 661, Statutes of 2000) granted San Francisco until January 1, 2014, or until the agency replaces all the housing units demolished, to incur debt to replace the demolished affordable housing units. It also gave the RDA until 2044 to repay this indebtedness. Prior to RDA dissolution in 2011, San Francisco had only developed 867 of the 6,709 units, and this outstanding balance of 5,842 units remains.
After dissolution, the successor agency placed these replacement-housing units on its ROPS so that they could be considered enforceable obligations to be repaid with RPTTF. While its oversight board approved this action, DOF rejected the successor agencies’ decision to consider these replacement-housing units to be enforceable obligations. The department did not find that these replacement-housing projects met the definition of enforceable obligations. In other words, they were not bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, or other legally binding and enforceable agreements or contracts.
In 2014, the Legislature passed SB 1404 (Leno) to allow San Francisco’s successor agency to finance specified affordable housing projects, including these replacement-housing projects, with RPTTF. However, Governor Brown vetoed this legislation. In 2015, the Legislature passed, and the Governor signed, SB 107 (Committee on Budget and Fiscal Review, Chapter 325, Statutes of 2015), which authorized the successor agency to issue bonds and incur debt for other projects using RPTTF, including the housing projects in Mission Bay, Hunters Point, and pursuant to the Transbay Implementation Agreement, but did not include projects to satisfy the replacement housing obligation. Using RPTTF to fund these projects extended the expected lifespan of the successor agency until 2058. Like its obligations under dissolution law, the successor agency must receive approval for these projects from its oversight board and DOF. For these obligations, the successor agency must make diligent efforts to ensure it obtains the lowest long-term financing, make use of an independent financial advisor, and follow other financial safeguards.
Comments
- Purpose of the bill. According to the author, “Decades after the injustice of redevelopment, San Francisco is still in desperate need of housing. The urban renewal process from the 1950s contributed to the crisis of affordable housing costs that continues to make the City unlivable for so many. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will provide a narrow and tailored funding source through the Redevelopment Property Tax Trust Fund, a limited continuance of specific tax increment financing powers that will not impact the General Fund. SB 593 sets San Francisco on a path to right this wrong and meet its affordable housing goals.”
- Special treatment. SB 593 allows San Francisco to finance certain affordable housing projects using RPTTF revenue despite DOF previously determining that these projects do not meet the definition of enforceable obligations that applies to all successor agencies. While SB 593 includes language to insulate other taxing entities from financial impacts associated with using RPTTF to finance these projects, SB 593 allows San Francisco to finance these projects in a way that no other city or county has enjoyed. While San Francisco undoubtedly has unmet affordable housing needs, other cities and counties do too. Instead of using RPTTF, these other cities would have to use other tools, such as asking 2/3 of their voters to approve of the issuance of general obligation bonds, issue other types of bonds, or create a tax-increment financing district to replace the revenue lost from RDA dissolution. The Legislature may wish to consider whether San Francisco should enjoy a benefit not offered to other local governments.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 9/11/23)
City and County of San Francisco (co-source)
Freedom West Homes Corporation (co-source)
Bethel African Methodist Episcopal Church
California African American Chamber of Commerce
California Housing Partnership Corporation
Council of Community Housing Organizations, San Francisco
Grow the Richmond
Housing Action Coalition
Livable California
Local Initiatives Support Corporation Bay Area
Low Income Investment Fund
Mercy Housing California
Mission Housing Development Corporation
NAACP San Francisco Branch
Non-profit Housing Association of Northern California
Northern Neighbors SF
Progress Noe Valley
San Francisco Foundation
SF YIMBY
Sigma Pi Phi Fraternity
Southside Forward
The San Francisco Housing Accelerator Fund
Third Baptist Church of San Francisco
Young Community Developers, Inc.
OPPOSITION: (Verified 9/11/23)
California Association of Realtors
Howard Jarvis Taxpayers Association
ASSEMBLY FLOOR: 61-13, 9/11/23
AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Lackey, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta
NO VOTE RECORDED: Alanis, Chen, Hoover, Petrie-Norris, Rodriguez, Wallis
Prepared by: Jonathan Peterson / GOV. & F. / (916) 651-4119
9/11/23 22:50:37
**** END ****
SENATE THIRD READING
STR Bill Id:SB 593
Author:(Wiener)
As Amended Ver:September 7, 2023
Majority vote
SUMMARY
Allows the successor agency of the Redevelopment Agency of the City and County of San Francisco (SFRDA) to finance certain affordable housing projects.
Major Provisions
- Authorizes the successor agency to the SFRDA to issue bonds or incur indebtedness to finance the development, construction, repair, renovation, or reconstruction of up to 5,842 units of affordable housing by or on behalf of San Francisco that shall remain affordable as specified.
- Provides that, for purposes of financing the development, construction, repair, renovation, or reconstruction of the specified units of affordable housing, the successor agency to the SFRDA may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the SFRDA the property tax revenues available in the Redevelopment Property Tax Trust Fund (RPTTF) to the extent the property tax revenues represent the amount of revenues on deposit in the RPTTF that otherwise would have been distributed to the City and County of San Francisco, as specified.
- Requires the property tax revenues allocated to the successor agency of SFRDA for the development, construction, repair, renovation, or reconstruction of the units of affordable housing to not include any moneys that are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund.
COMMENTS
Redevelopment. California Constitution Article XVI, Section 16, authorizes the Legislature to provide for the formation of redevelopment agencies (RDAs) to eliminate blight in an area by means of a self-financing schedule that pays for the redevelopment project with tax increment derived from any increase in the assessed value of property within the redevelopment project area (or tax increment). Generally, property tax increment financing involves a local government forming a tax increment financing district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues that are generated when projects financed by the bonds increase assessed property values within the project area.
To calculate the increased property tax revenues captured by the district, the amount of property tax revenues received by any local government participating in the district is "frozen" at the amount it received within a project area prior to the project area's formation. In future years, as the project area's assessed valuation grows above the frozen base, the resulting additional property tax revenues — the so-called property tax "increment" revenues — flow to the tax increment financing district instead of other local governments that would have received those funds absent the formation of the RDA. After the bonds have been fully repaid using the incremental property tax revenues, the RDA is dissolved, ending the diversion of tax increment revenues from participating local governments.
Prior to Proposition 13, very few RDAs existed; however, after its passage, RDAs became a source of funding for a variety of local infrastructure activities. RDAs were required to set-aside approximately 20% of funding generated in a project area to increase the supply of low and moderate income housing in the project areas [AB 3674 (Montoya), Chapter 1337, Statutes of 1976]. At the time of dissolution, over 400 RDAs statewide were diverting roughly 12% of property taxes, over $5.6 billion yearly.
In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Ultimately, the Legislature approved and the Governor signed two measures, ABX1 26 (Blumenfield), Chapter 5 and ABX1 27 (Blumenfield), Chapter 6 that together dissolved RDAs as they existed at the time and created a voluntary redevelopment program on a smaller scale. In response, the California Redevelopment Association (CRA) and the League of California Cities, along with other parties, filed suit challenging the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to ABX1 26. However, the Court did grant CRA's petition with respect to ABX1 27 (2011). As a result, all RDAs were required to dissolve as of February 1, 2012.
RDA Dissolution. ABX1 26 established successor agencies to manage the process of unwinding former RDA affairs, generally prohibited RDAs from incurring new or expanding existing monetary or legal obligations, and removed the authority for RDAs to engage in most activities except continuing to pay off enforceable obligations. With the exception of seven cities, the city or county that created each former RDA now serves as that RDA's successor agency. One of a successor agency's primary responsibilities is to make payments for the enforceable obligations RDAs entered into. These payments are supported by property tax revenues that would have gone to RDAs, but are instead deposited in the RPTTF. Enforceable obligations include bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, and other legally binding and enforceable agreements or contracts. Any remaining property tax revenues that exceed these enforceable obligations return to cities, counties, special districts, and school and community college districts to support core services.
Each successor agency has an oversight board responsible for supervising and approving its actions. The Department of Finance (DOF) can review and request reconsideration of an oversight board's decision. Once a successor agency takes over for an RDA, it reviews the RDA's outstanding assets and obligations, and develops a plan to resolve those obligations, also known as a Recognized Obligation Payment Schedule (ROPS). To obtain required DOF approval, a successor agency submits a series of ROPS to DOF. If DOF agrees with the plan, it issues a Finding of Completion acknowledging their progress towards paying off their obligations. Successor agencies issued a Finding of Completion can submit a Last and Final ROPS, meaning that (1) the remaining debt is limited to administrative costs and payments pursuant to enforceable obligations with defined payment schedules, (2) all remaining obligations have been previously listed on the ROPS and approved by DOF, and (3) the agency is not a party to outstanding or unresolved litigation. Successor agencies had until December 31, 2015 to receive their Finding of Completion from DOF. RDA dissolution law states that successor agencies that did not receive their Finding of Completion by this date, or did not enter into a written installment payment plan with DOF, were to never receive a Finding of Completion. Approximately nine successor agencies did not receive a Finding of Completion by the deadline.
San Francisco's RDA. SFRDA completed various redevelopment projects dating back to the 1960s. In 2003, the Department of Housing and Community Development (HCD) determined that San Francisco's RDA demolished 14,207 affordable housing units and replaced only 7,498 units, certifying a net loss of 6,709 units. Under AB 1018 (Sieroty), Chapter 970, Statutes of 1975, the City had to replace the remaining units. However, RDA law limited the effectiveness to 40 years after the redevelopment plan's adoption or 2009, whichever is later. Therefore, the City could not incur new debt to finance this replacement housing obligation.
SB 2113 (Burton) Chapter 661, Statutes of 2000, granted San Francisco until January 1, 2014, or until the agency replaces all the housing units demolished, to incur debt to replace the demolished affordable housing units. It also gave the RDA until 2044 to repay this indebtedness. Prior to RDA dissolution in 2011, San Francisco had only developed 867 of the 6,709 units, and this outstanding balance of 5,842 units remains. Following RDA dissolution, DOF did not find that these replacement-housing projects met the definition of enforceable obligations.
In 2015, the Legislature passed, and the Governor signed, SB 107 (Committee on Budget and Fiscal Review), Chapter 325, Statutes of 2015, which authorized San Francisco's successor agency to issue bonds and incur debt for other projects using RPTTF, including housing projects in Mission Bay, Hunters Point, and pursuant to the Transbay Implementation Agreement, but did not include projects to satisfy the replacement housing obligation. Using RPTTF to fund these projects extended the expected lifespan of the successor agency until 2058. Like its obligations under dissolution law, the successor agency must receive approval for these projects from its oversight board and DOF.
According to the Author
According to the author, "Decades after the injustice of redevelopment, San Francisco is still in desperate need of housing. The urban renewal process from the 1950s contributed to the crisis of affordable housing costs that continues to make the City unlivable for so many. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will provide a narrow and tailored funding source through the Redevelopment Property Tax Trust Fund, a limited continuance of specific tax increment financing powers that will not impact the General Fund. SB 593 sets San Francisco on a path to right this wrong and meet its affordable housing goals."
Arguments in Support
According to the Freedom West Homes Corporation, a nonprofit housing cooperative, "Beginning in the 1950s, the former San Francisco Redevelopment Agency (SFRA) used a significant amount of federal urban renewal funds to implement locally adopted redevelopment plans. Though the goal of these plans was to create vibrant, mixed-income communities, the result was the authorization of widespread clearance, mass demolition, and relocation of communities, particularly lower income communities and communities of color. The urban renewal process resulted in a net loss of 6,709 affordable housing units. In 1976, the state amended the Community Redevelopment Law (CRL) to require the replacement of affordable housing lost through redevelopment activities. The CRL mandates a one-for-one replacement of the total number of units, as well as an equal or greater number of bedrooms.
"San Francisco's Successor Agency to the Former Redevelopment Agency has taken seriously its charge to replace the remaining 5,842 affordable units, and has documented both the scope of the obligation and the need to allocate property tax revenues over time in order to fund the necessary construction. Tax increment financing will cover approximately one-half of construction costs and will leverage other public and private sources to complete affordable housing funding needs. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will right the wrongs of the past by funding the preservation and rebuilding of affordable housing while also sparking the economic revitalization needed to create an equitable and sustainable future for our current and future residents of color.
"Urban renewal displaced more than 20,000 residents and over 800 businesses in the Fillmore/Western Addition neighborhood and contributed significantly to the decline of the Black Population in San Francisco from 13% in the 1970s to only 5.3% today. The continued lack of affordable housing in the City further exacerbates this decline."
Arguments in Opposition
According to the Howard Jarvis Taxpayers Association, "This is to inform you that the Howard Jarvis Taxpayers Association must oppose your SB 593. The reasons for this were already made clear in the Senate Governance and Finance Committee staff report. The report notes that: 'SB 593 allows San Francisco to finance certain affordable housing projects using Redevelopment Property Tax Trust Fund revenue despite Department of Finance previously determining that these projects do not meet the definition of enforceable obligations that applies to all successor agencies.'
"It also states that: 'SB 593 allows San Francisco to finance these projects in a way that no other city or county has enjoyed. While San Francisco undoubtedly has unmet affordable housing needs, other cities and counties do too. Instead of using RPTTF, these other cities would have to use other tools, such as asking 2/3 of their voters to approve of the issuance of general obligation bonds, issue other types of bonds, or create a tax-increment financing district to replace the revenue lost from RDA dissolution.'
Simply put, bond issuance without voter approval and special exemptions for San Francisco are inappropriate and unwarranted. The Legislature must do everything in its power to ensure that the abuses that were so inherit with the original RDA program cannot be repeated. SB 593 is a step backwards."
FISCAL COMMENTS
None.
VOTES
SENATE FLOOR: 35-2-3
YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood‑Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
NO: Jones, Nguyen
ABS, ABST OR NV: Alvarado-Gil, Dahle, Grove
ASM LOCAL GOVERNMENT: 7-1-0
YES: Aguiar-Curry, Boerner, Pacheco, Ramos, Robert Rivas, Waldron, Wilson
NO: Dixon
ASM HOUSING AND COMMUNITY DEVELOPMENT: 6-0-2
YES: Wicks, Wendy Carrillo, Gabriel, Kalra, Quirk-Silva, Ward
ABS, ABST OR NV: Joe Patterson, Sanchez
UPDATED
VERSION: September 7, 2023
CONSULTANT: Jimmy MacDonald / L. GOV. / (916) 319-3958 FN: 0002082
SENATE THIRD READING
STR Bill Id:SB 593
Author:(Wiener)
As Amended Ver:June 30, 2023
Majority vote
SUMMARY
Allows the successor agency of the Redevelopment Agency of the City and County of San Francisco (SFRDA) to finance certain affordable housing projects.
Major Provisions
- Authorizes the successor agency to the SFRDA to issue bonds or incur indebtedness to finance the replacement of up to 5,842 units of affordable housing to satisfy the replacement housing obligation of the SFRDA as described in existing law and subsequently certified by the Department of Housing and Community Development (HCD).
- Specifies that to satisfy the replacement housing obligation and reduce the outstanding balance of units to be replaced, the successor agency to the SFRDA may assist housing projects previously assisted by the SFRDA where the project's affordability restrictions have expired, or are at risk of expiration, provided that any successor agency assistance shall be conditioned on the requirement that the assisted units remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
- Provides that, for purposes of financing the replacement housing obligation, the successor agency to the SFRDA may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the SFRDA the property tax revenues available in the Redevelopment Property Tax Trust Fund (RPTTF) to the extent the property tax revenues represent the amount of revenues on deposit in the RPTTF that otherwise would have been distributed to the City and County of San Francisco, as specified.
- Requires the property tax revenues allocated to the successor agency for the replacement housing obligation to not include any moneys that, notwithstanding the replacement housing obligation, are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund.
COMMENTS
Redevelopment. California Constitution Article XVI, Section 16, authorizes the Legislature to provide for the formation of redevelopment agencies (RDAs) to eliminate blight in an area by means of a self-financing schedule that pays for the redevelopment project with tax increment derived from any increase in the assessed value of property within the redevelopment project area (or tax increment). Generally, property tax increment financing involves a local government forming a tax increment financing district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues that are generated when projects financed by the bonds increase assessed property values within the project area.
To calculate the increased property tax revenues captured by the district, the amount of property tax revenues received by any local government participating in the district is "frozen" at the amount it received within a project area prior to the project area's formation. In future years, as the project area's assessed valuation grows above the frozen base, the resulting additional property tax revenues - the so-called property tax "increment" revenues - flow to the tax increment financing district instead of other local governments that would have received those funds absent the formation of the RDA. After the bonds have been fully repaid using the incremental property tax revenues, the RDA is dissolved, ending the diversion of tax increment revenues from participating local governments.
Prior to Proposition 13, very few RDAs existed; however, after its passage, RDAs became a source of funding for a variety of local infrastructure activities. RDAs were required to set-aside approximately 20% of funding generated in a project area to increase the supply of low and moderate income housing in the project areas [AB 3674 (Montoya), Chapter 1337, Statutes of 1976]. At the time of dissolution, over 400 RDAs statewide were diverting roughly 12% of property taxes, over $5.6 billion yearly.
In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Ultimately, the Legislature approved and the Governor signed two measures, AB 26 X1 (Blumenfield), Chapter 5 and AB 27 X1 (Blumenfield), Chapter 6 that together dissolved RDAs as they existed at the time and created a voluntary redevelopment program on a smaller scale. In response, the California Redevelopment Association (CRA) and the League of California Cities, along with other parties, filed suit challenging the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to AB 26 X1. However, the Court did grant CRA's petition with respect to AB 27 X1. As a result, all RDAs were required to dissolve as of February 1, 2012.
RDA Dissolution. ABX1 26 established successor agencies to manage the process of unwinding former RDA affairs, generally prohibited RDAs from incurring new or expanding existing monetary or legal obligations, and removed the authority for RDAs to engage in most activities except continuing to pay off enforceable obligations. With the exception of seven cities, the city or county that created each former RDA now serves as that RDA's successor agency. One of a successor agency's primary responsibilities is to make payments for the enforceable obligations RDAs entered into. These payments are supported by property tax revenues that would have gone to RDAs, but are instead deposited in the RPTTF. Enforceable obligations include bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, and other legally binding and enforceable agreements or contracts. Any remaining property tax revenues that exceed these enforceable obligations return to cities, counties, special districts, and school and community college districts to support core services.
Each successor agency has an oversight board responsible for supervising and approving its actions. The Department of Finance (DOF) can review and request reconsideration of an oversight board's decision. Once a successor agency takes over for an RDA, it reviews the RDA's outstanding assets and obligations, and develops a plan to resolve those obligations, also known as a Recognized Obligation Payment Schedule (ROPS). To obtain required DOF approval, a successor agency submits a series of ROPS to DOF. If DOF agrees with the plan, it issues a Finding of Completion acknowledging their progress towards paying off their obligations. Successor agencies issued a Finding of Completion can submit a Last and Final ROPS, meaning that (1) the remaining debt is limited to administrative costs and payments pursuant to enforceable obligations with defined payment schedules, (2) all remaining obligations have been previously listed on the ROPS and approved by DOF, and (3) the agency is not a party to outstanding or unresolved litigation. Successor agencies had until December 31, 2015 to receive their Finding of Completion from DOF. RDA dissolution law states that successor agencies that did not receive their Finding of Completion by this date, or did not enter into a written installment payment plan with DOF, were to never receive a Finding of Completion. Approximately nine successor agencies did not receive a Finding of Completion by the deadline.
San Francisco's RDA. SFRDA completed various redevelopment projects dating back to the 1960s. In 2003, the Department of Housing and Community Development (HCD) determined that San Francisco's RDA demolished 14,207 affordable housing units and replaced only 7,498 units, certifying a net loss of 6,709 units. Under AB 1018 (Sieroty), Chapter 970, Statutes of 1975, the City had to replace the remaining units. However, RDA law limited the effectiveness to 40 years after the redevelopment plan's adoption or 2009, whichever is later. Therefore, the City could not incur new debt to finance this replacement housing obligation.
SB 2113 (Burton), Chapter 661, Statutes of 2000, granted San Francisco until January 1, 2014, or until the agency replaces all the housing units demolished, to incur debt to replace the demolished affordable housing units. It also gave the RDA until 2044 to repay this indebtedness. Prior to RDA dissolution in 2011, San Francisco had only developed 867 of the 6,709 units, and this outstanding balance of 5,842 units remains. Following RDA dissolution, DOF did not find that these replacement-housing projects met the definition of enforceable obligations.
In 2015, the Legislature passed, and the Governor signed, SB 107 (Budget and Fiscal Review Committee), Chapter 325, Statutes of 2015, which authorized San Francisco's successor agency to issue bonds and incur debt for other projects using RPTTF, including housing projects in Mission Bay, Hunters Point, and pursuant to the Transbay Implementation Agreement, but did not include projects to satisfy the replacement housing obligation. Using RPTTF to fund these projects extended the expected lifespan of the successor agency until 2058. Like its obligations under dissolution law, the successor agency must receive approval for these projects from its oversight board and DOF.
According to the Author
According to the author, "Decades after the injustice of redevelopment, San Francisco is still in desperate need of housing. The urban renewal process from the 1950s contributed to the crisis of affordable housing costs that continues to make the City unlivable for so many. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will provide a narrow and tailored funding source through the Redevelopment Property Tax Trust Fund, a limited continuance of specific tax increment financing powers that will not impact the General Fund. SB 593 sets San Francisco on a path to right this wrong and meet its affordable housing goals."
Arguments in Support
According to the Freedom West Homes Corporation, a nonprofit housing cooperative, "Beginning in the 1950s, the former San Francisco Redevelopment Agency (SFRA) used a significant amount of federal urban renewal funds to implement locally adopted redevelopment plans. Though the goal of these plans was to create vibrant, mixed-income communities, the result was the authorization of widespread clearance, mass demolition, and relocation of communities, particularly lower income communities and communities of color. The urban renewal process resulted in a net loss of 6,709 affordable housing units. In 1976, the state amended the Community Redevelopment Law (CRL) to require the replacement of affordable housing lost through redevelopment activities. The CRL mandates a one-for-one replacement of the total number of units, as well as an equal or greater number of bedrooms.
"San Francisco's Successor Agency to the Former Redevelopment Agency has taken seriously its charge to replace the remaining 5,842 affordable units, and has documented both the scope of the obligation and the need to allocate property tax revenues over time in order to fund the necessary construction. Tax increment financing will cover approximately one-half of construction costs and will leverage other public and private sources to complete affordable housing funding needs. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will right the wrongs of the past by funding the preservation and rebuilding of affordable housing while also sparking the economic revitalization needed to create an equitable and sustainable future for our current and future residents of color.
"Urban renewal displaced more than 20,000 residents and over 800 businesses in the Fillmore/Western Addition neighborhood and contributed significantly to the decline of the Black Population in San Francisco from 13% in the 1970s to only 5.3% today. The continued lack of affordable housing in the City further exacerbates this decline."
Arguments in Opposition
According to the Howard Jarvis Taxpayers Association, "This is to inform you that the Howard Jarvis Taxpayers Association must oppose your SB 593. The reasons for this were already made clear in the Senate Governance and Finance Committee staff report. The report notes that: 'SB 593 allows San Francisco to finance certain affordable housing projects using Redevelopment Property Tax Trust Fund revenue despite Department of Finance previously determining that these projects do not meet the definition of enforceable obligations that applies to all successor agencies.'
"It also states that: 'SB 593 allows San Francisco to finance these projects in a way that no other city or county has enjoyed. While San Francisco undoubtedly has unmet affordable housing needs, other cities and counties do too. Instead of using RPTTF, these other cities would have to use other tools, such as asking 2/3 of their voters to approve of the issuance of general obligation bonds, issue other types of bonds, or create a tax-increment financing district to replace the revenue lost from RDA dissolution.'
Simply put, bond issuance without voter approval and special exemptions for San Francisco are inappropriate and unwarranted. The Legislature must do everything in its power to ensure that the abuses that were so inherit with the original RDA program cannot be repeated. SB 593 is a step backwards."
FISCAL COMMENTS
None.
VOTES
SENATE FLOOR: 35-2-3
YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood‑Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
NO: Jones, Nguyen
ABS, ABST OR NV: Alvarado-Gil, Dahle, Grove
ASM LOCAL GOVERNMENT: 7-1-0
YES: Aguiar-Curry, Boerner, Pacheco, Ramos, Robert Rivas, Waldron, Wilson
NO: Dixon
ASM HOUSING AND COMMUNITY DEVELOPMENT: 6-0-2
YES: Wicks, Wendy Carrillo, Gabriel, Kalra, Quirk-Silva, Ward
ABS, ABST OR NV: Joe Patterson, Sanchez
UPDATED
VERSION: June 30, 2023
CONSULTANT: Jimmy MacDonald / L. GOV. / (916) 319-3958 FN: 0001197
Date of Hearing: June 28, 2023
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Buffy Wicks, Chair
SBPCA Bill Id:SB 593
Author:(Wiener) – As Amended Ver:March 21, 2023
SENATE VOTE: 35-2
SUBJECT: Redevelopment: successor agency debt: City and County of San Francisco
SUMMARY: Allows the successor agency of the Redevelopment Agency of the City and County of San Francisco (SFRDA) to finance certain affordable housing projects. Specifically, this bill:
- Authorizes the successor agency to the SFRDA to issue bonds or incur indebtedness to finance the replacement of up to 5,842 units of affordable housing to satisfy the replacement housing obligation of the SFRDA as described in existing law and subsequently certified by the Department of Housing and Community Development (HCD).
- Specifies that to satisfy the replacement housing obligation and reduce the outstanding balance of units to be replaced, the successor agency to the SFRDA may assist housing projects previously assisted by the SFRDA where the project’s affordability restrictions have expired, or are at risk of expiration, provided that any successor agency assistance is conditioned on the requirement that the assisted units remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low-, and very low-income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
- Provides that, for purposes of financing the replacement housing obligation, the successor agency to the SFRDA may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the SFRDA the property tax revenues available in the Redevelopment Property Tax Trust Fund (RPTTF) to the extent the property tax revenues represent the amount of revenues on deposit in the RPTTF that otherwise would have been distributed to the City and County of San Francisco, as specified.
- Requires the property tax revenues allocated to the successor agency for the replacement housing obligation to not include any moneys that, notwithstanding the replacement housing obligation, are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund.
- Provides that a bond or other indebtedness issued, incurred, or entered into pursuant to 1) above must be secured by a pledge of, and lien on, and must be repaid from, moneys deposited in the RPTTF only to the extent the moneys represent the amount of moneys on deposit in the RPTTF that otherwise would have been distributed to the City and County of San Francisco pursuant to existing law. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this provision are taxes allocated to the successor agency pursuant to existing law.
- Makes additional technical and conforming changes.
- Finds and declares that a special statue is necessary and that a general statue cannot be made applicable because of the unique circumstances relating to the replacement of affordable housing demolished by the former SFRDA. Contains numerous other findings and declarations to support its purposes.
EXISTING LAW:
- Requires RDAs to dissolve effective February 1, 2012, pursuant to the California Supreme Court's decision in CRA v. Matosantos (2011).
- Establishes successor agencies to RDAs that would, except in certain situations, be the city, county, or city and county in the territorial jurisdiction of the former RDA. (Health and Safety Code (HS) Section 34177)
- Allows a city or county that authorized the creation of an RDA to elect to retain the housing assets and functions previously performed by the RDA. (HS 34177)
- Requires the entity assuming the housing functions of the former RDA to submit a list of all housing assets to DOF by August 1, 2012, as specified. (HS 34177)
- Allows the entity that assumed the housing functions to designate the use of and commit indebtedness obligation proceeds that remain after the satisfaction of enforceable obligations that have been approved in a Recognized Obligation Payment Schedule and that are consistent with the indebtedness obligation covenants. (HS 34177)
- Requires the proceeds to be derived from indebtedness obligations that were issued for the purposes of affordable housing prior to January 1, 2011, and were backed by the Low- and Moderate-Income Housing Fund. (HS 34177)
- Allows the RDA of the City and County of San Francisco to, subject to the approval of the Board of Supervisors of the City and County of San Francisco, retain its ability to incur indebtedness exclusively for Low- and Moderate-Income Housing Fund activities, as specified, until January 1, 2014, or until the agency replaces all of the housing units demolished prior to the enactment of the replacement housing obligations in Chapter 970 of the Statutes of 1975, whichever occurs earlier. (HS 34177.7)
- Allows the ability of the RDA of the City and County of San Francisco to receive tax increment revenues to repay indebtedness incurred for these Low- and Moderate- Income Housing Fund activities to be extended until no later than January 1, 2044. (HS 34177.7)
FISCAL EFFECT: None.
COMMENTS:
Author’s Statement: According to the author, “Decades after the injustice of redevelopment, San Francisco is still in desperate need of housing. The urban renewal process from the 1950s contributed to the crisis of affordable housing costs that continues to make the City unlivable for so many. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will provide a narrow and tailored funding source through the Redevelopment Property Tax Trust Fund, a limited continuance of specific tax increment financing powers that will not impact the General Fund. SB 593 sets San Francisco on a path to right this wrong and meet its affordable housing goals.”
Redevelopment: Article XVI, Section 16 of the California Constitution authorizes the Legislature to provide for the formation of redevelopment agencies (RDAs) to eliminate blight in an area by means of a self-financing schedule that pays for the redevelopment project with tax increment derived from any increase in the assessed value of property within the redevelopment project area (or tax increment). Generally, property tax increment financing involves a local government forming a tax increment financing district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues that are generated when projects financed by the bonds increase assessed property values within the project area.
To calculate the increased property tax revenues captured by the district, the amount of property tax revenues received by any local government participating in the district is “frozen” at the amount it received within a project area prior to the project area’s formation. In future years, as the project area's assessed valuation grows above the frozen base, the resulting additional property tax revenues — the so-called property tax “increment” revenues — flow to the tax increment financing district instead of other local governments that would have received those funds absent the formation of the RDA. After the bonds have been fully repaid using the incremental property tax revenues, the RDA is dissolved, ending the diversion of tax increment revenues from participating local governments.
Prior to Proposition 13, very few RDAs existed; however, after its passage, RDAs became a source of funding for a variety of local infrastructure activities. RDAs were required to set aside approximately 20 percent of funding generated in a project area to increase the supply of low and moderate income housing in the project areas (AB 3674 (Montoya), Chapter 1337, Statutes of 1976). At the time of dissolution, over 400 RDAs statewide were diverting roughly 12 percent of property taxes, over $5.6 billion yearly.
In 1975, the Legislature amended RDA law to require RDAs to replace low- or moderate-income housing units destroyed or removed as part of their previous projects (AB 1018 (Sieroty), Chapter 970, Statutes of 1975). In response to criticism that some redevelopment projects seemed to continue without end, the Legislature required local officials to limit the length of time during which redevelopment plans remained in effect, RDAs could issue debt, and property tax increment could be diverted to RDAs (AB 1290 (Isenberg), Chapter 942, Statutes of 1993).
In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Ultimately, the Legislature approved and the Governor signed two measures, ABX1 26 (Blumenfield), Chapter 5 and ABX1 27 (Blumenfield), Chapter 6 that together dissolved RDAs as they existed at the time and created a voluntary redevelopment program on a smaller scale. In response, the California Redevelopment Association (CRA) and the League of California Cities, along with other parties, filed suit challenging the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to ABX1 26. However, the Court did grant CRA's petition with respect to ABX1 27. As a result, all RDAs were required to dissolve as of February 1, 2012.
RDA Dissolution: ABX1 26 established successor agencies to manage the process of unwinding former RDA affairs, generally prohibited RDAs from incurring new or expanding existing monetary or legal obligations, and removed the authority for RDAs to engage in most activities except continuing to pay off enforceable obligations. With the exception of seven cities, the city or county that created each former RDA now serves as that RDA’s successor agency. One of a successor agency’s primary responsibilities is to make payments for the enforceable obligations RDAs entered into. These payments are supported by property tax revenues that would have gone to RDAs, but are instead deposited in the RPTTF. Enforceable obligations include bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, and other legally binding and enforceable agreements or contracts. Any remaining property tax revenues that exceed these enforceable obligations return to cities, counties, special districts, and school and community college districts to support core services.
Each successor agency has an oversight board responsible for supervising and approving its actions. The Department of Finance (DOF) can review and request reconsideration of an oversight board’s decision. Once a successor agency takes over for an RDA, it reviews the RDA’s outstanding assets and obligations, and develops a plan to resolve those obligations, also known as a Recognized Obligation Payment Schedule (ROPS). To obtain required DOF approval, a successor agency submits a series of ROPS to DOF. If DOF agrees with the plan, it issues a Finding of Completion acknowledging their progress towards paying off their obligations. Successor agencies issued a Finding of Completion can submit a Last and Final ROPS, meaning that (1) the remaining debt is limited to administrative costs and payments pursuant to enforceable obligations with defined payment schedules, (2) all remaining obligations have been previously listed on the ROPS and approved by DOF, and (3) the agency is not a party to outstanding or unresolved litigation. Successor agencies had until December 31, 2015 to receive their Finding of Completion from DOF. RDA dissolution law states that successor agencies that did not receive their Finding of Completion by this date, or did not enter into a written installment payment plan with DOF, were to never receive a Finding of Completion. Approximately nine successor agencies did not receive a Finding of Completion by the deadline.
San Francisco’s RDA: SFRDA completed various redevelopment projects dating back to the 1960s. In 2003, the Department of Housing and Community Development (HCD) determined that San Francisco’s RDA demolished 14,207 affordable housing units and replaced only 7,498 units, certifying a net loss of 6,709 units. Under AB 1018 of 1975, the City had to replace the remaining units. However, RDA law limited the effectiveness to 40 years after the redevelopment plan’s adoption or 2009, whichever is later. Therefore, the City could not incur new debt to finance this replacement housing obligation.
SB 2113 (Burton), Chapter 661, Statutes of 2000, granted San Francisco until January 1, 2014, or until the agency replaces all the housing units demolished, to incur debt to replace the demolished affordable housing units. It also gave the RDA until 2044 to repay this indebtedness. Prior to RDA dissolution in 2011, San Francisco had only developed 867 of the 6,709 units, and this outstanding balance of 5,842 units remains. Following RDA dissolution, DOF did not find that these replacement-housing projects met the definition of enforceable obligations.
In 2015, the Legislature passed, and the Governor signed, SB 107 (Committee on Budget and Fiscal Review), Chapter 325, Statutes of 2015, which authorized San Francisco’s successor agency to issue bonds and incur debt for other projects using RPTTF, including housing projects in Mission Bay, Hunters Point, and pursuant to the Transbay Implementation Agreement, but did not include projects to satisfy the replacement housing obligation. Using RPTTF to fund these projects extended the expected lifespan of the successor agency until 2058. Like its obligations under dissolution law, the successor agency must receive approval for these projects from its oversight board and DOF.
San Francisco Housing: According to the findings and declarations provided in the bill, “The San Francisco residential real estate market is one of the most expensive in the United States. In September 2022, RealtyHop reported that the median-priced home in San Francisco was $1,388,500. A household earning the city’s median household income of $126,117 would have to spend almost 67 percent of its yearly income to afford the median priced home. While the national home ownership rate is approximately 64 percent, only approximately 36 percent of San Franciscans own their own home. The majority of market-rate homes for sale in San Francisco are priced out of the reach of low- and moderate-income households. In 2022, the average rent was $3,340, which is affordable to households earning over $133,600. The Black population of San Francisco, with a median household income of less than $35,000 has little chance of being able to purchase or rent a home in the city. These factors contribute to a heavy demand for affordable housing in the city that the private market cannot meet.”
San Francisco’s 2022 housing element was adopted by the Board of Supervisors on January 31, 2023, and the Governor announced its certification on February 1, 2023. According to San Francisco, it has an unmet housing need at every income level and the housing element calls for the creation of more than 82,000 units within the city with approximately 46,000 of these units targeted to extremely low- and moderate-income households. The housing element estimates that meeting these housing goals will require a range of additional investments for affordable housing from between $1.3 billion in 2023 and $2.5 billion in 2031.
Arguments in Support: According to the Freedom West Homes Corporation, a nonprofit housing cooperative, “Beginning in the 1950s, the former San Francisco Redevelopment Agency (SFRA) used a significant amount of federal urban renewal funds to implement locally adopted redevelopment plans. Though the goal of these plans was to create vibrant, mixed-income communities, the result was the authorization of widespread clearance, mass demolition, and relocation of communities, particularly lower income communities and communities of color. The urban renewal process resulted in a net loss of 6,709 affordable housing units. In 1976, the state amended the Community Redevelopment Law (CRL) to require the replacement of affordable housing lost through redevelopment activities. The CRL mandates a one-for-one replacement of the total number of units, as well as an equal or greater number of bedrooms.
“San Francisco’s Successor Agency to the Former Redevelopment Agency has taken seriously its charge to replace the remaining 5,842 affordable units, and has documented both the scope of the obligation and the need to allocate property tax revenues over time in order to fund the necessary construction. Tax increment financing will cover approximately one-half of construction costs and will leverage other public and private sources to complete affordable housing funding needs. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will right the wrongs of the past by funding the preservation and rebuilding of affordable housing while also sparking the economic revitalization needed to create an equitable and sustainable future for our current and future residents of color.
“Urban renewal displaced more than 20,000 residents and over 800 businesses in the Fillmore/Western Addition neighborhood and contributed significantly to the decline of the Black Population in San Francisco from 13% in the 1970s to only 5.3% today. The continued lack of affordable housing in the City further exacerbates this decline.”
Arguments in Opposition: According to the Howard Jarvis Taxpayers Association, “This is to inform you that the Howard Jarvis Taxpayers Association must oppose your SB 593. The reasons for this were already made clear in the Senate Governance and Finance Committee staff report. The report notes that: ‘SB 593 allows San Francisco to finance certain affordable housing projects using Redevelopment Property Tax Trust Fund revenue despite Department of Finance previously determining that these projects do not meet the definition of enforceable obligations that applies to all successor agencies.’
“It also states that: ‘SB 593 allows San Francisco to finance these projects in a way that no other city or county has enjoyed. While San Francisco undoubtedly has unmet affordable housing needs, other cities and counties do too. Instead of using RPTTF, these other cities would have to use other tools, such as asking 2/3 of their voters to approve of the issuance of general obligation bonds, issue other types of bonds, or create a tax-increment financing district to replace the revenue lost from RDA dissolution.’
Simply put, bond issuance without voter approval and special exemptions for San Francisco are inappropriate and unwarranted. The Legislature must do everything in its power to ensure that the abuses that were so inherit with the original RDA program cannot be repeated. SB 593 is a step backwards.”
Committee Amendments: The author requested the committee consider the following amendment as committee amendments due to timing issues. The amendment would allow the City of San Francisco to allow the successor agency use of the city’s pass-through payments as additional collateral to be used only in the event the primary source of repayment – the Redevelopment Residual Revenues – are insufficient. Each year, the pass-through payments will be distributed to the City of San Francisco to the extent such pass-through payments are not needed to pay debt service on the bonds (i.e., because the Redevelopment Residual Revenues were sufficient in whole or in part to pay debt service). The successor agency estimates that in a ten-year period, it will be able to fund approximately 2,160 affordable units if the pass-through payments to the City are available to pay debt service in the event of a shortfall; if the pass-through payments are not available, approximately 1,700 units will be funded. The successor agency (and its predecessor redevelopment agency) have previously subordinated the payment of pass-through payments to taxing entities, including the City of San Francisco, to the payment of debt service. According to the sponsor, the successor agency and its predecessor have never used any pass-through payments to pay bond debt service. The sponsor is now proposing a limited subordination specifically relating only to the pass-through payments to the City of San Francisco and not to the other taxing entities.
On page 9, between lines 2 and 3, insert:
(d) Prior to issuing any bonds or incurring other indebtedness pursuant to subparagraph (C) of paragraph (1) of subdivision (a), the successor agency to the Redevelopment Agency of the City and County of San Francisco may subordinate to the bonds or other indebtedness the amount required to be paid to the City and County of San Francisco pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that the City and County of San Francisco has approved the subordinations pursuant to this subdivision.
Related Legislation:
SB 1404 (Leno) of 2014 would have allowed San Francisco's successor agency to receive tax increment revenues and issue debt to pay for specified replacement housing obligations. SB 1404 was vetoed by Governor Brown. Veto message:
“This bill allows the Successor Agency of the former City and County of San Francisco Redevelopment Agency to create a new enforceable obligation to replace approximately 5,800 units of affordable housing.
“Without a doubt, San Francisco faces extraordinary housing affordability challenges, compounded by the number of affordable units previously destroyed by the former redevelopment agency. I applaud the author and the mayor's continued efforts to increase affordability in this area. This bill as drafted, however, would grant this particular Successor Agency the ability to use tax increment and redevelopment law in a way that no other successor agency in the state has been granted.”
Double referred: This bill is double referred. It was heard in the Assembly Committee on Local Government and passed on a vote of 7-1 on June 21, 2023
REGISTERED SUPPORT / OPPOSITION:
Support
City & County of San Francisco (Sponsor)
Freedom West Homes Corporation (Sponsor)
Bay Area LISC
Bethel African Methodist Episcopal Church
Board of Supervisors for the City and County of San Francisco
CA African American Chamber of Commerce
California African American Chamber of Commerce
California Housing Partnership Corporation
Council of Community Housing Organizations
Grow the Richmond
Housing Action Coalition
Low Income Investment Fund
Mercy Housing California
Mission Housing Development Corporation
NAACP San Francisco Branch
New Livable California Dba Livable California
Northern Neighbors
Pacific Region of Sigma Pi Phi Fraternity
Pacific Region Sire Archon
Progress Noe Valley
San Francisco Foundation
San Francisco Yimby
Southside Forward
Opposition
Howard Jarvis Taxpayers Association (HJTA)
Oppose Unless Amended
California Association of Realtors
Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085
Date of Hearing: June 21, 2023
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cecilia Aguiar-Curry, Chair
SBPCA Bill Id:SB 593
Author:(Wiener) – As Amended Ver:March 21, 2023
SENATE VOTE: 35-2
SUBJECT: Redevelopment: successor agency debt: City and County of San Francisco.
SUMMARY: Allows the successor agency of the Redevelopment Agency of the City and County of San Francisco (SFRDA) to finance certain affordable housing projects. Specifically, this bill:
- Authorizes the successor agency to the SFRDA to issue bonds or incur indebtedness to finance the replacement of up to 5,842 units of affordable housing to satisfy the replacement housing obligation of the SFRDA as described in existing law and subsequently certified by the Department of Housing and Community Development (HCD).
- Specifies that to satisfy the replacement housing obligation and reduce the outstanding balance of units to be replaced, the successor agency to the SFRDA may assist housing projects previously assisted by the SFRDA where the project’s affordability restrictions have expired, or are at risk of expiration, provided that any successor agency assistance shall be conditioned on the requirement that the assisted units remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low, and very low income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
- Provides that, for purposes of financing the replacement housing obligation, the successor agency to the SFRDA may pledge to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to the SFRDA the property tax revenues available in the Redevelopment Property Tax Trust Fund (RPTTF) to the extent the property tax revenues represent the amount of revenues on deposit in the RPTTF that otherwise would have been distributed to the City and County of San Francisco, as specified.
- Requires the property tax revenues allocated to the successor agency for the replacement housing obligation to not include any moneys that, notwithstanding the replacement housing obligation, are payable to local agencies other than the City and County of San Francisco, school districts that maintain kindergarten and grades 1 to 12, inclusive, community college districts, or the Educational Revenue Augmentation Fund.
- Provides that a bond or other indebtedness issued, incurred, or entered into pursuant to 1) above shall be secured by a pledge of, and lien on, and shall be repaid from, moneys deposited in the RPTTF only to the extent the moneys represent the amount of moneys on deposit in the RPTTF that otherwise would have been distributed to the City and County of San Francisco pursuant to existing law. Property tax revenues pledged to any bonds or other indebtedness obligations authorized by this provision are taxes allocated to the successor agency pursuant to existing law.
- Makes additional technical and conforming changes.
- Finds and declares that a special statue is necessary and that a general statue cannot be made applicable because of the unique circumstances relating to the replacement of affordable housing demolished by the former SFRDA. Contains numerous other findings and declarations to support its purposes.
FISCAL EFFECT: None.
COMMENTS:
- Bill Summary and Author’s Statement. This bill expands the list of projects for which the successor agency of the SFRDA can issue bonds or incur other indebtedness by adding the replacement of up to 5,842 affordable housing units to satisfy the SFRDA’s replacement housing obligation. The City and County of San Francisco and Freedom West Homes are the sponsors of this bill.
According to the author, “Decades after the injustice of redevelopment, San Francisco is still in desperate need of housing. The urban renewal process from the 1950s contributed to the crisis of affordable housing costs that continues to make the City unlivable for so many. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will provide a narrow and tailored funding source through the Redevelopment Property Tax Trust Fund, a limited continuance of specific tax increment financing powers that will not impact the General Fund. SB 593 sets San Francisco on a path to right this wrong and meet its affordable housing goals.”
- Redevelopment. Article XVI, Section 16 of the California Constitution authorizes the Legislature to provide for the formation of redevelopment agencies (RDAs) to eliminate blight in an area by means of a self-financing schedule that pays for the redevelopment project with tax increment derived from any increase in the assessed value of property within the redevelopment project area (or tax increment). Generally, property tax increment financing involves a local government forming a tax increment financing district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues that are generated when projects financed by the bonds increase assessed property values within the project area.
To calculate the increased property tax revenues captured by the district, the amount of property tax revenues received by any local government participating in the district is “frozen” at the amount it received within a project area prior to the project area’s formation. In future years, as the project area's assessed valuation grows above the frozen base, the resulting additional property tax revenues — the so-called property tax “increment” revenues — flow to the tax increment financing district instead of other local governments that would have received those funds absent the formation of the RDA. After the bonds have been fully repaid using the incremental property tax revenues, the RDA is dissolved, ending the diversion of tax increment revenues from participating local governments.
Prior to Proposition 13, very few RDAs existed; however, after its passage, RDAs became a source of funding for a variety of local infrastructure activities. RDAs were required to set-aside approximately 20% of funding generated in a project area to increase the supply of low and moderate income housing in the project areas [AB 3674 (Montoya), Chapter 1337, Statutes of 1976]. At the time of dissolution, over 400 RDAs statewide were diverting roughly 12% of property taxes, over $5.6 billion yearly.
In 1975, the Legislature amended RDA law to require RDAs to replace low- or moderate-income housing units destroyed or removed as part of their previous projects [AB 1018 Sieroty), Chapter 970, Statutes of 1975]. In response to criticism that some redevelopment projects seemed to continue without end, the Legislature required local officials to limit the length of time during which redevelopment plans remained in effect, RDAs could issue debt, and property tax increment could be diverted to RDAs [AB 1290 (Isenberg), Chapter 942, Statutes of 1993].
In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Ultimately, the Legislature approved and the Governor signed two measures, ABX1 26 (Blumenfield), Chapter 5 and ABX1 27 (Blumenfield), Chapter 6 that together dissolved RDAs as they existed at the time and created a voluntary redevelopment program on a smaller scale. In response, the California Redevelopment Association (CRA) and the League of California Cities, along with other parties, filed suit challenging the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to ABX1 26. However, the Court did grant CRA's petition with respect to ABX1 27. As a result, all RDAs were required to dissolve as of February 1, 2012.
- RDA Dissolution. ABX1 26 established successor agencies to manage the process of unwinding former RDA affairs, generally prohibited RDAs from incurring new or expanding existing monetary or legal obligations, and removed the authority for RDAs to engage in most activities except continuing to pay off enforceable obligations. With the exception of seven cities, the city or county that created each former RDA now serves as that RDA’s successor agency. One of a successor agency’s primary responsibilities is to make payments for the enforceable obligations RDAs entered into. These payments are supported by property tax revenues that would have gone to RDAs, but are instead deposited in the RPTTF. Enforceable obligations include bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, and other legally binding and enforceable agreements or contracts. Any remaining property tax revenues that exceed these enforceable obligations return to cities, counties, special districts, and school and community college districts to support core services.
Each successor agency has an oversight board responsible for supervising and approving its actions. The Department of Finance (DOF) can review and request reconsideration of an oversight board’s decision. Once a successor agency takes over for an RDA, it reviews the RDA’s outstanding assets and obligations, and develops a plan to resolve those obligations, also known as a Recognized Obligation Payment Schedule (ROPS). To obtain required DOF approval, a successor agency submits a series of ROPS to DOF. If DOF agrees with the plan, it issues a Finding of Completion acknowledging their progress towards paying off their obligations. Successor agencies issued a Finding of Completion can submit a Last and Final ROPS, meaning that (1) the remaining debt is limited to administrative costs and payments pursuant to enforceable obligations with defined payment schedules, (2) all remaining obligations have been previously listed on the ROPS and approved by DOF, and (3) the agency is not a party to outstanding or unresolved litigation. Successor agencies had until December 31, 2015 to receive their Finding of Completion from DOF. RDA dissolution law states that successor agencies that did not receive their Finding of Completion by this date, or did not enter into a written installment payment plan with DOF, were to never receive a Finding of Completion. Approximately nine successor agencies did not receive a Finding of Completion by the deadline.
- San Francisco’s RDA. SFRDA completed various redevelopment projects dating back to the 1960s. In 2003, the Department of Housing and Community Development (HCD) determined that San Francisco’s RDA demolished 14,207 affordable housing units and replaced only 7,498 units, certifying a net loss of 6,709 units. Under AB 1018 of 1975, the City had to replace the remaining units. However, RDA law limited the effectiveness to 40 years after the redevelopment plan’s adoption or 2009, whichever is later. Therefore, the City could not incur new debt to finance this replacement housing obligation.
SB 2113 (Burton) Chapter 661, Statutes of 2000, granted San Francisco until January 1, 2014, or until the agency replaces all the housing units demolished, to incur debt to replace the demolished affordable housing units. It also gave the RDA until 2044 to repay this indebtedness. Prior to RDA dissolution in 2011, San Francisco had only developed 867 of the 6,709 units, and this outstanding balance of 5,842 units remains. Following RDA dissolution, DOF did not find that these replacement-housing projects met the definition of enforceable obligations.
In 2015, the Legislature passed, and the Governor signed, SB 107 (Committee on Budget and Fiscal Review), Chapter 325, Statutes of 2015, which authorized San Francisco’s successor agency to issue bonds and incur debt for other projects using RPTTF, including housing projects in Mission Bay, Hunters Point, and pursuant to the Transbay Implementation Agreement, but did not include projects to satisfy the replacement housing obligation. Using RPTTF to fund these projects extended the expected lifespan of the successor agency until 2058. Like its obligations under dissolution law, the successor agency must receive approval for these projects from its oversight board and DOF.
- San Francisco Housing. According to the findings and declarations provided in the bill, “The San Francisco residential real estate market is one of the most expensive in the United States. In September 2022, RealtyHop reported that the median-priced home in San Francisco was $1,388,500. A household earning the city’s median household income of $126,117 would have to spend almost 67 percent of its yearly income to afford the median priced home. While the national home ownership rate is approximately 64 percent, only approximately 36 percent of San Franciscans own their own home. The majority of market-rate homes for sale in San Francisco are priced out of the reach of low- and moderate-income households. In 2022, the average rent was $3,340, which is affordable to households earning over $133,600. The Black population of San Francisco, with a median household income of less than $35,000 has little chance of being able to purchase or rent a home in the city. These factors contribute to a heavy demand for affordable housing in the city that the private market cannot meet.”
San Francisco’s 2022 housing element was adopted by the Board of Supervisors on January 31, 2023, and the Governor announced its certification on February 1, 2023. According to San Francisco, it has an unmet housing need at every income level and the housing element calls for the creation of more than 82,000 units within the city with approximately 46,000 of these units targeted to extremely low- and moderate-income households. The housing element estimates that meeting these housing goals will require a range of additional investments for affordable housing from between $1.3 billion in 2023 and $2.5 billion in 2031.
- Previous Legislation. SB 1404 (Leno) of 2014 would have allowed San Francisco's successor agency to receive tax increment revenues and issue debt to pay for specified replacement housing obligations. SB 1404 was vetoed by Governor Brown saying, “This bill allows the Successor Agency of the former City and County of San Francisco Redevelopment Agency to create a new enforceable obligation to replace approximately 5,800 units of affordable housing.
“Without a doubt, San Francisco faces extraordinary housing affordability challenges, compounded by the number of affordable units previously destroyed by the former redevelopment agency. I applaud the author and the mayor's continued efforts to increase affordability in this area. This bill as drafted, however, would grant this particular Successor Agency the ability to use tax increment and redevelopment law in a way that no other successor agency in the state has been granted.” - Arguments in Support. According to the Freedom West Homes Corporation, a nonprofit housing cooperative, “Beginning in the 1950s, the former San Francisco Redevelopment Agency (SFRA) used a significant amount of federal urban renewal funds to implement locally adopted redevelopment plans. Though the goal of these plans was to create vibrant, mixed-income communities, the result was the authorization of widespread clearance, mass demolition, and relocation of communities, particularly lower income communities and communities of color. The urban renewal process resulted in a net loss of 6,709 affordable housing units. In 1976, the state amended the Community Redevelopment Law (CRL) to require the replacement of affordable housing lost through redevelopment activities. The CRL mandates a one-for-one replacement of the total number of units, as well as an equal or greater number of bedrooms.
“San Francisco’s Successor Agency to the Former Redevelopment Agency has taken seriously its charge to replace the remaining 5,842 affordable units, and has documented both the scope of the obligation and the need to allocate property tax revenues over time in order to fund the necessary construction. Tax increment financing will cover approximately one-half of construction costs and will leverage other public and private sources to complete affordable housing funding needs. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will right the wrongs of the past by funding the preservation and rebuilding of affordable housing while also sparking the economic revitalization needed to create an equitable and sustainable future for our current and future residents of color.
“Urban renewal displaced more than 20,000 residents and over 800 businesses in the Fillmore/Western Addition neighborhood and contributed significantly to the decline of the Black Population in San Francisco from 13% in the 1970s to only 5.3% today. The continued lack of affordable housing in the City further exacerbates this decline.”
- Arguments in Opposition. According to the Howard Jarvis Taxpayers Association, “This is to inform you that the Howard Jarvis Taxpayers Association must oppose your SB 593. The reasons for this were already made clear in the Senate Governance and Finance Committee staff report. The report notes that: ‘SB 593 allows San Francisco to finance certain affordable housing projects using Redevelopment Property Tax Trust Fund revenue despite Department of Finance previously determining that these projects do not meet the definition of enforceable obligations that applies to all successor agencies.’
“It also states that: ‘SB 593 allows San Francisco to finance these projects in a way that no other city or county has enjoyed. While San Francisco undoubtedly has unmet affordable housing needs, other cities and counties do too. Instead of using RPTTF, these other cities would have to use other tools, such as asking 2/3 of their voters to approve of the issuance of general obligation bonds, issue other types of bonds, or create a tax-increment financing district to replace the revenue lost from RDA dissolution.’
Simply put, bond issuance without voter approval and special exemptions for San Francisco are inappropriate and unwarranted. The Legislature must do everything in its power to ensure that the abuses that were so inherit with the original RDA program cannot be repeated. SB 593 is a step backwards.”
- Double-Referral. This bill is double-referred to the Assembly Committee on Housing and Community Development.
REGISTERED SUPPORT / OPPOSITION:
Support
City and County of San Francisco [SPONSOR]
Freedom West Homes Corporation [SPONSOR]
Bethel African Methodist Episcopal Church
California African American Chamber of Commerce
California Housing Partnership
Council of Community Housing Organizations
Grow the Richmond
Housing Action Coalition
Livable California
Local Initiatives Support Corporation (LISC) Bay Area
London N. Breed, Mayor, City and County of San Francisco
Low Income Investment Fund
Mercy Housing California
Mission Housing Development Corporation
NAACP San Francisco Branch
Non-Profit Housing Association of Norther California
Northern Neighbors
Progress Noe Valley
San Francisco Foundation
San Francisco Housing Accelerator Fund
San Francisco YIMBY
Sigma Pi Phi Fraternity
South Side Forward
Third Baptist Church of San Francisco
Young Community Developers
Opposition
California Association of Realtors (unless amended)
Howard Jarvis Taxpayers Association
Analysis Prepared by: Jimmy MacDonald / L. GOV. / (916) 319-3958
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 593 |
THIRD READING
Bill No: SB 593
Author: Wiener (D), et al.
Amended: 3/21/23
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 3/29/23
AYES: Caballero, Seyarto, Blakespear, Durazo, Glazer, Skinner, Wiener
NO VOTE RECORDED: Dahle
SENATE HOUSING COMMITTEE: 10-0, 5/2/23
AYES: Wiener, Ochoa Bogh, Caballero, Cortese, McGuire, Padilla, Seyarto, Skinner, Umberg, Wahab
NO VOTE RECORDED: Blakespear
SUBJECT: Redevelopment: successor agency debt: City and County of San Francisco
SOURCE: City and County of San Francisco
Freedom West Homes Corporation
DIGEST:
This bill allows San Francisco’s redevelopment successor agency to finance certain affordable housing projects using the successor agency’s property tax revenue.
ANALYSIS:
Existing law:
- Establishes the Community Redevelopment Law (CRL), which governs the authority to establish a redevelopment agency (RDA) and the authority for a RDA to function as an agency and to adopt and implement a redevelopment plan.
- Provides that RDA plans adopted on or before December 31, 1993, had to terminate no more than 40 years from their adoption or January 1, 2009, whichever is later. After this point, the RDA had no authority to act pursuant to the redevelopment plan except to pay previously incurred indebtedness, comply with affordable housing production requirements, and enforce existing covenants, contracts, or other obligations.
- Requires each RDA to make deposits into a Low and Moderate Income Housing Fund (Housing Fund) the agency maintained to increase, improve, and preserve the community’s supply of low- and moderate-income housing, generally not less than 20% of all taxes allocated to the agency.
- Requires RDAs to replace low- or moderate-income housing units destroyed or removed as part of their previous projects.
- Dissolves redevelopment agencies as of February 1, 2012.
- Establishes successor agencies to manage the process of unwinding former redevelopment agencies’ (RDAs) affairs, and oversight boards to approve successor agency decisions.
- Allows the Department of Finance (DOF) to review and request reconsideration of an oversight board’s decision.
- Requires the successor agency to submit specified information on its outstanding assets and obligations, also known as a Recognized Obligation Payment Schedule (ROPS).
- Allows DOF to issue a finding of completion to a successor agency acknowledging their progress towards paying off their obligations provided that its Final ROPS contains specified information.
- Allows a successor agency to make payments for the enforceable obligations RDAs entered into listed on the ROPS. These payments are supported by property tax revenues that would have gone to RDAs, but are instead deposited in a Redevelopment Property Tax Trust Fund (RPTTF). Enforceable obligations include bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, and other legally binding and enforceable agreements or contracts
This bill:
- Adds the replacement of up to 5,842 affordable housing units to satisfy the San Francisco RDA’s replacement housing obligation to the list of projects for which the successor agency can issue bonds or incur other indebtedness outside of the normal RDA dissolution process.
- Allows the San Francisco successor agency may pledge to the bonds or other indebtedness the successor agency issues, incurs, or enters into, the property tax revenues available in the RPTTF that otherwise would have been distributed to the City and County of San Francisco after paying for other dissolution obligations.
- Prevents the San Francisco successor agency from using moneys that are payable to the other taxing entities in the city and county for these projects.
- Allows the successor agency to satisfy this replacement housing obligation by assisting housing projects that the San Francisco RDA previously assisted where the project’s affordability restrictions have expired, or are at risk of expiration. This assistance must be conditioned on requirements that the assisted units remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low-, and very low-income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
Background
Redevelopment agencies. Citing a significant State General Fund deficit, Governor Brown’s 2011-12 budget proposed eliminating RDAs and returning billions of dollars of property tax revenues to schools, cities, and counties to fund core services. Among the statutory changes that the Legislature adopted to implement the 2011-12 budget, AB X1 26 (Blumenfield, Chapter 5, Statutes of 2011, First Extraordinary Session) dissolved all RDAs. The California Supreme Court's 2011 ruling in California Redevelopment Association v. Matosantos upheld AB X1 26, but invalidated AB X1 27 (Blumenfield, Chapter 6, Statutes of 2011, First Extraordinary Session 2011), which would have allowed most RDAs to avoid dissolution. In response, the California Redevelopment Association (CRA) challenged the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to AB X1 26, but granted it with respect to AB X1 27. As a result, all RDAs dissolved as of February 1, 2012. At the time of dissolution, over 400 RDAs statewide were diverting 12% of property taxes, over $5.6 billion yearly.
RDAs’ dissolution deprived many local agencies of the primary tool they used to eliminate physical and economic blight, finance new construction, improve public infrastructure, rehabilitate existing buildings, and increase the supply of affordable housing. At the time the state dissolved RDAs, the Controller estimated that statewide, the requirement to set aside 20% of funding generated in a project area for low- and moderate-income housing obligated RDAs to spend $1 billion on affordable housing.
City and County of San Francisco. In 2003, the Department of Housing and Community Development (HCD) determined that San Francisco’s RDA demolished 14,207 affordable housing units and replaced only 7,498 units, certifying a net loss of 6,709 units. Under AB 1018 (Sieroty, Chapter 970, Statutes of 1975), the City had to replace the remaining units. However, RDA law limited the effectiveness to 40 years after the redevelopment plan’s adoption or 2009, whichever is later. As such, the City could not incur new debt to finance this replacement housing obligation. SB 2113 (Burton, Chapter 661, Statutes of 2000) granted San Francisco until January 1, 2014, or until the agency replaces all the housing units demolished, to incur debt to replace the demolished affordable housing units. It also gave the RDA until 2044 to repay this indebtedness. Prior to RDA dissolution in 2011, San Francisco had only developed 867 of the 6,709 units, and this outstanding balance of 5,842 units remains.
After dissolution, the successor agency placed these replacement-housing units on its ROPS so that they could be considered enforceable obligations to be repaid with RPTTF. While its oversight board approved this action, DOF rejected the successor agencies’ decision to consider these replacement-housing units to be enforceable obligations. The department did not find that these replacement-housing projects met the definition of enforceable obligations. In other words, they were not bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, or other legally binding and enforceable agreements or contracts.
In 2014, the Legislature passed SB 1404 (Leno) to allow San Francisco’s successor agency to finance specified affordable housing projects, including these replacement-housing projects, with RPTTF. However, Governor Brown vetoed this legislation. In 2015, the Legislature passed, and the Governor signed, SB 107 (Committee on Budget and Fiscal Review, Chapter 325, Statutes of 2015), which authorized the successor agency to issue bonds and incur debt for other projects using RPTTF, including the housing projects in Mission Bay, Hunters Point, and pursuant to the Transbay Implementation Agreement, but did not include projects to satisfy the replacement housing obligation. Using RPTTF to fund these projects extended the expected lifespan of the successor agency until 2058. Like its obligations under dissolution law, the successor agency must receive approval for these projects from its oversight board and DOF. For these obligations, the successor agency must make diligent efforts to ensure it obtains the lowest long-term financing, make use of an independent financial advisor, and follow other financial safeguards.
Comments
- Purpose of the bill. According to the author, “Decades after the injustice of redevelopment, San Francisco is still in desperate need of housing. The urban renewal process from the 1950s contributed to the crisis of affordable housing costs that continues to make the City unlivable for so many. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will provide a narrow and tailored funding source through the Redevelopment Property Tax Trust Fund, a limited continuance of specific tax increment financing powers that will not impact the General Fund. SB 593 sets San Francisco on a path to right this wrong and meet its affordable housing goals.”
- Special treatment. SB 593 allows San Francisco to finance certain affordable housing projects using RPTTF revenue despite DOF previously determining that these projects do not meet the definition of enforceable obligations that applies to all successor agencies. While SB 593 includes language to insulate other taxing entities from financial impacts associated with using RPTTF to finance these projects, SB 593 allows San Francisco to finance these projects in a way that no other city or county has enjoyed. While San Francisco undoubtedly has unmet affordable housing needs, other cities and counties do too. Instead of using RPTTF, these other cities would have to use other tools, such as asking 2/3 of their voters to approve of the issuance of general obligation bonds, issue other types of bonds, or create a tax-increment financing district to replace the revenue lost from RDA dissolution. The Legislature may wish to consider whether San Francisco should enjoy a benefit not offered to other local governments.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 5/5/23)
City and County of San Francisco (co-source)
Freedom West Homes Corporation (co-source)
Bethel African Methodist Episcopal Church
California Housing Partnership Corporation
Council of Community Housing Organizations, San Francisco
Grow the Richmond
Housing Action Coalition
Local Initiatives Support Corporation Bay Area
Low Income Investment Fund
Mercy Housing California
Mission Housing Development Corporation
NAACP San Francisco Branch
Non-profit Housing Association of Northern California
Northern Neighbors SF
Progress Noe Valley
San Francisco Board of Supervisors
San Francisco Foundation
SF YIMBY
Sigma Pi Phi Fraternity
Southside Forward
The San Francisco Housing Accelerator Fund
Third Baptist Church of San Francisco
Young Community Developers, Inc.
OPPOSITION: (Verified 5/5/23)
California Association of Realtors
Prepared by: Jonathan Peterson / GOV. & F. / (916) 651-4119
5/5/23 13:17:55
**** END ****
SENATE COMMITTEE ON HOUSING
Senator Scott Wiener, Chair
2023 - 2024 Regular
Bill No: SB 593 Hearing Date: 5/2/2023
Author: | Wiener | ||
Version: | 3/21/2023 Amended | ||
Urgency: | No | Fiscal: | No |
Consultant: | Alison Hughes | ||
SUBJECT: Redevelopment: successor agency debt: City and County of San Francisco
DIGEST: This bill allows San Francisco’s redevelopment successor agency to finance certain affordable housing projects using the successor agency’s property tax revenue.
ANALYSIS:
Existing law:
- Dissolves redevelopment agencies as of February 1, 2012.
- Establishes the Community Redevelopment Law (CRL), which governs the authority to establish a redevelopment agency and the authority for a redevelopment agency (RDA) to function as an agency and to adopt and implement a redevelopment plan.
- Authorizes the successor agency for the RDA (herein after “successor agency”) of the City and County of San Francisco to have the authority, rights, and powers of the RDA to which it succeeded solely for the purpose of issuing bonds or incurring other indebtedness to finance specified projects.
This bill:
- Authorizes the successor agency for the City and County of San Francisco to issue bonds and incur indebtedness in order to replace of up to 5,842 units of affordable housing to satisfy specific replacement obligations (ie add to the list of projects for which the successor agency of the City and County San Francisco may issue bonds).
- Authorizes the successor agency to also assist housing projects previously assisted by the RDA of the City and County of San Francisco where the affordability restrictions expired in order to satisfy specified replacement obligations. This provision only applies if the units are conditioned on the requirement that the units remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low-, and very low-income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
- Authorizes the successor agency of the City and County of San Francisco to pledge the property tax revenues available in the Redevelopment Property Tax Trust Fund (RPTTF), to the extent the property tax revenues represent the amount of revenues on deposit in the RPTTF that otherwise would have been distributed to the City and County of San Francisco, to the bonds or other indebtedness issued, incurred, or entered into by the successor agency to finance the replacement housing obligations noted in (1) and (2).
COMMENTS:
- Author’s Statement. “Decades after the injustice of redevelopment, San Francisco is still in desperate need of housing. The urban renewal process from the 1950s contributed to the crisis of affordable housing costs that continues to make the City unlivable for so many. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will provide a narrow and tailored funding source through the Redevelopment Property Tax Trust Fund, a limited continuance of specific tax increment financing powers that will not impact the General Fund. SB 593 sets San Francisco on a path to right this wrong and meet its affordable housing goals.”
- Background of Community Redevelopment Law. Historically, the CRL allowed a local government to establish a redevelopment area and capture all of the increase in property taxes generated within the area (referred to as “tax increment financing” or TIF) over a period of decades. The law required redevelopment agencies to deposit 20% of tax increment into a Low and Moderate Income Housing Fund (L&M fund) to be used to increase, improve, and preserve the community’s supply of low- and moderate-income housing available at an affordable-housing cost.
In 2011, the Legislature enacted two bills, AB 26X (Blumenfield) and AB 27X (Blumenfield), Chapters 5 and 6, respectively, of the First Extraordinary Session. AB 26X eliminated redevelopment agencies and established procedures for winding down the agencies, paying off enforceable obligations, and disposing of agency assets. AB 26X established successor agencies, typically the city that established the agency, to take control of all redevelopment agency assets, properties, and other items of value. Successor agencies are to dispose of an agency’s assets as directed by an oversight board, made up of representatives of local taxing entities, with the proceeds transferred to the county auditor-controller for distribution to taxing agencies within each county.
AB 26X also included provisions allowing the host city or county of a dissolving redevelopment agency to retain the housing assets and functions previously performed by the agency, except for funds on deposit in the agency’s L&M fund, and thus become a housing successor. If the host city or county chooses not to become the housing successor, a local housing authority or the state’s HCD takes on that responsibility.
AB 27X allowed redevelopment agencies to avoid elimination if they made payments to schools in the current budget year and in future years. In December 2011, the California Supreme Court in California Redevelopment Association v. Matosantos upheld AB 26X and overturned AB 27X. As a result, all of the state’s roughly 400 redevelopment agencies dissolved on February 1, 2012, and local jurisdictions began implementing AB 26X’s provisions to distribute former redevelopment assets and pay the remaining obligations.
- RDA dissolution process. AB 26X prohibited RDAs from incurring new or expanding existing monetary or legal obligations unless otherwise specified, removed the authority for RDAs to engage in most activities except continuing to pay off enforceable obligations, and established successor agencies to manage the process of unwinding former RDA affairs. With the exception of seven cities, the city or county that created each former RDA now serves as that RDA’s successor agency.
One of a successor agency’s primary responsibilities is to make payments for the enforceable obligations RDAs entered into. These payments are supported by property tax revenues that would have gone to RDAs, but are instead deposited in a Redevelopment Property Tax Trust Fund (RPTTF). Enforceable obligations include bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, and other legally binding and enforceable agreements or contracts.
Any remaining property tax revenues that exceed these enforceable obligations return to cities, counties, special districts, and school and community college districts to support core services. The amount that these taxing entities receive increases as the successor agency pays off these enforceable obligations. As a successor agency adds additional enforceable obligations, the slower this stream of property tax revenue returns to these taxing entities.
- City and County of San Francisco RDA history. San Francisco’s RDA completed various redevelopment projects dating back to the 1960s. In 2003, the Department of Housing and Community Development (HCD) determined that San Francisco’s RDA demolished 14,207 affordable housing units and replaced only 7,498 units, certifying a net loss of 6,709 units. Under AB 1018 (Sieroty, Statutes of 1975), the City had to replace the remaining units. However, RDA law limited the application to 40 years after the redevelopment plan’s adoption or 2009, whichever is later. As such, the City could not incur new debt to finance this replacement housing obligation. SB 2113 (Burton, Chapter 661, Statutes of 2000) granted San Francisco until January 1, 2014, or until the agency replaces all the housing units demolished, to incur debt to replace the demolished affordable housing units. It also gave the RDA until 2044 to repay this indebtedness. Prior to RDA dissolution in 2011, San Francisco had only developed 867 of the 6,709 units, and this outstanding balance of 5,842 units remains.
After dissolution, the successor agency placed these replacement-housing units on its Recognized Obligation Payment Schedule (ROPS) – the successor agencies plan to resolve the RDAs obligations -- so that they could be considered enforceable obligations to be repaid with RPTTF. While its oversight board approved this action, DOF rejected the successor agencies’ decision to consider these replacement-housing units to be enforceable obligations. DOF did not find that these replacement-housing projects met the definition of enforceable obligations. In other words, they were not bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, or other legally binding and enforceable agreements or contracts.
In 2014, the Legislature passed SB 1404 (Leno) to allow San Francisco’s successor agency to finance specified affordable housing projects, including these replacement-housing projects, with RPTTF. However, Governor Brown vetoed this legislation. In 2015, the Legislature passed, and the Governor signed, SB 107 (Committee on Budget and Fiscal Review. Chapter 325), which authorized the successor agency to issue bonds and incur debt for other projects using RPTTF, including the housing projects in Mission Bay, Hunters Point, and pursuant to the Transbay Implementation Agreement, but did not include projects to satisfy the replacement housing obligation. Using RPTTF to fund these projects extended the expected lifespan of the successor agency until 2058.
- San Francisco housing crisis and local housing programs. As one of the most expensive housing markets in the nation, San Francisco remains an epicenter of California’s housing crisis. As of September 2022, RealtyHop, a real estate investment company, reported that the median home price in San Francisco was nearly $1.4 million. This means a median-income household, which in 2022 earned $126,117, would need to spend almost two-thirds of its yearly income to afford a median-priced home. On February 1, 2023, the state certified San Francisco’s housing element, which calls for the creation of over 82,000 new housing units, more than triple the city’s annual housing production average, including 46,000 affordable housing units.
In recent years, San Francisco has utilized several mechanisms to generate funding locally to finance affordable housing. In 2015 and 2019, the City passed general obligation bonds for the construction of affordable housing for $310 million and $600 million, respectively. The City plans to propose another general obligation bond in 2024. The City also uses impact fees, philanthropic funds, and a local housing trust fund to finance affordable housing.
The City also created the HOPE SF initiative, which will replace all 1,900 public housing units one-for-one and add affordable and market-rate units, nearly tripling the total number of homes to more than 5,300. The City also operates downpayment assistance and eviction protection and tenant stabilization programs. Lastly, the City is in the process of forming an Enhance Infrastructure Financing District to support entitled, large-scale, master-planned projects that contain affordable housing units.
- This bill summary. In order to complement existing funding sources in place locally, this bill would allow the successor agency to finance the replacement housing projects with RPTTF.
- Opposition. The California Association of Realtors is opposed to provisions that would allow for the units to be affordable to low and moderate income families for longer than 55 years.
- Double-referral. This bill passed out of the Senate Governance and Finance Committee on March 29th with a vote of 7-0.
Related Legislation:
SB 1404 (Leno, 2014) — would have allowed San Francisco’s successor agency to finance specified affordable housing projects with RPTTF. This bill was vetoed by Governor Jerry Brown, who issued this veto message:
“Without a doubt, San Francisco faces extraordinary housing affordability challenges, compounded by the number of affordable units previously destroyed by the former redevelopment agency. I applaud the author and the mayor's continued efforts to increase affordability in this area. This bill as drafted, however, would grant this particular Successor Agency the ability to use tax increment and redevelopment law in a way that no other successor agency in the state has been granted.”
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
POSITIONS: (Communicated to the committee before noon on Wednesday,
April 26, 2023.)
SUPPORT:
City and County of San Francisco (Co-Sponsor)
Freedom West Homes Corporation (Co-Sponsor)
Bethel African Methodist Episcopal Church
California Housing Partnership Corporation
Grow the Richmond
Housing Action Coalition
Local Initiatives Support Corporation (LISC) Bay Area
Low Income Investment Fund
Mercy Housing California
Mission Housing Development Corporation
NAACP San Francisco Branch
Non-profit Housing Association of Northern California (NPH)
Northern Neighbors Sf
Progress Noe Valley
San Francisco Board of Supervisors
San Francisco Foundation
Sf Yimby
Sigma Pi Phi Fraternity
Southside Forward
The San Francisco Housing Accelerator Fund
Third Baptist Church of San Francisco
Young Community Developers, INC.
OPPOSITION:
California Association of Realtors
-- END --
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Anna M. Caballero, Chair
2023 - 2024 Regular
Bill No: | SB 593 | Hearing Date: | 3/29/23 |
Author: | Wiener | Tax Levy: | No |
Version: | 3/21/23 | Fiscal: | No |
Consultant: | Peterson | ||
Redevelopment: successor agency debt: City and County of San Francisco
Allows San Francisco’s redevelopment successor agency to finance certain affordable housing projects using the successor agency’s property tax revenue.
Background
Redevelopment agencies. From the early 1950s until the state dissolved them in 2011, California redevelopment agencies (RDAs) used property tax increment financing to pay for economic development projects in blighted areas. Generally, property tax increment financing involves a city or county forming a tax increment financing district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues generated when projects financed by the bonds increase assessed property values within the project area. To calculate the increased property tax revenues captured by the district, the amount of property tax revenues obtained by any local agency that receives a share of property tax revenues from property within a project area is “frozen” at the amount it received from that property prior to the project area’s formation. In future years, as the project area's assessed valuation grows above the frozen base, the resulting additional property tax revenues—the increment—flows to the tax increment financing district instead of other local agencies. After the bonds have been fully repaid, the district is dissolved, ending the diversion of tax increment revenues from participating local agencies. Property tax revenues then flow back to each local agency that receives a share of the property tax.
RDA plans adopted on or before December 31, 1993, had to terminate no more than 40 years from their adoption or January 1, 2009, whichever is later. After this point, the RDA had no authority to act pursuant to the redevelopment plan except to pay previously incurred indebtedness, comply with affordable housing production requirements, and enforce existing covenants, contracts, or other obligations.
RDA law required each RDA to make deposits into a Low and Moderate Income Housing Fund (Housing Fund) the agency maintained to increase, improve, and preserve the community’s supply of low- and moderate-income housing, generally not less than 20% of all taxes allocated to the agency. In 1975, the Legislature amended RDA law to require RDAs to replace low- or moderate-income housing units destroyed or removed as part of their previous projects (AB 1018, Sieroty).
Citing a significant State General Fund deficit, Governor Brown’s 2011-12 budget proposed eliminating RDAs and returning billions of dollars of property tax revenues to schools, cities, and counties to fund core services. Among the statutory changes that the Legislature adopted to implement the 2011-12 budget, AB X1 26 (Blumenfield, 2011) dissolved all RDAs. The California Supreme Court's 2011 ruling in California Redevelopment Association v. Matosantos upheld AB X1 26, but invalidated AB X1 27 (Blumenfield, 2011), which would have allowed most RDAs to avoid dissolution. In response, the California Redevelopment Association (CRA) challenged the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to AB X1 26, but granted it with respect to AB X1 27. As a result, all RDAs dissolved as of February 1, 2012. At the time of dissolution, over 400 RDAs statewide were diverting 12% of property taxes, over $5.6 billion yearly.
RDAs’ dissolution deprived many local agencies of the primary tool they used to eliminate physical and economic blight, finance new construction, improve public infrastructure, rehabilitate existing buildings, and increase the supply of affordable housing. At the time the state dissolved RDAs, the Controller estimated that statewide, the requirement to set aside 20% of funding generated in a project area for low- and moderate-income housing obligated RDAs to spend $1 billion on affordable housing.
RDA dissolution. AB X1 26 (2011) prohibited RDAs from incurring new or expanding existing monetary or legal obligations unless otherwise specified, removed the authority for RDAs to engage in most activities except continuing to pay off enforceable obligations, and established successor agencies to manage the process of unwinding former RDA affairs. With the exception of seven cities, the city or county that created each former RDA now serves as that RDA’s successor agency.
One of a successor agency’s primary responsibilities is to make payments for the enforceable obligations RDAs entered into. These payments are supported by property tax revenues that would have gone to RDAs, but are instead deposited in a Redevelopment Property Tax Trust Fund (RPTTF). Enforceable obligations include bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, and other legally binding and enforceable agreements or contracts. In Affordable Housing Coalition of San Diego v. Drager Affordable Housing Coalition of San Diego v. Drager et al (2020) 20 WL 4344835, the 3rd District Court of Appeals found that the affordable housing requirements that RDAs did not complete by the effective date of AB X1 26 were not enforceable obligations, unless they met the definition of an enforceable obligations for another reason, such as being subject to enforceable agreements or contracts.
Any remaining property tax revenues that exceed these enforceable obligations return to cities, counties, special districts, and school and community college districts to support core services. The amount that these taxing entities receive increases as the successor agency pays off these enforceable obligations. As a successor agency adds additional enforceable obligations, the slower this stream of property tax revenue returns to these taxing entities.
Each successor agency has an oversight board responsible for supervising and approving its actions. The oversight board includes one member of the legislative body from each type of taxing entity, including the county, city, special districts, schools, and community colleges. Additionally, the county board of supervisors appoints a public member, and the mayor or board of supervisors appoints one member to represent RDA employees.
The Department of Finance (DOF) can review and request reconsideration of an oversight board’s decision. Once a successor agency takes over for an RDA, it reviews the RDA’s outstanding assets and obligations, and develops a plan to resolve those obligations, also known as a Recognized Obligation Payment Schedule (ROPS). To obtain required DOF approval, a successor agency submits a series of ROPS to the department. If DOF agrees with the plan, it issues a Finding of Completion acknowledging their progress towards paying off their obligations. Successor agencies issued a Finding of Completion can submit a Last and Final ROPS, meaning that (1) the remaining debt is limited to administrative costs and payments pursuant to enforceable obligations with defined payment schedules, (2) all remaining obligations have been previously listed on the ROPS and approved by DOF, and (3) the agency is not a party to outstanding or unresolved litigation. Successor agencies had until December 31, 2015 to receive their Finding of Completion from DOF. Nine successor agencies did not receive a Finding of Completion by the deadline.
City and County of San Francisco. San Francisco’s RDA completed various redevelopment projects dating back to the 1960s. The RDA project areas diverted funds from the City and County of San Francisco and other taxing entities, including Bay Area Rapid Transit District, San Francisco Unified School District, San Francisco Community College District, and the city and county’s Educational Revenue Augmentation Fund (ERAF), for its redevelopment projects.
In 1992-93 and 1993-94, in response to serious budgetary shortfalls, the state permanently redirected almost one-fifth of total statewide property tax revenue from cities, counties, and special districts to K-12 school and community college districts. Under the changes in property tax allocation laws, county auditors deposit the redirected property tax revenue into a countywide fund for schools also known as a county’s ERAF.
In 2003, the Department of Housing and Community Development (HCD) determined that San Francisco’s RDA demolished 14,207 affordable housing units and replaced only 7,498 units, certifying a net loss of 6,709 units. Under AB 1018 (Sieroty, 1975), the City had to replace the remaining units. However, RDA law limited the effectiveness to 40 years after the redevelopment plan’s adoption or 2009, whichever is later. As such, the City could not incur new debt to finance this replacement housing obligation. SB 2113 (Burton, 2000) granted San Francisco until January 1, 2014, or until the agency replaces all the housing units demolished, to incur debt to replace the demolished affordable housing units. It also gave the RDA until 2044 to repay this indebtedness. Prior to RDA dissolution in 2011, San Francisco had only developed 867 of the 6,709 units, and this outstanding balance of 5,842 units remains.
After dissolution, the successor agency placed these replacement-housing units on its ROPS so that they could be considered enforceable obligations to be repaid with RPTTF. While its oversight board approved this action, DOF rejected the successor agencies’ decision to consider these replacement-housing units to be enforceable obligations. The department did not find that these replacement-housing projects met the definition of enforceable obligations. In other words, they were not bonds, bond-related payments, some loans, payments required by the federal government, obligations to the state or imposed by state law, payments to RDA employees, judgements or settlements, or other legally binding and enforceable agreements or contracts.
In 2014, the Legislature passed SB 1404 (Leno) to allow San Francisco’s successor agency to finance specified affordable housing projects, including these replacement-housing projects, with RPTTF. However, Governor Brown vetoed this legislation with the following message:
“Without a doubt, San Francisco faces extraordinary housing affordability challenges, compounded by the number of affordable units previously destroyed by the former redevelopment agency. I applaud the author and the mayor's continued efforts to increase affordability in this area. This bill as drafted, however, would grant this particular Successor Agency the ability to use tax increment and redevelopment law in a way that no other successor agency in the state has been granted.”
In 2015, the Legislature passed, and the Governor signed, SB 107 (Committee on Budget and Fiscal Review), which authorized the successor agency to issue bonds and incur debt for other projects using RPTTF, including the housing projects in Mission Bay, Hunters Point, and pursuant to the Transbay Implementation Agreement, but did not include projects to satisfy the replacement housing obligation. Using RPTTF to fund these projects extended the expected lifespan of the successor agency until 2058. Like its obligations under dissolution law, the successor agency must receive approval for these projects from its oversight board and DOF. For these obligations, the successor agency must make diligent efforts to ensure it obtains the lowest long-term financing, make use of an independent financial advisor, and follow other financial safeguards.
As one of the most expensive housing markets in the nation, San Francisco remains an epicenter of California’s housing crisis. As of September 2022, RealtyHop, a real estate investment company, reported that the median home price in San Francisco was nearly $1.4 million. This means a median-income household, which in 2022 earned $126,117, would need to spend almost two-thirds of its yearly income to afford a median-priced home. On February 1, 2023, the state certified San Francisco’s housing element, which calls for the creation of over 82,000 new housing units, more than triple the city’s annual housing production average, including 46,000 affordable housing units.
To help finance affordable housing to address this lack of affordable housing production, San Francisco and Freedom West Homes, an affordable housing cooperative, want to allow the successor agency to finance the replacement housing projects with RPTTF.
Proposed Law
Senate Bill 593 adds the replacement of up to 5,842 affordable housing units to satisfy the San Francisco RDA’s replacement housing obligation to the list of projects for which the successor agency can issue bonds or incur other indebtedness outside of the normal RDA dissolution process. Under the measure, the San Francisco successor agency may pledge to the bonds or other indebtedness the successor agency issues, incurs, or enters into, the property tax revenues available in the RPTTF that otherwise would have been distributed to the City and County of San Francisco after paying for other dissolution obligations. The measure also includes provisions to prevent the San Francisco from using moneys that are payable to the other taxing entities in the city and county for these projects.
To satisfy this replacement housing obligation, the measure allows the successor agency to assist housing projects that the San Francisco RDA previously assisted where the project’s affordability restrictions have expired, or are at risk of expiration. This assistance must be conditioned on requirements that the assisted units remain affordable to, and occupied by, persons and families of low-, moderate-, extremely low-, and very low-income households for the longest feasible time, but not less than 55 years for rental units and 45 years for owner-occupied units.
The bill also makes findings and declares its intent.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill. According to the author, “Decades after the injustice of redevelopment, San Francisco is still in desperate need of housing. The urban renewal process from the 1950s contributed to the crisis of affordable housing costs that continues to make the City unlivable for so many. SB 593 will allow the Successor Agency to the Redevelopment Agency of the City and County of San Francisco to replace all of the housing units demolished prior to 1976 as well as preserve affordability of the replacement housing built in the 1970s. This legislation will provide a narrow and tailored funding source through the Redevelopment Property Tax Trust Fund, a limited continuance of specific tax increment financing powers that will not impact the General Fund. SB 593 sets San Francisco on a path to right this wrong and meet its affordable housing goals.”
2. Special treatment. SB 593 allows San Francisco to finance certain affordable housing projects using RPTTF revenue despite DOF previously determining that these projects do not meet the definition of enforceable obligations that applies to all successor agencies. While SB 593 includes language to insulate other taxing entities from financial impacts associated with using RPTTF to finance these projects, SB 593 allows San Francisco to finance these projects in a way that no other city or county has enjoyed. While San Francisco undoubtedly has unmet affordable housing needs, other cities and counties do too. Instead of using RPTTF, these other cities would have to use other tools, such as asking 2/3 of their voters to approve of the issuance of general obligation bonds, issue other types of bonds, or create a tax-increment financing district to replace the revenue lost from RDA dissolution. The Committee may wish to consider whether San Francisco should enjoy a benefit not offered to other local governments.
3. Delaying dissolution. AB X1 26 created successor agencies to unwind RDAs obligations so that property tax revenues previously going to RDAs flow back to the local agencies generating the revenue. The property tax revenue used to issue these bonds came not just from the successor agency, which is the city in many cases, but also the county, special districts, and school and community college districts, which impacts the state by way of the Proposition 98 minimum funding guarantee. While SB 593 includes provisions to ensure that only property tax revenues that would be returned to San Francisco are used to finance these affordable housing obligations, allowing the successor agency to incur new debt for these affordable housing projects could delay dissolution beyond the current 2058 estimate. While the bill prevents the successor agency from using RPTTF revenue that would instead go to other tax entities to finance the replacement affordable housing projects, delaying the dissolution of the RDA could still have effects on these taxing entities. Specifically, property tax revenue to pay for the successor agency’s administrative costs would continue to flow to the successor agency instead of returning to other taxing entities. Should other taxing entities shoulder the cost of the successor agency’s ongoing administrative costs for this replacement housing obligation?
4. Coming and going. The Senate Rules Committee has ordered a double referral of SB 593: first to the Senate Governance and Finance Committee to hear issues of redevelopment dissolution and then to the Senate Housing Committee.
5. Special legislation. Section 16 of Article Four of the California Constitution prohibits special legislation when a general law can apply. SB 593 contains findings and declarations explaining the need for legislation that applies only to the City and County of San Francisco.
Support and Opposition
(3/24/23)
Support:
London Breed, Mayor of San Francisco (Sponsor)
City and County of San Francisco (Sponsor)
Freedom West Homes Corporation (Sponsor)
Bethel African Methodist Episcopal Church
California Housing Partnership Corporation
Low Income Investment Fund
NAACP San Francisco Branch
Non-profit Housing Association of Northern California
San Francisco Foundation
The San Francisco Foundation
The San Francisco Housing Accelerator Fund
Third Baptist Church of San Francisco
Young Community Developers, INC.
Opposition:
California Association of Realtors
-- END --
Discussed in Hearing
2MIN
Senate Floor
8MIN
Assembly Standing Committee on Housing and Community Development
13MIN
Assembly Standing Committee on Local Government
4MIN
Senate Floor
20MIN
Senate Standing Committee on Housing
39MIN
Senate Standing Committee on Governance and Finance
Bill Author
Bill Co-Author(s):
