Assembly Standing Committee on Housing and Community Development

Good morning. I want to welcome you to the Assembly Housing Community Development Committee hearing for Friday, August 30. We have two items on our agenda today. Each Bill can have two main witnesses and support in opposition, and each main witness would get up to two minutes each.

You should feel free to submit written testimony through the position portal on the Committee's website. This will become part of the official record of the Bill and our hearing room will be open for attendance of this hearing. This morning we are in Room 447 at the state capitol.

All are encouraged to watch the hearing from its live stream on the Assembly's website and I want to thank you for your patience and understanding. I want to welcome our Vice Chair and welcome other Committee Members to join us in Room 447 as they are able at this time. We can start as a Subcommitee.

I see our first author is here. I'd like to welcome Assemblymember Fong to present item one, AB 1038. When you are situated and ready, you may begin your presentation.

Good Morning Mister chair Members. Assembly Bill 1038 is a district Bill that will enable the City of South Pasadena to increase affordable housing. In 2018, a decision was made to abandon the completion of the 710 freeway in the La area. As a result, all the homes purchased by Caltrans to make way for the freeway became surplus property.

Several bills were enacted to establish the processes for disposing of homes, consistent with state law the Roberti act. In order to create affordable housing for the City of South Pasadena, two processes were created, one for historic homes and one for non historic homes. For historic homes, the city is able to purchase the homes from Caltrans at cost and sell the properties as is at market rate with the proceeds from the sales of the properties.

The city is required to develop or acquire affordable housing for very low, low and moderate income households at a ratio of three units for every unit acquired from Caltrans. For non historic homes, however, the city is required to rehabilitate the properties which are unoccupied and uninhabitable, and either rent or sell to Low income families at affordable prices.

The problem is that the homes are in dilapidated conditions, are in need of a lot of rehabilitation. The City of South Pasadena estimates a cost of more than $7 million to bring the homes up to building codes. This makes it hard for the city to take control of the properties if they were not disposed of by the city or another housing entity. The properties will be sold through auction and will lose opportunity to increase our affordable housing stock.

Assembly Bill 1038 changes the process so that the city can dispose of non historic homes the same way they dispose of historic homes. This will mirror the authorization for the City of Pasadena. The language in this Bill has been vetted by Caltrans, the Department of Housing and Community Development, and the governor's office. I respectfully ask for an aye vote.

Thank you. Any witnesses in support? Not today. Okay, thank you. I have no registered opposition on file. Is there any witnesses in opposition? Can you see no primary testimony. Are there any Members of the public here in support or opposition that would like to register on the record? You see nobody approach any Committee Member comment?

Yeah, I just have a question about the sale of this land or the homes. Is it below market that they're going to sell it for? How's that entire process working?

Thank you so much, Mister Patterson, for that question. So there's 13 homes in the City of South Pasadena that have been deemed non historic and need a lot of rehabilitation. The cost would be approximately $7 million to bring these buildings up to code.

The buildings would be purchased as proposed by the City of South Pasadena at the cost from the 1960s and seventies. Okay.

And these projects, though, are intended for very low income projects, right?

Yes. It would be intended to do a three to one replacement ratio for very low, low and affordable housing units for the City of South Pasadena at a three to one ratio.

Thank you, Seeing, no other Members wishing to comment, just appreciate you working on this. I know the City of South Pasadena probably appreciates you as well. Certainly grateful that you're working for them to be able to improve the opportunities along the 710 corridor and create more options for affordable housing. I know it's consistent with other work that we've done here through the Legislature. With that, I invite you to close.

Thank you so much, Mister chair and colleagues, for your questions and comments. I respectfully ask for an aye vote.

Thank you. We don't have a quorum at this time. When we do, then we will be able to entertain a motion.

Thank you.

We have one more item. We will await that author and a few Committee Members as well. This time we have. I think at this time we have quorum. So I'm gonna ask Madam Secretary to call the roll.

[Roll Call]

We have a quorum. I would be happy to entertain a motion on item number one by Miss Reyes and a second by Mister Grayson. Madam Secretary, please call the roll.

[Roll Call]

That Bill has five votes. It'll be out and we'll hold the roll open for absent Members.

Thank you. At this time we will take up item number two. This is AB 1413 by Assemblymember Ting. When you are ready, you may begin presentation.

Thank you, Mr. Chair. Apologies for running a little late today. I'm presenting AB 1413. This clarifies a bill that I got passed last year, got signed into law, AB 1633. There were some issues that came up toward the end of session last year around the amount of time that people could comment.

So we added a couple items that we worked with all stakeholders to agree on. It requires local agency to post an applicant's notice on their website and provide copies when requested.

Requires local agencies to wait for 60 days once they receive written notice before making a determination and requires local agencies to consider all objections, comments, evidence, and concerns raised about a notice of violation before it makes a determination. So we really wanted to strike a balance to have public participation, but also not to have delays. Respectfully ask for your aye vote.

Motion and seconded. Thank you. Is there any primary witnesses in support of this bill?

Mr. Chair, I'll be exceptionally brief. Alex Torres with Brownstein Hyatt on behalf of the Bay Area Council representing over 320 of the largest employers in the nine county Bay Area. What Mr. Ting said, this was a historic bill that we were proud to sponsor last year. I urge your aye vote.

Thank you very much.

Thank you, Mr. Chair. Jeremy Smith here on behalf of the State Building and Construction Trades Council. We thank Mr. Ting for his hard work with us. We appreciate that. And urge an aye vote. Thank you.

Thank you. Are there any primary witnesses in opposition to the bill? I have none on file. Okay, seeing none, are there any members of the public here who wish to register additional support or opposition? All right, seeing nobody approach, I will turn it back to Member comment. We do have a motion and a second. Questions or comments?

Okay, seeing none. Mr. Ting, I want to thank you for your, I think, long history of leadership in the Legislature working on the Housing Accountability Act and a number of other areas to improve the supply of housing opportunities for all Californians, affordable and otherwise.

I know this cleanup bill is going to be able to help us reconcile ongoing understanding of the interaction between the Housing Accountability Act and CEQA and appreciate the last minute effort to try to get this right as well. With that, invite you to close.

Just respectfully ask for your I vote.

Thank you. Madam Secretary, please call the roll.

Action that Senate amendments be concurred in. [Roll Call]

With that, we have five votes. The bill will be out. I'll hold the roll open for absent Members. Thank you. Thank you all. We will hold the room open a little bit for absent Members.

We will reopen the. We're all here except we will reopen the roll for Members who have joined us. Madam Secretary, please call the roll for item number one.

[Roll Call]

Current roll is 8-0. Will hold a roll open for absent Member.

[Roll Call]

We'll hold a roll open for absent Members. Current roll is 8-0. All right. Thank you. We will reopen the roll for add on Members. Item number one. Madam Secretary,

[Roll Call]

That Bill has nine votes, 9-0. It's passed and then item number two.

[Roll Call]

That Bill also passes with 9-0 and with that, we are adjourned.

[Background Noise]

All right. I'm gonna welcome you all to our second Assembly Housing and Community Development Committee hearing for Friday, August 30. We have two items on this agenda today. Each Bill can have two main witnesses in support and opposition, and each main witness can get up to two minutes each as well.

I invite you to feel free to submit written testimony through the position portal on the Committee's website. This will become a part of the official record of the Bill. The hearing room will be open for attendance of this hearing and this morning. Excuse me, this afternoon, we are in room 127 at the Capitol.

All are encouraged to watch the hearing from its live stream on the Assembly's website. And I wanna thank you for your patience and understanding. As I said, we have two items on our agenda today. I believe that we do have. We are just shy of enough Members for our quorum. We'll begin as a Subcommitee. And I see that Miss Bonta is here for item number two. This is AB 846. When you're ready, I invite you to present your Bill.

Thank you. Apparently first to the Chair serves today. Good evening, Chair and Members. I decided to author AB 846 to protect Low income renters living in publicly assisted affordable housing from significant rent spikes. The Low Income Housing Tax Credit Program, or LIHTC, is a critical source of funding for affordable housing production and rehabilitation nationwide.

Unfortunately, the way the federal law regulates rents for LIHTC units provides no assurances that a tenant's rent will remain affordable over time. Tenants have to income qualify for LIHTC units and will pay anywhere between 30% to 40% of their income and rent at the start of their tenancy.

In LIHTC properties, there is no relationship between a tenant's income and their rent over time. Rent increases are solely tied to increases in AMI. For the county in which the property is located, LIHTC property owners are free to raise rent up to the new allowable maximum whenever AMI rises.

This means that LIHTC tenants can face unpredictable and often unmanageable high rent increases. Despite living in affordable housing, they are not living in housing they can afford. There is a solution to this problem. States can impose additional restrictions on rents in LIHTC properties, and a growing number of states have taken advantage of this authority.

The tax Credit Allocation Committee, TCAC, which oversees the LIHTC program recently adopted regulations that apply a rent cap to LIHTC properties as a condition of getting new tax credits. Unfortunately, TCAC did not believe it had clear authority to apply the new cap to existing properties.

This leaves tenants in a tenable situation where existing properties are incredibly vulnerable to high rent increases, and we want to avoid that. AB 846 provides the necessary clarity by directing TCAC to establish a limit on rent increases in existing lighted properties in California.

By asking TCAC to apply its carefully crafted new rent captain regulations to all existing LIHTC properties, it protects tenants and gives developers the flexibility that they need. With me to speak more on this bill, I have Anya Lawler with the California Rural Legal Assistance foundation.

Good evening, Mister Chair Members. Anya Lawler with CRLAF. This Bill has taken quite a journey since it was last heard in this Committee last April, I believe. But we think we are close to a solution on the issue of rent gouging and LIHTC properties.

As the Member said, TCAC adopted regulations in the spring that applied basically what had been in the bill at that point that had been negotiated with stakeholders, which is the same rent cap that applies in market rate properties. It's 5% plus CPI, or no more than 10%.

It's hovering around 9% right now, given where we're at with inflation. But TCAC's attorneys wanted a little bit more clarity that they could apply it to their entire existing portfolio, which is where millions of tenants live today. This bill provides that. It directs them to apply that policy, or whatever policy they choose to existing properties.

I will just say that we continue to get stories on an almost weekly basis of tenants receiving gargantuan rent increases in LIHTC properties, including just today, a story in Chico of Low income seniors getting a 20% increase. We don't think this, this is workable for anyone, and particularly people living in affordable housing.

And we think this is a good solution and we would respectfully ask for your aye vote.

Thank you for the presentation. At this time, I think we have enough Members. I'm going to establish a quorum. Madam Secretary, please call the roll.

[Roll Call]

We have a quorum. Are there any Members of the public here who also wish to state a position of support? You can approach the microphone over here for names, organizations and your position.

Hi, I'm Michelle Parasite with Public Advocates. We're a proud co sponsor of this bill and urge your aye vote.

Thank you.

Rebecca Gonzalez, Western center for law and poverty and support.

Thank you.

Are there any witnesses here on primary opposition who wish to offer testimony? Okay, seeing none. Any Members of the public here who wish to offer a statement of position of opposition? Okay, seeing none, we'll turn it back to the Members on the dais. Vice Chair Patterson.

Great. Thank you. I know we're all got a ton of energy right now. So in my community, you know, LIHTC has obviously been very instrumental in developing any kind of subsidized housing, you know, within just my district in General. And so I'm concerned about. Understand, actually, my mom lives in a LIHTC property in a different district.

And so, you know, obviously, I'm very concerned with rent increases, you know, on her, and I hear about it when there is one every year. And, but also, I'm just concerned about the delivery of units.

And I know you are as well, but I'm concerned that this bill might kind of impede the ability to deliver affordable units in my district. And obviously, if you have any comments on that, I'd love to hear it. I mean, I know you're trying to do for the population. I appreciate that.

But also I want to see more units built at the same time.

Somebody Member Patterson, just one thing to note is that the average LIHTC project is financed with the assumption of three to 5% rent growth over time. Most of them are financed at 3.5%.

And so given that we know that these projects can pencil through their life with that increase, and this policy would not allow an increase of below 5%, would not limit it further than that. So we think it's really common sense.

It's worked out so far just fine in market rate properties that have been subject to this policy since 2019.

And also note that the regs that TCAC adopted, which were widely supported, including by tenant advocates, include a provision that would allow for a waiver of the rent cap if a property was in financial distress, because we obviously don't want these properties to go under.

So there are some safeguards in place to make sure that a project is going to be able to get the rent increases it needs to remain solvent.

I mean, yeah, I guess just, I think just my overall concern is just the ability to deliver units in the first place because, I mean, the programs that I know of in my district all take advantage of this. And I know the financing already is so complicated, and that's a bad thing. Right.

But also, at the same time, you know, I just, I want to make sure they continue to be billed, as I'm sure you do as well. So thank you.

Thank you, Mister Vice Chair. No other Members wishing to ask a question or offer comment. I just wanted to say I want to thank the author for her work on this issue for almost two years.

I do believe that the TCAC regulations do strike a good balance between providing a lot of waiver opportunities for situations where an affordable housing provider does need, does not need to exceed the cap, but also believe that we need to extend some of those protections of the cap to residents of existing developments, as you're doing here.

So I'm happy to support this Bill. I'd entertain a motion for the Bill and invite you to close. We have a motion. We have a motion and a second. Invite you to close.

Respectfully request your aye vote. Thank you for the.

Thank you. Madam Secretary, please call the roll.

The action is that Senate amendments be conferred in. [Roll Call]

Thank you. At the moment, we're at 42. We'll hold the roll open for absent Members. Thank you. And back to item number one. This is Assembly Bill 598.

oh, great.

So, Member Wicks, when you are ready, you may go ahead and begin with your presentation.

Thank you, Mister chair Members, I am here to present AB 598. When this came to the Assembly the first time, it was the sex ed Bill that went through the Education Committee. It is no longer that in the Senate.

We amended it to be a BAHFA cleanup Bill in anticipation of the $20 billion bond that was proposed for the November ballot. And while, as we know, the Bay Area Metropolitan Transportation Commission and the Association of Bay Area Governments recently decided to remove the proposed bond from the ballot, sad face, the involved parties wanted to go ahead and make this change so that everyone was on better footing next time.

As a reminder, BAHFA is the Bay Area Housing Finance Authority, which is an entity that is governed by MTC and ABAG, who are the sponsors of the Bill.

This Bill reflects concerns by barrier builders and business groups that BAHFA would use its money to the money it raised to leverage changes in land use policy in local jurisdictions that are to receive that money. That is not BAHFA's intention, and this Bill makes that very explicit. BAHFA cannot leverage its money to influence local land use policy.

This Bill is supported by the Bay Area Builders and business groups, as well as affordable housing groups and social justice groups that sponsor BAHFA and has no opposition. And it got out of the Senate 40 to zero. So respectfully ask for an aye vote. Thank you.

Alison Ramey with Carter, Wetch & Associates here today on behalf of MTC ABAG in support of the Bill, we want to extend our appreciation. Appreciation to the Assembly Member for carrying this minor clarification and ask for your aye vote.

Thank you. Any Members of the public here in a wishing to register a statement of support.

Good afternoon, Mister chair and Members Graciela Castillo-Krings here on behalf of All Home and Enterprise Community Partners in strong support. Thank you.

Chair and Members Sosan Madanat, W Strategies, I've been asked to give a courtesy me too for a colleague on behalf of NPH, the Nonprofit Housing Association of Northern California. Thank you.

Mister chair Members. Good to see you all again. Alex Torres with the Bay Area Council in support.

Thank you. And is there anybody here for primary? As a primary witness of opposition, can you see? None. Any Members of the public here wishing to register a statement of opposition? Seeing none, I will turn back to Committee Members. I have a motion by Miss Wilson and a second by Miss Quirk-Silva. And no questions or comments. Mister Vice chair.

Question... Yeah, is there. You know, I know that there was recently a, you know, bond being considered in the Bay Area, and it's. I don't think it's really being considered anymore. And so.

Yeah, it's been pulled off the ballot.

Yeah. What's the necessity of this?

We anticipate it'll go on the ballot in two years. All right. And the Bill was already moving along in its way, so.

Okay. Yeah. Great. Thanks.

Thank you, Mister Vice Chair. Well, all the same, although this wasn't the year, I think getting ahead of that and thinking about some of the implementation efforts under this Bill that would help it be more successful should it pass by the voters would lend me to support the work that you're doing here so that they know what the rules are going forward as they approach the question, possibly in 2026 or some subsequent cycle. I invite you to close.

Just with respect to the best policy Committee in the Legislature would respectfully ask for an aye vote.

Thank you, Madam Secretary. Please call the roll.

[Roll Call]

We have a vote of four to two. And hold that roll up in for. Excuse me, four to zero with two Members not voting. I will hold the roll up and for absent Members. Thank you. And at this time, I know, we have multiple committees meeting, but if staff are listening for absent Members, we would encourage them to come down to room 127 to. To cast their votes. Thank you. We will reopen the roll for item number one. Adam. Secretary.

[Roll Call]

Current role is five to 25 to zero, with two not voting. And item number two.

[Roll Call].

That current roll is five to two. We will hold both open for absent members. Thank you, Mr. Lee.

We still have Labor Committee. Okay. They started already.

I think it was a 72-hour one.

Oh. I'm sure we have.

All right. Take care, you guys.

Food is good downstairs.

So you didn't take up the third supplemental? No, Chris?

Oh, me? No.

There's a third supplemental. You guys--

You're going to need to refer to few of those in the supplemental.

37 on file.

Oh. So 2:00 session, you want do lunch at noon instead? You want to move lunch up an hour since...?

Thank you. We'll reopen the roll for Item Number One.

Assembly Member Grayson? AB 598.

Aye.

[Roll Call].

Thank you. Current roll is at six/zero, and Item Number Two.

846. Assembly Member Grayson?

Aye.

Aye.

Current roll is at six/two. Thank you, Mr. Grayson. I'll hold the roll open for absent members.

Like cheese? Like that would be on like cheese?

And then like scrunch jam. And then like chocolate. I don't know. And then beer cheese. And some garlic. And it's like a great way to like eat.

It almost sounds like it'd be good. Almost like Focassia bread or whatever. You know, it's like even some tomatoes on there, you know, sliced tomatoes. Next is apple season.

Oh, she's--she's chairing Labor, and they've got three more committees en route. Or--and only three committees and he says en route. They heard things. Okay.

No schedule yet?

No, not yet.

They're doing the last bill. It's the Durazo, which will take a while, Caleb thinks. They just started the Durazo bill, so. I guess so. Yeah. It's his last bill. It's the Durazo, which will take a while. I don't know what the Durazo bill's about. Why are you doing the Durazo bill? Is that a bill?

All right, thank you. We're gonna reopen the roll on Item Number One. Madam Secretary.

And that is AB 598. Assembly Member Reyes?

Aye.

Assembly Member is aye.

That bill is out seven/zero with two members not voting. And Item Number Two.

AB 846. Assembly Member Reyes?

Aye.

Aye.

That bill is out on a seven/two vote, and with that, we are adjourned. Thank you.

Are you okay or did you want to see if there was anything there before they closed at seven? Are you okay on food?

They're going to close downstairs at seven?

Yeah. You want to go see if there's like any something?

Yeah, I think so.