The following article was written by Anna M. Caballero, Chair of the Local Government Committee

 Legislation brings needed flexibility for Redevelopment Housing Set Aside Dollars

-- Assembly member Anna M. Caballero, Chair of the Assembly Local Government Committee

Hard times, creative solutions

The last couple of years brought tough economic times for local governments in California.  I am hopeful that 2010 brings a brighter economic forecast and more opportunities for creative ideas.  Local governments, like the state, felt the impact of the down turn in the housing market, which has resulted in the decline in property tax revenues, sales tax revenues and skyrocketing unemployment in the housing construction industry. 

In the meantime, cities and counties with redevelopment agencies found that they had sizeable low and moderate income housing funds (known as 20% set aside funds) that they were carefully guarding to build new affordable housing. Generally, the agencies must wait for the set aside funds to accumulate enough money to actually build new housing units. During an economic downturn, it is hard to have funds sitting around when the agencies are cutting services, laying off staff and deferring maintenance. By the same token, the funds must be reserved for low and moderate housing units, and therein lies the opportunity.

In 2009 I authored Assembly Bill 720 to authorize cities and counties to include weatherization and energy efficiency improvements as part of the local government's efforts to substantially rehabilitate their housing stock.  AB 720 goes a step further and gives jurisdictions with redevelopment agencies an opportunity to spend a portion of their low and moderate income housing funds to rehabilitate or preserve existing affordable housing units.  This is extremely important in many jurisdictions that have little capacity to produce more units because of the lack of open space. AB 720 allows redevelopment agencies to take funds and immediately put the money to use.

Rehabilitation projects are generally smaller in scope than new construction, are easier to bond, meaning that local contractors have a good chance at landing a contract. A local contractor means local laborers get the work. Materials are generally purchased locally, helping local businesses and adding to the sales tax base - all of which is good for the local economy, workforce and business community. And, rehabilitation cleans up blighted neighborhoods and weatherization helps low and moderate income families reduce their utility bills.

AB 720, which took effect January 1, 2010, extends the time limit, from two years to four years, for a city or county to enter into a legally enforceable contract in order to provide committed financial assistance for the rehabilitation of affordable housing units. 

More importantly, the measure also allows a jurisdiction to claim credit in its annual housing report (up to 25%) for any units rehabbed, preserved, or acquired that meet the statutory requirements, regardless of whether its housing element included a program to address the alternative adequate sites requirement.  Units reported in this manner would reduce a city's zoning obligation in the housing element for the purposes of no net loss. 

AB 720 does not mandate how cities and counties may use their affordable housing funds, but what it does do is give more flexibility in the use of the funds, more time to contract and commit the financial assistance to the projects, and increases credit at the state level for meeting a state mandate to increase the stock of affordable housing units.  

I urge you to work with your local housing department to see how this legislation can help further your community's housing goals, help reduce blight, and stimulate your local economy. Please take action to put your valuable affordable housing dollars to work immediately.