1999-00 End of Year Reports

LEGISLATIVE SUMMARY FOR 1999-00

TABLE OF CONTENTS

• LEGISLATIVE SUMMARY
• BUILDING STANDARDS
• COMMON INTEREST DEVELOPMENTS
• FARMWORKER HOUSING
• HOUSING DISCRIMINATION
• HOMELESSNESS
• HOUSING FINANCE
• LAND USE
• MOBILEHOMES/MANUFACTURED HOUSING
• REDEVELOPMENT
• SENIOR HOUSING
• MISCELLANEOUS
• APPENDIX [Bills in Numerical Order]

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Legislative Summary

1999-2000 Session

Government Code Section 65580 declares: The availability of housing is of vital statewide importance, and the early attainment of decent housing and a suitable living environment for every Californian, including farm-workers, is a priority of the highest order.

In California, housing costs have, for the past 25 years, risen faster than the earning power of the average resident, and housing prices are among the highest in the nation.

During the seven-year period of 1991 – 1997, California housing production averaged only 96,000 units annually. In the early years of the decade, home prices were falling and people were leaving the state, so limited housing construction made some sense. More recently, however, California's economy has been booming, but housing production has managed only a modest expansion. Estimates of housing need range from 200,000 to 250,000 new units per year to keep up with current population and job growth.


Currently, an estimated 1.45 million housing units need to be rehabilitated or replaced. Also, an estimated two million households have unaffordable housing costs, that is, those paying excessive proportions of their income for housing. According to the Center on Budget and Policy Priorities, in California's six largest housing markets, a high percentage of low-income families spend more than 50 percent of their income on rent.

Affordable rental units are critically scarce. Of the 45 largest metropolitan areas in the nation, the six lowest-performing areas in providing affordable rental housing were all in California.

In July 2000, under the leadership of Chairman Alan Lowenthal, the Assembly Housing and Community Development Committee designed and worked to assure passage of the largest appropriation for affordable housing programs in the history of the state. This year the Governor signed a budget that included $570 million for multifamily housing development and homeownership down-payment assistance programs.

The budget package includes:

• $188 million for the development of multifamily rental housing.

Budget augmentation.

• $25 million to create the new “Downtown Rebound Program”. Downtown Rebound will provide financing to revitalize downtowns and neighborhoods, reduce development pressure of agricultural and open space resources and provide working families with options to live close to their jobs.

AB 2870 (Cedillo) Chapter 83, Statutes of 2000.

• $100 million for down payment assistance, homeownership programs. Funding shall be available for the following programs:
   
• California Homebuyer's Down Payment Assistance Program
  
  To provide down payment assistance to middle income families to purchase their own homes. Loans will be up to 3% of the home sales price.
  AB 2865 (Alquist) Chapter 81, Statutes of 2000.
• CalHome Program to be administered by HCD
  
  Provides grants and loans to local governments or non-profits to enable low and very low-income households to become or remain homeowners.
  SB 1656 (Alarcon) Chapter 84, Statutes of 2000.
• $110 million in grants to local governments who successfully attract more housing into job centers.
  AB 2864 (Torlakson) Chapter 80, Statutes of 2000.
   
• $39 million in funding for the Emergency Housing Assistance Program (EHAP), which provides grants to counties and nonprofit entities to finance emergency shelters for homeless individuals and families.
  Budget augmentation.
   
• Nearly $47 million for Farmworker Housing programs.
  Budget augmentation.
   
• $10 million for Building Code Enforcement and an Interregional Pilot Project for improvements to the planning process.
  AB 2867 (Lowenthal) Chapter 82, Statutes of 2000.

The lack of affordable housing has serious repercussions for all Californians. It affects the high-tech worker in the Silicon Valley who earns, what would be considered a very good income, in other parts of the country. It affects two income families with children. It contributes to longer commutes. It may result in slowing the growth of the economy if workers cannot find affordable places to live close to where they work.

This summary highlights the work of the Assembly Committee on Housing and Community Development during the 1999-2000 session of the California Legislature, provides background on all major areas of the committee's jurisdiction, and includes a list of legislation heard by the committee, including the final status of that legislation.

For additional information regarding this summary or other activities of the committee, please contact the committee staff at (916) 319-2085.

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BUILDING STANDARDS

Developing building standards requires a balancing act between health and safety concerns and the costs of addressing those concerns. Developers insist that it is difficult to build affordable housing when regulations increase their construction costs: consumer groups, fire departments, and disabled advocates argue for safer, energy-efficient, and accessible buildings. The public policy struggle is in determining the proper balance between the two.

Building standards in California are based upon model codes, such as the Uniform Building Code and the Uniform Mechanical Code. Model codes are published and approved by groups of national and regional experts on structural, mechanical, electrical, plumbing, and fire safety standards.

California building standards are adopted through a process in which state agencies, using the model codes, propose additions or changes to the California Building Standards Code (Code) (also known as Title 24 of the California Administrative Code). The California Building Standards Commission (BSC) then reviews, and adopts or rejects the proposed changes. An updated version of the code is published every three years. Local governments can modify the Code, but those modifications must be equal to or more stringent than the statewide standard.

In May 1998, the 2000 Code Partnership was formed to coordinate the next triennial publication of the California Building Standards Code. Over the last two years, the BSC, state agencies, and stakeholders have been conducting a large-scale analysis of existing and new model codes. The goal of the partnership is to develop a comprehensive plan that provides for the timely, effective, and complete development of the 2001 Code. The target publication date for the Code is January 2, 2001 and it becomes effective July 1, 2001.

The Code applies to all buildings and residential occupancies. Some structures, however, such as high-rise commercial buildings and private schools, are not subject to the Code and are governed by the model codes and local ordinances.

Although most building standards are created and adopted in the administrative process, numerous bills are introduced each year that propose new building standards or amendments to existing building standards. These bills are drafted in response to natural disasters, requests by industries or proposals by consumer groups in reaction to perceived dangers relating to existing building standards.

Major Legislation

AB 1221 (Dutra) Died in Assembly Committee on Judiciary:Would have established the California Homebuyer Protection and Quality Construction Act of 2000 to provide for 10 year home construction warranties for residential properties.

AB 1382 (Lowenthal) Chapter 664, Statutes of 2000: Establishes the Community Code Enforcement Pilot Program. Also, requires the Department of Housing and Community Development to award five $450,000 grants each to cities or counties to develop a three year code enforcement pilot program, and requires recipients to submit reports to the department by December 31, 2004.

AB 1626 (Migden) As introduced: Would have designated the International Association of Plumbing and Mechanical Officials, Uniform Mechanical Code, and the Western Fire Chiefs' Association Uniform Fire Code as the model codes to be used as the basis for the state building code.

This bill was amended in the Senate January 20, 2000 (Torlakson) to take effect immediately as a tax levy, to increase permanently the annual state low-income housing tax credit limit from $35 million to $50 million.

Signed by the Governor on February 23, 2000, Chapter 3, Statutes of 2000.

AB 2112 (Dutra) Died in Conference Committee: Would have set forth as the intent of the Legislature that Californians have access to affordable for-sale housing that incorporates high quality construction free from construction defects.

AB 2632 (Calderon) Died in Assembly Committee on Judiciary: Would have provided immunity from liability for a third party inspector who contracts with the developer of a residential building to check plans and specifications to determine compliance with building standards. Also, would have provided that the immunity given to an inspector does not remove or reduce the responsibility for any damages to persons or property caused by construction or design defects for any person other than the inspector.

Other 1999-2000 Legislation:

AB 423 (Dutra) Chapter 380, Statutes of 1999: Requires the installation of fire retardant roofing material when repairing, altering, or replacing an existing roof.

AB 543 (Papan) As Introduced: Would have required the Department of Housing and Community Development to study and report to the Legislature by March 1, 2001 regarding compliance with interim flushing procedures and worker safety measures required for the installation of chlorinated polyvinyl chloride plastic pipe allowed between January 1, 1996 and January 1, 1998.

This bill was amended in the Senate September 9, 1999 (Torlakson): Would have required plumbing pipes and fittings used for potable and wastewater piping systems to be labeled with the country of origin and manufacturer's name. Also, would have allowed optical disc manufacturers to use a unique identifying code in order for law enforcement to identify the manufacturer.

Vetoed by the Governor.

AB 942 (Dutra) Chapter 391, Statutes of 1999: Requires specified information to be mailed or posted regarding orders and notices of repair due to building code violations.

AB 1554 (Calderon) Died in Assembly Committee on Housing and Community Development: Would have defined model code to include the most recent edition of specified uniform codes.

AB 1837 (Torlakson) Died in Assembly Committee on Housing and Community Development: Would have required cast iron plumbing pipe and fittings used for potable and wastewater piping systems be labeled with the country of origin and the manufacturer's name.

SB 1064 (Perata) As Introduced: Would have allowed cities and counties to adopt alternative building regulations for the conversion of commercial, manufacturing, or industrial buildings to residential use.

This bill was amended in the Assembly September 7, 1999 to allow the Mexican American Veterans' Memorial Beautification and Enhancement Account check off to remain on the tax form through 2000 tax year.

Chapter 989, Statutes of 1999.

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COMMON INTEREST DEVELOPMENTS

“Subordination of individual property rights to the collective judgment of the owners' association, together with restrictions on the use of real property, comprise the chief attributes of owning property in a common interest development.”

California Supreme Court, September 2, 1994

Nahrstedt v. Lakeside Village Condominium Association

A common interest development (CID) combines a separate interest in the ownership of a unit with a combined interest in the ownership of the common area. The owners of the separate interests are members of an association created for the purpose of managing the CID. The board of directors of the association is responsible for the day-to-day management and operation of the CID.

Under California law, the Davis-Stirling Act (Act) governs CIDs including community apartment projects, condominium projects, planned developments, and stock cooperatives. The Act provides for association voting requirements, access to records, levying of assessments, conduct of meetings, and liability of officers and directors.

The Department of Real Estate is the governmental entity responsible for approving, with limited exceptions, the public report required before a CID can be established. It is estimated that there are over 30,000 CID associations.

The most important legislative issues surrounding CIDs continue to be:

• Disclosure of information to a prospective buyer of a unit located in a CID, especially about the potential for increases in assessments and other financial matters relating to the maintenance of the property.

• Ongoing disclosure to homeowners about issues relating to any construction defects, litigation arising out of defects, or increases in assessments that affect homeowners.

• The rights and privileges of individual homeowners within a CID when they conflict with the association's rules or covenants, conditions, and restrictions (CC&R).

Major Legislation

AB 860 (Thomson) Chapter 551, Statutes of 2000: Allows mobilehome park residents and homeowners in common interest developments the right to keep pets subject to reasonable rules and regulations.

AB 1048 (Firebaugh) Chapter 898, Statutes of 1999: Requires common interest development homeowners' association to provide information disclosing the amount of funds received from a construction or design defect lawsuit and how the funds will be spent.

AB 1859 (McClintock) Chapter 125, Statutes of 2000: Exempts regular assessments collected by a homeowners' association to pay for essential services required in its governing documents from execution by a judgment creditor and requires a court of law to ensure that only the funds collected to perform essential services such as paying for utilities and insurance are exempted.

AB 1893 (Migden) As Introduced: Would have created the Common Interest Development Manager Certification Act to regulate and certify managers of common interest developments under the Department of Consumer Affairs. Also, would have modified real estate brokers educational requirements to allow them to provide management or financial services to developments.

This bill was amended in the Senate August 7, 2000 (Dutra): Would have provided that when an obligation secured by any deed of trust has been satisfied, the beneficiary has 39 days to execute and deliver to the trustee (who then has 21 days to record) the documents necessary to re-convey the deed of trust within 60 calendar days after satisfaction of the obligation. Also, would have provided that a reconveyance fee may not be charged unless the fee is both expressly authorized under the deed of trust or mortgage and demand for the fee was included in the payoff demand statement.

Died in the Senate Committee on Judiciary.

SB 1148 (Burton) Chapter 589, Statutes of 1999: Provides that no declaration or other governing document of a common interest development shall contain any discriminatory restrictive convenants.

Other 1999-2000 Legislation

AB 1823 (Dutra) Chapter 257, Statutes of 2000: Requires community association boards of directors to notify an association member in writing, 15 days prior to meeting, to consider or impose disciplinary action against that member; permits the member to appear and address the board at the meeting; and requires the board of directors to notify the member in writing within 10 days following the decision to impose disciplinary action. Also, requires sellers to give a prospective purchaser a written statement detailing any unpaid monetary fines or penalties levied on the owner's interest in the development.

AB 2031 (Nakano) Died in Senate Committee on Judiciary: Would have required the board of directors of the homeowners' association to provide all members with complete access to all documents and records of the association and to retain all documents and records of the association for at least seven years. Also, would have provided that any member who has sustained economic loss because of the association's violations of these provisions, may recover up to $5,000 in damages.

ACR 136 (Oller) Resolution Chapter 86, Statutes of 2000: Encourages homeowner associations and landlords to allow residents and tenants to exercise their lawful right to display the United States flag.

SB 453 (O'Connell) Signed by the Governor on May 23, 2000, Chapter 26, Statutes of 2000: An urgency statute to take effect immediately, revises the voting and signature requirements for the conversion of community apartment projects and stock cooperatives to condominiums.

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FARMWORKER HOUSING

Affordable, safe, and sanitary housing is virtually nonexistent for the vast majority of California's farmworkers. When a migrant farmworker arrives in a rural agricultural town, he/she has few options: most of the existing housing is occupied; available units often consist of the most dilapidated units in the community; rents are high; and per-person charges are used to capitalize on “doubling up.” If the migrant fails to arrive in town early enough to get a substandard unit, there are four choices available: double up in an occupied unit; pay rent to live in a shed, barn, garage, or backyard; live in a car; or try to obtain housing in a surrounding community and commute to work. Although there are a number of state-operated farm labor camps and some employer-provided housing, these programs address only a minimal portion of the total housing need.

Several reasons are commonly cited for the lack of farmworker housing. Housing advocates maintain that government has not spent enough money for farmworker housing. The agricultural industry maintains that housing is expensive to provide and investments are rarely recaptured because the housing is only used seasonally. Agricultural interests also contend that governmental regulations and community opposition make farmworker housing difficult to build and maintain. Moreover, the increasing use of farm labor contractors as intermediaries has increased the distance between growers and labor, which blunt workers' attempts to attain better working conditions and benefits directly from growers.

Two state programs and a number of private camps offer a combined total of 5,607 units assisting an estimated 39,374 farmworkers and their families. The federal Rural Economic Development Services Agency (formerly the Farmers Home Administration) provides funding to build low- and moderate-income farmworker housing.

The state housing programs are:

1) Office of Migran Services(OMS): This program, administered by the Department of Housing and Community Development (HCD), operates 26 migrant centers in 16 counties, annually serving an estimated 12,546 migrant farmworkers and their families in 2,107 units.

Thirty percent of the farmworkers come from California, 35 percent from Mexico, and the rest from Arizona, New Mexico, and Texas. The centers generally operate from April through November. Land is provided by the local jurisdiction. The state owns the buildings and equipment and operates the program, usually by contracting with a local housing authority. The Fiscal Year 2000-01 Budget funded this program with $7.7 million.

2) Farmworker Housing Grant Program: This HCD-administered program offers up to 50 percent matching grants for the construction and rehabilitation of owner-occupied and rental housing for low-income, year-round farmworkers. This program has assisted 3,500 units and an estimated 14,280 total farmworkers and their families since 1977. In 1998, $4 million has been appropriated to the Farmworker Housing Grant Program through the passage of AB 10 (Ducheny), Chapter 881, Statutes of 1997. All funding has been committed and projects totaling 375 assisted units are being developed. Fiscal Year 2000-01 Budget funded $46.5 million.

Major Legislation

AB 2306 (Flores) Signed by the Governor September 2, 2000, Chapter 312, Statutes of 2000: An urgency statute to take effect immediately, creates the Joe Serna Farmworker Family Wellness Act to integrate housing and health services for agricultural workers in conjunction with the Farmworker Housing Grant Program, and requires the Department of Housing and Community Development to establish a task force to assist in the development of the farm labor assistance plan.

Other 1999-2000 Legislation

AB 1580 (Florez) Died in the Assembly Committee on Appropriations: Would have required the Department of Housing and Community Development to establish a task force to develop a strategy for the development of farm labor housing.

SB 805 (McPherson) Signed by the Governor on September 1, 1999, Chapter 308, Statutes of 1999: An urgency statute to take effect immediately, authorizes the Department of Housing and Community Development to grant extensions for migrant farm labor centers to stay open up to 28 days beyond the normal 180 day operating period.

SB 1545 (Costa) Chapter 702, Statutes of 2000: Imposes specific planning and zoning requirements on local jurisdictions regarding rehabilitation of employee housing for agricultural employees.

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HOUSING DISCRIMINATION

Housing discrimination in California is governed by the state Fair Employment and Housing Act, the Unruh Civil Rights Act, and the federal Fair Housing Amendments Act of 1988.

The Fair Employment and Housing Act (FEHA): FEHA prohibits the owner of any housing accommodation from discriminating against any person in the sale or rental of housing accommodations based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, or age. Employers with four or fewer employees and non-profit religious organizations are exempt from FEHA.

The Department of Fair Employment and Housing (DFEH) investigates and adjudicates complaints arising under FEHA. Complaints must be filed within one year of the alleged incident.

Remedies available for housing discrimination include a DFEH order for the landlord to cease and desist and to sell or rent the accommodation to the complainant, the assessment of actual damages, and the assessment of punitive damages of $10,000 for a first offense, $25,000 for a second, and $50,000 for three or more. In addition, the complainant can chose to file a civil action in lieu of or during the DFEH administrative process.

The Unruh Civil Rights Act: The Unruh Act broadly prohibits business establishments from discriminating against people based on their sex, race, color, religion, ancestry, national origin, or disability. The California Supreme Court has opined that the Act also prohibits other arbitrary discrimination by business establishments, such as that based on age (Marina Point Ltd. v. Wolfson (1982) 30 Cal.3d 72) and sexual orientation (Hubert v. Williams (1982) 133 Cal.App.3 Supp.1).

Several California court cases have established the applicability of the Act to the sale or rental of housing. In Marina Point Ltd., the Supreme Court held that the landlord of an apartment complex and the homeowners association in a planned development constituted business establishments, and were therefore prohibited from discriminating in the sale or rental of housing based on age. The Court did, however, carve out an exception for senior housing facilities that include special amenities for seniors. In Park Redlands Covenant Control Committee v. Simon (App. 4 Dist. 1986) 226 Cal.Rptr. 199, 181 Cal.App.3d 87, the court held that a tract housing homeowners association was a business establishment.

DFEH investigates complaints arising under the Unruh Act. In addition, the Attorney General, district attorneys, city attorneys, or any complainant can bring a civil action, with the following remedies allowed: actual damages, punitive damages in an amount equal to three times the actual damages or $1,000, whichever is greater, and attorney's fees.

Fair Housing Amendments Act of 1988 (FHAA): The federal FHAA prohibits discriminatory housing practices based on handicap or familial status. The federal Department of Housing and Urban Development (HUD) has adopted regulations that recognize, as an exception to the prohibition against discrimination, the special needs and status of senior citizens. These regulations permit "seniors only" developments under specified conditions. The FHAA expressly does not limit the applicability of any reasonable occupancy standards adopted by the state and local governments.

The FHAA specifies that if HUD receives a complaint alleging discrimination in housing, HUD must refer the complaint to a state or local agency for action if the agency has jurisdiction and is certified by HUD as having protections, procedures, and remedies "substantially equivalent" to HUD in fair housing enforcement.

Major Legislation

AB 1493 (Nakano) Signed by the Governor on September 1, 2000, Chapter 291, Statutes of 2000: An urgency statute to take effect immediately, modifies the stamp or coversheet requirements to be placed on a declaration, governing document or deed, which states that any discriminatory restriction violates the law and is void. Also, establishes a procedure whereby an owner of property may seek to remove any discriminatory restriction from a relevant document.

1999-2000 Legislation

AB 1001 (Villaraigosa) Chapter 592, Statutes of 1999: Moves the provisions prohibiting employment discrimination on the basis of sexual orientation from the Labor Code to the Fair Employment and Housing Act. Also, prohibits housing discrimination on the basis of sexual orientation.

AB 1831 (Bates) Died in Senate Committee on Judiciary: Would have added language to the cover page disclaiming discriminatory restrictive covenants, which are attached to a deed, specifying that senior communities are authorized to enforce restrictive covenants based on age or familial status.

SB 1531 (Morrow) Died in the Assembly Committee on Housing and Community Development: Would have added legislative intent language to clarify that the real property covenant cover sheet does not have bearing on or affect the senior housing exemption from the definition of “familial status” for purposes of the Fair Employment and Housing Act. Also, would have added language to the real property covenant sheet that senior communities are authorized to enforce restrictive covenants based on familial status.

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HOMELESSNESS

Homelessness is a problem in every major city in California, as well as in many rural areas.

California's streets, malls, beaches, parks, and riverbanks are rife with people who for one reason or another do not have permanent places to live. The homeless problem stems from many sources including high housing costs, unemployment, alcoholism, drug addiction, reduced services for the mentally ill, reduced federal housing funds, as well as conversions of federally subsidized housing to market rates.

Despite the acknowledgment by many in government, the media, and the private sector of the problems of homelessness, there is neither agreement on how best to attack the problem nor significant public money with which to fight it. In large part, the battle against homelessness is being fought by church groups and other non-profit organizations with volunteers, donations, and a trickle of government funds.

Many cities have enacted stiff anti-camping and panhandling ordinances in response to outraged citizens and business owners who demand a “get-tough” approach to the problem.

Thirty seven percent of the homeless in California have families, 38 percent have problems with alcohol, 39 percent suffer from mental illness, and 26 percent have a drug problem.

The number of homeless people in California is difficult to estimate. Since a person can be homeless for days, weeks, months, or years, the homeless population is in constant fluctuation. However, according to the latest data from Housing California, California is meeting only a fraction of the need for emergency shelters. On any given night, there are approximately 185,000 homeless individuals and 105,000 homeless families. About 1 in 6 individuals and 1 in 5 families may have a bed.

To address the wide array of needs for the homeless, the state and federal government provide services to the homeless through a complicated array of agencies, departments, and programs which focus on either emergency shelter and services or narrowly-focused programs that address specific subgroups of the homeless population.

The 2000-01 Budget provided $39 million in funding for the Emergency Housing Assistance Program (EHAP), which provides grants to counties and nonprofit entities to finance emergency shelters for homeless individuals and families.

Federal and State Housing Programs

1) Emergency Housing Assistance Program (EHAP): Operated by the state Department of Housing and Community Development. Provides grants to local service providers who offer temporary emergency shelter to the homeless. Grants may be used for the acquisition and renovation or expansion of existing facilities, general maintenance costs, and limited administrative expenses.

Proposition 84 approved by the voters in June 1988, and Proposition 107, approved in June 1990 provided temporary funding for EHAP. Proposition 84 allocated $25 million and Proposition 107 allocated an additional $10 million in bond proceeds to for “hard costs,” i.e., development and rehabilitation of shelters. All of these funds have been committed.

2) Federal Emergency Shelter Grant Program: Provides Stewart B. McKinney Homeless Assistance Act of 1987 (McKinney Act) grant funds for rehabilitation of homeless shelters, essential services, operating expenses, homeless prevention, and grant administration. Approximately $1.5 million was allocated to California for this program in 1994, but these funds are expected to decline.

3) Homeless Handicapped Program: Funded by the federal Department of Housing and Urban Development under the McKinney Act. The state program contracts with approximately 30 non-profit housing providers who acquire and rehabilitate single-family homes for use by the handicapped homeless. Currently, the program serves between 250 to 300 people. HUD pays for a percentage of the ongoing costs for up to five years, and the residents (most of whom receive Social Security) contribute 30 percent of their incomes toward household needs and maintenance costs. Over the last five years, the program has received $9.7 million in federal funds; previously there was no state funding. Currently this program receives approximately $186,000 per year in state General Fund money.

1990-2000 Legislation

AB 2166 (Cardenas) Vetoed: Would have increased the maximum length of stay in transitional housing funded under the Battered Women's Shelter Program from 18 to 24 months. Also, would have required state agencies currently collecting data on the housing needs of domestic violence victims to biennially report this data to the Department of Housing and Community Development to be included in the Statewide Housing Plan.

AB 2258 (Leach) Vetoed: Would have required the State Department of Social Services to study the licensing of crisis nurseries as a separate category of care facilities that provide temporary shelter for children. Also, would have required the department to submit a study to the Legislature by January 1, 2002.

AJR 39 (Washington) Resolution Chapter 67, Statutes of 2000: Makes declarations as to the problem of homelessness, urges the President and Congress to develop a comprehensive plan to end homelessness, and requests the President to convene a National Commission on Homelessness.

SB 1593 (Burton) Chapter 667, Statutes of 2000: Requires the Department of Housing and Community Development to implement some of the recommendations of the Senate Task Force on Homelessness contained in their final report released in June 2000 as to how California might improve its funding and services for the homeless.

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HOUSING FINANCE

Affordability is the most significant housing problem confronting California's families, followed to a lesser extent by overcrowding and substandard quality. Affordability problems affect both renters and owners and low- and moderate-income families. The state's affordability crisis has dramatic implications for the quality of life for millions of California households and, potentially, for the future performance of California's economy. Simply put, a very large proportion of California families—both renters and homeowners—can not afford housing costs.

California has among the most expensive single-family and multi-family housing markets in the nation, and has extremely low vacancy rates in major urban areas. As a result, Californians, especially those with lower incomes, face a major affordable housing crisis. According to the Department of Finance, we need to build 250,000 housing units per year to keep pace with population growth, but only 130,000 are constructed annually. Both homeowners and renters feel the growing impact of this disparity:

• According to the affordability index, 29 percent of California households could afford the median-priced home in August of 2000 compared to 38 percent in August of 1998.

• California’s homeownership rate is the second lowest in the nation. Homeownership rates in California were more than 10 percent less than the national average in 2000 (55.7 percent vs. 66.8 percent), according to the 1999 U.S. Census.
   
• The California Budget Project in conjunction with Housing California published a report, Locked Out: California's Affordable Housing Crisis dealing with the lack of affordable housing in the state. According to the report:
  
  "Ownership rates declined for all age groups except seniors between 1979 and 1999. While 62 percent of the state’s white-headed households were homeowners in 1999; just 40 percent of African-American-headed households owned their own homes, along with 54 percent of Asian/Pacific Islander-headed households and 42 percent of Latino-headed households."
   
• The number of Californians in need of affordable housing far outstrips the supply of low-cost units. In 1997, the number of low-income renter households in the state’s metropolitan areas exceeded low-cost rental units by more than 2-to-1, a gap of 684,000 units.
   
• Nearly two-thirds of low-income renters in California’s metropolitan areas paid more than half of their income for housing and 86 percent spent more than the recommended 30 percent of their income for housing in 1997.
   
• Between 1990 and 1999, building permits were issued for an average of 28,089 units per year of multifamily housing, just 25 percent of permits issued and a 69 percent drop from the levels of the 1980s.

• The gap between income and rents will widen further as a result of a continuing reduction in federal subsidies to the Section 8 rental housing program. Over the next two to three years, mortgage contracts for over 110,000 units of privately-owned, federally-assisted rental housing units will expire, with the potential loss of over $500 million in federal subsidies. Elderly citizens occupy 44 percent of these units; the annual average income of all occupants is $9,300.

The lack of decent, safe housing has serious repercussions for all Californians. Bay Area companies are unable to recruit new employees because housing simply is not available. Two-income families cannot find housing near their work sites, resulting in long commutes and latchkey children.

Government Housing Finance Programs

1) Tax-exempt bond financing: The California Housing Financing Agency (CHFA)

and local housing agencies provide low interest rate mortgage loans through the sale of tax-exempt revenue bonds. These mortgage loans are usually offered to eligible homebuyers through private mortgage brokers.

The Federal Tax Reform Act (TRA) of 1986 limits the amount of tax-exempt bonds that can be issued annually, based on the state's population. In 1998, the state's ceiling was $1.6 billion. The TRA allows the bonds to be used for housing, student loans, industrial development, and exempt facilities.

The California Debt Limit Allocation Committee (CDLAC) allocates the tax-exempt bonds to state and local issuers. Typically, housing projects received the majority of allocations. In 1998, $1.24 billion was reserved for housing, 76.7 percent of the total available. (For more information about CDLAC's allocation procedures and proposed changes, see the Assembly Committee on Housing and Community Development's 1997 interim hearing report "Doling Out the Bonds: California's Use of Tax-Exempt Bonds for Affordable Housing".)

2) The Federal HOME Program: The HOME Investment Partnership Act was authorized by the Cranston-Gonzalez National Affordable Housing Act (1989). HOME is a federal block grant program which provides funds to state and local governments which, in turn, make money available for the development or rehabilitation of owner-occupied and rental units, and the provision of first-time homebuyer and rent subsidy programs.

The HOME Program is a unique program among the many programs administered by HCD. Under HOME, applicants may apply for funding for both individual projects and for programs comprising several different types of housing projects.

Under the funding formula, some communities in California are eligible to receive direct allocations from the federal Department of Housing and Urban Development (HUD) while other communities must compete for the general state allocation. However, a community eligible to receive a direct allocation may transfer that allocation to the state and then compete for a portion of the state allocation. This transfer can be very beneficial to a community which has a solid housing program, but needs more money than it would receive under the direct allocation formula. As an example, the City of Redding has transferred its $409,000 direct annual allocation to HCD and is now eligible to apply for up to a $1 million allocation from HCD.

3) Low Income Housing Tax Credits: The Low Income Housing Tax Credit provides a credit against net tax for personal income, bank and corporation, and insurance gross premiums tax for costs related to qualified low-income housing developments. The credit is 30 percent of costs for the purchase of, or improvements to, low-income housing. The credit is claimed over a four-year period. The state's low-income housing tax credit parallels a similar credit in federal law.

Taxpayers — usually housing developers — apply to the California Tax Credit Allocation Committee for an allocation of both the state and federal credits. The amount of tax credit allocated to a project is based on the amount needed to insure the financial feasibility of the project and a number of criteria that target projects in areas or types of housing where there is significant need. The amount of state credit available is limited to $50 million per year, plus any unallocated and returned balances from prior years. (See AB 1626 (Torlakson) Chapter 3, Statutes of 2000.)

The low income housing tax credit is unique among state tax provisions. The amount of credit available is capped and project sponsors must apply for an allocation of credits. In most cases, individual taxpayers receive tax credits as members of a limited partnership when the general partner is the project sponsor, and the limited partners receive credits based on their individual financial participation. Investors (i.e., the taxpayer ultimately claiming the credits) typically buy into a project by paying fifty to sixty cents for each dollar of tax credit received.

4) General Obligation Bond Financing: Prior to 1980, the federal government took the lead in financing local, affordable housing projects. Since then, however, federal housing funds have declined precipitously.

To make up a small portion of this shortfall, the Legislature enacted, and the voters approved, Propositions 77 and 84 in 1988 and Proposition 107 in 1990. Proposition 77 provided for a $150 million general bond issue: $80 million for seismic safety and $70 million for general rehabilitation loans. Proposition 84 provided for a $300 million bond issue, including $200 million for financing new construction of rental units. Proposition 107 authorized the sale of $150 million of bonds, including $100 million for the Rental Housing Construction Program. All of these funds have been spent.

5) Down Payment Assistance Programs

CHFA administers five down payment assistance programs for first-time and income eligible homebuyers.

• School Facility Fee Down Payment Assistance Program

This program was established by SB 50 (Greene) Chapter 407, Statutes of 1998, approved by the voters in Proposition 1A in 1998. Three of these programs provide down payment assistance, through 2003, for homebuyers of newly constructed single family residences. In order to qualify for assistance, homebuyers must meet one of the following criteria: live in an economically distressed area; purchase a home with a maximum sales price of $130,000; or meet the requirements of a first time, moderate income homebuyer.

The fourth program provides assistance for sponsors of rental units for low-income tenants.

• Affordable Housing Partnership Program

This program is a joint effort by CHFA and cities, counties, redevelopment agencies and housing authorities whereby a deferred payment subordinate loan from a locality is utilized by the first-time homebuyer to assist him or her with down payments and/or closing costs.

• California Homebuyer’s Down Payment Assistance Program

This program provides a deferred-payment junior loan of an amount up to the lesser of three percent of the purchase price or appraised value of a home. This loan may be combined with another CHFA loan or a mortgage. This program is intended to be used in conjunction with a first, second or third mortgage for such costs as the closing costs.

The 2000-01 Budget provides $50 million for this program.

• 100 Percent Loan Program

This program provides up to 100 percent of the financing needs of prospective eligible first-time homebuyers.

• CalHome Program to be administered by HCD

This program provides grants and loans to local governments or non-profits to enable low and very low-income households to become or remain homeowners.

6) Mortgage Bond and Loan Insurance: California is one of five states which has its own

"private" mortgage insurance company, the California Housing Loan Insurance Fund (CHLIF). This has enabled Californians to obtain lower financing in areas and under conditions which the Federal Housing Administration (FHA) or private insurers cannot meet. During the severe devaluation of home prices during 1988 to 1989, CHLIF was able to replace the insurance on those CHFA loans issued by private insurance companies that were collapsing and continue homeowner coverage.

The California Housing Loan Insurance Fund was created in 1977 for the purpose of providing reasonably priced bond and loan insurance, reducing the risk factor in providing loans for single family and rental housing, including privately financed loans, and securing revenue bonds issued by local agencies.

It was not until 1988, however, that CHLIF earned a claims paying credit rating, thereby becoming the state's equivalent of a private mortgage insurance company. Under an agreement with Standard and Poor's and Moody's, from 1988 until 1991 CHLIF operated under certain rating agency restrictions regarding the types of loans it could insure.

Beginning in March 1991, however, these restrictions were no longer applicable, and CHLIF can provide single-family mortgage insurance to developers of affordable housing outside of CHFA's programs, including for-profit and non-profit developers, redevelopment agencies, and local finance agencies.

7) 2000 Budget includes:

• $188 million for the development of affordable multifamily rental housing.
   
• $25 million to create the new "Downtown Rebound Program." Downtown Rebound will provide financing to revitalize downtowns and neighborhoods, reduce development pressure of agricultural and open space resources and provide working families with options to live close to their jobs.
   
• $100 million for down payment assistance and homeownership programs. Funding shall be available for the following programs:

California Homebuyers Downpayment Assistance Programs
$50 million for down payment assistance to low and moderate income families to purchase their own homes. Loans will be up to 3 percent of the home sales price.

CalHome Program to be administered by the Department of Housing and Community Development
$50 million for grants and loans to local governments or non-profits to enable low and very low-income households to become or remain homeowners.

$39 million in funding for the Emergency Housing Assistance Program which provides grants to counties and nonprofit entities to finance emergency shelters for homeless individuals and families.
 

• $46.5 million for Farmworker Housing programs.
   
• $10 million for Building Code Enforcement and an Interregional Pilot Project for improvements to the planning process.

Major Legislation

AB 97 (Torlakson) Chapter 893, Statutes of 1999: Deletes the January 1, 2000 sunset date for low-income housing tax credits and ensures that $50 million in state housing tax credits will be available annually for as long as the federal low-income housing tax credit program remains in effect.

AB 398 (Migden) As Introduced: Would have enacted the Housing Bond Act of 2000 and proposed $750 million general obligation bonds for state housing programs (i.e., construction, rehabilitation, or preservation of affordable rental housing, assist first-time homebuyers, and farmworker housing).

This bill was amended in the Senate August 30, 2000: Requires the Wildlife Conservation Board to authorize the acquisition of property in San Francisco Bay currently owned by the Cargill Salt Division and transfers $30 million from the General Fund to implement the recommendations of the Baylands Ecosystem Habitat Goals Report.

Signed by the Governor and he reduced the appropriation from $30 million to

$25 million, Chapter 395, Statutes of 2000.

AB 1903 (Lowenthal) Vetoed: Tax levy that would have allowed development of low-income housing to sell state and federal low-income housing credits to separate investors.

SB 510 (Alarcon) As Introduced: Would have enacted the Housing Bond Acts of 2000, 2002, 2004 and 2006 and proposed $980 million ($245 million each) in general obligation bonds for state housing programs (i.e., assist first-time homebuyers down payment assistance, build single family homes, apartments, and farm worker housing, preservation of existing homes, and code enforcement).

This bill was amended May 25, 2000: Would have continuously appropriated money in the California Housing Trust Fund to finance housing programs for low- and very low income households.

Died in the Assembly Committee on Housing and Community Development.

SB 1593 (Alarcon) As Introduced: Would have established the CalHome Program to provide loans and grants to eligible local public agencies or nonprofit corporations to facilitate home ownership by low- and very low-income households. (Note: Budget trailer bill AB 2865 (Alquist) Chapter 81, Statutes of 2000, created the California Homebuyer's Downpayment Assistance Program.)

This bill was amended in the Assembly August 25, 2000 (Burton): Requires the Department of Housing and Community Development to implement some of the recommendations of the Senate Task Force on Homelessness contained in their final report released in June 2000 as to how California might improve its funding and services for the homeless.

Chapter 667, Statutes of 2000.

Other 1999-2000 Legislation

AB 943 (Dutra) As Introduced: Would have repealed the requirement that certain reports to the California Debt Investment Advisory Commission be prepared relating to the finance of bonds to finance residential housing.

This bill was amended in the Senate August 7, 2000: Requires California Debt and Investment Advisory Commission to collect, maintain, and provide information on local agency investments of public funds to promote the best investment and to receive local government investor portfolio information, and requires cities and counties that manage their own investment portfolios to semiannually forward their most recent quarterly investment reports and policy statements to CDIAC. Also, requires CDIAC to report to the Legislature by May 1, 2006 on its information collection activities and the value of this reporting requirement, and terminates the reporting requirement on January 1, 2007. Chapter 687, Statutes of 2000.

AB 1396 (Lowenthal) As Introduced: Would have created the California Housing Preservation Program to make low cost, long-term loans for the purchase of multifamily housing projects.

This bill was amended August 28, 2000 (Aroner) to make a one-time appropriation of $212 million to local governments for fiscal relief based on a specific allocation formula Chapter 903, Statutes of 2000.

AB 1404 (Dutra) Chapter 264, Statutes of 1999: Increases the California Housing Finance Agency's mortgage revenue bond limit from $6.75 to $8.95 billion.

AB 1626 (Torlakson) Signed by the Governor on February 23, 2000, Chapter 3, Statutes of 2000: A tax levy to take effect immediately, increases permanently the annual state low-income housing tax credit limit from $35 million to $50 million.

AB 1720 (Soto) Died in the Assembly Committee on Housing and Community Development: Would have established the Teacher Home Loan Program, administered by the California Housing Finance Agency, to assist school districts in recruiting and retaining qualified teachers by providing home loan assistance.

AB 2060 (Steinberg) Chapter 331, Statutes of 2000: Establishes the Extra Credit Teacher Home Purchase Program within the California Debt Limit Allocation Committee to provide federal mortgage credit certificates and reduces interest loans funded by mortgage revenue bonds to eligible teachers, principals, vice principals, and assistant principals who agree to teach or provide administration in low performing schools.

AB 2070 (Shelley) Died in the Senate Committee on Appropriations: Would have enacted the Teachers Homebuyer Assistance Program, administered by the California Housing Finance Agency, to provide home loan assistance, in the form of down payments, for teachers employed in low performing challenge schools.

AB 2157 (Lowenthal) Chapter 553, Statutes of 2000: Allows California Housing Finance Agency to issue loans either secured and unsecured for the purposes of financing multifamily housing, and requires that a loan document for a loan that is not secured by real property and is made to a person, must state that the personal property of the borrower may be subject to lien and sale in order to pay off the loan. Also, removes the requirement that mortgage loans be long-term and instead allows loans to be short-term if they are made "to create or preserve the long-term affordability" of the housing development.

AB 2747 (Alquist) Died in the Assembly Committee on Housing and Community Development: Would have required the Department of Housing and Community Development, the California Housing Finance Agency, and the California Debt Limit Allocation Committee to increase funding for housing in "housing demand area" defined as an area where the median price of a home is unaffordable to 70 percent of the county's population.

AB 2786 (Bates) Vetoed: Would have created new source of funding for the development of affordable housing for elders through the redirection of certain escheated funds.

SB 2197 (Soto) Chapter 307, Statutes of 2000: Repeals three requirements of the Home Purchase Assistance Program and recasts, as intent language, the requirement that no more than 50 percent of program funds be used for new construction.

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LAND USE

Housing Element Law requires every locality to adopt and update a housing element every five years which includes an identification of existing and projected housing needs, an inventory of land suitable for residential development, and a five-year plan to meet those identified needs.

The housing element, as a planning tool, was initially developed to describe how growth would be accommodated using a "best case scenario" approach. A locality was not expected to build the units, but was required to provide appropriate zoning for the development of the housing need identified within its housing element, including the regional need for housing.

Over the years, amendments have been made to Housing Element Law which hold local governments responsible for ensuring that housing is actually built, including identifying specific sites, to accommodate a community's lower income housing unit regional allocation.

In 1981, California began a comprehensive program to allocate among local governments the statewide need for low-, moderate- and above moderate-income housing units. For the first time, each community was required to include in the housing element of its general plan a plan to meet its "share" of California's housing need.

Because both the federal and state governments have consistently reduced funding for affordable housing over the last twenty years, many local governments find it difficult to meet regional allocation goals. In addition to a shortage in resources, local governments are also plagued by the ever-increasing phenomenon of NIMBYism or "not-in-my-back-yard" when efforts are made to provide and disperse additional affordable housing in the community.

Furthermore, cash-strapped cities and counties often engage in the "fiscalization of land use" by prioritizing commercial, retail and industrial development--which generate more property and sales tax revenue--over residential development.

In 1998 the Legislature passed AB 438 (Torlakson) which allowed local jurisdictions to fulfill a portion of their region's affordable housing needs, by providing either substantially rehabilitated units and market-rate units converted to affordable units, or federally assisted multi-family units whose affordability has been extended for 40 years.

Additionally, the Select Committee on Jobs-Housing Balance has analyzed the shortage of affordable housing near work sites resulting in long commutes, increased traffic congestion and greater numbers of latchkey children.

Housing Element Process

A local jurisdiction's regional housing needs allocation is developed through the following process:


1. Every five years, the Department of Finance projects statewide growth for the next five-year period. From this data the Department of Housing and Community Development (HCD) establishes the existing and projected statewide need for affordable housing by income group.
2. HCD, in consultation with the regional council of governments (COGs), divides the statewide need into regional shares.
3. The COG distributes the regional need to the county(s) and cities within the region.
4. The local government develops its housing element, which includes the local government's regional share.
5. The local government submits its housing element for review to HCD to ensure conformity and consistency with the statewide need for housing.
6. The local government adopts its housing element after considering HCD's comments and revising its element to reflect those comments or adopting findings as to why HCD's comments should be ignored

Major Legislation

SB 948 (Alarcon) Chapter 968, Statutes of 1999: Specifies that the Ellis Act is not intended to interfere with local governments authority to regulate the demolition of rental property nor its authority to regulate conversion of non-residential use following its withdrawal from rent or lease.

SB 1621 (Alarcon) Vetoed: Would have clarified that a local government must identify and appropriately zone sufficient land to meet the jurisdiction's housing needs for all income categories and would have assured that the zoning are accompanied by appropriate standards to facilitate the development of housing for lower income as well as moderate income households. Also, would have prohibited local governments from adopting interim ordinances that would deny approval of multifamily housing projects unless that entity makes a written finding, based on substantial evidence.

Other 1999-2000 Legislation

AB 919 (Dutra) Chapter 966, Statutes of 1999: Makes changes to law which prohibit a local government from not approving an affordable housing development.

AB 1505 (Ducheny) Chapter 967, Statutes of 1999: Requires local general plans' housing elements to identify adequate sites with public services and facilities for housing for agricultural employees to meet the city or county's regional share of farmworker housing.

AB 1744 (Longville) Signed by the Governor on July 7, 2000, Chapter 117, Statutes of 2000: An urgency statute to take effect immediately, extends the deadline to complete the third revision of their housing elements from June 30, 2000 to December 31, 2000 for local governments within the regional jurisdiction of the Southern California Association of Governments and from June 30, 2001 to December 31, 2001 for local governments within the regional jurisdiction of the Association of Bay Area Governments.

AB 2048 (Torlakson) Died in the Assembly Committee on Appropriations: Would have authorized cities or counties located in metropolitan statistical area with an imbalance between housing and jobs to create a housing opportunity district to mitigate the imbalance.

AB 2054 (Torlakson) Chapter 665, Statutes of 2000: Provides "clean-up" language to a budget trailer bill, AB 2864 (Torlakson) Chapter 80, Statutes of 2000, which created both the Inter-Regional Partnership state pilot project and the Jobs-Housing Balance Improvement Program.

AB 2430 (Wiggins) Chapter 358, Statutes of 2000: Extends the authority and adds conditions for Napa County to transfer 15 percent of its low-income housing need to cities in the county.

AB 2755 (Bock) Chapter 556, Statutes of 2000: Applies the density bonus law to projects that convert existing commercial buildings to residential use, and to the substantial rehabilitation of existing multifamily dwellings that result in a net increase in residential units.

HR 40 (Torlakson) Adopted by the Assembly on January 20, 2000: Requests the Department of Housing and Community Development to commission a study identifying the

areas of high job and household growth over the next 20 years and to study ways in which more responsible land use decisions can be made to provide critically needed housing.

SB 1642 (Figueroa) Vetoed: Would have required the Department of Housing and Community Development and regional councils of government, when determining regional fair shares of housing, incorporate measures to improve the balance of jobs and housing within each region's employment centers, taking into consideration market demand for housing, existing and projected employment and commuting patterns.

SB 1816 (Vasconcellos) Vetoed: Would have required the Department of Housing and Community Development to issue guidance to local governments regarding electronic submission of housing element and would have made the state's housing element process electronically based by January 1, 2003.

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MOBILEHOMES/MANUFACTURED HOUSING

Mobilehome Parks

Mobilehome parks are a popular source of affordable housing, especially for seniors and low- and moderate-income families. Statewide, there are 5,750 parks, with 464,778 spaces, housing an estimated 800,000 people.

The mobilehome park industry, however faces many challenges: few new parks are being built; park owners and residents are often locked in a struggle of complaints, counter-complaints, lawsuits, and counter-lawsuits; residents are buying their parks through the conversion process and becoming park owners; a growing number of land-lease manufactured home communities are being constructed which offer affordability without the problems of the park owner/resident relationship; and additionally some mobilehome parks face safety and security issues.

The age and location of many parks create other problems. Older mobilehome parks suffer from significant infrastructure deterioration: sewers, utilities, roads, and common areas need to be upgraded and replaced. As cities expand, the areas surrounding the parks are developed for industrial or commercial use. Park owners are tempted to sell their land to developers for higher profits, thereby displacing long-time residents.

There are five major issues facing mobilehome park residents in the state:

1. Rent increases largely a local issue.
2. Old and dilapidated facilities.
3. Rents and fees.
4. Pass-through fees.
5. Maintenance and organization

In response to some of these issues, SB 700 (O'Connell), Chapter 520, Statutes of 1999 created a new state inspection program that requires at least one inspection every four years. The program focuses mainly on those parks with the most serious violations or substantial number of complaints.

Senior-Only Mobilehome Parks

Prior to 1988, many mobilehome parks were reserved for adults only (age 18 and over). The passage of the 1988 Fair Housing Amendments Act, which prohibits age discrimination in housing except for senior citizen housing, caused a shift in the demographics of mobilehome parks by forcing owners whose parks did not meet the criteria for senior housing to open their parks to families with children. In 1988, 75 percent of mobilehome parks were either senior- or adult-only parks; by 1994, only 25 percent of parks restricted occupancy to seniors.

In 1995, under pressure from senior groups, Congress enacted HR 660, which eliminated the requirement that senior housing provide significant facilities and services requirements. While this change makes it easier to develop senior housing, it is unclear whether family mobilehome parks will be able to convert to senior parks since 80 percent of the spaces must be rented to a person who is age 55 or older.

New Directions For Manufactured Housing

For the last several decades, the manufactured housing industry has been quietly transforming itself--with quality improvements, imaginative designs, and legislative measures on both federal and state levels--from a narrow-niche builder of "trailers" or "mobilehomes" into a broad-band builder of a wide range of housing products. Many of these new housing products compete quality-for-quality and amenity-for-amenity with conventional site-built housing.

Although still the supplier of mobilehome park housing, the industry has been busy creating new markets for its new products. The industry is producing housing for inner-city infill lots; standard single-family subdivision developments; long-term, land-lease manufactured housing communities; and rural property. More than half of all new manufactured homes are being sited outside of mobilehome parks, with approximately 32 percent installed on permanent foundations in urban, suburban, or rural neighborhoods.

The driving force behind the manufactured home industry is the affordability of its products. Through the efficiencies of factory, and savings generated from a shorter construction schedule, manufactured housing is the most affordable type of housing available in California today. Construction costs average $9 less per square foot than site-built construction. In 1995, the average cost per square foot for site-built construction was $50.00, compared to manufactured housing with an average per-foot "installed" cost of $41.00. For an average 1500 square foot home, the savings amount to $13,500.

Major Legislation

AB 860 (Thomson) Chapter 551, Statutes of 2000: Allows mobilehome park residents and homeowners in common interest developments the right to keep pets subject to reasonable rules and regulations.

AB 1644 (Floyd) Died in the Assembly Committee on Housing and Community Development: Would have prohibited mobilehome parks owners from closing or changing the use of a park to a landlord-tenant facility and declared that mobilehome owners are entitled to protection from eviction.

SB 476 (Chesbro) Chapter 326, Statutes of 1999: Caps the price a mobilehome operator may charge a resident for liquefied petroleum gas to 110 percent of the actual price paid by the operator.

SB 574 (Dunn) Chapter 473, Statutes of 1999: Expands the Mobilehome Park Resident Ownership Program to allow qualified nonprofit housing sponsors and local public entities to use the program to fund mobilehome park conversions. Also, requires at least 30 percent of the spaces in a mobilehome park be reserved for low-income households.

SB 1627 (Dunn) Chapter 433, Statutes of 2000: Requires the Department of Housing and Community Development, in consultation with local fire agencies, to adopt and implement regulations requiring regular maintenance and the periodic inspection of fire hydrants in mobilehome parks by January 1, 2002. And, permits local jurisdictions to assume fire safety inspection authority without administering the Mobilehome Parks Act.

Other 1999-2000 Legislation

AB 479 (Wiggins) Assembly failed to concur in Senate amendments: Would have required that mobilehome park management must maintain physical improvements in the common areas using funds acquired through payment of rent and not through any other fees.

AB 546 (Wayne) Died in the Assembly Committee on Housing and Community Development: Would have required the management to be responsible for the trimming of all trees within the mobilehome park and for the disposal or removal of those trimmings.

AB 690 (Washington) Died in the Assembly Committee on Housing and Community Development: Would have required the Department of Housing and Community Development to conduct a study and prepare a report by July 2000 regarding mobilehome park conversion and closure.

AB 862 (Correa) Chapter 423, Statutes of 2000: Requires park management to assume physical and fiscal responsibility for tree and driveway maintenance in a park.

AB 984 (Correa) Chapter 23, Statutes of 2000: Deletes the statutory requirement that the registration decal located on the back of the mobilehome show current status of any registration fee.

AB 2015 (Dickerson) Chapter 542, Statutes of 2000: Allows special occupancy parks to include camping cabins and subjects camping cabins to regulation under the Mobilehome Parks Act.

AB 2239 (Corbett) Chapter 554, Statutes of 2000: Limits the repair or improvement requirements management can impose on a mobilehome upon sale or transfer, and requires management to provide a written summary of required repairs to the seller before a home is sold.

AB 2256 (Correa) Chapter 555, Statutes of 2000: Clarifies that the education and experience requirements apply only to applicants for mobilehome and manufactured housing dealer licenses, modifies the prerequisites to become a manufactured and mobilehome dealer, and raises the amount that consumers may recover from the Manufactured Home Recovery Fund from $40,000 to $75,000.

AB 2605 (Cardenas) Died in the Assembly Committee on Appropriations: Would have established a grant program to provide fire protection materials and fire safety educational materials to residents of eligible mobilehome parks.

SB 351 (Figueroa) Chapter 323, Statutes of 1999: Specifies fees imposed on a mobilehome owner by park management pursuant to amended rules and regulations are void and unenforceable unless expressly agreed to by the homeowner.

SB 534 (Dunn) Chapter 517, Statutes of 1999: Creates two separate statutory disclosure forms to be used in the resale of mobilehomes and manufactured housing.

SB 619 (Dunn) Vetoed: Would have renamed the ombudsman program within the Department of Housing and Community Development as the Mobilehome and Manufactured Home Ombudsman Program. Would have provided funding for the program. Also, would have expanded the duties of the ombudsman, and made changes to the posting of signs about the program.

SB 700 (O'Connell) Signed by the Governor on September 27, 1999, Chapter 520, Statutes of 1999: An urgency statute to take effect immediately, extends the Mobilehome Park Inspection Program (AB 925 (O'Connell) Chapter 1175, Statutes of 1990) to January 1, 2007, and makes various changes to the program.

SB 1612 (Chesbro) Chapter 232, Statutes of 2000: Expands the current 110 percent limitation that mobilehome parks may charge tenants for propane to cases where federal, state or local laws or regulations prohibit tenants from installing their own propane tanks.

SB 1905 (Sher) Died in the Assembly Committee on Housing and Community Development: Would have allowed mobilehome park owners and management to adopt rules permitting or prohibiting renting of mobilehomes by homeowners.

SB 2131 (O'Connell) Vetoed: Would have removed all references to special occupancy parks, also known as recreational vehicle parks, from the Mobilehome Parks Act and would have enacted a separate provision known as the Special Occupancy Parks Act.

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REDEVELOPMENT

Redevelopment began in 1945 as a post-war blight removal program that used federal urban-renewal grants to clean up blighted urban areas. These first projects were few in number: 27 projects in 1966. Project size was also limited; prior to 1957, most project areas ranged from 10 to 100 acres.

Today, however, due to the use of tax-increment financing authorized by the voters in 1952 and fiscal restrictions imposed upon local governments by Proposition 13, redevelopment has emerged as a key local financing tool. Redevelopment has grown so tremendously that now there is scarcely a jurisdiction that does not have an agency; there are currently 369 cities, 26 counties, and 5 joint city-county agencies. Many project areas encompass thousands of acres.

Redevelopment offers several unique powers to local officials. First, under redevelopment, jurisdictions can issue bonds without a vote of the people; and second, they can use eminent domain authority to take private property for other private development uses.

Redevelopment agencies accumulate their funds by freezing the property tax base within a project area that has been designated as “blighted.” With the property tax base frozen, all the affected taxing entities that receive property tax — schools, fire departments, police departments, special districts — continue to receive the same share of property tax that they received in the year when the redevelopment plan took effect. For instance, if a school was receiving $100,000 in property tax in 1990, it continues to receive that amount from the project area throughout the life of the redevelopment plan. Any additional property tax generated above the base year goes to the redevelopment agency. But the agency must share a percentage of this money with the affected taxing entities. A statutory formula requires certain percentages of funds to be passed through to the affected taxing entities. The specific percentages increase through the term of the redevelopment project.

A central interest the state has with redevelopment is its significant fiscal impact on the General Fund. These state costs are the result of the state guaranteeing minimum levels of school funding. Schools currently receive approximately 50 percent of local property tax dollars. When a redevelopment project area is declared and the property tax base within that area is “frozen,” a large portion of the increase in the property tax increment generated within the project area flows to the redevelopment agency. Schools — unlike all the other affected taxing entities that receive property tax within a project area — are then reimbursed by the state for any amounts that they lose to redevelopment.

These high state costs, the lack of clear public scrutiny, proliferation of agencies, and large project areas make redevelopment controversial. Once agencies are started, they gather momentum and are rarely if ever stopped.

City officials and developers tout redevelopment's benefits and advantages to revive down-trodden urban areas; tax watch-dog groups and adversely-affected business owners view redevelopment agencies as administrative behemoths that gobble up scarce tax dollars and engage in grand-scale development deals of dubious value. The suspicious see redevelopment agencies as engaging in games of fiscal sleights of hand with its true powers only understood by attorneys, consultants, and staff.

In many cases, redevelopment powers have been used prudently and have produced good results. Examples are numerous where a run-down urban area is “redeveloped” and brought back to life again. In other more-controversial cases, these powers have been used to “develop” as opposed to redevelop. This happens when large areas of vacant land are deemed “blighted,” and redevelopment agencies issue bonds without a public vote. These funds are then used to build infrastructure to attract development or to engage in bidding wars with surrounding communities to attract auto malls and “big-box” retailers and other sales-tax generators.

The Legislature sought to limit redevelopment abuses by passing laws, such as AB 1290 (Isenberg), Chapter 942, Statutes of 1993, to attempt to keep redevelopment focused on removing true urban blight.

Redevelopment Reform: AB 1290

The early 1990's were difficult times for redevelopment agencies. Many members of the Legislature were openly criticizing agencies for adopting large project areas with questionable evidence of blight, engaging in bidding wars with other jurisdictions for new commercial developments, and hoarding millions of dollars in unspent housing set aside funds. The cry for reform was in the air. With little sympathy for the pleas of the defenders of redevelopment, the

Legislature raided these perceived “cash cows” to help balance the state's budget deficit for two years in a row. In response to this negative environment, the California Redevelopment Association sponsored AB 1290 (Isenberg), Chapter 942, Statutes of 1993, which proposed numerous reforms to the existing redevelopment process. The bill focused on issues that had historically caused concerns among redevelopment critics, including the definition of “blight,” the length of time a redevelopment plan stayed in effect, and mitigation agreements.

In brief, AB 1290:

• Alters the definition of “blight.”

• Specifies term limits for new and previously adopted project areas, i.e., the term of the redevelopment plan, the term of the available flow of tax increment moneys, and the term of the agency's redevelopment powers.

• Increases and modifies penalties for the failure to expend tax increment moneys in an agency's Low and Moderate Income Housing Fund.

• Authorizes the development of affordable housing units outside the project area to count toward an agency's inclusionary requirements. Under the provisions of the bill, an agency must produce two units outside the project area for every one unit owed.

• Prohibits the dedication of sales tax to an agency by its legislative body.

• Authorizes the financing of facilities or capital equipment made in conjunction with the development or rehabilitation of property used for industrial or manufacturing purposes.

• Deletes provisions relating to negotiated mitigation agreements and, instead, provides for a guaranteed statutory pass-through beginning in the first year of a project area for all affected taxing entities.

Major Legislation

AB 178 (Torlakson) Chapter 462, Statutes of 1999: Prohibits cities, counties, and redevelopment agencies from providing any financial assistance to an auto dealership or a big box retailer that relocates from one city or county to another community in the same market area, unless the receiving community offers a contract to share some of the resulting sales tax revenues with the other city or county.

AB 634 (Wildman) Chapter 442, Statutes of 1999: Makes statutory reforms recommended by the State Auditor to increase redevelopment officials' accuracy and accountability.

AB 1855 (Lowenthal) Chapter 756, Statutes of 2000: Extends the sunset from January 1, 2001 to January 1, 2002 on the requirements relating to housing that apply to redevelopment agencies. Also, allows the Contra Costa County Redevelopment Agency to spend its Low and Moderate Income Housing Fund in the City of Walnut Creek at sites contiguous to the Pleasant Hill BART Station Area Redevelopment Project Area.

Other 1999-2000 Legislation

AB 264 (Mazzoni) Chapter 38, Statutes of 1999: Allows the City of Novato Redevelopment Agency to pay any amounts of money, notwithstanding the statutory limits, to the County of Marin, Novato Fire Protection District, and Marin Community College District to alleviate financial burden or detriment caused by the Hamilton Field Redevelopment Project.

AB 601 (Cedillo) Vetoed: Would have appropriated $5 million for grant programs in the City of Los Angeles to reimburse property owners for the costs of adapting commercial property into residential. Also, would have appropriated $1 million to the City of Compton for urban adaptive reuse programs.

AB 774 (Calderon) As Introduced: Would have authorized the Pico Rivera Redevelopment Agency to reduce its project base year valuation by 50 percent for the purpose of calculating tax increment for three years. Also, would have required the agency to repay the state over ten years, beginning September 1, 2003, the total amount of increased aid to schools received from the state and resulting from the reduction in base year value.

This bill was amended in the Senate June 14, 2000 (Cardoza) to designate the County of Merced as the local base reuse authority and as the redevelopment agency for Castle Air Force Base.

Chapter 290, Statutes of 2000.

AB 950 (Thomson) Chapter 469, Statutes of 2000: Extends the sunset date from January 1, 2001, to January 1, 2006, on the law allowing the creation of a joint powers agency for the purpose of meeting the housing needs of the Travis Air Force Base and preventing its relocation.

AB 971 (Olberg) Chapter 611, Statutes of 1999: Reallocates property taxes in San Bernardino County. Also, specifies that the redevelopment agency for the March Air Force Base shall make certain payments to other agencies under a specified, existing cooperative agreement, rather than as provided by statute.

AB 1901 (Cedillo) As Introduced: Would have created the Urban Initiatives Act to encourage urban revitalization through property tax relief, income tax credit, and regulatory flexibility.

This bill was amended August 29, 2000 in the Senate (Steinberg) to require that developers receiving loans from the Department of Housing and Community Development under the Multifamily Housing Program or the Downtown Rebound Program agree to the payment of prevailing wage rates during construction.

Chapter 957, Statutes of 2000.

AB 2041 (Dutra) Chapter 552, Statutes of 2000: Allows contiguous redevelopment agencies, located within a high metropolitan statistical area to establish a joint powers authority for the purpose of pooling low- and moderate-income housing funds.

AB 2174 (Ackerman) Died in the Assembly Committee on Housing and Community Development: Would have allowed the Redevelopment Agency of the County of Orange to use the Low and Moderate Income Housing Fund inside or outside of a project area adopted by ordinance of the Board of Supervisors of the County of Orange..

AB 2255 (Cedillo) As Introduced: Would have made a technical change to the provisions of redevelopment.

This bill was amended March 27, 2000 to appropriate $10 million from the General Fund for the seismic retrofit of St. Vibiana's Cathedral in Los Angeles for use as a performing arts center by California State University, Los Angeles and the Los Angeles County High School for the Arts.

Died in the Assembly Committee on Appropriations.

AB 2302 (Cardenas) Chapter 638, Statutes of 2000: Provides a process by which a redevelopment project area could be transferred from an established city to a newly incorporated city, in the case of secession.

SB 307 (Rainey) Chapter 17, Statutes of 1999: Clarifies that local officials cannot use the one-year extension opportunity created by AB 1342 (Napolitano), Chapter 635, Statutes of 1998, to extend the statutory deadline for creating more debt by 10 years. Also, states that its language is declaratory of existing law.

SB 497 (Rainey) Chapter 362, Statutes of 1999: Authorizes the Attorney General to obtain a court order for a redevelopment agency's noncompliance with the Community Redevelopment Law.

SB 766 (Escutia) Signed by the Governor September 26, 2000, Chapter 766, Statutes of 2000: An urgency statute to take effect immediately, exempts from specific provisions of California Redevelopment Law a specific parcel of land proposed for addition to the redevelopment agency of the City of South Gate.

SB 1190 (Solis) Died in the Assembly Committee on Housing and Community Development: Would have specified that redevelopment agencies can use the Low and Moderate Housing Fund for the construction, rehabilitation, or preservation of affordable housing for very low, low- and moderate-income persons or families.

SB 1375 (Alarcon) Chapter 610, Statutes of 2000: Provides a mechanism by which a redevelopment project area may be transferred from an existing city to a newly incorporated city.

SB 1789 (Rainey) Vetoed: Would have required the Department of Housing and Community Development to prepare a report by January 1, 2002 analyzing policies, incentives and disincentives regarding the remediation and redevelopment of brownfields.

SB 2113 (Burton) Chapter 661, Statutes of 2000: Allows the San Francisco Redevelopment Agency to extend its ability to incur debt and receive tax increment, for an additional 10 years, for Low and Moderate-Income Housing Fund activities.

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Senior Housing

The Unruh Civil Rights Act prohibits arbitrary discrimination by business establishments. In Marina Point, Ltd. v. Wolfson (1982) 30 Cal.3d 72 and O'Connor v. Village Green Owners, Assn . (1983) 33 Cal.3d 790, the California Supreme Court held that the Unruh Act covered discrimination on the basis of age and that it therefore prohibited apartments and condominium developments, respectively, from excluding families with children. In Marina Point , the Court suggested in dicta that its holding was not intended to prohibit seniors-only developments:

“In light of the public policy reflected . . . [by the Unruh Act], age qualifications as to a housing facility reserved for older citizens can operate as a reasonable and permissible means under the Unruh Act of establishing and preserving specialized facilities for those particularly in need of such services or environment. Such a specialized institution designed to meet a social need differs fundamentally from the wholesale exclusion of children from an apartment complex otherwise open to the general public.”

In 1984, the Legislature enacted two bills designed to codify this dicta in Marina Point, AB 3909 (Davis) and SB 1553 (Boatwright), which added Civil Code sections 51.2 and 51.3, respectively, to the Unruh Act. Section 51.2 affirms that the general prohibition against arbitrary discrimination in Section 51 prohibits discriminating in the sale or rental of housing based on age. It also states that “where accommodations are designed to meet the physical and social needs of senior citizens, those accommodations can exclude non-senior citizens, as provided in 51.3, unless preempted by federal law.

Section 51.3 declares that its purpose is to establish and preserve “specially designed accessible housing“ for senior citizens.

1999-2000 Legislation

SB 382 (Haynes) Chapter 324, Statutes of 1999: Allows adult dependent children of senior residents to be qualified permanent residents of senior housing and extends the sunset provision from January 1, 2000 to January 1, 2001 from senior housing design requirements, excluding Riverside County. Also, allows certain persons without ownership interest to live in senior housing.

SB 1382 (Haynes) Vetoed: Would have removed conflicting and redundant regulatory burdens imposed by the Unruh Civil Rights Act to simplify the act for senior housing.

SB 2011 (Escutia) Chapter 1004, Statutes of 2000: Makes several changes to the existing exemption from the Unruh Civil Rights Act for senior housing.

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MISCELLANEOUS

AB 248 (Torlakson) Chapter 876, Statutes of 1999: Creates a separate statutory section for Natural Hazard Disclosure Statements.

AB 1564 (Strom Martin) Chapter 596, Statutes of 1999: Creates a California Rural Policy Task Force to oversee the mobilization and effective delivery of the state's resources to rural California. Also, creates a Rural California Technical Assistance Program to contract with public or private nonprofit organizations to provide technical assistance in assessing resources from federal, state and local resources.

AB 2008 (Housing Committee) Chapter 471, Statutes of 2000: Makes technical changes to a variety of code sections in order to facilitate the implementation of a number of programs related to housing and community development.

AB 2756 (Bock) Died in the Assembly Committee on Housing and Community Development: Would have repealed the Costa-Hawkins Rental Housing Act.

SB 1121 (Alarcon) Chapter 637, Statutes of 1999: Creates the Multifamily Housing Program to provide financial assistance through deferred payment loans to fund the development, construction, reconstruction, rehabilitation, and acquisition of new and existing transitional and rental housing developments.

SB 1205 (Escutia) Signed by the Governor on May 26, 1999, Chapter 26, Statutes of 1999: An urgency statute to take effect immediately, exempts from the nine-month advance notice requirements for owners of subsidized housing developments who enter into purchase contracts with qualified purchasers. Also, allows purchaser to raise rent as long as they remain within the limits set by tax credit rent restrictions.

SB 1572 (Alarcon) Chapter 666, Statutes of 2000: Revises the state notice requirements

SJR 12 (Escutia) Resolution Chapter 53, Statutes of 1999: Urges Congress and the Department of Housing and Urban Development to take the necessary steps to preserve the inventory of federally assisted housing in California.

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APPENDIX [Bills in Numerical Order]

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