9 Proposed Modifications Under AB 1585 – Trailer Legislation for AB 26
John Perez, California State Assembly Speaker, recently introduced AB 1585, a companion bill to SB 654, which would expand the term “Enforceable Obligations” and change the allocation of housing funds as outlined under AB 26.
9 Modifications Under AB 1585:
- Would permit temporary increases in administrative costs to cover litigation and asset preservation efforts of the successor agencies, without limiting the amounts or temporary time period.
- Would add three new agreements to the list of City-Agency contracts that are otherwise null: a loan made within two years of a project area being formed if the loan was for that project area; certain SERAF loans; and other loans between City-Agency “established” so long as the oversight board determines that the loan was for legitimate redevelopment purposes, had economic substance, and was based on reasonable repayment terms. It is unclear whether this provision relates to loans created after the effective date of AB 26 or before.
- Would transfer the Low Income Housing Fund to the successor housing agency to be used as set forth in the Community Redevelopment Act.
- Would require (rather than permit) the successor housing agency to enforce affordability covenants.
- If 80% of Low Income Housing Fund moneys are not expended or encumbered within three years, the excess amount (less amounts reserved for ongoing monitoring and maintenance) would be allocated to the county auditor to be used for housing purposes.
- If the redevelopment agency staff is actually city staff, then the union member on the oversight board would be a representative of the union representing the city staff.
- The oversight board would have to approve long-term bond issues (for any financing arrangement that requires payments more than is received in any year).
- The successor agency would have to inventory all real property assets by project area. The oversight board would be required to adopt a policy or strategy for the disposal or transfer of such assets.
- The successor agency would be permitted to reserve funds from the January 16 allocation to cover costs arising in the second half of the calendar year that will not be disbursed in subsequent allocations.
The bill is currently in draft form, but is expected to be sent to committee soon. We will continue to monitor AB 1585 as it progresses through the Legislature.
