In conducting research for a new story on redevelopment I came across the following information that may be of interest to Juice readers.
New legislation, AB 637, created significant changes to housing within the California Redevelopment Law. The new laws are effective as of January 1, 2002 and will require that the Agency monitor and address the new requirements. The implementation time frame for compliance for the new affordable housing requirements of AB 637 is a 10 year cycle. Many of the AB 637 requirements will likely cause higher per unit costs for affordable housing development and therefore possibly fewer total units being produced over the life of a redevelopment plan. For example, the longer affordability covenants can significantly add to costs.
A summary of the key changes created by AB 637 are as follows:
1. AFFORDABILITY LEVELS – Low to Moderate Income Housing (LMIH) set-aside funds must be used in at least the same proportion as needs for each income group, i.e., very low, low, and moderate. The proportional needs are determined by the Housing Element of the city’s General Plan in accordance with the Regional Housing Needs Allocations by the Southern California Association of Governments (SCAG). I intend to provide Mission Viejo’s Housing Element proportions for very low, low, and moderate income.
Readers can add their own city figures which should be easily available under a Public Records request.
2. AGE RESTRICTED UNITS – LMIH funds can only be expended in proportion to the age of the population for the city as determined by the U.S. Census, particularly for seniors defined as 65 and over. Mission Viejo’s 65 and over population is 23.9% per the 2000 census, therefore affordable housing project expenditures for senior/age restricted units cannot exceed 23.9% of the total set-aside funds.
3. PUBLIC IMPROVEMENTS – LMIH financial assistance towards on- or off-site public improvements can only be used in directly benefiting the affordable housing units in a project and only in proportionate share to the percentage of the affordable units in the project.
4. SUBSTITUTION OF HOUSING FUNDS FOR OTHER AVAILABLE MONEYS – If LMIH funds are used for 50% or more of the cost of a project then all reasonable means of private financing must be utilized. This is to maximize leverage of public funds and to minimize unnecessary public subsidies.
5. REPLACEMENT HOUSING – 100% (versus 75%) of replacement units must be affordable to persons at the same or lower income level category as the displaced persons.
6. HOUSING PRODUCTION OBLIGATIONS – Only agency assisted new or rehabilitated units may satisfy production requirements. Housing production requirements can be satisfied by constructing units outside a project area on a 1 to 2 credit basis; AB 637 made this a permanent provision that previously had a sunset date.
7. AFFORDABILITY COVENANTS – Any Agency assisted housing or replacement housing must have affordability covenants for 55 (versus 15) years for rental units and 45 (versus 10) years for owner occupied units.
8. PRIORITY OCCUPANCY FOR DISPLACED PERSONS – Persons and families displaced by redevelopment activities must be given priority for any agency assisted or required replacement units.
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