Redevelopment Reporting Requirements; New Legislation

This Memorandum describes recent changes in Community Redevelopment Law and summarizes redevelopment agency reporting requirements.

Redevelopment Plan Time Limits Must be Identified in Implementation Plans and Reports to the Legislative Body  (SB 437, amending Health and Safety Code Sections 33080.1 and 33490.)

Effective January 1, 2008, redevelopment agency implementation plans and annual reports to the legislative body must identify the fiscal years in which the agency expects each of the following time limits to be reached: (i) the time limit for commencement of eminent domain proceedings; (ii) the time limit for incurring indebtedness; (iii) the time limit for the effectiveness of the redevelopment plan; and (iv) the time limit to repay indebtedness with tax increment.

Notice of Affordability Restrictions Must be Recorded (AB 987, amending Health and Safety Code Sections 33334.3,, 33413, and 33418.)

In addition to the affordability covenants/restrictions redevelopment agencies are required to record pursuant to existing law, beginning January 1, 2008, agencies must record a separate additional notice for all new or substantially rehabilitated residential units assisted with low- and moderate-income housing funds or which the agency counts toward satisfaction of affordable housing production or replacement housing obligations. The notice must bear the title “Notice of Affordability Restrictions on Transfer of Property” in 14-point type or larger, and must include: a recitation of the affordability covenants/restrictions, the date that the affordability restrictions expire, the street address and unit number of the property, the assessor’s parcel number, and the legal description of the property. A sample form of notice is attached.

The additional notice is only required for properties that are assisted or that are subject to affordability restrictions recorded on or after January 1, 2008; the separate notice requirement does not apply to previously-assisted projects. The notice must be recorded within 30 days following the date of recordation of the affordability covenants/restrictions. If the notice is recorded concurrently with the affordability restrictions, then the notice must reference that document. If the notice is recorded after recordation of the affordability restrictions, then the notice must state the recorder’s identification number for the document that sets forth the affordability restrictions. The statute provides that the county recorder must index both the notice and the affordability covenants and restrictions by both the agency and the current property owner and permits the recorder to charge public agencies applicable fees for recordation of the notice.

Database of Restricted Affordable Units

Pursuant to AB 987, redevelopment agencies are required to compile a database of all existing, new and substantially rehabilitated residential units that have been developed or otherwise assisted with funds from the Agency’s low and moderate-income housing fund or which the Agency counts toward satisfaction of affordable housing production or replacement housing requirements. The database must be available to the public on the internet and must be updated annually. The legislation does not specify a time period within which the database must be compiled and published. When the database is established, the Agency must provide notice to the community that the database is available.

The database must include: the street address and assessor’s parcel number for each property, the number of bedrooms in each unit, the year in which construction/rehabilitation was completed, the date of recordation and the document number for the affordability restrictions or covenants, the date upon which the restrictions expire, and for owner-occupied units that have changed ownership during the reporting year, the date and document number of the new affordability covenants. The database must include information for all existing assisted and restricted affordable housing except property that is used to provide housing on a confidential basis to victims of domestic violence.

Enforcement of Affordability Restrictions

AB 987 expands the group of persons who may enforce housing affordability covenants and restrictions to include the following: (i) residents of restricted units; (ii) a residents’ association with members who reside in restricted units; (iii) a former resident of a restricted unit who last resided in that unit; (iv) an applicant for residency in a restricted unit who was denied occupancy due to an alleged breach of an affordability covenant provided the applicant is of low- or moderate-income and is able and willing to occupy such unit; and (v) persons on affordable housing waiting lists who are of low- or moderate-income and able and willing to occupy a restricted unit.

Reduced Affordability Requirement for Mutual Self-Help Housing

In lieu of the 45-year term of affordability applicable to owner-occupied housing, AB 987 permits agencies to elect to impose 15-year affordability restrictions for new and substantially rehabilitated mutual self-help housing units assisted with low- and moderate-income housing funds or counted toward satisfaction of the agency’s affordable housing production or replacement housing obligations. A mutual self-help housing unit is defined as an “owner-occupied housing unit for which persons and families of very low and low income contribute no fewer than 500 hours of their own labor in individual or group efforts to provide a decent, safe, and sanitary ownership housing unit for themselves, their families, and others authorized to occupy the unit.” Agencies may credit each mutual self-help unit that is subject to a 15-year affordability covenant as 1/3 of a unit toward satisfaction of the agency’s affordable housing production requirement.

Agencies may permit mutual self-help housing units to be sold prior to the expiration of the 15-year period for a price in excess of the restricted price if the agency has adopted a program that (i) protects the agency’s investment of funds (e.g., an equity sharing program), and (ii) ensures via a recorded instrument that if the unit is sold after the expiration of the 15-year period but prior to 45 years following recordation of the covenant, the agency will recover from the sale proceeds at least the original principal amount provided from the agency’s low- and moderate-income housing fund.

Please contact any member of the Meyers Nave Redevelopment, Real Estate and Affordable Housing Practice Group for further information or assistance on any of these matters.