In December, the California Supreme Court ruled in favor of the state regarding ABX1 26, a bill signed into law by Governor Jerry Brown (D) that will dissolve more than 400 state redevelopment agencies on February 1 (see Memo, 11/11/2011).  In response, NLIHC state coalition partners Housing California, Non-Profit Housing Association of Northern California (NPH), and California Coalition for Rural Housing (CCRH) are now working to ensure passage of SB 654 to secure the remaining balances in the redevelopment agencies’ low and moderate income housing funds so they can be retained for housing-related purposes. With the court’s decision leaving only scarce and dwindling federal and state revenue sources for housing production, advocates are also planning to work with legislators to create new financing tools for affordable housing development in the state.

The California Redevelopment Association and League of California Cities filed a suit against the state in response to Governor Brown’s approval of ABX1 26, which calls for the redistribution of redevelopment agency funds to local services and education. The Supreme Court’s decision to side with the state was unanimous. However, the court struck down ABX1 27, a companion measure to require redevelopment agencies to make remittance payments to the state in order to stay in operation. This decision will result in the loss of more than $5 billion in annual redevelopment taxes, 20% ($1 billion) of which was reserved for low to moderate income housing production. Redevelopment funds have been a target for legislators in recent years as a way to address the state budget crisis.

In a final attempt to preserve revenue for housing, advocates have mobilized their networks to urge legislators to pass SB 654. There is bipartisan support for the bill and advocates hope to get the bill through the legislature on an expedited basis given the number of projects in the pipeline that depend on access to those funds. Currently SB 654 is up for a vote on the Senate floor and will then go to the Assembly.

“ABX1 26 is devastating to affordable housing in the state,” said Michael Lane, Policy Director for the Non-Profit Housing Association. “Redevelopment funds were a critical piece of financing in putting together deals. We are now working to retain the existing low/mod fund balances on hand with the dissolved agencies and to create new revenue sources for the provision of affordable and workforce housing in the state.”

Senator Darrell Steinberg (D-Sacramento) and Speaker of the Assembly John Perez (D-Los Angeles) are exploring options for creating new sources of funding for affordable housing. “Loss of redevelopment dollars will also have a profound impact in some small and rural communities that have few other sources of local funding for housing,” said Rob Weiner, Executive Director of California Coalition for Rural Housing. “All the more reason why we need to generate new revenue sources for a statewide housing trust fund.”

For more information, contact Gabriella Chiarenza, Policy Associate, Non-Profit Housing Association of Northern California, at gabriella@nonprofithousing.org; or Julie Snyder, Policy Director, Housing California, at jsnyder@housingca.org.