Local affordable housing authorities in California will see their oversight enhanced with the passage of AB 2035, signed Friday by Gov. Jerry Brown. Last year, Brown signed legislation authorizing cities and counties to create an affordable housing authority to plan and fund housing projects using tax increment financing and bonds. AB 2035 expands the list of projects an affordable housing authority may fund to include, among other projects, emergency shelters and transitional housing. The new law also provides some technical fixes and clarifications.
 
Like other housing bills, AB 2035 reflects the Legislature’s interest in monitoring how local governments are implementing new tools to address California’s housing crisis. The Legislature has made regular updates to these laws to either clarify points of confusion or tighten provisions of unintended flexibility.
 
An affordable housing authority is created by resolution of a city or county. An authority consists of five or seven members, which must include at least three members of the city council or board of supervisors and at least one member of the public who lives or works in the authority’s boundaries.
 
An affordable housing authority is funded by either the issuance of bonds or tax increment financing. After the authority is created, it may approve the issuance of bonds to fund its project. Before the authority is created, the city may approve tax increment financing for the authority. Generally, counties collect property taxes and then disburse the revenues to the cities. With property tax increment financing, the city may allocate its annual revenue from property tax increases to the authority.
 
Existing law authorizes an affordable housing authority to acquire real estate and make loans and grants for certain affordable housing projects. AB 2035 expands the range of projects an authority may fund, including projects to:

• Develop housing that meets the local share regional very low-, low- and moderate-income housing needs;
• Develop only very low-income housing, regardless of the local share of regional housing needs;
• Rehabilitate, expand or construct emergency shelters, supporting housing or transitional housing;
• Provide services and assistance that are ancillary to affordable housing (e.g., social work, counseling or job training), but such expenditures may not be financed by bonds and may not exceed 5 percent of the authority’s total funds and
• Finance water, sewer and other public infrastructure to support affordable housing.

Along with these new projects, AB 2035 makes some technical fixes and clarifications for financing of affordable housing authorities. The new law:

• Requires that the county disburse the revenue from property tax increments directly to the authority after deducting any administrative costs;
• Requires that tax increment financing start the tax year after the Dec. 1 in which a city approves financing (this means that if a city creates an authority on Oct. 5, 2018, the financing will start on Jan. 1, 2019, but, if a city approves financing on Dec. 2, 2018, the financing will start Jan. 1, 2020) and
• Makes clear that a city’s tax increment financing will in no way effect the calculation or determination of local property tax rates.

Finally, AB 2035 limits opportunities to challenge an affordable housing authority. Under the new bill, any lawsuit to the authority’s creation, affordable housing plan or financing must be filed within 30 days of the relevant action.

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