CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1850

Introduced by Assembly Member Ward

February 08, 2022

An act to add Part 2.8 (commencing with Section 18970) to Division 13 of the Health and Safety Code, relating to housing.


LEGISLATIVE COUNSEL'S DIGEST


AB 1850, as introduced, Ward. Public housing: unrestricted housing.
Existing law, the Planning and Zoning Law, requires each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city, and specified land outside boundaries, that includes, among other mandatory elements, a housing element.
Existing law provides for the establishment of various special districts that may support and finance housing development, including affordable housing special beneficiary districts that are authorized to promote affordable housing development with certain property tax revenues that a city or county would otherwise be entitled to receive.
This bill would prohibit a city, county, city and county, joint powers authority, or any other political subdivision of a state or local government from acquiring unrestricted housing, as defined, unless each unit in the development meets specified criteria, including that the initial rent for the first 12 months postconversion is at least 10% less than the average monthly rent charged for the unit over the 12-month period prior to conversion and at least 20% less than the small area fair market rent.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Part 2.8 (commencing with Section 18970) is added to Division 13 of the Health and Safety Code, to read:

PART 2.8. UNRESTRICTED HOUSING

18970.
 (a) A public entity shall not acquire unrestricted housing unless each unit in the development meets all of the following criteria:
(1) The rent for the unit prior to conversion was not affordable to very low, low-, or moderate-income households.
(2) (A) The unit is subject to a long-term recorded regulatory agreement with a public entity that requires the unit to be affordable to, and occupied by, low- or moderate-income persons and families for a term of 55 years.
(B) Notwithstanding subparagraph (A), all households at the time of acquisition, regardless of income, shall be allowed to remain in residency.
(C) For purposes of this paragraph, rent limits shall be consistent with rent limits published by the California Tax Credit Allocation Committee, extrapolated from the 100 percent area median income rent for any income levels not directly stated by the committee.
(3) (A) The initial rent for the first 12 months postconversion for the unit is at least 10 percent less than the average monthly rent charged for the unit over the 12-month period prior to conversion and at least 20 percent less than the small area fair market rent, as determined by the United States Department of Housing and Urban Development, for the ZIP Code in which the development is located and the number of bedrooms in the unit.
(B) To determine the maximum rental rate in subsequent years, the initial postconversion rent for the unit shall be compared to the rent limit at the 100-percent income level published by the California Tax Credit Allocation Committee for the year of conversion, and the regulatory agreement shall limit the rent on the unit for the term of the regulatory agreement to that ratio multiplied by the 100-percent income level rent limit for the respective year, except that in no case shall the maximum rental rate increase by more than 3 percent over the previous 12 months.
(C) Notwithstanding subparagraphs (A) and (B), a project owner may shift rent restrictions on units within a given property so long as the overall distribution of regulated rents remain the same.
(4) The unit is in decent, safe, and sanitary condition at the time of occupancy following the conversion.
(5) The unit was not acquired by eminent domain as part of the conversion.
(6) The unit is subject to a governmental monitoring program to ensure continued affordability and occupancy by qualifying households.
(7) The projected income from the property is adequate to repay all debt over a period not to exceed 30 years.
(8) (A) Except as provided in subparagraph (B), a public entity shall approve all debt on the property and hold an assignable right to purchase the development, any interest in the development, or any interest in a partnership that owns the development for a price that does not exceed the principal amount of outstanding indebtedness secured by the building and all federal, state, and local taxes attributable to that sale.
(B) This paragraph shall not apply to a development that is subject to a regulatory agreement with the California Tax Credit Allocation Committee.
(b) For the purposes of this section:
(1) “Public entity” shall mean a city, county, city and county, joint powers authority, or any other political subdivision of a state or local government.
(2) “Unrestricted housing” shall mean a development consisting of one or more residential units that is not subject to a deed restriction limiting rents or the incomes of occupants.
(c) The Legislature finds and declares that ensuring housing, especially publicly-owned housing, is affordable and safe is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this section applies to all cities, including charter cities.