HomeMy WebLinkAboutRDA TAX INCREMNT REV 01-07-85REDEVELOPMENT AGENCY NO. 4 1-7-85 DATE: January 7, 1985 Inter- Com TO: CHAIRMAN AND I~"NBERS OF THE REDEVELOPNENT AGENCY FROM: COI~IUNITY DEVELOPMENT DEPARTMENT SUBJECT: REPORT CONCERNING TAX INCREHENT REVENUE RESTRICTED FOR AFFORDABLE HOUSING BACKGROUND: Section 33334.2 of the Community Redevelopment law, with certain exceptions, requires the. Redevelopment Agency to use not less than 20 percent of tax increment revenue for the purpose of increasing and improving the community's supply of low and moderate income housing available at affordable housing costs to persons and families of low or moderate, income. Several requests have been received from developers for Redevelopment Agency financial assistance for projects within the South/Central Project area. Mark Ainslie requested a contribution for the installation of a water main serving his project on Walnut Street. The owners of the Californian Apartments on Newport Avenue requested loans and/or grants to permit reconstruction of faulty plumbing and space heating systems. Mark Ferguson has requested Agency construction of required public improvements for his Mitchell Avenue project. Staff has recommended the adoption of a specific policy and priority criteria for the allocation of funds for low and moderate income housing assistance. The Agency may use the housing set-aside funds by exercising any or all of its powers, including the following: 1. Acquire land or building sites. 2. Improve land or building sites with on-site or off-site improvements. 3. Donate land to private or public persons or entities. 4. Construct buildings or structures. 5. Acquire buildings or structures. 6. Rehabilitate buildings or structures. 7. Provide subsidies to, or for the benefit of, very low income households, lower income households, or persons and families of low or moderate income. 8. Develop plans, pay principle and interest on bonds, loans, and other indebtedness, or pay financing charges. Housing funds generated within the South/Central Project area may be allocated to any area of the city upon a finding of the Redevelopment Agency and City Council that such use will benefit the project area. There is also a requirement that the Redevelopment Agency replace within four years any low income housing units that are removed from the project area. Housing funds may be used to replace low income housing, and replacement housing may be located anywhere within the city's jurisdiction. Redevelopment Agency Housing page t~o Policies of the Hous!ng Element read as follows: "The powers of the Redevelopment Agency will be used when required to acquire undeveloped properties to permit development at the density authorized for low income housing accommodations." And, "Use the tax increment set aside for housing of the South/Central'Redevelopment Agency for the reduction of land and housing costs within the jurisdiction of the city." The South/Central Redevelopment Plan requires replacement housing to remain available at affordable housing cost to persons and families of low and moderate income households. The housing requirements of the South/Central Redevelopment Plan are contained in Sections 320.1 thru 321.5 of the plan. DISCUSSION: The demand for funds to satisfy the low and moderate income family housing requirements will exceed available revenues into the distant future. There is a mandatory requirement imposed upon the Redevelopment Agency to replace any low or very low income housing that is removed as part of a redevelopment project, within four years, Replacement housing therefore warrants the first priority for the accumulation and allocation of housing funds. Since the very low income households are the most difficult market area for the private sector to accommodate, a priority is warranted for the financial assistance of the Redevelopment Agency. The next consideration is to obtain the maximum leverage from the investment of redevelopment funds. This could result from establishing a housing assistance revolving loan fund. The funds could be used for short term loans at below market interest rates and upon payback they could be reinvested in other deserving projects. Consideration should be given to a means of assuring the affordability of housing accommodations for projects that are provided financial assistance. The following policy issues are presented for consideration by the Redevelopment Agency: A. Distribution of Funds. What percentage of available funds should be established in a revolving loan fund and what percentage should be available for grants? What percentage of funds should be retained for replacement housing? B. Scope of Projects. Should funds be accumulated to enable major projects or should they be allocated as accrued to meet individual requests? Community Development Department Redevelopment Agency Housfng page three C. Assurance of Affordabllity of Housing Units. There is.a requirement of law for assurance of affordabiltty for replacement housing. Is assurance of affordability desired for loans and grants for redevelopment projects? Location of Affordable Housing. Should new affordable housing accommodations be promoted and assisted within ext:sting developed areas or should priority be given to locating replacement housing in the East Tustin area? E. Object of Expenditures. Should housing funds be used to reduce the cost of public improvements and private project costs or allocated for the purchase or financing of land costs for affordable housing? F. Award of Funds. Should funds be allocated on the basis of fixed criteria or upon evaluation of specific project requests? RECO~tENDATION: It is recommended that the Redevelopment Agency adopt a policy for allocation of housing set-aside tax Increment funds, which would address the the above issues. A draft policy statement is attached for consideration by the Redevelopment Agency. ~)ONALD D. LAMM, 'u Director of Community Development DDL:RKF:do attach: Draft Policy Statement for Allocation of Housing Assistance Funds Community Development Department DRAFT POLICY OF THE REDEVELOPMENT AGENCY FOR THE ALLOCATION OF HOUSING ASSISTANCE FUNDS A. GENERAL POLICY The Redevelopment Agency will consider requests for financial assistance for low and moderate income housing on a project by project basis, giving consideration to the specific policies contained herein. B. ALLOCATION OF FUNDS Of the total funds and interest accruing from the tax increment housing set-aside, not less than 50.percent shall be reserved and allocated for the replacement of low and moderate income housing that has been removed as part of a redevelopment project. The remaining 50 percent of housing set-aside funds shall be allocated on the basis of one-half in a revolving loan fund and the other one-half as project grants. The allocation of housing funds will be in the order of requests subject to the availability of funds, and in accordance with the priorities of the Redevelopment Agency. C. OPERATION OF REVOLVING FUND Loans may be made to private developers of housing projects at below market interest rates for periods not to exceed five years. Said funds may be applied to the construction of public improvements, land or building costs. Interest rates for revolving loans shall be not less than the interest rate of any bonded indebtedness of the Redevelopment Agency and shall be determined by the Agency at the time of application. Security for the loan* shall be in a manner as approved by the City Attorney and Redevelopment Agency. D. IMPROVEMENT GRANTS Grants may be awarded to private developers for affordable housing projects, subject to the availability of housing set-aside funds. The funds may be used for the purpose of reducing housing costs pursuant to the powers of the agency. E. ASSURANCE OF AFFORDABILITY Housing project loans shall be conditioned upon assurance of the availability of affordable housing units as defined by Section 50052.5 of the California Health and Safety Code. Not less than one affordable unit shall be provided and one additional unit shall be provided for each $1,000 or portion thereof of the loan amount for rental units. The assurance shall be subject to the City Attorney's approval and shall extend for the duration of the loan. Community Development Department Redevelopment Agency Policy page two Grants for housing projects shall be conditioned upon the same assurances required for loans but shall extend for the duration of the redevelopment plan. F. PRZORZTZES Priorities for the allocation of available housing set-aside funds shall be as follows: 3. 4. 5. 6. 7. 8. 9. Replacement Housing with preference given to the dispersion of low income housing. Projects accommodating the greatest number of low income families. Affordable senior citizen projects. Public improvement loans. Private improvement loans. Land acquisition grants. Public improvement grants. Subsidy payments. Mortgage subsidies. Community Development Department