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