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DATE: January 23, 2012
TO: - Honorable Mayor-and Council Members through City Manager
FROM: Bonne Gaebler, Housing Administrator ,,1
SUBJECT: A Resolution of City Council of City of Petaluma Electing to Retain the
Housing Assets and Functions of the Petaluma Community Development
Commission (PCDC) Pursuant to Health and Safety Code Section 34176(a)
RECOMMENDATION
It is-recommended that the CityCouncil adopt the attached Resolution-Electing To Retain the
Housing Assets and Functions of the Petaluma Community Development Commission Pursuant
to Health and Safety Code Section 34167(a).
BACKGROUND
At the City Council meeting of 1/9/12, the Council adopted a resolution approving the City
Council as a Successor Agency. The same action is now being recommended regarding the
transfer of housing functions of PCDC to a"Successor Housing Agency".
To reiterate from the January 9, 2012, staff report the following is the background necessitating
this action:
Responding to a declared state fiscal emergency, in the summer of 201 1 the State Legislature
enacted two measures intended to stabilize school funding by reducing or eliminating the
allocation of property tax revenues to the State's redevelopment,agencies ("RDA's").
Assembly-Bill 1X26 (the "Dissolution Act") bars RDA's from engaging..in'new business and
provides for their windup and dissolution. AB IX 27 offered an alternative: redevelopment
agencies could continue to operate if the cities and or counties that created them agreed to make
payments into funds benefitting the school and special districts. In October 2011, the California
Redevelopment Association (the'"CRA") and League of California Cities (and others) sought
relief from both bills from the California Supreme Court.
On December 29, 2011, the California Supreme Court delivered a bifurcated decision, effective
immediately, determining that all RDAs will be dissolved under the Dissolution Act and that
Agenda ReviewOf City Attorney Finance Director City Manager
none will have the opportunity to "opt into" continued existence under AB IX 27. Although the
CRA and various housing development,advocacy groups (including many of.Petaluma's
nonprofit agencies) have indicated their intent to seek legislative relief to continue economic
development and affordable housing_activities in California, it is premature to speculate on the
nature or likely outcome of such proposals.
Therefore, there are certain decisions and actions that each city or county (the "Sponsoring
Community") that established,an existing redevelopment agency must make in January 2012.
One of those decisions requires the Council to decide whether or not it will designate the City as
the "Successor Housing Agency" to the PCDC.
DISCUSSION
Under the Dissolution.Act, a Sponsoring Community may elect to assume the housing functions
and take over the housing assets of its redevelopment agency, along with related rights, powers,
liabilities, duties and obligations thereby becoming.a."Successor Housing Agency". While no
specific date for such action is set forth'in the Dissolution Act, the City Attorney recommends
that if the City desires to serve as the Successor Housing Agency to the PCDC, it adopt a
resolution to that effect before PCDC is dissolved on February 1.
There are four compelling reasons to retain the Housing Assets and Functions:
• The City receives program income from several of our properties and this action will
allow us to retain those funds.
• There is optimism that the Legislature will pass legislation approving keeping the
Housing Fund balance (approximately $2,000,000)with the Successor Housing Agency.
• There is legislative activity to allow successor housing agencies to continue to implement
redevelopment housing law..
• In house status will allow us to maintain existing grants and apply for additional ones.
If the City does not elect to become,the Successor Housing Agency, PCDC's housing functions
and all related assets will be transferred to the local Housing Authority (or to the State
Department of Housing and Community Development, if there is no local Housing Authority).
The local Housing Authority with territorial jurisdiction is the Sonoma County Housing
Authority.
If the City becomes the Successor Housing Agency it will be able to use the former PCDC's
inherent..powers (not-limited by the Dissolution Act's restrictions on Successor Agencies) to
fulfill housing obligations and will be able to exercise Community Redevelopment Law housing
powers to fulfill such obligations. Some of those housing functions will include:
• Monitoring;our housing properties, which include 2,000 units, on an annual basis
• Enforcing affordability covenants and regulatory agreements on our affordable housing
properties
• Shepherding all housing loan documents
• Reviewing property management standards
• Administering Mobilehome Rent Control
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FISCAL.IMPACTS
There are significant financial impacts to the housing program resulting from the dissolution of
PCDC. PCDC's Housing Fund balance of$2,100,000 is in jeopardy of being transferred to the
County for distribution among the taxing entities after payment of the enforceable obligations.
This will happen whether or not the City decides to become the Successor Housing Agency,
unless housing advocates are.sueoessful in their current lobbying of the Legislature to obtain
legislation that would keep the current Housing Fund balance with the Successor Housing
Agency.
If the City does not become the Successor Housing Agency, the assets (net of the current
Housing Fund balance) would be transferred to the County Housing Authority. As of January 9,
2012, the net housing assets total.$21,902,528, which consists of notes receivable for our First
Time Homebuyer program, and a'majority of all affordable housing properties.
ATTACHMENTS
1. Exhibit#1: Resolution Electing to Serve as Successor Housing.Agency
Exhibit#2: Resolution Declining to Serve as Successor Housing Agency
s/housing/successolagencysf affrepo rt
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ATTACHMENT#1
EXHIBIT#1
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA
ELECTING TO RETAIN THE HOUSING ASSETS AND FUNCTIONS OF THE
PETALUMA COMMUNITY DEVELOPMENT COMMISSION PURSUANT TO
HEALTH AND SAFETY CODE SECTION 34176(a)
WHEREAS, the City Council of the City of Petaluma ("City") approved and adopted
the Redevelopment Plan for the Central Business District Redevelopment Project and the
Petaluma Community Development Project("Redevelopment Plans") covering certain properties
within the City ("Project Area"), pursuant to the California Community Redevelopment Law
(Health and Safety Code Section 33000 et seq.) (the "CRL"); and .
WHEREAS, the PetalumaCommunity Development Commission ("Commission") is a
redevelopment agency engaged in activities to execute and implement the Redevelopment Plans
pursuant to the CRL; and
WHEREAS, the California Legislature adopted, the Governor signed, and the California
Supreme Court, in California Redevelopment Association, et al. v. Ana Matosantos, et al., has
upheld ABX1 26, legislation°that amends the CRL; provides that the Commission will be
dissolved effective as of February 1, 2012; and further provides that the City may elect to retain
the responsibility for performing housing functions previously performed by the Commission, in
which event all rights, powers, assets, liabilities, duties and obligations associated with the
housing activities of the Commission, excluding any amounts in the Commission's Low and
Moderate Income Housing Fund, shall be transferred to the City in-accordance with the
provisions of Health and Safety Code Section 34176(a); and
WHEREAS,pursuant to Health and Safety Code Section 34176(b), in the event that the
City did not elect to retain the Commission's housing assets and functions, the transferee would
be the local housing authority in the territorial jurisdiction of the former redevelopment agency,
which in.this=instance would be the Sonoma County Housing Authority, or, if there were no local
housing authority in the:territorial jurisdiction, the transferee would be the State Department of
Housing and Community Development; and
WHEREAS,the City Council of the City of Petaluma believes that it is in the best
interest of the community for the City to retain the housing assets and functions previously
performed by the Commission.
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma
as follows:
Section 1. All of the recitals above are true and correct and incorporated herein.
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Section 2. Based on the foregoing recitals and the information provided to the City
Council by City staff, the City Council hereby declares.that<the City of Petaluma elects to retain
the housing assets and functions previously performed by the Petaluma Community
Development Commission and to assume the transfer thereof in accordance with Health and
Safety Code Section 34176(a) and other applicable law.
Section 3. The City Manager is hereby authorized to take all action necessary to
effectuate this Resolution.
Section'4. This Resolution is effective on the day of its adoption.
Section 5. If any provision, clause, section or part of this Resolution is found to be
unconstitutional, illegal or invalid, such finding shall affect only such provision, sentence,
clause, section or part, and shall not affect or impair any of the remaining parts.
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EXHIBIT 2
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA
DECLINING TO RETAIN THE HOUSING ASSETS AND FUNCTIONS OF THE
PETALUMA COMMUNITY DEVELOPMENT COMMISSION PURSUANT TO
HEALTH AND SAFETY CODE SECTION 34176(b)
WHEREAS, the City Council of the City of Petaluma ("City") approved and adopted
the Redevelopment Plan for the Central Business District Redevelopment Project and the
Petaluma Community Development Project ("Redevelopment Plans") covering certain properties
within the City("Project Area"), pursuant to the California Community Redevelopment Law
(Health and Safety Code Section 33000 et seq.) (the "CRL"); and
WHEREAS, the Petaluma Community Development Commission ("Commission") is a
redevelopment agency engaged in activities to execute and implement the Redevelopment Plans
pursuant to the CRL; and
WHEREAS, the California Legislature adopted, the Governor signed, and the California
Supreme Court, in California Redevelopment Association, et at v. Ana Matosantos, et at, has
upheld ABX1 26, legislation that amends the CRL; provides that the Commission will be
dissolved effective as of February 1, 2012; and further provides that the City may elect not to
retain the responsibility for performing housing functions previously performed by the .
Commission, in which event all rights, powers, assets, liabilities, duties and obligations
associated with the housing activities of the Commission, excluding any amounts in its Low and
Moderate Income Housing Fund, shall be transferred to another entity in accordance with the
provisions of Health and Safety Code Section 34176(b); and
WHEREAS, pursuant to Health and Safety Code Section 34176(b), in the event that the
City does not elect to retain the Commission's housing assets and functions, the transferee is the
local housing authority in the territorial jurisdiction of the former redevelopment agency, which
in this instance is the Sonoma County Housing Authority, or, if there is no local housing
authority in the,territorial jurisdiction, the transferee would be the State Department of Housing
and Community Development;and
WHEREAS, the City Council of the City of Petaluma believes that it is not in the best
interest of the community for the City to retain the housing assets and functions previously
performed by the Commission.
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma
as follows:
Section.l. All of the recitals above are true and correct and incorporated herein.
Section 2. Based on the foregoing recitals and the information provided to the City
Council by City staff, the City Council hereby declaresthat the City of Petaluma elects not to
retain the housing assets and functions previously performed by the Petaluma Community
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Development Commission, and consents to,the transfer of all rights, powers, assets, liabilities,
duties and obligations associated with the housing activities of the Commission, excluding any
amounts in the Commission's Low and Moderate Income Housing Fund, to the Sonoma County
Housing Authority in accordance with Health and Safety Code Section 34I76(b)(2) and other
applicable law.
Section 3. The City Manager is hereby authorized to take all action necessary to
effectuate this Resolution.
Section 4. This Resolution is effective on the day of its adoption.
Section 5. If any provision, clause, section or part of this Resolution is found to be
unconstitutional, illegal or invalid, such finding shall affect only such provision, sentence,
clause, section or part, and shall not affect or impair any of the remaining parts.
1778144.1
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