Wednesday, August 1, 2012

The Phoenix Will Rise From Bankruptcy

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Affordable Housing Technical Review


"The Phoenix Will Rise From Bankruptcy"
Issue: # 29August 2012 (issued August 1, 2012)

To Our LDC Clients and Colleagues:

The dominoes have begun to fall in the post-redevelopment era and shockwaves have been felt as a handful of cities recently declared bankruptcy - Stockton

, Mammoth Lakes
, and San Bernardino
- and Duarte has just declared a state of emergency. This may be the tip of the iceberg as Compton, Lancaster, Montebello and El Monte have all been called out as being likely to face similar fiscal fates.


Cities will continue to struggle to make ends meet with fewer resources, but there is a silver lining - where there is crisis, there is innovation and perseverance.  One example exists with the County of San Bernardino - the County is pursuing a pioneering partnership with private enterprise to boost their struggling real estate market and provide aid to homeowners. According to The New York Times, the County is exploring the use of eminent domain "to buy up mortgages for homes that are underwater." The County would then "cut the mortgages to the current value of the homes and resell the mortgages to a private investment firm, which would allow homeowners to lower their monthly payments and hang onto their property."


Another example of innovation comes from the Time for Change Foundation, a non-profit in San Bernardino which has the foresight to include new economic development and sustainability techniques within their affordable housing developments. The Press Enterprise writes that the Foundation's new development, Phoenix Square, will include a 'grid neutral' solar-paneled parking structure for reusable energy and a garden for organic micro-enterprises, thus creating a space for the community to attend educational classes and for residents to manage their personal businesses.


Like a phoenix, California's cities and municipalities will rise again but must do so through fresh thinking, and creative new partnerships that simultaneously promote progress, sustainable practices and fiscal efficiencies.  As always, we will continue to provide our clients with opportunities for pursuing best practices, innovation and cross-collaboration in addition to our diverse suite of strategic planning, and affordable housing policy and financing services.  And we'll maintain keeping you up to date on the latest news and policy developments in our industry.


Best Wishes,

Jennifer LeSar signature              

Jennifer LeSar                                     Gretchen Kinney Newsom

President                                             Editor

LeSar Development Consultants     

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Federal Budget Update


Congress will be in recess for the entire month of August and will not return to session until September 10th.

Fiscal Year 2013 funding for the Department of Housing and Urban Development, and thus money for many affordable housing programs, has still not been finalized.  It is doubtful that these issues will be settled before the Presidential election.




Legislative Update


The Legislature returns from their recess on August 6th and will immediately take up their duties of law making. Here is a brief overview on the status of key legislation that we having been following and reporting on this session:


Assembly Bill 1585
(Perez) re-appropriates $50 million of bond revenues to the Department of Housing and Community Development (HCD) from monies derived from the Housing and Emergency Shelter Trust Fund Act of 2006 (Prop 1C). Proceeds from the sale of these bonds are proposed to be used to finance various existing housing programs, including capital for transit oriented developments and infill development.  This bill will be heard in the Senate Appropriations Committee on August 6th.

Assembly Bill 1951
(Atkins) realigns $30 million of monies generated from Prop 1C into the Multifamily Housing Program to assist with the construction, preservation and rehabilitation of low-income rental housing.  This bill will be heard in the Senate Appropriations Committee on August 6th.

Senate Bill 1156
(Steinberg) allows cities and counties to create joint power authorities to finance projects within "Sustainable Community Investment Areas."  This bill has been re-referred to the Assembly Appropriations Committee and a hearing is not yet set.

AB 2144 (Perez) renames Infrastructure Financing Districts (IFDs) as "Infrastructure and Revitalization Financing Districts," and lowers the voter approval threshold to 55% (as opposed to the current two-thirds voter approval requirement).  This bill will be heard in the Senate Appropriations Committee on August 6th.

Post Redevelopment Update 


AB 1484,  the redevelopment dissolution clean-up legislation, has resulted in some positive changes for affordable housing assets and new future affordable housing resources, as well as a new set of timelines and requirements applicable to Successor Agencies and Oversight Boards.


One positive aspect of AB1484 as it relates to housing is that it makes significant new resources available for low and moderate income housing by defining "housing assets" to be transferred to the housing successor agency to include all low and moderate income properties acquired with any source of funds, as well as their associated lease and rental revenues.   Additionally, the bill requires RDA loan repayments to cities and counties to first be directed to the retirement of any outstanding balances owed on loans from the Low and Moderate Income funds, and establishes a 20% set aside on the RDA loan repayments going forward.


Oversight Boards must now approve the Recognized Obligation Payment Schedule (ROPS) for the period of January through June 2013 prior to September 1, 2012 - which is the deadline for the successor agency to submit ROPS #3 to the Department of Finance and the County Auditor Controller.  We expect a slew of Oversight Board meetings this month as they strive to meet this new deadline.


Further, AB 1484 has created a new audit requirement wherein Successor Agencies must employ a licensed accountant approved by the auditor-controller to conduct a due diligence review (DDR).  This audit is used "to determine the unobligated balances available to transfer to affected taxing entities" and will include, among other things, the dollar value of all assets transferred from the former RDA to the successor agency.  Successor agencies must conduct two separate DDRs -- one for housing funds and another for non-housing funds.  This due diligence review for housing funds must be submitted to the oversight board for approval prior to October 1, 2012.  The DDR for all other funds is due to the oversight board by December 15, 2012.


In other news, the San Diego Housing Federation reported that the California League of Cities will file a lawsuit challenging AB 1484. "The League is concerned about the law's provision allowing the state Department of Finance to "claw-back" city sales taxes and property taxes to satisfy demands under AB 1484."  Cities throughout California have also filed their own lawsuits after receiving bills for what the  Department of Finance said were overpayments in December 2011 property taxes.  Most cities made these payments, but many did so under protest. Gray


 New Deputy Director of Housing Policy Development at HCD

Governor Jerry Brown has recently appointed Lisa Bates as the new Deputy Director of Housing Policy Development at the California Department of Housing and Community Development (HCD).  The press release  notes that Bates had served as "Deputy Executive Director at the Sacramento Housing and Redevelopment Agency since 2007, where she has held multiple positions since 1991.  Bates is a board member for the California Association of Local Housing Finance Agencies, Sacramento State University Enterprises Inc., Urban Land Institute Sacramento, Alley Activation Alliance and the Downtown Sacramento Partnership." Congratulations Lisa!



Funding and Financing Alert: Bank of America and CDFI


Bank of America  

The Bank of America Charitable Foundation

 recently awarded $22 million in grants for affordable housing.  These grants were provided to nonprofits that answered the foundation's request for proposals to "build and rehab affordable housing, offer foreclosure prevention services and homeowner counseling, and provide other services intended to revitalize neighborhoods and help working families find and keep suitable homes."  Bank of America estimates that these grants will support more than 650 national and local community nonprofits in 34 states and benefit more than 31 million people, "providing nearly 8,000 new affordable housing units and rehabbing over 11,000 units."


CDFI fund  The U.S. Department of the Treasury's Community Development Financial Institutions Fund (CDFI Fund) has opened the 2012 round of competition under the New Markets Tax Credit Program (NMTC Program) and has made available $5 billion in tax credits (pending Congressional authorization).  Since the inception of the NMTC Program, the CDFI Fund has made 664 awards - totaling $33 billion in tax credit allocation authority to Community Development Entities (CDEs).  The CDE certification application deadline is August 3rd and the NMTC program application is due on September 12th.


Studies of Interest: Historic Tax Credits and Economic Impacts  

In case you missed it, the Historic Tax Credit Coalition and Rutgers University recently released their Third Annual Report on the Economic Impact of the Federal Historic Tax Credit

.  The study reveals that this program is a "highly efficient job creator-accounting for the creation of over 2 million new jobs over the life of the program, 64,000 of which were generated in 2011."  The report also espouses the need for additional legislation to expand the Historic Tax Credit program to a wider pool of eligible applicants and to encourage utilization of the tax credits for sustainable/green projects. 
About Us
LeSar Development Consultants provides a full range of consulting services primarily to local government agencies involved in redevelopment, community development, affordable housing, and homelessness.
In This Issue
Federal Budget Update
State Legislative Update
Post Redevelopment Update
New Deputy Director of Housing Policy Development at HCD
Funding and Financing Alert
Studies of Interest
Upcoming Events


CDFA National Development Finance Summit 

July 31- August 3, 2012

Washington DC





LeSar Development Consultants | 2410 First Avenue | San Diego | CA | 92101

1 comment:

  1. Great post Will! I know when I was going through my bankruptcy issues my lawyer Francis S. Hallinan Esquire really helped me out and showed me that their were options out there for people in my situation. Thank you for sharing this with us!