Today's Law As Amended


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AB-2337 Public retirement system: investments: predatory investment practices.(2009-2010)



As Amends the Law Today


SECTION 1.
 The Legislature finds and declares that investments by public retirement boards in companies that engage in predatory investment practices, which rely on, or result in, the displacement of persons residing in rent-regulated housing in order to generate profits to investors, are not only harmful to the persons displaced by these practices but also to the entire community in which those persons reside.

SEC. 2.

 Section 7513.75 is added to the Government Code, to read:

7513.75.
 (a) As used in this section, the following definitions shall apply:
(1) “Board” means the retirement board of a public pension or retirement system, as defined in subdivision (h) of Section 17 of Article XVI of the California Constitution.
(2) (A) “Predatory investment practices” means private real estate investments that rely on, or result in, the displacement of persons residing in rent-regulated housing, converting rent-regulated housing units to market rate units, or raising rents above regulated levels as determined by the appropriate governing authority, in order to generate profits to investors. “Predatory investment practices” shall not include investment in strategies that create new, or redevelop existing, rent-regulated housing units, including strategies that include demolition of existing rent-regulated housing units, provided that the following minimum criteria are met:
(i) Any rent-regulated housing units that are demolished as part of the investment or project are replaced with new rent-regulated housing units.
(ii) Any person lawfully residing in rent-regulated units who is displaced as a result of such strategies receives relocation benefits in accordance with relocation requirements as mandated by the local housing authority or by state or federal laws, if applicable.
(B) “Predatory investment practices” shall not include the exercise of the power of sale granted under Section 2924 of the Civil Code.
(C) For purposes of this paragraph “private real estate investments” shall not include real estate investment trusts or other similar securities that are publicly traded.
(b) The board shall develop and implement, on or before June 30, 2011, and thereafter maintain, a policy that prohibits the investment of public employee retirement funds in predatory investment practices. The policy shall include, but not be limited to, the following requirements:
(1) A prohibition on the investment of public employee retirement funds in predatory investment practices.
(2) Principles that are consistent with the Principles for Responsible Investment, as set forth by the United Nations, to the extent those principles relate to responsible real property investing.
(3) A statement that requires an annual report to the board if a private real estate investment is materially inconsistent with the objectives of the policy, regardless of whether the investment was made prior to or after the effective date of the policy. The report shall describe the investment, including the impacts and anticipated impacts of those investments on tenants living in rent-regulated housing units, as well as any impacts on investment performance.
(4) A statement that requires any investment manager that enters into an investment agreement with the board, or its agents, that involves the acquisition of occupied rent-regulated housing to agree, in writing, to abide by the board’s policy on real estate investment strategies impacting rent-regulated housing units.
(5) If, after the effective date of the policy, an investment manager makes investments that are materially inconsistent with this section, the board shall not use that manager for any new investments.
(c) Notwithstanding Section 10231.5, the board shall provide an annual report regarding implementation and compliance with this section, and any policy adopted pursuant to this section, to the Legislature. Any report filed pursuant to this subdivision shall comply with Section 9795.
(d) Nothing in this section shall require the board to take action as described in this section unless the board determines, in good faith, that the action described in this section is consistent with the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution.