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SB-563 Second Neighborhood Infill Finance and Transit Improvements Act: housing developments: homelessness prevention programs: enhanced infrastructure financing plan review and amendment process.(2021-2022)

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Date Published: 05/03/2021 10:00 AM
SB563:v96#DOCUMENT

Amended  IN  Senate  May 03, 2021
Amended  IN  Senate  April 13, 2021
Amended  IN  Senate  April 05, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 563


Introduced by Senator Allen

February 18, 2021


An act to amend Sections 53398.69 and 53398.75.7 of the Government Code, relating to local government.


LEGISLATIVE COUNSEL'S DIGEST


SB 563, as amended, Allen. Second Neighborhood Infill Finance and Transit Improvements Act: housing developments: homelessness prevention programs: enhanced infrastructure financing plan review and amendment process.
Existing law, the Second Neighborhood Infill Finance and Transit Improvements Act, or NIFTI-2, authorizes a city or county to adopt a resolution to allocate its tax revenues to an enhanced infrastructure financing district, including revenues derived from local sales and use taxes imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or transactions and use taxes imposed in accordance with the Transactions and Use Tax Law, if certain conditions are or will be met. Among those conditions, existing law includes requirements that the area financed with those funds is within 1/2 mile of a major transit stop, as specified, and that the boundaries of the enhanced infrastructure financing district are coterminous with the city or county that established the district. Existing law also requires the infrastructure financing plan to require specified minimum percentages of the funds to be used to develop affordable housing, as specified, and to give first priority to income-qualified households displaced from the district, as specified, and secondary priority to households with a member or members employed within 2 miles of the district. Existing law authorizes the remaining funds to be used for certain affordable housing, mixed-use, transit, or greenhouse gas emission reduction related projects or programs.
This bill would revise NIFTI-2 to, among other things, remove the requirements that the area financed be within 1/2 mile of a major transit stop and that the boundaries of the district be coterminous with the city or county. The bill would require specified minimum percentages of the funds be used for homelessness prevention programs or development of affordable housing that is within 1/2 mile of a major transit stop, as specified. The bill would revise the description of tax revenue that may be allocated to a district. The bill would require first priority for the housing be given to households who were displaced from the district within the past 10 years, and secondary priority for households with a member or members who are employed within 2 miles of the housing or who live within the district and are children, elderly, or disabled. The bill would require first priority for the homelessness prevention programs to be given to households living within the district with a member or members who are employed within the district or who are children, elderly, or disabled, and secondary priority for households not living within the district with a member or members who are employed within the district or who are children, elderly, or disabled. The bill would authorize the remaining funds to be used for certain transit related projects in specified areas within a 1/2 mile of a major transit stop. The bill would also authorize the remaining funds to be used for certain homelessness prevention, affordable housing, enhanced transit ridership, or greenhouse gas emission reduction projects or programs throughout the district. The bill would prohibit a project receiving financing from an enhanced infrastructure financing district unless various requirements regarding the use of a skilled and trained workforce, as defined, on the project are satisfied. The bill would prescribe enforcement procedures and penalties in this regard. By requiring that a developer certify specified information with respect to these requirements, this bill would expand the crime of perjury.
This bill would prohibit a city or county that allocates tax revenues to a district pursuant to NIFTI-2 from approving a development project within the district that will require the demolition of housing to comply or certain classes of housing units unless the project will create at least as many units or comply with specified requirements, including the provision of relocation assistance and a right of first refusal in the new housing to displaced occupants, as provided. The bill would provide that these provisions do not supersede any provision of a locally adopted ordinance that places greater restrictions on the demolition of residential dwelling units or the subdivision of residential rental units or that requires greater relocation assistance to displaced households.
This bill would authorize a district to receive funds, real property, or other in-kind resources from private persons, the state, or the federal government. The bill would also authorize a district to receive real property or other in-kind resources from the city or county.
Existing law establishes the Department of Housing and Community Development and prescribes its powers and duties. Existing law establishes in state government the Strategic Growth Council and requires the council to, among other duties, manage and award grants and loans to support the planning and development of sustainable communities.
This bill would require the council, Department of Housing and Community Development, upon appropriation, to disburse each year matching funds to a district formed by a city and county county, or jointly formed by a city and a county county, based on the funds and other resources contributed by those local governments, as specified. The bill would require the department to administer this matching fund program in consultation with the Strategic Growth Council and the Homeless Coordinating and Financing Council. The bill would prescribe requirements for applications for state matching funds and their use and would authorize the council to establish other requirements in this regard. The bill would also prescribe requirements for the council department in approving these applications, including that it approve all plans for qualifying homelessness prevention programs and affordable housing requirements. The bill would require districts that receive funds to provide reports to the council department and, under certain circumstances, to develop a corrective action plan based on council recommendations. The bill would require the council department to issue findings if a district fails to provide or comply with a corrective action plan and to stop providing funds, and prohibit application for additional funds, if the district has not satisfied funding requirements. The bill would condition a district’s receipt of any matching funds on compliance with specified requirements by the constituent entities of the district.
Existing law exempts the adoption of an enhanced infrastructure financing plan that allocates tax revenues pursuant to NIFTI-2 from certain provisions generally applicable to enhanced infrastructure financing districts, and instead requires the district to follow specific notice, protest, and election proceedings for the adoption, review, and amendment of the enhanced infrastructure financing plan. With regard to the review and amendment of the plan, existing law requires the public finance authority to adopt annually, after holding a public hearing, a report containing, among other information, a description of the projects undertaken in the fiscal year and a chart comparing the actual revenues and expenses of the authority to the budgeted revenues and expenses. Existing law requires the authority every 10 years at that public hearing to conduct a protest proceeding to consider whether the landowners and residents within the district wish to present oral or written protests against the enhanced infrastructure financing district, as specified.
This bill, instead, would require the authority every 15 years at that public hearing to consider whether the landowners and residents within the district wish to propose amendments to the plan, and would authorize the authority to consider and adopt amendments to the plan at the conclusion of the hearing. After considering any amendments, the bill would require the authority to conduct a protest proceeding to consider whether the landowners or residents within the district wish to present oral or written protests against the enhanced infrastructure financing district undertaking new projects under the plan, as specified. The bill would make other related changes.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 53398.69 of the Government Code is amended to read:

53398.69.
 (a) (1) At the conclusion of the hearings pursuant to Section 53398.66, the public financing authority may adopt a resolution proposing adoption of the infrastructure financing plan, as modified, and formation of the enhanced infrastructure financing district in a manner consistent with Section 53398.68, or it may adopt a resolution abandoning the proceedings. If the proceedings are abandoned, then the public financing authority shall cease to exist by operation of this section with no further action required of the legislative body and the legislative body may not enact a resolution of intention to establish a district that includes the same geographic area within one year of the date of the resolution abandoning the proceedings.
(2) In the case of an infrastructure financing plan adopted pursuant to Section 53398.75.7, the proceedings set forth in subdivision (f) of that section shall govern the adoption of the infrastructure financing plan.
(b) The infrastructure financing plan shall take effect upon the adoption of the resolution. The infrastructure financing plan shall specify if the district shall be funded solely through the district’s share of tax increment, governmental or private loans, grants, bonds, assessments, fees, other resources authorized by law with respect to particular districts, or some combination thereof. However, the public financing authority shall not issue bonds or levy assessments or fees that may be included in the infrastructure financing plan before one or more of the following:
(1) The adoption of a resolution meeting the requirements of Section 53398.77, and, if applicable, subdivision (c) of Section 53398.78, to issue bonds to finance the infrastructure financing plan.
(2) Compliance with the procedures required in subdivision (f) of Section 53398.75, to levy assessments or fees to finance the infrastructure financing plan.
(c) In addition, the district may expend up to 10 percent of any accrued tax increment in the first two years of the effective date of the enhanced infrastructure financing district on planning and dissemination of information to the residents within the district’s boundaries about the infrastructure financing plan and planned activities to be funded by the district.

SEC. 2.

 Section 53398.75.7 of the Government Code is amended to read:

53398.75.7.
 (a) This section shall be known and may be cited as the Second Neighborhood Infill Finance and Transit Improvements Act, or NIFTI-2.
(b) For purposes of this section, the following definitions shall apply:
(1) “Council” means the Strategic Growth Council.
(2) “District” means a district allocated tax revenue pursuant to this section.
(3) “Homelessness prevention programs” includes, but is not limited to, rent subsidy programs, eviction defense programs, and code enforcement programs for households with incomes below 60 percent of area median income.
(4) “Development of housing” includes predevelopment or land acquisition for, and acquisition, construction, or rehabilitation of housing, including a multifamily affordable housing project or mixed-use projects with only affordable multifamily housing and ground floor commercial, artistic, cultural, or community uses that support infill and compact development.
(5) “Major transit stop” has the same meaning as that term is defined in Section 21064.3 of the Public Resources Code.
(6) “Predevelopment costs” includes, but is not limited to, site control, engineering studies, architectural plans, application fees, legal services, permits, bonding, and site preparation.
(7) “Department” means the Department of Housing and Community Development.
(c) At any time before or after the adoption of the infrastructure financing plan, a city, county, or city and county may adopt a resolution to allocate tax revenues of that entity to the district, including taxes or tax increment pursuant to Sections 53398.63 and 53398.75 and any other tax revenues after receipt by the city, county, or city and county, if all of the following apply:
(1) (A) Except as provided in subdivision (n), the infrastructure financing plan requires that at least 20 percent of the total funds received by the district pursuant to this section be used for homelessness prevention programs for, or development of housing that is within one-half mile of a major transit stop and affordable to and occupied by, households with incomes below 60 percent and greater than 30 percent of area median income, and that at least 20 percent of the total funds received by the district pursuant to this section be used for homelessness prevention programs for, or development of housing that is within one-half mile of a major transit stop and affordable to and occupied by, households with incomes below 30 percent of area median income, or permanent supportive housing to help homeless persons get off the street.
(B) The infrastructure financing plan shall require that the city, county, or city and county ensure that the requirements of this paragraph are met within every five years.
(2) The infrastructure financing plan gives priority for occupancy of housing funded through this plan to income-qualified households as follows:
(A) First priority for households who were displaced from the district through no fault of their own within the past 10 years.
(B) Secondary priority for households with a member or members who are either of the following:
(i) Employed within two miles of the housing.
(ii) Live within the district and are children, elderly, or disabled.
(3) The infrastructure plan gives priority for homelessness prevention programs to income-qualified households as follows:
(A) First priority for households living within the district with a member or members who are either of the following:
(i) Employed within the district.
(ii) Are children, elderly, or disabled.
(B) Secondary priority for households not living within the district with a member or members who are either of the following:
(i) Employed within the district.
(ii) Are children, elderly, or disabled.
(4) The infrastructure financing plan requires that at least 10 percent of the total funds received by the district pursuant to this section be used for investments in the capital costs of parks, urban forestry, or permanent greening improvements along boulevards, streets, or other public areas within a district, or active transportation capital projects that qualify under the Active Transportation Program (Chapter 8 (commencing with Section 2380) of Division 3 of the Streets and Highways Code), including pedestrian or bicycle facilities or supportive infrastructure, including connectivity to transit stations.
(5) The use of the revenues derived from the local sales and use taxes imposed under the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) or transactions and use taxes imposed in accordance with the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code) pursuant to the infrastructure financing plan is consistent with the purposes for which that tax is imposed.
(6) If the infrastructure financing plan proposes to allocate tax revenues of that entity to the district that are derived from the local sales and use taxes imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code), the city, county, or city and county has received the consent of any impacted transportation agency that receives tax revenues derived from any tax adopted pursuant to that law, and has ensured that existing or planned transportation operations and capital projects will not be negatively impacted.
(d) This section does not authorize a city, county, or city and county to allocate all, or a portion of any sales and use taxes imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) or transactions and use taxes imposed in accordance with the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code), that was approved by the voters for a special purpose not related to the purposes in subdivision (c).
(e) The funds received pursuant to this section that are not allocated pursuant to subdivision (c) may be used for any of the following:
(1) In parcels that are within one-half mile of a major transit stop, located along boulevards or in downtown areas, and are zoned for commercial or industrial uses, and in the adjacent sidewalks, boulevards, and downtown streets adjacent to those parcels, any of the following:
(A) Transit capital projects, including transit stations and waterborne transit.
(B) Transit-oriented development projects, including infrastructure at or near transit stations or connecting those developments to transit stations. If the transit-oriented development project includes housing, it must include ground floor commercial, artistic, cultural, or community uses that support infill and compact development and a minimum of 20 percent of the units must be for households with incomes below 60 percent of area median income for rent or purchase.
(C) Capital projects that implement local complete streets programs.
(D) Parking, including detached and decoupled parking structures that provide parking for residents, businesses, or visitors in lieu of onsite parking for proposed developments. These parking structures should provide no more than one space for each residential unit. The ground floors in these parking structures should provide space for pedestrian-oriented commercial or public uses. Revenues from parking may be used to maintain these parking structures and to implement transportation demand management programs to reduce automobile trips to and from the district.
(2) In any location in the district, any of the following:
(A) Homelessness prevention programs.
(B) Development of housing affordable to and occupied by households with incomes below 60 percent of area median income.
(C) Programs that support enhanced transit ridership, including, but not limited to, transit pass programs that provide low-cost transit service for students, seniors, and persons with disabilities.
(D) Programs designed to reduce greenhouse gas emissions and other criteria air pollutants by reducing automobile trips and vehicle miles traveled within a community.
(f) (1) Sections 53398.66 and 53398.67 shall not apply to the adoption of an enhanced infrastructure financing plan that includes the allocation of tax revenues pursuant to this section.
(2) (A) The public financing authority shall consider adoption of the enhanced infrastructure financing plan at three public hearings that shall take place at least 30 days apart.
(B) At the first public hearing, the public financing authority shall hear all written and oral comments, but take no action.
(C) At the second public hearing, the public financing authority shall consider any additional written and oral comments and take action to modify or reject the enhanced infrastructure financing plan. If the enhanced infrastructure financing plan is not rejected at the second public hearing, then the public financing authority shall conduct a protest proceeding at the third public hearing to consider whether the landowners and residents within the enhanced infrastructure financing plan area wish to present oral or written protests against the adoption of the enhanced infrastructure financing plan.
(3) The draft enhanced infrastructure financing plan shall be made available to the public and to each landowner within the area at a meeting held at least 30 days prior to the notice given for the first public hearing. The purposes of the meeting shall be to allow the staff of the public financing authority to present the draft enhanced infrastructure financing plan, answer questions about the enhanced infrastructure financing plan, and consider comments about the enhanced infrastructure financing plan.
(4) (A) Notice of the meeting required by paragraph (3) and the public hearings required by this paragraph shall be given in accordance with paragraph (11). The notice shall do all of the following, as applicable:
(i) Describe specifically the boundaries of the proposed area.
(ii) Describe the purpose of the enhanced infrastructure financing plan.
(iii) State the day, hour, and place when and where any and all persons having any comments on the proposed enhanced infrastructure financing plan may appear to provide written or oral comments to the enhanced infrastructure financing district.
(iv) Notice of the second public hearing shall include a summary of the changes made to the enhanced infrastructure financing plan as a result of the oral and written testimony received at or before the public hearing and shall identify a location accessible to the public where the enhanced infrastructure financing plan proposed to be presented and adopted at the second public hearing can be reviewed.
(v) Notice of the third public hearing to consider any written or oral protests shall contain a copy of the enhanced infrastructure financing plan adopted pursuant to paragraph (2), and shall inform the landowner and resident of his or her their right to submit an oral or written protest before the close of the public hearing. The protest may state that the landowner or resident objects to the public financing authority taking action to implement the enhanced infrastructure financing plan.
(B) At the third public hearing, the public financing authority shall consider all written and oral protests received prior to the close of the public hearing and shall terminate the proceedings or adopt the enhanced infrastructure financing plan subject to confirmation by the voters at an election called for that purpose. The public financing authority shall terminate the proceedings if there is a majority protest. A majority protest exists if protests have been filed representing over 50 percent of the combined number of landowners and residents in the area who are at least 18 years of age. An election shall be called if between 25 percent and 50 percent of the combined number of landowners and residents in the area who are at least 18 years of age file a protest.
(5) An election required pursuant to subparagraph (B) of paragraph (4) shall be held within 90 days of the public hearing and may be held by mail-in ballot. The public financing authority shall adopt, at a duly noticed public hearing, procedures for this election.
(6) If a majority of the landowners and residents vote against the enhanced infrastructure financing plan, then the public financing authority shall not take any further action to implement the proposed enhanced infrastructure financing plan. The public financing authority shall not propose a new or revised enhanced infrastructure financing plan to the affected landowners and residents for at least one year following the date of an election in which the enhanced infrastructure financing plan was rejected.
(7) At the hour set in the notice required by paragraph (2), the public financing authority shall consider all written and oral comments.
(8) If less than 25 percent of the combined number of landowners and residents in the area who are at least 18 years of age file a protest, the public financing authority may adopt the enhanced infrastructure financing plan at the conclusion of the third public hearing by ordinance. The ordinance adopting the enhanced infrastructure financing plan shall be subject to referendum as prescribed by law.
(9) For the purposes of this chapter, the enhanced infrastructure financing plan shall be the enhanced infrastructure financing plan adopted pursuant to this section.
(10) The public financing authority shall consider and adopt an amendment or amendments to an enhanced infrastructure financing plan in accordance with the provisions of this section.
(11) The public financing authority shall post notice of each meeting or public hearing required by this section in an easily identifiable and accessible location on the enhanced infrastructure financing district’s internet website and shall mail a written notice of the meeting or public hearing to each landowner, each resident, and each taxing entity at least 10 days prior to the meeting or public hearing.
(A) Notice of the first public hearing shall also be published not less than once a week for four successive weeks prior to the first public hearing in a newspaper of general circulation published in the county in which the area lies. The notice shall state that the district will be used to finance public facilities or development, briefly describe the public facilities or development, briefly describe the proposed financial arrangements, including the proposed commitment of incremental tax revenue, including revenues derived from local sales and use taxes imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code), or transactions and use taxes imposed in accordance with the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code), describe the boundaries of the proposed district, and state the day, hour, and place when and where any persons having any objections to the proposed infrastructure financing plan, or the regularity of any of the prior proceedings, may appear before the public financing authority and object to the adoption of the proposed plan by the public financing authority.
(B) Notice of the second public hearing shall also be published not less than 10 days prior to the second public hearing in a newspaper of general circulation in the county in which the area lies. The notice shall state that the district will be used to finance public facilities or development, briefly describe the public facilities or development, briefly describe the proposed financial arrangements, including the proposed commitment of incremental tax revenue, including revenues derived from local sales and use taxes imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code), or transactions and use taxes imposed in accordance with the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code), describe the boundaries of the proposed district, and state the day, hour, and place when and where any persons having any objections to the proposed infrastructure financing plan, or the regularity of any of the prior proceedings, may appear before the public financing authority and object to the adoption of the proposed plan by the public financing authority.
(C) Notice of the third public hearing shall also be published not less than 10 days prior to the third public hearing in a newspaper of general circulation in the county in which the area lies. The notice shall state that the district will be used to finance public facilities or development, briefly describe the public facilities or development, briefly describe the proposed financial arrangements, including the proposed commitment of incremental tax revenue, including revenues derived from local sales and use taxes imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code), or transactions and use taxes imposed in accordance with the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code), describe the boundaries of the proposed district, and state the day, hour, and place when and where any persons having any objections to the proposed infrastructure financing plan, or the regularity of any of the prior proceedings, may appear before the public financing authority and object to the adoption of the proposed plan by the public financing authority.
(g) (1) The public financing authority shall review the enhanced infrastructure financing plan at least annually and make any amendments that are necessary and appropriate in accordance with the procedures set forth in paragraph (5) and shall require the preparation of an annual independent financial audit paid for from revenues of the enhanced infrastructure financing district.
(2) A public financing authority shall adopt an annual report on or before June 30 of each year after holding a public hearing. Written copies of the draft report shall be made available to the public 30 days prior to the public hearing. The public financing authority shall cause the draft report to be posted in an easily identifiable and accessible location on the enhanced infrastructure financing district’s internet website and shall mail a written notice of the availability of the draft report on the internet website to each owner of land and each resident within the area covered by the enhanced infrastructure financing plan and to each taxing entity that has adopted a resolution pursuant to Section 53398.68. The notice shall be mailed by first-class mail, but may be addressed to “occupant.”
(3) The annual report shall contain all of the following:
(A) A description of the projects undertaken in the fiscal year, including any rehabilitation of structures, and a comparison of the progress expected to be made on those projects compared to the actual progress.
(B) A chart comparing the actual revenues and expenses, including administrative costs, of the public financing authority to the budgeted revenues and expenses.
(C) The amount of tax increment revenues received.
(D) The amount of revenues expended for housing meeting the requirements of this section.
(E) An assessment of the status regarding completion of the enhanced infrastructure financing district’s projects.
(F) The amount of revenues expended to assist private businesses.
(4) If the public financing authority fails to provide the annual report required by paragraph (1), the public financing authority shall not spend any funds received pursuant to a resolution adopted pursuant to this section until the public financing authority has provided the report.
(5) Every 15 years, at the public hearing held pursuant to paragraph (2), after adopting the annual report, the public financing authority shall consider whether the landowners and residents within the enhanced infrastructure financing district wish to propose amendments to the enhanced infrastructure financing plan. The authority may consider and adopt amendments to the plan at the conclusion of the public hearing. After considering any amendments to the plan, the authority shall conduct a protest proceeding to consider whether the landowners or residents within the enhanced infrastructure financing district wish to present oral or written protests against the enhanced infrastructure financing district undertaking new projects under the plan. Notice of this protest proceeding shall be included in the written notice of the hearing on the annual report and shall inform the landowner and resident of their right to submit proposed amendments to the plan, or an oral or written protest to oppose new projects under the plan before the close of the public hearing. The protest may state that the landowner or resident objects to the public financing authority taking action to implement new projects under the enhanced infrastructure financing plan on and after the date of the election described in paragraph (6). The public financing authority shall consider all written and oral protests received prior to the close of the public hearing.
(6) If there is a majority protest, the public financing authority shall not take any further action to implement the enhanced infrastructure financing plan on and after the date the existence of a majority protest is determined. If between 25 percent and 50 percent of the landowners and residents file protests, then the public financing authority shall call an election of the landowners and residents in the area covered by the enhanced infrastructure financing plan, and shall not initiate or authorize any new projects until the election is held. A majority protest exists if protests have been filed representing over 50 percent of the combined number of landowners and residents at least 18 years of age or older in the area.
(7) An election required pursuant to paragraph (6) shall be held within 90 days of the public hearing and may be held by mail-in ballot. The public financing authority shall adopt, at a duly noticed public hearing, procedures for holding this election.
(8) If a majority of the landowners and residents vote against the enhanced infrastructure financing plan, then the public financing authority shall not take any further action to implement new projects under the enhanced infrastructure financing plan on and after the date of the election held pursuant to paragraph (5). This subdivision shall not prohibit any of the following:
(A) An authority from fulfilling its obligations to repay all outstanding bonded indebtedness, fulfill all contractual obligations to third parties, or take all actions necessary so that the interest on any outstanding bonded indebtedness is excluded from gross income for federal income tax purposes.
(B) An authority from expending bond proceeds and other revenues to complete any previously approved project or contractual obligation.
(C) The expenditure of funds as required to comply with subdivision (c).
(h) Notwithstanding Section 53398.52, revenues collected and allocated for the purposes of this section shall not be used for highway or highway interchange improvements.
(i) The district shall require, by recorded covenants or restrictions, that affordable housing units financed pursuant to this section remain permanently available at affordable housing costs to, and occupied by, very low income households, persons and families of low income, or persons and families of low or moderate income for the longest feasible time, but for not less than 55 years for rental units and 45 years for owner-occupied units.
(j) A legislative body shall not adopt an ordinance terminating an enhanced infrastructure financing district created pursuant to this section if the district has not complied with its affordable housing obligations.
(k) Paragraph (1) of subdivision (c) of Section 1720 of the Labor Code shall not apply to projects financed by the enhanced infrastructure financing district.
(l) A project shall not be eligible to receive financing from the enhanced infrastructure financing district unless the developer has certified to the district that a skilled and trained workforce will be used tlo to perform all construction work on the project.
(1) For purposes of this subdivision, “skilled and trained workforce” has the same meaning as provided in Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code.
(2) If the developer has certified that a skilled and trained workforce will be used to construct all work on the project, the following shall apply:
(A) The developer shall require in all contracts for the performance of work that every contractor and subcontractor at every tier will individually use a skilled and trained workforce to construct the project.
(B) Every contractor and subcontractor shall use a skilled and trained workforce to construct the project.
(C) Except as provided in subparagraph (D), the developer shall provide to the district, on a monthly basis while the project is being performed, a report demonstrating compliance with Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code. A monthly report provided to the district pursuant to this subparagraph shall be a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1) and shall be open to public inspection. A developer that fails to provide a monthly report demonstrating compliance with Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code shall be subject to a civil penalty of ten thousand dollars ($10,000) per month for each month for which the report has not been provided. Any contractor or subcontractor that fails to use a skilled and trained workforce shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of the skilled and trained workforce requirement. Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development using the same procedures for issuance of civil wage and penalty assessments pursuant to Section 1741 of the Labor Code and may be reviewed pursuant to the same procedures in Section 1742 of the Labor Code. Penalties shall be paid to the State Public Works Enforcement Fund.
(D) Subparagraph (C) shall not apply if all contractors and subcontractors performing work on the project are subject to a project labor agreement that requires compliance with the skilled and trained workforce requirement and provides for enforcement of that obligation through an arbitration procedure. For purposes of this subparagraph, “project labor agreement” has the meaning set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(m) (1) Notwithstanding Section 53398.56, a city or county allocating tax revenues to the district pursuant to this section shall not approve a development project within the district that will require the demolition of residential dwelling units unless the project will create at least as many residential dwelling units as will be demolished.
(2) Notwithstanding Section 53398.56, a city or county allocating tax revenues to the district pursuant to this section shall not approve a development project within the district that will require the demolition of occupied or vacant protected units, unless all of the following apply:
(A) (i) The project will replace all existing or demolished protected units.
(ii) Any protected units replaced pursuant to this subparagraph shall be considered in determining whether the housing development project satisfies the requirements of Section 65915 or a locally adopted requirement that requires, as a condition of the development of residential rental units, that the project provide a certain percentage of residential rental units affordable to, and occupied by, households with incomes that do not exceed the limits for moderate-income, lower income, very low income, or extremely low income households, as specified in Sections 50079.5, 50093, 50105, and 50106 of the Health and Safety Code.
(iii) Notwithstanding clause (i), in the case of a protected unit that is or was, within the seven-year period preceding the application, subject to a form of rent or price control through a local government’s valid exercise of its police power, and that is or was occupied by persons or families above lower income, the city or county may do either of the following:
(I) Require that the replacement units be made available at affordable rent or affordable housing cost to, and occupied by, low-income persons or families. If the replacement units will be rental dwelling units, these units shall be subject to a recorded affordability restriction for as long as possible, but at least 55 years.
(II) Require that the units be replaced in compliance with the jurisdiction’s rent or price control ordinance, provided that each unit is replaced, with the initial rent for the replacement unit equal to the last rent for the demolished unit plus permitted annual rent increases to the time the replacement unit is occupied. Unless otherwise required by the city or county’s rent or price control ordinance, these units shall not be subject to a recorded affordability restriction.
(B) The housing development project will include at least as many residential dwelling units as the greatest number of residential dwelling units that existed on the project site within the last seven years.
(C) Any existing residents will be allowed to occupy their units until six months before the start of construction activities with proper notice, subject to Chapter 16 (commencing with Section 7260) of Division 7 of Title 1.
(D) The developer agrees to provide both of the following to the occupants of any protected units:
(i) Relocation benefits to the occupants of those affordable residential rental units, subject to Chapter 16 (commencing with Section 7260) of Division 7 of Title 1.
(ii) A right of first refusal for a comparable unit available in the new housing development affordable to the household at an affordable rent, as defined in Section 50053 of the Health and Safety Code, or an affordable housing cost, as defined in Section 50052.5 of this code.
(E) For purposes of this paragraph:
(i) “Equivalent size” means that the replacement units contain at least the same total number of bedrooms as the units being replaced.
(ii) “Protected units” means any of the following:
(I) Residential dwelling units that are or were subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of moderate, lower, or very low income within the past seven years.
(II) Residential dwelling units that are or were subject to any form of rent or price control through a public entity’s valid exercise of its police power within the past seven years.
(III) Residential dwelling units that are or were occupied by moderate- lower, or very low income households within the past seven years.
(IV) Residential dwelling units that were withdrawn from rent or lease pursuant to Chapter 12.75 (commencing with Section 7060) of Division 7 of Title 1 within the past 15 years.
(iii) Subject to clauses (iv) and (v), “replace” means either of the following:
(I) If a protected unit is occupied on the date of application, the proposed development shall provide at least the same number of units of equivalent size to be made available at affordable rent or affordable housing cost to, and occupied by, persons and families in the same or lower income category as those households in occupancy. If the income category of the household in occupancy is not known, it shall be rebuttably presumed that moderate- and lower income renter households occupied these units in the same proportion of moderate- and lower income renter households to all renter households within the jurisdiction, as determined by the most recently available data from the United States Department of Housing and Urban Development’s Comprehensive Housing Affordability Strategy database. For unoccupied protected dwelling units in a development with occupied units, the proposed housing development shall provide units of equivalent size to be made available at affordable rent or affordable housing cost to, and occupied by, persons and families in the same or lower income category as the last household in occupancy. If the income category of the last household in occupancy is not known, it shall be rebuttably presumed that moderate- and lower income renter households occupied these units in the same proportion of moderate- and lower income renter households to all renter households within the jurisdiction, as determined by the most recently available data from the United States Department of Housing and Urban Development’s Comprehensive Housing Affordability Strategy database. All replacement calculations resulting in fractional units shall be rounded up to the next whole number. If the replacement units will be rental dwelling units, these units shall be subject to a recorded affordability restriction for at least 55 years.
(II) If all protected dwelling units have been vacated or demolished within the seven-year period preceding the application, the proposed housing development shall provide at least the same number of units of equivalent size as existed at the highpoint of those units in the seven-year period preceding the application to be made available at affordable rent or affordable housing cost to, and occupied by, persons and families in the same or lower income category as those persons and families in occupancy at that time, if known. If the incomes of the persons and families in occupancy at the highpoint is not known, it shall be rebuttably presumed that moderate-, low-, and very low income renter households occupied these units in the same proportion of moderate-, low-, and very low income renter households to all renter households within the jurisdiction, as determined by the most recently available data from the United States Department of Housing and Urban Development’s Comprehensive Housing Affordability Strategy database. All replacement calculations resulting in fractional units shall be rounded up to the next whole number. If the replacement units will be rental dwelling units, these units shall be subject to a recorded affordability restriction for at least 55 years.
(iv) If the proposed development is for-sale units, the applicant shall agree to, and the city, county, or city and county shall ensure that, the initial occupant of all for-sale units that replace protected units are persons and families of very low, low-, or moderate- income, as required, and that the units are offered at an affordable housing cost, as that cost is defined in Section 50052.5 of the Health and Safety Code. The local government shall enforce an equity sharing agreement, unless it is in conflict with the requirements of another public funding source or law. Subparagraphs (A), (B), and (C) of paragraph (2) of subdivision (c) of Section 65915 apply to the equity sharing agreement.
(v) For a project within the coastal zone as defined and delineated in Division 20 (commencing with Section 30000) of the Public Resources Code, replacement dwelling units shall be located within the same city or county as the dwelling units proposed to be converted or demolished. The replacement dwelling units shall be located on the site of the converted or demolished structure or elsewhere within the coastal zone if feasible, or, if location on the site or elsewhere within the coastal zone is not feasible, they shall be located within three miles of the coastal zone.
(3) This subdivision does not supersede within the district any objective provision of a locally adopted ordinance that places restrictions on the demolition of residential dwelling units or the subdivision of residential rental units that are or do any of the following:
(A) More protective of moderate-income or lower income households or more protective of units subject to a form of rent or price control through a local government’s valid exercise of its police power.
(B) Requires the provision of a greater number of units affordable to moderate-income or lower income households.
(C) Requires greater relocation assistance to displaced households.
(n) In addition to any tax revenues allocated by the city, county, or city and county, a district also may elect to receive the following for use in carrying out the infrastructure plan:
(1) Funds, real property, or other in-kind resources from private persons, the state, or the federal government. These funds and resources shall not be considered in the determination of the amount of funds received by the district or the percentage of funds used for purposes of paragraphs (1) and (4) of subdivision (c).
(2) Real property or other in-kind resources from the city, county, or city and county forming the district. The fair market value of these resources as determined by an independent appraisal shall be considered when determining either the amount of funds received by the district or the percentage of funds used for purposes of paragraphs (1) and (4) of subdivision (c).
(o) If a city and county forms a district district, or a city and a county jointly form a district, the council, department, upon appropriation, shall disburse each year state matching funds to the district for use only in qualifying homelessness prevention programs and affordable housing projects, subject to the following: provisions of this subdivision. The department shall administer the matching fund program prescribed by this subdivision in consultation with the council and the Homeless Coordinating and Financing Council.
(1) Qualifying homelessness prevention programs and affordable housing projects are limited to those that are permissible under paragraphs (1), (2), and (3) of subdivision (c), and also satisfy any additional requirements established by the council. The council department. The department shall consult with the council and the Homeless Coordinating and Financing Council prior to establishing any additional requirements for qualifying homelessness prevention programs or for supportive housing for formerly homeless persons.
(2) State funds to which the city and county or the city and the county are entitled or are otherwise awarded without requiring formation of a district shall not count toward the state matching contribution pursuant to this subdivision. Receipt of state matching funds pursuant to this subdivision shall not be considered when evaluating any application by the city, county, city and county, or other applicant for a project residing therein for additional funds from any state program.
(3) The maximum state matching contribution to a district each year shall equal one-half of the total amount of tax revenues, real property, or other in-kind resources contributed by the city and the county or the city and county to the district since its formation that meet all of the following requirements:
(A) The tax revenues, real property, or other in-kind resources contributed by the city and the county or the city and county shall only have been used or be used for homelessness prevention programs or the development of housing affordable to and occupied by households with incomes below 60 percent of area median income.
(B) Unless the local jurisdiction is a city and county, the value of the total amount of tax revenues, real property, or other in-kind resources allocated to the district by the county for these purposes is equal to, or more than, that allocated by the city.
(C) Unless the local jurisdiction is a city and county, the tax revenues, real property, or other in-kind resources allocated to the district by the city for these purposes have not been contributed to the city by the county, state, or federal government.
(D) The tax revenues, real property, or other in-kind resources allocated to the district by the county or the city and county for these purposes have not been contributed to the county by the state or federal government.
(E) The value of the real property or other in-kind resources allocated by the city, county, or city and county for these purposes shall be determined by an independent appraisal for purposes of this paragraph.
(F) The state has not provided a matching contribution to the tax revenues, real property, or other in-kind resources contributed by the city and county or the city and county in a prior year.
(4) (A) At least 12 percent of the overall amount of state funding under this subdivision shall be set aside for counties with populations of less than 200,000 and districts formed in these counties. Of this amount, 2 percent shall be set aside to provide technical assistance for counties with populations of less than 200,000 or districts formed in these counties, which shall not be considered administrative costs for purposes of a plan.
(B) To the extent that all funds set aside in one year for counties with populations of less than 200,000 or districts within these counties are not dedicated to plans approved by the council, department, the amount of funds not dedicated shall be available to counties with populations of less than 200,000 residents or districts within these counties in the following year.
(5) A district requesting matching state funds shall submit to the council department one or more plans that include all of the following information:
(A) A description of the proposed program or programs and project or projects to be completed by the district pursuant to the plan and the funding amount necessary for each year the district requests funding pursuant to this subdivision. The applicant may request funding for no more than 30 years for each program or project included in the plan.
(B) Information necessary to demonstrate that the district is, or will be, entitled to state matching funds in the amounts requested at the times requested in the plan.
(C) Information necessary to demonstrate that each program or project proposed by the plan complies with all of the statutory requirements of any statutory authorization pursuant to which the project is proposed, including the requirements of NIFTI-2.
(D) Information identifying the source of any additional funds necessary to conduct each proposed program or complete each proposed project.
(E) The amount of administrative costs associated with the plan. The plan may set aside not more than 5 percent of the total state matching funds amount requested in the plan for administrative costs.
(F) Certification that any affordable housing projects that receive funding pursuant to this subdivision will comply with paragraph (8) of subdivision (a) of Section 65913.4.
(G) A strategy for outreach to, and retention of, women, minority, disadvantaged youth, formerly incarcerated, and other underrepresented subgroups in coordination with the California Workforce Investment Board and local boards, to increase their representation and employment opportunities in the building and construction trades.
(H) Any further information that the council department may establish a requirement for the district to furnish.
(6) (A) Within 30 days of receipt of a plan, the council department shall provide the applicant with a written statement identifying any questions about the plan.
(B) If the council department denies approval of the plan, the council department shall, not more than 30 days following the date the council department has issued a decision, provide the district with a written statement explaining the reasons why the plan was denied.
(C) The council department shall approve all plans for qualifying homelessness prevention programs and affordable housing projects.
(7) The council, department, after consultation with the council and the Homeless Coordinating and Financing Council, shall develop guidelines for allocating available state matching funds in any year when the available funds are less than the matching funds required by all approved plans. These guidelines shall consider, among other factors, the number of persons assisted per state dollar expended by each qualifying homelessness prevention program and affordable housing project, and maintenance of geographical equity.
(8) (A) Each district that has received financing pursuant to this subdivision for any fiscal year shall provide an annual report to the council department by a date set by the council department that includes all of the following information for the previous fiscal year:
(i) The amount of state matching funds received by the district.
(ii) The purposes for which those state matching funds were used, including the number of households assisted through homelessness prevention programs, and the number of housing units constructed, with what number of bedrooms and at which income levels.
(iii) The actions taken during the prior fiscal year to implement each program or project.
(iv) The total amount of funds expended for planning and general administrative costs.
(B) The council department shall develop a corrective action plan for noncompliance with the requirements of this part.
(9) (A) If, based on annual reports submitted to the council, department, the council department determines that any of the following has occurred, the council department shall direct the district to develop a corrective action plan based on recommendations made by the council: department:
(i) The applicant is not on track to produce the number of housing units included in the plan.
(ii) The applicant is not on track to provide homelessness prevention programs to the number of persons included in the plan.
(iii) The applicant is on track to exceed the 5-percent limit on administrative expenses.
(iv) The applicant is found to have used state matching funding for purposes not authorized by NIFTI-2, including subsidizing market rate housing.
(v) The district has violated the requirements of subdivision (m).
(vi) The district is not on track to complete all of the projects included in the plan according to the timeline included in the plan.
(B) The district shall have one year from the date that the council department directed the district to develop a corrective action plan.
(10) The council department shall issue a finding that the district is out of compliance with the funding requirements of this subdivision if the council department finds any of the following apply:
(A) The district has not complied with a corrective action plan developed by the council department pursuant to paragraph (8).
(B) The district has not provided an adequate corrective action plan to the council department within one year of the date the council department directed the district to develop a corrective action plan.
(C) The annual report provided to the council department does not demonstrate that the district has taken adequate steps to implement the corrective action plan that was provided to the council department within one year of the date the council department directed the district to develop a corrective action plan.
(11) If the council department finds that the district is out of compliance with the funding requirements of this subdivision, the council department shall stop transferring state matching funds to the district and shall prohibit the district from applying for additional state matching funds for a period of five years.
(12) (A) In order to be eligible to receive funding under this subdivision, a district shall comply with all of the following requirements:
(i) (I) To the extent applicable, the city and county, or a city and a county, within the district shall have a housing element that the Department of Housing and Community Development has determined to be in substantial compliance with Article 10.6 (commencing with Section 65580) of Chapter 3 of Division 1 of Title 7, pursuant to Section 65585.
(II) The city and county, or the city and the county, subject to this clause shall annually submit their housing elements to the Department of Housing and Community Development for review to ensure that their housing elements remain in substantial compliance with state law.
(ii) No city and county, or city or county, within the district shall have been found to have violated the Housing Accountability Act (Section 65589.5) or the Density Bonus Law (Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7) within the past five years.
(iii) No city and county, or city or county, within the district shall have taken any of the actions described in subparagraph (B).
(B) A district shall not be eligible to receive state matching funds pursuant to this subdivision if the city and county, or a city or a county, within the district has taken any action, whether by the legislative body of the city and county, city, or county, or the electorate exercising its local initiative or referendum power, that has any of the following effects:
(i) Established or implemented any provision that:
(I) Limits the number of land use approvals or permits necessary for the approval and construction of housing that will be issued or allocated within all or a portion of the applicant.
(II) Acts as a cap on the number of housing units that can be approved or constructed either annually or for some other time period.
(III) Limits the population of the cities or counties.
(ii) Imposes a moratorium or enforces an existing moratorium on housing development, including mixed-use development, within all or a portion of the jurisdiction of the applicant, except pursuant to a zoning ordinance that complies with the requirements of Section 65858.
(iii) Requires voter approval of any updates to the city and county’s, or a city’s or a county’s, housing element to comply with Article 10.6 (commencing with Section 65580) of Chapter 3 of Division 1 of Title 7 of the Government Code, or any rezoning of sites or general plan amendment to comply with an updated housing element or Section 65863.
(iv) Changes the zoning of a parcel or parcels of property to a less intensive use or reduces the intensity of land use within an existing zoning district below what was allowed under the general plan land use designation and zoning ordinances of the city and county or a city or a county in the district in effect on January 1, 2021. For purposes of this subparagraph, “less intensive use” includes, but is not limited to, reductions to height, density, floor area ratio, or new or increased open space or lot size requirements, for property zoned for residential use in the city and county’s or a city’s or a county’s general plan or other planning document.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.