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AB-2053 The Social Housing Act.(2021-2022)



Current Version: 06/23/22 - Amended Senate

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AB2053:v95#DOCUMENT

Amended  IN  Senate  June 23, 2022
Amended  IN  Senate  June 14, 2022
Amended  IN  Assembly  May 19, 2022
Amended  IN  Assembly  April 06, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 2053

Introduced by Assembly Members Lee, Carrillo, and Kalra
(Coauthors: Assembly Members Bennett, Mia Bonta, Cristina Garcia, Haney, Santiago, and Ward)
(Coauthors: Senators Wiener, Allen, and Gonzalez)

February 14, 2022

An act to add Title 6.9 (commencing with Section 64660) to the Government Code, relating to housing.


LEGISLATIVE COUNSEL'S DIGEST


AB 2053, as amended, Lee. The Social Housing Act.
Existing law establishes the Department of Housing and Community Development and sets forth its powers and duties. Existing law creates a housing authority in each county or city, which functions upon the adoption of a specified resolution by the relevant governing body. Existing law authorizes these housing authorities, within their jurisdictions, to construct, reconstruct, improve, alter, or repair all or part of any housing project. Existing law establishes various programs that provide housing assistance.
This bill would enact the Social Housing Act and would create the California Housing Authority, as an independent state body, the mission of which would be to produce and acquire social housing developments for the purpose of eliminating the gap between housing production and regional housing needs assessment targets, as specified. The bill would prescribe a definition of social housing that would describe, in addition to housing owned by the authority, housing owned by other entities, as specified, provided that all social housing developed by the authority would be owned by the authority. The bill would prescribe the composition of the California Housing Authority Board, which would govern the authority, and would be composed of appointed members and members who are elected by residents of social housing developments, as specified. The bill would prescribe the powers and duties of the authority and the board. The bill would provide that the authority seeks to achieve revenue neutrality, as defined, and would require the authority to seek to recover the cost of development and operations over the life of its properties through the mechanism of rent cross-subsidization, as defined. The bill would require the authority to prioritize the development of specified property, including vacant parcels and parcels near transit, and would prescribe a process for the annual determination of required social housing units. Under the bill, social housing would accommodate a mix of household income ranges and would provide specified protections for residents, who would participate in the operation and management of the units in which they reside.
This bill would require the California Housing Authority to employ 2 leasing models in social housing developments, to be referred to as the rental model and the ownership model, and would prescribe the characteristics of both models. Under the ownership model, the authority would extend a 99-year lease, in the form of a limited equity arrangement, as defined, to individuals who commit to a minimum 5-year term of residence, and would authorize the authority to act as a lender to residents who lease under the ownership model, for the purpose of creating leasehold mortgages. The bill would prescribe how the amounts of rents and payments on leasehold mortgages are to be set in relation to household income, and with reference to property subject to the ownership model, how they may be sold and transferred. The bill would establish eligibility requirements for social housing residents and provide for the selection of residents by lottery, as specified, providing that people who may have been displaced from a property as part of its development would be granted a preference for occupancy.
This bill, among other things, would require the authority to accept a local jurisdiction’s preference for a project parcel if specified conditions are met. The bill would establish various duties for the authority and requirements for contractors and subcontracting in connection with the labor used to produce housing, including provisions relating to the solicitation of bids, the payment of prevailing wages, and the participation of a skilled and trained workforce. The bill would prescribe civil penalties to be imposed by the Labor Commissioner on the authority, contractors, and subcontractors for specified violations of these provisions. The bill would prescribe requirements for the participation of labor in the production, rehabilitation, and maintenance of housing, including requiring the authority to enter into community workforce agreements and to comply with specified requirements for the payment of prevailing wages. The bill would state the intent of the Legislature to develop and implement high-road labor policies to use a skilled construction workforce to build projects utilizing bond funds. The bill would state the intent of the Legislature to enact legislation to provide financing for the activities of the authority through the issuance of general obligations bonds. The bill would authorize the authority to issue revenue bonds, as specified. The bill would require the board to provide for regular audits of the authority’s accounts and records, as specified. The bill would also require the authority to prepare and submit specified reporting information on its business plan and progress to the Legislature on an annual basis.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) The housing crisis has reached unprecedented and unacceptable proportions in the State of California, where more than two in five households spend greater than 30 percent of their income on housing and more than one in five households spend greater than 50 percent of their income on housing.
(b) The United States Department of Housing and Urban Development defines cost-burdened families as those who pay more than 30 percent of their income for housing and may have difficulty affording necessities such as food, clothing, transportation, and medical care. Severe rent burden is defined as paying more than 50 percent of one’s income on rent.
(c) Housing burden creates severe financial, physical, and emotional impacts on households.
(d) The affordable housing crisis has imposed a significant toll on the California economy, as overpriced rents depress the California gross domestic product by approximately 2 percent and more than 600,000 people leave the state annually in search of lower rent.
(e) Current efforts, while laudable, have proven insufficient in resolving the state’s affordable housing crisis, since 97 percent of cities and counties have been unable to meet the regional housing needs assessment targets for very low income, low-income, and moderate-income housing.
(f) With such a great failure to meet the housing needs of California residents, the state has a duty to act and help localities fill the gap, by financing publicly owned, affordable housing built sustainably with union labor, based on the widely successful Vienna model and many other successful models of mixed-income rental and ownership housing.
(g) It is the intent of the Legislature to establish the California Housing Authority, an independent public entity, to offer the necessary social housing to eliminate the gaps between housing production and acquisition and regional housing needs assessment targets in all jurisdictions throughout the state.
(h) It is the intent of the Legislature in enacting this title to set an ambitious goal for creating social housing, through both new production and preservation of existing units, and to establish the means for achieving that goal.
(i) It is further the intent of the Legislature for the California Housing Authority to ensure no Californian pays more than 30 percent of their income on housing by the year 2050.

SEC. 2.

 Title 6.9 (commencing with Section 64660) is added to the Government Code, to read:

TITLE 6.9. THE SOCIAL HOUSING ACT

PART 1. General Provisions

CHAPTER  1. Title
CHAPTER  1. 

64660.
 This title shall be known, and may be cited, as the Social Housing Act.

CHAPTER  2. Definitions

64662.
 Unless the context demands otherwise, the definitions provided by this chapter shall apply to this title.

64664.
 “California Housing Authority,” “CHA,” or “authority” means the independent state entity created under this title for the purpose of developing social housing for all California residents.

64666.
 “Social housing” means housing with the following characteristics:
(a) (1) The housing units are owned by the California Housing Authority, a public entity, a local housing authority, or a mission-driven not-for-profit private entity.
(2) For the purposes of this act, all social housing developed by the authority shall be owned by the authority.
(b) If a housing unit is in a social housing development, the development contains housing units that accommodate a mix of household income ranges, including extremely low income, very low income, low income, moderate income, and above moderate income.
(c) Units that are owned and managed by a mission-driven not-for-profit private entity shall have units that are permanently restricted by deed to be affordable.
(d) Residents of housing units are afforded, at a minimum, all protections granted to tenants with tenancies in private property under Section 1946.2 of the Civil Code, including protection against termination without just cause or for any discriminatory, retaliatory, or other arbitrary reason, and shall be afforded due process prior to being subject to eviction procedures, in addition to other protections provided by this title.
(e) The housing units shall be protected for the duration of their useful life from being sold or transferred to a private for-profit entity or a public-private partnership.
(f) Residents of the housing units have the right to participate directly and meaningfully in decisionmaking affecting the operation and management of their housing units.

64670.
 “Prevailing wage rates” means the general prevailing rate of per diem wages for the craft, classification, or type of work within the locality and in the nearest labor market area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, and the applicable prevailing apprentice wage rate.

64671.
 “Community workforce agreement” means a project labor agreement as described in Section 2500 of the Public Contract Code that includes provisions to provide opportunities for local and disadvantaged workers and contractors.

64672.
 “Revenue neutrality” means a system in which all monetary expenditures that result from the development and operation of social housing owned by the authority are returned to the authority through rents, payments on leasehold mortgages, or other subsidies.

64674.
 “Rent and mortgage cross-subsidization” means a system in which the below-cost rents and leasehold mortgages of certain units are balanced by above-cost payments on other units within the same multiunit property so as to ensure the property’s overall revenue meets development and operational costs.

64676.
 “Limited equity arrangement” means an ownership model in which residents are extended a long-term lease of a unit, take out a subsidized leasehold mortgage on the property from the authority, make monthly mortgage payments, and commit to resell at a price determined by a formula designed to balance ongoing affordability and resident wealth generation.

64678.
 “Regional housing needs assessment” or “RHNA” means a representation of housing needs for all income levels in a jurisdiction pursuant to Article 10.6 (commencing with Section 65580) of Chapter 3 of Division 1 of Title 7.

64680.
 “Area median income” means the median family income in a metropolitan or nonmetropolitan area, as determined by the Department of Housing and Community Development.

64682.
 “Extremely low income” means income that does not exceed the qualifying limits for extremely low income families, as described in Section 50106 of the Health and Safety Code.

64684.
 “Very low income” means income that does not exceed the qualifying limits for very low income families, as described in Section 50105 of the Health and Safety Code.

64685.
 “Low income” means income for households that does not exceed the qualifying limits for lower income families, as described in Section 50079.5 of the Health and Safety Code.

64686.
 “Moderate income” means income for households of low or moderate income whose income exceeds the income limit for lower income households, as described in Section 50093 of the Health and Safety Code.

64688.
 Above “Above moderate income” means income for households that exceeds the moderate-income level, as described in Section 50093 of the Health and Safety Code.

64690.
 “Underutilized parcel” means a parcel of property upon which is built a structure that contains fewer units than the maximum number of units permissible under local zoning regulations.

64692.
 “Multifamily property” means a revenue-neutral collection of units featuring extremely low income, very low income, low-income, moderate-income, and above-moderate income units. A multifamily property may be a single building, multiple buildings on the same or adjacent parcels, or multiple buildings across several blocks within a single jurisdiction, or as may be defined by the authority.

64694.
 “Board” means the California Housing Authority Board.

PART 2. California Housing Authority

CHAPTER  1. Creation, Powers, and Duties
Article  1. Creation

64700.
 (a) The California Housing Authority is hereby created. The authority shall be governed by the California Housing Authority Board.
(b) The core mission of the authority shall be to produce and acquire social housing developments for the purpose of eliminating the gap between housing production and regional housing needs assessment targets and to preserve affordable housing.

Article  2. Powers

64702.
 The authority shall have the following general powers:
(a) Sue and be sued.
(b) Have a seal and alter the same at its pleasure.
(c) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions to perform its mission.
(d) Make rules with respect to its projects, operations, properties, and facilities.
(e) Through its executive officer, appoint officers, agents, and employees; prescribe their duties and qualifications; set their employment descriptions and salaries subject to civil service rules; provide for participation in health care and retirement benefits available to similar state employees; and delegate to one or more of its agents or employees the powers and duties it deems proper.
(f) Acquire, reacquire, or contract to acquire or reacquire by grant or purchase real, personal, or mixed property or any interest therein and own, hold, clear, improve, rehabilitate, sell, assign, exchange, transfer, convey, lease, or otherwise dispose of or encumber the same.
(g) Acquire or dispose of real, personal, or mixed property.
(h) By itself, or in partnership with qualified persons, acquire, reacquire, construct, reconstruct, rehabilitate, improve, alter, or repair or provide for the construction, reconstruction, improvement, alteration, or repair of any project; own, hold, sell, assign, transfer, convey, exchange, lease, or otherwise dispose of or encumber any project.
(i) Enter into development partnerships with municipalities, joint powers of authority, and other public entities and agencies in order to further its social housing development goals.

(i)

(j) Arrange or contract for the planning, replanning, opening, grading, or closing of streets, roads, roadways, alleys, or other places, or for the furnishing of facilities or for the acquisition of property or property rights, or for the furnishing of property or services in connection with a project.

(j)

(k) Grant options to purchase any project or to renew any lease entered into by it in connection with any of its projects, on terms and conditions as it deems advisable.

(k)

(l) Prepare or cause to be prepared project plans, specifications, designs, and estimates of costs for the construction, reconstruction, rehabilitation, improvement, alteration, or repair of any project, and from time to time modify the plans, specifications, designs, or estimates.

(l)

(m) Enter into community workforce and project labor agreements.

(m)

(n) Provide advisory, consultative, training, and educational services, technical assistance, and advice to any person, partnership, or corporation, either public or private, to carry out its mission, and engage the services of consultants on a contractual basis for rendering professional and technical assistance and advice.

(n)

(o) Contract for and accept funding in any form from any public or private agency or from any other source.

(o)

(p) Employ technical experts and officers, agents, and employees, permanent or temporary, as required.

(p)

(q) Call upon the Attorney General for legal services as it may require.

Article  3. Duties

64704.
 (a) The authority shall implement and operate the social housing program, as prescribed by Chapter 3 (commencing with Section 64724), and is hereby granted all powers necessary for this purpose.
(b) The authority may contract with property managers to manage its properties according to the following requirements:
(1) Property managers shall meet standards on responsiveness to resident needs prescribed by the authority.
(2) Property managers shall meet rules regarding resident rights and protections or be subject to termination of employment.

64706.
 (a) The authority shall prepare, publish, adopt, and submit to the Governor and the Legislature an annual business plan. At least 60 days prior to the publication of the plan, the authority shall publish a draft business plan for public review and comment. The draft plan shall also be submitted to the Governor and the Legislature.
(b) The business plan shall include, but need not be limited to, all of the following elements:
(1) A description of the type of projects the authority is producing or acquiring and the proposed timeline, estimated costs, and funding sources.
(2) A projection of the expected residents, income levels, and other demographic data.
(3) An estimate and description of the anticipated funds the authority intends to leverage to fund the construction and operation activities, and the authority’s level of confidence for obtaining each type of funding.
(4) Any written agreements with public or private entities, such as technical assistance agreements.
(c) On or before December 31 of each year, the authority shall provide and submit to the Legislature an analysis on the effect of its developments on gentrification. The report of the analysis shall be subject to public comment and shall be considered by the board for future decisionmaking.
(d) On or before December 31 of each year, the authority shall provide an annual update to the Legislature on its progress, which shall include relevant resident statistics once social housing developments owned by the authority are occupied.
(e) The reports and annual updates that this section requires the authority to provide to the Legislature shall be submitted in compliance with Section 9795.

CHAPTER  2. California Housing Authority Governance
Article  1. Formation and Structure of Governing Board

64708.
 (a) The board shall be composed of the following:
(1) An expert in housing development and finance.
(2) An expert in housing construction.
(3) An expert in property maintenance.
(4) An appointee of the Speaker of the Assembly.
(5) An appointee of the Senate Committee on Rules.
(6) An appointee of the Governor.
(7) Three representatives of the residents, to be appointed initially as described in subdivision (c).
(b) All appointees shall serve at the pleasure of their respective appointing authorities. The Governor shall appoint the experts in housing development and finance, housing construction, and property management, whose appointments shall be subject to confirmation by Senate approval by majority vote.
(c) Prior to the occupancy of the first social housing unit developments owned by the authority, the resident representatives shall be appointed by the Speaker of the Assembly, the Senate Committee on Rules, and the Governor, respectively. The Speaker of the Assembly, the Senate Committee on Rules, and the Governor shall consult with advocates for tenants’ rights in the course of making their respective selections.
(d) Following the occupancy of the first social housing unit developments owned by the authority, resident representatives shall be elected according to the following procedure:
(1) Any resident may nominate another resident to sit on the board, who shall be elected by a vote of all social housing residents who reside in units owned by the authority.
(2) Each resident may vote for up to three nominees to sit on the board. The three nominees who receive the most votes shall have the right to sit on the board for terms of one year.
(3) Resident elections for board seats shall take place annually and the elections shall be coordinated by the board and its executive officer.

64710.
 All board decisions shall be approved by majority vote.

64712.
 The board shall select a board chair, who may hold special powers as determined by members of the board.

64714.
 The board is a state body for purposes of the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2).

Article  2. Board Powers and Duties

64716.
 The duties of the board include, but are not limited to, the following:
(a) Establish a strategy to achieve the core goal of elimination of the gap between housing production and acquisition and regional housing needs assessment targets.
(b) Set objectives and performance targets designed to achieve the strategy required by subdivision (a).
(c) Monitor and assess the degree of the authority’s success in achieving its objectives and performance targets.
(d) Exercise exclusive hiring and firing power over an executive officer.
(e) Establish and monitor performance measures for the executive officer and an associated succession plan.
(f) Approve the annual budget prepared by the executive officer.
(g) Foster a culture and set of values consistent with the short-term, medium-term, and long-term goals of the authority.
(h) Integrate risk management into the authority’s strategic planning process.
(i) Notify the Governor and the Legislature of unanticipated and sizable risks facing CHA in meeting its objectives.
(j) Adopt and amend regulations, which shall include election procedures for resident board positions.
(k) Following an initial trial period, create and make public an annual business plan as described in Section 64706.
(l) Hold biannual meetings with resident governance councils.

64718.
 The executive officer of the board shall have the following powers and duties:
(a) Manage the day-to-day operations of the authority in accordance with the strategy, delegations, business plans, and policies of the board and this title.
(b) Employ and manage staff, including establishing, promoting, and maintaining a positive organizational culture that effectively aligns with the values and employment principles of the authority.
(c) Transform the strategic plans of the board into action.
(d) Ensure the effectiveness of the authority’s operational systems, including financial management, human resource management, information systems management, risk management, communications, marketing, fund raising, asset management, and reporting.
(e) Ensure the board is kept informed of changes to gubernatorial directives, relevant legislation and changes in law, and other critical information relating to the board’s functions and powers.
(f) Ensure compliance with applicable law and governmental policies.
(g) Maintain effective communication and cooperation with external stakeholders in collaboration with the chair of the board.
(h) Provide advice and information to the board on any material issues concerning strategy, finance, reporting obligations, or other important matters that arise.
(i) Prepare the annual business plan, including organizational performance targets, for board approval.
(j) Interact with and, where appropriate, report to the Governor and the Legislature.
(k) Additional responsibilities as determined by the board.

Article  3. Resident Governance Councils

64720.
 Each multifamily social housing development owned by the authority shall form a governance council, which shall include residents in both rental and ownership model properties. The governance council shall be made up of no more than 10 percent of the overall population of the multifamily development. The authority shall establish appropriate size limitations for governance councils based on the size of the developments that they represent.

64722.
 An authority multifamily social housing development governance council shall have the following powers and responsibilities:
(a) Host regular meetings to gather feedback and perspective of residents.
(b) Provide the resident perspective to property management.
(c) Represent the interests of the development in biannual meetings with the board.
(d) Determine how to spend the development’s allotted annual budget for common room amenities and social events.
(e) Participate in the approval of renovation projects.
(f) Other responsibilities as determined by the board.

64723.
 A multifamily social housing development governance council and the board may consult with a mission-driven nonprofit corporation or community land trust with appropriate experience for the purpose of establishing managerial policies and practices that align with the requirements of affordable housing and the need to provide suitable tenant protections.

CHAPTER  3. Social Housing Program
Article  1. Program Design

64724.
 (a) In all its operations, the authority seeks to achieve revenue neutrality over the long term. The authority shall seek to recuperate the cost of development and operations over the life of its properties through the mechanism of rent cross-subsidization.
(b) The authority shall develop regional target percentages for extremely low income, very low income, and low-income housing that seek to maximize low-income housing within the constraints of long-term revenue neutrality and maintaining sufficient operational, maintenance, and capital reserves. The methodology for low-income housing maximization in each development region shall be explained at a board meeting and shall be subject to public comment.

(b)

(c) The authority shall prioritize development of property with the following characteristics:
(1) Vacant parcels.
(2) Underutilized parcels or redevelopment of underutilized parcels without affordability covenants or rent-controlled units.
(3) Surplus public properties.
(4) Parcels near transit.

(c)

(d) (1) If the development of a property requires the rehabilitation or demolition of covenanted affordable units, the new development shall include a greater number of affordable units by income group than the previous property.
(2) Each multiunit property shall include a variety of mixed-income units according to area median income levels.

(d)

(e) If the development of a property requires the removal of residents from the property, the authority shall cover the temporary relocation costs of these residents, including, but not limited to, the following:
(1) Costs of searching for a new residence.
(2) Moving costs.
(3) Any differences between the resident’s previous rent at the property and their rent during the authority development period.

(e)

(f) Residents who are displaced during the authority’s development of the property shall have the right to live in the new social housing property for their previous rent or for 30 percent of household income, whichever is lower.

(f)

(g) If a displaced resident chooses not to occupy the new social housing development, the authority is not obligated to pay the difference between new and old rents, as described in subdivision (d), (e), after the displaced resident could otherwise have begun occupying the property.

64726.
 The authority shall make an annual determination of the required amount of social housing units to be produced in the following manner:
(a) Annual regional housing needs assessment targets shall be calculated as the total RHNA cycle targets for each jurisdiction divided by the length of the RHNA cycle. The authority shall update its calculations each year based on housing construction data submitted by jurisdictions to the Department of Housing and Community Development.
(b) On or before January 1, 2027, and each year thereafter, the authority shall determine the gap between the previous year’s regional housing needs assessment targets for very low income, low-income, moderate-income, and “above moderate-income” above moderate-income housing, as determined by the Department of Housing and Community Development and local councils of government, and actual housing construction, as determined by official local statistics.
(c) The authority shall split the very low income RHNA allocation into extremely low income and very low income allocations based on the latest available census or official survey data for the relevant jurisdiction.
(d) Within a given year, the authority is authorized at least to construct the required number of units to meet the gap between the previous year’s very low income, low-income, moderate-income, and “above moderate-income” above moderate-income housing unit construction and regional housing needs assessment targets.

64728.
 (a) In creating social housing, the authority shall employ two different leasing models, the rental model and the ownership model, consistent with the requirements of this title.
(b) In the rental model, the authority shall extend a one-year lease for a social housing unit to eligible individuals who commit to a minimum of one year of residence, barring extraordinary circumstances.
(c) In the ownership model, the authority shall extend a 99-year lease to individuals who commit to a minimum of five years of residence in the social housing unit. This lease shall be in the form of a limited equity arrangement. Following the five-year term, a resident operating pursuant to the ownership model may sell their interest in the social housing unit subject to the following conditions:
(1) The authority shall have the right of first refusal to purchase the unit.
(2) If the authority does not exercise its right to purchase the unit, the unit may be sold by the owner to an eligible buyer subject to requirements established by the authority, provided that these requirements shall allow the resident to have a reasonable return on investment.
(d) Under the ownership model, upon the death of the owner of the social housing unit, the unit may be transferred to the deceased’s heir by devise or as any other real property may pass. If a transferee is not eligible to be a resident, the transferee shall sell the unit to the authority.
(e) The rents or the rates on a leasehold mortgage in a multifamily property shall be set according to the following requirements:
(1) A resident shall not pay more than 30 percent of the resident’s income for housing.
(2) Rent adjustments shall be applied annually in a manner that does not discourage the residents’ pursuit of higher income.
(3) Subject to the directive of paragraph (2), if a resident’s income changes, upon the next vacancy, the property manager shall rent to an appropriate income group to abide by revenue neutrality and meet other requirements.
(f) Under the ownership model, the following conditions shall apply:
(1) The authority shall operate as a lender for residents who lease under the ownership model. Residents shall pay a 15-percent down payment. The purchase price of the property for a leasehold mortgage shall be set so that a monthly payment does not exceed 30 percent of household income.
(2) Properties shall be sold at the price for which the owner purchased the property, plus documented capital improvements, and adjusted for inflation.
(g) Residents may be evicted for either of the following reasons:
(1) Failure to meet social housing community standards, as determined by the authority or governance council.
(2) Failure to pay rent for more than one month.
(h) Residents shall enjoy the following protections:
(1) Property managers shall provide a 48-hour notice before entering the resident’s unit.
(2) Termination for nonpayment of rent requires a 14-day notice prior to eviction.
(3) Residents may recover abandoned properties within 60 days of receiving an eviction notice.

64730.
 Applicants to be residents and continuing residents shall meet the following eligibility requirements, as may be applicable to them:
(a) Except in the case of “above moderate-income” above moderate-income units, social housing units shall be the resident’s sole residence.
(b) A potential resident shall prove that they have been living or working in California at the time of their application. The authority shall promulgate rules and criteria to determine the necessary residency or work qualifications solely for eligibility purposes, and these shall include sufficient qualifying criteria that do not discriminate against applicants based on their belonging to any protected class.
(c) Upon approval by the authority, or the applicable governance council if authorized by the authority, residents whose units are part of the ownership model may sublease their units. The authority shall prescribe the conditions pursuant to which a governance council may regulate subleasing.
(d) Residents under the rental model shall commit to one year of residence in the rental unit, after which a month-to-month tenancy may take effect. Residents under the ownership model shall commit to at least five years of residence in their unit.
(e) Under certain circumstances, a resident shall be allowed to interrupt residence requirements without penalty, including:
(1) Job relocation.
(2) Change in the household structure.
(3) Serious physical or mental illness.
(4) A mutually agreed-upon unit swap with another social housing resident within the same property pursuant to authority requirements.
(5) Other circumstances authorized by the authority or the governance council, to the extent authorized by the authority.
(f) If a resident interrupting their tenancy or leasehold mortgage does not satisfy the requirements for an exception, the resident may be subject to one of the following penalties:
(1) Obligation to pay rent or make payments on a leasehold mortgage until a new resident is located.
(2) In the case of a resident leasing under the ownership model, forfeiture of proceeds from resale of the property.
(3) Ineligibility to reside in authority units for a period of five years.
(g) Except in cases that evidence a clear and manifest danger to the development or its residents, as may be determined by the authority, a prior criminal record shall not in any way preclude a person from residing in social housing.

64732.
 (a) Subject to the requirements of subdivision (b), the authority shall use a lottery to select residents to be offered social housing residents from all qualifying applicants. The lottery shall be structured by income categories and shall provide separate selection results for each category.
(b) If residents of a property who were displaced during the authority’s development of the property as social housing have elected to lease a unit in the social housing, they shall be accommodated prior to offering units to others pursuant to subdivision (a).

Article  2. Production of Housing

64734.
 (a) The authority is authorized to conduct ground-up construction and rehabilitation of existing structures.
(b) For projects produced pursuant to this chapter, the authority shall do all of the following:
(1) At least seven days before issuing a bid solicitation for the project, send a notice of the solicitation that describes the project to the following entities within the jurisdiction of the proposed project site:
(A) Any bona fide labor organization representing workers in the building and construction trades who may perform work necessary to complete the project.
(B) Any organization representing contractors that may perform work necessary to complete the project.
(2) Ensure that all contractors and subcontractors performing work on the project will be required to pay prevailing wages for any proposed construction, alteration, or repair in accordance with Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code. All of the following shall occur:
(A) The authority shall ensure that the prevailing wage requirement is included in all contracts for the performance of all construction work.
(B) All contractors and subcontractors shall pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(C) Except as provided in subparagraph (E), all contractors and subcontractors shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code, and make those records available for inspection and copying as provided therein.
(D) Except as provided in subparagraph (E), the obligation of the contractors and subcontractors to pay prevailing wages may be enforced by the Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the development, or by an underpaid worker through an administrative complaint or civil action, or by a joint labor-management committee though a civil action under Section 1771.2 of the Labor Code. If a civil wage and penalty assessment is issued, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code.
(E) Subparagraphs (C) and (D) shall not apply if all contractors and subcontractors performing work on the development are subject to a multicraft building trades project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure. For purposes of this subparagraph, “project labor agreement” has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(3) (A) For projects financed pursuant to this chapter with onsite construction, alteration, or repair costs totaling twenty-five million dollars ($25,000,000) or more, seek bids containing an enforceable commitment that all contractors and subcontractors performing work on the project will use a skilled and trained workforce to perform any rehabilitation, construction, or alterations work on the project that falls within an apprenticeable occupation in the building and construction trades.
(B) For purposes of this section, “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.
(4) For the purpose of establishing a bidder pool of eligible contractors and subcontractors that satisfy the skilled and trained workforce requirements, establish a process to prequalify prime contractors and subcontractors, including, but not limited to, electrical, mechanical, and plumbing subcontractors. This process shall include, but is not limited to, all of the following requirements:
(A) The authority shall only accept bids from prime contractors that have been prequalified and listed as eligible contractors.
(B) If the authority receives at least two bids from prequalified prime contractors, the contract shall be awarded to the lowest qualified bidder and the authority shall certify that a skilled and trained workforce will be used to perform all construction work on the development.
(C) If the authority receives fewer than two bids from prequalified prime contractors, the contract may be rebid and awarded to the lowest responsive bidder without the skilled and trained workforce requirement applying to the prime contractor’s scope of work.
(D) A prime contractor shall only accept bids and list subcontractors from the prequalified list. If the prime contractor receives bids from at least two subcontractors in each tier listed on the prequalified list, the prime contractor shall require that the contract for that tier or scope of work will require a skilled and trained workforce.
(E) If the prime contractor fails to receive at least two bids from subcontractors listed on the prequalified list in any tier, the prime contractor will not require that a skilled and trained workforce be used for that scope of work, and may list subcontractors that do not appear on the prequalified list.
(F) The authority shall establish minimum qualifications that are, to the maximum extent possible, quantifiable and objective. Only criterion, and minimum thresholds for any criterion, that are reasonably necessary to ensure that any bidder awarded a project can successfully complete the proposed scope shall be used by the project proponent.
(G) All bids submitted by prime contractors and subcontractors shall be sealed, opened in a public process that is open to all bidders and other interested parties, and listed on the authority’s internet website.
(H) The Subletting and Subcontracting Fair Practices Act established pursuant to Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code shall apply.
(5) (A) Except as provided in subparagraph (B), provide to the authority on a monthly basis while the development or contract 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 authority 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 of the Government Code) and shall be open to public inspection. If the authority 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, it 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.
(B) Subparagraph (A) shall not apply if all contractors and subcontractors performing work on the development are subject to a multicraft building trades 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 same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(6) Notify the Department of Industrial Relations within five calendar days of the contract award.

(b)

(c) The authority is authorized to dedicate building space to commercial use and may lease the space to qualifying small businesses and nonprofit corporations, pursuant to requirements established by the authority.

(c)

(d) When appropriate, the state shall gift public lands to the authority for social housing development purposes.

(d)

(e) In the absence of suitable state-owned parcels, the authority is authorized to purchase municipal, county, other local jurisdiction, and private lands.

64735.
 (a) The authority shall accept a local jurisdiction’s preference for a project parcel if all of the following conditions are met:
(1) The parcel allows the authority to meet the jurisdiction’s regional housing needs assessments goals.
(2) The parcel does not exceed the cost of all suitable alternative sites by more than 2 percent.
(3) The parcel offers comparable community amenities to all suitable alternatives.
(b) The authority shall seek input from the local jurisdiction’s city council, board of supervisors, or planning agency, as applicable, on the following dimensions of an authority development:
(1) Specific site of development.
(2) Number of stories.
(3) Number of units.
(4) Development timeline.

64737.
 With regard to the participation of labor in the production and rehabilitation of housing, the following shall apply:
(a) The authority shall, to the maximum extent feasible, enter into community workforce agreements that apply to work to be undertaken, assisted, funded, and financed by the authority.
(b) The authority shall require the prequalification of contractors and subcontractors for work undertaken by the authority.
(c) All work undertaken, assisted, funded, or financed by the authority and performed by outside contractors is public work for which prevailing wages shall be paid for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code.

(d)It is the intent of the Legislature to develop and implement high-road labor policies to use a skilled construction workforce to build projects utilizing bond funds.

Article  3. Acquisition

64740.
 The authority may acquire, reacquire, or contract to acquire or reacquire by grant or purchase real, personal, or mixed property or any interest therein and own, hold, clear, improve, rehabilitate, sell, assign, exchange, transfer, or otherwise dispose of or encumber the same.

64742.
 The authority shall prioritize acquiring or reacquiring property with the following characteristics:
(a) Parcels with affordability covenants or rent control units in danger of losing affordability status, in order to preserve affordable housing stock.
(b) Parcels at risk of becoming unaffordable or at the end of their affordability covenants.
(c) Underutilized parcels or redevelopment of underutilized parcels with affordability covenants or rent-controlled units.
(d) Surplus public properties.
(e) Parcels near transit.

CHAPTER  4. Funding

64750.
 The activities of the authority shall be conducted with a goal to cover its costs over the long term in accordance with the principle of revenue neutrality.

64752.
 (a) It is the intent of the Legislature to enact legislation to provide financing for the activities of the authority through the issuance of general obligations bonds.
(b) The authority may, from time to time, issue revenue bonds in the principal amount that the agency determines necessary to provide sufficient funds for financing social housing developments, the payment of interest on these bonds, the establishment of reserves to secure the bonds, and the payment of other expenditures of the agency incident to, and necessary or convenient to, issuance of the bonds.
(c) The board shall provide for regular audits of the authority’s accounts and records and shall maintain accounting records and shall report accounting transactions in accordance with generally accepted accounting principles adopted by the Governmental Accounting Standards Board of the Financial Accounting Foundation for both public reporting purposes and for reporting of activities to the Controller.

64753.
 The authority may utilize funds appropriated for these purposes pursuant to from other legislation, cities and counties, or other sources, in order to build more low-, very low, and extremely low income housing.