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HomeMy WebLinkAbout1978-07-18; City Council; 5511; Council Inquiry Relative to Low-Income ReferendumCITY OF CARLSBAD ~ • ' "~ ' Initial AGENDA BILL NO. c5"v5" / / „_ Dept. Head DATE: ^y 18' 1978 City Atty. DEPARTMENT: PLANNING (REDEVELOPMENT) City Mgr. SUBJECT: COUNCIL INQUIRY RELATIVE TO LOW-INCOME REFERENDUM-STATE CONSTITUTION, ARTICLE XXXIV STATEMENT_OF THE MATTER: The attached report is provided in response to Council inquiry regarding low- rent housing. The report is quite legal in tone due to the nature of the constitutional provisions and the court's involvement in the issue of public housing. RECOMMENDATION If the Council desires to hold a referendum as outlined in the attached 'repprt, it should direct staff to prepare a Resolution of Intention for consideration at its next meeting. This will insure that appropriate wording and documentation can be delivered to the County by the August 25th deadline established for placement of items on the November ballot. EXHIBITS Memorandum to Paul Bussey from Jack Henthorn, dated July 13, 1978 Council action 7-18-78 The Council authorized the placing of a measure on the November ballot to satisfy the requirements of Article XXXIV of the State Constitution - the wording of the measure to read as follows: "Shall the ordinance approving the development construction, acquisition of low rent housing projects on scattered sites within the City of Carlsbad for persons of low income, including senior citizens and handicapped, be adopted?". MEMORANDUM DATE: JULY 13, 1978 TO: PAUL BUSSEY, City Manager FROM: JACK HENTHORN, Redevelopment Coordinator SUBJECT: COUNCIL INQUIRY RELATIVE TO LOW-INCOME REFERENDUM- STATE CONSTITUTION, ARTICLE XXXIV INTRODUCTION Article XXXIV of the State Constitution was adopted by the State's electorate in November of 1950. This initiative item was precipitated by a 1950 State Supreme Court decision which found basically that State Constitutional referendum provisions did not apply to local decisions relative to Federal funding. Within six months of that decision, California voters went to the polls and adopted Article XXXIV to bring public housing under the State's referendum policy. . The initial motivating force behind Article XXXIV is not clear. However, three items which have been documented as possible factors involved in the evolution of Article XXXIV are: 1. The California Association of Realtors was seeking to discourage development of low-income housing under the United States Housing Act passed in 1937. 2. The electorate wanted to prevent government from expending funds or granting tax exemptions without the benefit of a popular vote. 3.• The electorate desired to avoid the problems associated with the typical low-income project found in the eastern United States. Research of case law indicates that a combination of the aforementioned factors gave rise to the electorate's action. In fact, the ballot argument originally submitted to the voters stated, in part, that the intent of the proposition was to secure voter approval of "The impact that a large, permanent, or long-term project would have on the physical characteristics of the community... (and) of the financial burden proportedly resulting from a project's local tax exemption and other forms of local assistance." (47 Ops. Atty. Gen., 17, 20-21) Article XXXIV has been considered a major constraint upon construction of low-income housing in the State of California. Federally administered Section 23 and Section 8 existing housing programs have met some of the need, although changing Federal housing policies and Congressional appropriations carry no guarantee as to how long these subsidies will continue. Paul Bussey, City Mana - ' • "~" . July 13, 1978 Page Two (2) TERMINOLOGY «In order to give this report a definitional base, the following brief definition section is presented as prepared by the Los Angeles County Bar Association, Housing and Urban Development Law Committee: kiticle. XXXI V pn.ovUeA that: "Wo tow n,e,nt houA-ing pnoje.ct &hatt heAe.a&teA be. de.veJLope.d, conf>tn.ucte.d, on, acquMie,d Jin any manneA. by any Atate. pubLic body untit a majority ofi the. quaLifae-d eJLe,ctonA ofi the, city, town, on. county, cu> the, cat>i may be., -in which -it -u> pn.opot>e.d to d2.ve.lop, coni>tn.uct, on acquine: the, Aame., voting upon Auch -cMue, appnove. Auch ptioje.c£ by voting -in fiavosi theA.e.0^ at an eJLe.dtA.on to be. heJtd {pn. that pusipo&e., on. at any ge.neAaJL on. t>pe.cJjat eJLe.ctA.on ..." In kntA.cJLe. XXXI I/, the. teJvm "low n.e.nt kouA-ing pfioje.(Lt" -u> de.&-ine.d "(A)ny de.veJLopme.nt composed o& unban on. nunaJL a.pantnne.nt^ on. othejt Living ac.c.otmodationA fa tow -income., h<inanc.e.d -in whote, on. -in pant- by the. Fe.deAaJL Gove/inme.nt on. a i>tate. pabtic. body on. to which the. FecfeA GoveAnme.nt on. a Atate. pabtic body e,xte.ndt> a^&-if,tance. by gaoAja.nte.eA.ng the. payment o& tie.m,, on. otheAu)-i!>e.." The. teAm "peAAom, ofi £ou) -income," -ti* de,{^-ine,d OA: on, fiamiLieA who Lack, the, amount!, o& -income. which -u> ne.ceAAan.y (oi detenm^neA by the. Atate. pubtic body de.veJLopi.ng, constructing, on. acqiuAA.ng the. houAtng pn.oje.ct] to enabte. them, w-ithout ^-inanctaJL a&£-u>tance., to Live, -in de.ce.nt, &a.^e., and Aanitan.y dweJLLing-f, , without oveJicnowding." NOTE: This definition has been further amplified as a result of AB 4473, C1339, 1976 Stats: Section 41056 of the Health and Safety Code: "Persons and families of low or iroderate income" means persons and families whose income does not exceed 120 percent of area iredian income. However, the agency and the department jointly, or either acting with the concurrence of the Secretary of the Business and Transportation Agency, may permit higher income limitations in designated geographic areas of the state, upon a determination that 120 percent of the median income in the particular geographic area is too low to qualify a substantial number of persons and families of low or moderate income who can , afford rental or home purchase of housing financed pursuant to Part 3 (commencing with Section 41300) without subsidy. .Paul Bussey, City Manar" July 13, 1978 Page Three (3) ' "Persons and families of low or moderate income" includes very low income households, as defined in Section 41067, and includes person of low income, persons and families of moderate income, and middle- income families. As used in this division : a. "Persons of low income" means persons or families who are eligible for financial assistance specifically provided by a governmental agency for the benefit of occupants of housing financed pursuant to this division. b. "Persons and families of moderate income" or "middle-income f . families" means persons and families of low or moderate | income whose income exceeds 80 percent of the area median income. | As used in this section, "area median income" means the median [ household income of a geographic area of the state, as adjusted j for family size, as determined by the agency. Nothing in this \ section shall prevent the agency from adopting Federal estimates I of area median income, or Federal formulas for adjustment of area I median income for family size in determining area median income. ' j The. teAm "Atate. pubLLc. body" JJ> de.&i.ne.d oi: "(T)kc6 Atate., oft any c^ity, c^uty and county, county, dLi>tfu.c.t, authosu£y, agency, on. any othnn. i>ubcLi\><u*-ion oft pubLic. body o tkit, Of additional concern when discussing this issue is the phrase, "develop, • | construct, or acquire". Since the courts (Superior through State Supreme) { are currently in the process of rendering decisions regarding what actually 3 constitutes development, construction, "or acquisition, it is impossible to | give a concise definition in the Article XXXIV context. The courts have f indicated that there is a range within which involvement can take place • I without the necessity of an Article XXXIV referendum. However, the exact | perimeters of that range are unknown. f I In some instances, it has been found that local involvement in an "extensive regulatory and supervisory" role necessitates compliance with Article XXXIV referendum provisions regardless of direct involvement in construction, development, or acquisition in the conventional sense of the terms. OPTIONS UNDER ARTICLE XXXIV Voter approval simply enables the sponsor to develop housing, but does hot" mandate that such housing actually be built. Article XXXTV elections may seek approval for: An individual pro j ect . This approach is normally used when the private sector has approached the public agency with a project requiring public assistance, or when a public agency desires to develop, construct, or . acquire a low rent housing project. .Baul Bussey, City Mana-"" — ' July 13, 1978 Page Four (4) A certain type and number of housing units. This approach is selected when a public entity desires to construct a specific number of units for one of the following specific groups: a. Senior Citizens. Usually defined as individuals or families with head of household 55 to 62 years of age or over. b. Families. Unrestricted by age, but normally consisting of four or less members. c. Large Families. Unrestricted by age, but usually consisting of five or more members. An unlimited number of an unspecified type of housing. This approach provides the broadestamount of latitude to the local agency in determining location, type, and number of units to be permitted. It should be noted that the most successful referendum approach has been the senior housing type incorporating a specific number of units. Wording used. in recent referendums in their county is provided as Attachment 1. ARTICLE XXXIV STATUS IN SAN DIEGO COUNTY Currently, Article XXXIV, elderly only, authorization in San Diego County is confined to housing within the Cities of San Diego, El Cajon, National City, and La Mesa. An Article XXXIV proposition placed before the voters in Oceanside • was defeated in November, 1972 and again in June of 1978. The City of Chula Vista passed the referendum for an unlimited amount of an unspecified type of housing in April, 1978. The County of San Diego in June of 1978 was authorized by the electorate to construct 1,000 units of an unspecified- type of housing on land not currently owned by the County of San Diego. In addition, the City of Escondido had a successful referendum which ultimately permitted the construction of a senior citizen housing development on property leased from the city located on West Ninth Street. COURT DECISIONS Although court action regarding Article XXXTV applicability has been ongoing for quite some time, the most far-reaching decisions have been handed down since 1970. In 1970, the United States Supreme Court heard a case (James v. Valtierra) after a Federal District Court had held Article XXXIV to be unconstitutional. Although this case is best known for its finding that Article XXXIV provisions involved no discrimination based upon race, it should be noted that the decision also found that the people of a given community should have a voice in a decision which could lead to a large expenditure of public funds, increased public services, and lower tax revenues, as noted in the original ballot argument. In 1973, Winkleman v. City of Tiberon, 32 Cal., App., 3rd, 834, the question of what constituted the need for an Article XXXIV referendum was raised. The court found that in this specific situation, development of a Section 236 project on land sold by the County of Marin to a developer, involving the Paul Bussey, City Manager __ 'tJuly 13, 1978 • "Page Five (5) . subsequent leaseback of 30 percent of the units to the Housing Authority under the then active Section 23 program, Article XXXIV did not apply. In an opinion issued in December of 1977, by the State Department of Housing and Community Development, it was found that localities may proceed with land banking without holding a referendum because simple land purchase would not constitute development, construction, or acquisition of low rent housing. The basis for this finding is the Winkleman case. The State Department of Housing and Community Development goes on to state that if the public body had knowledge in advance that the land in question would be used in the actual development or construction of low rent housing, then the Article XXXIV provisions would apply. The opinion goes on to state that the determination as to wheter or not Article XXXIV applies to a specific agency's involvement in a housing development should be made by answering the following three part question: "Does a (1) State public body (2) develop, construct, or acquire (3) a low rent housing project?" If all three parts of this question are answered affirmatively, Article XXXIV provisions definitely apply. • CALIFORNIA HOUSING FINANCE AGENCY AND ARTICLE XXXIV The California Housing Finance Agency was formed as a result of the Zenovich- Mascone-Chacon Housing and Home Finance Act (AB-IX) of 1975. This bill brought Article XXXIV issues to the forefront in the area of housing. The CHFA, as defined in adopted legislation, was established to meet the housing needs of low-moderate income persons in the State. To accomplish this mission, the legislature authorized the agency to issue revenue bonds totaling $450 million dollars and subsequently authorized it to seek approval of general obligation bonds. Proceeds from these bonds can now be provided directly to private sponsors and local public agencies for construction and mortgage loans.. CHFA may also purchase loans from qualified mortgage lenders or may provide funds to qualified lenders who will then make loans for local housing projects. CHFA funds are available to governmental bodies such as counties, cities, and housing authorities, as well as private sponsors. It should be noted that in addition to its funding possibilities, CHFA may certify a local agency as a local public housing agent. This certification entitles the designated agent to approve or disapprove all loan applications for housing projects proposed within the agent's boundaries. This provides a broad spectrum of local discretion when proposals are being considered for CHFA funding. . COURT ACTION/ARTICLE XXXIV APPLICABILITY Shortly after the passage of the Housing and Home Finance Act, the State Supreme Court was asked to clarify certain aspects relating to regulatory- functions of the CHFA. On June 21, 1976, the court upheld the housing finance and regulatory functions of CHFA, but held that such activity constituted development of low income housing projects by a State agent, even though such pro- jects remain on the tax rolls. Thus, it was found that CHFA funding could only be made available to public and private sponsors of low rent housing in jurisdictions where voters had approved a referendum pursuant to Article XXXIV of the California Constitution. Paul Bussey, City Mar >r 'July 13, 1978 Page Six (6) This initial decision has led to renewed interest in Article XXXIV by agencies and individuals from both sides of the housing issue. OTHER PROGRAMS REQUIRING ARTICLE XXXIV REFERENDUM Certain Federal programs, as well as direct local agency involvement in construction, development and acquisition of low rent housing, require a local Article XXXIV referendum in order to be implemented. A successful Article XXXIV referendum insures that the city will be able to take advantage of the broadest spectrum of financing vehicles available for providing low rent housing. Without passage of an Article XXXIV referendum, a private developer is hampered by not being able to avail hijnself to all programs capable of providing quality low cost housing at an acceptable level of risk. CONCLUSION Ihe need for an Article XXXIV referendum in the City of Carlsbad is primarily determined by the Council/Housing Authority/Redevelopment Agency's desire to become involved in programs which could be construed as involving the develop- ment of low rent housing. If the Council decides that there is significant need for direct agency involvement or sponsorship in the financing of such project, then it should consider placement of an Article XXX3V referendum on the ballot in the next city-wide election. JEHrle Attachment 1, Example of wording used in recent referendums.