BACKGROUND
The former Hercules Redevelopment Agency (“Former Agency”) dissolved effective February 1, 2012, pursuant to the Dissolution Law enacted by Assembly Bill x1 26 and subsequent amendments. The City of Hercules (“City”) did not elect to serve as the Housing Successor to the Hercules Redevelopment Agency (“Housing Successor”) pursuant to Health and Safety Code (“HSC”) Section 34176.
HSC 34176(b) states if a city does not elect to retain the responsibilities for former redevelopment agency housing functions, all rights, powers, assets, duties, and obligations associated with the housing activities of the former redevelopment agency shall be transferred to the local housing authority. As a result, the Contra Costa County Housing Authority (“Housing Authority”) automatically became the Housing Successor as the local housing authority by operation of law because the City did not elect to do so.
On June 6, 2012, Joseph Villarreal, Executive Director of the Housing Authority, notified the City that it was declining Housing Successor responsibilities and assets. The California Department of Finance (“DOF”) sent a letter to the Housing Authority dated September 17, 2012, stating the Housing Authority has no legal basis for refusing to perform the duties required by HSC Section 34176(b)(2) (see Exhibit A). Zach Stacy, Manager of the Office of State Audits and Evaluations at DOF, confirmed in an e-mail dated July 6, 2022, that the Housing Successor role was transferred to the Housing Authority.
The Housing Authority has not initiated a transfer of Former Agency housing assets to date. As a result, over 100 homeowner and developer loans issued by the Former Agency have not been actively administered. The City would like to formally become the Housing Successor so it can administer such loans and assets.
PURPOSE & INTENT
The City proposes entering into an agreement with the Housing Authority to formally transfer the Hercules Housing Successor role, responsibilities, and assets from the Housing Authority to the City.
TERMS & CONDITIONS
The Initial Terms contemplated by the City and Housing Authority (“Parties”) to be set forth in an agreement are as follows:
1. HOUSING AUTHORITY
Contra Costa County Housing Authority, a public body corporate and politic, and serving as a housing authority pursuant to Housing Authorities Law (“HAL”) per Health and Safety Code (“HSC”) Section 34200, et seq. and concurrently serving as the “Housing Successor” to the former Hercules Redevelopment Agency under Division 24, Part 1.85, HSC 34170, et seq., in particular HSC 34176 and 34176.1 (“Dissolution Law”) (“Housing Authority”)
2. CITY
City of Hercules, a California municipal corporation (“City”). In its capacity as the sponsoring entity that authorized the creation of the former Hercules Redevelopment Agency (“Former Agency”)
3. TRANSFER OF HOUSING SUCCESSOR ROLE
The Housing Authority shall transfer the role of Housing Successor to the Former Hercules Redevelopment Agency to the City of Hercules.
The City shall retain the housing assets and functions previously performed by the Former Agency. All rights, powers, duties, obligations, and housing assets as defined in HSC 34176 shall be retained by the City.
4. ASSETS TRANSFERRED
Any housing assets of the Former Agency as defined in HSC 34176(e) shall be retained by the City. This includes:
Any real property, interest in, or restriction on the use of real property, whether improved or not, and any personal property provided in residences, including furniture and appliances, all housing-related files and loan documents, office supplies, software licenses, and mapping programs, that were acquired for low- and moderate-income housing purposes, either by purchase or through a loan, in whole or in part, with any source of funds.
Any funds that are encumbered by an enforceable obligation to build or acquire low- and moderate-income housing, as defined by the Community Redevelopment Law (Part 1 (commencing with Section 33000)) unless required in the bond covenants to be used for repayment purposes of the bond.
Any loan or grant receivable, funded from the Low- and Moderate-Income Housing Fund, from homebuyers, homeowners, nonprofit or for-profit developers, and other parties that require occupancy by persons of low or moderate income as defined by the Community Redevelopment Law (Part 1 (commencing with Section 33000)).
Any funds derived from rents or operation of properties acquired for low- and moderate-income housing purposes by other parties that were financed with any source of funds, including residual receipt payments from developers, conditional grant repayments, cost savings and proceeds from refinancing, and principal and interest payments from homebuyers subject to enforceable income limits.
A stream of rents or other payments from housing tenants or operators of low- and moderate-income housing financed with any source of funds that are used to maintain, operate, and enforce the affordability of housing or for enforceable obligations associated with low- and moderate-income housing.
Repayments of loans or deferrals owed to the Low- and Moderate-Income Housing Fund pursuant to subparagraph (G) of paragraph (1) of subdivision (d) of Section 34171, which shall be used consistent with the affordable housing requirements in the Community Redevelopment Law (Part 1 (commencing with Section 33000)).
Exhibit B presents a Housing Asset Transfer List documenting known assets to be retained by the City. The City shall retain all revenues generated by such assets since February 1, 2012, as permitted by HSC 34176 and 34176.1.
5. LOW- AND MODERATE-INCOME HOUSING FUND BALANCE DUE DILIGENCE REVIEW PAYMENT HSC 34176(a) states amounts on deposit in the Low- and Moderate-Income Housing Fund (“LMIHF”) are excluded from assets transferred from the Former Agency to the Housing Successor.
The Successor Agency to the Hercules Redevelopment Agency (“Successor Agency”) conducted a Low- and Moderate-Income Housing Asset Fund Due Diligence Review (“DDR”) as required by HSC 34179.6. The DDR determined the LMIHF amounts on deposit upon dissolution that were available for distribution to taxing entities.
DOF made a determination on October 21, 2016, that the total amount of LMIHF available was $213,689. The Successor Agency remitted this amount to the Contra Costa County Auditor-Controller on October 28, 2016.
No other LMIHF funds are available. All funds generated by Former Agency housing assets are to be retained as Low- and Moderate-Income Housing Asset Funds by the City as Housing Successor.
EXHIBIT A
DOF LETTER DATED SEPTEMBER 17, 2012
EXHIBIT B
HOUSING ASSET TRANSFER LIST
Draft Term Sheet – Hercules Housing Successor Transfer
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TERM SHEET
FOR THE TRANSFER OF FORMER HERCULES REDEVELOPMENT AGENCY HOUSING ASSETS AND FUNCTIONS
FROM THE CONTRA COSTA COUNTY HOUSING AUTHORITY
TO THE CITY OF HERCULES AS HOUSING SUCCESSOR
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