August 2008

Federal Housing Bill - Resources for Local Government CalHFA Community Stabilization Home Loan Program

Summary: On July 30, 2008, President Bush signed into law H.R. 3221, the Housing and Economic Recovery Act of 2008 (the "Act"). This comprehensive bill includes the most far-reaching housing finance reform legislation of the past several decades. In addition to the widely-reported measures that increase FHA loan limits, provide tax-exempt financing to permit the refinancing of sub-prime mortgages, give tax breaks to first-time homebuyers, and provide federal support for Fannie Mae and Freddie Mac, the Act includes a number of provisions that will benefit California communities grappling with rising rates of foreclosure and neighborhood blight resulting from property abandonment.

Governor Proposes Permanent Take From Redevelopment Funds To Close Budget Deficit

The California Redevelopment Association (CRA) has issued a Legislative Alert to its members that the Governor is proposing to permanently take redevelopment funds to help close the existing state budget deficit. CRA has not reviewed any formal budget proposal, but understands the estimated take from redevelopment funds is $200 million statewide, or approximately 4.385% of gross tax increment from each redevelopment agency in the state. CRA has learned that the permanent take will be structured as an increased pass-through payment possibly to certain taxing entities that receive state funds. To view the CRA Legislative Alert, click here.

CRA has also calculated the estimated loss to each redevelopment agency using 2006-2007 Fiscal Year data. To view CRA's estimated loss to redevelopment agencies, click here.

Appellate Court Finds that Property Owners are Bound by Previous Property Owners’ Williamson Act Contract and Revisions to the Williamson Act Guidelines

In County of Humboldt v. McKee, the First District Court of Appeal found a property owner liable for sales of parcels that violated the previous owners’ Williamson Act contract, including violations of revisions to the Act’s guidelines that were adopted after execution of the initial contract. Under the Williamson Act, property owners may voluntarily adopt restrictions limiting their land to agricultural uses in exchange for favorable tax rates. A Williamson Act contract must have an initial term of ten years, and each year is automatically extended for an additional year, unless notice of nonrenewal is given by one of the parties. The McKee property had been the subject of a 1977 Williamson Act contract, which, in accordance with the Williamson Act guidelines in effect at the time, prohibited division of the property into parcels of less than 160 acres. The year after execution of the contract, the guidelines were revised to prohibit division of Williamson Act property into parcels of less than 600 acres (“1978 Guidelines”). In 2002, the McKees began subdividing and selling parcels, some of which were smaller than 600 acres. The County sued alleging violation of the Williamson Act and breach of contract.