October 14, 2007 - Governor Signs Housing Affordability Covenants Bill

ASSEMBLYMEMBER DAVE JONES
9TH ASSEMBLY DISTRICT
For Immediate Release: October 14, 2007
Contact: Tom Clark
Phone: (916) 319-2334

Jones Bill Will Help Preserve Affordable Housing

(Sacramento) – Assembly Judiciary Committee Chairperson Dave Jones (D-Sacramento) applauded Governor Schwarzenegger today for signing AB 987, a measure that seeks to ensure that the state's supply of affordable housing will remain affordable to persons of low to moderate income.

Jones introduced the bill in part due to revelations that owners of affordable housing units sometimes convert their properties to higher price units, even when those units are required by law to remain affordable. Under existing law, redevelopment agencies are required to set aside a certain portion of their funds for housing that is affordable to persons of low to moderate income. In order to ensure that units developed by these funds remain affordable, redevelopment agencies are required to record affordability covenants – legal stipulations, binding on subsequent owners, that those units may only be sold or rented at affordable rates for a prescribed period of time.

According to Jones, however, "these covenants are too often ignored with impunity." Mr. Jones cites, in particular, the Bristol Hotel in Los Angeles. The Bristol's owner converted this low-income residential hotel into a pricey "boutique" tourist hotel, despite the existence of affordability covenants that required the units to remain affordable for several more years. Long time residents of the hotel were forced to relocate or became homeless. The owner, who had purchased the hotel after the covenants had been recorded, claimed to have no knowledge of any restrictions. The low-income residents who were evicted had no standing to bring an action. According to Mr. Jones, "the Bristol Hotel was a particularly egregious case. But it is by no means the only case, and it is happening throughout the state."

The new law will remedy this problem in two ways. First, because affordability covenants are often buried in much longer documents, the bill will require for all future units the recording of a single-page and conspicuous document that will clearly notify title searchers and subsequent purchasers of the restrictions. Second, it will permit the low-income persons who are displaced by breaches of the covenant to bring an action to enforce the covenant. Under current law, only the redevelopment agency may bring an action to enforce the covenant. "By signing my bill," said Mr. Jones, "the Governor helps preserve affordable housing. This new law will make sure that buyers of affordable housing are on notice that they need to keep the housing affordable. And it gives a much-needed legal remedy to tenants and others seeking affordable housing who are harmed when owners violate affordability agreements and convert affordable units to market rate."

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