BILL ANALYSIS Ó
AB 936
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 936 (Hueso) - As Amended: May 2, 2011
SUBJECT : Redevelopment: debt forgiveness: public notice.
SUMMARY : Requires if, a local legislative body considers any
matter on a meeting agenda to forgive a loan, advance, or
indebtedness of a redevelopment agency, then the matter be
considered in a public meeting at least two weeks prior to the
adoption of any action. Specifically, this bill :
1)Requires if, a local legislative body considers any matter on
a meeting agenda to forgive a loan, advance, or indebtedness
of a redevelopment agency, then the matter be considered in a
public meeting at least two weeks prior to the adoption of any
action.
2)Requires the local agencies' chief financial officer to be
present at the public meeting to provide information as to the
status of the potential impact of forgiveness of that loan,
advance, or indebtedness on the financial health of the city,
county, or agency.
3)Prohibits the adoption of any redevelopment agency debt
forgiveness proposal from being placed on a consent calendar.
EXISTING LAW :
1)Authorizes a redevelopment agency to accept financial or other
assistance from any public or private source, for the agency's
activities, powers, and duties, and expends any funds so
received for any of the purposes of redevelopment law.
2)Authorizes a redevelopment agency to borrow money or accept
financial or other assistance from the state or the federal
government or any other public agency for any redevelopment
project within its area of operation, and may comply with any
conditions of such loan or grant.
3)Requires each redevelopment agency to prepare or cause to be
prepared, and approve, a redevelopment plan for each project
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area and for that purpose may hold hearings and conduct
examinations, investigations, and other negotiations.
4)Authorizes the legislative body of a redevelopment agency by
ordinance to adopt amendments to a redevelopment plan
following a public hearing.
5)Requires notice of the public hearing to be mailed to the
governing body of each of the affected taxing entities at
least 30 days prior to the hearing.
6)Requires the notice to also be published in a newspaper of
general circulation in the community at least once, not less
than 10 days prior to the date of the public hearing.
7)Requires if a redevelopment agency is amending its plan notice
of the hearing shall be published for three weeks prior to the
date of hearing in a newspaper of general circulation, printed
and published in the community, or, if there is none, in a
newspaper selected by the agency.
8)Requires the notice of plan amendment to include a legal
description of the boundaries of the project area by reference
to the description recorded with the county recorder and of
the boundaries of the land proposed to be added to the project
area, if any, and a general statement of the purpose of the
amendment.
9)Requires, under the Ralph M. Brown Act (Brown Act), that all
meetings of a legislative body of a local agency be open and
public and all persons be permitted to attend unless a closed
session is authorized.
10)Requires, at least 72 hours before a regular meeting, the
legislative body of the local agency, or its designee, to post
an agenda containing a brief general description of each item
of business to be transacted or discussed at the meeting,
including items to be discussed in closed session.
FISCAL EFFECT : Unknown
COMMENTS :
1)When establishing a redevelopment agency, cities and counties
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may provide some capital to the agency in the form of a loan.
The loan is used to allow the redevelopment agency to show
debt on their statement of indebtedness so that the agency has
something to bond against. In some communities, the loan is
made with a high interest rate, creating more debt to bond
against and generate tax increment to fund redevelopment
projects. Loans have also been issued recently to help
redevelopment agencies make their payment to the Supplemental
Educational Revenue Augmentation Fund (SERAF) pursuant to 2009
Budget actions ÝAB 26 4X (Committee on Budget), Chapter 21,
Statues of 2009].
2)In a case provided by the author, the City of San Diego (City)
capitalized the redevelopment agency by using Community
Development Block Grant (CDBG) funds. The redevelopment
agency carried amounts equal to CDBG allocations and the
United States Department of Housing and Urban Development
(HUD) Section 108 loan proceeds as part of the agency debt to
the City. The City was audited by HUD which required that the
City initiate the redevelopment agency's repayment of CDBG
funds to the City in the amount of $139,201,997. The
repayment agreement between the City and the redevelopment
agency stated " the Agency and the City desire to provide, by
and through this Agreement, the terms for the Agency's
repayment of the CDBG Debt to the City in the total amount of
Seventy Eight Million Seven Hundred Eighty Seven Thousand
Dollars ($78,787,000) to be paid annually over a ten year
period in accordance with this Agreement." The agreement went
on to say the parties determined that the proposed repayment
plan serves a public purpose in that: (a) the agency will be
reducing its indebtedness to the City; (b) the City will
benefit from the resolution of certain HUD concerns raised in
the 2008 OIG Audit Report and from the provision of additional
CDBG Program funds to be allocated to eligible projects and
activities, used for administration and planning, and
committed to decease certain
outstanding HUD Section 108 Loan Guarantee Program loans; and
(c) the City has benefitted, and will continue to benefit,
significantly from the Agency's redevelopment projects.
3)AB 936 would require that if a local governing body meets to
consider the forgiveness of a debt of the redevelopment
agency, the chief financial officer must be present at the
meeting and the item is prohibited from being on consent. In
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addition, forgiveness of the loan or indebtedness must be
considered two weeks prior to taking any action on the
forgiveness of debt.
According to the author this measure is needed "to ensure that
the public has the opportunity to understand the financial
implications of the debt forgiveness. This bill does not
hinder the ability, of a city to forgive a loan to a
redevelopment agency. The two week notice will ensure that the
public has the opportunity to evaluate these important
financial decisions."
4)Support arguments: Supporters argue that AB 936 brings
transparency to the activities of redevelopment agencies.
Redevelopment agencies have recently been under fire for lack
of accountability in some cases and this measure will help
ensure that redevelopment agencies fulfill their obligations.
Opposition arguments: Opposition could argue that the Brown
Act already provides for notice and posting of information
prior to a public meeting and that AB 936 just adds another
level of requirements on local governments.
5)This bill was heard by the Housing and Community Development
Committee on April 27, 2011, and passed with a 7-0 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
CA Professional Firefighters ÝSPONSOR]
CA Rural Legal Assistance Foundation
Stockton Professional Firefighters, Local 456
Western Center on Law and Poverty
Opposition
None on file
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958
AB 936
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