BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 936
                                                                  Page  1

          Date of Hearing:   May 18, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                      AB 936 (Hueso) - As Amended:  May 2, 2011 

          Policy Committee:                              Local Government 
          Vote:        8-0

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              Yes

           SUMMARY  

          This bill establishes requirements for a local legislative body 
          that is considering forgiving a loan made to a redevelopment 
          agency.   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, the matter to be considered in a 
            public meeting at least two weeks prior to 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 local 
            agency.

          3)Prohibits the adoption of any redevelopment agency debt 
            forgiveness proposal from being placed on a consent calendar.

           FISCAL EFFECT  

          There will be minor reimbursement of state mandated costs, 
          approximately $25,000, from local agencies complying with this 
          requirement.

           COMMENTS  

           1)Purpose .  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 








                                                                  AB 936
                                                                  Page  2

            redevelopment agency. The two week notice will ensure that the 
            public has the opportunity to evaluate these important 
            financial decisions."    
             
             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.

           2)Background  .  When establishing a redevelopment agency, cities 
            and counties 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 ƯAB 26 4X (Committee on 
            Budget), Chapter 21, Statues of 2009.

           3)There is no registered opposition to this bill.
                



           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081