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