BILL ANALYSIS Ó
AB 936
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CONCURRENCE IN SENATE AMENDMENTS
AB 936 (Hueso)
As Amended July 12, 2011
Majority vote
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|ASSEMBLY: |75-0 |(May 26, 2011) |SENATE: |38-0 |(August 15, |
| | | | | |2011) |
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Original Committee Reference: H. & C.D.
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SUMMARY : Requires a public body or a redevelopment agency (RDA) to
adopt a resolution prior to forgiving a loan, advance, or
indebtedness.
The Senate amendments :
1)Require a RDA or a public body to adopt a resolution that includes
the following before forgiving a loan, advance or indebtedness:
a) Name of the public body or RDA;
b) Amount of the proposed forgiveness;
c) Terms of the loan, advance or indebtedness;
d) The fiscal effect of the proposed forgiveness of the public
body or RDA; and,
e) The date on which the RDA or public body intends to act on
the proposed forgiveness which must be no less than 15 days
after adoption of the resolution.
2)Require a RDA on or before February 1, 2012, to adopt a resolution
that declares whether or not it has forgiven a loan, advance, or
indebtedness between January 1, 2010, and December 31, 2011, owed
by an RDA or a public body.
3)Require the resolution to include the following:
a) Name of the public body or RDA;
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b) Amount of forgiveness;
c) Terms of the loan, advance or indebtedness; and,
d) Fiscal effect of the proposed forgiveness on the public body
or RDA.
4)Require the RDA to transmit a copy of the resolution to the State
Controller no later than 10 days after adopting the resolution.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required the chief financial officer to be present at the public
meeting of the local legislative body to provide information at
the public meeting as to:
a) The status of the financial health of the agency's funds;
b) How the agency is able to effectively continue providing
services to the public absent the repayment of the debt
proposed to be forgiven; and,
c) The public interest in forgiving loan, advance or
indebtedness.
1)Provided that the adoption of any redevelopment agency debt
forgiveness proposal from being placed on consent.
FISCAL EFFECT : None
COMMENTS : 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.
In a case provided by the author, in San Diego, the city capitalized
the redevelopment agency by using Community Development Block Grant
(CDBG) funds. The redevelopment agency carried amounts equal to
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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 agency's repayment of CDBG funds to the
city. As part of the hearing in which the city approved the
repayment, it also considered forgiving the sizable about of
interest that was outstanding from the original loan that the city
made to capitalize the redevelopment agency. The city decided
against this action and instead agreed to have the redevelopment
agency pay back the interest as it could.
The Brown Act (Government Code Sections 54950, et seq.) requires
that any time a city council or board of supervisors meets that the
meeting is public and meets standards to provide for public
participation. Redevelopment agency governing boards are also
subject to these requirements. With a few exceptions (emergencies,
previously discussed items and an action needing immediate vote not
on an agenda) the Brown Act requires at least 72 hours prior to
meeting, the a governing body, must post an agenda containing a
brief general description of each action or discussion item to be
considered, including items to be considered at closed sessions.
The purpose is to notify members of the public of items in which
they may wish to participate.
This bill would require that any time a city, county or RDA forgives
a debt of the other; it must adopt a resolution making specified
finings. In addition, cities, counties and RDAs are required to
adopt a resolution by February 1, 2012, stating whether or not they
forgave any loans, advances, or indebtedness between the January 1,
2010, to December 31, 2011, owed by an RDA or a public body. The
resolution must be sent to the State Controller.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085 FN:
0001710