BILL ANALYSIS Ó
AB 1484
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1484 (Budget Committee)
As Amended June 25, 2012
Majority vote. Budget Bill Appropriation Takes Effect Immediately
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|ASSEMBLY: | |(March 22, |SENATE: |21-18|(June 27, |
| | |2012) | | |2012) |
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(vote not relevant)
Original Committee Reference: BUDGET
SUMMARY : Makes the statutory changes needed to achieve a total of
$3.3 billion of budget savings related to the dissolution of
redevelopment agencies (RDAs) as estimated in the Governor's May
Revision of the Budget. The bill includes a process to identify
excess redevelopment property tax revenues that should have been
allocated to schools this month, but was withheld by successor
agencies or county auditor controllers, and requires the rapid
allocation of those funds. The bill also requires an audit process to
identify and locate the assets of the former redevelopment agencies
and to require the return of cash balances for distribution as
property tax number. After successful completion of these processes,
successor agencies and their communities will be entitled to retain
most real estate assets of the former RDAs consistent with a plan that
they develop for their use, use excess RDA bond proceeds for
additional projects, and receive repayments of community loans to the
former RDAs over time. The bill also makes many additional specific
changes intended to facilitate the dissolution and winding up process,
better resolve disputes, and provide additional tools and certainty.
Furthermore, the bill provides for repayments of loans from the Low
and Moderate Income Housing Funds, defines housing assets, and
authorizes the expenditure of excess housing bond proceeds for
affordable housing purposes.
The Senate amendments delete the Assembly version of this bill, and
instead:
1)Establish a due diligence review of successor agencies, to be done
by a licensed accountant, approved by the county auditor controller,
in order to make a determination of the unobligated balances
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available for transfer to taxing entities.
2)Specify that a due diligence review, at a minimum, shall include the
following:
a) The dollar value of assets transferred from the former
redevelopment agency (RDA) to the successor agency;
b) The dollar value of assets transferred after January 1, 2011,
through June 30, 2012, by the RDA or successor agency to the
city, county, or city and county which established the former RDA
(sponsoring entity), the purpose of the transfer and whether it
was required by an existing enforceable obligation;
c) The dollar value of any cash or cash equivalents transferred
after January 1, 2011, through June 30, 2012, by the RDA or
successor agency to any other public agency or private party, the
purpose of the transfer and whether it was required by an
existing enforceable obligation;
d) A review of expenditure and revenue accounting information and
identification of transfers and funding sources for the 2010-11
and 2011-12 fiscal years that reconciles balances, assets, and
liabilities of the successor agency on June 30, 2012 to those
reported to the State Controller for the 2009-10 fiscal year;
e) A separate accounting balance for the Low and Moderate Income
Housing Fund; and,
f) A total of the net balances as prescribed, thus resulting in a
sum that shall be transferred to the county auditor-controller
and allocated to affected taxing entities.
3)Specify the due diligence review conducted of the Low and Moderate
Income Housing Funds are due to the Department of Finance (DOF), the
county auditor-controller, the State Controller, and the oversight
board, by October 1, 2012, and specifies that the review of the
remaining fund and account balances are due December 15, 2012.
4)Require the oversight board to conduct a public comment session five
business days prior to approving the determination of the amount of
cash and cash equivalents that are available for disbursement to
taxing entities pursuant to the findings in the due diligence
review.
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5)Authorize an oversight board to allow a successor agency to retain
specified assets or funds necessary to meet enforceable obligations
and requires the oversight board to notify DOF of these changes and
the purposes for which the funds are being retained.
6)Authorize DOF to adjust any amount associated with the determination
and requires DOF to complete its review of the Low and Moderate
Income Housing Fund determinations by November 9, 2012, and the
remainder of the funds and accounts by April 1, 2012.
7)Require DOF to provide the oversight board and the successor agency
an explanation of its basis for overturning or modifying any
findings, determinations, or authorizations of the oversights boards
decisions regarding the determinations of the due diligence review
findings.
8)Authorize a successor agency and sponsoring entity to request to
meet and confer with DOF to resolve any disputes regarding the
amounts or sources of funds identified as available for transfer as
determined by DOF; the decision and determinations may be modified
accordingly.
9)Require each successor agency to transmit to the county
auditor-controller the amount of funds required pursuant to the
final determination of DOF within five working days of the final
determination and for the county auditor-controller to disburse
these funds to the taxing entities.
10)Provide that if DOF determines that the payment of the full amount
required by the final determination is not currently feasible or
would jeopardize the ability of the successor agency to pay
enforceable obligations in a timely manner, it may agree to an
installment payment plan.
11)Provide that if a successor agency fails to remit to the county
auditor-controller the sums established in the final determination,
and no payment plan was established, the funds may be recovered
through an offset of sales and use tax or property tax allocations
to any local agency to which the funds were transferred in absence
of an enforceable obligation and/or to the city, county, city and
county that created the former RDA and who is also performing the
duties of the successor agency.
12)Establish the process for DOF and the county auditor-controller to
follow if they are using an offset to recover the funds.
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13)Require, if a legal action contesting a withholding of sales tax or
property tax is successful, that upon a final judicial
determination, the court to order the state or the county auditor-
controller to pay the prevailing party a penalty equal to 10% of the
amount of funds found by the court to be improperly offset.
14)Provide a process for the reversal of the offset of sales or
property tax if necessary.
15)Provide that if the full payment is made, either through final
determination of the amount due or upon final judicial
determination, DOF shall issue a finding of completion of the
requirements to the successor agency.
16)Provide the following to a successor agency or sponsoring entity
upon the successor agency receipt of a finding of completion from
DOF:
a) The ability to retain real property formerly owned by the RDA,
in addition to governmental use property, after a long range
property management plan has been approved by DOF;
b) Repayment of loans made by the sponsoring entity to the former
RDA as prescribed; and,
c) The ability to spend remaining excess proceeds from bonds
issued prior to January 1, 2011, as prescribed.
17)Establish a Community Redevelopment Trust Fund to serve as a
repository of the former redevelopment agency's real properties
(other than those used for governmental purposes) until a long range
property management plan can be prepared by the successor agency.
18)Create the process successor agencies shall follow when developing
their long range property management plans.
19)Specify that if a sponsoring entity has been authorized to receive
repayment of loans to its former RDA, then 20% of the repayment
monies shall be transferred to the Low and Moderate Income Housing
Asset Fund of the entity that assumed the former RDAs housing
functions, to be spent on affordable housing.
20)Toll the two year statute of limitations with respect to adoptions,
findings, and determinations of any former redevelopment agency or
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its legislative body until DOF has issued a finding of completion to
the successor agency of the former RDA.
21)Toll the statute of limitation for bringing an action with respect
to the validity or legality of any issue, document, or action
related to the validity of bonds and the redevelopment plan of any
former RDA or its legislative body until DOF has issued a finding of
completion to the successor agency of the former RDA.
22)Require a successor agency to submit a copy of the Recognized
Obligation Payment Schedule (ROPS) to the county administrative
officer, the county auditor-controller, and DOF at the same time the
successor agency submits it to the oversight board.
23)Require, the county auditor- controller to make any objection to
the inclusion of an item on a ROPS prior to the ROPS being approved
by the oversight board.
24)Clarify the process and timelines for a successor agency to submit
its ROPS to DOF.
25)Authorize a successor agency to request an opportunity to meet and
confer with DOF over disputed items on the ROPS, such a process may
last up to 30 days.
26)Provide that if a successor agency does not submit a ROPS to DOF
within the specified timelines then the sponsoring entity that
created the RDA shall be subject to a civil penalty of $10,000 per
day for every day the ROPS is late. If a ROPS is more than 10 days
late the successor agency will forego 25% of the maximum
administrative costs approved for that period.
27)Specify if a successor agency fails to submit a ROPS within five
days of the date of the next property tax allocation DOF may
determine if any amount should be withheld by the county
auditor-controller for payments for enforceable obligations from
distribution to the taxing entities.
28)Prohibit a county auditor- controller from withholding any other
amounts from the property tax allocations as prescribed by the
redevelopment dissolution process, unless required by court order.
29)Prohibit a successor agency or oversight board from restoring
funding for an enforceable obligation that was deleted or reduced by
DOF unless it reflects the decisions made during the meet and confer
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process with DOF or pursuant to a court order.
30)Require DOF to provide notice to the successor agency and the
county auditor-controller as to the reasons it is eliminating or
modifying any item on a ROPS prior to approval of the ROPS.
31)Authorize DOF to agree to an amendment to a ROPS to reflect a
resolution of a disputed item, provided that it does not affect a
past allocation of property tax or create a liability for any
affected taxing entity.
32)Require the county auditor-controller to report to DOF regarding
the property tax disbursement amounts and how each disbursement was
calculated.
33)Establish a process for successor agencies or the county
auditor-controller, as needed, to make any required pass-through
payments that were not previously made by the former redevelopment
agency prior to its dissolution.
34)Require, by July 9, 2012, the county auditor-controller to
determine the amount owed by the successor agency to taxing entities
from the 2011-12 tax increment allocation to the former RDA that was
not distributed to the taxing entities for the period of January 1,
2012- June 30, 2012 and make a demand for payment of these funds
which shall be paid by July 12, 2012.
35)Specify that if the county auditor-controller fails to determine
the amounts owed to the taxing entities and present a demand for
payment by July 9, 2012, to the successor agencies, DOF or any
affected taxing entity may request a writ of mandate to require the
county auditor-controller to immediately perform this duty. Any
failure to perform the duty will result in a civil penalty of 10% of
the amount owed to the taxing entities plus 1.5% of the amount owed
for each month that the duties are not performed.
36)Provide that if the county auditor-controller fails to distribute
the full amount of funds received from the successor agencies as
required under the payment due July 9, 2012, then the county shall
not receive its distribution of sales and use tax scheduled for July
18, 2012, until such actions are performed.
37)Specify that if, any successor agency that fails to make the
payment demanded and due to the county auditor-controller by July 9,
2012, then DOF or any affected taxing entity may file for a writ of
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mandate to require the successor to immediately make this payment.
Failure to make the payment by July 12, 2012, shall be subject to a
civil penalty of 10% of the amount owed to taxing entities plus .5%
of the amount owed to the taxing entity for each month that the
payment is not made.
38)Create a penalty for the city, county, or city and county which
created the redevelopment area of 10% of the amount the successor
agency has failed to pay by July 12, 2012, plus 1.5% of the amount
owed to the taxing entity per each month the payment is late. The
city, county, or city and county that created the redevelopment area
could also forego its distribution of sales tax, scheduled to be
distributed on July 18, 2012, until the payment is made by the
successor.
39)Provide that if the State Controller determines that a non-housing
asset was transferred by a successor agency to the sponsoring entity
after January 31, 2012, and that transfer did not occur pursuant to
a ROPS approved enforceable obligation, then the non-housing asset
shall be returned to the successor agency.
40)Require the entity assuming the housing functions of the former
redevelopment (housing successor) to submit a list to DOF by August
1, 2012, of all the housing assets that have been transferred to it
since February 1, 2012, and all remaining housing assets that need
to be transferred to the housing successor. The list must contain
an explanation of how each property/asset meets the definition of
housing asset. DOF will have 30 days to object to any asset on the
list and may have a meet and confer process to discuss the asset
with the housing successor if there is objection to an item.
Transfers for which there is no objection (or the objection is
withdrawn) shall not be subject to further review.
41)Create a new Low and Moderate Income Housing Asset Fund to be
maintained by each housing successor and requires that any monies
placed in the fund be spent consistent with the housing-related
provisions of the Community Redevelopment Law.
42)Define "housing assets" of the former RDAs that are to be
transferred to the housing successor as follows:
a) Any real property, interest in, or restriction on the use of
real property, and any personal property provided in residences,
that were acquired for low-and moderate-income housing purposes,
either by purchase or through a loan with any source of funds;
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b) Any funds that are encumbered by an enforceable obligation to
build or acquire low-and moderate-income housing;
c) Any loan or grant receivable, funded from the Low and Moderate
Income Housing Fund, from homebuyers, homeowners, nonprofits, or
for-profit developers, and other parties that require occupancy
by persons of low or moderate income;
d) Any funds derived from rents or operation of properties for
low-and moderate-income housing purposes by other parties that
were financed with any source of funds;
e) A stream of rents or other payments from housing tenants or
operators of low-and moderate-income housing financed with any
source of funds that are used to maintain, operate, and enforce
the affordability of housing or for enforceable obligations
associated with low-and moderate -income housing; and,
f) Repayments of loans or deferrals owed to the Low and Moderate
Income Housing Fund by the former RDA to finance payments made to
the Supplemental Educational Augmentation Revenue Fund (SERAF).
43)Authorize repayments of any SERAF loans or deferrals to the housing
successor beginning in the 2013-14 fiscal year. For each housing
successor, the maximum repayment amount authorized each fiscal year
shall be equal to one-half of the increase between the amount
distributed to taxing entities from the Redevelopment Property Tax
Trust Fund in that fiscal year and the amount that is distributed to
taxing entities in the 2012-13 base year.
44)Authorize a housing successor to direct the spending of the
proceeds of housing bonds that were issued for the purposes of
affordable housing and backed by the Low and Moderate Income Housing
Fund prior to January 1, 2011; specifies that the proceeds are the
remainder after authorized enforceable obligations are paid.
45)Establish a process for the housing successor to identify projects
and direct expenditures from the remaining housing bonds.
46)Authorize the transfer of all land use related plans and functions
of the former RDA to the sponsoring entity at its request; however,
prohibits the sponsoring entity from changing or adding on to a
project area, or take any action that would increase the amount of
tax increment obligated.
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47)Require that notice relating to any validation action of any
successor agency or former redevelopment agency be given to DOF and
the State Controller prior to the actions being filled.
48)Provide that all actions contesting any act taken or determination
or decisions made related to redevelopment dissolution law be
brought in superior court and be filled in the County of Sacramento;
and, includes up to $2 million subject to allocation by DOF for the
Sacramento County Superior Court for workload specific to these
actions.
49)Authorize a successor agency to refund or refinance bonds or other
indebtedness as prescribed.
50)Include, for the purposes of defining a city, county, or city and
county under this part, any entity included in an annual financial
report, any component unit, and any entity controlled by and
financially responsible or accountable to, a city, county, or city
and county.
51)Authorize oversight boards to reduce the minimum threshold on the
administrative cost allowance.
52)Specify that the cap on successor agency administrative cost
allowances excludes any litigation expenses related to assets or
obligations, settlements and judgments, and the costs of maintaining
assets prior to disposition.
53)Specify that employee costs associated with work on a specific
project implementation shall not constitute administrative costs
subject to the cost cap.
54)Authorize a reserve to be held when required by the bond indenture
or when the next property tax allocation will be insufficient to pay
obligations due under the provisions of the bond for the next
payment due.
55)Specify that costs incurred to fulfill collective bargaining
agreements for layoffs or terminations of city employees who
performed work for the former RDA are enforceable obligations
payable from property tax funds.
56)Provide that obligations to employees that are transferred from the
former RDA or successor agency to the entity assuming the housing
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functions are enforceable obligations payable from property tax
funds.
57)Require the successor agency or designated local authority to enter
into an agreement with the entity assuming the housing functions and
to reimburse it for any costs of specified employee obligations if
an employee is transferred to the housing successor entity.
58)Provide that when appointing a member of the oversight board from
the employees of the former RDA, if the majority of the employees
were city or county employees, then the appointment should be made
from the organization that represents those employees.
59)Provide that if there is no employee organization that represents
the employees of the former RDA, city, or county, then the
appointment should be made from among the employees of the successor
agency.
60)Require the auditor-controller to deposit the unitary,
supplemental, and roll corrections applicable to tax increment that
would have been due to the former RDA into the Redevelopment
Property Tax Trust Fund (Property Tax Trust Fund).
61)Clarify that an RDA or successor shall not make any future deposits
to the Low and Moderate Income Housing Fund.
62)Provide immunity to members of the designated local authorities and
oversight boards for actions taken related to this Budget Act.
63)Allow a city, county, or city and county, or joint powers authority
that authorized the creation of the former RDA and elected not to be
the successor agency to subsequently reverse that decision and serve
as the successor agency.
64)Extend the provisions of the Polanco Redevelopment Act, for
purposes of clean-up plans and liability limits, to successor
agencies and authorizes those powers to be also transferred to a
housing successor entity at its request.
65)Clarify that a successor agency is a separate public entity and
states that the liabilities of the former RDA shall not transfer to
the sponsoring entity.
66)Require successor entities to follow the Ralph M. Brown Act.
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67)Authorize a sponsoring entity to loan or grant funds to a successor
agency for administrative costs, enforceable obligations, or
project-related expenses at the sponsoring entities discretion,
subject to oversight board approval. Repayment of such loans shall
be deemed an enforceable obligation.
68)Add successor agencies to the list of "local public entities" that
can file for bankruptcy under federal law.
69) Make conforming changes related to the delays caused by the
California Supreme Court's ruling in the case California
Redevelopment Association v. Matosantos (2011) 53 Cal. 4th 231.
70)Appropriate $22 million to DOF for its use or allocation to other
departments to implement the provisions of this Budget Act, subject
to legislative notification. This amount includes providing up to
$2 million for court costs as prescribed.
71)Contain an appropriation allowing this bill take effect immediately
upon enactment.
72)Add Legislative intent language regarding the methodology for
calculating pass-through payments in order to ensure pass-through
payments are fully paid.
AS PASSED BY THE ASSEMBLY , this bill expressed the intent of the
Legislature to enact statutory changes relating to the Budget Act of
2012.
FISCAL EFFECTS : This bill makes the statutory changes needed to
achieve a total of $3.3 billion of budget savings related to the
dissolution of redevelopment agencies (RDAs) as estimated in the
Governor's May Revision of the Budget. This amount is composed of two
parts: 1) $1.5 billion in school funding from transfers of cash
balances that were held by the former RDAs; and, 2) $1.8 billion in
school funding budgeted from ongoing property tax savings resulting
from the winding down of redevelopment.
COMMENTS :
1)Under the existing law former RDAs are required dissolve and
establish a successor agency to unwind the affairs of the RDA, and
make the necessary approved expenditures to pay off debts. Many
RDAs, prior to shut down in February 2012, made expenditures of cash
and transferred other cash assets that might in fact be contrary to
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the provisions of AB 26 X1 (Blumenfield), Chapter 5, Statutes of
2011-12 First Extraordinary Session. Current law provides for a way
to reclaim the assets through actions of the State Controller,
however, due to the budget cash shortage the state needs to have
these cash assets returned to the successor agency for distribution
to the taxing entities sooner than the current process provides for.
This will achieve $1.5 billion of school funding from transfers of
cash balances that were held by the former RDAs.
2)Provisions regarding immediate payments are required because the
last property tax payments prior to RDA dissolution did not get
distributed properly; including the RDA failing to make the
pass-through payments. Taxing entities, including schools, are out
millions of dollars in past-through payments that should have been
made by the former RDA at the beginning of the year.
3)The trailer bill is directed at expediting and enhancing collection
and disbursement of the outstanding payments that are due to taxing
entities in an expedient manner:
a) It sets up a process to review financial records and
transactions that occurred between the former RDA or the
successor agency and other public or private entities that may
not have been authorized under the provisions established in AB
26 X1 and return those funds to the successor agencies for the
benefit of the taxing entities either through direct payment, or
an offset of sales or property tax if the successor agency or
sponsor entity fail to comply with the payment request; and,
b) It provides assurance to successor agencies and others that
offsets will not be used haphazardly by requiring a penalty to be
paid by the state or county if a sales tax or property tax offset
is determined by a court to be improperly levied.
4)The trailer bill also works to provide more flexibility to the
process than what is authorized under existing law:
a) It creates the ability for successor agencies to fund other
projects not currently enforceable obligations with excess
remaining bonds proceeds;
b) It provides certainty to the transfer of assets, both housing
and non-housing after appropriate review;
a) It suspends the "fire sale" of redevelopment property and
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enables communities to retain properties for
redevelopment-related purposes after cash balances are recovered
and settled;
b) It provides to local governments loan repayments made to RDAs
and those due to the Low and Moderate Income Housing Funds; and,
c) It makes a variety of technical changes that are intended to
ease the process of dissolution and provide greater direction to
the successor agencies, oversight boards, and successor housing
entities that are integral to the dissolution process.
Analysis Prepared by : Christian Griffith / BUDGET / (916) 319-2099
FN: 0004269