BILL ANALYSIS Ó
AB 1555
Page 1
ASSEMBLY THIRD READING
AB 1555 (Norby)
As Amended May 1, 2012
Majority vote
HOUSING 4-2 LOCAL GOVERNMENT 8-0
-----------------------------------------------------------------
|Ayes:|Bradford, Beth Gaines, |Ayes:|Smyth, Alejo, Bradford, |
| |Hueso, Jeffries | |Campos, Davis, Gordon, |
| | | |Knight, Norby |
|-----+--------------------------+-----+--------------------------|
|Nays:|Torres, Atkins | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : Prohibits the oversight board responsible for the
wind-down of a redevelopment agency (RDA) to require the
successor agency to forgive a loan, advance, or indebtedness
that is owed to the dissolved RDA by a private body.
Specifically, this bill :
1)Prohibits the oversight board responsible for the wind-down of
a RDA to require the successor agency to forgive a loan,
advance, or indebtedness that is owed to the dissolved RDA by
a private body.
2)Permits the oversight board to set aside any agreements that
relate to the forgiveness of a loan, indebtedness, or advance
owed by a private body to a dissolved RDA dating back to
January 1, 2011.
FISCAL EFFECT : None
COMMENTS : In 2011, the Legislature approved and the Governor
signed two measures, AB 26 X1 (Blumenfield), Chapter 5, Statutes
of 2011-12 First Extraordinary Session, and AB 27 X1
(Blumenfield), Chapter 6, Statutes of 2011-12 First
Extraordinary Session, that would together dissolve RDAs as they
existed at the time and create a voluntary redevelopment program
on a smaller scale. In response the California Redevelopment
Association (CRA) and the League of California Cities, along
with other parties, filed suit challenging the two measures. The
Supreme Court denied the petition for peremptory writ of mandate
with respect to AB 26 X1. However, the Court did grant CRA's
AB 1555
Page 2
petition with respect to AB 27 X1. As a result, all RDAs were
required to dissolve as of February 1, 2012.
Purpose of this bill: According to the author, when RDAs were
dissolved, certain entities, among them some private developers,
still owed money to the RDA. The author's office provided as
background an article discussing the City of Montebello that
reported that the city council forgave loans to a developer who
made political contributions to the council members. Another
article provided by the author reported that in the City of
Riverbank, the city council was reluctant to become the
successor agency to the former RDA because they did not think
they had enough revenue to cover a multi-million dollar bond the
former RDA had issued for economic development projects. They
voted not to become the successor agency. Under AB 26 X1, the
county, school district, or other taxing entities in the county
can opt to become the successor agency. If not, the Governor
appoints three residents of the county to a "designated local
authority" to oversee the winding down of the RDA.
This bill would prohibit an oversight board from directing a
successor agency to forgive a loan in whole or in part made from
the former RDA to a private body. Additionally, the oversight
board would have authority to set aside any agreements made to
forgive loans owed to the former RDA by a private body that date
back to January 1, 2011.
AB 26 X1 requires a successor agency to enforce all former RDA
rights for the benefit of the taxing entities, including, but
not limited to, collecting loans, rents, and other revenues that
are due to the RDA. This provision would invalidate actions
taken by the city council to forgive a loan made to a private
developer. In addition, forgiveness of a loan to a private
entity by a city council would be unconstitutional as a gift of
public funds.
Role of the oversight board: The oversight board is made up of
representatives of the taxing entities in the jurisdiction of
the former RDA, one member of the public, and one employee of
the dissolved RDA. The oversight board oversees the successor
agency's disposition of all assets and properties of the former
RDA, payment of enforceable obligations, merging of project
areas, and the termination of any agreements between the former
RDA and public bodies. Under the direction of the oversight
AB 1555
Page 3
board, the successor agency is responsible for determining
whether any contracts, agreements, or other arrangements between
the dissolved RDA and private parties should be terminated or
renegotiated to reduce liability and increase net revenues to
the taxing entities. The successor agency must present proposals
to terminate or amend agreements to the oversight for approval.
This bill would remove the oversight board's discretion in
determining what is in the best interest of the taxing entities
in regards to what actions to take on loans made by a former RDA
to a private developer.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0003616