BILL NUMBER: SB 654	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JANUARY 4, 2012

INTRODUCED BY   Senator Steinberg

                        FEBRUARY 18, 2011

   An act  relating to taxation   to amend
Sections 34171, 34176, and 34177 of the Health and Safety Code,
relating to redevelopment  .



	LEGISLATIVE COUNSEL'S DIGEST


   SB 654, as amended, Steinberg.  Income taxes: federal
conformity: Patient Protection and Affordable Care Act. 
 Redevelopment.  
   Existing law suspends various activities of redevelopment agencies
and prohibits the agencies from incurring indebtedness for a
specified period. Existing law also dissolves redevelopment agencies
and community development agencies, as of October 1, 2011, and
designates successor agencies, as defined. Existing law requires
successor agencies to wind down the affairs of the dissolved
redevelopment agencies and to, among other things, repay enforceable
obligations, as defined, and to remit unencumbered balances of
redevelopment agency funds, including housing funds, to the county
auditor-controller for distribution to taxing entities.  
   Existing law authorizes the city, county, or city and county that
authorized the creation of a redevelopment agency to retain the
housing assets, functions, and powers previously performed by the
redevelopment agency, excluding amounts on deposit in the Low and
Moderate Income Housing Fund.  
   This bill would revise the definition of the term "enforceable
obligation" and modify provisions relating to the transfer of housing
funds and responsibilities associated with dissolved redevelopment
agencies. The bill would provide that any amounts on deposit in the
Low and Moderate Income Housing Fund of a dissolved redevelopment
agency be transferred to specified entities. The bill would make
conforming changes.  
   The Personal Income Tax Law, in specified conformity with federal
income tax law, provides certain gross income exclusions, imposes
specified tax rates, and allows various deductions and credits in
computing the income that is subject to the taxes imposed by that
law, as specified.  
   This bill would state the intent of the Legislature to enact
legislation to conform the Personal Income Tax Law to provisions of
the Patient Protection and Affordable Care Act. 
   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 34171 of the   Health
and Safety Code   is amended to read: 
   34171.  The following terms shall have the following meanings:
   (a) "Administrative budget" means the budget for administrative
costs of the successor agencies as provided in Section 34177.
   (b) "Administrative cost allowance" means an amount that, subject
to the approval of the oversight board, is payable from property tax
revenues of up to 5 percent of the property tax allocated to the
successor agency for the 2011-12 fiscal year and up to 3 percent of
the property tax allocated to the Redevelopment Obligation Retirement
Fund money that is allocated to the successor agency for each fiscal
year thereafter; provided, however, that the amount shall not be
less than two hundred fifty thousand dollars ($250,000) for any
fiscal year or such lesser amount as agreed to by the successor
agency. However, the allowance amount shall exclude any
administrative costs that can be paid from bond proceeds or from
sources other than property tax.
   (c) "Designated local authority" shall mean a public entity formed
pursuant to subdivision (d) of Section 34173.
   (d) (1) "Enforceable obligation" means any of the following:
   (A) Bonds, as defined by Section 33602 and bonds issued pursuant
to Section 58383 of the Government Code, including the required debt
service, reserve set-asides, and any other payments required under
the indenture or similar documents governing the issuance of the
outstanding bonds of the former redevelopment agency.
   (B) Loans of moneys borrowed by the redevelopment agency for a
lawful purpose, to the extent they are legally required to be repaid
pursuant to a required repayment schedule or other mandatory loan
terms.
   (C) Payments required by the federal government, preexisting
obligations to the state or obligations imposed by state law, other
than passthrough payments that are made by the county
auditor-controller pursuant to Section 34183, or legally enforceable
payments required in connection with the agencies' employees,
including, but not limited to, pension payments, pension obligation
debt service, unemployment payments, or other obligations conferred
through a collective bargaining agreement.
   (D) Judgments or settlements entered by a competent court of law
or binding arbitration decisions against the former redevelopment
agency, other than passthrough payments that are made by the county
auditor-controller pursuant to Section 34183. Along with the
successor agency, the oversight board shall have the authority and
standing to appeal any judgment or to set aside any settlement or
arbitration decision.
   (E) Any legally binding and enforceable agreement or contract that
is not otherwise void as violating the debt limit or public policy.
However, nothing in this act shall prohibit either the successor
agency, with the approval or at the direction of the oversight board,
or the oversight board itself from terminating any existing
agreements or contracts and providing any necessary and required
compensation or remediation for such termination.
   (F) Contracts or agreements necessary for the administration or
operation of the successor agency, in accordance with this part,
including, but not limited to, agreements to purchase or rent office
space, equipment and supplies, and pay-related expenses pursuant to
Section 33127 and for carrying insurance pursuant to Section 33134.
   (G) Amounts borrowed from or payments owing to the Low and
Moderate Income Housing Fund of a redevelopment agency, which had
been deferred as of the effective date of the act adding this part;
provided, however, that the repayment schedule is approved by the
oversight board.
   (2) For purposes of this part, "enforceable obligation" does not
include any agreements, contracts, or arrangements between the city,
county, or city and county that created the redevelopment agency and
the former redevelopment agency. However, written agreements entered
into (A) at the time of issuance, but in no event later than December
31, 2010, of indebtedness obligations, and (B) solely for the
purpose of securing or repaying those indebtedness obligations may be
deemed enforceable obligations for purposes of this part.
Notwithstanding this paragraph, loan agreements entered into between
the redevelopment agency and the city, county, or city and county
that created it, within two years of the date of creation of the
redevelopment agency,  or within two years of the date of the
creation of a project area if the loan is specific to that project
area, and any obligations imposed by paragraph (1) of subdivision (d)
of Section 33691  may be deemed to be enforceable obligations.
   (3) Contracts or agreements between the former redevelopment
agency and other public agencies, to perform services or provide
funding for governmental or private services or capital projects
outside of redevelopment project areas that do not provide benefit to
the redevelopment project and thus were not properly authorized
under Part 1 (commencing with Section 33000) shall be deemed void on
the effective date of this part; provided, however, that such
contracts or agreements for the provision of housing properly
authorized under Part 1 (commencing with Section 33000) shall not be
deemed void.
   (e) "Indebtedness obligations" means bonds, notes, certificates of
participation, or other evidence of indebtedness, issued or
delivered by the redevelopment agency, or by a joint exercise of
powers authority created by the redevelopment agency, to third-party
investors or bondholders to finance or refinance redevelopment
projects undertaken by the redevelopment agency in compliance with
the Community Redevelopment Law (Part 1 (commencing with Section
33000)).
   (f) "Oversight board" shall mean each entity established pursuant
to Section 34179.
   (g) "Recognized obligation" means an obligation listed in the
Recognized Obligation Payment Schedule.
   (h) "Recognized Obligation Payment Schedule" means the document
setting forth the minimum payment amounts and due dates of payments
required by enforceable obligations for each six-month fiscal period
as provided in subdivision (m) of Section 34177.
   (i) "School entity" means any entity defined as such in
subdivision (f) of Section 95 of the Revenue and Taxation Code.
   (j) "Successor agency" means the county, city, or city and county
that authorized the creation of each redevelopment agency or another
entity as provided in Section 34173.
   (k) "Taxing entities" means cities, counties, a city and county,
special districts, and school entities, as defined in subdivision (f)
of Section 95 of the Revenue and Taxation Code, that receive
passthrough payments and distributions of property taxes pursuant to
the provisions of this part.
   SEC. 2.    Section 34176 of the   Health and
Safety Code   is amended to read: 
   34176.  (a) The city, county, or city and county that authorized
the creation of a redevelopment agency may elect to retain the
housing assets and functions previously performed by the
redevelopment agency. If a city, county, or city and county elects to
retain the responsibility for performing housing functions
previously performed by a redevelopment agency, all rights, powers,
duties, and obligations  , excluding  
associated with the housing activities of the agency, including 
any amounts on deposit in the Low and Moderate Income Housing Fund,
shall be transferred to the city, county, or city and county. 
Any funds transferred to the city, county, or city and county
pursuant to this subdivision shall be maintained in a separate Low
and Moderate Income Housing Fund and expe   nded pursuant to
the provisions of the Community Redevelopment Law relating to the
Low and Moderate Income Housing Fund. 
   (b) If a city, county, or city and county does not elect to retain
the responsibility for performing housing functions previously
performed by a redevelopment agency, all rights, powers, assets,
liabilities, duties, and obligations associated with the housing
activities of the agency,  excluding   including
 any amounts in the Low and Moderate Income Housing Fund, shall
be transferred as follows: 
   (1) Where there is no local housing authority in the territorial
jurisdiction of the former redevelopment agency, to the Department of
Housing and Community Development.  
   (2) 
    (1)  Where there is one local housing authority in the
territorial jurisdiction of the former redevelopment agency, to that
local housing authority. 
   (3) 
    (2)  Where there is more than one local housing
authority in the territorial jurisdiction of the former redevelopment
agency, to the local housing authority selected by the city, county,
or city and county that authorized the creation of the redevelopment
agency. 
   (3) Where there is no local housing authority in the territorial
jurisdiction of the former redevelopment agency or where the local
housing authority selected does not accept the responsibility for
performing housing functions previously performed by the former
redevelopment agency, to the Department of Housing and Community
Development. 
   (c) Commencing on the operative date of this part, the entity
assuming the housing functions formerly performed by the
redevelopment agency  may   shall  enforce
affordability covenants and perform related activities pursuant to
applicable provisions of the Community Redevelopment Law (Part 1
(commencing with Section 33000)  )  , including, but not
limited to, Section 33418.
   SEC. 3.    Section 34177 of the   Health and
Safety Code   is amended to read: 
   34177.  Successor agencies are required to do all of the
following:
   (a) Continue to make payments due for enforceable obligations.
   (1) On and after October 1, 2011, and until a Recognized
Obligation Payment Schedule becomes operative, only payments required
pursuant to an enforceable obligations payment schedule shall be
made. The initial enforceable obligation payment schedule shall be
the last schedule adopted by the redevelopment agency under Section
34169. However, payments associated with obligations excluded from
the definition of enforceable obligations by paragraph (2) of
subdivision  (e)   (d)  of Section 34171
shall be excluded from the enforceable obligations payment schedule
and be removed from the last schedule adopted by the redevelopment
agency under Section 34169 prior to the successor agency adopting it
as its enforceable obligations payment schedule pursuant to this
subdivision. The enforceable obligation payment schedule may be
amended by the successor agency at any public meeting and shall be
subject to the approval of the oversight board as soon as the board
has sufficient members to form a quorum.
   (2) The Department of Finance and the Controller shall each have
the authority to require any documents associated with the
enforceable obligations to be provided to them in a manner of their
choosing. Any taxing entity, the department, and the Controller shall
each have standing to file a judicial action to prevent a violation
under this part and to obtain injunctive or other appropriate relief.

   (3) Commencing on January 1, 2012, only those payments listed in
the Recognized Obligation Payment Schedule may be made by the
successor agency from the funds specified in the Recognized
Obligation Payment Schedule. In addition, commencing January 1, 2012,
the Recognized Obligation Payment Schedule shall supersede the
Statement of Indebtedness, which shall no longer be prepared nor have
any effect under the Community Redevelopment Law.
   (4) Nothing in the act adding this part is to be construed as
preventing a successor agency, with the prior approval of the
oversight board, as described in Section 34179, from making payments
for enforceable obligations from sources other than those listed in
the Recognized Obligation Payment Schedule.
   (5) From October 1, 2011, to July 1, 2012, a successor agency
shall have no authority and is hereby prohibited from accelerating
payment or making any lump-sum payments that are intended to prepay
loans unless such accelerated repayments were required prior to the
effective date of this part.
   (b) Maintain reserves in the amount required by indentures, trust
indentures, or similar documents governing the issuance of
outstanding redevelopment agency bonds.
   (c) Perform obligations required pursuant to any enforceable
obligation.
   (d) Remit unencumbered balances of redevelopment agency funds to
the county auditor-controller for distribution to the taxing entities
 , including, but not limited to, the unencumbered balance
of the Low and Moderate Income Housing Fund of a former redevelopment
agency  . In making the distribution, the county
auditor-controller shall utilize the same methodology for allocation
and distribution of property tax revenues provided in Section 34188.
   (e) Dispose of assets and properties of the former redevelopment
agency as directed by the oversight board; provided, however, that
the oversight board may instead direct the successor agency to
transfer ownership of certain assets pursuant to subdivision (a) of
Section 34181. The disposal is to be done expeditiously and in a
manner aimed at maximizing value. Proceeds from asset sales and
related funds that are no longer needed for approved development
projects or to otherwise wind down the affairs of the agency, each as
determined by the oversight board, shall be transferred to the
county auditor-controller for distribution as property tax proceeds
under Section 34188.
   (f) Enforce all former redevelopment agency rights for the benefit
of the taxing entities, including, but not limited to, continuing to
collect loans, rents, and other revenues that were due to the
redevelopment agency.
   (g) Effectuate transfer of housing functions and assets to the
appropriate entity designated pursuant to Section 34176.
   (h) Expeditiously wind down the affairs of the redevelopment
agency pursuant to the provisions of this part and in accordance with
the direction of the oversight board.
   (i) Continue to oversee development of properties until the
contracted work has been completed or the contractual obligations of
the former redevelopment agency can be transferred to other parties.
Bond proceeds shall be used for the purposes for which bonds were
sold unless the purposes can no longer be achieved, in which case,
the proceeds may be used to defease the bonds.
   (j) Prepare a proposed administrative budget and submit it to the
oversight board for its approval. The proposed administrative budget
shall include all of the following:
   (1) Estimated amounts for successor agency administrative costs
for the upcoming six-month fiscal period.
   (2) Proposed sources of payment for the costs identified in
paragraph (1).
   (3) Proposals for arrangements for administrative and operations
services provided by a city, county, city and county, or other
entity.
   (k) Provide administrative cost estimates, from its approved
administrative budget that are to be paid from property tax revenues
deposited in the Redevelopment Property Tax Trust Fund, to the county
auditor-controller for each six-month fiscal period.
   (l) (1) Before each six-month fiscal period, prepare a Recognized
Obligation Payment Schedule in accordance with the requirements of
this paragraph. For each recognized obligation, the Recognized
Obligation Payment Schedule shall identify one or more of the
following sources of payment:
   (A) Low and Moderate Income Housing Fund.
   (B) Bond proceeds.
   (C) Reserve balances.
   (D) Administrative cost allowance.
   (E) The Redevelopment Property Tax Trust Fund, but only to the
extent no other funding source is available or when payment from
property tax revenues is required by an enforceable obligation or by
the provisions of this part.
   (F) Other revenue sources, including rents, concessions, asset
sale proceeds, interest earnings, and any other revenues derived from
the former redevelopment agency, as approved by the oversight board
in accordance with this part.
   (2) A Recognized Obligation Payment Schedule shall not be deemed
valid unless all of the following conditions have been met:
   (A) A draft Recognized Obligation Payment Schedule is prepared by
the successor agency for the enforceable obligations of the former
redevelopment agency by November 1, 2011. From October 1, 2011, to
July 1, 2012, the initial draft of that schedule shall project the
dates and amounts of scheduled payments for each enforceable
obligation for the remainder of the time period during which the
redevelopment agency would have been authorized to obligate property
tax increment had such a redevelopment agency not been dissolved, and
shall be reviewed and certified, as to its accuracy, by an external
auditor designated pursuant to Section 34182.
   (B) The certified Recognized Obligation Payment Schedule is
submitted to and duly approved by the oversight board.
   (C) A copy of the approved Recognized Obligation Payment Schedule
is submitted to the county auditor-controller and both the Controller'
s office and the Department of Finance and be posted on the successor
agency's Internet Web site.
   (3) The Recognized Obligation Payment Schedule shall be forward
looking to the next six months. The first Recognized Obligation
Payment Schedule shall be submitted to the Controller's office and
the Department of Finance by December 15, 2011, for the period of
January 1, 2012, to June 30, 2012, inclusive. Former redevelopment
agency enforceable obligation payments due, and reasonable or
necessary administrative costs due or incurred, prior to January 1,
2012, shall be made from property tax revenues received in the spring
of 2011 property tax distribution, and from other revenues and
balances transferred to the successor agency. 
  SECTION 1.    It is the intent of the Legislature
to enact legislation to conform the Personal Income Tax Law to
provisions of the federal Patient Protection and Affordable Care Act.