BILL NUMBER: SB 986 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Dutton
JANUARY 31, 2012
An act to amend Sections 34177 and 34180 of the Health and Safety
Code, relating to redevelopment, and declaring the urgency thereof,
to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 986, as introduced, Dutton. Redevelopment: bond proceeds.
Existing law dissolves redevelopment agencies and community
development agencies, as of February 1, 2012, and designates
successor agencies, as defined. Existing law requires that successor
entities perform certain duties, including, among others, remitting
unencumbered funds of that agency to the county auditor-controller,
and overseeing the use of bond proceeds. Existing law requires each
successor agency to have an oversight board that is composed of 7
members who meet certain qualifications. Existing law requires the
oversight board to approve certain actions of the successor agency.
This bill would provide that all bond proceeds that were generated
by the former redevelopment agency shall be deemed to be encumbered
and would prohibit a successor agency from remitting these proceeds
to the county auditor-controller. This bill would also require that
the proceeds of bonds issued by a former redevelopment agency must be
used by the successor agency for the purposes for which the bonds
were sold pursuant to an enforceable obligation, as defined, that was
entered into either by the former redevelopment agency prior to its
dissolution, or is entered into by the successor agency by December
14, 2014. This bill would also provide that if an enforceable
obligation is not entered into by that time, or if the purpose for
which the bonds were sold can no longer be achieved, then the bond
proceeds shall be used to defease the bonds or to purchase
outstanding bonds on the open market for cancellation.
This bill would also require the oversight board to approve of the
establishment of an enforceable obligation with respect to bond
proceeds. This bill would prohibit the oversight board from
disapproving the establishment of an enforceable obligation with
respect to bond proceeds if that obligation is reasonably in
furtherance of the purposes for which the bonds were sold.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. 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) 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. For
purposes of this subdivision, bond proceeds of the redevelopment
agency shall be deemed to be encumbered, and therefore the successor
agency shall not remit those funds to the county auditor-controller.
(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 the
bonds were sold unless the purposes can no longer be
achieved, in which case, the proceeds may be used to defease the
bonds , if and to the extent that the successor agency
is either performing an obligation required pursuant to any
enforceable obligation entered into by the former redevelopment
agency, or is performing an enforceable obligation entered into by
the successor agency on or before December 31, 2014, to fulfill the
purposes for which the bonds were sold by the dissolved redevelopment
agency. Any amount of bond proceeds not subject to an enforceable
obligation as of January 1, 2015, shall be used to defease the bonds
or to purchase outstanding bonds on the open market for cancellation.
If the purposes for which the bonds were sold by the dissolved
redevelopment agency can no longer be achieved, then the
proceeds shall be used to defease the bonds or to purchase
outstanding bonds on the open market for cancellation .
(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 that
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.
SEC. 2. Section 34180 of the Health and Safety Code is amended to
read:
34180. All of the following successor agency actions shall first
be approved by the oversight board:
(a) The establishment of new repayment terms for outstanding loans
where the terms have not been specified prior to the date of this
part.
(b) Refunding of outstanding bonds or other debt of the former
redevelopment agency by successor agencies in order to provide for
savings or to finance debt service spikes; provided, however, that no
additional debt is created and debt service is not accelerated.
(c) Setting aside of amounts in reserves as required by
indentures, trust indentures, or similar documents governing the
issuance of outstanding redevelopment agency bonds.
(d) Merging of project areas.
(e) Continuing the acceptance of federal or state grants, or other
forms of financial assistance from either public or private sources,
where assistance is conditioned upon the provision of matching
funds, by the successor entity as successor to the former
redevelopment agency, in an amount greater than 5 percent.
(f) (1) If a city, county, or city and county wishes to retain any
properties or other assets for future redevelopment activities,
funded from its own funds and under its own auspices, it must reach a
compensation agreement with the other taxing entities to provide
payments to them in proportion to their shares of the base property
tax, as determined pursuant to Section 34188, for the value of the
property retained.
(2) If no other agreement is reached on valuation of the retained
assets, the value will be the fair market value as of the 2011
property tax lien date as determined by the county assessor.
(g) Establishment of the Recognized Obligation Payment Schedule.
(h) A request by the successor agency to enter into an agreement
with the city, county, or city and county that formed the
redevelopment agency that it is succeeding.
(i) A request by a successor agency or taxing entity to pledge, or
to enter into an agreement for the pledge of, property tax revenues
pursuant to subdivision (b) of Section 34178.
(j) The establishment of an enforceable obligation with respect to
bond proceeds pursuant to subdivision (i) of Section 34177. However,
the oversight board shall not disapprove the establishment of an
enforceable obligation with respect to bond proceeds if that
obligation is reasonably in furtherance of the purposes for which the
bonds were sold.
SEC. 3. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to provide guidance to the successor agencies on the use
of bond proceeds, it is necessary for this act to take effect
immediately.