BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  SB 1156|
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                                 THIRD READING


          Bill No:  SB 1156
          Author:   Steinberg (D)
          Amended:  5/25/12
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  6-3, 4/18/12
          AYES:  Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
          NOES:  Dutton, Fuller, La Malfa

           SENATE TRANSPORTATION & HOUSING COMM.  :  5-3, 4/24/12
          AYES:  DeSaulnier, Kehoe, Lowenthal, Pavley, Simitian
          NOES:  Gaines, Harman, Wyland
          NO VOTE RECORDED:  Rubio

           SENATE APPROPRIATIONS COMMITTEE  :  5-2, 5/24/12
          AYES:  Kehoe, Alquist, Lieu, Price, Steinberg
          NOES:  Walters, Dutton


           SUBJECT  :    Community Development and Housing Joint Powers
                      Authority

           SOURCE  :     Author


           DIGEST  :    This bill authorizes a city and county that 
          included the territory of a redevelopment agency to form a 
          Sustainable Communities Investment Authority to carry out 
          Community Redevelopment Law, using the assets of a former 
          redevelopment agency as well as new revenues that the bill 
          authorizes.

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           ANALYSIS  :    Until 2011, the Community Redevelopment Law 
          allowed local officials to set up redevelopment agencies 
          (RDAs), prepare and adopt redevelopment plans, and finance 
          redevelopment activities.

          A redevelopment agency kept the property tax increment 
          revenues generated from increases in property values within 
          a redevelopment project area.  As a redevelopment project 
          area's assessed valuation grew above its base-year value, 
          the resulting property tax revenues, the property tax 
          increment, went to the RDA instead of going to the 
          underlying local governments.  When a redevelopment agency 
          diverted property tax revenues from a school district, the 
          State General Fund paid the difference.

          Citing a significant State General Fund deficit, Governor 
          Brown's 2011-12 budget proposed eliminating RDAs and 
          returning billions of dollars of property tax revenues to 
          schools, cities, and counties to fund core services.  Among 
          the statutory changes that the Legislature adopted to 
          implement the 2011-12 Budget, AB 26X1 (Blumenfield), 
          Chapter 5, Statutes of 2011-12 First Extraordinary Session, 
          dissolved all RDAs.

          This bill authorizes a city and county that includes 
          territory of a former RDA to form a Sustainable Communities 
          Investment Authority (Authority) to carry out the Community 
          Redevelopment Law, as specified.  Specifically, this bill:

            1.  Authorizes the Authority to enter into financial and 
              other agreements with community colleges, K-12 school 
              districts, and private businesses to "facilitate the 
              development and operation of articulated career 
              technical education pathways."

            2.  Authorizes the Authority to adopt a redevelopment 
              plan for a project area that would expire within 30 
              years of the first issuance of bonded indebtedness.

            3.  Places the specified limits on project area 
              designations:  (1) for regions within a metropolitan 
              planning organization (MPO) with an adopted sustainable 
              communities strategy (SCS) that has been accepted by 
              the Air Resources Board, possible project areas may 

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              include transit priority areas identified in an SCS and 
              for each jurisdiction, one small walkable community, as 
              specified; or (2) sites that have land use approvals or 
              other controls restricting the site to clean energy 
              manufacturing and sites consistent with the SCS, if 
              those sites are within the geographic boundaries of an 
              MPO.

            4.  Authorizes a state or local public pension fund to 
              invest in public infrastructure projects and private 
              commercial and residential development undertaken by an 
              Authority.

            5.  Authorizes an Authority to implement a local 
              transactions and use tax, above the state's base 7.25 
              percent sales and use tax, provided that the resolution 
              authorizing the tax designates the use of the proceeds 
              of the tax.

            6.  Authorizes an Authority to issue bonds paid for with 
              authority proceeds in order to carry out the provisions 
              of this bill.

            7.  Authorizes an Authority to exercise the powers of an 
              infrastructure financing district to divert property 
              tax increment revenues and issue bonds to pay for 
              public works.

            8.  Authorizes an Authority to finance infrastructure by 
              issuing bonds and lending the proceeds for public 
              works, working capital, and insurance programs as 
              provided in the Marks-Roos Local Bond Pooling Act.

            9.  Statutorily redefines the term "district" as used in 
              Article XVI, Section 16 of the California Constitution 
              for purposes of calculating redevelopment tax 
              increment, to exclude school districts and special 
              districts.

            10. Provides additional governance structures that allow 
              cities to capture the full increment subject to county 
              approval, or to capture only the city share of the 
              increment.


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            11. Requires the adoption of a jobs plan, prevailing wage 
              provisions, and developer prequalification provisions 
              in connection with the establishment of a Sustainable 
              Communities Investment Area.

           Comments
           
          Eliminating redevelopment agencies did not eliminate the 
          need for communities throughout California to build more 
          affordable housing, eliminate blight, foster business 
          activity, clean up contaminated brownfields, and create 
          jobs.  This bill establishes a new approach to local 
          economic development and housing policy that is focused on 
          building sustainable communities and creating high skill, 
          high wage jobs.  This bill's Authority model fosters 
          collaboration between cities and counties on local economic 
          development efforts and mitigates the zero-sum competition 
          for scare property tax revenues among cities, counties, and 
          school districts.  The bill offers local governments 
          flexibility by allowing an authority to use a variety of 
          tools, including tax increment financing, Community 
          Redevelopment Law powers, local sales taxes, infrastructure 
          financing districts, and the ability to leverage public 
          pension fund investments.

           Related Legislation
          
          SB 986 (Dutton) which allows successor agencies to keep 
          former RDAs' bond proceeds and enter into new enforceable 
          obligations funded by bond proceeds.  

          SB 1056 (Hancock) which expands the definition of 
          "enforceable obligation" to include financial obligations 
          related to a project funded with both tax increment and 
          federal school construction bonds.

          SB 1151 (Steinberg) which creates an alternative process by 
          which communities can use their former redevelopment 
          agencies' assets for economic development and housing 
          purposes.

          Other bills that amend the statutes governing the 
          disposition and use of former RDAs' assets include:


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          SB 1337 (Pavley) which allows a successor agency to retain 
          former RDA land that is a brownfield site for the purpose 
          of hazardous substance remediation or removal.

          AB 1585 (Perez) which makes numerous amendments to the 
          statutes governing the redevelopment dissolution process.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

          According to the Senate Appropriations Committee, 
          significant diversion of future property tax increment to 
          joint powers authorities to cover staffing and 
          administrative costs associated with new redevelopment 
          activity authorized by the bill.  This could be a 
          particularly difficult and costly administrative task for a 
          county that forms an Authority with numerous cities within 
          its boundaries.

           SUPPORT  :   (Verified 4/24/12) (per Senate Transportation 
          and Housing Committee analysis - unable to reverify at time 
          of writing)

          BRIDGE Housing
          California Infill Builders Association
          California State Association of Counties 
          DMB Pacific Ventures
          Los Angeles Alliance for a New Economy
          Mission Bay Development Group

           OPPOSITION  :    (Verified 4/24/12) (per Senate 
          Transportation and Housing Committee analysis - unable to 
          reverify at time of writing)

          California Special Districts Association
          Howard Jarvis Taxpayers Association


          AGB:nl  5/25/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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