BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1156| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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. CONTINUED SB 1156 Page 2 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 CONTINUED SB 1156 Page 3 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. CONTINUED SB 1156 Page 4 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: CONTINUED SB 1156 Page 5 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 **** END **** CONTINUED SB 1156 Page 6 CONTINUED