BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 471
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          AB 471 (Atkins, et al.)
          As Amended  January 29, 2014
          2/3 vote
          |ASSEMBLY:  |     |(May 9, 2013)   |SENATE: |35-0 |(February 6,   |
          |           |     |                |        |     |2014)          |
               (vote not relevant)

          Original Committee Reference:    HEALTH  

           SUMMARY  :  Allows infrastructure financing districts (IFDs) to  
          include portions of former redevelopment project areas and  
          amends several statutes governing the dissolution of  
          redevelopment agencies (RDAs).

           The Senate amendments  delete the Assembly version of this bill,  
          and instead:  

          1)Make clarifying amendments to the provision of the bill that  
            authorizes an IFD to finance a project or portion of a project  
            that is located in, or overlaps with, a redevelopment project  
            area or former redevelopment project area.

          2)Require a successor agency to the former redevelopment agency  
            to receive a finding of completion, as defined, prior to the  
            district financing any project or portion of a project in a  
            former redevelopment project area.

          3)Provide that any debt or obligation of an IFD shall be  
            subordinate to an enforceable obligation of a former  
            redevelopment agency, and provide that the division of taxes  
            allocated to the IFD shall not include any taxes required to  
            be deposited by the county auditor-controller into the  
            Redevelopment Property Tax Trust fund, as specified.

          4)Allow the legislative body of the city forming the IFD to  
            choose to dedicate any portion of its net available revenue to  
            the IFD through the financing plan, as specified.

          5)Define "net available revenue" to mean periodic distributions  
            to the city from the Redevelopment Property Tax Trust Fund  
            that are available to the city after all preexisting legal  


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            commitments and statutory obligations funded from that revenue  
            are made, as specified, and prohibit "net available revenue"  
            from including any funds deposited by the county  
            auditor-controller in the Redevelopment Property Tax Trust  
            Fund or funds remaining in the Redevelopment Property Tax  
            Trust Fund prior to distribution and from including any moneys  
            payable to a school district that maintains kindergarten and  
            grades 1 to 12, inclusive, community college districts, or to  
            the Educational Revenue Augmentation Fund.

          6)Define, from July 1, 2014, to July 1, 2018, inclusive,  
            "housing entity administrative cost allowance" to mean an  
            amount of up to 1 % of the property tax allocated to the  
            redevelopment Obligation Retirement Fund on behalf of the  
            successor agency for each applicable fiscal year, but not less  
            than $150,000 per fiscal year.

          7)Require the housing entity administrative cost allowance to be  
            listed by the successor agency on the Recognized Obligation  
            Payment Schedule (ROPS), and provide, upon approval of the  
            ROPS by the oversight board and the Department of Finance,  
            that the housing entity administrative cost allowance shall be  
            remitted by the county auditor-controller on each January 2  
            and July 1 to the local housing authority that assumed the  
            housing functions of the former redevelopment agency.

          8)Provide, if there are insufficient moneys in the Redevelopment  
            Obligations Retirement Fund in any given fiscal year to make  
            the authorized payment, that the unfunded amount may be listed  
            on each subsequent ROPS until it has been paid in full.

          9)Allow a successor agency to utilize reasonable estimates and  
            projections to support payment amounts for enforceable  
            obligations if the successor agency submits appropriate  
            supporting documentation of the basis for the estimate or  
            projection to the Department of Finance and the  

          10)Allow specified ROPS payments to be scheduled beyond the  
            existing ROPS cycle upon a showing that a lender requires cash  
            on hand beyond the ROPS cycle.

          11)Allow a successor agency to utilize reasonable estimates and  
            projections to support payment amounts for enforceable  
            obligations, when a payment is shown to be due during the ROPS  


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            period, but an invoice or other billing document has not yet  
            been received, if the successor agency submits appropriate  
            supporting documentation of the basis for the estimate or  
            projection to the Department of Finance and the  

          12)Allow a ROPS to also include appropriation of moneys from  
            bonds subject to passage during the ROPS cycle when an  
            enforceable obligation requires the agency to issue the bonds  
            and use the proceeds to pay for project expenditures.

          13)Provide that the term "identified in an approved  
            redevelopment plan" includes properties listed in a community  
            plan or a five-year implementation plan.

          14)Specify that no reimbursement is required by this act because  
            this act provides for offsetting savings to local agencies or  
            school districts that result in no net costs.

          15)Contain an urgency clause.

           EXISTING LAW  : 

          1)Authorizes cities and counties to create IFDs and issue bonds  
            to pay for community scale public works:  highways, transit,  
            water systems, sewer projects, flood control, child care  
            facilities, libraries, parks, and solid waste facilities.

          2)Allows an IFD to divert property tax increment revenues from  
            other local governments, excluding school districts, for up to  
            30 years, in order to pay back bonds issued by the IFD.

          3)Requires that in order to form an IFD a city or county must  
            develop an infrastructure plan, send copies to every  
            landowner, consult with other local governments, and hold a  
            public hearing.

          4)Requires that when forming an IFD, local officials must find  
            that its public facilities are of communitywide significance  
            and provide significant benefits to an area larger than the  

          5)Requires that every local agency who will contribute its  
            property tax increment revenue to the IFD approve the plan.


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          6)Requires a two-thirds voter approval of the formation of the  
            IFD and the issuance of bonds.

          7)Requires majority voter approval for setting the IFD's  
            appropriations limits.

          8)Specifies that public agencies that own land in a proposed IFD  
            may not vote on issues regarding the district.

          9)Authorizes IFDs to issue a variety of debt instruments,  
            including bonds, certificates of participation, leases, and  

          10)Requires any IFD that constructs dwelling units to set aside  
            not less than 20% of those units to increase and improve the  
            community's supply of low- and moderate-income housing  
            available at an affordable housing cost to persons and  
            families of low- and moderate-income.

           AS PASSED BY THE ASSEMBLY  , this bill deleted the current  
          limitation for the Department of  Health Care Services to enter  
          into up to 15 contracts for implementation of the Program of  
          All-Inclusive Care for the Elderly), and in so doing, would have  
          authorized an unlimited number of contracts.

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, this bill contains unknown General Fund impact,  
          likely in the range of $750,000 annually for five years.  This  
          figure is based on the assumption that approximately 10  
          successor housing agencies would be eligible for at least  
          $150,000 annually in allocations from the Redevelopment Property  
          Tax Trust Fund through 2018, prior to distribution of residual  
          revenues to local agencies and school entities.   As such, the  
          bill would reduce the amount of residual property tax revenues  
          subject to general distribution by at least $1.5 million  
          annually through 2018, about half of which would accrue to K-14  
          schools.  In general, any property tax proceeds diverted from  
          schools results in an equivalent General Fund cost, pursuant to  
          Proposition 98's minimum funding guarantees.  

           COMMENTS  :  This bill would delete the prohibition on  
          infrastructure financing district including any portion of a  
          redevelopment project area. This bill also makes various changes  
          to the redevelopment dissolution policies in order to allow  
          dissolution to occur in a more orderly fashion while still  


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          allowing needed economic development. 

          Existing law prohibits an infrastructure financing district  
          (IFD) from including any portion of a redevelopment project area  
          for the purposes of collecting tax increment. Given that  
          redevelopment agencies were dissolved effective February 1,  
          2012, and are no longer collecting additional tax increment to  
          create new activities to promote economic development and  
          infrastructure, the restriction on the overlap with IFDs seems  
          to be unnecessary. 

          This bill would delete the prohibition on infrastructure  
          financing district including any portion of redevelopment  
          project area.  Furthermore, as redevelopment project areas get  
          wrapped up through the work of successor agencies many projects  
          still remain in flux.  This bill provides clarity to the law on  
          how projects that were already in the pipeline prior to  
          dissolution can still be completed. 
          This bill is similar to AB 662 (Atkins) of 2013 which was vetoed  
          with the following message:

               This measure would provide flexibility to cities and  
               successor agencies around the state currently winding  
               down their redevelopment affairs.  More importantly,  
               this bill would authorize cities to create  
               Infrastructure Financing Districts within the  
               boundaries of former redevelopment project areas, as  
               well as provide additional property taxes for  
               administrative costs to the local housing authorities  
               currently managing stranded housing assets.   
               Unfortunately, as currently written, the language to  
               authorize new or amended contracts for existing  
               enforceable obligations could result in unintended  
               costs to the General Fund.
               I applaud the author for her efforts to improve the  
               dissolution process.  Therefore, I am directing my  
               administration to work with the author's office to  
               make changes to the bill's language in a manner that  
               avoids those costs.  When the changes are made, I look  
               forward to seeing the measure return to my desk for  

          Support arguments:  This bill makes a number of changes to the  
          redevelopment dissolution process in order to ensure a more  


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          orderly dissolution and deletes an unnecessary prohibition on  
          IFDs including any portion of a redevelopment project area.

          Opposition arguments:  None on file.
          Analysis Prepared by  :    Debbie Michel / L. GOV. / (916)  

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