BILL ANALYSIS �
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THIRD READING
Bill No: AB 662
Author: Atkins (D), et al.
Amended: 9/3/13 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 6/5/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/30/13
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 76-0, 4/25/13 (Consent) - See last page for
vote
SUBJECT : Local government: redevelopment: successor
agencies to redevelopment
SOURCE : Author
DIGEST : This bill deletes the prohibition on infrastructure
financing districts (IFDs) to include portions of former
redevelopment project areas and modifies the statutes governing
redevelopment agencies (RDAs) dissolution.
ANALYSIS : Until 2011, the Community Redevelopment Law allowed
local officials to set up RDAs, prepare and adopt redevelopment
plans, and finance redevelopment activities. 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
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local governments. The RDA kept the property tax increment
revenues generated from increases in property values within a
redevelopment project area.
Citing a significant State General Fund (GF) 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) dissolved all
RDAs. The California Supreme Court's 2011 ruling in California
Redevelopment Association v. Matosantos upheld AB 26X1, but
invalidated AB 27X1 (Blumenfield, Chapter 6, Statutes of 2011),
which would have allowed most RDAs to avoid dissolution.
Existing law requires that specified actions of a successor
agency be first approved by its oversight board, including,
among others, the establishment of a Recognized Obligation
Payment Schedule (ROPS).
Existing law, AB 1484 (Assembly Budget Committee, Chapter 26,
Statutes of 2012), requires the Department of Finance (DOF) to
provide a successor agency with a "finding of completion" after
the agency remits specified RDA property tax allocations and
unencumbered cash assets to the county auditor-controller
through a due diligence process.
This bill:
1. Allows an IFD to include portions of former RDA project
areas, and makes several changes to the laws governing the
dissolution of RDAs.
2. Authorizes an IFD to finance a project located at least
partially in a former RDA project area, as long as DOF has
issued a certificate of completion to the successor agency.
Any IFD debts would be subordinate to enforceable
obligations.
3. Requires a successor agency to notify the oversight board 10
days prior to entering into a contract or agreement for the
use or disposition of specified properties. Authorizes the
board to notify the successor agency during that 10-day
period that the board intends to conduct a hearing to
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determine whether the contract or agreement is consistent
with the successor agency's long-range property management
plan and requires the board to hold the hearing and issue
findings within 30 days after it so notified the successor
agency.
4. Allows a successor agency to schedule ROPS payments beyond
the existing six-month ROPS cycle upon a showing that a
lender requires cash on hand beyond the ROPS cycle.
5. Allows a successor agency to utilize reasonable estimates
and projections to support payment amounts for enforceable
obligations if it submits appropriate supporting
documentation of the basis for the estimate or projection to
the DOF.
6. Specifies that a ROPS can include appropriation of moneys
from bonds subject to passage during the ROPS cycle when an
enforceable obligation requires the successor agency to issue
the bonds and use the proceeds to pay for project
expenditures.
7. Specifies that the phrase "identified in an approved
redevelopment plan" includes properties listed in a community
plan, or a five-year implementation plan.
8. Provides that the loan repayment schedule excludes amounts
paid to taxing entities from the Redevelopment Property Tax
Trust Fund (Trust Fund) pursuant to the "due diligence
review" process during the 2012-13 base year.
9. Allows a successor agency that has received a finding of
completion to enter into, or amend existing, contracts and
agreements, or otherwise administer projects in connection
with long-term enforceable obligations, if the contract,
agreement, or project will not commit new tax funds, or will
not otherwise adversely affect the flow of specified tax
revenues or payments to taxing agencies.
10.Repeals the state law that prohibits an IFD's territory from
including any portion of a redevelopment project area,
allowing IFDs to use tax increment revenues to finance public
works in former RDA project areas.
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11.Requires the county auditor-controller, prior to
distributing residual revenues to taxing entities, to
allocate moneys from the Trust Fund from January 1, 2014
through June 1, 2018 to an entity that has assumed the
housing duties of a former RDA.
12.Specifies that this "housing entity administrative cost
allowance" would be 1%, but not less than $150,000 annually,
of the property tax allocated to the Redevelopment Obligation
Retirement Fund each fiscal year.
13.Authorize a successor agency that has received a finding of
completion, upon specified notice to an oversight board, to
enter into contracts or administer projects in connection
with an enforceable obligation, if no new tax revenues are
committed and the activity will not adversely impact the flow
of property tax revenues or payments.
Comments
Local officials and developers have identified ambiguities and
obstacles in current law which prevent them from completing
vital economic development projects that began before RDAs were
dissolved. Because agreements related to millions of dollars of
Proposition 1C infill infrastructure grants are not recognized
as enforceable obligations, communities throughout the state may
be unable to complete much-needed infill and transit-oriented
development projects. Because state law does not provide
successor agencies any flexibility to adjust contracts for
enforceable obligations in ways that do not affect tax increment
or to schedule ROPS payments beyond a single six-month ROPS
period, many successor agencies may be unable to finance or
complete long-term phased development projects that are already
underway. By eliminating these ambiguities and obstacles, and
eliminating an unnecessary prohibition against an IFD including
any portion of a redevelopment project area for the purposes of
collecting tax increment, this bill will support the completion
of numerous development projects that have already received
millions of dollars of public investments, support state policy
goals, and benefit residents throughout California.
Related Legislation
SB 33 (Wolk) waives the voter-approval requirements to create an
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IFD, extends an IFD's life term, requires annual, independent
audits, and authorizes an IFD's use for projects in
disadvantaged communities, hazardous cleanup, environmental
mitigation, and flood protection.
SB 628 (Beall) removes the voter-approval requirements to create
an IFD and issue bonds for a transit priority project.
AB 229 (J. P�rez) creates infrastructure and revitalization
financing districts (IRFDs) and authorizes a city, county, city
and county, or Joint Power Authority acting as the military base
reuse authority -- following a 2/3-vote to form the district, a
2/3-vote to issue the bonds, and a majority-vote for the
appropriations limit -- to finance projects like flood
management, environmental mitigation, and hazardous cleanup.
AB 243 (Dickinson) creates IRFDs and reduces the 2/3-voter
thresholds to 55% to form an IRFD and issue bonds.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee, unknown GF
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 Trust Fund through
2018, prior to distribution of residual revenues to local
agencies and school entities. As such, this bill will 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 GF cost, pursuant to Proposition 98's minimum funding
guarantees.
SUPPORT : (Verified 8/30/13)
AFSCME, AFL-CIO
BRIDGE Housing
California Infill Builders Association
Cities of Sacramento, San Diego and West Sacramento
Cynthia Morgan, Chair of the Board of Civic San Diego
Mission Bay Development Group
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San Diego Housing Federation
Smart Growth Investors II
Strada Investment Group
OPPOSITION : (Verified 8/30/13)
Santa Clara County Board of Supervisors
ASSEMBLY FLOOR : 76-0, 4/25/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nestande, Olsen, Pan, Patterson, Perea, V. Manuel P�rez,
Quirk, Quirk-Silva, Rendon, Salas,
Skinner, Stone, Ting, Torres, Wagner, Waldron, Weber,
Wieckowski, Wilk, Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Cooley, Lowenthal, Nazarian, Vacancy
AB:k 9/3/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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