BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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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 León, 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. Pérez) 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, Chávez, Chesbro, Conway,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,  
            Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,  
            Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones,  
            Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,  
            Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,  
            Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez,  
            Quirk, Quirk-Silva, Rendon, Salas, 
          Skinner, Stone, Ting, Torres, Wagner, Waldron, Weber,  
            Wieckowski, Wilk, Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Cooley, Lowenthal, Nazarian, Vacancy


          AB:k  9/3/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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