BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 662
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 662 (Atkins, et al.)
          As Amended  September 6, 2013
          Majority vote

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          |ASSEMBLY:  |76-0 |(April 25,      |SENATE: |36-0 |(September 11, |
          |           |     |2013)           |        |     |2013)          |
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           Original Committee Reference:    L. GOV.  

           SUMMARY  :  Allows an infrastructure financing district (IFD) to  
          include portions of former redevelopment project areas, and make  
          several changes to the laws governing the dissolution of  
          redevelopment agencies (RDAs).

           The Senate amendments  :  

          1)Allow an infrastructure financing district (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 certificate of completion, as defined, prior to  
            the district financing any project or portion of a project.

          3)Provide that any debt or obligation of a district 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  
            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  








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            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)Allow, if a successor agency has received a finding of  
            completion, the agency 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,  
            and will not otherwise adversely affect the flow of property  
            tax revenues or payments made to the taxing agencies, as  
            specified.  

          7)Define "housing entity administrative cost allowance" to mean  
            an amount of up to 1% of the property tax allocated to the  
            Redevelopment Obligation Retirement Fun on behalf of the  
            successor agency for each applicable fiscal year, but not less  
            than $150,000 per fiscal year.

          8)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 June 1 to the public housing authority that assumed the  
            housing functions of the former redevelopment agency.

          9)Provide, if there are insufficient moneys in the Redevelopment  
            Obligations Retirements 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.

          10)Allow a successor agency to utilize reasonable estimates and  
            projects 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.

          11)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.








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          12)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  
            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.

          13)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.

          14)Require a successor agency to provide notice to the oversight  
            board at least 10 days prior to entering into a contract or  
            agreement for the use or disposition of properties, as  
            specified, and specify that during the 10-day period the  
            oversight board may notify the successor agency that the board  
            intends to conduct a hearing to determine whether the contract  
            or agreement is consistent with the successor agency's  
            long-range property management plan.  Requires the board to  
            hold the hearing and issue findings within 30 days after it so  
            notified the successor agency.

          15)Establish a "housing administrative cost allowance" as  
            specified.

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

          17)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.

          18)Add in chaptering out language to address conflicts with AB  
            564 (Mullin) of the current legislative session.




           EXISTING LAW  :

          1)Authorizes cities and counties to create IFDs and issue bonds  








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            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  
            IFD.

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

          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  
            loans.

          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 prohibition on  
          infrastructure financing districts including any portion of a  
          redevelopment project area. 

           FISCAL EFFECT  :  According to the Senate Appropriations  








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          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 deletes the prohibition on an  
          infrastructure financing district (IFD) from including any  
          portion of a redevelopment project area, and makes a number of  
          other various changes to the redevelopment dissolution process  
          in order to allow dissolution to occur in a more orderly fashion  
          while still allowing needed economic development.  This bill is  
          author-sponsored.

          Existing law prohibits an IFD from including any portion of a  
          redevelopment project area for the purposes of collecting tax  
          increment.  The author argues that given that redevelopment  
          agencies were dissolved on 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 is unnecessary.  

          The bill also makes a number of changes to the statutes  
          governing the wind-up of redevelopment agencies and provides  
          clarity to the law on how projects that were already in the  
          pipeline prior to dissolution can still be completed.  This bill  
          adds a number of provisions into the redevelopment dissolution  
          process.  First, the bill clarifies a successor agency's  
          flexibility to enter into, make contracts and agreements, make  
          land use decisions or otherwise administer projects in  
          connection with long-term enforceable obligations so long as  
          such amendments will not commit new tax funds or will not  
          adversely affect the flow of tax increment to the taxing  
          agencies.  In order to take advantage of this authorization, the  
          successor agency must have received a finding of completion from  
          the Department of Finance.  Second, the bill allows items on a  
          recognized obligation payment schedule (ROPS) to be scheduled  








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          beyond an existing ROPS cycle, when certain conditions are met.

          The bill also allows reasonable estimates and projections to be  
          used to support payment amounts for enforceable obligations,  
          when appropriate supporting documentation of the basis for the  
          estimate is submitted to the Department of Finance.  This bill  
          clarifies that the loan repayment schedule, authorized once a  
          successor agency receives a finding of completion, shall not  
          include amounts paid back pursuant to the due diligence review  
          process during the base year, thus lowering the base year amount  
          and permitting faster loan repayment.  The bill also allows an  
          oversight board to object to purchase and sales contracts  
          entered into a part of the long range property management plan,  
          but not require oversight board approval in all cases.

          Support arguments:  This bill makes a number of changes to the  
          redevelopment dissolution process in order to ensure a more  
          orderly dissolution and deletes an unnecessary prohibition on  
          IFDs including any portion of a redevelopment project area.

          Opposition arguments:  None on file.

          The Senate amendments have significantly expanded the scope of  
          this measure; therefore, these policy changes have not been seen  
          in any Assembly policy committee this legislative session.
           

          Analysis Prepared by  :    Debbie Michel / L. GOV. / (916)  
          319-3958 


          FN:  
          0002733