BILL ANALYSIS Ó
AB 662
Page 1
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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|COMMITTEE VOTE: |9-0 |(September 11, |RECOMMENDATION: |concur |
|(L. GOV.) | |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)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 certificate 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 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.
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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 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 Fund 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
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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.
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" for public
housing authorities who take over housing responsibilities from a
former redevelopment agency, 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.
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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 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 Committee,
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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
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
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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: The Santa Clara County Board of Supervisors
argues that by allowing new enforceable obligations, this bill runs
directly counter to the purpose of winding-down RDAs.
Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958
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