BILL ANALYSIS �
AB 662
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Date of Hearing: September 11, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 662 (Atkins) - As Amended: September 6, 2013
SUBJECT : Local government: redevelopment: successor agencies
to redevelopment agencies.
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 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 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.
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
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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" 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.
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 :
1)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.
2)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
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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 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.
3)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.
REGISTERED SUPPORT / OPPOSITION :
Support
BRIDGE Housing
California Infill Builders Federation
Cities of West Sacramento, Sacramento, and San Diego
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Civic San Diego
Mission Bay Development Group
San Diego Housing Federation
Strada Investment Group
Opposition
Santa Clara County Board of Supervisors
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958