BILL ANALYSIS �
AB 1175
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Date of Hearing: April 17, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 1175 (Bocanegra) - As Amended: March 21, 2013
SUBJECT : Public employee benefits: postemployment health care
SUMMARY : Provides a process for administering the retirement
benefits of employees of the redevelopment agency of the City of
Los Angeles. Specifically, this bill :
1)Requires that if the governing board of the designated local
authority (authority) for the former redevelopment agency of
the City of Los Angeles dissolves, the governing board must
identify an entity responsible for assuming the obligation
necessary to fully compensate for the postretirement benefit
costs of the former personnel of the authority and the former
redevelopment agency.
2)Provides that the entity that assumes the responsibility shall
be considered the employer of the former personnel of the
authority and former redevelopment agency for the purpose of
making ongoing contributions for the premium payments.
3)Declares the need for a special law to address this issue
because of the circumstances that established an authority for
the former redevelopment agency of the City of Los Angeles.
EXISTING LAW
1)Provides that if no local agency elects to become the
successor agency for a dissolved redevelopment agency then an
authority will be immediately formed in the county of the
former redevelopment agency and vested with all of the powers
and duties of a successor agency (Health and Safety Code
Section 34173).
2)Requires the Governor to appoint three residents of the county
to serve as the governing board of the authority (Health and
Safety Code Section 34173).
3)Requires the authority to serve as successor agency until a
local agency elects to become the successor agency (Health and
Safety Code Section 34173).
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4)Gives the members of the authority the immunities applicable
to public entities and public employees (Health and Safety
Code Section 34173).
5)Requires the successor agency or authority to identify the
enforceable obligations of the former redevelopment agency
(Health and Safety Code Section 34171).
6)Includes as enforceable obligations of the former
redevelopment agency: legally enforceable payments required in
connection with the agencies' employees, including, but not
limited to, pension payments, pension obligation debt service,
unemployment payments, or other obligations conferred through
a collective bargaining agreement (Health and Safety Code
Section 34171).
FISCAL EFFECT : Unknown.
COMMENTS :
Background : In 2011, the Legislature approved and the Governor
signed two measures, ABX1 26 and ABX1 27 that together dissolved
redevelopment agencies as they existed at the time and created a
voluntary redevelopment program on a smaller scale. In
response, the California Redevelopment Association (CRA), and
the League of California Cities, along with other parties, filed
suit challenging the two measures. The Supreme Court denied the
petition for peremptory writ of mandate with respect to ABX1 26.
However, the Court did grant CRA's petition with respect to ABX1
27. As a result, all redevelopment agencies were required to
dissolve as of February 1, 2012.
As part of the dissolution process, local communities with
redevelopment agencies were required to establish a successor
agency that is responsible for identifying the enforceable
obligations or those debts of the former redevelopment agency
that need to be retired. In four jurisdictions, Los Angles,
Merced, Stanislaus, and Ventura no local agency agreed to become
the successor agency to the former redevelopment agency and the
Governor appointed an authority.
Successor agencies and authorities are required to submit a list
of recognized enforceable obligations to the Department of
Finance for approval. Over time, these obligations will be
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repaid by property taxes collected and deposited by the county
auditor-controller into the Redevelopment Property Tax Trust
Fund. Included in the list of enforceable obligations are
legally enforceable payments required in connection with
agencies employees, including but not limited to pension
payments, pension obligations debt service, unemployment
payments or other obligations conferred through a collective
bargaining agreement. Health care benefits are not
specifically listed but if they were part of the collective
bargaining agreement they would be considered enforceable
obligations.
Once all of the debts of a former redevelopment agency have been
paid off then the successor agency and authority terminate its
existence. Health benefits negotiated under a collective
bargaining agreement would be enforceable obligations and
therefore the successor agency could not be dissolved if health
benefits are still owed. However, the sponsor believes that
once the designated authority no longer has active employees and
only retired employees, CalPERS will be prevented from providing
health care benefits to the retirees of the former redevelopment
agency.
In most cases the employees of the former redevelopment agency
were considered employees of the city or county and when the
redevelopment agency was dissolved the city or county continued
to provide health care benefits to those employees or retirees.
In Los Angeles the redevelopment agency and the City of Los
Angeles had a Memo of Understanding (MOU) that the city would
provide health care benefits to the former redevelopment agency.
The city did not become the successor agency and did not renew
the MOU to provide health care benefits to the former employees
of the redevelopment agency. The authority contracted with
CalPERS to provide benefits to the current employees of the
authority and the retirees of the redevelopment agency.
Purpose of this bill : According to the sponsor of this bill,
current law requires agencies that contract with CalPERS for
health benefits to have at least one employee in order to
qualify as a public agency, which then allows CalPERS to provide
healthcare to an agency's retiree population. California's
elimination of redevelopment agencies will eventually result in
the dismissal of all active employees of the redevelopment
agencies. As a result retirees of each agency will no longer be
able to contract with CalPERS for the provision of retiree
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health care. This bill changes existing law to allow retirees,
specifically those of the former redevelopment agency in Los
Angeles City to receive health benefits.
Staff comments : This bill does not specify who would take over
responsibility for the health care benefits of former employees
of the Los Angeles redevelopment agency if the authority no
longer exists. The city did not want to become the successor
agency, so it's unclear if they would not take over the
postretirement benefits of the agency employees, who will.
Three other communities have authorities appointed by the
governor. It's unclear if they also would need to be included in
this bill to ensure the former employees of those redevelopment
agencies receive postretirement health benefits.
Double referred : If AB 1175 pass out of this committee, the
bill will be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees,
AFL-CIO (sponsor)
Three individual letters
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085