BILL ANALYSIS Ó
AB 1175
Page 1
Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1175 (Bocanegra) - As Amended: March 21, 2013
Policy Committee: Local
GovernmentVote:7-2
Housing and Community Development 5-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill 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 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 for
the retirement benefits shall be considered the employer of
the former personnel 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 establishing an authority for the
former redevelopment agency of the City of Los Angeles.
FISCAL EFFECT
Negligible fiscal impact.
COMMENTS
1)Purpose . According to the author, this bill ensures that
retired employees of the redevelopment agency for the City
AB 1175
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of Los Angeles continue to receive their already accrued
retirement and health benefits. Current law requires
agencies that contract with CalPERS for healthcare benefits,
have at least one active employee in order to qualify as a
public agency. The author explains the state's recent
elimination of redevelopment agencies will eventually lead
to the dismissal of all active employees in these agencies,
which will leave their retirees unable to contract with
CalPERS to receive their healthcare.
2)Support . This bill is sponsored by the American Federation
of State, County, and Municipal Employees (AFSCME).
According to the sponsor, Los Angeles is a unique situation
because it is the only designated local authority that
contracts with CalPERS under the Public Employees' Medical
and Hospital Care Act (PEMHCA) for employee and retiree
health benefits. Current law requires agencies that
contract with CalPERS for healthcare benefits to have at
least one active employee to qualify as a public agency.
The sponsor argues due to the circumstances that established
a unique designated local authority for the former
redevelopment agency of Los Angeles that does not consist of
the city or county, and the unique contractual relationship
between the designated local authority and CalPERS, AB 1175
is a critical step to finalize the dissolution of
redevelopment agencies.
3)Redevelopment. In 2011, 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. The action was
challenged, but the Supreme Court eventually decided 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 responsible for identifying the enforceable
obligations and/or 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.
Successor agencies and authorities are required to submit a
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list of recognized enforceable obligations to the Department
of Finance for approval. Over time, these obligations will
be 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.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081