BILL ANALYSIS �
AB 1175
Page 1
ASSEMBLY THIRD READING
AB 1175 (Bocanegra)
As Amended March 21, 2013
Majority vote
HOUSING 5-2 LOCAL GOVERNMENT 7-2
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|Ayes:|Torres, Atkins, Brown, |Ayes:|Achadjian, Levine, Alejo, |
| |Chau, Mullin, | |Bradford, Gordon, Mullin, |
| | | |Frazier |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Beth Gaines, Maienschein |Nays:|Melendez, Waldron |
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Campos, | | |
| |Eggman, Gomez, Hall, | | |
| |Rendon, Pan, Quirk, Weber | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Bigelow, | | |
| |Donnelly, Linder, Wagner | | |
| | | | |
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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
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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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, negligible fiscal impact.
COMMENTS :
Background: In 2011, the Legislature approved and the Governor
signed two measures, AB 26 X1 and AB 27 X1 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 AB 26
X1. However, the Court did grant CRA's petition with respect to
AB 27 X1. 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
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 the
agency's 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
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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, California Public Employees' Retirement
System (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 Memorandum 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
health care. This bill changes existing law to allow retirees,
specifically those of the former redevelopment agency in the
City of Los Angeles to receive health benefits.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0000585
AB 1175
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