BILL ANALYSIS                                                                                                                                                                                                    



                                                                SB 470
                                                                       

                       SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                               Senator Jerry Hill, Chair
                               2013-2014 Regular Session
                                            
           BILL NO:    SB 470
           AUTHOR:     Wright
           AMENDED:    April 9, 2013
           FISCAL:     Yes               HEARING DATE:     May 1, 2013
           URGENCY:    No                CONSULTANT:       Rachel Machi
                                                               Wagoner  

           SUBJECT  :    COMMUNITY DEVELOPMENT:  ECONOMIC OPPORTUNITY
           
            SUMMARY  :    
           
            Existing law  :

           1) Dissolved redevelopment agencies (RDAs) and community  
              development agencies (CDAs), as of February 1, 2012, and  
              provides for the designation of a successor agency, as  
              defined, to resolve the final matters of the agencies and to  
              dispose of assets and properties in accordance with certain  
              procedures.



           2) Under the Polanco Redevelopment Act (the Polanco Act) which  
              was part of the Community Redevelopment Act, assisted  
              redevelopment agencies in responding to brownfield properties  
              in their redevelopment areas.  It prescribed processes for  
              redevelopment agencies to follow when remediating a hazardous  
              substance release in a redevelopment project area.  It also  
              provided specified immunity from liability for sites cleaned  
              up under a cleanup plan approved by the Department of Toxic  
              Substances Control (DTSC) or a Regional Water Quality Control  
              Board (RWQCB).   It provided limited liability protections  
              for RDAs and future purchasers of properties remediated under  
              the Polanco Act.



            This bill  :










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           1) Replicates the provisions of the California Community  
              Redevelopment Law (CRL) for cities and counties instead of  
              RDAs, allowing cities and counties to exercise powers that  
              are similar to statutory powers that former RDAs used to  
              have, including:  sell property, provide financial assistance  
              to development projects, and clean up contaminated property  
              in order to promote economic opportunity specifically for  
              properties that were part of a former RDA.



           2) Defines "economic opportunity" as any of the following: 



              a)    Development agreements or other agreements that create,  
                 retain, or expand new jobs.  A city or county must make a  
                 finding that the agreement will create or retain at least  
                 one full-time equivalent, permanent job per $35,000 of  
                 city, county, or city and county investment in the project  
                 after full capacity and implementation of the agreement. 



              b)    Development agreements that increase property tax  
                 revenues to all property tax-collecting entities.  A city  
                 or county must make a finding that the agreement will  
                 result in an increase of at least 15% of total property  
                 tax resulting from the project at full implementation when  
                 compared to the year prior to the property being acquired  
                 by the government entity.   



              c)    Creation of affordable housing, if a demonstrated  
                 affordable housing need exists in the community, as  
                 defined in the approved housing element or regional  
                 housing needs assessment. 












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              d)    Projects that meet specified climate, air quality, and  
                 energy conservation goals and have been included in an  
                 adopted Sustainable Communities Strategy or Alternative  
                 Planning Strategy, or a project that specifically  
                 implements the goals of those adopted plans. 



              e)    Transit priority project areas, as defined in state  
                 law.



           3) Replicates the provisions of the Polanco Act for cities and  
              counties instead of RDAs, allowing cities and counties the  
              authority to remediate brownfields and provides immunity from  
              liability to public agencies and property purchasers under an  
              approved cleanup plan.  



           4) Specifically this bill:



              a)    Allows a city, county, or city and county to take any  
                 actions that it determines are necessary and that are  
                 consistent with other state and federal laws to remedy or  
                 remove a release of hazardous substances on, under, or  
                 from property within its jurisdiction, whether it owns  
                 that property or not, subject to specified conditions. 



              b)    Requires the city, county, or city and county to  
                 request cleanup guidelines from the Department of Toxic  
                 Substances Control (DTSC) or RWQCB before taking action to  
                 remedy or remove a release, unless an administering agency  
                 has been designated under state law.  The city, county, or  
                 city and county must submit for approval a cleanup or  
                 remedial action plan to DTSC or RWQCB before taking action  
                 to remedy or remove a release.  DTSC or RWQCB must respond  
                 to the requests for guidelines and approvals within a  









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                 reasonable period of time.



              c)    Identifies the conditions under which a city, county,  
                 or city and county can designate a local agency, in lieu  
                 of DTSC or RWQCB, to review and approve a cleanup or  
                 remedial action plan and to oversee the remediation or  
                 removal of hazardous substances from a specific hazardous  
                 substance release site.  This bill allows a local agency  
                 to withdraw from its designation and allows DTSC or RWQCB  
                 to require, under specified conditions, a local agency to  
                 withdraw from the designation.



              d)    Requires a city, county, or city and county to notify  
                 DTSC, RWQCB, and local health and building departments of  
                 cleanup activity at least 30 days before the activity  
                 begins.  With specified exceptions, the bill allows DTSC  
                 or RWQCB to require a city, county, or city and county to  
                 remedy or remove a release of a hazardous substance  
                 pursuant to state law if the city, county, city and  
                 county, or a responsible party's action to remedy or  
                 remove a release of a hazardous substance is inconsistent  
                 with an approved plan.   



              e)    Imposes specified conditions on a city, county, or city  
                 and county's authority to remedy or remove a release of  
                 hazardous substances.



              f)    Allows a city, county, or city and county to require  
                 the owner or operator of any site within a project area to  
                 provide the city, county, or city and county with all  
                 existing environmental information pertaining to the site,  
                 except for information which is determined to be  
                 privileged.  A person can only be requested to furnish  
                 information that is within their possession or control,  
                 including actual knowledge of information within the  









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                 possession or control of any other party.  If  
                 environmental assessment information is not available, the  
                 city, county, or city and county can require the owner of  
                 the property to conduct an assessment in accordance with  
                 standard real estate practices for conducting phase I or  
                 phase II environmental assessments.



              g)    Provides that a city, county, or city and county is not  
                 liable under specified state and local liability laws if  
                 it undertakes and completes an action, or causes another  
                 person to undertake and complete an action, to remedy or  
                 remove a hazardous substance release in accordance with a  
                 cleanup or remedial action plan that meets specified  
                 criteria.   



              h)    Requires that a city, county, or city and county must  
                 receive written acknowledgement from DTSC, RWQCB, or local  
                 agency that it will receive specified immunity from  
                 liability upon proper completion of a remedial or removal  
                 action in accordance with an approved plan.



              i)    Specifies the manner in which DTSC, RWQCB, or local  
                 agency must make a determination that a remedial or  
                 removal action has been properly completed and notify the  
                 city, county, or city and county in writing that the  
                 immunity provided by the bill is in effect.  A city,  
                 county, or city and county must reimburse DTSC, RWQCB, and  
                 local agency for costs incurred in reviewing or approving  
                 cleanup or remedial action plans.



              j)    Requires that a local agency's approval of a cleanup or  
                 remedial action also must be subject to the concurrent  
                 approval by DTSC or RWQCB, under specified conditions.











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              aa)   Identifies the people and entities to which it extends  
                 immunity from specified liability upon proper completion  
                 of a remedial or removal action.  The bill also identifies  
                 people and entities to which it does not extend immunity.



              bb)   States that the bill:
                              Provides immunity that is in addition to any  
                      other immunity of a city, county, or city and county  
                      provided by law.
                              Does not impair specified causes of action  
                      against the person, firm, or entity responsible for  
                      the hazardous substance release that is the subject  
                      of a removal or remedial action.
                              Does not apply to, or limit, alter, or  
                      restrict, any action for personal injury, property  
                      damage, or wrongful death.
                              Does not limit liability under a specified  
                      provision of federal law.


                              Does not establish, limit, or affect the  
                      liability of a city, county, or city and county for  
                      any release of a hazardous substance that is not  
                      investigated or remediated pursuant to state laws.


              a)    Requires any responsible parties to be liable to a  
                 city, county, or city and county that remedies or removes,  
                 or requires others to remedy or remove, a release of a  
                 hazardous substance.  The bill prohibits a city, county,  
                 or city and county from recovering the costs of goods and  
                 services that were not procured in accordance with  
                 applicable procurement procedures. The amount of the costs  
                 must include the interest, calculated according to a  
                 specific formula, on the costs accrued from the date of  
                 expenditure and reasonable attorney's fees.  The costs can  
                 be recovered in a civil action.  

              b)    Identifies the defenses that are available to a  
                 responsible party under state law.









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              c)    Allows a city, county, or city and county to recover  
                 costs for developing and implementing an approved cleanup  
                 or remedial action plan to the same extent DTSC is  
                 authorized to recover those costs.  The bill defines the  
                 scope and standard of liability for recovering a city,  
                 county, or city and county's costs.

              d)    Require a city, county, or city and county to begin an  
                 action to recover costs of a remedy or removal within  
                 three years after completion of the remedy or removal.   
                 The bill states that the cost recovery authority it grants  
                 is in addition to, and is not to be construed as  
                 restricting, any other cause of action available to a  
                 city, county, or city and county.

              e)    With specified exceptions, requires that a city,  
                 county, or city and county that undertakes and completes a  
                 remedial action, or otherwise causes a remedial action to  
                 be undertaken and completed, shall not be liable, based on  
                 its ownership of property after a release occurred, for  
                 any costs that any responsible party incurs to investigate  
                 or remediate the release or to compensate others for the  
                 effects of that release.

              f)    With specified exceptions, states that its provisions  
                 do not limit the powers of the State Water Resources  
                 Control Board or a RWQCB to enforce specified provisions  
                 of state law.

              g)    Replicates the Polanco Act's definitions for numerous  
                 terms.

            COMMENTS  :

            1) Purpose of Bill  .  In recent years, local governments have  
              lost nearly all the tools they commonly used to promote  
              economic development.  SB 470 restores some significant  
              powers that cities and counties previously exercised under  
              provisions of the Community Redevelopment Law.  The bill  
              gives local officials vitally needed flexibility to sell land  
              at "fair reuse value" rather than "fair market value" and  
              reestablishes the powers and protections that allowed them to  









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              clean up brownfields.  After the recent turmoil surrounding  
              RDAs' dissolution, SB 470 will benefit communities throughout  
              California by helping local officials get their economic  
              development efforts back on track.


            2) Background  .  In 1945, the California Legislature enacted the  
              Community Redevelopment Act to assist local governments in  
              eliminating blight through development, reconstruction, and  
              rehabilitation of residential, commercial, industrial, and  
              retail districts.  The Act gave cities and counties the  
              authority to establish RDAs.





              In 1951, the Legislature superseded the Community  
              Redevelopment Act with the CRL, Chapter 710, Statutes of  
              1951.  Codified in California Constitution, Article XVI,  
              Section 16, and the Health and Safety Code, beginning with  
              Section 33000, the CRL provided funding from local property  
              taxes to promote the redevelopment of blighted areas.





              The CRL also established the authority for tax increment  
              financing (TIF), which is a public financing method to  
              subsidize redevelopment, infrastructure, and other  
              community-improvement projects.  TIF used future increases  
              in property taxes to subsidize current improvements, which  
              are projected to create the conditions for the increases. 


               


              In 1976, the California Legislature required that at least  
              20% of the tax increment revenue from redevelopment project  
              areas be used to increase, improve, and preserve the supply  
              of housing for very low, low, and moderate income  









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              households.




              AB 3193 (Polanco) Chapter 1113, Statutes of 1990, part of the  
              Community Redevelopment Act, was enacted to assist  
              redevelopment agencies in responding to brownfield properties  
              in their redevelopment areas.  It prescribes processes for  
              redevelopment agencies to follow when cleaning up a hazardous  
              substance release in a redevelopment project area.  It also  
              provides specified immunity from liability for sites cleaned  
              up under a cleanup plan approved by DTSC or a Regional Board.  


              AB 1290 (Isenberg) Chapter 942, Statutes of 1993 known as  
              the "Community Redevelopment Law Reform Act of 1993,"  
              revised the CRL to address alleged abuses, and added  
              restrictions on redevelopment activities, including limiting  
              them predominately to urban areas.





              Citing a significant State General Fund deficit, Governor  
              Brown's 2011-12 budget proposed eliminating RDAs and  
              returning billions of dollars of property tax revenues to  
              schools, cities, and counties to fund core services.  




              On June 28, 2011, the Governor approved two bills, AB1X 26  
              (Blumenfield), Chapter 5, Statutes of 2011 and AB1X  
              27(Blumenfield), Chapter 5, Statutes of 2011, which amended  
              the CRL.  AB1X 26 was the "dissolution" bill, which set  
              November 1, 2012 as the date to dissolve all RDAs.  The  
              companion legislation AB1X 27, the "reinstatement" bill,  
              allowed cities to keep their agencies in place by committing  
              to substantial "community remittances" to be paid to the  
              State. 










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              In July, 2011, a lawsuit was filed challenging the  
              constitutionality of both AB1x 26 and AB1X 27. The California  
              Supreme Court accepted the case and issued a "stay" under  
              which agencies remained in place but in the suspended state  
              pending a decision by the court.

              On December 29, 2011, the California Supreme Court issued  
              its decision: it upheld AB1X 26, which eliminate  
              redevelopment agencies, but struck down AB1X 27, which  
              would have allowed cities to agree to community remittance  
              payments to keep their agencies in place.  As a result,  
              under the schedule set by the California Supreme Court,  
              AB1X 26 provides that cities may create successor agencies  
              and could continue to implement "enforceable obligations"  
              which were in place prior to the suspension-existing  
              contracts, bonds, leases, etc.-and take title to all of  
              the former redevelopment agencies' housing and other  
              assets.  







              June 27, 2012, the Governor approved AB 1484, a Budget  
              trailer bill making some significant clarifications and  
              procedural changes in   AB1X 26, the redevelopment  
              dissolution law. 






            3) Purpose of the Polanco Act  .  California recognizes that  
              cleaning up brownfield properties frees previously unavailable  
              land for productive reuse, while taking development pressures  
              off undeveloped open land, thereby improving and protecting  
              the environment.  Brownfields are properties that are  
              contaminated, or thought to be contaminated, and are  
              underutilized due to perceived remediation costs and liability  
              concerns.  Timely investigations and cleanups of brownfield  









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              sites promote economic development and reinvestment in  
              California through post-cleanup development and sustainable  
              reuse.  To this end California enacted the Polanco Act to  
              provide RDAs with tools to compel remediation and provide  
              immunity from liability as a responsible party from future  
              remediation of contamination found.

            4) Expansive Authority and Liability Protection to Local  
              Governments  .  SB 470 replicates the authority and protections  
              provided under the CRL and the Polanco Act, however with two  
              key differences:  a) applies those authorities and protections  
              to all cities and counties rather than within the limitations  
              of an RDA, and b) does it for all property that meets the very  
              broad definition of "economic opportunity" purposes rather  
              than limited to properties within a redevelopment area.   
              Within the context of the CRL and the Polanco Act, the  
              liability protections and authorities to require a property to  
              be remediated were inherently limited to properties that were  
              within a defined RDA and were subject to the many limitations  
              that applied to that RDA's activities under the CRL and the  
              Polanco Act.  Those limitations were aimed at protecting the  
              public interest and to provide protection against potential  
              misuse by a local government.  By removing the controlling  
              limitations of the CRL and the Polanco Act and applying it  
              more broadly, SB 470 gives local officials far greater  
              authority than they had before RDAs' dissolution.  The narrow  
              rules that made sense in the context of RDA law are not  
              appropriate in all cases for all city or county remediation  
              projects.  

              By providing liability protections to all properties broadly  
              deemed an "economic opportunity" this bill provides that  
              current and future owners of one of these properties would not  
              be responsible for further remediation even if the property  
              was found to be making inhabitants or future purchasers of the  
              property sick.  If there is no longer a responsible party  
              available on the property then there is no way to compel  
              remediation of the contamination.  Liability immunity applied  
              this broadly creates serious potential health risks for future  
              inhabitants of the property.  This type of liability relief  
              should be limited to minimize this risk.  In addition, this  
              type of incentive should be limited to those blighted,  
              brownfield properties that truly need this type of incentive  









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              for revitalization.
               
               The committee should amend SB 470 to apply its Polanco Act  
              provisions only to those blighted, brownfield properties that  
              were acquired by a former RDA, similar to the amendment taken  
              in the Governance and Finance Committee that limited the land  
              sale provisions.


            5) Related legislation  .  AB 440 (Gatto) allows local agencies  
              to clean up hazardous substance releases and receive  
              liability immunity under provisions that are similar to  
              those in the Polanco Redevelopment Act.  The bill is  
              awaiting a hearing in the Assembly Committee on  
              Environmental Safety and Toxic Materials.



              SB 1335 (Pavley) of 2012 would have authorized successor  
              agencies with approval of their oversight board, to retain  
              properties that are considered brownfields for the purpose of  
              remediating the contamination in order to maximize their  
              value.  The successor agencies would use available financing,  
              funds obtained from a responsible party, existing state or  
                                                                      federal grants or any other funds at the disposal of the  
              successor agency. This measure failed in the Senate  
              Appropriations Committee.

              AB 1235 (Hernandez) of 2011 would have applied all authority,  
              rights, powers, duties, obligations, and protections afforded  
              to a redevelopment agency under the Polanco Redevelopment Act  
              to a successor agency, as defined, for any property that was  
              within a redevelopment project of a redevelopment agency that  
              has been dissolved by an act of the Legislature.  The measure  
              was amended on the Senate Floor to pertain to another  
              subject.


            SOURCE  :        City of Long Beach  

           SUPPORT  :       California Contract Cities Association
                          Gateway Cities Council of Governments
                          League of California Cities









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                          Los Angeles Mayor Antonio R. Villaraigosa
                          San Francisco Mayor Edwin Lee
                          San Jose Mayor Chuck Reed
                          Santa Ana Mayor Miguel Pulido
                          
            
           OPPOSITION  :    None on file