BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 470
                                                                  Page  1

          Date of Hearing:   July 3, 2013

               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
                                   Ed Chau, Chair
                      SB 470 (Wright) - As Amended:  May 8, 2013

           SENATE VOTE  :   36-0
           
          SUBJECT  :   Community development:  economic opportunity 

           SUMMARY  :  Gives cities, counties, or cities and counties the  
          authority that redevelopment agencies (RDAs) had under the  
          Polanco Redevelopment Act (the Polanco Act) to cleanup  
          brownfields and the authority to sell or lease land for an  
          economic opportunity, at less than market value, in the  
          jurisdiction of a former RDA.  Specifically,  this bill  :   

          1)Includes legislative intent language. 

          2)Defines "economic opportunity" to mean any of the following:

             a)   Development agreements that create, retain or expend new  
               jobs that the legislative body finds will create or retain  
               at least one full-time permanent job for every $35,000 of  
               city, county, or city and county investment in a project;

             b)   Development agreements that will increase the property  
               tax revenues to all taxing entities by at least 15% when  
               the project is at full implementation as compared to the  
               rate one year prior to the acquisition by a governmental  
               entity;

             c)   The creation of affordable housing if there are  
               demonstrated affordable housing needs as defined in the  
               approved housing element or regional housing needs  
               assessment (RHNA); 

             d)   Projects that meet the goals of SB 375 (Steinberg),  
               Chapter 728, Statutes of 2008, is included in a sustainable  
               communities strategy, an alternative planning strategy or  
               implements the goals of those adopted plans; and 

             e)   Transit priority projects. 

          1)Creates a process for a city, county, or city and county to  








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            sell or lease properties that are returned to them as part of  
            the long-range property management plan of former RDA  
            properties for an economic development purpose.  

          2)Requires a legislative body to approve the sale or lease of a  
            property that is part of the long-range property management  
            plan for an economic purpose by resolution after a public  
            hearing that has been noticed for two consecutive weeks in the  
            newspaper.

          3)Requires the city, county or city and county to provide a  
            report for the public to review and copy that includes the  
            following:

             a)   A copy of the proposed sale or lease;

             b)   The cost of the agreement to the city, county, or city  
               and county that includes land acquisition costs, clearance  
               costs, relocation costs, cost of improvements provided by  
               the local government's interest on any loans or bonds to  
               finance the agreements;

             c)   The estimated value of the property to be sold or leased  
               as determined by the highest and best uses permitted under  
               the general plan or zoning;

             d)   The estimated value of the property to be sold or leased  
               with the conditions, covenants, and development costs  
               required by the sale or lease;

             e)   The purchase price or lease payments that the lessor  
               will be required to make during the term of the lease;

             f)   If the sale price or rental amount is less than fair  
               market value as determined by the highest and best use,  
               then the legislative body must provide an explanation for  
               the difference;

             g)   An explanation of why the sale or lease of the property  
               will result in the creation of economic opportunity;

          1)Requires the resolution approving the sale or lease of the  
            property to be approved by a majority vote, or a 2/3 vote if  
            required by an adopted ordinance, a finding that the sale or  
            lease of the property will assist in the creation of economic  








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            opportunity, and include one of the following:

             a)   The consideration is not less that the fair market reuse  
               value at its highest and best use;  or 

             b)   The consideration is not less than the fair reuse value  
               at the use and with the covenants and conditions and  
               development costs authorized by the sale or lease. 

          1)Provides that the provisions of this bill are an alternative  
            to any other authority granted to cities to dispose of  
            city-owned property. 

          2)As allowed under Community Redevelopment Law (CRL) for a RDA,  
            allows a city, county, or city and county to establish a  
            program to make loans to owners or tenants to rehabilitate  
            commercial buildings or structures. 

          3)As allowed under the CRL for a RDA, permits a city, county, or  
            city and county to assist with the financing facilities or  
            capital equipment as part of an agreement with a developer or  
            rehabilitate a property that will be used for industrial or  
            manufacturing purposes.  

          4)As allowed under the CRL for a RDA, requires a city, county,  
            or city and county to make a finding, after a public hearing,  
            that assisting with the purchase of capital equipment or  
            facilities is necessary for the economic feasibility of the  
            development and cannot be achieved through the private market.  


          5)States the provisions of this bill are not intended to  
            authorize the use of eminent domain for economic development  
            purposes. 
          6)Gives a city, county, or city and county authority to clean up  
            contaminated properties under the Polanco Redevelopment Act  
            that are in the project areas of a former RDA whether it owns  
            the property or not. 

          7)Allows a city, county, or city and county to take any actions  
            that it determines are necessary and that is 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.








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          8)Requires the city, county, or city and county to request  
            cleanup guidelines from the Department of Toxic Substances  
            Control (DTSC) or Regional Water Quality Control Board (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  
            reasonable period of time.

          9)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.   
            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.

          10)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.  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.   

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

          12)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 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  








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            accordance with standard real estate practices for conducting  
            phase I or phase II environmental assessments.

          13)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.   

          14)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.

          15)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.

          16)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.

          17)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.

          18)States that the bill:

             a)   Provides immunity that is in addition to any other  
               immunity of a city, county, or city and county provided by  
               law;

             b)   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;

             c)   Does not apply to, or limit, alter, or restrict, any  








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               action for personal injury, property damage, or wrongful  
               death;

             d)   Does not limit liability under a specified provision of  
               federal law; and 


             e)   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.


          1)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.  

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

          3)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.

          4)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.

          5)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  








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            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.

          6)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.

          7)Replicates the Polanco Act's definitions for numerous terms.
           EXISTING LAW  

          1) Dissolved RDAs 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) Allowed RDAs to sell or lease properties at less than the  
             value of the property at the highest and best use if it  
             provides various disclosures including an explanation that  
             the sale will assist in the elimination of blight.  Requires  
             the sale to be approved by resolution in a public meeting by  
             a majority vote unless the legislative body has placed an  
             ordinance requiring a two-thirds vote (Health and Safety Code  
             Section 33433).

          3) Under the Polanco Act which was part of the Community  
             Redevelopment Act, assisted RDAs in responding to brownfield  
             properties in their redevelopment areas.  It prescribed  
             processes for RDAs 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.

           FISCAL EFFECT  :   None. 

           COMMENTS  :  

          In 2011, facing a severe budget shortfall, the Governor proposed  
          eliminating RDAs in order to deliver more property taxes to  
          other local taxing agencies.  Redevelopment redirected 12% of  








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          property taxes statewide away from schools and other local  
          taxing entities and into community development and affordable  
          housing.  Ultimately, the Legislature approved and the Governor  
          signed two measures, ABX1 26 and ABX1 27 that together dissolved  
          RDAs as they existed at the time and created a voluntary  
          redevelopment program on a smaller scale.  In response, the  
          California Redevelopment Association (CRA), 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 RDAs were required to dissolve as of  
          February 1, 2012.    

           Purpose of this bill:  According to the author, "local economic  
          development has remained stagnant since the dissolution of  
          redevelopment.  The ability of local governments and  
          partner-agencies to support transit-oriented development, assist  
          with affordable housing, create jobs or generally increase tax  
          revenues through sale of local land.  This bill authorizes local  
          governments to promote economic opportunity using local dollars  
          through agreements that create, retain, or expand new jobs. It  
          gives local governments the ability to enter into land sale  
          agreements based upon "faire reuse value" at term defined and  
          achieved only if the local government can transparently prove  
          community benefits through a public review process and  
          verifiable to data. SB 470 will also reinstate the Polanco Act  
          to allow local governments to enter into collaborate partnership  
          and utilize unique powers to mitigate environmentally tax  
          brownfield sites."

           Disposition of property:    Under Community Redevelopment Law,  
          RDAs could sell or lease property at the "fair reuse value" or  
          an amount less than the value at the highest and best use  
          because a RDA imposed specific development conditions, covenants  
          and criteria that are more restrictive than what would be  
          permitted under the highest and best use.   RDAs were required  
          to approve the sale or lease in a public hearing and disclose  
          the value of the property at the highest and best use as it  
          compared to the fair reuse value.  This bill would allow cities  
          and counties to use this process to sell or lease properties  
          that were owned by the former redevelopment and are part of the  
          long-range property management plan approved by DOF as part of  
          the dissolution of the RDA.  The city or county would be  
          required to show that the new use of the property would result  








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          in job creation, affordable housing, or an increase in property  
          taxes as a measure of economic development.  This authority  
          gives local governments the ability to evaluate the community  
          and economic benefit to selling a property for less than the  
          market value.  

           Economic development  :    Redevelopment was created to eradicate  
          blight. In order to sell or lease a property at less than the  
          value at the highest and best use, RDAs were required to explain  
          how the sale for fair reuse value would reduce blight.  This  
          bill requires that the city or county explain how the  
          disposition of the property will result in an economic benefit.   
          The bill also gives cities and counties the authority that RDAs  
          had to make loans for capital development after making a finding  
          at a public hearing that the assistance cannot be obtained for  
          economically feasible terms in the private market.   
           
          The Polanco Act  :  In 1990, AB 3193 (Polanco), Chapter 1113  
          (Polanco Redevelopment Act), was enacted to assist RDAs in  
          responding to brownfield properties in their redevelopment  
          areas.  It prescribes a process for RDAS to follow when cleaning  
          up a hazardous substance released 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 water quality control board.  RDAs had the authority to  
          take any actions that the agency determined was necessary to  
          address a release of hazardous substances on or under property  
          within a project area. In return the agency, the developer of  
          the property and the subsequent owners received limited immunity  
          from further cleanup liability.  This bill gives cities and  
          counties similar authority that RDAs  had under the Polanco Act  
          to remediate properties that are in the jurisdiction of former  
          redevelopment project areas. 
          

          Committee amendments:
           
          On page 5, delete lines 33-35. This section is repetitive. 

           Double referred  :  If SB 470 passes this committee, the bill will  
          be referred to the Committee on Local Government. 
           
          REGISTERED SUPPORT / OPPOSITION  :

           Support 








                                                                 SB 470
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          City of Long Beach (sponsor)
          California Contract Cities Association
          Gateway Cities Council of Governments
          Los Angeles County Division of the League of California Cities 
           
            Opposition 
           
          None on file.

           Analysis Prepared by  :    Lisa Engel / H. & C.D. / (916) 319-2085