BILL ANALYSIS �
SB 470
Page 1
Date of Hearing: August 14, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
SB 470 (Wright) - As Amended: August 5, 2013
SENATE VOTE : 36-0
SUBJECT : Community development: economic opportunity.
SUMMARY : Reestablishes the powers and protections of the
Polanco Act for cities and counties to clean up contaminated
land, and grants flexibility for cities and counties to sell
land at "fair reuse value." Specifically, this bill :
1)Defines "economic opportunity" to mean any of the following:
a) Development agreements or other agreements that create,
retain, or expand new jobs, in which the legislative body
finds that the agreement will create or retain at least one
full time equivalent, permanent job for every thirty-five
thousand dollars ($35,000) of city, county, or city and
county investment in the project after full capacity and
implementation;
b) Development agreements that increase property tax
revenues to all property tax collecting entities, in which
the legislative body finds 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;
d) Projects that meet the goals set forth in Chapter 728 of
the Statutes of 2008 [SB 375 (Steinberg)] 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;
and,
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e) Transit priority projects, as defined.
2)Requires, before any city, county, or city and county property
that is returned to the city, county, or city and county per
the long-range property management plan, is sold or leased for
economic development purposes, the sale or lease shall first
be approved by the legislative body by resolution after public
hearing.
3)Requires notice of the time and place of the hearing to be
published in a newspaper of general circulation in the
community at least once per week for at least two successive
weeks, as specified, prior to the hearing.
4)Requires the city, county, or city and county to make
available, for public inspection and copying at a cost not to
exceed the cost of duplication, a report no later than the
time of publication of the first notice of the required
hearing, and requires the report to contain both of the
following:
a) A copy of the proposed sale or lease; and,
b) A summary that describes and specifies all of the
following:
i) The cost of the agreement to the city, county, or
city and county, including land acquisition costs,
clearance costs, relocation costs, the costs of any
improvements to be provided by the city, county, or city
and county, plus the expected interest on any loans or
bonds to finance the agreements;
ii) The estimated value of the interest to be conveyed
or leased, determined at the highest and best uses
permitted under the general plan or zoning;
iii) The estimated value of the interest to be conveyed
or leased, determined at the use and with the conditions,
covenants, and development costs required by the sale or
lease. The purchase price or present value of the lease
payments which the lessor will be required to make during
the term of the lease. If the sale price or total rental
amount is less than the fair market value of the interest
to be conveyed or leased, determined at the highest and
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best use, then the city, county, or city and county shall
provide as part of the summary an explanation of the
reasons for the difference; and,
iv) An explanation of why the sale or lease of the
property will assist in the creation of economic
opportunity, with reference to all supporting facts and
materials relied upon in making this explanation.
5)Requires the resolution approving the lease or sale to be
adopted by a majority vote unless the legislative body has
provided by ordinance for a two-thirds vote for that purpose,
and requires the resolution to contain a finding that the sale
or lease of the property will assist in the creation of
economic opportunity.
6)Requires the resolution to also contain one of the following
findings:
a) The consideration is not less than the fair market 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.
7)States that the provisions of this section regarding sales and
leases of property per the long-range property management plan
are an alternative to any other authority granted by law to
cities to dispose of city-owned property.
8)Allows a city, county, or city and county to establish a
program under which it loans funds to owners or tenants for
the purpose of rehabilitating commercial building or
structures.
9)Allows, as part of an agreement that provides for the
development or rehabilitation of property that will be used
for industrial or manufacturing purposes, a city, county, or
city and county to assist with the financing of facilities or
capital equipment, including, but not necessarily limited to,
pollution control devices.
10)Requires, prior to entering into an agreement for a
development that will be assisted pursuant to 9) above, that a
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city, county, or city and county to find, after a public
hearing, that the assistance is necessary for the economic
feasibility of the development and that the assistance cannot
be obtained on economically feasible terms in the private
market.
11)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 redevelopment agency
(RDA) whether it owns the property or not.
12)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.
13)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.
14)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.
15)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
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hazardous substance is inconsistent with an approved plan.
16)Imposes specified conditions on a city, county, or city and
county's authority to remedy or remove a release of hazardous
substances.
17)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
accordance with standard real estate practices for conducting
phase I or phase II environmental assessments.
18)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.
19)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.
20)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.
21)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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22)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.
23)Declares the intent of the Legislature to do all of the
following:
a) Promote economic development on a local level so that
communities can enact local strategies to increase jobs,
create economic opportunity, and generate tax revenue for
all levels of government;
b) Give local governments tools, at no cost to the state,
that allow local governments to use their funds in a manner
that promotes economic opportunity; and,
c) With the loss of redevelopment funds, cities, counties,
and cities and counties need to continue certain powers
afforded to RDAs that were critical to economic
development, yet do not have an impact on schools and the
state budget.
24)Declares the policy of the state:
a) To protect and promote the sound development of economic
opportunity in cities and counties and the general welfare
of the inhabitants of those communities through the
employment of all appropriate means;
b) That whenever the creation of economic opportunity in
cities and counties cannot be accomplished by private
enterprise alone, without public participation and
assistance in the acquisition of land, in planning and in
the financing of land assembly, in the work of clearance,
and in the making of improvements necessary therefor, it is
in the public interest to advance or expend public funds
for these purposes, and to provide a means by which
economic opportunity can be created;
c) That the creation of economic opportunity and the
provisions for appropriate continuing land use and
construction policies with respect to property acquired, in
whole or in part, for economic opportunity constitute
public uses and purposes for which public money may be
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advanced or expended and private property acquired, and are
governmental functions of state concern in the interest of
health, safety, and welfare of the people of the state and
cities and counties; and,
d) That the necessity in the public interest for the
provisions of this part is declared to be a matter of
legislative determination.
25)States that the bill's provisions shall not be interpreted to
authorize the use of eminent domain for economic development
purposes.
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 DTSC or RWQCB. It
provided limited liability protections for RDAs and future
purchasers of properties remediated under the Polanco Act.
FISCAL EFFECT : This bill is keyed fiscal.
COMMENTS :
1)As part of the winding down of redevelopment agencies, AB 1484
(Blumenfield), Chapter 26, Statutes of 2012, made various
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statutory changes associated with the dissolution of RDAs and
addressed a number of substantive issues related to
administrative processes, affordable housing activities,
repayment of loans from communities, use of existing bond
proceeds and the disposition or retention of former RDA
assets.
One of the provisions in AB 1484 allowed successor agencies
that have received a "finding of completion" from the
Department of Finance (DOF) to have additional discretion
regarding former agency real property assets, loan repayments
to the local government community that formed the agency, and
use of proceeds from bonds issued by the former RDA. In order
to receive the finding of completion, the successor agency
must undergo specified due diligence reviews and make the
requirement payments to DOF.
Once the successor agency receives the finding of completion,
the agency gains access to three specific benefits listed in
statute - first, the ability to transfer former RDA-owned
properties to the city or county for redevelopment upon
completion of a long-term management plan approved by DOF;
second, the ability to repay city loans made to the RDA; and
third, the ability to use unspent bond proceeds issued by RDAs
prior to December 31, 2010. However, the repayment of
city-agency loans and the expenditure of unspent bond proceeds
would become an "enforceable obligation." Once a finding of
completion is issued, the successor agency must prepare a
long-range property management plan that addresses the
disposition and use of the real properties of the former RDA.
The report is required to be submitted to the oversight board
and DOF for approval no later than six months following the
issuance to the successor agency of the finding of completion.
2)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 clean up brownfields. This
bill is sponsored by the City of Long Beach.
3)The author notes that "cities and counties remain interested
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in economic development. For properties that are returned to
local governments from the redevelopment dissolution process,
SB 470 will give cities and counties additional economic
opportunity powers that are not currently available.
"The only two powers this bill authorizes are: (1) the ability
to sell the property at 'fair reuse value,' and (2) the
ability [of local agencies] to use the Polanco Act. The
Health and Safety Code previously authorized local governments
to sell land at 'fair reuse value,' rather than simply at
'fair market value', and the Polanco Act incentivized
brownfield site abatement. These sections of the law were
incredibly useful to local governments in pursuit of
developing economic opportunity. Despite the fact that they
have no monetary impact to the State, they were removed as
part of sweeping changes to state law in 2011."
According to the sponsor, this bill "provides a city, county,
or city and county with a transparent process to engage in
facilitating economic opportunity at no cost to the State?and
allows local governments to sell locally owned land at 'fair
reuse value' using local dollars if warranted, which will
enable a local government to consider community benefits,
local needs, and other factors when selling land."
The sponsor argues that due to the changes to state law in
2011, portions of the Health and Safety Code "need to be
restored as part of the Government Code to allow a city or
county to promote economic development."
4)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 an 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 RDA 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 in job
creation, affordable housing, or an increase in property taxes
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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.
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.
5)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.
6)A similar bill, AB 440 (Gatto), was heard by this Committee in
April. AB 440 would authorize local government agencies to
remedy or remove a release of hazardous substances within the
boundaries of a local agency. This bill, however, focuses on
contaminated land that is in the project areas of former RDAs.
7)Provisions in this bill conflict with two other measures
currently moving through the legislative process - AB 229
(Speaker P�rez) and AB 243 (Dickinson), both of which were
heard by the Committee in April. In order to resolve the
conflict, this bill will need chaptering out amendments.
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8)Support arguments : Supporters note that this bill will
benefit communities throughout California by helping local
officials get their economic development efforts back on
track.
Opposition arguments : None on file.
9)This bill was heard by the Assembly Housing and Community
Development Committee on July 3, 2013, and passed on a 5-2
vote.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Long Beach [SPONSOR]
City of Whittier
Contract Cities Association
Gateway Cities Council of Government
Mayors of the Cities of Long Beach, San Francisco, Los Angeles,
Santa Ana, and San Jose
Los Angeles County Division, League of California Cities
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958