BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 470
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          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 Pérez) 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