BILL ANALYSIS Ó AB 806 Page 1 Date of Hearing: May 13, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 806 (Dodd) - As Amended April 6, 2015 ----------------------------------------------------------------- |Policy |Local Government |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Housing and Community | |6 - 0 | | |Development | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill specifies that agreements entered into by a former redevelopment agency (RDA) prior to June 30, 2011, to fund state highway infrastructure improvements are enforceable obligations. AB 806 Page 2 The bill also makes various technical changes to redevelopment dissolution law regarding appointments to local oversight boards, modifications to existing contracts, and compensation agreements as part of the approval of long-range property management plans. FISCAL EFFECT: Unknown, General Fund losses, perhaps in the hundreds of thousands of dollars, from specifying that RDA agreements entered into prior to June 30, 2011, that include highway improvements are enforceable obligations. Absent this bill, these revenues would be distributed to local taxing entities, including schools. Under Proposition 98, the General Fund would be required to backfill the resulting property tax losses to schools. The number of projects affected is unknown, but likely small. COMMENTS: 1)Purpose. This bill continues a multi-year process to clean up lingering issues and resolve disputes regarding the redevelopment dissolution process. According to the author, "Each year, since the dissolution of local RDAs, the Legislature identifies relatively minor issues that require some adjustment in the dissolution statute that allows the dissolution process and its aftermath to work better." 2)Background. In 2011, the Legislature approved and governor signed two measures, ABX1 26 and ABX1 27 that together dissolved redevelopment agencies as they existed and created a voluntary redevelopment program on a smaller scale. In response, the California Redevelopment Association, the League of California Cities and other partied, filed suit challenging AB 806 Page 3 the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to ABX1 26 and granted the petition with respect to ABX1 27. As a result of the court's decision, all redevelopment agencies were required to dissolve as of February 1. 2012 and there was no authority for any new redevelopment program. In 2012, AB 1484 (Blumenfield), Chapter 26, made the statutory changes needed to achieve budget savings related to the dissolution of redevelopment agencies. AB 1484 clarified the process for dissolving all redevelopment agencies, made various statutory changes associated with the dissolution of redevelopment agencies, 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 redevelopment agency assets. AB 1484 specified all proceeds from bonds issued in 2011 must be defeased, the exception being if the redevelopment agency has enforceable obligations with third parties to spend the proceeds. 3)Addressing the Governor's Veto. This bill is similar to SB 1129 (Steinberg) of 2014, which was vetoed by Governor Brown. Some of the provisions the Governor objected to have been removed from this bill. Others have been modified to address his concerns, including allowing the modification of existing contracts with the approval of the oversight board, and not eliminating compensation agreements altogether, but rather allowing them to be developed and executed after the approval of a long-range management plan. However, a provision to allow the spending of 2011 bond proceeds remains in this bill. In his veto message the Governor stated, in part, "This bill allows Successor Agencies to expend revenues from bonds issues after December 2010,...Furthermore, I have already vetoed AB 2493, and this AB 806 Page 4 bill contains a similar provision to allow 2011 bond proceeds to be spent." 4)Related Current Legislation. There are four additional bills regarding redevelopment pending in this Committee: a) AB 654 (Brown) would prohibit revenues derived from a property tax rate approved by voters in a city, county, or special district to pay for the State Water Project to be allocated to the Redevelopment Property Tax Trust Fund. b) AB 974 (Bloom) would allow redevelopment successor agencies, and entities performing the housing functions of former redevelopment agencies (RDAs), to spend bond proceeds from bonds issued by former RDAs in 2011. c) AB 1009 (Garcia) would allow revenues from a voter-approved pension property tax to be allocated to the city or county whose voters approved the tax. d) AB 1412 (Perea) would allow for an expedited loan repayment schedule between a former RDA and a city or county, under specified conditions. 1)Related Prior Legislation. There have been numerous bills seeking to amend the statutes governing redevelopment dissolution. Among the most recent: a) AB 1963 (Atkins) Chapter 146, Statutes of 2014, extends the date by which DOF must approve a redevelopment successor agency's long-range management plan until January 1, 2016. AB 806 Page 5 Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081