BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 806 |Hearing | 6/15/16 |
| | |Date: | |
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|Author: |Dodd |Tax Levy: |No |
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|Version: |6/6/16 Amended |Fiscal: |No |
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|Consultant|Weinberger |
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Community development: economic opportunity
Allows all counties and cities to acquire, sell, or lease
county-owned or city-owned real property to promote economic
development, subject to specified requirements.
Background
The California Constitution (Article XVI, Section Six) prohibits
counties and general law cities from making a gift of public
funds. Courts have determined that charter cities are not
subject to that prohibition.
State law generally allows a city to dispose of real property in
any way it chooses if doing so is for the common benefit. A
city may sell or lease real property for less than fair market
value, without violating the constitutional prohibition against
making a gift of public funds, if the sale or lease serves a
public purpose.
State law generally requires a county to sell or lease property
using a competitive sealed-bid process. A county board of
supervisors must, by a two-thirds vote, adopt a resolution in a
regular open meeting declaring its intention to sell or lease
the property. The resolution must describe the property and the
terms upon which it will be sold or leased. At least three
weeks after adopting the resolution, the board must hold a
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public meeting at which sealed proposals to purchase or lease
the property must be considered. State law exempts a county
from these requirements, and allows it to sell real property at
less than fair market value, to provide housing that is
affordable to low and moderate income residents.
Until 2011, the Community Redevelopment Law allowed local
officials to set up redevelopment agencies (RDAs), prepare and
adopt redevelopment plans, and finance redevelopment activities.
The Law authorized RDAs to sell or lease property without
public bidding as long as the RDA provided public notice and
held a public hearing. 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. Among
the statutory changes that the Legislature adopted to implement
the 2011-12 budget, AB X1 26 (Blumenfield, 2011) dissolved all
RDAs. The Community Redevelopment Law specified the manner in
which former redevelopment agencies could sell or lease real
property. Those provisions now apply to successor agencies to
redevelopment agencies. State law requires successor agencies to
prepare a long-range property management plan and dispose of
property under that plan.
If a successor agency has transferred property to a city or
county as part of a long-range property management plan, state
law allows the city or county to use use alternative procedures
to dispose of the property for economic development purposes (SB
470, Wright, 2013). The 2013 Wright bill also allowed a city or
county to establish a program under which it loans funds to
owners or tenants for the purpose of rehabilitating commercial
buildings or structures.
Some local officials want the Legislature to expand counties'
and general law cities statutory authority to acquire, sell, or
lease public property for economic development by allowing the
alternative procedures enacted by the 2013 Wright bill to be
used for any city- or county-owned property.
Proposed Law
Assembly Bill 806 deletes statutory language that limits the
authority to sell or lease city-owned or county-owned property
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for economic development purposes to property that is governed
by a long-range property management plan. As a result, the bill
allows a city, county, or city and county to sell or lease any
county-owned or city-owned property to create an economic
opportunity, as defined in state law.
AB 806 allows a city, county, or city and county to acquire
property in furtherance of the creation of an economic
opportunity.
AB 806 requires that the creation of an economic opportunity
must be subject to a specified statute that requires public
agencies to disclose specified information, hold hearings, and
produce reports relating to economic development subsidies.
For the purposes of specified statutes authorizing the sale,
lease, or transfer of property for the creation of an economic
opportunity, AB 806 prohibits a city, county, or city and county
from selling, leasing, or otherwise transferring, at a price
that is less than the fair market value, any real property that
was acquired through eminent domain. AB 806 exempts from this
prohibition any property that is governed by a long-range
property management plan pursuant to a specified statute.
AB 806 requires that a loan provided by a city or county to
owners or tenants for the purpose of rehabilitating commercial
buildings or structures must be in the form of a written loan
agreement that includes:
A payment schedule,
The terms for interest calculation,
The rights and remedies of the parties in the case of
default, and
Any other material terms of the loan.
AB 806 specifies that loan agreements, sale agreements, and
lease agreements that meet specified criteria are included in
the statutory definition of "economic opportunity."
AB 806 requires that, before entering into a loan agreement, a
city, county, or city and county, must find, after a public
hearing, that the assistance is necessary for the economic
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feasibility of the development and that the assistance cannot be
obtained on economically feasible terms in the private market.
The bill declares that:
A legislative body's determinations made pursuant to
specified statutes governing the acquisition, sale, lease,
or transfer of real property for the creation of an
economic opportunity are final and conclusive.
Specified statutes amended by the bill are an
alternative to any authority of a city, county, or city and
county to create an economic opportunity or to acquire,
sell, or lease property for economic development, found in
the Constitution, state law, local ordinance, or charter.
Specified statutes amended by the bill do not limit or
in any way affect, the application of any other such laws.
AB 806 makes additional clarifying and conforming changes to
state law.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . AB 806 provides cities and counties
with additional flexibility to use city- or county-owned real
property to fulfill economic development goals. In the wake of
redevelopment agencies' dissolution, local officials have lost
many of the tools that they previously used to promote economic
development within their communities. AB 806 restores some
significant powers that cities and counties previously exercised
over the acquisition and disposition of public property pursuant
to provisions of the Community Redevelopment Law. The bill
builds upon the provisions of SB 470 (Wright, 2013) by granting
local officials authority to sell or lease any publicly owned
real property at less than fair market value to create an
economic opportunity. AB 806 will benefit communities
throughout California by helping local officials get their
economic development efforts back on track.
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2. Accountability . State laws requiring advanced notice of a
proposed sale of land owned by a county, a public hearing on the
sale, a super-majority vote by county supervisors, and a
competitive sealed-bid sales process are intended to protect
taxpayers' interests in publicly-owned assets. These
requirements ensure that local officials dispose of
publicly-owned lands transparently, with an opportunity for
public input, and in a manner that maximizes the compensation
the county receives. AB 806 seeks to provide transparency for
the sale or lease of public property to create an economic
opportunity by requiring that public officials who use the
bill's provisions must comply with notice, hearing, and
reporting requirements that apply to economic development
subsidies. The Committee may wish to consider whether AB 806's
broad exemption from the statutory requirements that generally
govern county land sales, including the super-majority vote and
sealed bidding requirements, strikes the right balance between
administrative flexibility and political accountability for
county property sales and leases.
3. Final and conclusive . One way that members of the public
can hold public officials accountable for selling or leasing
public property is by filing a lawsuit and asking a court to
determine whether a sale or lease complied with relevant state
laws. AB 806 requires local legislative bodies to make
specified findings and determinations and, in some cases,
requires that evidence be included in the public record to
support their decisions. However, the bill also declares that a
local legislative body's determinations are "final and
conclusive." By including this declaration, AB 806 appears to
limit judicial discretion when reviewing the validity of a local
legislative body's determinations and whatever evidence may
support them. The portions of the Community Redevelopment Law
that required city councils or county boards of supervisors to
make similar determinations relating to the sale or lease of
redevelopment property did not declare those determinations to
be "final and conclusive." The Committee may wish to consider
amending AB 806 to delete the language declaring that local
officials' determinations are final and conclusive to allow for
greater judicial scrutiny of actions taken under the bill's
provisions.
4. Legislative history . As passed by the Assembly, AB 806
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contained provisions amending the state laws that govern the
dissolution of former redevelopment agencies. The July 13, 2015
amendments deleted AB 806's contents and inserted language
relating to local government permit requirements for
stand-mounted antenna. The Senate Governance & Finance
Committee never heard either of those versions of the bill. The
April 14, 2016 amendments deleted AB 806's contents and inserted
the current language relating to local governments' property
management powers.
Assembly Actions
Not relevant to the April 14, 2016 version of the bill.
Support and
Opposition (6/9/16)
Support : California Association for Local Economic Development;
Cities of American Canyon, Azusa, Camarillo, Commerce,
Fairfield, Industry; Napa, Norwalk, and Redding; Fairfield
Suisun Chamber of Commerce; League of California Cities; Lystek
International, Ltd.
Opposition : Unknown.
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