BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 806| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 806 Author: Dodd (D) and Frazier (D) Amended: 6/21/16 in Senate Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/15/16 AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley ASSEMBLY FLOOR: 79-0, 6/3/15 - See last page for vote SUBJECT: Community development: economic opportunity SOURCE: Author DIGEST: This bill 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. ANALYSIS: Existing law: 1)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. 2)Allows, generally, a city to dispose of real property in any way it chooses if doing so is for the common benefit. A city AB 806 Page 2 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. 3)Requires a county to sell or lease property using a competitive sealed-bid process, pursuant to specified requirements: a) 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. b) The resolution must describe the property and the terms upon which it will be sold or leased. c) At least three weeks after adopting the resolution, the board must hold a public meeting at which sealed proposals to purchase or lease the property must be considered. 4)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. This bill: 1)Deletes statutory language that limits the authority to sell or lease city-owned or county-owned property for economic development purposes to property that is governed by a long-range property management plan. As a result, this 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 Page 3 2)Allows a city, county, or city and county to acquire property in furtherance of the creation of an economic opportunity. 3)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. 4)Prohibits, for the purposes of specified statutes authorizing the sale, lease, or transfer of property for the creation of an economic opportunity, 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. This bill exempts from this prohibition any property that is governed by a long-range property management plan pursuant to a specified statute. 5)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 specified elements. 6)Specifies that loan agreements, sale agreements, and lease agreements that meet specified criteria are included in the statutory definition of "economic opportunity." 7)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 feasibility of the development and that the assistance cannot be obtained on economically feasible terms in the private market. 8)Declares that: AB 806 Page 4 a) Specified statutes amended by this 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. b) Specified statutes amended by this bill do not limit or in any way affect, the application of any other such laws. 9)Makes additional clarifying and conforming changes to state law. Background 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, ABX1 26 (Blumenfield, Chapter 5, Statutes of 2011 First Extraordinary Session) dissolved all RDAs. The Community Redevelopment Law specified the manner in which former RDAs could sell or lease real property. Those provisions now apply to successor agencies to RDAs. 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 alternative procedures to dispose of the property for economic development purposes (SB AB 806 Page 5 470, Wright, Chapter 659, Statutes of 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. Comments Purpose of the bill. This bill provides cities and counties with additional flexibility to use city- or county-owned real property to fulfill economic development goals. In the wake of RDAs' dissolution, local officials have lost many of the tools that they previously used to promote economic development within their communities. This bill 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. This 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. This bill will benefit communities throughout California by helping local officials get their economic development efforts back on track. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No SUPPORT: (Verified6/21/16) California Association for Local Economic Development City of American Canyon AB 806 Page 6 City of Azusa City of Camarillo City of Commerce City of Fairfield City of Industry City of Napa City of Norwalk City of Redding Fairfield Suisun Chamber of Commerce League of California Cities Lystek International, Ltd. OPPOSITION: (Verified6/21/16) None received ASSEMBLY FLOOR: 79-0, 6/3/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Harper Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119 6/22/16 15:15:20 **** END **** AB 806 Page 7