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:  8/8/16 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.


          Senate Floor Amendments of 8/8/16 clarify that an exemption in  
          the bill applies to former redevelopment agency housing assets  
          that are transferred to any city or any county, not just to "a  
          city and county."


          Senate Floor Amendments of 8/1/16 exempt specified former  
          redevelopment agency housing assets from this bill's prohibition  
          against selling, leasing, or otherwise transferring, at a price  
          that is less than fair market value, any real property that was  
          acquired through eminent domain.








                                                                     AB 806  
                                                                    Page  2




          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  
            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.







                                                                     AB 806  
                                                                    Page  3




          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.


          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:


             a)   Governed by a long-range property management plan  
               pursuant to a specified statute.


             b)   A housing asset of a former redevelopment agency that is  
               transferred to a city, county, or city and county pursuant  
               to specified statutes, provided that the successor agency  
               or designated local authority in the affected jurisdiction  
               has received a finding of completion from the Department of  
               Finance.








                                                                     AB 806  
                                                                    Page  4



          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:


             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  







                                                                     AB 806  
                                                                    Page  5


          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 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 alternative procedures to  
          dispose of the property for economic development purposes (SB  
          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  







                                                                     AB 806  
                                                                    Page  6


          upon the provisions of SB 470 (Wright, Chapter 659, Statutes of  
          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:   (Verified8/9/16)


          California Association for Local Economic Development
          City of American Canyon
          City of Azusa
          City of Camarillo
          City of Commerce
          City of Fairfield
          City of Fountain Valley
          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:   (Verified8/9/16)


          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  







                                                                     AB 806  
                                                                    Page  7


            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
          8/10/16 15:45:22


                                   ****  END  ****