California Legislature—2015–16 Regular Session

Assembly Bill No. 1412

Introduced by Assembly Member Perea

(Principal coauthor: Senator Cannella)

February 27, 2015

An act to amend Section 34191.4 of the Health and Safety Code, relating to redevelopment.

LEGISLATIVE COUNSEL’S DIGEST

AB 1412, as introduced, Perea. Redevelopment: successor agencies to redevelopment agencies.

Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to wind down the affairs of the dissolved redevelopment agencies, subject to review by oversight boards, and to, among other things, make payments due for enforceable obligations and to perform obligations required pursuant to any enforceable obligation. Existing law requires the Department of Finance to issue a finding of completion to a successor agency upon confirmation by the county auditor-controller that specified payments have been fully made by the successor agency. Existing law defines “enforceable obligation” for these purposes to generally exclude any agreements, contracts, or arrangements between the city, county, or city and county that created the redevelopment agency and the former redevelopment agency. However, existing law provides that upon application by the successor agency and approval by the oversight board, loan agreements entered into between the redevelopment agency and the city, county, or city and county that created the redevelopment agency are deemed to be enforceable obligations provided that the oversight board makes a finding that the loan was for legitimate redevelopment purposes.

This bill would additionally provide that upon application by the successor agency and approval by the oversight board, loan agreements entered into between the redevelopment agency and the city, county, or city and county that created the redevelopment agency, where the outstanding principal balance of the loan is $1,250,000 or less, are enforceable obligations if the oversight board finds, among other things, that the loan was for legitimate redevelopment purposes, it was entered into more than 2 years after the creation of the former redevelopment agency and prior to January 1, 2011, and it is the only debt of the former redevelopment agency remaining to be paid on the recognized obligation payment schedule.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 34191.4 of the Health and Safety Code
is amended to read:

34191.4.  

The following provisions shall apply to any successor
agency that has been issued a finding of completion by the
Department of Finance:

(a) All real property and interests in real property identified in
subparagraph (C) of paragraph (5) of subdivision (c) of Section
34179.5 shall be transferred to the Community Redevelopment
Property Trust Fund of the successor agency upon approval by the
Department of Finance of the long-range property management
plan submitted by the successor agency pursuant to subdivision
(b) of Section 34191.5 unless that property is subject to the
requirements of any existing enforceable obligation.

(b) (1)  begin delete Notwithstanding end delete begin insert Except as provided in subdivision (c),
and notwithstanding end insert subdivision (d) of Section 34171, upon
application by the successor agency and approval by the oversight
board, loan agreements entered into between the redevelopment
agency and the city, county, or city and county that created the
redevelopment agency shall be deemed to be enforceable
obligations provided that the oversight board makes a finding that
the loan was for legitimate redevelopment purposes.

(2) If the oversight board finds that the loan is an enforceable
obligation, the accumulated interest on the remaining principal
amount of the loan shall be recalculated from origination at the
interest rate earned by funds deposited into the Local Agency
Investment Fund. The loan shall be repaid to the city, county, or
city and county in accordance with a defined schedule over a
reasonable term of years at an interest rate not to exceed the interest
rate earned by funds deposited into the Local Agency Investment
Fund. The annual loan repayments provided for in the recognized
obligation payment schedules shall be subject to all of the following
limitations:

(A) Loan repayments shall not be made prior to the 2013-14
fiscal year. Beginning in the 2013-14 fiscal year, the maximum
repayment amount authorized each fiscal year for repayments
made pursuant to this subdivision and paragraph (7) of subdivision
(e) of Section 34176 combined shall be equal to one-half of the
increase between the amount distributed to the taxing entities
pursuant to paragraph (4) of subdivision (a) of Section 34183 in
that fiscal year and the amount distributed to taxing entities
pursuant to that paragraph in the 2012-13 base year, provided,
however, that calculation of the amount distributed to taxing
entities during the 2012-13 base year shall not include any amounts
distributed to taxing entities pursuant to the due diligence review
process established in Sections 34179.5 to 34179.8, inclusive.
Loan or deferral repayments made pursuant to this subdivision
shall be second in priority to amounts to be repaid pursuant to
paragraph (7) of subdivision (e) of Section 34176.

(B) Repayments received by the city, county, or city and county
that formed the redevelopment agency shall first be used to retire
any outstanding amounts borrowed and owed to the Low and
Moderate Income Housing Fund of the former redevelopment
agency for purposes of the Supplemental Educational Revenue
Augmentation Fund and shall be distributed to the Low and
Moderate Income Housing Asset Fund established by subdivision
(d) of Section 34176.

(C) Twenty percent of any loan repayment shall be deducted
from the loan repayment amount and shall be transferred to the
Low and Moderate Income Housing Asset Fund, after all
outstanding loans from the Low and Moderate Income Housing
Fund for purposes of the Supplemental Educational Revenue
Augmentation Fund have been paid.

begin insert

(c) (1) Notwithstanding subdivision (b) and subdivision (d) of
Section 34171, upon application by the successor agency and
approval by the oversight board, loan agreements entered into
between the redevelopment agency and the city, county, or city
and county that created the redevelopment agency, where the
outstanding principal balance of the loan is one million two
hundred fifty thousand ($1,250,000) or less, shall be deemed to
be enforceable obligations if the oversight board makes all of the
following findings:

end insert begin insert

(A) The loan was for legitimate redevelopment purposes.

end insert begin insert

(B) The loan was entered into more than two years after the
creation of the former redevelopment agency, and prior to January
1, 2011.

end insert begin insert

(C) The loan was related to an indebtedness obligation.

end insert begin insert

(D) The loan is the only debt of the former redevelopment
agency remaining to be paid on the recognized obligation payment
schedule.

end insert begin insert

(E) The amount distributed to the taxing entities pursuant to
paragraph (4) of subdivision (b) of Section 34183 in the previous
fiscal year was less than two hundred fifty thousand dollars
($250,000).

end insert begin insert

(2) Repayments of a loan described in this subdivision are not
subject to the requirements of subdivision (b). The accumulated
interest rate shall be recalculated from origination at the interested
rate of .25 percent.

end insert begin delete

(c)

end delete

begin insert (d) end insert  (1) Bond proceeds derived from bonds issued on or before
December 31, 2010, shall be used for the purposes for which the
bonds were sold.

(2) (A) Notwithstanding Section 34177.3 or any other
conflicting provision of law, bond proceeds in excess of the
amounts needed to satisfy approved enforceable obligations shall
thereafter be expended in a manner consistent with the original
bond covenants. Enforceable obligations may be satisfied by the
creation of reserves for projects that are the subject of the
enforceable obligation and that are consistent with the contractual
obligations for those projects, or by expending funds to complete
the projects. An expenditure made pursuant to this paragraph shall
constitute the creation of excess bond proceeds obligations to be
paid from the excess proceeds. Excess bond proceeds obligations
shall be listed separately on the Recognized Obligation Payment
Schedule submitted by the successor agency.

(B) If remaining bond proceeds cannot be spent in a manner
consistent with the bond covenants pursuant to subparagraph (A),
the proceeds shall be used to defease the bonds or to purchase
those same outstanding bonds on the open market for cancellation.