BILL ANALYSIS Ó
AB 2031
Page 1
Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2031
(Bonta) - As Amended March 17, 2016
SUBJECT: Local government: affordable housing: financing
SUMMARY: Authorizes a city or county that formed a
redevelopment agency (RDA) that has received a finding of
completion from Department of Finance (DOF), to bond against the
property tax revenues it receives as a result of redevelopment
dissolution for affordable housing purposes, without voter
approval. Specifically, this bill:
1)Defines "affordable housing" to mean a dwelling available for
purchase or lease by persons and families who qualify as low-,
very low-, extremely low- and moderate income.
1)Defines "distributions of property tax revenues" to mean all
additional property tax revenues a city or county is entitled
to receive as a result of the dissolution of RDAS.
2)Defines "beneficiary district" to mean an affordable housing
special beneficiary district that exists for a limited
duration as a distinct local government entity for the
purposes of receiving the rejected distribution of property
tax revenues of a city or county and providing financial
AB 2031
Page 2
assistance to promote affordable housing within its
boundaries.
3)Authorizes a city or county that formed a RDA and is the
successor agency that received a finding of completion after
dissolving its RDA from DOF to adopt an ordinance or
resolution to reject its distribution of property tax revenues
as a result of redevelopment dissolution.
4)Provides that once a city or county rejects its distribution
of property taxes and it is redirected to a beneficiary
district it has no claim or control over it except for its
role in governing the beneficiary district.
5)Requires the county auditor-controller upon request to
transfer all of a city's or county's rejected property taxes
to the beneficiary district.
6)Provides that a beneficiary district can only promote the
development of affordable housing within its boundaries.
7)Allows a beneficiary district to promote the development of
affordable housing by doing any of the following:
a) Issuing bonds to be repaid from the property tax
revenues directed to the beneficiary district;
b) Providing financial assistance for the development of
affordable housing, including but not limited to, providing
loans, grants, and other financial incentives and support;
AB 2031
Page 3
c) Taking other actions the board determines will promote
the development of affordable housing within its
boundaries;
d) Prohibits a beneficiary district from undertaking any
obligation that requires an action after the date it ceases
to exist including issuing a bond that requires any
repayment of the bond obligation.
1)Requires a beneficiary district to comply with the Ralph M.
Brown Act.
2)Provide that when a beneficiary district ceases to exist, its
public record will be the property of the city or county that
rejected its distribution of property tax proceeds.
3)Provides that beginning when a successor entity receives a
finding of completion, there exists within the same
geographical boundaries of the jurisdiction of the successor
agency a beneficiary district.
4)Provides that a beneficiary district ceases to exist on the
90th calendar day after the date that the county
auditor-controller makes the final transfer of distributed
property tax revenues to the beneficiary district.
5)Provides that on or after the date a beneficiary district
ceases to exist the beneficiary district will no longer have
authority to conduct any business include but not limited to
taking an action or making any payment, and any funds of the
beneficiary district will automatically transfer to the city
or county that rejected its distribution of property tax
revenues that had been redirected to the beneficiary district.
AB 2031
Page 4
6)Provides that any legal right of the beneficiary district on
or after the date that it ceases to exist, including but not
limited to, the right to repayment of a loan made by the
beneficiary district is the right of the city or county that
created it.
7)Provides that a beneficiary district will be governed by a
Board composed of the following five members:
a) Three members of the city council, if the city council
formed the RDA and become the successor agency to the RDA;
or
b) Three members of the county board of supervisors, if the
county formed the RDA and become the successor agency to
the RDA; and
c) The treasurer of the city or county that formed the RDA
and become the successor agency to the RDA; and
d) One member of the public who lives within the boundaries
of beneficiary district who is appointed by the city or
county that formed the RDA and become the successor agency.
1)Provides that the Board members will serve a term of four
years from the date of appointment and vacancies on the Board
will be filled by the appointing authority for a new four year
term.
AB 2031
Page 5
2)Provides that the Board will select one of its members as
chairperson.
3)Provides that Board members will serve without compensation.
4)Provides that the terms of the Board members expire once the
beneficiary district ceases to exist.
EXISTING LAW:
1)Dissolves RDAs as of February 1, 2012 and institutes a process
for winding down their activities.
2)Requires DOF to issue a finding of completion to the successor
agency, within five business days, once the following
conditions have been met and verified:
a) The successor agency has paid the full amount as
determined during the due diligence reviews and the county
auditor-controller has reported those payments to DOF; and,
b) The successor agency has paid the full amount as
determined during the July True-up process; or,
c) The successor agency has paid the full amount upon a
final judicial determination of the amounts due and
confirmation that those amounts have been paid by the
county auditor-controller.
3)Allows the successor agency, upon receiving the finding of
completion, to:
a) Retain dissolved RDA assets;
AB 2031
Page 6
b) Place loan agreements between the former RDA and
sponsoring entity on the ROPS, as an enforceable
obligation, provided the oversight board makes a finding
that the loan was for legitimate redevelopment purposes;
and,
c) Utilize proceeds derived from bonds issued prior to
January 1, 2011, in a manner consistent with the original
bond covenants.
4)Requires, after DOF issues a finding of completion, the
successor agency to prepare a long-range property management
plan that addresses the disposition and use of the real
properties of the former RDA, and requires the report to be
submitted to the oversight board and DOF for approval no later
than six months following the issuance to the successor agency
of the finding of completion.
FISCAL EFFECT: None.
COMMENTS:
In 2011, facing a severe budget shortfall, the Governor proposed
eliminating RDAs in order to deliver more property taxes to
other local agencies. Statewide, redevelopment redirected 12% of
property taxes away from schools and other local taxing entities
and into community development and affordable housing.
Ultimately, the Legislature approved and the Governor signed two
measures, ABX1 26 (Blumenfield), Chapter 5 and ABX1 27
(Blumenfield), Chapter 6 that together dissolved RDAs as they
existed at the time and created a voluntary redevelopment
program on a smaller scale. In response the California
Redevelopment Association (CRA) and the League of California
Cities, along with other parties, filed suit challenging the two
measures. The Supreme Court denied the petition for peremptory
writ of mandate with respect to ABX1 26. However, the Court did
grant CRA's petition with respect to ABX1 27. As a result, all
RDAs were required to dissolve as of February 1, 2012.
AB 2031
Page 7
When RDAs were dissolved, successor agencies were established to
wind down their obligations and responsibilities. Generally,
the city or county that formed the RDA serves as the successor
agency. Successor agencies are required to receive a "finding of
completion" from DOF. In order to receive a finding of
completion, a successor agency has to undergo due diligence
reviews and make required payments to DOF. Once it receives a
finding of completion, a successor agency has additional
discretion regarding former agency real property assets, loan
repayments to the local government community that formed the
agency, and use of proceeds from bonds issued by the former RDA.
RDAs froze the property tax rate at the time they were created
and captured any increase in property taxes to pay for their
activities. Dissolution redirected those property taxes into a
Redevelopment Property Tax Trust Fund (RPTTP) which the
county-auditor controller distributes to the taxing entities
including cities, counties, and special districts. This bill
would allow a city or county that serves as the successor agency
to a RDA that has received a finding of completion from DOF, to
redirect the property taxes it receives as a result of
redevelopment dissolution, also known as "boomerang funds," to a
beneficiary district. The boomerang funds would be redirected
before they are deposited into the city's or county's general
fund. A beneficiary district could bond against the revenues
from the boomerang funds, provide loans and grants for an
affordable housing development, or take other actions that the
board of the beneficiary district determines support the
development of affordable housing within its boundaries. Because
the property taxes are deposited into the beneficiary district
and not into the city's or county's general fund no voter
approval is required to allow the affordable housing beneficiary
district to bond against the income stream from the ongoing
property tax distribution. The geographic boundaries of the
affordable housing beneficiary district are limited to the
jurisdiction of the city or county that serves as the successor
AB 2031
Page 8
agency. A five member Board made of up three representatives of
either the city or county, the treasurer of the city or county,
and one member of the public would oversee the activities of a
housing beneficiary district. Once the duties of the successor
agency are complete and all of the bonds and obligations of the
former RDA are paid then the beneficiary district would cease to
exist and any money held by the beneficiary district will
transfer to the city or county that created it.
Purpose of this bill : According to the author, "the proposal is
to give cities and counties the authority to approve issuance of
affordable housing bonds to be paid for with any portion of its
"net available revenue" without voter approval. The net
available revenue is referred to as "boomerang funds"
distributed by the county auditor-controller to cities from the
Redevelopment Property Tax Trust Fund (RPTTF). There is no
fiscal impact to the State's general fund and no property taxes
would be diverted from the other taxing entities."
Arguments in support : According to supporters, "since the
dissolution of redevelopment agencies no permanent source of
funds from the State has been made available to support the
construction of much need affordable housing. What local
governments need, is a stable ongoing source of funding in order
to build and support the construction of affordable and
workforce housing immediately. This bill offers a mechanism for
meeting California's high demand for affordable housing
development by allowing cities to bond against the revenue
stream without raising taxes or diverting property taxes from
other taxing entities and there is no fiscal impact to the
State's general fund."
Double referred: If AB 2031 passes this committee, the bill will
AB 2031
Page 9
be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION:
Support
City of Oakland (Sponsor)
Non-profit Housing Association of California (Co- Sponsor)
American Federation of State, County and Municipal Employees
Burbank Housing Development Corporation
California Apartment Association
California Coalition for Rural Housing
California Housing Consortium
California Housing Partnership Corporation
City of Walnut Creek
Community Housing Opportunities Corporation
AB 2031
Page 10
East Bay Asian Local Development Corporation
Equity Community Builders
EveryOne Home
Housing Leadership Council of San Mateo County
MidPen Housing
Northern California Community Loan Fund
San Diego Housing Federation
Sonoma County Board of Supervisors
Opposition
Howard Jarvis Taxpayers Association
Analysis Prepared by: Lisa Engel / H. & C.D. / (961) 319-2085
AB 2031
Page 11