BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2031


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          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  








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            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;










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             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.  








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          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. 









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          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;









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             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.    








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          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  








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          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  








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          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 








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          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










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