BILL ANALYSIS Ó
AB 2031
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Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2031
(Bonta and Atkins) - As Amended March 17, 2016
SUBJECT: Local government: affordable housing: financing.
SUMMARY: Allows a successor agency to create an affordable
housing beneficiary district for the purpose of receiving
rejected distributions of property tax revenues and providing
financing assistance to promote affordable housing within its
boundaries. Specifically, this bill:
1)Defines the following terms:
a) "Affordable housing" to mean a dwelling available for
purchase or lease by persons and families who qualify as
low- or moderate-income, very low-income households, or
extremely low-income households, as defined;
b) "Beneficiary district" to mean an affordable housing
special beneficiary district that exists for a limited
duration as a distinct local governmental entity for the
purposes of receiving rejected distributions of property
tax revenues and providing financing assistance to promote
affordable housing within its boundaries; and,
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c) "Distributions of property tax revenues" means all
property tax revenues a city or county would be entitled to
receive pursuant to state law regarding the dissolution of
RDAs.
2)Specifies that when a successor entity receives a finding of
completion pursuant to redevelopment agency (RDA) dissolution
law, that there exists, within the same geographical
boundaries of the jurisdiction of that successor agency, an
affordable housing special beneficiary district (beneficiary
district).
3)Allows a city or county that formed a redevelopment agency
(RDA) and became the successor agency that received a finding
of completion to, by ordinance or resolution, reject its
distributions of property tax revenues from the trust fund.
Requires that on or after the date that a city or county
rejects its distributions of property tax revenues, the city
or county shall not have any claim to, or control over, the
distributions of property tax revenues it would have otherwise
received, the county auditor-controller to transfer all of
that distribution of property tax revenues to the beneficiary
district.
4)Requires a beneficiary district to only promote the
development of affordable housing within its boundaries, and
allows the beneficiary district to do this by any of the
following:
a) Issue bonds to be repaid from the property tax revenues
directed to the district;
b) Provide financial assistance for the development of
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affordable housing, including, but not limited to,
providing loans, grants, and other financial incentives and
support; and,
c) Take other actions the board determines will promote the
financing of development of affordable housing within its
boundaries.
5)Requires a beneficiary district to be governed by a Board
composed of the following five members:
a) Three members of the city council, if a city formed the
RDA and became the successor agency that received the
finding of completion, or three members of the board of
supervisors, if a county formed the RDA and became the
successor agency that received the finding of completion.
Specifies that the three members shall be appointed by the
city council or board of supervisors;
b) The treasurer of the city or county that formed the RDA
and became the successor agency that received the finding
of completion; and,
c) One member of the public who lives within the boundaries
of the beneficiary district who is appointed by the city
council or county board of supervisors of the city or
county that formed the RDA that became the successor agency
that received a finding of completion.
6)Requires the Board to elect one of its members as the
chairperson.
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7)Provides that each member shall serve a term of four years
from the date of his or her appointment, and specifies that
vacancies on the Board shall be filled by the appointing
authority for a new four-year term. Allows a member to be
reappointed.
8)Prohibits a Board member from receiving compensation.
9)Prohibits a beneficiary district from undertaking any
obligation that requires an action after the date it will
cease to exist, including, but not limited to, issuing a bond
that requires any repayment of the bond obligation after the
date the beneficiary district will cease to exist.
10)Provides that a beneficiary district ceases to exist on the
90th calendar day after the date the county auditor-controller
makes the final transfer of distributed property tax revenues
to the beneficiary district. Provides that on and after the
date a beneficiary district ceases to exist, that the
beneficiary district shall not have the authority to conduct
any business, including, but not limited to, taking any action
or making any payment, and any funds of the beneficiary
district shall automatically transfer to the city or county
that rejected its distributions of property tax revenues that
were thereafter directed to the district.
11)Provides that the terms of the members of the Board of a
beneficiary district shall expire on the date the beneficiary
district ceases to exist.
12)Provides that any legal right of the beneficiary district on
or after the date the beneficiary district ceases to exist,
including, but not limited to, the right to repayment pursuant
to a loan made by the beneficiary district, is the right of
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the city or county that rejected its distributions of property
tax revenues that was thereafter directed to the district.
13)Requires a beneficiary district to comply with the Ralph M.
Brown Act and the California Public Records Act.
14)Requires a public record of the beneficiary district to be
the property of the city or county that rejected its
distribution of property tax proceeds, when a 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 the Department of Finance (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:
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a) Retain dissolved RDA assets;
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:
1)Bill Summary. This bill would allow a city or county that
serves as the successor agency to an 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, and take other actions that the Board of the
beneficiary district determines support the development of
affordable housing within its boundaries.
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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 agency. A five- member Board made up of
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.
This bill is sponsored by the City of Oakland.
2)Author's Statement. 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."
3)Background. 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
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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
an RPTTP, which the county-auditor controller distributes to
the taxing entities, including cities, counties, and special
districts.
4)Arguments in Support. Supporters argue that this bill will
authorize successor agencies to direct the incoming allocation
of property tax revenues to an affordable housing special
beneficiary district, a creative solution that will greatly
help restore affordable housing funding lost when over 400
RDAs were eliminated in 2012.
5)Arguments in Opposition. Howard Jarvis Taxpayers Association
argues that this bill sets a bad precedent, not only by not
requiring a vote, but also because it opens the door for a
scheme like this to occur with taxes or other forms of
property assessment.
6)Double-Referral. This bill was heard by the Housing and
Community Development Committee on April 27, 2013, where it
passed with a 5-2 vote.
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REGISTERED SUPPORT / OPPOSITION:
Support
City of Oakland [SPONSOR]
California Apartment Association
Burbank Housing Development Corporation
City of Walnut Creek
Community Housing Opportunities Corporation
East Bay Asian Local Development Corporation
Equity Community Builders
EveryOne Home
Housing Leadership Council of San Mateo County
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MidPen Housing Corporation
Non-profit Housing Association of Northern California
Northern California Community Loan Fund
San Diego Housing Federation
Sonoma County
Opposition
Howard Jarvis Taxpayers Association
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958
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