BILL ANALYSIS                                                                                                                                                                                                    



                                                                    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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