BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 2031 Hearing Date: 6/14/2016
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|Author: |Bonta, Atkins |
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|Version: |3/17/2016 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Alison Dinmore |
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SUBJECT: Affordable Housing Special Beneficiary Districts
DIGEST: This bill authorizes a city or county that formed a
redevelopment agency (RDA) that has received a finding of
completion from the Department of Finance (DOF) to bond against
the property tax revenues it receives as a result of RDA
dissolution for affordable housing purposes, without voter
approval.
ANALYSIS:
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
b) The successor agency has paid the full amount as
determined during the July true-up process
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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
1) Allows the successor agency, upon receiving the finding of
completion, to:
a) Retain dissolved RDA assets
b) Place loan agreements between the former RDA and
sponsoring entity on the Recognized Obligation Payments
Schedule (ROPS), as an enforceable obligation, provided
the oversight board makes a finding that the loan was for
legitimate redevelopment purposes
c) Utilize proceeds derived from bonds issued prior to
January 1, 2011, in a manner consistent with the original
bond covenants
1) 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.
This bill:
1) Defines "affordable housing" as a dwelling for purchase or
lease by persons of families who qualify as low or moderate
income, very low-income households, or extremely low-income
households.
2) Defines "beneficiary district" as 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 financial assistance to promote
AB 2031 (Bonta) Page 3 of ?
affordable housing within its boundaries.
3) Defines "distributions of property tax revenues" to mean
all property tax revenues a city or county is entitled to
receive as a result of the dissolution of RDAs.
4) Authorizes a city or county that formed an 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 and redirect those revenues to a beneficiary
district. Once the funds are rejected and redirected, the
local jurisdiction no longer has control over it.
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 and provides that a beneficiary
district can only promote the development of affordable
housing within its boundaries.
6) 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
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
AB 2031 (Bonta) Page 4 of ?
1) Requires a beneficiary district to comply with the Ralph
M. Brown Act and the California Public Records Act.
2) Provides 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 on or after the date a beneficiary district
ceases to exist, the beneficiary district will no longer
have authority to conduct any business including 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.
4) 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 became the successor agency to
the RDA; or three members of the county board of
supervisors, if the county formed the RDA and became the
successor agency to the RDA
b) The treasurer of the city or county that formed the
RDA and became the successor agency to the RDA
c) One member of the public who lives within the
boundaries of the beneficiary district
COMMENTS:
1) Purpose of the bill. According to the author, it takes
years to put enough affordable housing on the market to make
an impact on prices. Depending on the project, construction
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can take a few weeks to several months. In addition, average
approval time is eight months to a year in cities like San
Francisco and Los Angeles. Finally, with the dissolution of
redevelopment agencies, and no permanent source of funding
from the state to support the construction of affordable
housing, there is no ongoing revenue to subsidize the
construction of affordable and workforce housing.
This bill empowers local governments to rapidly address the
affordable housing crisis. The bill allows cities to pass an
ordinance to issue bonds for affordable housing without
raising taxes or diverting property taxes from other sources.
AB 2031 allows cities to tap any portion of their net
available revenue to use bonds for affordable housing. The
net available, also known as "boomerang funds," is distributed
by the county auditor-controller to cities from the
Redevelopment Property Tax Trust Fund (RPTTF). By
front-loading projects with a bond, cities can build more
units more quickly and address displacement.
2) Background of RDAs. Historically, Community Redevelopment
Law allowed a local government to establish a redevelopment
area and capture all of the increase in property taxes
generated within the area (referred to as "tax increment")
over a period of decades. The law required redevelopment
agencies to deposit 20% of tax increment into a low- and
moderate-income housing fund to be used to increase, improve,
and preserve the community's supply of low- and
moderate-income housing available at an affordable-housing
cost.
In 2011, facing a severe budget shortfall, the Governor
proposed eliminating RDAs to deliver more property taxes to
other local agencies. Ultimately, the legislature acted and
RDAs were dissolved as of February 1, 2012.
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, which requires
undergoing due diligence reviews and making 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
AB 2031 (Bonta) Page 6 of ?
community that formed the agency, and use of proceeds from
bonds issued by the former RDA.
3) Boomerang funds. RDA 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 an RDA that has received a finding of
completion from the 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. According to the
sponsor, permitting the beneficiary district to bond on these
boomerang funds would provide more money up front for the
construction of affordable housing projects. 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.
4) Beneficiary districts. 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
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 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 would transfer to the city or
county that created it.
5) Opposition. According to the Howard Jarvis Taxpayers
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Association, while no money will be diverted from other local
agencies to pay off these bonds, it represents poor fiscal
policy. These bonds will be on the books for decades, and
ultimately, directly or indirectly, will be the responsibility
of the taxpayers to pay off. The California Constitution
requires a two-thirds vote for most local government bond
debt. This bill establishes a bad precedent not only by
removing the vote requirement, but also because it opens the
door for other taxes or other forms of property assessment.
6) Double-referral. This bill has been double-referred to this
committee and the Senate Governance and Finance Committee.
Assembly Votes:
Floor: 51-27
L.Gov: 7-1
H&CD: 5-2
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 8, 2016.)
SUPPORT:
City of Oakland (co-sponsor)
Non-profit Housing Association of Northern California
(co-sponsor)
American Federation of State, County and Municipal Employees
(AFSCME)
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
East Bay Asian Local Development Corporation
East Bay Developmental Disabilities Legislative Coalition
Equity Community Builders
EveryOne Home
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Housing Leadership Council of San Mateo County
MidPen Housing
Northern California Community Loan Fund
Peoples' Self Help Housing
Sacramento Housing Alliance
San Diego Housing Federation
Sonoma County Board of Supervisors
The Arc and United Cerebral Palsy California Collaboration
OPPOSITION:
Howard Jarvis Taxpayers Association
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