BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 2031 |Hearing |6/29/16 |
| | |Date: | |
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|Author: |Bonta |Tax Levy: |No |
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|Version: |3/17/16 |Fiscal: |No |
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|Consultant|Weinberger |
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Local government: affordable housing: financing
Allows a city or county to reject allocations of specified
revenues resulting from redevelopment agencies' dissolution to
make those revenues available to develop affordable housing.
Background
Until 2011, the Community Redevelopment Law allowed local
officials to set up redevelopment agencies (RDAs), prepare and
adopt redevelopment plans, and finance redevelopment activities.
Citing a significant State General Fund deficit, Governor
Brown's 2011-12 budget proposed eliminating RDAs and returning
billions of dollars of property tax revenues to schools, cities,
and counties to fund core services. Among the statutory changes
that the Legislature adopted to implement the 2011-12 Budget,
ABX1 26 (Blumenfield, 2011) dissolved all RDAs. The California
Supreme Court's 2011 ruling in California Redevelopment
Association v. Matosantos upheld ABX1 26, but invalidated ABX1
27 (Blumenfield, 2011), which would have allowed most RDAs to
avoid dissolution.
AB X1 26 established successor agencies to manage the process of
unwinding former RDAs' affairs. With limited exceptions, the
city or county that created each former RDA now serves as that
RDA's successor agency. Each successor agency has an oversight
board that is responsible for supervising it and approving its
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actions. The Department of Finance (DOF) can review and request
reconsideration of an oversight board's decisions.
If a successor agency complies with state laws that require it
to remit specified RDA property tax allocations and cash assets
identified through a "due diligence review" process, it receives
a "finding of completion" from the DOF (AB 1484, Assembly Budget
Committee, 2012).
One of the successor agencies' primary responsibilities is to
make payments for enforceable obligations entered into by former
RDAs. Subject to statutory requirements, successor agencies'
obligations are payable out of a Redevelopment Property Tax
Trust Fund (RPTTF), which contains the revenues that would have
been allocated as tax increment to a former RDA. After all
preexisting legal commitments and statutory obligations funded
from the RPTTF are made pursuant to state law, periodic
distributions of the remaining revenues in the RPTTF are made to
other taxing entities within the former RDA's territory.
The loss of the ongoing funding for affordable housing that RDAs
used to provide has left many local officials with few tools
they can use to respond to their communities' affordable housing
needs. Some officials want to be able to dedicate the revenues
that their cities and counties receive as a part of the RDA
dissolution process to developing affordable housing.
Proposed Law
Assembly Bill 2031 creates an affordable housing beneficiary
district within the geographical boundaries of each successor
agency that has received a finding of completion.
AB 2031 defines an "affordable housing beneficiary district" as
a 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.
AB 2031 requires a beneficiary district to be governed by a
five-member board comprised of:
Three members of the city council or board of
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supervisors that formed the former redevelopment agency;
The treasurer of the city or county that formed the
former redevelopment agency; and,
A member of the public who lives within the boundaries
of the beneficiary district.
AB 2031 specifies the manner in which the beneficiary districts'
board members must be appointed and board vacancies filled,
establishes four-year terms for board members, prohibits board
members from receiving compensation, and requires board members
to elect a chairperson.
AB 2031 allows a city or county that became the successor agency
to a former redevelopment agency and received a finding of
completion to reject, by adopting an ordinance or resolution,
its distributions of property tax revenues from the trust fund.
AB 2031 requires the county auditor-controller to transfer to
the beneficiary district all of the distribution of property tax
revenues from the trust fund that the city or county rejected.
With a specified exception, AB 2031 prohibits a city or county
that rejects its distributions of property tax revenues from
having any claim to, or control over, the distributions of
property tax revenues it may have otherwise received pursuant to
specified statutes governing former RDAs' dissolution.
AB 2031 requires that a beneficiary district must only promote
the development of affordable housing within its boundaries. AB
2031 defines "affordable housing" as 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 those categories are defined in specified
statutes. AB 2031 directs that a beneficiary district may
promote the development of affordable housing by doing any of
the following:
Issuing bonds to be repaid from the property tax
revenues directed to the district.
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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Taking other actions that the board determines will
promote the financing of the development of affordable
housing within its boundaries.
AB 2031 requires a beneficiary district to comply with specified
open meeting and public records statutes.
AB 2031 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.
AB 2031 requires that:
A beneficiary district must cease 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.
On and after the date a beneficiary district ceases to
exist, the beneficiary district must not have the authority
to conduct any business, including taking any action or
making any payment
Any funds of the beneficiary district must automatically
transfer to the city or county that rejected its
distributions of property tax revenues that were thereafter
directed to the district.
The terms of the members of the board of a beneficiary
district shall expire on the date the beneficiary district
ceases to exist.
Any legal right of the beneficiary district on or after
the date the beneficiary district ceases to exist,
including the right to repayment pursuant to a loan made by
the beneficiary district, is the right of the city or
county that rejected its distributions of property tax
revenues that was thereafter directed to the district.
When a beneficiary district ceases to exist, a public
record of the beneficiary district shall be the property of
the city or county that rejected its distribution of
property tax proceeds.
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State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Redevelopment agencies' dissolution
left California without any permanent source of funding to
support the construction of affordable housing. AB 2031
empowers local governments to address the affordable housing
crisis using revenues generated by the former RDAs' dissolution.
The bill allows eligible cities and counties to pass an
ordinance to issue bonds for affordable housing without raising
taxes or diverting property taxes from other sources. AB 2031
allows cities and counties to tap the revenues they receive from
a Redevelopment Property Tax Trust Fund to repay bonds for
affordable housing. By front-loading projects with a bond,
cities and counties can build a larger number of affordable
housing units more quickly and address displacement.
2. Voter approval for local debts . State law requires
supermajority voter approval for debt that encumbers general
purpose revenues. Two-thirds of voters must approve before a
city or county can commit a portion of the property tax revenues
that flow into its general fund, as a limited obligation, to
repay bonds used to build infrastructure. The financing
approach authorized by AB 2031, by diverting revenues before
they are placed into a government's general fund and requiring
debt to be issued through a special district, may thread the
needle of avoiding any legal requirements to obtain two-thirds
voter approval. However, as a matter of policy, a city or
county's decision to "reject" net available revenues that would
otherwise flow into its general fund so that those revenues can
instead repay affordable housing bonds warrants the same voter
scrutiny that state law requires for limited obligation bonds.
AB 2031 may erode the California Constitution's voter approval
requirement for public debt.
3. Too narrow ? AB 2031 may unintentionally exclude some cities
and counties from the authority granted by the bill.
Specifically, the bill allows property tax allocations from a
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RPTTF to be rejected only by "a city or county that became the
successor agency to a former redevelopment agency." This
language could exclude the City of Los Angeles, which elected
not to become the successor agency to its former redevelopment
agency. In addition to Los Angeles, six other local governments
did not become successor agencies, but instead allowed an
appointed "designated local authority" to take responsibility
for unwinding the affairs of their former RDAs. The bill's
narrow language also may exclude counties that never formed an
RDA, but that receive allocations from a RPTTF. The Committee
may wish to consider amending AB 2031 to apply the bill's
provisions to:
Any city or county in which the former RDA's successor
entity has received a finding of completion, regardless of
whether the city or county is the successor agency, and
Any county that receives RPTTF allocations to use the
bill's authority, regardless of whether that county had
ever formed an RDA.
4. Let's get technical . AB 2031 specifically defines what the
phrase "distribution of property tax revenues" means for the
purposes of the bill's provisions. With one exception, the bill
consistently refers to distributions of property tax revenues.
To make the bill's language more consistent, the Committee may
wish to consider amending AB 2031 to substitute the term
property tax "revenues" in place of the reference to property
tax "proceeds" on page 5, line 17.
5. Double-referred . The Senate Rules Committee has ordered a
double-referral of AB 2031, first to the Senate Committee on
Transportation & Housing, which has jurisdiction over bill
relating to housing policy, and then to the Senate Governance &
Finance Committee, which has jurisdiction over bills relating to
local government bonds. The Senate Transportation & Housing
Committee passed AB 2031 at its June 14, 2016 hearing on a 8-3
vote.
Assembly Actions
Assembly Housing and Community Development Committee: 5-2
Assembly Local Government Committee: 7-1
Assembly Floor: 51-27
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Senate Transportation and Housing Committee: 8-3
Support and
Opposition (6/23/16)
Support : 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; Cities of Oakland and Walnut Creek;
Community Housing Opportunities Corporation; East Bay Asian
Local Development Corporation; East Bay Developmental
Disabilities Legislative Coalition; Equity Community Builders;
EveryOne Home; Housing Leadership Council of San Mateo County;
MidPen Housing; Non-profit Housing Association of Northern
California; 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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