BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2031|
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THIRD READING
Bill No: AB 2031
Author: Bonta (D) and Atkins (D), et al.
Amended: 8/2/16 in Senate
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 8-3, 6/14/16
AYES: Beall, Allen, Galgiani, Leyva, McGuire, Mendoza, Roth,
Wieckowski
NOES: Cannella, Bates, Gaines
SENATE GOVERNANCE & FIN. COMMITTEE: 4-2, 6/29/16
AYES: Hertzberg, Beall, Hernandez, Lara
NOES: Nguyen, Moorlach
NO VOTE RECORDED: Pavley
ASSEMBLY FLOOR: 51-27, 5/12/16 - See last page for vote
SUBJECT: Local government: affordable housing: financing
SOURCE: City of Oakland
Non-profit Housing Association of Northern California
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.
AB 2031
Page 2
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.
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, 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.
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Page 3
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 households, 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
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 from
DOF after dissolving its RDA 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:
AB 2031
Page 4
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.
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:
AB 2031
Page 5
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.
1) Provides that this bill shall not apply to any city, county,
or city and county that formed a redevelopment agency if the
successor agency did not receive a finding of completion.
Background
1) 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 RDAs 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
AB 2031
Page 6
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.
2)Boomerang funds. 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,
which the county auditor-controller distributes to the taxing
entities, including cities, counties, and special districts.
This bill allows 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.
3)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
AB 2031
Page 7
by the beneficiary district would transfer to the city or
county that created it.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified8/2/16)
City of Oakland (co-source)
Non-profit Housing Association of Northern California
(co-source)
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 Oakland
City of Walnut Creek
Community Housing Opportunities Corporation
Community Loan Fund
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
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: (Verified8/2/16)
Howard Jarvis Taxpayers Association
AB 2031
Page 8
ARGUMENTS IN SUPPORT: According to the author, it takes years
to put enough affordable housing on the market to make an impact
on prices. Additionally, with the dissolution of RDAs, 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. This bill 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. By front-loading
projects with a bond, cities can build more units more quickly
and address displacement.
ARGUMENTS IN OPPOSITION: According to the Howard Jarvis
Taxpayers 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.
ASSEMBLY FLOOR: 51-27, 5/12/16
AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown,
Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh,
Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández,
Holden, Irwin, Levine, Lopez, Low, McCarty, Medina, Mullin,
Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas,
Santiago, Mark Stone, Thurmond, Ting, Waldron, Weber,
Williams, Wood, Rendon
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper,
Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes,
Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Wilk
AB 2031
Page 9
NO VOTE RECORDED: Burke, Jones-Sawyer
Prepared by:Alison Dinmore / T. & H. / (916) 651-4121
8/3/16 18:54:30
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