California Legislature—2015–16 Regular Session

Assembly BillNo. 2514


Introduced by Assembly Member Brown

February 19, 2016


An act to amend Section 34171 of the Health and Safety Code, relating to redevelopment.

LEGISLATIVE COUNSEL’S DIGEST

AB 2514, as introduced, Brown. Local government: redevelopment: successor agencies to redevelopment agencies: enforceable obligations.

Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to wind down the affairs of the dissolved redevelopment agencies and to, among other things, make payments due for enforceable obligations and to perform obligations required pursuant to any enforceable obligation. Existing law defines the term “enforceable obligation” for these purposes to mean, among other things, preexisting obligations to the state or obligations imposed by state law, other than specified passthrough payments that are made by the county auditor-controller.

This bill would expressly include federal base reuse obligations for the former Norton Air Force Base pursuant to specified agreements as a preexisting obligation to the state or obligation imposed by state law.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 34171 of the Health and Safety Code is
2amended to read:

3

34171.  

The following terms shall have the following meanings:

4(a) “Administrative budget” means the budget for administrative
5costs of the successor agencies as provided in Section 34177.

6(b) (1) “Administrative cost allowance” means the maximum
7amount of administrative costs that may be paid by a successor
8agency from the Redevelopment Property Tax Trust Fund in a
9fiscal year.

10(2) The administrative cost allowance shall be 5 percent of the
11property tax allocated to the successor agency on the Recognized
12Obligation Payment Schedule covering the period January 1, 2012,
13through June 30, 2012. The administrative cost allowance shall be
14up to 3 percent of the property tax allocated to the Redevelopment
15Obligation Retirement Fund for each fiscal year thereafter ending
16on June 30, 2016. However, the administrative cost allowance
17shall not be less than two hundred fifty thousand dollars ($250,000)
18in any fiscal year, unless this amount is reduced by the oversight
19board or by agreement with the successor agency.

20(3) Commencing July 1, 2016, and for each fiscal year thereafter,
21the administrative cost allowance shall be up to 3 percent of the
22actual property tax distributed to the successor agency by the
23county auditor-controller in the preceding fiscal year for payment
24of approved enforceable obligations, reduced by the successor
25agency’s administrative cost allowance and loan repayments made
26to the city, county, or city and county that created the
27redevelopment agency that it succeeded pursuant to subdivision
28(b) of Section 34191.4 during the preceding fiscal year. However,
29the administrative cost allowance shall not be less than two hundred
30fifty thousand dollars ($250,000) in any fiscal year, unless this
31amount is reduced by the oversight board or by agreement between
32the successor agency and the department.

33(4) Notwithstanding paragraph (3), commencing July 1, 2016,
34a successor agency’s annual administrative costs shall not exceed
3550 percent of the total Redevelopment Property Tax Trust Fund
36distributed to pay enforceable obligations in the preceding fiscal
37year, which latter amount shall be reduced by the successor
38agency’s administrative cost allowance and loan repayments made
P3    1to the city, county, or city and county that created the
2redevelopment agency that it succeeded pursuant to subdivision
3(b) of Section 34191.4 during the preceding fiscal year. This
4limitation applies to administrative costs whether paid within the
5administrative cost allowance or not, but does not apply to
6administrative costs paid from bond proceeds or grant funds, or,
7in the case of a successor agency that is a designated local
8authority, from sources other than property tax.

9(5) The administrative cost allowance shall be approved by the
10oversight board and shall be the sole funding source for any legal
11expenses related to civil actions brought by the successor agency
12or the city, county, or city and county that created the former
13redevelopment agency, including writ proceedings, contesting the
14validity of this part or Part 1.8 (commencing with Section 34161)
15or challenging acts taken pursuant to these parts. Employee costs
16associated with work on specific project implementation activities,
17including, but not limited to, construction inspection, project
18management, or actual construction, shall be considered
19project-specific costs and shall not constitute administrative costs.

20(c) “Designated local authority” shall mean a public entity
21formed pursuant to subdivision (d) of Section 34173.

22(d) (1) “Enforceable obligation” means any of the following:

23(A) Bonds, as defined by Section 33602 and bonds issued
24pursuant to Chapter 10.5 (commencing with Section 5850) of
25Division 6 of Title 1 of the Government Code, including the
26required debt service, reserve set-asides, and any other payments
27required under the indenture or similar documents governing the
28issuance of the outstanding bonds of the former redevelopment
29agency. A reserve may be held when required by the bond
30indenture or when the next property tax allocation will be
31insufficient to pay all obligations due under the provisions of the
32bond for the next payment due in the following half of the calendar
33 year.

34(B) Loans of moneys borrowed by the redevelopment agency
35for a lawful purpose, to the extent they are legally required to be
36repaid pursuant to a required repayment schedule or other
37mandatory loan terms.

38(C) Payments required by the federal government, preexisting
39obligations to the state or obligations imposed by state law,
40begin insert specifically including, but not limited to, federal base reuse
P4    1obligations for the former Norton Air Force Base as confirmed by
2the 1990 Joint Powers Agreement providing for member
3contributions and by the 1990 cooperation agreement pass with
4a state water contractor,end insert
other than passthrough payments that are
5made by the county auditor-controller pursuant to Section 34183,
6or legally enforceable payments required in connection with the
7agencies’ employees, including, but not limited to, pension
8payments, pension obligation debt service, unemployment
9 payments, or other obligations conferred through a collective
10bargaining agreement. Costs incurred to fulfill collective bargaining
11agreements for layoffs or terminations of city employees who
12performed work directly on behalf of the former redevelopment
13agency shall be considered enforceable obligations payable from
14property tax funds. The obligations to employees specified in this
15subparagraph shall remain enforceable obligations payable from
16property tax funds for any employee to whom those obligations
17apply if that employee is transferred to the entity assuming the
18housing functions of the former redevelopment agency pursuant
19to Section 34176. The successor agency or designated local
20authority shall enter into an agreement with the housing entity to
21reimburse it for any costs of the employee obligations.

22(D) Judgments or settlements entered by a competent court of
23law or binding arbitration decisions against the former
24redevelopment agency, other than passthrough payments that are
25made by the county auditor-controller pursuant to Section 34183.
26Along with the successor agency, the oversight board shall have
27the authority and standing to appeal any judgment or to set aside
28any settlement or arbitration decision.

29(E) Any legally binding and enforceable agreement or contract
30that is not otherwise void as violating the debt limit or public
31policy. However, nothing in this act shall prohibit either the
32successor agency, with the approval or at the direction of the
33oversight board, or the oversight board itself from terminating any
34existing agreements or contracts and providing any necessary and
35required compensation or remediation for such termination. Titles
36of or headings used on or in a document shall not be relevant in
37determining the existence of an enforceable obligation.

38(F) (i) Contracts or agreements necessary for the administration
39or operation of the successor agency, in accordance with this part,
40including, but not limited to, agreements concerning litigation
P5    1expenses related to assets or obligations, settlements and
2judgments, and the costs of maintaining assets prior to disposition,
3and agreements to purchase or rent office space, equipment and
4supplies, and pay-related expenses pursuant to Section 33127 and
5for carrying insurance pursuant to Section 33134. Beginning
6January 1, 2016, any legal expenses related to civil actions,
7including writ proceedings, contesting the validity of this part or
8Part 1.8 (commencing with Section 34161) or challenging acts
9taken pursuant to these parts shall only be payable out of the
10administrative cost allowance.

11(ii) A sponsoring entity may provide funds to a successor agency
12for payment of legal expenses related to civil actions initiated by
13the successor agency, including writ proceedings, contesting the
14validity of this part or Part 1.8 (commencing with Section 34161)
15or challenging acts taken pursuant to these parts. If the successor
16agency obtains a final judicial determination granting the relief
17requested in the action, the funds provided by the sponsoring entity
18for legal expenses related to successful causes of action pled by
19the successor agency shall be deemed an enforceable obligation
20for repayment under the terms set forth in subdivision (h) of
21Section 34173. If the successor agency does not receive a final
22judicial determination granting the relief requested, the funds
23provided by the sponsoring entity shall be considered a grant by
24the sponsoring entity and shall not qualify for repayment as an
25enforceable obligation.

26(G) Amounts borrowed from, or payments owing to, the Low
27and Moderate Income Housing Fund of a redevelopment agency,
28which had been deferred as of the effective date of the act adding
29this part; provided, however, that the repayment schedule is
30approved by the oversight board. Repayments shall be transferred
31to the Low and Moderate Income Housing Asset Fund established
32pursuant to subdivision (d) of Section 34176 as a housing asset
33and shall be used in a manner consistent with the affordable
34housing requirements of the Community Redevelopment Law (Part
351 (commencing with Section 33000)).

36(2) For purposes of this part, “enforceable obligation” does not
37include any agreements, contracts, or arrangements between the
38city, county, or city and county that created the redevelopment
39agency and the former redevelopment agency. However, written
40agreements entered into (A) at the time of issuance, but in no event
P6    1later than December 31, 2010, of indebtedness obligations, and
2(B) solely for the purpose of securing or repaying those
3indebtedness obligations may be deemed enforceable obligations
4for purposes of this part. Additionally, written agreements entered
5into (A) at the time of issuance, but in no event later than June 27,
62011, of indebtedness obligations solely for the refunding or
7refinancing of other indebtedness obligations that existed prior to
8January 1, 2011, and (B) solely for the purpose of securing or
9repaying the refunded or refinanced indebtedness obligations may
10be deemed enforceable obligations for purposes of this part.
11Notwithstanding this paragraph, loan agreements entered into
12between the redevelopment agency and the city, county, or city
13and county that created it, within two years of the date of creation
14of the redevelopment agency, may be deemed to be enforceable
15obligations. Notwithstanding this paragraph, an agreement entered
16into by the redevelopment agency prior to June 28, 2011, is an
17enforceable obligation if the agreement relates to state highway
18infrastructure improvements to which the redevelopment agency
19committed funds pursuant to Section 33445. Notwithstanding this
20paragraph, an agreement between the city, county, or city and
21county that created the former redevelopment agency and the
22former redevelopment agency is an enforceable obligation if that
23agreement requires the former redevelopment agency to repay or
24fulfill an outstanding loan or development obligation imposed by
25a grant or loan awarded or issued by a federal agency, including
26the United States Department of Housing and Urban Development,
27to the city, county, or city and county which subsequently loaned
28or provided those funds to the former redevelopment agency.

29(3) Contracts or agreements between the former redevelopment
30agency and other public agencies, to perform services or provide
31funding for governmental or private services or capital projects
32outside of redevelopment project areas that do not provide benefit
33to the redevelopment project and thus were not properly authorized
34under Part 1 (commencing with Section 33000) shall be deemed
35void on the effective date of this part; provided, however, that such
36contracts or agreements for the provision of housing properly
37authorized under Part 1 (commencing with Section 33000) shall
38not be deemed void.

39(e) “Indebtedness obligations” means bonds, notes, certificates
40of participation, or other evidence of indebtedness, issued or
P7    1delivered by the redevelopment agency, or by a joint exercise of
2powers authority created by the redevelopment agency, to
3third-party investors or bondholders to finance or refinance
4redevelopment projects undertaken by the redevelopment agency
5in compliance with the Community Redevelopment Law (Part 1
6(commencing with Section 33000)).

7(f) “Oversight board” shall mean each entity established pursuant
8to Section 34179.

9(g) “Recognized obligation” means an obligation listed in the
10Recognized Obligation Payment Schedule.

11(h) “Recognized Obligation Payment Schedule” means the
12document setting forth the minimum payment amounts and due
13dates of payments required by enforceable obligations for each
14six-month fiscal period until June 30, 2016, as provided in
15subdivision (m) of Section 34177. On and after July 1, 2016,
16“Recognized Obligation Payment Schedule” means the document
17setting forth the minimum payment amounts and due dates of
18payments required by enforceable obligations for each fiscal year
19as provided in subdivision (o) of Section 34177.

20(i) “School entity” means any entity defined as such in
21subdivision (f) of Section 95 of the Revenue and Taxation Code.

22(j) “Successor agency” means the successor entity to the former
23redevelopment agency as described in Section 34173.

24(k) “Taxing entities” means cities, counties, a city and county,
25special districts, and school entities, as defined in subdivision (f)
26of Section 95 of the Revenue and Taxation Code, that receive
27passthrough payments and distributions of property taxes pursuant
28to the provisions of this part.

29(l) “Property taxes” include all property tax revenues, including
30those from unitary and supplemental and roll corrections applicable
31to tax increment.

32(m) “Department” means the Department of Finance unless the
33context clearly refers to another state agency.

34(n) “Sponsoring entity” means the city, county, or city and
35county, or other entity that authorized the creation of each
36redevelopment agency.

37(o) “Final judicial determination” means a final judicial
38determination made by any state court that is not appealed, or by
39a court of appellate jurisdiction that is not further appealed, in an
40action by any party.

P8    1(p) From July 1, 2014, to July 1, 2018, inclusive, “housing entity
2administrative cost allowance” means an amount of up to 1 percent
3of the property tax allocated to the Redevelopment Obligation
4Retirement Fund on behalf of the successor agency for each
5applicable fiscal year, but not less than one hundred fifty thousand
6dollars ($150,000) per fiscal year.

7(1) If a local housing authority assumed the housing functions
8of the former redevelopment agency pursuant to paragraph (2) or
9(3) of subdivision (b) of Section 34176, then the housing entity
10administrative cost allowance shall be listed by the successor
11agency on the Recognized Obligation Payment Schedule. Upon
12approval of the Recognized Obligation Payment Schedule by the
13oversight board and the department, the housing entity
14administrative cost allowance shall be remitted by the successor
15agency on each January 2 and July 1 to the local housing authority
16that assumed the housing functions of the former redevelopment
17agency pursuant to paragraph (2) or (3) of subdivision (b) of
18Section 34176.

19(2) If there are insufficient moneys in the Redevelopment
20Obligations Retirement Fund in a given fiscal year to make the
21payment authorized by this subdivision, the unfunded amount may
22be listed on each subsequent Recognized Obligation Payment
23Schedule until it has been paid in full. In these cases the five-year
24time limit on the payments shall not apply.



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