BILL ANALYSIS Ó
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Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2514
(Brown) - As Introduced February 19, 2016
SUBJECT: Local government: redevelopment: successor agencies
to redevelopment agencies: enforceable obligations.
SUMMARY: Allows federal base reuse obligations for the former
Norton Air Force Base as confirmed by the 1990 Joint Powers
Agreement providing for member contributions, and by the 1990
cooperation agreement with a state water contractor, to be
deemed enforceable obligations, for purposes of the law related
to redevelopment dissolution.
EXISTING LAW:
1)Creates infrastructure and revitalization financing districts,
authorizes a military base reuse authority to form a district,
and allows these districts to finance a broader range of
projects and facilities to clean-up and develop former
military bases.
2)Allows local agencies to establish an Enhanced Infrastructure
Financing District which provides broad authorities for local
agencies to use tax increment to finance a wide variety of
projects including infrastructure, such as roads, bridges and
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wastewater and groundwater facilities; affordable housing,
mixed-use development and sustainable development;
transit-oriented development; light rail; industrial
structures; parks and open space; libraries; child care
facilities; military base reuse; and brownfields remediation.
3)Authorizes local governments to create a Community
Revitalization and Investment Authority to use tax increment
revenue to improve infrastructure, assist businesses, and
support affordable housing in disadvantaged communities and
allows a plan within an area that is within a former military
base that is principally characterized by deteriorated or
inadequate infrastructure and structures.
4)Allows, pursuant to the Joint Exercise of Powers Act, two or
more public agencies by agreement, to jointly exercise any
power common to the contracting parties, as specified,
if authorized by their legislative or other governing bodies.
5)Allows the legislative bodies for communities having territory
within, adjacent to or in proximity to a military facility or
installation, as specified, to create a separate joint powers
agency (JPA) to have and exclusively exercise powers of an
agency in furtherance of the redevelopment of a project area
approved by the JPA and makes a number of findings and
declarations, including:
a) The closure of two or more military facilities or
installations within the County of San Bernardino will
cause serious economic hardship in that county, including
loss of jobs, increased unemployment, deterioration of
properties and land utilization and undue disruption of the
lives and activities of the people; and,
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b) It is the policy of the Legislature to assist
communities within the County of San Bernardino in their
attempt to preserve the military facilities and
installations for their continued use as airports and
aviation-related purposes.
6)Dissolves Redevelopment Agencies (RDAs) and establishes a
process for winding down their activities.
7)Defines "enforceable obligations" and requires successor
agencies to make payments due to enforceable obligations, as
specified.
8)Requires successor agencies to prepare a Recognized Obligation
Payment Schedule (ROPS), before each six-month fiscal period,
in accordance with specified requirements, and requires the
schedule to identify one or more of the following sources of
payment:
a) Low- and Moderate-Income Housing Fund;
b) Bond proceeds;
c) Reserve balances;
d) Administrative cost allowance;
e) The RDA Property Tax Trust Fund (RPTTF), as specified;
and,
f) Other revenue sources, including rents, concessions,
asset sale proceeds, interest earnings, and any other
revenues derived from the former redevelopment agency, as
approved by the oversight board.
9)Requires each successor agency to have an oversight board of
seven members to approve certain actions of the successor
agency and requires the Department of Finance (DOF) to review
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the actions of an oversight board.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
1)Bill Summary. This bill allows federal base reuse obligations
for the former Norton Air Force Base as confirmed by the 1990
Joint Powers Agreement providing for member contributions, and
by the 1990 cooperation agreement with a state water
contractor, to be deemed enforceable obligations, for purposes
of the law related to redevelopment dissolution.
This bill is sponsored by the Inland Valley Development Agency
(IVDA).
2)Author's Statement. According to the author, "As a result of
limitations created by the redevelopment dissolution law, the
Department of Finance has been unable to confirm that the
pledge of tax revenues under a JPA contract is an enforceable
obligation to the IVDA. Each member of the JPA pledged a
portion of its tax rate to satisfy the requirements of the
Department of Defense to enter into a federally-approved
military base reuse agreement. IVDA had state RDA authority
and its formation and funding is unique. IVDA is the only
military base reuse entity in California organized as a JPA.
IVDA has complied with RDA dissolution requirements and today
the Agency includes the on-going base reuse JPA and a
Successor Agency. However, the RDA dissolution statutes
caused a disruption in the local funding agreements pursuant
to the federal contracts executed when the JPA was formed 26
years ago. Since 2012, IVDA has lost $24 million in revenues
pledged to the JPA, limiting base reuse initiatives. That
revenue is being redistributed to other agencies."
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3)Background on IVDA. IVDA is a joint powers authority (JPA)
comprised of the Cities of San Bernardino, Colton, and Loma
Linda, and the County of San Bernardino. In 1989,
AB 419 (Eaves), Chapter 545, Statutes of 1989, added a new
section to the Health and Safety Code to specifically
authorize the legislative bodies of these local agencies to
form a JPA for purposes of redevelopment of Norton Air Force
Base and George Air Force Base, thus granting IVDA the powers
to act as a redevelopment agency. AB 419 contained a number
of findings, including the need for a JPA to assist
communities within the County of San Bernardino in their
attempt to preserve the military facilities and installations
because of their closure and the serious economic hardship and
accompanying blight that would follow.
Thus, pursuant to the enabling legislation (AB 419) and the
Joint Exercise of Powers Act, IVDA was formed in 1990 with the
authority and power to plan for the use and reuse of the
Norton AFB, to acquire, maintain and operate an airport for
the economic benefit of the East Valley, and to serve as a
federal base re-use authority. IVDA is specifically
designated by the United States Department of Defense as the
officially recognized Local Redevelopment Authority under 32
CFR Part 175, Section 175.3 and under Public Law 100-526 (also
known as the Base Realignment and Closure Act).
Agreements and Tax Increment Contributions. As part of the
joint powers agreement in 1990, the local agency members
agreed to provisions requiring tax contributions from each
member agency to fund IVDA. The agreement required "Tax
Increment Revenues attributable to the project area shall be
allocated for Agency use from each Member's percentage share
of the one percent (1%) tax rate as follows: (i) each member
which is an incorporated city shall have allocated for Agency
use one-half (1/2) of their percentage share of the one
percent (1%) tax rate for property taxes generated upon the
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incremental assessed value of property located within their
municipal boundaries of the project area; (ii) the County
shall have allocated for Agency use one-half (1/2) of the
County General Fund share of the one percent (1%) tax rate for
property taxes generated upon the incremental assessed value
of property which is within the County unincorporated areas of
the project area."
There was also an agreement in 1990 between IVDA and the San
Bernardino Valley Municipal Water District (SBVMWD) to
"cooperatively provide for the redevelopment
of certain areas within the territorial limits of the Agency."
The agreement specifies that SBVMWD would continue to receive
tax revenues resulting from increases in the District debt
services tax levies and the two percent (2%) annual escalation
in assessed values, and that IVDA would receive all other tax
increment revenues attributable to the District had the
redevelopment plan not been adopted, and would remit 50% to
the District.
2012 Binding Settlement. On February 27, 2014, the IVDA
entered into a binding settlement agreement with the State of
California, DOF and others to resolve prior litigation matters
regarding the IVDA's unique formation and operation under
federal and state law. That settlement ensured that going
forward, IVDA had a Successor Agency function that served to
address the post-dissolution functions related to IVDA's
exercise of California redevelopment powers. It further
established that IVDA's existence and operation as a military
base reuse JPA was not dissolved and continues to function for
the purposes for which it was originally established. The
Successor Agency and the Joint Powers Authority are separate
and distinct legal entities.
4)Post-Dissolution. DOF, in a letter dated December 17, 2014,
to IVDA, denied Base Reuse Joint Powers Authority Obligations
in the amount of $3.9 million, noting that "it is our
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understanding that this item relates to the revenue
contribution to be made by members of the IVDA JPA for the
continued operation of IVDA JPA?Finance initially denied this
item because it does not fall within the meaning of an
enforceable obligation as defined by HSC Section 34171 (d)(1).
During the Meet and Confer process, the Agency contends that
this item is the IVDA JPA's revenues that should be passed
through the Agency for payment to the IVDA JPA. However the
Agency has not provided any documents to show that an
enforceable obligation, pursuant [to] HSC section 34171
(d)(1), exists that requires the payment of these revenues to
the IVDA JPA to be listed on the ROPS. Therefore, this item
is not eligible for RPTTF funding."
In another letter from DOF to IVDA dated November 16, 2015,
pass-through agreements totaling $3.9 million were not allowed
with DOF stating that "The Agency was unable to provide
sufficient documentation to support the amounts claimed, and
pursuant to HSC section 34183 (a)(1) the County Auditor
Controller (CAC) is required to make the necessary
pass-through payments?"
In a letter dated May 13, 2014, to DOF from the Department of
the Air Force (Air Force Civil Engineer Center), regarding
IVDA's recognized obligations, the Department of the Air Force
notes that "conveyance of all properties to four surrounding
cities and San Bernardino County from the DOD (Department of
Defense) was accomplished under representations from the joint
powers authority that revenues from reuse activities,
including the commitment of member revenues and redevelopment
tax increment from the economically impacted area around the
former base, would be directed to the reuse and operation of
the former base property."
5)Policy Considerations. The Committee may wish to consider the
following:
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a) End Date. Is there an end anticipated for the member
contributions and pass through that the bill would be
allowing? If not, that runs contrary to the point of RDA
dissolution which is to wind down RDA activities, not allow
them to continue into perpetuity.
b) IVDA Obligations. Are the member contributions and
water district pass through revenues pledged to pay off
bond debt pre June 28, 2011, in accordance with RDA
dissolution law, or are these revenues anticipated to be
used to fund ongoing base reuse projects into the future?
If it is to continue funding base reuse projects going
forward, then this runs contrary to RDA dissolution laws.
c) Different Approaches and Options. While the bill allows
the member contributions and pass through agreements to
continue to exist, the Committee may wish to ask the author
and sponsor whether the following options were
contemplated, and if so, to discuss why these options (none
of which require state legislation) are not feasible:
i) Local Agreement. If all the cities and the County
agree that they should put in tax increment to fund
IVDA's ongoing activities, why not do it through a
separate local agreement?
ii) Infrastructure and Revitalization Financing District
(IRFD). AB 229 (John Perez), Chapter 775, Statutes of
2014, created infrastructure and revitalization financing
districts, modeled after infrastructure financing
districts. AB 229 specifically allowed a military base
reuse authority to form an IRFD in order to finance a
broad range of projects and facilities to clean-up and
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redevelop former military bases.
iii) Enhanced Infrastructure Financing District (EIFD).
SB 628 (Beall), Chapter 785, Statutes of 2014, provided
broad authorities for local agencies to use tax increment
to finance a wide variety of projects, including
infrastructure, such as roads, bridges and wastewater and
groundwater facilities; affordable housing, mixed-use
development and sustainable development; transit-oriented
development; light rail; industrial structures; parks and
open space; libraries; child care facilities; military
base reuse; and brownfields remediation. EIFDs provide
broad flexibility in funding and no public vote is
required to establish an authority, although a 55% vote
is required to issue bonds. EIFDs can cross
jurisdictional boundaries and involve multiple cities and
a county and there are no geographic limitations where it
can be used.
iv) Community Revitalization and Investment Authority
(CRIA). AB 2 (Alejo and E. Garcia), Chapter 319,
Statutes of 2015, authorized local governments to create
CRIAs to use tax increment revenue to improve
infrastructure, assist businesses, and support affordable
housing in disadvantaged communities. AB 2 specifically
allowed a CRIA to carry out a plan within an area that is
within a former military base that is principally
characterized by deteriorated or inadequate
infrastructure and structures.
d) Vague Language. Language in the bill that adds to the
definition of enforceable obligations, specifically,
"including, but not limited to, federal base reuse
obligations for the former Norton Air Force Base as
confirmed by the 1990 Joint Powers Agreement providing for
member contributions and by the 1990 cooperation agreement
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pass with a state water contractor" is vague and confusing.
Should the bill move forward, the author may wish to
strengthen this language by striking "including, but not
limited to" and more specifically defining both the 1990
Joint Powers Agreement and the cooperation agreement with
the San Bernardino Valley Municipal Water District so that
the intent is clear.
6)Arguments in Support. Supporters argue that the bill will
once again allow tax revenues pledged in 1990 to flow to IVDA,
and is important to maximize job creation and economic
development activities in and around the former base, ensuring
that the original federal obligations and base reuse plan are
realized.
7)Arguments in Opposition. None on file.
8)Double-Referral. This bill is double-referred to the Housing
and Community Development Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Cities of Colton, Loma Linda, and San Bernardino
Highland Area Chamber of Commerce
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Hillwood
Inland Empire Economic Partnership
Matich Corporation
San Bernardino Area Chamber of Commerce
San Bernardino City Unified School District
San Bernardino Community College District
San Bernardino County Superintendent of Schools
Opposition
None on file
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958
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