BILL ANALYSIS Ó
SB 441
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Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 441
(Leno) - As Amended April 6, 2015
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|Policy |Housing and Community |Vote:|5 - 2 |
|Committee: |Development | | |
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| |Local Government | |7 - 1 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY: This bill authorizes the San Francisco redevelopment
successor agency, subject to the approval of the oversight
board, to issue bonds or incur other indebtedness to finance the
infrastructure requirements of the Transbay Implementation
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Agreement and the affordable housing components of four
designated projects.
FISCAL EFFECT:
Net General Fund (GF) expenditures of approximately $273 million
over 40 years by authorizing bond financing pledged by revenues
in San Francisco's Redevelopment Property Tax Trust Fund (RPTTF)
for specified projects, rather than financing those projects on
a pay-as-you-go (pay/go) basis. Using the bond financing
authorized by this bill, San Francisco's schools would receive
$85 million more in RPTTF funds over the next ten years than
they would have under current law, thereby decreasing GF
backfill obligations. This will be followed by $358 million less
in RPTTF allocations to schools over the 30 years thereafter,
thus increasing GF obligations to backfill those losses to
schools.
Staff notes that all figures used here are based on comparative
scenarios for financing the projects (pay/go vs. bonding) with
data provided by San Francisco's successor agency.
COMMENTS:
1)Purpose. According to the author, "At the time of
redevelopment dissolution in 2012, the former redevelopment
agency had just started planning and funding for the
affordable housing projects in Transbay and Hunters Point
Shipyard/Candlestick Point and had completed or approved less
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than 1,000 units of affordable housing at Mission Bay. In
2013 and 2014, the California Department of Finance (DOF)
finally and conclusively determined that the Successor
Agency's obligations to fund affordable housing and public
infrastructure in the Major Approved Development Projects were
enforceable under redevelopment dissolution law and thus
constituted continuing obligations of the San Francisco
Successor Agency."
Redevelopment dissolution law generally does not provide
successor agencies with the authority to issue tax allocation
bonds to complete enforceable obligations. As a result, the
completion of San Francisco's affordable housing program
cannot be financed and would require, in the next several
years, the set aside of large amounts of property tax revenues
that would otherwise go to schools and other local taxing
entities.
This bill is a narrowed version of last year's SB 1404 (Leno,
2014), which was vetoed by the Governor. This bill will
authorize San Francisco to use bond financing to fund and
construct the remaining affordable housing units that have
been determined to be enforceable obligations by DOF.
2)Background. Historically, the Community Redevelopment Law had
allowed a local government to establish redevelopment agencies
(RDAs) and capture all of the increase in property taxes that
is generated within the project area beyond the base year
value (referred to as "tax increment") over a period of
decades. Prior to their dissolution in 2012, RDAs used tax
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increment financing (including the school share), oftentimes
issuing long-term debt in the form of tax allocation bonds, to
address issues of blight, construct affordable housing,
rehabilitate existing buildings, and finance development and
infrastructure projects.
Existing law establishes procedures for winding down RDA
activity, including a requirement that successor agencies
dispose of former RDAs' assets under direction of an oversight
board. Successor agencies are required to make any payments
related to enforceable obligations, as specified in an adopted
biannual recognized obligation payment schedule (ROPS), and
remit unencumbered balances of RDA funds to the county
auditor-controller for distribution to local taxing entities
in the county. DOF reviews each ROPS to determine if the
listed payments meet the statutory criteria for repayment, and
has the authority to disallow any payments that do not meet
those criteria. A successor agency can request that DOF issue
a binding, "final and conclusive" determination that an
enforceable obligation is valid.
The DOF has determined that specified development projects
approved by San Francisco's former RDA in the Transbay,
Mission Bay, and Hunter's Point shipyard/Candlestick Point
areas are finally and conclusively approved enforceable
obligations. When completed, those projects will account for
more than 3,300 units of affordable housing. Under current
law, San Francisco's successor agency is not authorized to
issue new debt backed by the RPTTF, and instead must finance
these projects on a pay-as-you-go basis with RPTTF funds. The
pay/go model is expected to obligate nearly all RTTPF funds in
the near future, leaving very little residual amounts for
disbursement to schools and other taxing entities.
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3)Prior Legislation. SB 1404 (Leno, 2014), a broader version of
this bill, would have allowed the San Francisco successor
agency to receive property tax increment from six specified
redevelopment project areas, and issue debt to pay for
specified replacement housing obligations. The bill was vetoed
and the veto message read, in part:
I applaud the author and the mayor's continued efforts to
increase affordability in this area. This bill as drafted,
however, would grant this particular Successor Agency the
ability to use tax increment and redevelopment law in a way
that no other successor agency in the state has been
granted.
I am directing the Department of Finance to work closely
with the author and sponsors of this measure to explore
other alternatives.
This year's bill is narrowed to include only projects that DOF
has finally and conclusively determined to be enforceable
obligations.
Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081
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