BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Patricia Wiggins, Chair
BILL NO: SB 430 HEARING: 5/6/09
AUTHOR: Dutton FISCAL: No
VERSION: 2/26/09 CONSULTANT: Detwiler
REDEVELOPMENT AFTER DISASTERS
Background and Existing Law
Because of their extraordinary powers to generate public
capital and manage real estate, redevelopment agencies can
speed recovery after disasters. The Community
Redevelopment Disaster Project Law allows local officials
to accelerate the adoption of redevelopment plans after
declared disasters (AB 189, Hauser, 1995).
Standard redevelopment law sets time limits on
redevelopment activities: 20 years to create debt, 30 years
for the effectiveness of the redevelopment plan
(redevelopment activities), and 45 years to repay debt with
property tax increment revenues. The disaster
redevelopment law cuts those deadlines to 10 years to
create debt, 10 years for the plan's effectiveness, and 30
years to repay debt.
In November 2004, San Bernardino County officials created
the Cedar Glen Disaster Recovery Project Area to help
rebuild an area where a 2003 wildfire destroyed over 325
structures. The Cedar Glen Project Area has until 2014 to
create debt, until 2014 for the plan's effectiveness, and
until 2034 to repay its debts.
Mounting debts and the loss of customers after the fire
forced the private Arrowhead Manor Water Company into state
receivership. State officials can waive penalties and
interest if San Bernardino County acquires the water system
(AB 2680, Adams, 2008). The delay caused by the water
system's financial problems cut into the time that the
Cedar Glen Project Area can conduct redevelopment
activities; only five years remain. San Bernardino County
officials want the Legislature to extend the statutory time
limits.
Proposed Law
SB 430 -- 2/26/09 -- Page 2
Senate Bill 430 changes the Cedar Glen Disaster Recovery
Project Area's time limits:
For creating debt, from 10 years to 15 years.
For the plan's effectiveness, from 10 years to 20.
For repaying debt with property tax increment
revenues, 30 years.
Comments
1. Time's running out . After the delays caused by the
private water system's financial problems, San Bernardino
County officials are now nearing completion on Phase I of
the Cedar Glen Disaster Redevelopment Project Area: a new
water tank, new well, new water lines and fire hydrants,
and over two miles of road improvements. More work remains
to be done, but there are just five years left to create
more debt and finish the redevelopment activities. SB 430
gives San Bernardino County redevelopment officials five
more years to borrow money and 10 more years to build the
public works that the Cedar Glen area needs.
2. It's about time . San Bernardino County officials used
the 1995 Hauser law to skip a lot of procedural steps so
that they could quickly rebuild the Cedar Glen area with
redevelopment powers. In 2005, redevelopment officials
borrowed over $10 million to pay for improving Cedar Glen's
water system and roads. By 2006-07, the Cedar Glen's
property tax base had grown from about $188 million to
about $218 million, producing nearly $425,000 in annual
property tax increment revenues. Redevelopment officials
have had no problems borrowing money, but SB 430 asks for a
five-year time extension to create more debt. Unscrambling
the private water company's financial problems slowed down
the rebuilding effort by five years, but SB 430 asks for a
10-year extension for redevelopment activities. The
Committee may wish to consider amendments that keep the
current 10-year time limit for creating debt, but give
redevelopment officials five more years to work on their
Cedar Glen project.
3. Special situation, special bill . The California
Constitution prohibits special legislation when a general
SB 430 -- 2/26/09 -- Page 3
law could apply (Article IV, 16). While the Legislature
could extend the time limits for all disaster project
areas, SB 430 focuses only on the Cedar Glen Disaster
Redevelopment Project Area. To avoid a possible
constitutional challenge to the bill, the Committee may
wish to consider an amendment that inserts the so-called
"special legislation disclaimer" and explains the need for
a special law.
4. Double-referred . The Legislature's fiscal committees
review bills that appropriate money, change state
departments' duties, affect state revenues and spending,
and create new state mandated local programs. Although the
Legislative Counsel's Digest does not identify SB 430 as a
fiscal bill, the Senate Rules Committee has nevertheless
ordered a double-referral; first to the Senate Local
Government Committee for a policy review and then to the
Senate Appropriations Committee. Because the State General
Fund backfills the property tax revenues that redevelopment
agencies divert from school districts, SB 430's longer time
limit on creating debt may result in costs to the State
General Fund.
Support and Opposition (4/30/09)
Support : County of San Bernardino, Lake Arrowhead
Community Chamber of Commerce, Rebuilding Mountain Hearts
and Lives.
Opposition : Unknown.