BILL ANALYSIS �
AB 936
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Date of Hearing: April 27, 2011
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 936 (Hueso) - As Introduced: February 18, 2011
SUBJECT : Redevelopment: debt forgiveness: public notice
SUMMARY : Requires that whenever a local legislative body
considers any matter on a meeting agenda to forgive a loan,
advance, or indebtedness of a redevelopment agency that the
matter be consider in a public meeting at least two weeks prior
to the adoption of any action. Specifically, this bill :
1)Requires the chief financial officer to be present at the
public meeting of the local legislative body to provide
information at the public meeting as to:
a) the status of the financial health of the agency's
funds;
b) to demonstrate how the agency is able to effectively
continue providing services to the public absent the
repayment of the debt proposed to be forgiven; and
c) the public interest in forgiving loan, advance or
indebtedness.
1)Provides that the adoption of any redevelopment agency debt
forgiveness proposal from being placed on consent.
EXISTING LAW
Requires a local governing body to do all of the following
before adopting a redevelopment plan: hold a public meeting and
provide a description of the physical and economic blight; an
implementation plan describing the agency's goals and potential
projects; the proposed method of financing; and an analysis of
the effect the plan will have on the affected taxing agencies
(Health & Safety Code Section 33333.2).
FISCAL EFFECT : None.
COMMENTS :
AB 936
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When establishing a redevelopment agency, cities and counties
may provide some capital to the agency in the form of a loan.
The loan is used to allow the redevelopment agency to show debt
on their statement of indebtedness so that the agency has
something to bond against. In some communities, the loan is
made with a high interest rate, creating more debt to bond
against and generate tax increment to fund redevelopment
projects.
In a case provided by the author, in San Diego, the city
capitalized the redevelopment agency by using Community
Development Block Grant (CDBG) funds. The redevelopment agency
carried amounts equal to CDBG allocations and the United States
Department of Housing and Urban Development (HUD) Section 108
loan proceeds as part of the agency debt to the city. The city
was audited by HUD which required that the city initiate the
agency's repayment of CDBG funds to the city. As part of the
hearing in which the city approved the repayment, it also
considered forgiving the sizable about of interest that was
outstanding from the original loan that the city made to
capitalize the redevelopment agency. The city decided against
this action and instead agreed to have the redevelopment agency
pay back the interest as it could.
The Brown Act (Government Code Sections 54950, et seq.) requires
that any time a city council or board of supervisors meets that
the meeting is public and meets standards to provide for public
participation. Redevelopment agency governing boards are also
subject to these requirements. With a few exceptions
(emergencies, previously discussed items and an action needing
immediate vote not on an agenda) the Brown Act requires at least
72 hours prior to meeting, the a governing body, must post an
agenda containing a brief general description of each action or
discussion item to be considered, including items to be
considered at closed sessions. The purpose is to notify members
of the public of items in which they may wish to participate.
This bill would require that any time a local governing body
meets to consider the forgiveness of a debt of the redevelopment
agency, that the chief financial officer is present at the
meeting and that the item may not go on consent. In addition,
forgiveness of the loan or indebtedness must be considered two
weeks prior to taking any action on the forgiveness of debt.
Purpose of this bill : The author states," AB 936 is needed to
AB 936
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ensure that the public has the opportunity to understand the
financial implications of the debt forgiveness. This bill does
not hinder the ability, of a city to forgive a loan to a
redevelopment agency. The two week notice will ensure that the
public has the opportunity to evaluate these important financial
decisions."
Committee amendments :
The following amendments clarify the bill:
The chief financial officer at the public meeting described in
Section 33354.7 shall be present to provide information at the
public financial status of the agency . meeting as to the status
of the financial health of the agency's funds and demonstrate
how the agency is able to effectively continue providing
services to the public absent the repayment of the debt proposed
to be forgiven and the public interest in doing so.
Double referred : The Assembly Committee on Rules referred AB
936 to the Committee on Housing and Community Development and
Local Government. If AB 936 passes this committee, the bill
must be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION :
Support
California Professional Firefighters (sponsor)
California Rural Legal Assistance Foundation
Stockton Professional Firefighters, Local 456
Western Center on Law & Poverty
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085