BILL ANALYSIS Ó
AB 1338
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Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 1338 (Hernández) - As Amended: May 2, 2011
SUBJECT : Redevelopment.
SUMMARY : Requires, on or after January 1, 2012, all real
property purchased or otherwise acquired in exchange for
financial remuneration by a redevelopment agency to be subject
to an appraisal by a qualified independent appraiser to
determine the fair market value of that property.
EXISTING LAW :
1)Allows, within the survey area or for purposes of
redevelopment an agency to:
a) Purchase, lease, obtain option upon, acquire by gift,
grant, bequest, devise, or otherwise, any real or personal
property, any interest in property, and any improvements on
it, including repurchase of developed property previously
owned by the agency.
b) Acquire real property by eminent domain.
2)Allows a redevelopment agency to, within the survey area or
for purposes of redevelopment, sell, lease, for a period not
to exceed 99 years, exchange, subdivide, transfer, assign,
pledge, encumber by mortgage, deed of trust, or otherwise, or
otherwise dispose of any real or personal property or any
interest in property.
3)Requires, for any lease or sale made pursuant to existing law
to be made without public bidding but only after a public
hearing, notice of which shall be given by publication for not
less than once a week for two weeks in a newspaper of general
circulation published in the county in which the land lies.
4)Requires, before any property of the agency acquired in whole
or in part, directly or indirectly, with tax increment moneys
is sold or leased for development pursuant to the
redevelopment plan, the sale or lease shall first be approved
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by the legislative body by resolution after public hearing
(except for the sale or lease of a small housing project, as
specified).
5)Provides that notice of the time and place of the hearing
shall be published in a newspaper of general circulation in
the community at least once per week for at least two
successive weeks, as specified, prior to the hearing.
6)Requires the agency to make available, for public inspection
and copying at a cost not to exceed the cost of duplication, a
report no later than the time of publication of the first
notice of the hearing mandated by this section. This report
shall contain both of the following:
a) A copy of the proposed sale or lease.
b) A summary which describes and specifies all of the
following:
i) The cost of the agreement to the agency, including
land acquisition costs, clearance costs, relocation
costs, the costs of any improvements to be provided by
the agency, plus the expected interest on any loans or
bonds to finance the agreements;
ii) The estimated value of the interest to be conveyed
or leased, determined at the highest and best uses
permitted under the plan;
iii) The estimated value of the interest to be conveyed
or leased, determined at the use and with the conditions,
covenants, and development costs required by the sale or
lease. The purchase price or present value of the lease
payments which the lessor will be required to make during
the term of the lease. If the sale price or total rental
amount is less than the fair market value of the interest
to be conveyed or leased, determined at the highest and
best use consistent with the redevelopment plan, then the
agency shall provide as part of the summary an
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explanation of the reasons for the difference;
iv) An explanation of why the sale or lease of the
property will assist in the elimination of blight, with
reference to all supporting facts and materials relied
upon in making this explanation; and,
v) The report shall be made available to the public no
later than the time of publication of the first notice of
the hearing mandated by this section.
7)Requires the resolution approving the lease or sale to be
adopted by a majority vote unless the legislative body has
provided by ordinance for a two-thirds vote for that purpose
and shall contain a finding that the sale or lease of the
property will assist in the elimination of blight or provide
housing for low- or moderate-income persons, and is consistent
with the implementation plan adopted pursuant to existing law.
8)Requires the resolution to contain one of the following
findings:
a) The consideration is not less than the fair market value
at its highest and best use in accordance with the plan;
or,
b) The consideration is not less than the fair reuse value
at the use and with the covenants and conditions and
development costs authorized by the sale or lease.
9)States that it is the intent of the Legislature that property
acquired from a redevelopment agency pursuant to a
redevelopment plan not be the subject of real estate
speculation.
FISCAL EFFECT : Unknown
COMMENTS :
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1)This bill requires property purchased by a redevelopment
agency, or property that is otherwise acquired in exchange for
financial remuneration, to be subject to an appraisal by a
qualified independent appraiser to determine the fair market
value of that property.
2)According to the author, the purpose of this bill is to ensure
that redevelopment agencies allocate an appropriate amount of
funding to properties based on the fair market value of the
property. Given the constantly fluctuating real estate
market, property values have been decreasing substantially,
yet no law exists to require an independent third-party
appraisal before a redevelopment agency acquires property.
The author believes that by requiring a
fair, third-party appraisal of the property prior to
negotiations, local agencies and property holders will be
armed with accurate value estimates, which will ensure that
taxpayer dollars are justly used.
3)Support arguments: The California Redevelopment Association
writes that "obtaining an independent third-party appraisal is
already done by most RDAs and putting this practice into
statute ensures that both the interests of the property owner
and the tax payer are served in a real estate transaction."
Opposition arguments: The provisions of the bill could create
additional costs to redevelopment agencies to pay for an
independent appraisal each time an agency wants to purchase
property.
REGISTERED SUPPORT / OPPOSITION :
Support
Howard Jarvis Taxpayers Association
California Redevelopment Association
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
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