BILL ANALYSIS Ó
AB 1338
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1338 (Roger Hernández)
As Amended June 28, 2011
Majority vote
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|ASSEMBLY: |76-0 |(May 26, 2011) |SENATE: |38-0 |(July 14, |
| | | | | |2011) |
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Original Committee Reference: L. GOV.
SUMMARY : Requires, on or after January 1, 2012, a redevelopment
agency (RDA) to obtain an appraisal from a qualified independent
appraiser to determine the fair market value of property before
the RDA acquires or purchases property.
The Senate amendments revise the wording of the requirement for
an RDA to obtain an appraisal from a qualified independent
appraiser.
EXISTING LAW :
1)Allows, within the survey area or for purposes of
redevelopment an RDA 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 RDA; and,
b) Acquire real property by eminent domain.
1)Allows an RDA 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.
2)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.
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3)Requires, before any property of the RDA 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 by the
legislative body by resolution after public hearing (except
for the sale or lease of a small housing project, as
specified).
4)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.
5)Requires the RDA 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; and,
b) A summary which describes and specifies all of the
following:
i) The cost of the agreement to the RDA, including land
acquisition costs, clearance costs, relocation costs, the
costs of any improvements to be provided by the RDA, 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
RDA shall provide as part of the summary an explanation
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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.
1)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.
2)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.
3)States that it is the intent of the Legislature that property
acquired from an RDA pursuant to a redevelopment plan not be
the subject of real estate speculation.
AS PASSED BY THE ASSEMBLY , this bill required, 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.
FISCAL EFFECT : Unknown
COMMENTS : This bill requires an RDA to obtain an appraisal from
a qualified independent appraiser to determine the fair market
value of property before the RDA acquires or purchases real
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property.
According to the author, the purpose of this bill is to ensure
that RDAs 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 an RDA
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.
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 RDAs to pay for an independent appraisal
each time an RDA wants to purchase property.
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
FN: 0001430