BILL ANALYSIS Ó
AB 1585
Page 1
( Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB 1585 (John A. Pérez)
As Amended August 24, 2012
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |58-7 |(March 26, |SENATE: |21-5 |(August 30, |
| | |2012) | | |2012) |
-----------------------------------------------------------------
------------------------------------------------------------------------
|COMMITTEE VOTE: |5-2 |(August 30, 2012) |RECOMMENDATION: |concur |
|(H. & C.D.) | | | | |
------------------------------------------------------------------------
Original Committee Reference: H. & C.D.
SUMMARY : Appropriates funds to the Infill Incentive Grant Program
and to the Transit- Oriented Development Program created by
Proposition 1C: Housing and Emergency Shelter Trust Fund Act of
2006.
The Senate amendments delete the Assembly version of the bill, and
instead:
1)Provide that the provisions of the Community Redevelopment Law
(CRL) governing administrative and planning costs for the Low and
Moderate Income Housing Fund shall apply to any funds retained by
a housing successor agency that assume the responsibilities of a
former redevelopment agency.
2)Appropriate $50 million to HCD for the following:
a) $25 million to the Infill Incentive Grants program; and,
b) $25 million to the Transit-Oriented Development Program
1)Specify that any funds disencumbered and deposited for the
2012-2013 and 2013-2014 fiscal years will be deposited into the
Regional Planning, Housing, and Infill Incentive Account and made
available through the Infill Incentive Grants Program.
AB 1585
Page 2
2)Specify that any funds disencumbered and deposited for the
2012-2013 into the Transit-Oriented Development Account will be
made available through the Transit-Oriented Development Program.
AS PASSED BY THE ASSEMBLY , this bill made changes to the process of
dissolving redevelopment agencies (RDAs), including requiring the
funds on deposit in the Low-and Moderate-Income Housing Fund (L&M
Fund) of the former RDA to remain with the entity that assumes the
housing functions rather than being distributed as property tax
revenue. Specifically, this bill :
1)Clarified that the "administrative cost allowance" is 5% of the
property tax, including property tax that was allocated to the
former RDA and the successor agency for the 2011-2012 fiscal
year.
2)Specified that employee costs associated with work on specific
project implementation activities, including, but not limited to,
construction inspection, project management, or actual
construction, are not subject to the administrative cost
allowance cap.
3)Specified that costs incurred to fulfill collective bargaining
agreements for layoffs or terminations of city employees who
performed work for the former RDA are enforceable obligations
payable from property tax funds.
4)Provided that obligations to employees that are transferred from
the former RDA or successor agency to the entity assuming the
housing functions are enforceable obligations payable from
property tax funds.
5)Required the successor agency or designated local authority to
enter into an agreement with the entity assuming the housing
functions and to reimburse it for any costs of the employee
obligations if an employee is transferred to the housing
successor entity.
6)Added the following categories of enforceable obligations and
requires their approval by the oversight board:
a) Loans made by the former city, county, or city and county
that created the RDA to the RDA if the loan was made within
two years of the date of the creation of a project area, if
AB 1585
Page 3
the loan was for the project area; and,
b) Loans made from the city or county to the former RDA to
make a payment to the state's Supplemental Educational Revenue
Augmentation Fund (SERAF).
1)Clarified that repayment of SERAF loans made from the L&M Fund to
the former RDA must be deposited into the L&M Fund maintained by
the entity that assumes the housing functions.
2)Required the oversight board to do the following in order to deem
other loan agreements from the city, county, or city and county
to the former RDA an enforceable obligation:
a) Made a finding that the loan was for legitimate
redevelopment purposes; and,
b) Conditioned its approval on the loan being repaid to the
city, county, or city and county based on a defined schedule
over a reasonable term, at an interest rate not to exceed the
interest rate earned by funds deposited into the Local Agency
Investment Fund.
1)Provided that when listing the payment dates for enforceable
obligations on the Recognized Obligation Payment Schedule (ROPS),
the successor agency may list payments on an annual basis.
2)Specified that the successor agency is a public entity that is
separate from the entity or entities that authorized the creation
of the redevelopment agency, that acts by resolution, can sue and
be sued, and can have additional powers that may be conferred
upon it.
3)Clarified that successor agencies are subject to the Ralph M.
Brown Act.
4)Allowed a city, county, or city and county, or joint powers
authority that authorized the creation of the former RDA and
elected not to be the successor agency to subsequently reverse
that decision and serve as the successor agency.
5)Provided the reversal of decision does not take effect until 60
days after the notice is given to the current successor agency
and oversight board.
AB 1585
Page 4
6)Provided that the city, county, or city and county or joint
powers authority that reverses its decision and elects to become
the successor agency cannot invalidate any actions of the current
successor agency or oversight board prior to the transfer of
responsibility.
7)Required any amounts on deposit in the L&M Fund of a former RDA
to be transferred to the city, county, or city and county that
elected to retain the responsibility for performing the housing
functions of the former agency.
8)Required any amounts on deposit in the L&M Fund that are
transferred to the L&M Fund of the succeeding housing entity must
be maintained in a separate account and used for the purposes
defined in the Community Redevelopment Law relating to authorized
uses of the L&M Fund.
9)Required the entity that assumes the housing functions of the
former RDA to enforce affordability covenants and other related
activities as defined in Community Redevelopment Law.
10)Required, where there is no local housing authority that elected
to accept authority for performing the housing functions, that
any amounts on deposit in the L&M Fund be deposited in the State
Low-and Moderate Income Housing Trust Fund (State Trust Fund),
created by this measure, administered by the Department of
Housing and Community Development (HCD), to be awarded on a
competitive basis to projects within the counties in which it was
collected.
11)Required, when awarding funds out of the State Trust Fund, that
priority must be given to eligible projects that serve extremely
low-, very low-, and low-income families and individuals.
12)Defined "succeeding housing entity" as the entity that assumes
responsibility for retaining the housing assets and functions
previously performed by the RDA.
13)Required the succeeding housing entity to contract to expend at
least 80% of the monies in the L&M Fund within two years of the
date of receipt of those monies.
14)Specified that if within four years of the date of receipt of
the L&M Fund monies the succeeding housing entity has not spent
the monies, then the excess amount, minus the amount necessarily
AB 1585
Page 5
reserved for the ongoing monitoring and maintenance of affordable
housing projects shall be transferred to the State Trust Fund for
expenditure by HCD.
15)Prohibited excess funds from being transferred to HCD if the
succeeding housing entity applies for, and receives, a time
extension waiver from HCD.
16)Specified if the waiver is granted the funds shall remain with
the succeeding housing entity for an additional two years.
17)Required HCD in approving a waiver to consider, among other
factors, all of the following:
a) Whether the succeeding housing entity has a site specific
project plan with local approvals, including the issuance of
building permits;
b) Whether the project has secured financing; and,
c) Evidence that some funds have been expended from the L&M
Fund.
18)Authorized a succeeding housing entity to reapply at the end of
the two-year period for a renewal of the previously granted
waiver.
19)Authorized a succeeding housing entity to transfer all or a
portion of the monies in the L&M Fund to another succeeding
housing entity within the same county, to be spent on affordable
housing if all of the following conditions are met:
a) The funds will be spent on projects that primarily benefit
low-income families or families that are below low income;
b) Both succeeding housing entities involved in the transfer
adopt a resolution detailing the need for the transfer of
funds and the intended use of the funds by the receiving
jurisdiction; and,
c) The funds will be spent in compliance with the requirements
outlined in 18) through 21) above.
1)Required the succeeding housing entity, within 45 days of the
date this measure is enacted, or 45 days from the receipt of
AB 1585
Page 6
moneys from the L&M Fund, whichever is later, to notify HCD of
the amount of money on deposit in the L&M Fund and the entity's
plan for spending it.
2)Required, within two years from the date of notification to HCD,
the succeeding housing entity to report to HCD the percentage of
funds that it has entered into contract to spend.
3)Required at the end of four years the succeeding housing entity
to report to HCD if there are any remaining moneys in the L&M
Fund and to notify HCD if it will be applying for a waiver or
transferring the excess funds to HCD.
4)Required that assets and properties of the former RDA, under the
direction of the oversight board, be disposed of in an
expeditious but orderly manner that preserves the value of the
assets.
5)Provided that the first ROPS for the period of January 1, 2012,
through June 20, 2012, may, if necessary, include the following:
a) The total amount of payments required for enforceable
obligations over the next two six-month periods; and,
b) In the case of debt obligations, the amount of the annual
debt service reserve set-asides and any other amounts required
under indenture or similar documents.
1)Clarified that the member of the oversight board representing
special districts should represent the special district having
the largest property tax share within the redevelopment project
areas of the former RDA.
2)Provided that when appointing a member of the oversight board
from the employees of the former RDA, if the majority of the
employees were city or county employees, then the appointment
should be made from the organization that represents those
employees.
3)Provided that if there is no employee organization that
represents the employees of the former RDA, city, or county, then
the appointment should be made from among the employees of the
successor agency.
4)Provided that an employee that is appointed to the oversight
AB 1585
Page 7
board is deemed not to have a conflict of interest, solely due to
his or her employment, in voting to approve a contract as an
enforceable obligation.
5)Required all actions taken by an oversight board to be adopted by
resolution.
6)Allowed the successor agency, subject to approval of the
oversight board, to enter into a financing agreement, including
issuing bonds, to fund required payments under an enforceable
obligation that exceed the property tax revenue available to the
successor agency when the payment is due.
7)Provided that a successor agency is not permitted to create
additional enforceable obligations except when necessary to pay
the financing costs of existing enforceable obligations.
8)Allowed the successor agency, subject to oversight board
approval, to temporarily increase the administrative cost
allowance to carry out the requirements of an enforceable
obligation, to cover litigation costs, or to maintain and
preserve the value of assets while in the possession of the
successor agency.
9)Required the oversight board to direct the successor agency to do
the following:
a) Compile a complete inventory of existing real property
assets of the former RDA by project area; and,
b) Include in the inventory the general categories of real
property assets, the purpose for which the assets were
originally acquired, the original purchase price of each
asset, and the estimated current market value.
1)Required the oversight board, prior to disposing of any assets,
to receive and review the inventory of assets prepared by the
successor agency and adopt a policy or strategy for disposal or
transfer of such assets that ensures it is done in an expeditious
but orderly manner that preserves the value of the asset.
2)Provided that in disposing of assets and properties, the
oversight board may direct the successor agency to transfer
ownership of assets that were constructed or used for a purpose
integral to the operation of a governmental purpose, like parking
AB 1585
Page 8
facilities, to the appropriate public jurisdiction.
3)Required the auditor-controller to deposit the unitary and
supplemental tax increment due to the former RDA into the
Redevelopment Property Tax Trust Fund (Property Tax Trust Fund).
4)Required the auditor-controller, in making the first annual
distribution from the Property Tax Trust Fund, to reserve any
funds necessary to cover payments made in the second half of the
calendar year, as described in the ROPS, that are in excess of
the amount that is anticipated to be deposited in the Property
Tax Trust Fund from the May or June allocation.
5)Provided that in distributing property tax revenues associated
with the payment of a retired recognized obligation, the
auditor-controller should only distribute property tax to the
extent that it is not currently required for the payments of
other recognized obligations.
6)Required the successor agency to cause to be completed an audit
of its financial transactions and records, annually, by a
certified accountant.
7)Clarified that enforceable obligations of the successor agency do
not become obligations of the succeeding housing entity.
8)Deleted the requirement that the California Law Revision
Commission draft a Community Redevelopment Law clean-up bill by
January 1, 2013.
9)Included an urgency clause.
FISCAL EFFECT : According to the Senate Appropriations Committee:
1)Appropriation of $25 million from the Regional Planning, Housing,
and Infill Incentive Account to HCD (bond funds).
2)Appropriation of $25 million from the Transit-Oriented
Development Implementation Fund to HCD (bond funds).
COMMENTS : The Senate amendments delete the contents of the bill
and instead appropriate $25 million to the Infill Incentive Grant
program and $25 million to the Transit-Oriented Development
Program. Both of these programs were created and funded by
Proposition 1C: Housing and Emergency Shelter Trust Fund Act of
AB 1585
Page 9
2006. Although all of the original bond funds were awarded to
projects, some projects that received awards have or will return
the funds because they were unable to complete the project. HCD
estimates that it will recover approximately $50 million by the end
of this fiscal year, which will need to be awarded to other
projects that meet the program guidelines.
The bill also clarifies those housing successor entities that
assume the housing functions of former redevelopment agencies are
required to adhere to the requirements of the CRL with regard to
how they spend on planning and administration. This provision is
clarifying as housing successor entities are already subject to the
CRL.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0005861