BILL NUMBER: SB 986 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 11, 2012
INTRODUCED BY Senator Dutton
JANUARY 31, 2012
An act to amend Sections 34177 and 34180 of the Health and Safety
Code, relating to redevelopment, and declaring the urgency thereof,
to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 986, as amended, Dutton. Redevelopment: bond proceeds.
Existing law dissolves dissolved
redevelopment agencies and community development agencies, as of
February 1, 2012, and designates provides for
the designation of successor agencies, as defined. Existing
law requires that successor entities perform certain duties,
including, among others, remitting unencumbered funds of that agency
to the county auditor-controller, and overseeing the use of bond
proceeds. Existing law requires each successor agency to have an
oversight board that is composed of 7 members who meet certain
qualifications. Existing law requires the oversight board to approve
certain actions of the successor agency.
This bill would provide that all bond proceeds that were
generated by the former redevelopment agency shall be deemed to be
encumbered and would prohibit a successor agency from remitting these
proceeds to the county auditor-controller require
that unencumbered balances of funds that are derived from tax exempt
bond proceeds be used in accordance with the requirements of this
bill . This bill would also require that the proceeds of bonds
issued by a former redevelopment agency must
on or before December 31, 2010, be used by the successor agency
for the purposes for which the bonds were sold pursuant to an
enforceable obligation, as defined, that was entered into either by
the former redevelopment agency prior to its dissolution, or is
entered into by the successor agency by December 14
31 , 2014. This bill would also provide that if
an enforceable obligation is not entered into by that time
the bond proceeds are not subject to an enforceable
obligation , or if the purpose for which the bonds were sold
can no longer be achieved, then the bond proceeds shall be used to
defease the bonds or to purchase outstanding bonds on the open market
for cancellation.
This bill would also require authorize
the oversight board to approve of the establishment of an
enforceable obligation with respect to bond proceeds . This
bill would prohibit the oversight board from disapproving the
establishment of an enforceable obligation with respect to bond
proceeds if certain requirements are met,
including, among others, if that obligation is reasonably in
furtherance of the purposes for which the bonds were sold.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 34177 of the Health and Safety Code is amended
to read:
34177. Successor agencies are required to do all of the
following:
(a) Continue to make payments due for enforceable obligations.
(1) On and after October 1, 2011, February
1, 2012, and until a Recognized Obligation Payment Schedule
becomes operative, only payments required pursuant to an enforceable
obligations payment schedule shall be made. The initial enforceable
obligation payment schedule shall be the last schedule adopted by the
redevelopment agency under Section 34169. However, payments
associated with obligations excluded from the definition of
enforceable obligations by paragraph (2) of subdivision (e) of
Section 34171 shall be excluded from the enforceable obligations
payment schedule and be removed from the last schedule adopted by the
redevelopment agency under Section 34169 prior to the successor
agency adopting it as its enforceable obligations payment schedule
pursuant to this subdivision. The enforceable obligation payment
schedule may be amended by the successor agency at any public meeting
and shall be subject to the approval of the oversight board as soon
as the board has sufficient members to form a quorum.
(2) The Department of Finance and the Controller shall each have
the authority to require any documents associated with the
enforceable obligations to be provided to them in a manner of their
choosing. Any taxing entity, the department, and the Controller shall
each have standing to file a judicial action to prevent a violation
under this part and to obtain injunctive or other appropriate relief.
(3) Commencing on January May 1,
2012, only those payments listed in the Recognized Obligation Payment
Schedule may be made by the successor agency from the funds
specified in the Recognized Obligation Payment Schedule. In addition,
commencing January May 1, 2012, the
Recognized Obligation Payment Schedule shall supersede the Statement
of Indebtedness, which shall no longer be prepared nor have any
effect under the Community Redevelopment Law.
(4) Nothing in the act adding this part is to be construed as
preventing a successor agency, with the prior approval of the
oversight board, as described in Section 34179, from making payments
for enforceable obligations from sources other than those listed in
the Recognized Obligation Payment Schedule.
(5) From October 1, 2011, February 1,
2012, to July 1, 2012, a successor agency shall have no
authority and is hereby prohibited from accelerating payment or
making any lump-sum payments that are intended to prepay loans unless
such accelerated repayments were required prior to the effective
date of this part.
(b) Maintain reserves in the amount required by indentures, trust
indentures, or similar documents governing the issuance of
outstanding redevelopment agency bonds.
(c) Perform obligations required pursuant to any enforceable
obligation.
(d) Remit unencumbered balances of redevelopment agency funds to
the county auditor-controller for distribution to the taxing
entities, including, but not limited to, the unencumbered balance of
the Low and Moderate Income Housing Fund of a former redevelopment
agency. In making the distribution, the county auditor-controller
shall utilize the same methodology for allocation and distribution of
property tax revenues provided in Section 34188. For
purposes of this subdivision, bond proceeds of the redevelopment
agency shall be deemed to be encumbered, and therefore the successor
agency shall not remit those funds to the county auditor-controller.
Notwithstanding the requirements of this subdivision,
if the unencumbered balance of funds is derived from tax exempt bond
proceeds, those balances shall be used in accordance with the
requirements of subdivision (i).
(e) Dispose of assets and properties of the former redevelopment
agency as directed by the oversight board; provided, however, that
the oversight board may instead direct the successor agency to
transfer ownership of certain assets pursuant to subdivision (a) of
Section 34181. The disposal is to be done expeditiously and in a
manner aimed at maximizing value. Proceeds from asset sales and
related funds that are no longer needed for approved development
projects or to otherwise wind down the affairs of the agency, each as
determined by the oversight board, shall be transferred to the
county auditor-controller for distribution as property tax proceeds
under Section 34188.
(f) Enforce all former redevelopment agency rights for the benefit
of the taxing entities, including, but not limited to, continuing to
collect loans, rents, and other revenues that were due to the
redevelopment agency.
(g) Effectuate transfer of housing functions and assets to the
appropriate entity designated pursuant to Section 34176.
(h) Expeditiously wind down the affairs of the redevelopment
agency pursuant to the provisions of this part and in accordance with
the direction of the oversight board.
(i) Continue to oversee development of properties until the
contracted work has been completed or the contractual obligations of
the former redevelopment agency can be transferred to other parties.
Bond proceeds derived from bonds sold on or before December 31,
2010, shall be used for the purposes for which the bonds were
sold, if and to the extent that the successor agency is either
performing an obligation required pursuant to any enforceable
obligation entered into by the former redevelopment agency, or is
performing an enforceable obligation entered into by the successor
agency on or before December 31, 2014, to fulfill the purposes for
which the bonds were sold by the dissolved redevelopment agency
; provided, however, that this section shall not be interpreted to
grant to a successor agency the power of eminent domain
. Any amount of bond proceeds derived from bonds sold on
or before December 31, 2010, not subject to an enforceable
obligation as of January 1, 2015, shall be used to
defease the bonds or to purchase outstanding bonds on the open market
for cancellation. If the purposes for which the
bonds that were sold by the dissolved redevelopment agency
on or before December 31, 2010, can no longer be
achieved, then the proceeds shall be used to defease the bonds or to
purchase outstanding bonds on the open market for cancellation.
(j) Prepare a proposed administrative budget and submit it to the
oversight board for its approval. The proposed administrative budget
shall include all of the following:
(1) Estimated amounts for successor agency administrative costs
for the upcoming six-month fiscal period.
(2) Proposed sources of payment for the costs identified in
paragraph (1).
(3) Proposals for arrangements for administrative and operations
services provided by a city, county, city and county, or other
entity.
(k) Provide administrative cost estimates, from its approved
administrative budget that are to be paid from property tax revenues
deposited in the Redevelopment Property Tax Trust Fund, to the county
auditor-controller for each six-month fiscal period.
(l) (1) Before each six-month fiscal period, prepare a Recognized
Obligation Payment Schedule in accordance with the requirements of
this paragraph. For each recognized obligation, the Recognized
Obligation Payment Schedule shall identify one or more of the
following sources of payment:
(A) Low and Moderate Income Housing Fund.
(B) Bond proceeds.
(C) Reserve balances.
(D) Administrative cost allowance.
(E) The Redevelopment Property Tax Trust Fund, but only to the
extent no other funding source is available or when payment from
property tax revenues is required by an enforceable obligation or by
the provisions of this part.
(F) Other revenue sources, including rents, concessions, asset
sale proceeds, interest earnings, and any other revenues derived from
the former redevelopment agency, as approved by the oversight board
in accordance with this part.
(2) A Recognized Obligation Payment Schedule shall not be deemed
valid unless all of the following conditions have been met:
(A) A draft Recognized Obligation Payment Schedule is prepared by
the successor agency for the enforceable obligations of the former
redevelopment agency by November 1, 2011
March 1, 2012 . From October 1, 2011, to July 1, 2012, the
initial draft of that schedule shall project the dates and amounts of
scheduled payments for each enforceable obligation for the remainder
of the time period during which the redevelopment agency would have
been authorized to obligate property tax increment had that
redevelopment agency not been dissolved, and shall be reviewed and
certified, as to its accuracy, by an external auditor designated
pursuant to Section 34182.
(B) The certified Recognized Obligation Payment Schedule is
submitted to and duly approved by the oversight board.
(C) A copy of the approved Recognized Obligation Payment Schedule
is submitted to the county auditor-controller and both the Controller'
s office and the Department of Finance and be posted on the successor
agency's Internet Web site.
(3) The Recognized Obligation Payment Schedule shall be forward
looking to the next six months. The first Recognized Obligation
Payment Schedule shall be submitted to the Controller's office and
the Department of Finance by December 15, 2011,
April 15, 2012, for the period of January 1, 2012, to June
30, 2012, inclusive. Former redevelopment agency enforceable
obligation payments due, and reasonable or necessary administrative
costs due or incurred, prior to January 1, 2012, shall be made from
property tax revenues received in the spring of 2011 property tax
distribution, and from other revenues and balances transferred to the
successor agency.
SEC. 2. Section 34180 of the Health and Safety Code is amended to
read:
34180. All of the following successor agency actions shall first
be approved by the oversight board:
(a) The establishment of new repayment terms for outstanding loans
where the terms have not been specified prior to the date of this
part.
(b) Refunding of outstanding bonds or other debt of the former
redevelopment agency by successor agencies in order to provide for
savings or to finance debt service spikes; provided, however, that no
additional debt is created and debt service is not accelerated.
(c) Setting aside of amounts in reserves as required by
indentures, trust indentures, or similar documents governing the
issuance of outstanding redevelopment agency bonds.
(d) Merging of project areas.
(e) Continuing the acceptance of federal or state grants, or other
forms of financial assistance from either public or private sources,
where assistance is conditioned upon the provision of matching
funds, by the successor entity as successor to the former
redevelopment agency, in an amount greater than 5 percent.
(f) (1) If a city, county, or city and county wishes to retain any
properties or other assets for future redevelopment activities,
funded from its own funds and under its own auspices, it must reach a
compensation agreement with the other taxing entities to provide
payments to them in proportion to their shares of the base property
tax, as determined pursuant to Section 34188, for the value of the
property retained.
(2) If no other agreement is reached on valuation of the retained
assets, the value will be the fair market value as of the 2011
property tax lien date as determined by the county assessor.
(g) Establishment of the Recognized Obligation Payment Schedule.
(h) A request by the successor agency to enter into an agreement
with the city, county, or city and county that formed the
redevelopment agency that it is succeeding.
(i) A request by a successor agency or taxing entity to pledge, or
to enter into an agreement for the pledge of, property tax revenues
pursuant to subdivision (b) of Section 34178.
(j) The establishment of an enforceable obligation with respect to
bond proceeds from bonds sold on or before December 31, 2010,
pursuant to subdivision (i) of Section 34177. However,
the The oversight board shall not
disapprove may approve the establishment of an
enforceable obligation with respect to bond proceeds if that
both of the following conditions are met:
(1) The obligation is reasonably
in furtherance of the purposes for which the bonds were sold.
(2) The obligation is consistent with one or more of the
following:
(A) The obligation is required in order to meet a federal or state
matching funds requirement in which federal or state funds have
already been committed, and is specific to the project requiring the
obligation.
(B) The obligation is required in order to meet the requirements
for the expenditure of a local general obligation bond approved by
the voters.
(C) (i) The obligation is required to complete a project specific
to critical public infrastructure that is in, or provides benefit to,
the project area of the former redevelopment agency and the evidence
of the benefit to the community in proceeding with the obligation
substantially outweighs the resulting delay in the distribution of
tax increment to the impacted taxing entities.
(ii) For purposes of this subparagraph, "critical public
infrastructure" does not include any of the following:
(I) An automobile dealership that will be or is on a parcel of
land that has not previously been developed for urban use.
(II) A development project or business that, either directly or
indirectly, acquires, constructs, improves, rehabilitates, or
replaces property that is or would be used for a golf course or for a
racetrack, speedway or other racing venue.
(III) A development project or business that acquires, constructs,
improves, rehabilitates, or replaces property that is or would be
used for a stadium, coliseum, arena, ballpark or other sports
facility that is intended for use by a professional sports franchise.
(IV) A development project or business that, either directly or
indirectly, acquires, constructs, improves, rehabilitates, or
replaces property that is or would be used for gambling or gaming of
any kind whatsoever, including, but not limited to, casinos, gaming
clubs, bingo operations, or any facility in which banked or
percentage games, any form of gambling device, or lotteries, other
than the California State Lottery, are or will be played.
(V) A development project or business, either directly or
indirectly, acquires, constructs, improves, rehabilitates, or
replaces property that is or would be used for retail, entertainment,
or other private purpose unrelated to public works, such as bridges,
parks, roads, municipal buildings, dams, railroads, schools,
hospitals, and other long-term, public physical assets and
facilities.
SEC. 3. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to provide guidance to the successor agencies on the use
of bond proceeds, it is necessary for this act to take effect
immediately.