BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 986|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 986
Author: Dutton (R), et al.
Amended: 5/29/12
Vote: 27 - Urgency
SENATE GOVERNANCE & FINANCE COMMITTEE : 8-0, 4/18/12
AYES: Wolk, Dutton, DeSaulnier, Fuller, Hancock,
Hernandez, Kehoe, Liu
NO VOTE RECORDED: La Malfa
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/24/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
SUBJECT : Redevelopment: bond proceeds
SOURCE : Author
DIGEST : This bill authorizes successor agencies to use
the proceeds of bonds issued by former redevelopment
agencies prior to January 1, 2011 to fulfill an enforceable
obligation of the former agency or enter into new
enforceable obligations funded by those bond proceeds until
December 31, 2014, as specified.
ANALYSIS : Until 2011, the Community Redevelopment Law
allowed local officials to set up redevelopment agencies
(RDAs), prepare and adopt redevelopment plans, and finance
redevelopment activities.
CONTINUED
SB 986
Page
2
Citing a significant State General Fund deficit, Governor
Brown's 2011-12 Budget proposed eliminating RDAs and
returning billions of dollars of property tax revenues to
schools, cities, and counties to fund core services. Among
the statutory changes that the Legislature adopted to
implement the 2011-12 Budget, AB 26X1 (Blumenfield),
Chapter 5, Statutes of 2011, First Extraordinary Session,
dissolved all RDAs.
AB 26X1 established successor agencies to manage the
process of unwinding former RDAs' affairs. With the
exception of seven cities that chose not to serve as
successor agencies, the city or county that created each
former RDA now serves as that RDA's successor agency. Each
successor agency has an oversight board that is responsible
for supervising it and approving its actions. Oversight
boards are comprised of seven members, including city,
county, special district, and school district
representatives, appointed by local governments that serve
the area. The Department of Finance can review and request
reconsideration of an oversight board's decisions.
This bill imposes requirements on a successor agency's use
of the unencumbered balance of funds derived from tax
exempt bond proceeds.
This bill requires successor agencies to use bond proceeds
derived from bonds sold on or before December 31, 2010 for
the purposes for which the bonds were sold if the successor
agency is performing an obligation required pursuant to any
enforceable obligation entered into by the former
redevelopment agency.
With respect to bond proceeds from bonds sold on or before
December 31, 2010, if the purposes for which bonds that
were sold by a former redevelopment agency cannot be
achieved, this bill requires a successor agency to use the
bond proceeds to either defease the bonds or purchase
outstanding bonds on the open market for cancellation.
This bill requires that a successor agency must use any
amount of bond proceeds from bonds sold after December 31,
2010, that are not subject to an enforceable obligation to
either defease the bonds or purchase outstanding bonds on
SB 986
Page
3
the open market for cancellation.
Related Legislation
SB 1056 (Hancock) expands the definition of "enforceable
obligation" to include financial obligations related to a
project funded with both tax increment and federal school
construction bonds.
SB 1151 (Steinberg) requires a successor agency to prepare
a long-range asset management plan that outlines a strategy
for maximizing the long-term value of a former RDA's real
property and assets.
AB 1585 (Perez) makes numerous amendments to the statutes
governing the redevelopment dissolution process.
SB 1156 (Steinberg) allows a Community Development and
Housing Joint Powers Authority, and some counties, to use
tax increment financing and other local revenues to
finance specified local economic development activities.
SB 1337 (Pavley) allows a successor agency to retain former
RDA land that is a brownfield site for the purpose of
hazardous substance remediation or removal.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, on the
prior version of the bill, there are "unknown, very major
General Fund impact to the extent bond proceeds would be
used for continued redevelopment activities rather than
defeasing the bonds. Continuation of redevelopment
activities would require the diversion of property tax
increment revenues to successor agencies to pay off tax
allocation bonds, rather than distribution of those
revenues to local agencies, including schools. The total
amount of unencumbered bond proceeds that would be subject
to the bill's provisions is unknown, but likely in excess
of $100 million. Approximately 50% of tax increment
revenues necessary to pay off the debt used for continued
redevelopment activity would be diverted from schools. In
general, any property tax proceeds diverted from schools
SB 986
Page
4
results in an equivalent General Fund cost, pursuant to
Proposition 98's minimum funding guarantees."
SUPPORT : (Verified 4/18/12) (per Senate Governance and
Finance Committee analysis - per the prior version of the
bill)
California Contract Cities Association
California Redevelopment Association
Cities of Adelanto, Atascadero, Bellflower, Blythe, Brea,
Buena Park, Camarillo, Cerritos, Colton, Fairfield,
Folsom, Glendora, Grand Terrace, La Mirada, La Quinta,
Lakewood, Lawndale, Lynnwood, Moorpark, Norwalk, Ontario,
Palm Desert, Paramount, Placentia, Pomona, Rancho
Cucamonga, Rialto, Rosemead, Santa Cruz, Signal Hill,
Simi Valley, South El Monte, Temecula, Thousand Oaks,
Victorville, Vista, and Whittier
County of Riverside
County of San Bernardino
League of California Cities
OPPOSITION : (Verified 4/18/12) (per Senate Governance
and Finance Committee analysis - per the prior version of
the bill)
California Alliance to Protect Private Property Rights
County of Los Angeles
County of Santa Clara
AGB:mw 5/29/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****