BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 1151
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: steinberg
VERSION: 3/29/12
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: April 24, 2012
SUBJECT:
Sustainable Economic Development and Housing Trust Fund
DESCRIPTION:
This bill permits local jurisdictions to use an alternative
process to administer the assets of their former redevelopment
agencies for economic development and housing purposes. To do
so, the bill authorizes a Community Development and Housing
Joint Powers Authority to place redevelopment assets in a
Sustainable Economic Development and Housing Trust Fund and
requires a long-range asset management plan to govern that trust
fund.
ANALYSIS:
Historically, the Community Redevelopment Law allowed a local
government to establish a redevelopment area and capture all of
the increase in property taxes generated within the area
(referred to as "tax increment") over a period of decades. The
law requires redevelopment agencies to deposit 20 percent of tax
increment into a Low and Moderate Income Housing Fund (L&M fund)
to be used to increase, improve, and preserve the community's
supply of low and moderate income housing available at an
affordable housing cost.
In 2011, the Legislature enacted two bills, AB 26X (Blumenfield)
and AB 27X (Blumenfield), Chapters 5 and 6, respectively, of the
First Extraordinary Session. AB 26X eliminated redevelopment
agencies and established procedures for winding down the
agencies, paying off enforceable obligations, and disposing of
agency assets. AB 26X established successor agencies, typically
the city or county that established the agency, to take control
of all redevelopment agency assets, properties, and other items
of value. Successor agencies are to dispose of an agency's
assets as directed by an oversight board, made up of
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representatives of local taxing entities, with the proceeds
transferred to the county auditor-controller for distribution to
taxing agencies within each county.
AB 26X also included provisions allowing the host city or county
of a dissolving redevelopment agency to retain the housing
assets and functions previously performed by the agency, except
for funds on deposit in the agency's L&M fund, and thus become a
successor housing agency. If the host city or county chooses
not to become the successor housing agency, a local housing
authority or the state's Department of Housing and Community
Development (HCD) may do so.
AB 27X allowed redevelopment agencies to avoid elimination if
they made payments to schools in the current budget year and in
future years. In December 2011, the California Supreme Court in
California Redevelopment Association v. Matosantos upheld AB 26X
and overturned
AB 27X. As a result, all of the state's roughly 400
redevelopment agencies dissolved on February 1, 2012, and local
jurisdictions are in the process of implementing AB 26X's
provisions to distribute former redevelopment assets.
This bill :
1.Provides that the AB 26X process for disposing of
redevelopment agency assets and remitting unencumbered
balances funds for distribution to the taxing entities does
not apply to a jurisdiction that has by August 1, 2012 formed
a Community Development and Housing Joint Powers Authority
(authority) pursuant to SB 1156 (Steinberg), which is also on
today's agenda.
2.Requires each authority to administer a Sustainable Economic
Development and Housing Trust Fund to receive and hold the
former redevelopment agency's unencumbered funds, assets, and
properties. The trust fund may also accept revenues from any
source and may include the proceeds from selling redevelopment
agency assets.
3.Allows an authority to use the trust fund for public or
private infrastructure needed for infill development,
affordable housing, land acquisitions, clean energy,
education, job training, transitional housing for former
inmates transferred to a county pursuant to the 2011
realignment, loans for development activities, and
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environmental mitigation, including cleaning up brownfield
sites.
4.Directs an authority to prepare a long-range asset management
plan to govern the disposition and ongoing use of the
Sustainable Economic Development and Housing Trust Fund. The
plan must:
Inventory all assets, assess the value and purpose of
acquisition of these assets, and determine the current
value of real property assets.
Address the use or disposition of all of the assets in
the trust.
Outline a strategy for maximizing the long-term social
and monetary value of the real property and assets in the
trust consistent with the provisions of SB 1156 and so as
to create high wage and high skill jobs, plus affordable
housing.
1.Requires the authority to submit this long-range asset
management plan to the Department of Finance (DOF) for
approval by December 1, 2012. DOF may approve the plan or
return it for revisions by December 31, 2012. An authority
must update and resubmit its plan annually to DOF by each
December 1 thereafter. DOF, as a condition of granting its
approval, may require that K-14 schools and local agencies
receive a minimal amount of funding from the dissolution of
assets.
2.Requires any entity receiving financial support under this
bill or SB 1156 to incorporate into any and all agreements a
jobs plan, which shall describe how the project will create
construction careers that pay prevailing wages and a program
for community outreach, local hire, and job training.
COMMENTS:
1.Purpose . AB 26X requires successor agencies, at the direction
of their oversight boards, to dispose of the former RDA assets
"expeditiously and in a manner aimed at maximizing value" but
offers no guidance on how to achieve this objective. Absent
such guidance, the author is concerned that the result may be
the "fire sale" of real property assets of the former
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redevelopment agencies and a transfer of wealth from the
public to private sectors. To address this concern, this bill
establishes Sustainable Economic Development and Housing Trust
Funds to serve as repositories for the assets of the former
redevelopment agencies, including cash, liquid investments,
and real and personal property expected to be valued in the
billions of dollars. City and county joint powers authorities
would manage these trusts for future economic development and
housing activities.
The bill requires joint powers authorities to develop Long
Range Asset Management Plans to maximize the social and
economic value of the former redevelopment agency assets for
the public sector. The plans would include detailed
valuation and environmental contamination information on a
parcel-by-parcel basis and facilitate the integration of
properties into local land use plans. The bill authorizes the
use of the trust funds to finance public and private
infrastructure needed for infill development, affordable
housing, environmental mitigation, former military bases,
clean energy and energy efficiency, as well as educational,
labor-management, and job training programs leading to high
skill, high wage jobs.
2.Definitions needed . This bill directs that these trust funds
receive and hold redevelopment assets and then use those
assets for public or private infrastructure needed for infill
development, affordable housing, land acquisitions, clean
energy, education, job training, transitional housing for
former inmates transferred to a county pursuant to the 2011
realignment, loans for development activities, and
environmental mitigation, including cleaning up brownfield
sites. The bill, however, does not provide definitions of
these terms. Definitions are necessary to ensure that the use
of these funds comports with state goals and polices. In
particular, existing redevelopment law provides extensive
definitions and rules on the provision of affordable housing
to ensure that it is provided to income-qualified individuals
in proportion to their population in the community.
3.Two housing agencies . It is unclear how the affordable
housing functions of the authority will interact with the work
of the successor housing agencies established by AB 26X. The
committee may wish to amend this bill to ensure that all of
the housing assets, including the L&M balances, are located in
one entity by allowing the authority to contribute its
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resources to the housing successor entity.
4.Who is in charge ? AB 26X gives oversight boards broad
discretion to approve or disapprove successor agencies'
actions. Each successor agency must, every six months, draft
a list of enforceable obligations that are payable during a
subsequent six-month period, to which the oversight board must
agree. This bill does allow a Community Development and
Housing Joint Powers Authority to use funds in the Sustainable
Economic Development and Housing Trust Fund to pay a former
redevelopment agency's liabilities and does not limit this
authority to paying for liabilities that are recognized by an
oversight board as enforceable obligations. One could see how
this bill could undermine the oversight board process by
allowing an authority to use proceeds from former
redevelopment assets to pay for redevelopment liabilities that
an oversight board would not recognize as an enforceable
obligation. The committee may wish to amend this bill to
clarify the role of the oversight board when a community forms
an authority under this bill.
5.Urgency needed . This bill offers communities an alternative
approach to managing former redevelopment agency assets if
they establish an authority before August 1, 2012. This
timing is necessary because successor agencies are working now
to distribute those assets. But because this bill does not
include an urgency clause, its provisions will not take effect
until January 1, 2013. The author or committee may wish to
consider amending the bill to include an urgency clause.
6.Technical amendments .
On page 8, line 25, after the "and" insert "is"
On page 8, line 29, delete "article" and insert "this
part or Part 1.86 (commencing with Section 34191.1)"
On page 9, lines 14-15, delete "joint powers authority
specified in and consistent with" and insert "Community
Development and Housing Joint Powers Authority established
pursuant to"
On page 9, line 32, delete "34191.2" and insert
"34191.15"
1.Committee of second referral . The Rules Committee referred
this bill to the Governance and Finance Committee and to the
Transportation and Housing Committee. This bill passed that
committee on April 18 by a 6 to 3 vote. The Governance and
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Finance Committee's analysis and hearing of the bill dealt
primarily with the provisions of the bill related to the local
government finance provisions, leaving the housing provisions
for review in this committee.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 18,
2012)
SUPPORT: BRIDGE Housing
California Infill Builders Association
California Labor Federation
California State Association of Counties
DMB Pacific Ventures
Los Angeles Alliance for a New Economy
Mission Bay Development Group
OPPOSED: None received.