BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1151|
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THIRD READING
Bill No: SB 1151
Author: Steinberg (D)
Amended: 5/29/12
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-3, 4/18/12
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller, La Malfa
SENATE TRANSPORTATION & HOUSING COMM. : 5-3, 4/24/12
AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Simitian
NOES: Gaines, Harman, Wyland
NO VOTE RECORDED: Rubio
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/24/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SUBJECT : Sustainable Economic Development and Housing
Trust Fund
SOURCE : Author
DIGEST : This bill creates an alternative process by
which communities can use their former redevelopment
agencies assets for specified economic development and
housing purposes. The alternative process requires a
Sustainable Communities Investment Authority to develop a
long-range asset management plan to govern the disposition
and use of former redevelopment agency assets that are
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placed into a Sustainable Economic Development and Housing
Trust Fund.
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.
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) 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.
Successor agencies must dispose of former RDAs' assets, at
an oversight board's direction, pursuant to specific
statutory requirements. The disposal must be done
expeditiously and in a manner aimed at maximizing value.
Successor agencies must transfer 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 to the county auditor-controller for
distribution as property tax proceeds. Successor agencies
also must remit unencumbered balances of RDA funds to the
county auditor-controller for distribution to local taxing
entities in the county.
I. Sustainable Communities Investment Authority . A related
bill, SB 1156 (Steinberg, 2012), allows a city council
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and county board of supervisors representing the
geographic territory served by a former redevelopment
agency to form a Sustainable Communities Investment
Authority to carry out the Community Redevelopment Law's
provisions. In a jurisdiction where a Sustainable
Communities Investment Authority is formed, pursuant to
SB 1156's provisions, by August 1, 2012, SB 1151 exempts
a successor agency from having to:
Remit unencumbered balances of redevelopment
agency funds to the county auditor-controller for
distribution to taxing entities.
Dispose of the former redevelopment agency's
assets and properties as directed by the oversight
board.
Transfer 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 to the county
auditor-controller for distribution as property tax
proceeds.
II. Sustainable Economic Development and Housing Trust Fund .
In a jurisdiction where a Community Development and
Housing Authority is formed by August 1, 2012, this bill
establishes a Sustainable Economic Development and
Housing Trust Fund. The Trust Fund serves as the
repository of the unencumbered balances for each former
redevelopment agency's funds, assets, and properties.
This bill defines "assets" as including: real and
personal property holdings, tax revenues, former
redevelopment project revenues, other revenues and
investment accounts, deeds of trust and mortgages held
by the former agency, rents, fees, charges, moneys,
accounts receivable, contracts rights, and other rights
to payment of whatever kind or other real or personal
property.
This bill requires the Sustainable Communities
Investment Authority to administer the Sustainable
Economic Development and Housing Trust Fund and allows
the trust fund to accept revenues from any source,
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including tax revenues, grants, and loans, in addition
to the former redevelopment agency's assets.
This bill allows moneys in the Sustainable Economic
Development and Housing Trust Fund to be used for:
Purchasing, acquiring, financing, or maintaining
public or private infrastructure needed for infill
development consistent with the provisions of SB 375
(Steinberg), Chapter 728, Statutes of 2008.
Affordable housing.
Transitional housing for former inmate
populations transferred to the counties' jurisdiction
pursuant to the 2011 criminal justice realignment.
Loans to public or private entities for specified
development activities.
Environmental mitigation, including brownfield
site remediation.
Payment of the former redevelopment agency's
liabilities.
Land acquisition.
Clean energy and energy efficiency investments.
Educational, labor-management, and job training
programs leading to careers in high-need,
high-growth, or emerging regional economic sectors.
This bill allows the Sustainable Communities Investment
Authority to retain the proceeds of asset sales for its
ongoing sustainable economic development and affordable
housing activities and prohibits the proceeds from being
distributed as property tax pursuant to state law.
III. Long-range asset management plan . This bill requires a
Sustainable Communities Investment Authority to prepare
a long-range asset management plan to govern the
disposition and ongoing use of the Sustainable Economic
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Development and Housing Trust Fund. This bill requires
the plan to be submitted to the Department of Finance
(DOF) for approval by December 1, 2012. DOF must
approve the plan or return the plan to the authority for
revisions prior to final approval, by December 31, 2012.
The Authority must update the plan annually and submit
it to DOF for approval by December 1 of each year.
This bill allows DOF, as a condition of granting
approval to the long-range asset management plan
submitted by the authority, to establish a minimum asset
distribution requirement, to ensure that K-14 schools
and local agencies receive a minimal amount of funding
from the dissolution of assets of the trust pursuant to
state law.
This bill requires the long-range asset management plan
to outline a strategy for maximizing the long-term
social and monetary value of the real property and
assets in the trust for the purpose of:
sustainable economic development consistent with
specified statutes
creating high wage, high skill jobs, and
affordable housing.
This bill requires the long-range asset management plan
to include an inventory of all assets in the trust,
including all assets identified by the
auditor-controller in the audit conducted pursuant to
state law. The inventory must consist of:
The date of the acquisition of the asset and the
value of the asset at that time, and an estimate of
the current value of the asset.
The purpose for which the asset was acquired.
For real property assets:
- Parcel data, including address, lot size, and
current zoning in the former agency redevelopment
plan or specific, community, or general plan.
- An estimate of the current value of the
parcel, including, if available, any appraisal
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information.
- A history of environmental contamination,
including designation as a brownfield, and any
related environmental studies and history of any
remediation efforts.
- A description of the strategic value of the
property with respect to its potential for
transit-oriented development and advancing the
planning objectives of the member agencies of the
Community Development and Housing Authority.
- A brief history of previous development
proposals and activity, including rental or lease
of property.
This bill requires the long-range asset management plan
to address the use or disposition of all of the assets
in the trust. Permissible uses include:
Retaining the asset for governmental use,
pursuant to state law.
Selling the asset.
Retaining the asset in the trust for future use.
This bill states that an authority does not need to
maximize the monetary value of an asset if an
alternative deployment of the asset furthers social and
community objectives determined by the authority and is
consistent with specified statutes. This bill prohibits
property disposed of by the authority from being the
subject of real estate speculation.
IV. Other provisions . This bill requires all entities
receiving financial support from or authorized by its
provisions to incorporate into all agreements a jobs
plan, which shall describe how the project will create
construction careers that pay prevailing wages, living
wage permanent jobs, and a program for community
outreach, local hire, and job training. The plan must
also describe the project developer's commitment to
offer jobs to disadvantaged California residents,
including veterans of the Iraq and Afghanistan wars,
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people with a history in the criminal justice system,
and single parent families.
This bill contains a legislative finding and declaration
that the assets, properties, contracts, leases, books
and records, buildings, and equipment of former
redevelopment agencies constitute a valuable resource
that should be maintained for the purpose of economic
development and housing within the communities served by
the former redevelopment agency.
Comments
State law requires successor agencies to dispose of former
RDA's assets "expeditiously and in a manner aimed at
maximizing value." Local officials are concerned that a
lack of specific guidance on how to achieve this outcome
will result in successor agencies' selling useful public
assets to private entities at prices that are far short of
the assets' actual value or selling assets that would
produce greater public benefit if they were retained and
managed by local governments. This bill allows local
communities to avoid the problems associated with the rapid
liquidation of former RDA assets. The long range asset
management plans required by this bill will produce
specific valuation and environmental information about
former RDA properties and will facilitate those properties'
integration into local land use plans. The Sustainable
Economic Development and Housing Trust Funds created by
this bill provide local governments with a pool of
resources to use in support of important local development
priorities including infill development, affordable
housing, environmental mitigation, clean energy, education
and job-training. This bill promotes the wise management
of public assets.
Related Legislation
SB 986 (Dutton) allows successor agencies to keep former
RDAs' bond proceeds and enter into new enforceable
obligations funded by bond proceeds. The bill is on the
Senate Third Reading File.
SB 1056 (Hancock) would have expanded the definition of
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"enforceable obligation" to include financial obligations
related to a project funded with both tax increment and
federal school construction bonds. The bill died in the
Senate Governance and Finance Committee.
SB 1156 (Steinberg) allows a Sustainable Communities
Investment Authority, and some counties, to use tax
increment financing and other local revenues to finance
specified local economic development activities. The bill
is on the Senate Third Reading File.
Other bills that amend the statutes governing the
disposition and use of former RDAs' assets include:
SB 1335 (Pavley) would have allowed a successor agency to
retain former RDA land that is a brownfield site for the
purpose of hazardous substance remediation or removal. The
bill died in the Senate Appropriations Committee.
AB 1235 (Hernandez) provides all the authority, rights,
powers, duties, obligations and protections provided by the
Polanco Redevelopment Act to successor agencies. The bill
is on the Senate Inactive File.
AB 1585 (Perez) makes numerous amendments to the statutes
governing the redevelopment dissolution process. The bill
is in the Senate Governance and Finance Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Unknown General Fund revenue loss to the extent that
balances of former RDA funds and assets and properties
are retained by Community Development and Housing
Authorities (JPAs) instead of being remitted to county
auditor-controllers for allocation to local agencies,
including schools. The value of former RDA unencumbered
balances, assets, and properties is unknown but could be
in excess of $2 billion statewide, not including L&M �Low
and Moderate Income Housing] funds. Approximately 50% of
these funds would be distributed to schools in the
near-term, absent this bill. In general, any property
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tax proceeds diverted from schools results in an
equivalent General Fund cost, pursuant to Proposition
98's minimum funding guarantees.
Unknown General Fund costs to DOF, potentially in the
range of $1 million annually, to audit long-range asset
management plans annually. For illustrative purposes,
DOF recently redirected 20-25 PY �personnel years] of
audit staff to review successor agency recognized
obligation payment schedules as part of the RDA
dissolution process.
SUPPORT : (Verified 5/29/12)
BRIDGE Housing
California Infill Builders Association
California Labor Federation
California State Association of Counties
DMB Pacific Ventures
LAANE (Los Angeles Alliance for a New Economy)
Mission Bay Development Group
Natural Resources Defense Council
AGB:mw 5/29/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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