BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 1156
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: steinberg
VERSION: 3/29/12
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: April 24, 2012
SUBJECT:
Community Development and Housing Joint Powers Authority
DESCRIPTION:
This bill authorizes a city and county that included the
territory of a redevelopment agency to form a Community
Development and Housing Joint Powers Authority to carry out
Community Redevelopment Law, using the assets of a former
redevelopment agency as well as new revenues that the bill
authorizes.
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 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 representatives of
local taxing entities, with the proceeds transferred to the
county auditor-controller for distribution to taxing agencies
within each county.
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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 and pay its
remaining obligations.
SB 375 (Steinberg), Chapter 728, Statutes of 2008, required the
Air Resources Board (ARB), by September 30, 2010, to provide
each region that has a metropolitan planning organization (MPO)
with a greenhouse gas emission reduction target for the
automobile and light truck sector for 2020 and 2035,
respectively. Each MPO, in turn, is required to include within
its regional transportation plan a sustainable communities
strategy (SCS) designed to achieve the ARB targets for
greenhouse gas emission reduction. Each MPO must submit its SCS
to ARB for review. ARB must accept or reject the MPO's
determination that the SCS submitted would, if implemented,
achieve the greenhouse gas emission reduction targets.
This bill :
1.Permits a city and county representing the geographic
territory covering the area served by a former redevelopment
agency to form a Community Development and Housing Joint
Powers Authority (authority) after July 1, 2012 to carry out
the Community Redevelopment Law. If a county formed a
redevelopment agency, then the county may form an authority.
An authority so formed may adopt a redevelopment plan for a
project area. This plan must terminate on a specified date
not more than 30 years after the first issuance of bond
indebtedness by the authority.
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2.Limits possible project areas to only the following:
a. Within an MPO. For regions with an adopted SCS that
ARB has accepted, possible project areas may include
transit priority areas identified in a SCS and for each
jurisdiction, one small walkable community, as defined.
b. Within or outside of an MPO. Sites that have land
use approvals or other controls that restrict the sites
to clean energy manufacturing and are consistent with the
SCS strategy, where applicable. The bill defines clean
energy manufacturing as the manufacture of components,
parts, or materials for the generation of renewal energy
resources for alternative fuel vehicles.
If the project area is based on proximity to a planned major
transit stop or a high-quality transit corridor, the stop or
the corridor must be scheduled to be completed within the
planning horizon established by specified federal regulations
governing the metropolitan transportation planning process.
The bill specifies that a transit priority area can include a
military base reuse plan that meets the definition of a
transit priority area and a contaminated site within a transit
priority area.
3.Retains in the Sustainable Economic Development and Housing
Trust Fund, which can be created under SB 1151, also on
today's agenda, the existing L&M fund of the former
redevelopment agency for use in accordance with existing
redevelopment law. If the L&M funds are not contracted for
use within 60 months from the effective date of this bill,
then the local agency shall transfer the L&M fund monies to an
agency designated by the governor for use as grants to the
authority for the provision of affordable housing.
4.Allows a redevelopment plan adopted pursuant to this bill to
include a provision for the receipt of tax increment funds
provided that the local government with land use jurisdiction
has adopted all of the following:
a. A school mitigation plan, which fiscally affected
school districts must approve, to offset the loss of
property tax revenue to schools that serve the project
area. If the fiscally affected school districts do not
approve this plan, then the Department of Finance may
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approve it and must do so if there is no impact on the
state budget.
b. An analysis of public service costs and the
revenue-generating impact of new development with respect
to the provision of basic public services, including
police and fire services.
c. A sustainable parking standards ordinance that
restricts parking in transit priority project areas.
d. A requirement that 20 percent of the housing in the
project area be affordable to persons of low and moderate
income.
e. Within an MPO for transit priority areas and small
walkable communities, a plan must be consistent with the
land use policies in the SCS, and the MPO must concur in
this finding. In addition, the plan must require a
density of at least 20 dwelling units per net acre, and
for nonresidential uses set a minimum floor area ration
of 0.75.
f. Outside of an MPO, a plan for new residential
construction shall provide a density of at least 20
dwelling units per acre, and for nonresidential uses set
a minimum floor area ration of 0.75.
5.Permits an authority to enter into financial agreements with
community colleges, school districts, and private businesses
to facilitate the development and operation of articulated
career educational pathways.
6.Permits a state or local public pension fund to invest in
public infrastructure projects and private commercial and
residential development that an authority undertakes.
7.Authorizes an authority to implement a local transactions and
use tax, above the state's base 7.25 percent sales and use
tax, provided that the resolution authorizing the tax
designates the use of the proceeds of the tax.
8.Authorizes an authority to issue bonds paid for with authority
proceeds in order to carry out the provisions of this bill.
9.Authorizes an authority to exercise the powers of an
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infrastructure financing district to divert property tax
increment revenues and issue bonds to pay for public works.
10. Allows an authority to finance infrastructure by
issuing bonds and lending the proceeds for public works,
working capital, and insurance programs as provided in the
Marks-Roos Local Bond Pooling Act.
COMMENTS:
1.Purpose . The author introduced this bill to set forth a new
vision of local economic development and housing policy for
the 21st century, focused on building sustainable communities
and creating the high skill, high wage jobs that are the key
to our future prosperity.
The purpose of bringing together the cities and the counties
as equal partners in an inclusive governance structure is to
correct the old model of redevelopment that pitted cities
against counties and schools for limited tax revenues. Both
cities and counties have land use authority, and both share
responsibility for directing growth toward infill and
transit-oriented development consistent with SB 375 of 2008.
The author asserts that this bill will encourage cooperation,
not competition, between cities and counties in furtherance of
sustainable economic development.
This bill recognizes that economic development requires
investments both in the physical capital of our infrastructure
and the human capital of our workforce, and therefore
authorizes financial agreements with community colleges, K-12
school districts, and industry to advance career education and
credentialing programs.
2.How much area does the bill cover ? This bill provides for the
creation of new Community Development and Housing Joint Powers
Authorities to take over the assets of the former
redevelopment agencies, to set up a new system of tax
increment financing with less impact to the state's finances,
to confer new revenue authority, and to retain all the other
powers that redevelopment agencies possessed under state law,
except it significantly limits the areas that would qualify as
project areas. This bill explicitly states that these project
areas need not be blighted, but limits project areas to clean
energy manufacturing sites and, for cities and counties within
a MPO, to just a single small walkable community in each
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jurisdiction plus transit priority areas.
It is unclear how much area within the state would actually
meet these qualifications, because:
The bill defines a clean energy manufacturing site as
one with existing land use controls to restrict the site to
clean energy manufacturing, which the bill deems to consist
of "components, parts, or materials for the generation of
renewable energy resources for alternative fuel vehicles."
This definition provides no assurance that the clean energy
subsidized through this bill would indeed further or even
comport with existing state policy and laws on greenhouse
gas emissions, air pollution emissions, or renewal energy.
The committee may wish to define better what would qualify
as "clean energy" manufacturing for purposes of this bill.
The referenced definition of small walkable community
that the bill uses states that a small walkable community
cannot be in the area of a MPO, but the bill's provisions
describing possible project areas specifically allow small
walkable communities within MPOs. The committee may wish
to amend this bill to clarify whether small walkable
communities may be included in a project area.
SB 375 provided for the creation of transit priority
areas, but the financial incentives in this bill could lead
over time to a proliferation of these as a means to access
the many powers conferred to an authority created under
this bill.
1.Housing provisions raise many questions . This bill retains
with the new authorities and trust fund, created in SB 1151,
also on today's agenda, the existing L&M fund of the former
redevelopment agency for use in accordance with existing
redevelopment law. The bill further provides that if the
authority does not contract for use of the L&M funds within 60
months from the effective date of this bill, then the local
agency shall transfer the L&M fund monies to an agency
designated by the governor for use as grants to the authority
for the provision of affordable housing. These housing
provisions raise numerous questions, including:
Existing law prescribes a process for ensuring that
redevelopment agencies spend their L&M funds appropriately
and in a timely process over four-year periods (known as
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the excess surplus law). Why does this bill provide five
years from the effective date of this bill for contracting
to expend these funds, and is this meant to replace
existing law for existing L&M balances?
Does the bill mean for these provisions to govern new
L&M revenues accruing from new tax increment financing or
just the remaining, unencumbered L&M fund balance?
Given that the tax increment generated from this bill
would be much less than that generated from redevelopment
project areas, because at least the school share of the
property tax would be excluded, is a 20% set aside for the
L&M fund sufficient to support an affordable housing
program?
To what agency would the governor transfer unexpended
L&M balances?
Why does the bill return L&M funds back as grants to the
very entities that did not spend the money on affordable
housing in the first place?
Finally, this bill also requires that 20 percent of the
housing in the project area be affordable to persons of low
and moderate income. To whom will these units be
affordable and how will this requirement mesh with existing
inclusionary and production requirements in the Community
Redevelopment Law?
1.Where are the SB 450 fixes ? Last year the Legislature passed
SB 450 (Lowenthal), which substantively reformed how
redevelopment agencies spend their L&M funds. That bill
passed this committee on April 5, 2011 by a 9-0 vote, but the
governor vetoed SB 450, deeming it premature in light of the
then pending Supreme Court decision on AB 26X and AB 27X in
California Redevelopment Association v. Matosantos. This
bill, however, proposes restoring the use of the redevelopment
law, including its housing provisions, but without the changes
that SB 450 would have made. The committee or the author may
therefore wish to amend this bill to include the reforms SB
450 proposed to how redevelopment agencies spend their housing
dollars.
2.Urgency clause needed . This bill lets cities and counties
form Community Development and Housing Joint Powers
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Authorities to administer economic development and housing
programs after July 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
committee may wish to consider amending the bill to include an
urgency clause.
3.Technical Amendments .
On page 4, line 26, delete "body" and insert "bodies"
On page 5, line 23, delete "agency" and insert
"authority"
On page 6, line 17, delete "34191.11" and insert
"34191.15"
On page 7, line 13, after "per" insert "net"
On page 8, line 13, delete "proceed" and insert
"proceeds"
On page 9, line 32, after "per" insert "net"
On page 11, line 7, after "per" insert "net"
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
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 State Association of Counties
DMB Pacific Ventures
Los Angeles Alliance for a New Economy
Mission Bay Development Group
OPPOSED: California Special Districts Association
Howard Jarvis Taxpayers Association
SB 1156 (STEINBERG) Page 9