BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1156 (Steinberg) - Community Development and Housing Joint
Powers Authorities.
Amended: April 30, 2012 Policy Vote: G&F 6-3, T&H 5-3
Urgency: No Mandate: No
Hearing Date: May 14, 2012 Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1156 would allow cities and counties to form
Community Development and Housing joint powers authorities
(JPAs) to administer economic development and housing programs.
Fiscal Impact:
Estimated loss of as much as $700 million in General Fund
savings by preventing the general reallocation of
approximately $1.36 billion in unreserved Low and Moderate
Income (L&M) funds to local governments, including schools.
To the extent this bill prevents these revenues from flowing
to schools, there would be a corresponding loss of General
Fund savings. Approximately 50 percent of unencumbered L&M
funds would be distributed to schools in the near-term,
absent this bill. In general, any property tax proceeds
diverted from schools results in an equivalent General Fund
cost, pursuant to Proposition 98's minimum funding
guarantees.
Unknown costs to the Department of Finance (DOF), likely
exceeding $150,000 annually, to review school mitigation
plans and determine impacts on the state budget and whether
the impacts are "not unacceptable."
Potential for future General Fund impacts to the extent
that school districts or DOF approve a school mitigation
plan that is deemed to have no impact or an acceptable
impact on the state budget. An impact deemed acceptable now
may grow to an unacceptable level in future years, as the
redevelopment plan would be in effect for up to 30 years.
In addition, the school mitigation plan may be deemed to
have no impact on a school district or the state budget
during a particular fiscal year, depending on whether we are
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in a Test 1, 2, or 3 year pursuant to Proposition 98, or if
a school district is basic-aid.
Significant diversion of future property tax increment to
JPAs to cover staffing and administrative costs associated
with new redevelopment activity authorized by the bill.
This could be a particularly difficult and costly
administrative task for a county that forms JPAs with
numerous cities within its boundaries.
Background: Historically, the Community Redevelopment Law has
allowed a local government to establish redevelopment agencies
(RDAs) and capture all of the increase in property taxes that is
generated within the project area beyond the base year value
(referred to as "tax increment") over a period of decades. RDAs
used tax increment financing to address issues of blight,
construct affordable housing, rehabilitate existing buildings,
and finance development and infrastructure projects.
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
X1 26 (Blumenfield) Chap 5/2011 dissolved all RDAs and
established procedures for winding down RDA activity. Existing
law requires successor agencies to dispose of former RDAs'
assets and properties, at an oversight board's direction, in an
expeditious manner aimed at maximizing value. Successor
agencies are required to make any payments related to
enforceable obligations, as specified in an adopted recognized
obligation payment schedule (ROPS) and remit unencumbered
balances of RDA funds and proceeds from asset sales to the
county auditor-controller for distribution to local taxing
entities in the county. Successor agencies cannot enter into
new enforceable obligations.
SB 375 (Steinberg) Chap 728/2008, requires the Air Resources
Board (ARB) 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
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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.
Proposed Law: SB 1156 would authorize a city and county that
includes territory of a former RDA to form a Community
Development and Housing Joint Powers Authority (JPA) to carry
out the Community Redevelopment Law, as specified.
Specifically, this bill would do the following:
Require L&M funds of a former RDA to be retained in the
Sustainable Economic Development and Housing Trust Fund
(established by SB 1151, the companion measure to this bill).
If the L&M funds are not contracted for use within 60 months
from the effective date of this bill, the local agency would
transfer the L&M funds to an agency designated by the Governor
for use as grants to the JPA for the provision of affordable
housing.
Authorize the JPA to enter into financial and other agreements
with community colleges, K-12 school districts, and private
businesses to "facilitate the development and operation of
articulated career technical education pathways."
Authorize the JPA to adopt a redevelopment plan for a project
area that would expire within 30 years of the first issuance
of bonded indebtedness.
Place the specified limits on project area designations: (1)
for regions within an MPO with an adopted SCS that has been
accepted by ARB, possible project areas may include transit
priority areas identified in an SCS and for each jurisdiction,
one small walkable community, as specified; or (2) sites that
have land use approvals or other controls restricting the site
to clean energy manufacturing and sites consistent with the
SCS, if those sites are within the geographic boundaries of an
MPO.
Authorize a redevelopment plan to include a provision for the
receipt of tax increment funds provided the local government
adopts a school mitigation plan, an analysis of public service
costs and revenue-generating impacts of development of the
provision of basic services, restrictions on parking in
transit areas, and other practices consistent with an SCS.
Specify that an adopted school mitigation plan to offset
losses of property tax revenue to schools must be approved by
the fiscally affected schools or submitted to DOF, which must
approve the plan if there is no impact on the state budget or
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if the impacts on the budget are not unacceptable.
Authorize a state or local public pension fund to invest in
public infrastructure projects and private commercial and
residential development undertaken by a JPA.
Authorize a JPA 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.
Authorize a JPA to issue bonds paid for with authority
proceeds in order to carry out the provisions of this bill.
Authorize a JPA to exercise the powers of an infrastructure
financing district to divert property tax increment revenues
and issue bonds to pay for public works.
Authorize a JPA 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.
Related Legislation: The following bills all plan for the
aftermath of redevelopment:
SB 986 (Dutton), which authorizes successor agencies to use
the proceeds of certain bonds issued by former redevelopment
agencies to fulfill an enforceable obligation of the former
agency or enter into new enforceable obligations funded by
those bond proceeds until December 31, 2014.
SB 1056 (Hancock), which 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), which creates an alternative process by
which communities can use their former redevelopment agencies'
assets for economic development and housing purposes. SB 1151
is a companion measure to this bill.
SB 1335 (Pavley), which allows a successor agency to retain
former RDA land that is a brownfield site for the purpose of
hazardous substance remediation or removal.
AB 1235 (Hernandez), which provides all the authority, rights,
powers, duties, obligations and protections provided by the
Polanco Redevelopment Act to successor agencies.
AB 1585 (Perez), which makes numerous amendments to the
statutes governing the redevelopment dissolution process.
Recommended Amendments: This bill authorizes the formation of
JPAs after July 1, 2012. This timing is necessary because
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successor agencies are working now to distribute those assets.
Since the bill, as drafted would not take effect until January
1, 2013, Staff recommends an amendment to add an urgency clause.