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 24, 2012 Consultant: Mark McKenzie
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
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:
Significant diversion of future property tax increment
(local share only) 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. As proposed to be amended, property tax
increment would not include the school share of property
taxes.
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'
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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
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
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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
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
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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.
Staff Comments: In addition to this bill and the related but
competing legislative proposals noted above, the Governor's May
Revision proposes to use cash or cash equivalent assets held by
successor agencies to former RDAs to offset its Proposition 98
obligations. The Proposition 98 offset is proposed is estimated
to be $1.4 billion in 2012-13 and $600 million in 2013-14. In
addition, the May Revision assumes General Fund savings of about
$800 million in 2011-12 and $900 million in 2012-13 as a result
of increased property tax revenues flowing to schools,
offsetting General Fund payments that would otherwise be
required under Proposition 98. Any proposal that reserves a
portion of former RDA assets for other purposes, including this
bill, would reduce the amount of funding available to offset
General Fund education spending and exacerbate the projected
state budget deficit.
Recommended Amendments: This bill authorizes the formation of
JPAs after July 2, 2012. This timing is necessary because
successor agencies are working now to distribute those assets.
Since the current version of the bill would not take effect
until January 1, 2013, staff recommends an amendment to add an
urgency clause
Proposed amendments would:
Authorize the establishment of a "Sustainable
Communities Investment Authority" to exercise the
provisions of the Community Redevelopment Law, including
tax increment financing authority granted by Article XVI,
Section 16 of the California Constitution.
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Statutorily redefine the term "district" as used in
Article XVI, Section 16 of the California Constitution for
purposes of calculating redevelopment tax increment, to
exclude school districts and special districts.
Delete the school mitigation provisions because the
school share of property tax is no longer considered in the
calculation of tax increment.
Delete provisions requiring L&M funds of a former RDA to
be retained in the Sustainable Economic Development and
Housing Trust Fund.
Provide additional governance structures that allow
cities to capture the full increment subject to county
approval, or to capture only the city share of the
increment.
Require the adoption of a jobs plan, prevailing wage
provisions, and developer prequalification provisions in
connection with the establishment of a Sustainable
Communities Investment Area.