BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1335 HEARING: 4/25/12
AUTHOR: Pavley FISCAL: Yes
VERSION: 4/18/12 TAX LEVY: No
CONSULTANT: Weinberger
SUCCESSOR AGENCIES AND BROWNFIELD SITES
Allows successor agencies to retain former RDAs' brownfield
properties for the purpose of remediating or removing
hazardous materials.
Background and Existing Law
Until 2011, the Community Redevelopment Law allowed local
officials to set up redevelopment agencies (RDAs), prepare
and adopt redevelopment plans, and finance redevelopment
activities.
As part of the Community Redevelopment Law, the Polanco
Redevelopment Act allowed redevelopment officials and
property owners to clean up contaminated properties -
sometimes called "brownfields" - within redevelopment
project areas and to receive limited immunity from future
liability (AB 3193, Polanco, 1990).
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, 2011)
dissolved all RDAs.
AB X1 26 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
SB 1335 -- 4/18/12 -- Page 2
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.
Redevelopment agencies' dissolution deprives local
government officials of the Polanco Act's powers to abate
toxic hazards and obtain immunity from liability. It also
eliminates the tax increment financing that was used to
finance brownfield cleanup. Without some ongoing ability
to remediate and remove hazardous materials from
contaminated former RDA properties, local officials worry
that it will be difficult for successor agencies to comply
with the statutes requiring them to dispose of former RDA
properties.
Proposed Law
Senate Bill 1335 lets a successor agency, with its
oversight board's approval and at its direction, retain
former redevelopment agency land that is a brownfield site
for the purpose of remediating or removing the release of
hazardous substances on, under, or from the property.
SB 1335 specifies that "land of the former redevelopment
agency that is a brownfield site" means contaminated
parcels and surrounding or nearby related parcels that are
considered part of the site for the purpose of financing
the remediation and redevelopment of the site.
The bill allows a successor agency to use available
financing, funds obtained from a responsible party,
existing state or federal grants, or any other funds at the
disposal of the successor agency in order to maximize the
asset's value.
SB 1335 -- 4/18/12 -- Page 3
Upon completion of the remediation or removal of hazardous
substances from the brownfield site, SB 1335 requires the
successor agency to dispose of the property.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . The Polanco Redevelopment Act
was the primary tool local governments used to clean up and
develop properties contaminated by hazardous materials.
Redevelopment agencies' dissolution left many successor
agencies in possession of contaminated parcels of land that
state law requires them to dispose of expeditiously and in
a manner aimed at maximizing value, raising a number of
problems for successor agencies. Contaminated properties
are unlikely to sell for a price that maximizes the value
of those assets; some parcels may not sell at any price. A
successor agency's inability to cleanup brownfield
properties may also prevent them from maximizing the value
of adjacent parcels. SB 1335 offers local communities some
vital flexibility to retain and clean brownfields before
eventually disposing of those properties as required by
state law. The bill allows successor agencies and
oversight boards to make informed, local, case-by-case
decisions about which contaminated lands ought to be
cleaned up before they are sold.
2. Power shortage . SB 1335 allows successor agencies to
retain contaminated properties for the purpose of cleaning
them up, but it does not provide them with the full
statutory powers that allowed RDAs to clean up brownfields.
Without the Polanco Act's authority to remediate
contaminated property and its grant of specific immunity
from liability, successor agencies may not benefit from SB
1335's flexibility to retain brownfield properties. AB
1235 (Hernandez, 2011) grants a successor agency all of the
authority, rights, powers, duties, obligations, and
protections that the Polanco Redevelopment Act vested in a
former redevelopment agency for any property that was
within a redevelopment project of the former RDA. The
Hernandez bill is on the Senate's inactive file, awaiting a
SB 1335 -- 4/18/12 -- Page 4
floor vote. To ensure that successor agencies have the
statutory powers and protections they need to clean up
brownfields that they retain, the Committee may wish to
consider amending SB 1335 to grant successor agencies the
authorities, rights, powers, duties, obligations, and
protections that the Polanco Redevelopment Act vested in
RDAs.
3. Insufficient funds . SB 1335 allows successor agencies
to retain contaminated properties for the purpose of
cleaning them up, but it offers only limited sources of
funding to pay for the cleanup. The federal Environmental
Protection Agency offers some grants and revolving loans
for brownfield cleanup. Some funds may be available from
previous owners and operators of contaminated properties,
or other so-called "responsible parties" who caused or
contributed to contamination on the property. In many
communities the funding sources available to successor
agencies under SB 1335 will be insufficient to pay for the
extensive cleanup work that some properties require.
Without an adequate funding source, successor agencies may
not benefit from SB 1335's flexibility to retain brownfield
properties. To provide more funding for brownfield
remediation, the Committee may wish to consider amending SB
1335 to allow a successor agency, with oversight board
approval, to seek federal and state grants that would
require the agency to contribute a minimum amount of
matching funds. To provide more substantial funding, the
Committee could amend SB 1335 to allow a successor agency
to enter into new enforceable obligations, with an
oversight board's approval, to pay for brownfield
remediation work that is necessary to maximize a property's
value or address an imminent threat to public health,
safety, or the environment.
4. Double-referred . The Senate Rules Committee ordered a
double-referral of SB 1335, first to the Senate
Environmental Quality Committee and then to the Senate
Governance & Finance Committee. On April 16, SB 1335
passed out of the Senate Environmental Quality Committee on
a 6-0 vote.
Support and Opposition (4/19/12)
Support : Center for Creative Land Recycling; City of Brea,
SB 1335 -- 4/18/12 -- Page 5
City Manager; Sierra Club California.
Opposition : Unknown.