BILL ANALYSIS �
AB 981
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Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 981 (Bloom) - As Introduced: February 22, 2013
SUBJECT : Redevelopment dissolution.
SUMMARY : Allows successor agencies greater flexibility to use
bond obligation proceeds issued between January 1, 2011 and June
28, 2011. Specifically, this bill :
1)Extends, from January 1, 2011 to June 28, 2011, the date by
which an entity that has assumed the housing functions in the
winding down of redevelopment can designate the use of, and
commit, indebtedness obligation proceeds that were issued for
affordable housing purposes.
2)Allows, upon the issuance of a finding of completion by the
Department of Finance (DOF),
a successor agency to use redevelopment bond proceeds issued
between January 1, 2011 and June 28, 2011.
EXISTING LAW
1)Dissolves redevelopment agencies and institutes a process for
winding down their activities (Health and Safety Code Section
34170).
2)Requires the proceeds to be derived from indebtedness
obligations that were issued for the purposes of affordable
housing prior to January 1, 2011 and were backed by the Low-
and Moderate-Income Housing Fund. (Health and Safety Code
Section 34176)
3)Requires DOF to issue a finding of completion to the successor
agency within five business days once the following conditions
have been met and verified:
a) The successor agency has paid the full amount as
determined during the due diligence reviews and the county
auditor-controller has reported those payments to DOF, and
the successor agency has paid the full amount as determined
during the July true-up process; or,
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b) The successor agency has paid the full amount upon a
final judicial determination of the amounts due and DOF has
received confirmation from the county auditor-controller
that those amounts have been paid (Health and Safety Code
Section 34179.7).
4)Allows the successor agency, upon receiving the finding of
completion, to:
a) Retain dissolved redevelopment agency assets;
b) Place loan agreements between the former redevelopment
agency and the sponsoring entity on the ROPS as an
enforceable obligation, provided the oversight board makes
a finding that the loan was for legitimate redevelopment
purposes; and,
c) Utilize proceeds derived from bonds issued prior to
January 1, 2011, in a manner consistent with the original
bond covenants. (Health and Safety Code Section 34191.4)
5)Requires, after DOF issues a finding of completion, the
successor agency to prepare a long-range property management
plan that addresses the disposition and use of the real
properties of the former redevelopment agency, and requires
the report to be submitted to the oversight board and DOF for
approval no later than six months following the issuance to
the successor agency of the finding of completion. (Health and
Safety Code Section 34191.5)
FISCAL EFFECT : Unknown
COMMENTS :
In 2011, facing a severe budget shortfall, the Governor proposed
eliminating redevelopment agencies in order to deliver more
property taxes to other local agencies. Statewide, redevelopment
redirected 12% of property taxes away from schools and other
local taxing entities and into community development and
affordable housing. Ultimately, the Legislature approved and the
Governor signed two measures, ABX1 26 (Blumenfield), Chapter 5
and
ABX1 27 (Blumenfield), Chapter 6, that together dissolved
redevelopment agencies as they existed at the time and created a
voluntary redevelopment program on a smaller scale. In response
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the California Redevelopment Association (CRA) and the League of
California Cities, along with other parties, filed suit
challenging the two measures. The Supreme Court denied the
petition for peremptory writ of mandate with respect to ABX1 26.
However, the Court did grant CRA's petition with respect to ABX1
27. As a result, all redevelopment agencies were required to
dissolve as of February 1, 2012.
Last year, AB 1484 (Blumenfield), Chapter 26, made the statutory
changes needed to achieve a total of $3.3 billion of budget
savings related to the dissolution of redevelopment agencies as
estimated in the Governor's May Revision of the Budget. AB 1484
clarified the process for dissolving all redevelopment agencies,
made various statutory changes associated with the dissolution
of redevelopment agencies, and addressed a number of substantive
issues related to administrative processes, affordable housing
activities, repayment of loans from communities, use of existing
bond proceeds, and the disposition or retention of former
redevelopment agency assets.
AB 1484 limited successor housing agencies to using housing bond
proceeds that were issued prior to January 1, 2011. All proceeds
issued in 2011 must be defeased. AB 1484 also allowed
successor agencies that have received a "finding of completion"
from DOF to have additional discretion regarding former agency
real property assets, loan repayments to the local government
community that formed the agency, and use of proceeds from bonds
issued by the former redevelopment agency. In order to receive
the finding of completion, the successor agency must undergo
specified due diligence reviews and make the required payments
to DOF. Once the successor agency receives the finding of
completion, the agency gains access to three specific benefits
listed in statute: the ability to transfer former redevelopment
agency-owned properties to the city or county for redevelopment
upon completion of a long-term management plan approved by DOF,
the ability to repay city loans made to the redevelopment
agency, and the ability to use unspent bond proceeds issued by
redevelopment agency prior to December 31, 2010.
Purpose of this bill: AB 981 extends from January 1, 2011 to
June 28, 2011, the date by which an entity that has assumed the
housing functions in the winding down of a redevelopment agency
can designate the use of, and commit, indebtedness obligation
proceeds that were issued for affordable housing purposes. This
change will allow successor agencies to use an additional six
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months of housing bond proceeds that were issued by the former
redevelopment agency. The bill also expands the cutoff date for
the use of non-housing redevelopment bond proceeds from December
31, 2010 (as established by AB 1X 26) to June 28, 2011, upon
issuance of a finding of completion by DOF. June 28, 2011, is
the date the dissolution legislation (AB 1X 26) was signed.
The author estimates that there are approximately $670 million
in non-housing redevelopment bond proceeds and $134 million in
housing bond proceeds issued in 2011 that cannot be spent due to
the deadline by which bonds would have needed to have been sold
to be eligible. These bonds were issued to finance a variety of
public works projects such as infrastructure construction and
repair, new public facilities, and affordable housing. The bonds
are held by 37 successor agencies throughout the state. DOF has
directed successor agencies to defease the 2011 bonds. According
to the author, 90% of these bonds cannot be defeased for ten
years, during which time nearly $1 billion would be spent on
debt service payments for the bonds.
According to Smart Cities Prevails, if these bond proceeds could
be used, they could generate between 16,000 and 18,000 jobs
statewide, between $2.3 and $2.7 million in statewide economic
activity, and between $117 and $135 million in new state and
local tax revenues. Between 74 percent and 86 percent of those
impacts would be in counties with an average unemployment rate
of 9.2 percent.
Double referred : This bill passed the Committee on Local
Government on April 24, 2013, by a vote of 9 to 0.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association for Local Economic Development
California Building Industry Association
California Contract Cities Association
California Teamsters Public Affairs Council
City of Brea
City of Culver City
City of Fortuna
City of Glendale
City of Grand Terrace
City of Lemoore
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City of Lynwood
City of Novato
City of San Marcos
City of Santa Ana
City of Santa Clara
City of Santa Monica
City of Signal Hill
City of West Hollywood
City of Yorba Linda
Culver City Chamber of Commerce
Glendale Chamber of Commerce
Glendale City Employees Association
Glendale Successor Agency and Oversight Board
League of California Cities
Non-Profit Housing Association of Northern California
Organization of SMUD Employees
Palm Communities
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Santa Clara Chamber of Commerce and Convention-Visitors Bureau
Santa Rose City Employees Association
Smart Cities Prevail
West Hollywood Chamber of Commerce
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085