Amended in Assembly April 22, 2014

Amended in Assembly April 3, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1582

Introduced by Assembly Member Mullin

February 3, 2014

An act to amend Section 34177 of the Health and Safety Code, relating to redevelopment.

LEGISLATIVE COUNSEL’S DIGEST

AB 1582, as amended, Mullin. Redevelopment: successor agencies: Recognized Obligation Payment Schedule.

The Community Redevelopment Law authorized the establishment of redevelopment agencies in communities to address the effects of blight, as defined. Existing law dissolved redevelopment agencies as of February 1, 2012, and provides for the designation of successor agencies, as defined. Existing law requires successor agencies to wind down the affairs of the dissolved redevelopment agencies. Existing law requires a successor agency to, among other things, prepare a Recognized Obligation Payment Schedule for payments on enforceable obligations for each 6-month fiscal period.

This bill would revise the timeline for the preparation of the required Recognized Obligation Payment Schedule to provide that the successor agency prepare a schedule for begin delete an annual end delete begin insert a 12-month end insert fiscal period begin insert , and would authorize the Recognized Obligation Payment Schedule to be amended by the oversight board if the amendment is approved at least 90 days before the date of the next property tax distribution end insert .

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 34177 of the Health and Safety Code is
amended to read:

34177.  

Successor agencies are required to do all of the
following:

(a) Continue to make payments due for enforceable obligations.

(1) On and after February 1, 2012, and until a Recognized
Obligation Payment Schedule becomes operative, only payments
required pursuant to an enforceable obligations payment schedule
shall be made. The initial enforceable obligation payment schedule
shall be the last schedule adopted by the redevelopment agency
under Section 34169. However, payments associated with
obligations excluded from the definition of enforceable obligations
by paragraph (2) of subdivision (d) of Section 34171 shall be
excluded from the enforceable obligations payment schedule and
be removed from the last schedule adopted by the redevelopment
agency under Section 34169 prior to the successor agency adopting
it as its enforceable obligations payment schedule pursuant to this
subdivision. The enforceable obligation payment schedule may
be amended by the successor agency at any public meeting and
shall be subject to the approval of the oversight board as soon as
the board has sufficient members to form a quorum. In recognition
of the fact that the timing of the California Supreme Court’s ruling
in the case California Redevelopment Association v. Matosantos
(2011) 53 Cal.4th 231 delayed the preparation by successor
agencies and the approval by oversight boards of the January 1,
2012, through June 30, 2012, Recognized Obligation Payment
Schedule, a successor agency may amend the Enforceable
Obligation Payment Schedule to authorize the continued payment
of enforceable obligations until the time that the January 1, 2012,
through June 30, 2012, Recognized Obligation Payment Schedule
has been approved by the oversight board and by the Department
of Finance. The successor agency may utilize reasonable estimates
and projections to support payment amounts for enforceable
obligations if the successor agency submits appropriate supporting
documentation of the basis for the estimate or projection to the
Department of Finance and the auditor-controller.

(2) The Department of Finance and the Controller shall each
have the authority to require any documents associated with the
enforceable obligations to be provided to them in a manner of their
choosing. Any taxing entity, the department, and the Controller
shall each have standing to file a judicial action to prevent a
violation under this part and to obtain injunctive or other
appropriate relief.

(3) Commencing on the date the Recognized Obligation Payment
Schedule is valid pursuant to subdivision (l), only those payments
listed in the Recognized Obligation Payment Schedule may be
made by the successor agency from the funds specified in the
Recognized Obligation Payment Schedule. In addition, after it
becomes valid, the Recognized Obligation Payment Schedule shall
supersede the Statement of Indebtedness, which shall no longer
be prepared nor have any effect under the Community
Redevelopment Law (Part 1 (commencing with Section 33000)).

(4) Nothing in the act adding this part is to be construed as
preventing a successor agency, with the prior approval of the
oversight board, as described in Section 34179, from making
payments for enforceable obligations from sources other than those
listed in the Recognized Obligation Payment Schedule.

(5) From February 1, 2012, to July 1, 2012, a successor agency
shall have no authority and is hereby prohibited from accelerating
payment or making any lump-sum payments that are intended to
prepay loans unless such accelerated repayments were required
prior to the effective date of this part.

(b) Maintain reserves in the amount required by indentures,
trust indentures, or similar documents governing the issuance of
outstanding redevelopment agency bonds.

(c) Perform obligations required pursuant to any enforceable
obligation.

(d) Remit unencumbered balances of redevelopment agency
funds to the county auditor-controller for distribution to the taxing
entities, including, but not limited to, the unencumbered balance
of the Low and Moderate Income Housing Fund of a former
redevelopment agency. In making the distribution, the county
auditor-controller shall utilize the same methodology for allocation
and distribution of property tax revenues provided in Section
34188.

(e) Dispose of assets and properties of the former redevelopment
agency as directed by the oversight board; provided, however, that
the oversight board may instead direct the successor agency to
transfer ownership of certain assets pursuant to subdivision (a) of
Section 34181. The disposal is to be done expeditiously and in a
manner aimed at maximizing value. 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, each
as determined by the oversight board, shall be transferred to the
county auditor-controller for distribution as property tax proceeds
under Section 34188. The requirements of this subdivision shall
not apply to a successor agency that has been issued a finding of
completion by the Department of Finance pursuant to Section
34179.7.

(f) Enforce all former redevelopment agency rights for the
benefit of the taxing entities, including, but not limited to,
continuing to collect loans, rents, and other revenues that were due
to the redevelopment agency.

(g) Effectuate transfer of housing functions and assets to the
appropriate entity designated pursuant to Section 34176.

(h) Expeditiously wind down the affairs of the redevelopment
agency pursuant to the provisions of this part and in accordance
with the direction of the oversight board.

(i) Continue to oversee development of properties until the
contracted work has been completed or the contractual obligations
of the former redevelopment agency can be transferred to other
parties. Bond proceeds shall be used for the purposes for which
bonds were sold unless the purposes can no longer be achieved,
in which case, the proceeds may be used to defease the bonds.

(j) Prepare a proposed administrative budget and submit it to
the oversight board for its approval. The proposed administrative
budget shall include all of the following:

(1) Estimated amounts for successor agency administrative costs
for the upcoming begin delete six-month end delete begin insert 12-month end insert fiscal period.

(2) Proposed sources of payment for the costs identified in
paragraph (1).

(3) Proposals for arrangements for administrative and operations
services provided by a city, county, city and county, or other entity.

(k) Provide administrative cost estimates, from its approved
administrative budget that are to be paid from property tax revenues
deposited in the Redevelopment Property Tax Trust Fund, to the
county auditor-controller for each six-month fiscal period.

(l) (1) Before each begin delete annual end delete begin insert 12-month end insert fiscal period, to correspond
with the former agency’s fiscal year, prepare a Recognized
Obligation Payment Schedule in accordance with the requirements
of this paragraph. For each recognized obligation, the Recognized
Obligation Payment Schedule shall identify one or more of the
following sources of payment:

(A) Low and Moderate Income Housing Fund.

(B) Bond proceeds.

(C) Reserve balances.

(D) Administrative cost allowance.

(E) The Redevelopment Property Tax Trust Fund, but only to
the extent no other funding source is available or when payment
from property tax revenues is required by an enforceable obligation
or by the provisions of this part.

(F) Other revenue sources, including rents, concessions, asset
sale proceeds, interest earnings, and any other revenues derived
from the former redevelopment agency, as approved by the
oversight board in accordance with this part.

(2) A Recognized Obligation Payment Schedule shall not be
deemed valid unless all of the following conditions have been met:

(A) A Recognized Obligation Payment Schedule is prepared
by the successor agency for the enforceable obligations of the
former redevelopment agency. The initial schedule shall project
the dates and amounts of scheduled payments for each enforceable
obligation for the remainder of the time period during which the
redevelopment agency would have been authorized to obligate
property tax increment had the a redevelopment agency not been
dissolved.

(B) The Recognized Obligation Payment Schedule is submitted
to and duly approved by the oversight board. The successor agency
shall submit a copy of the Recognized Obligation Payment
Schedule to the county administrative officer, the county
auditor-controller, and the Department of Finance at the same time
that the successor agency submits the Recognized Obligation
Payment Schedule to the oversight board for approval.

(C) A copy of the approved Recognized Obligation Payment
Schedule is submitted to the county auditor-controller, the
Controller’s office, and the Department of Finance, and is posted
on the successor agency’s Internet Web site.

(3) The Recognized Obligation Payment Schedule shall be
forward looking to the next fiscal year, for fiscal years commencing
on or after January 1, 2015. The first Recognized Obligation
Payment Schedule shall be submitted to the Controller’s office
and the Department of Finance by April 15, 2012, for the period
of January 1, 2012, to June 30, 2012, inclusive. This Recognized
Obligation Payment Schedule shall include all payments made by
the former redevelopment agency between January 1, 2012, through
January 31, 2012, and shall include all payments proposed to be
made by the successor agency from February 1, 2012, through
June 30, 2012. Former redevelopment agency enforceable
obligation payments due, and reasonable or necessary
administrative costs due or incurred, prior to January 1, 2012, shall
be made from property tax revenues received in the spring of 2011
property tax distribution, and from other revenues and balances
transferred to the successor agency.

begin insert

(4) The Recognized Obligation Payment Schedule may be
amended by the oversight board as long as the amendment is
approved at least 90 days before the date of the next property tax
distribution.

end insert

(m) The Recognized Obligation Payment Schedule for the period
of January 1, 2013, to June 30, 2013, shall be submitted by the
successor agency, after approval by the oversight board, no later
than September 1, 2012. Commencing with the Recognized
Obligation Payment Schedule covering the period July 1, 2013,
through December 31, 2013, successor agencies shall submit an
oversight board-approved Recognized Obligation Payment
Schedule to the Department of Finance and to the county
auditor-controller no fewer than 90 days before the date of property
tax distribution. The Department of Finance shall make its
determination of the enforceable obligations and the amounts and
funding sources of the enforceable obligations no later than 45
days after the Recognized Obligation Payment Schedule is
submitted. Within five business days of the department’s
determination, a successor agency may request additional review
by the department and an opportunity to meet and confer on
disputed items. The meet and confer period may vary; an untimely
submittal of a Recognized Obligation Payment Schedule may result
in a meet and confer period of less than 30 days. The department
shall notify the successor agency and the county auditor-controllers
as to the outcome of its review at least 15 days before the date of
property tax distribution.

(1) The successor agency shall submit a copy of the Recognized
Obligation Payment Schedule to the Department of Finance
electronically, and the successor agency shall complete the
Recognized Obligation Payment Schedule in the manner provided
for by the department. A successor agency shall be in
noncompliance with this paragraph if it only submits to the
department an electronic message or a letter stating that the
oversight board has approved a Recognized Obligation Payment
Schedule.

(2) If a successor agency does not submit a Recognized
Obligation Payment Schedule by the deadlines provided in this
subdivision, the city, county, or city and county that created the
redevelopment agency shall be subject to a civil penalty equal to
ten thousand dollars ($10,000) per day for every day the schedule
is not submitted to the department. The civil penalty shall be paid
to the county auditor-controller for allocation to the taxing entities
under Section 34183. If a successor agency fails to submit a
Recognized Obligation Payment Schedule by the deadline, any
creditor of the successor agency or the Department of Finance or
any affected taxing entity shall have standing to and may request
a writ of mandate to require the successor agency to immediately
perform this duty. Those actions may be filed only in the County
of Sacramento and shall have priority over other civil matters.
Additionally, if an agency does not submit a Recognized Obligation
Payment Schedule within 10 days of the deadline, the maximum
administrative cost allowance for that period shall be reduced by
25 percent.

(3) If a successor agency fails to submit to the department an
oversight board-approved Recognized Obligation Payment
Schedule that complies with all requirements of this subdivision
within five business days of the date upon which the Recognized
Obligation Payment Schedule is to be used to determine the amount
of property tax allocations, the department may determine if any
amount should be withheld by the county auditor-controller for
payments for enforceable obligations from distribution to taxing
entities, pending approval of a Recognized Obligation Payment
Schedule. The county auditor-controller shall distribute the portion
of any of the sums withheld pursuant to this paragraph to the
affected taxing entities in accordance with paragraph (4) of
subdivision (a) of Section 34183 upon notice by the department
that a portion of the withheld balances are in excess of the amount
of enforceable obligations. The county auditor-controller shall
distribute withheld funds to the successor agency only in
accordance with a Recognized Obligation Payment Schedule
approved by the department. County auditor-controllers shall lack
the authority to withhold any other amounts from the allocations
provided for under Section 34183 or 34188 unless required by a
court order.

(4) (A) The Recognized Obligation Payment Schedule payments
required pursuant to this subdivision may be scheduled beyond
the existing Recognized Obligation Payment Schedule cycle upon
a showing that a lender requires cash on hand beyond the
Recognized Obligation Payment Schedule cycle.

(B) When a payment is shown to be due during the Recognized
Obligation Payment Schedule period, but an invoice or other billing
document has not yet been received, the successor agency may
utilize reasonable estimates and projections to support payment
amounts for enforceable obligations if the successor agency submits
appropriate supporting documentation of the basis for the estimate
or projection to the department and the auditor-controller.

(C) A Recognized Obligation Payment Schedule may also
include appropriation of moneys from bonds subject to passage
during the Recognized Obligation Payment Schedule cycle when
an enforceable obligation requires the agency to issue the bonds
and use the proceeds to pay for project expenditures.

(n) Cause a postaudit of the financial transactions and records
of the successor agency to be made at least annually by a certified
public accountant.

begin insert

(o) The changes made by the act that added this subdivision
shall not be construed to alter the semiannual distribution of
Redevelopment Property Tax Trust Fund payments made in
accordance with the projected payment schedule of the approved
Recognized Obligation Payment Schedule.

end insert