BILL ANALYSIS �
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1582|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1582
Author: Mullin (D)
Amended: 6/17/14 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-1, 6/11/14
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu, Walters
NOES: Knight
ASSEMBLY FLOOR : 74-2, 5/15/14 - See last page for vote
SUBJECT : Redevelopment: successor agencies: Recognized
Obligation Pay
SOURCE : Author
DIGEST : This bill lengthens, from six months to 12 months,
the fiscal period covered by a redevelopment successor agency's
recognized obligation payment schedule (ROPS), and directs that,
for fiscal years beginning on or after January 1, 2016, a ROPS
must cover a 12-month period, with the first of these periods
commencing July 1, 2016, that corresponds to the fiscal year of
the city, county, or city and county that created the former
redevelopment agency (RDA). This bill allows an oversight board
to amend a ROPS as long as the amendment is approved at least 90
days before the date of the next property tax distribution.
ANALYSIS : Until 2011, the Community Redevelopment Law allowed
local officials to set up RDAs, prepare and adopt redevelopment
plans, and finance redevelopment activities. Citing a
CONTINUED
AB 1582
Page
2
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
26 1X (Blumenfield, Chapter 5, Statutes of 2011-12 First
Extraordinary Session) dissolved all RDAs. The California
Supreme Court's 2011 ruling in California Redevelopment
Association v. Matosantos upheld AB X1 26, but invalidated AB 27
1X (Blumenfield, Chapter 6, Statutes of 2011-12 First
Extraordinary Session), which would have allowed most RDAs to
avoid dissolution.
AB X1 26 established successor agencies to manage the process of
unwinding former RDAs' affairs. With limited exceptions, 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. The Department of Finance (DOF) can review and request
reconsideration of an oversight board's decisions.
One of the successor agencies' primary responsibilities is to
make payments for enforceable obligations entered into by former
RDAs. The statutory definition of an enforceable obligation
includes bonds, specified bond-related payments, some loans,
payments required by the federal government, obligations to the
state, obligations imposed by state law, legally required
payments related to RDA employees, judgments or settlements, and
other legally binding and enforceable agreements or contracts
that are not otherwise void.
Each successor agency must, every six months, draft a list of
enforceable obligations that are payable during a subsequent six
month period. This ROPS must be adopted by the oversight board
and is subject to review by the DOF. Obligations listed on a
ROPS are payable from a Redevelopment Property Tax Trust Fund,
which contains revenues that would have been allocated as
property tax increment to a former RDA.
This bill:
1.Lengthens, from six months to 12 months, the fiscal period
covered by a redevelopment successor agency's ROPS, and
directs that, for fiscal years beginning on or after January
CONTINUED
AB 1582
Page
3
1, 2016, a ROPS must cover a 12-month period, with the first
of these period, beginning July 1, 2016, that corresponds to
the fiscal year of the city, county, or city and county that
created the former RDA. Allows an oversight board to amend a
ROPS as long as the amendment is approved at least 90 days
before the date of the next property tax distribution.
2.Declares that its provisions must 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 ROPS.
Comments
The biannual ROPS process is complex and time-consuming. The
preparation and administration of each ROPS involves significant
time by local agency staff and attorneys, as well as additional
workload for oversight boards and DOF. Biannual ROPS reviews
also create uncertainty that make it difficult for some
successor agencies to ensure that they can make contractually
obligated payments for long-term development projects. By
shifting the ROPS process to an annual cycle, this bill will
save staff time by avoiding repetitive processing on
non-controversial items and improve predictability for local
agencies.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 7/10/14)
Association of California Cities
California Infill Builders Federation
Cities of: Brea, Camarillo, Foster City, Glendale, Huntington
Beach, Moorpark, Pasadena, Redwood City, Sacramento, San
Clemente, Salinas, Vista, and West Hollywood
League of California Cities
MuniServices
Orange County
ARGUMENTS IN SUPPORT : According to the author, "AB 1582 would
greatly assist successor agencies that have annual enforceable
obligations payable in only one ROPS period. In many instances,
CONTINUED
AB 1582
Page
4
the 6-month ROPS period has had a detrimental impact on the
relationship with project area developers in terms of ensuring
that they are "made whole" in regards to the contractual
obligations between them and the former agency, and now the
Successor Agency. Moreover, the administrative burden being
placed upon Successor Agency staff in preparing 6-months ROPS
and projections that may not fulfill the obligations with
developers is problematic and unnecessary if the Dissolution Act
were amended to be compliant with what former agencies and
successor agency staff have been accustomed to all along - an
annual, fiscal year budget process.
"There are administrative efficiencies that would be gained by
the Successor Agency, County Auditor-Controller, State
Controller, and especially the State Department of Finance by
moving towards an annual ROPS submittal.
"The closer that a successor agency can come to knowing what its
projected tax increment and enforceable obligations might be for
the coming year, the more accurate those projections might be."
ASSEMBLY FLOOR : 74-2, 5/15/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Fong, Fox, Frazier, Garcia,
Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman,
Hall, Harkey, Roger Hern�ndez, Holden, Jones, Jones-Sawyer,
Levine, Linder, Logue, Lowenthal, Maienschein, Medina,
Melendez, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan,
Perea, John A. P�rez, V. Manuel P�rez, Quirk, Quirk-Silva,
Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting,
Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada,
Atkins
NOES: Donnelly, Patterson
NO VOTE RECORDED: Eggman, Beth Gaines, Mansoor, Vacancy
AB:nld 7/11/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED
AB 1582
Page
5
CONTINUED