BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2280|
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THIRD READING
Bill No: AB 2280
Author: Alejo (D), et al.
Amended: 8/18/14 in Senate
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 8-2, 6/10/14
AYES: DeSaulnier, Cannella, Galgiani, Hueso, Lara, Liu, Pavley,
Roth
NOES: Gaines, Wyland
NO VOTE RECORDED: Beall
SENATE GOVERNANCE & FINANCE COMMITTEE : 4-2, 6/25/14
AYES: Wolk, Beall, DeSaulnier, Liu
NOES: Knight, Walters
NO VOTE RECORDED: Hernandez
SENATE APPROPRIATIONS COMMITTEE : 5-1, 8/14/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Gaines
NO VOTE RECORDED: Walters
ASSEMBLY FLOOR : 57-12, 5/8/14 - See last page for vote
SUBJECT : Community Revitalization and Investment Authorities
SOURCE : Author
DIGEST : This bill allows a local government or local
governments jointly to establish a Community Revitalization and
Investment Authority (authority) to use tax increment revenues
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to invest in disadvantaged communities.
ANALYSIS : Historically, the Community Redevelopment Law (CRL)
allowed a local government to establish a redevelopment area and
capture all of the increase in property taxes generated within
the area (referred to as "tax increment") over a period of
decades. The law requires redevelopment agencies to deposit 20%
of tax increment into a Low and Moderate Income Housing Fund
(L&M fund) to be used to increase, improve, and preserve the
community's supply of low- and moderate-income housing available
at an affordable housing cost.
In 2011, the Legislature enacted two bills, AB 26X (Blumenfield,
Chapter 5, First Extraordinary Session) and AB 27X (Blumenfield,
Chapter 6, First Extraordinary Session). AB 26X eliminated
redevelopment agencies and established procedures for winding
down the agencies, paying off enforceable obligations, and
disposing of agency assets. AB 26X established successor
agencies, typically the city that established the agency, to
take control of all redevelopment agency assets, properties, and
other items of value. Successor agencies are to dispose of an
agency's assets as directed by an oversight board, made up of
representatives of local taxing entities, with the proceeds
transferred to the county auditor-controller for distribution to
taxing agencies within each county.
AB 26X also included provisions allowing the host city or county
of a dissolving redevelopment agency to retain the housing
assets and functions previously performed by the agency, except
for funds on deposit in the agency's L&M fund, and thus become a
housing successor. If the host city or county chooses not to
become the housing successor, a local housing authority or the
Department of Housing and Community Development takes on that
responsibility.
AB 27X allowed redevelopment agencies to avoid elimination if
they made payments to schools in the current budget year and in
future years. In December 2011, the California Supreme Court in
California Redevelopment Association v. Matosantos upheld AB 26X
and overturned AB 27X. As a result, all of the state's roughly
400 redevelopment agencies dissolved on February 1, 2012, and
local jurisdictions began implementing AB 26X's provisions to
distribute former redevelopment assets and pay the remaining
obligations.
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This bill authorizes local governments to create authorities to
use tax increment revenue to improve the infrastructure, assist
businesses, and support affordable housing in disadvantaged
communities. Specifically, this bill:
1.Permits a city, county, or city and county to create an
authority. The authority board shall have five members, three
of whom shall be members of the legislative body of the city
or county and two of whom shall be public members who live or
work within the community revitalization and investment area.
2.Permits, as an alternative, any combination of a city, county,
city and county, and a special district, but not a school
district, to enter a joint powers agreement to form an
authority. The board of the authority in this case shall
consist of a majority of members from the legislative bodies
and a minimum of two public members who live or work within
the community revitalization and investment area.
3.Specifies an authority created by a city or county that
created a redevelopment agency dissolved pursuant to AB 26X of
2011 does not become effective until the successor agency
adopts findings of fact stating:
A. They received a finding of completion from the
Department of Finance;
B. No former RDA assets which are the subject of litigation
against the state have been or will be used to benefit any
efforts of an authority unless litigation has been
resolved; and
C. The successor agency has complied with all orders of the
State Controller, as specified.
1.Allows an authority to carry out a community revitalization
plan within a community revitalization and investment area
(plan area). This bill requires that at least 80% of the land
calculated by census tracts or block groups within the plan
area must be characterized by both of the following
conditions:
A. An annual median household income that is less than 80%
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of the statewide annual median income.
B. Three of the following four conditions:
(1) Non-seasonal unemployment that is at least 3% higher
than statewide median unemployment rate;
(2) Crime rates that are 5% higher than the statewide
median crime rate;
(3) Deteriorated or inadequate infrastructure such as
streets, sidewalks, water supply, sewer treatment or
processing, and parks; or
(4) Deteriorated commercial or residential structures.
Alternatively, an authority may carry out a community
revitalization and investment plan within a plan area
established within a former military base that is principally
characterized by deteriorated or inadequate infrastructure and
structures. The board of an authority established within a
former military base must include a member of the military
base closure commission as a public member.
1.Allows any city, county, or special district, other than a
school entity, that receives ad valorem property taxes from
property located in a plan area to adopt a resolution
allocating some, or all of its share of tax increment within
the plan area for a number of years it specifies. The city,
county, or special district may also dedicate its tax
increment to specific purposes or programs. In addition, the
city, county, or special district may cease providing tax
increment to an authority, unless its increment is pledged to
repay debt.
2.Deems an authority an "agency" pursuant to CRL for purposes of
receiving tax increment revenue, but limits an agency's powers
and duties to those prescribed in this bill. These powers
include:
A. Provide funding to rehabilitate, repair, upgrade, or
construct infrastructure;
B. Provide funding for low- and moderate-income housing;
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C. Remedy or remove a release of hazardous substances,
pursuant to provisions of the CRL known as the Polanco Act;
D. Provide for seismic retrofits of existing buildings
pursuant to the CRL;
E. Acquire and transfer real property in accordance with
specified provisions of the CRL, including by use of
eminent domain;
F. Issue bonds;
G. Borrow money, receive grants, or accept financial or
other assistance from the state or federal government;
H. Adopt a community revitalization and investment plan;
I. Make loans and grants for owners or tenants to improve,
rehabilitate, or retrofit buildings or structures within
the plan area; and
J. Provide direct assistance to businesses within the plan
area in connection with new or existing facilities for
industrial or manufacturing uses.
1.Requires an authority following a specified public notice and
hearing process to adopt a community revitalization and
investment plan. The plan may include a provision for the
receipt of tax increment funds generated within the area,
provided the plan includes these elements:
A. A statement of its principal goals and objectives;
B. A description of deteriorated or inadequate
infrastructure within the plan area and a program to
upgrade that infrastructure;
C. A program to remedy or remove a release of hazardous
substances;
D. A program to provide funding or otherwise facilitate the
economic revitalization of the plan area;
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E. Time limits as provided in the CRL, which prescribe the
maximum time an authority may establish debt, act pursuant
to an area plan, and repay debt;
F. A fiscal analysis setting forth the receipt of revenue
and projected expenses over a five-year planning horizon;
G. A program to use 25% of the tax increment revenue to
increase, improve, and preserve the supply of low-and
moderate-income housing available at an affordable housing
cost in compliance with the CRL's housing provisions; and
H. A program that builds on the housing requirements in the
CRL by doing both of the following:
(1) Prohibits the number of housing units occupied by
extremely low-, very low-, and low-income households,
including the number of bedrooms in those units, from
being reduced within the area during the effective period
of the plan; and
(2) Requires the replacement of dwelling units that
house extremely low-, very low-, or low-income households
when removed from an area within two years, rather than
the four years under existing provisions of the CRL.
An authority shall follow the same process when making plan
amendments. In addition, each year the authority must
review its plan and make modifications as appropriate.
1.Allows an authority to transfer funding for affordable housing
to a housing authority or the entity that received the housing
assets of the former redevelopment agency within the
territorial jurisdiction of the local jurisdiction of the
authority, if it makes a finding that the transfer will reduce
administrative costs or expedite the construction of
affordable housing.
2.Requires that an authority adopt an annual report each year by
June 30 after holding a public hearing on the draft report and
complying with specified notification requirements. The
annual report must detail projects undertaken, revenues and
expenses, housing activities, and assistance provided to
private businesses. If an authority fails to provide its
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annual report, then it cannot spend any tax increment funds
received.
3.Requires that every 10 years an authority shall conduct at its
annual report-adoption hearing, a protest hearing at which
property owners and residents within the plan area may present
protests against the authority pursuant to a process specified
in the bill. Under this process, if more than 50% of the
combined number of property owners and residents over age 18
protest, then the authority must call an election within 90
days and, in the meantime, take no actions on any new
projects. If a majority of property owners and residents vote
against the authority at the protest election, then the
authority shall take no further action to implement its plan,
except that it may finish those projects for which it had
begun making expenditures of any kind.
4.Requires an authority to contract every five years, beginning
in the year which the authority has allocated a cumulative
total of more than $1 million in tax increment revenues, for
an independent financial and performance audit to determine
compliance with the affordable housing requirements of the
bill. The State Controller shall establish guidelines, on or
before December 31, 2020, for ensuring that an authority is
meeting the housing requirements of the bill (described in the
final bullet under #7 above) over each five-year period
covered by the audit. Each authority shall provide its
completed audit to the State Controller. If its audit shows
that an authority is failing to comply with these housing
requirements, then it shall submit to the State Controller
with its audit a plan to achieve compliance in not less than
two years. The plan must include one of the following means
of achieving compliance:
A. Expenditure of an additional 10% of the authority's tax
increment revenues on providing low-income housing;
B. A 10% increase in the production of housing for very
low-income households, as required under the CRL's housing
production requirements; or
C. The targeting of expenditures from its L&M fund
exclusively to rental housing affordable to, and occupied
by, persons of very low and extremely low income.
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This bill prescribes financial penalties that an authority
must pay if it fails to provide this audit to the State
Controller within 20 days of receiving written notice from the
State Controller of the failure. These penalties vary from as
little as $2,500 to as much $10,000 depending on the revenue
of the authority. In addition, the penalties are double for a
second consecutive year of failure and triple for a third or
more consecutive year. Also, after three or more consecutive
years, the State Controller shall conduct its own financial
audit report for which the authority shall pay. Finally, upon
request of the State Controller, the Attorney General may take
action to collect the fines.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Potentially major redirection of local property tax revenues
from participating local agencies, excluding schools, to a
CRIA over a period of decades. Since the bill prohibits
schools from participating, there is no state fiscal impact
related to the redirection of local property tax revenues.
Estimated one-time costs to the State Controller's Office of
up to $217,000 (General Fund) to establish guidelines for
periodic financial and performance audits that include
provisions for determining compliance with affordable housing
requirements as well as secondary review and compliance
measures for failure to achieve initial compliance on the
regular audit schedule. (Staff assumes up to two personnel
years of audit staff to establish guidelines)
Estimated periodic costs to the State Controller's Office in
the range of $50,000 to $100,000 (General Fund) on a periodic
basis for accepting audits and reviewing and approving
secondary compliance plans submitted by agencies that fail to
comply with initial audit requirements. (Staff assumes up to
one personnel year of audit work on a periodic basis)
SUPPORT : (Per Senate Transportation and Housing Committee
analysis of 6/10/14--Unable to reverify at time of writing)
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Building Owners and Managers Association of California
California Association for Local Economic Development
California Building Industries Association
California Business Properties Association
California Chamber of Commerce
California Coalition for Rural Housing
California Rural Legal Assistance Foundation
California Special Districts Association
Cities of Adelanto, Antioch, Blue Lake, Camarillo, Fort Bragg,
Healdsburg, Indio, La
Puente, La Quinta, Lakeport, National City, Plymouth, Rosemead,
Sacramento, Salinas, Thousand Oaks and Vista
Coachella Valley Economic Partnership
Glendale City Employees Association
Housing California
International Council of Shopping Centers
League of California Cities
League of California Cities-Latino Caucus
NAIOP of California
Organization of SMUD Employees
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Ventura Council of Governments
Western Center on Law and Poverty
OPPOSITION : (Per Senate Transportation and Housing Committee
analysis of 6/10/14--Unable to reverify at time of writing)
California Taxpayers Association
Fieldstead and Company
ASSEMBLY FLOOR : 57-12, 5/8/14
AYES: Achadjian, Alejo, Ammiano, Atkins, Bloom, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Cooley, Dababneh, Daly, Dickinson,
Fong, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray,
Hagman, Hall, Roger Hern�ndez, Holden, Jones-Sawyer, Levine,
Lowenthal, Maienschein, Medina, Mullin, Muratsuchi, Nazarian,
Olsen, Pan, Perea, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Waldron, Weber,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Allen, Bigelow, Ch�vez, Dahle, Donnelly, Beth Gaines,
Harkey, Jones, Logue, Melendez, Patterson, Wagner
NO VOTE RECORDED: Conway, Eggman, Fox, Gorell, Grove, Linder,
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Mansoor, Nestande, V. Manuel P�rez, Wilk, Vacancy
JA:e 8/16/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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