BILL ANALYSIS �
SB 1129
Page 1
SENATE THIRD READING
SB 1129 (Steinberg)
As Amended August 22, 2014
Majority vote
SENATE VOTE :27-8
LOCAL GOVERNMENT 9-0 HOUSING 5-1
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|Ayes:|Achadjian, Levine, Alejo, |Ayes:|Chau, Ammiano, Brown, |
| |Bradford, Gordon, | |Maienschein, Quirk-Silva |
| |Melendez, Mullin, Rendon, | | |
| |Waldron | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Beth Gaines |
| | | | |
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APPROPRIATIONS 12-2
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|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Campos, | | |
| |Eggman, Gomez, Holden, | | |
| |Pan, Quirk, | | |
| |Ridley-Thomas, Weber | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Bigelow, Jones | | |
| | | | |
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SUMMARY : Makes various changes to provisions of law governing
former redevelopment agencies (RDAs). Specifically, this bill :
1)Clarifies that the provision contained in community
redevelopment law (CRL) that prohibits an agency or community
officer or employee who in the course of his or her duties is
required to participate in the formulation of, or to approve
plans or policies for, the redevelopment of a project area
from acquiring any interest in any property included within a
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project area, does not prohibit any agency or community
officer or employee from acquiring an interest in property
within a former redevelopment project area of a dissolved RDA.
2)Specifies, for the existing requirement that the State
Controller (Controller) review the activities of RDAs in the
state to determine whether an asset transfer has occurred
after January 1, 2012, between the city or county, or city and
county that created an RDA or any other public agency, and the
RDA, that that review shall be completed no later than January
1, 2016.
3)Allows an agreement entered into between an RDA prior to June
30, 2011, to be an enforceable obligation, if the agreement
relates to state highway infrastructure improvements to which
the RDA committed funds pursuant to provisions in CRL related
to property disposition, rehabilitation and development.
4)Allows, for oversight boards, each appointing authority
identified in existing law to appoint an alternate
representative to serve on the oversight board as may be
necessary to attend any meeting of the oversight board in the
event that the appointing authority's primary representative
is unable attend any meeting for any reason.
5)Provides, if the alternate representative attends any meeting
in place of the primary representative, that the alternative
representative shall have the same participatory and voting
rights as all other attending members of the oversight board.
6)Requires the successor agency to promptly notify the
Department of Finance (DOF) regarding the appointment of any
alternate representative to the oversight board.
7)Requires DOF, prior to the rejection of an enforceable
obligation from a Recognized Obligation Payment Schedule
(ROPS) for a successor agency that has received a finding of
completion from DOF, as specified, to submit the proposed
rejection to the oversight board for review and approval,
whose determination shall be final and conclusive without
further review by DOF.
8)Places a time limit of 45 days for DOF to provide written
confirmation, if an enforceable obligation provides for an
irrevocable commitment of property tax revenue and where
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allocation of such revenues is expected to occur over time and
the successor agency has petitioned DOF to provide written
confirmation that its determination of such enforceable
obligation as approved in a ROPS is final and conclusive, as
specified.
9)Specifies that provisions of law that require a city, county,
or city and county that wishes to retain any property or other
assets for future redevelopment activities, funded from its
own funds and under its own auspices, to reach a compensation
agreement with the other taxing entities to provide payments
to them in property to their shares of the base property tax,
as specified, for the value of the property retained, shall
not apply to the disposition of properties pursuant to a
long-range property management plan.
10)Revises provisions in statute that apply to any successor
agency that has been issued a finding of completion by DOF
pertaining to loans made to an RDA by the city, county, or
city and county that created the RDA, as specified.
11)Requires, if the oversight board finds that a loan is an
enforceable obligation, that the accumulated interest on the
remaining principal balance of the loan shall be calculated
using the interest rate earned by funds deposited into the
Local Agency Investment Fund (LAIF) in effect on the date of
loan origination, and as adjusted quarterly thereafter.
Requires the remaining balance of the loan and the accumulated
interest to be repaid to the city, county, or city and county
in accordance with a defined schedule over a reasonable term
of years at an interest rate not to exceed the interest rate
earned by funds deposited in the LAIF as the rate is adjusted
on a quarterly basis.
12)Provides that it is the intent of the Legislature that the
amendments specified in 10) and 11) above, made by this bill,
are clarifying.
13)Allows, if the successor agency has received a finding of
completion, as specified, the successor agency to enter into,
or amend existing, contracts and agreements, or otherwise
administer projects in connection with enforceable obligations
approved pursuant to existing law related to the ROPS approval
process, including the substitution of private developer
capital in a disposition and development agreement that has
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been deemed an enforceable obligation, if the contract,
agreement, or project will not commit new property tax funds,
and will not otherwise reduce property tax revenues or
payments made to the taxing agencies, as specified.
14)Prohibits DOF, as part of the approval of a long-range
property management plan, from requiring a compensation
agreement or agreements as described in existing law that
specifies which actions of the successor agency must first
obtain approval by the oversight board that requires a city,
county, or city and county that wishes to retain any property
or other assets for future redevelopment activities, funded
from its own funds and under its own auspices, to reach a
compensation agreement with the other taxing entities to
provide payments to them in property to their shares of the
base property tax, as part of the approval of a long-range
property management plan.
15)Specifies that DOF shall only consider whether a long-range
property management plan makes a good faith effort to address
the requirements set forth in the existing law that specifies
what the long-range property management plan shall do.
16)Requires DOF to approve a long-range property management plan
as expeditiously as possible.
17)Specifies that actions relating to the disposition or
property after approval of a long-range property management
plan shall not require review by DOF.
18)Contains chaptering out amendments to deal with conflicts
between this bill and SB 1404 (Leno) of the current
legislative session and AB 2493 (Bloom) of the current
legislative session.
EXISTING LAW :
1)Dissolves RDAs and institutes a process for winding down their
activities.
2)Allows a city or county that authorized the creation of an RDA
to elect to retain the housing assets and functions previously
performed by the RDA.
3)Required the entity assuming the housing functions of the
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former RDA to submit to DOF by August 1, 2012, a list of all
housing assets, as specified.
4)Allows the entity that assumed the housing functions to
designate the use of and commit indebtedness obligation
proceeds that remain after the satisfaction of enforceable
obligations that have been approved in a ROPS and that are
consistent with the indebtedness obligation covenants.
5)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.
6)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,
b) The successor agency has paid the full amount as
determined during the July True-up process; or,
c) The successor agency has paid the full amount upon a
final judicial determination of the amounts due and
confirmation that those amounts have been paid by the
county auditor-controller.
7)Allows the successor agency, upon receiving the finding of
completion, to:
a) Retain dissolved RDA assets;
b) Place loan agreements between the former RDA and
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.
8)Requires, after DOF issues a finding of completion, the
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successor agency to prepare a long-range property management
plan that addresses the disposition and use of the real
properties of the former RDA, 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, any losses to schools would have a corresponding
increase in state General Fund spending pursuant to Proposition
98 (1988). Revisions to the process for disposing of former RDA
properties through the LRPMP process, particularly the deletion
of requirements for compensation agreements, would result in
benefits for some local governments at the expense of other
local governments that would have otherwise received a portion
of proceeds from the sale of former RDA properties, potentially
including schools. The magnitude of these revenue shifts among
local agencies is unknown, but likely substantial.
COMMENTS :
1)Background on RDA dissolution. In 2011, facing a severe
budget shortfall, the Governor proposed eliminating RDAs in
order to deliver more property taxes to other local agencies.
Redevelopment redirected 12% of property taxes statewide 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,
AB26 X1 (Blumenfield), Chapter 5, Statutes of 2011-12 First
Extraordinary Session, and AB 27 X1 (Blumenfield), Chapter 6,
Statutes of 2011-12 First Extraordinary Session that together
dissolved RDAs as they existed at the time and created a
voluntary redevelopment program on a smaller scale. In
response, 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 AB 26 X1. However, the Supreme Court did grant
CRA's petition with respect to AB 27 X1. As a result, all
RDAs were required to dissolve as of February 1, 2012.
As part of the winding down of RDAs, AB 1484 (Blumenfield),
Chapter 26, Statutes of 2012, made various statutory changes
associated with the dissolution of RDAs and addressed a number
of substantive issues related to administrative processes,
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affordable housing activities, repayment of loans from
communities, use of existing bond proceeds and the disposition
or retention of former RDA assets.
One of the provisions in AB 1484 allowed successor agencies
that have received a "finding of completion" from DOF to have
additional discretion regarding former RDA real property
assets, loan repayments to the local government community that
formed the agency, and use of proceeds from bonds issued by
the former RDA. In order to receive the finding of
completion, the successor agency must undergo specified due
diligence reviews and make the requirement payments to DOF.
Once the successor agency receives the finding of completion,
the agency gains access to three specific benefits listed in
statute - first, 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; second, the ability
to repay city loans made to the redevelopment agency; and,
third, the ability to use unspent bond proceeds issued by
redevelopment agencies prior to December 31, 2010. However,
the repayment of city-agency loans and the expenditure of
unspent bond proceeds would become an "enforceable
obligation." Once a finding of completion is issued, the
successor agency must prepare a long-range property management
plan that addresses the disposition and use of the real
properties of the former redevelopment agency. The plan is
required 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, and must
include an inventory of all properties in the trust, the date
of the acquisition of the property and previous and current
value, the purpose for which the property was acquired,
specified parcel data, among other requirements.
To date, DOF has approved more than 90 plans submitted by
successor agencies. A city, county, or city and county that
wishes to retain any properties or other assets for future
redevelopment activities, funded from its own funds and under
its own auspices, must read a compensation agreement with the
other taxing entities to provide payments to them in
proportion to their shares of the base property tax, as
determined pursuant to state law, for the value of the
property retained.
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2)Author's statement. According to the author, "This bill was
introduced in response to a number of complaints from local
governments throughout the state concerning their frustrations
in dealing with DOF on the redevelopment dissolution process.
First, this bill clarifies that successor agencies do not have
to pay compensation to the other taxing entities for the real
property assets they elect to retain, once they have received
a finding of completion from DOF. Second, this bill requires
DOF to get Oversight Board approval for the removal of items
from a successor agency's Recognized Obligation Payment
Schedule after DOF has issued a finding of completion to the
successor agency. Third, this bill would allow successor
agencies to amend contracts in connection with enforceable
obligations if the amendment does not commit new tax funds.
Fourth, the bill allows a successor agency to use 2011 bond
proceeds if the Oversight Board, in consultation with the
relevant Metropolitan Planning Organization, determines that
the use of bond proceeds is consistent with the agency's
Sustainable Communities Strategy developed pursuant to SB 375
[(Steinberg), Chapter 728, Statutes of 2008]."
This bill is author-sponsored.
3)Arguments in support. Supporters of this bill note the
following benefits for cities:
a) Long-range property management plans. This bill
addresses several key concerns voiced by local agencies
with long-range property management plans and will expedite
the approval of these plans, reduce the potential for
delays and disputes and allow affected agencies to get to
work on projects that improve their communities.
b) New benefits for agencies with a finding of completion.
This bill provides additional benefits to local agencies
receiving a finding of completion by i) requiring DOF to
receive oversight board approval prior to DOF's rejection
of an enforceable obligation from a ROPS; ii) authorizing a
successor agency to enter into or amend existing contracts
and agreements, and administer projects in connection with
an approved enforceable obligation, if the contract
agreement, or project will not commit new property tax
funds, and will not otherwise reduce property tax payment
to taxing entities; and,
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iii) requiring DOF to respond in writing within 45 days on
determinations that enforceable obligations listed on a
ROPS are final and conclusive.
4)Arguments in opposition. Opponents of this bill argue that
this bill does not advance the dissolution process. Concerns
by opponents include:
a) Compensation agreements. This bill proposes to
eliminate compensation agreements from the long-range
property management plan process. Opponents of this bill
note that compensation agreements provide necessary
flexibility for addressing the use and disposition of
former RDA property through collaboration and partnerships
among local governments, and protect the collective
investment of the local governments that directly or
indirectly funded the acquisition of former RDA property.
b) DOF authority. Opponents argue this bill reduces DOF
oversight authority in several areas, including the review
of the long-range property management plans, removal of
enforceable obligations and approval of certain loan
agreements, and that reducing DOF's successor agency
oversight authority and relying predominantly on oversight
boards will be to the detriment of a thorough oversight
process.
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
FN: 0005326