sr-061212-3cCity of
Santa Monied
l s
City Council Meeting: June 12, 2012
Agenda Item:
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: State Affordable Housing Legislation
Recommended Action
Staff recommends that the City Council:
1. Formally support all current State legislation that creates, preserves or re-
allocates funds for low- and moderate income housing;
2. Prioritize the City's affordable housing advocacy on the passage of Assembly Bill
1585; and
3. Oppose the latest budget trailer bill language proposed by the Department of
Finance relative to redevelopment.
Executive Summary
This report describes current State housing finance legislation that may impact the
provision of affordable housing opportunities in Santa Monica and recommends Council
support for legislation that creates, preserves or re- allocates affordable housing funds.
It is recommended that the City focus its affordable housing legislative efforts on
support of AB 1585 and opposition to the Department of Finance (DOF) redevelopment
budget trailer. AB 1585 seeks to clarify the terms of the 2011 redevelopment agency
dissolution law (AB 26x1) regarding enforceable obligations, and proposes to retain
unencumbered affordable housing funds with local jurisdictions. The report also
summarizes a May Revision budget proposal, made by the DOF, to sweep
unencumbered housing funds to the state's General Fund and grant the DOF
extraordinary and inappropriate authority to withhold sales taxes or property taxes to
cities if the DOF, in its sole discretion, determines cities are not following certain
subjective steps in the wind down of redevelopment.
Background
On December 29, 2011, the California Supreme Court issued an opinion to uphold
AB 26x1, dissolving redevelopment agencies effective February 1, 2012.
The consequences of AB 26x1 are profound as nearly 75 percent of the City's
affordable housing production and preservation activities over the last two decades
were financed by redevelopment funds. In the absence of redevelopment tax
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increment, it is likely that State funding will be a critical factor in the financial feasibility
of Santa Monica's future affordable housing developments.
Discussion
Current State legislation under consideration aims to find a permanent State source of
funding for affordable housing development, to 'clean -up' the original redevelopment
dissolution laws, and to preserve remaining redevelopment agency (RDA) resources
locally.
Priority Housing Finance Bills for City Action
AB 1585 (Perez, et al) — Redevelopment Low /Mod Housing Funds
This bill codifies that existing unencumbered Low and Moderate Income Housing Fund
balances will transfer to successor housing agencies and will be utilized for affordable
housing. It also clarifies the definition of and revises the deadlines associated with
enforceable obligations. The Governor has proposed to utilize these funds to fill the
State budget gap. Legislators are discussing the possibility saving portions of these
funds. Preservation of these funds is critical, especially after the defeat of the Housing
Opportunity Trust Act of 2012 (SB 1220), which proposed to establish a State -level
permanent source of affordable housing funding. The current amended version of AB
1585 is provided as Attachment A and a summary prepared by the California
Redevelopment Association is Attachment B.
Other Current Housing Finance Bills
SB 1151 (Steinberg) — Sustainable Economic Development and Housing Trust Fund
This bill would allow local communities to retain the assets of former redevelopment
agencies and to utilize those assets for the purpose of economic development and
housing. This bill proposes that existing law regarding asset disposition and transfer
provisions will not apply to jurisdictions that form a Community Development and
Housing Authority by August 1, 2012. It is running parallel to SB 1156 (below) and was
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passed by the Senate Appropriations Committee on May 24th. This bill is awaiting a
date for action on the Senate Floor.
SB 1156 (Steinberg) — Community Development and Housing Joint Powers Authority
This bill would allow governing entities of former redevelopment agencies to form
Community Development and Housing Joint Powers Authorities to carry out the
provisions of Community Redevelopment Law. Powers would include the ability to
adopt area or site redevelopment plans, to provide tax increment financing, to retain
Low and Moderate Income Housing Funds and to facilitate career technical education
pathways. Each Authority would be an alternative to a successor agency and would
assume the successor agency responsibility for managing former redevelopment
agency assets and property. This bill is running parallel to SB 1151 (above) and was
passed by the Senate Appropriations Committee on May 24th. This bill is awaiting
action on the Senate Floor.
SB 654 (Steinberg) — Redevelopment Low /Mod Housing Funds
This bill establishes that any amounts on deposit in the Low and Moderate Income
Housing Fund (20 percent set - aside) of a dissolved redevelopment agency can be
retained by the successor agency of the sponsoring community and it revises the
definition of certain enforceable obligations. This bill was passed by the Senate on
January 31, 2012 and is being held in the Assembly.
AB 1951 (Atkins) — Housing Bonds
AB 1951 increases the affordable housing allocations within existing Proposition 1C
funds. The 2006 Housing and Emergency Shelter Trust Fund Act authorizes the
issuance of bonds to finance transit - oriented development, associated affordable
housing and infill development, brownfield cleanup and parks. This act allocates
$1.5 billion to the Affordable Housing Account, increases the continuous allocation from
$50 million to $100 million, transfers administration to the Department of Housing and
Community Development (HCD) and modifies previous allocations. This bill was
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passed on May 25th by the Assembly Appropriations Committee, and awaits action on
the Assembly Floor.
AB 2447 (Skinner /Perez) California Neighborhood Stabilization Partnership Act
(CNSPA) of 2012
AB 2447 re- allocates $25 million of underutilized Proposition 1C funds (2006 Housing
and Emergency Shelter Trust Fund Act) to a newly created California Neighborhood
Revitalization Fund. Applicants to the fund would be able to apply for grants or loans to
purchase foreclosed homes, establish land banks, demolish blighted structures and
redevelop demolished or vacant properties. The California Housing Finance Agency
would administer this fund in consultation with the Department of Housing and
Community Development. This bill was passed on May 25th by the Assembly
Appropriations Committee, and awaits action on the Assembly Floor.
Proposed Redevelopment Trailer Bill Language
As part of the Governor's May Revision to his January budget proposal for 2012 -13, the
Department of Finance recently submitted for legislative consideration and action
budget trailer bill language providing clarified and new authorities under the existing AB
26x1 redevelopment law. The League of California Cities notes that while the measure
contains several provisions considered helpful, "the thrust of the proposal is extremely
negative for state -local relations. It proposes to sweep all remaining redevelopment
affordable housing and other funds to the benefit of the state budget, provide DOF and
county auditor - controllers with indisputable authority in all matters of dispute involving
ROPS and enforceable obligations, limit the ability of successor agencies and oversight
boards to defend against DOF decisions that are considered unreasonable, and erode
local control."
The League notes that the bill's prominent features include:
® Reduction in June 1 property tax payment to Successor Agencies to retroactively
pay for December 2011 "underpayment" to taxing agencies
® Empowers DOF with final decision - making authority
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® Diversion of unencumbered cash reserves, including housing funds, to
implement the Governor's May Budget Revise
® Clawback of "improper" payments to cities or private parties; use of sales or
property tax to reimburse improper payments
• Clarification on bonds, environmental immunities and housing
® Separate legal status of Successor Agency and governing role of Oversight
Board clarification
It is staff's view that the DOF legislation grants arbitrary new authorities to the DOF and
county auditor - controllers that risk City funds. Any slight improvements made in the
language to the RDA dissolution process by this legislation are greatly outweighed by
the negative impacts which could include rescission of the City's property tax or sales
tax. The League has prepared significant amendments to the DOF legislation and is
currently working with legislators on the proposed amendments. Staff recommends that
City Council oppose this legislation unless it is significantly altered.
Financial Impacts & Budget Actions
There are no financial impacts associated with Council support of these affordable
housing bills.
Prepared by: James Kemper, Housing Administrator
Approved:
y
Andy Ag le Director
Housing and Economic Development
Forwarded to Council:
Rod Gould
City Manager
Attachment A Text of AB 1585
Attachment B AB 1585 summary prepared by the California Redevelopment
Association
Attachment C League of California Cities Summary of DOF's Proposed Post -RDA
Budget Trailer
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AMENDED IN ASSEMBLY MARCH 21, 2012
AMENDED IN ASSEMBLY MARCH 15, 2012
AMENDED IN ASSEMBLY MARCH 8, 2012
CALIFORNIA LEGISLATURE- 2011 -12 REGULAR SESSION
ASSEMBLY BILL No. 1585
Introduced by Assembly Members John A. Perez,Atldns, Dieldnson,
Hill, Mitchell, Perea, and Torres
February 2, 2012
An act to amend Sections 34171, 34173, 34176, 34177, 34179, 34180,
34181, 34182, 34183, 34187, and 34189 of the Health and Safety Code,
relating to redevelopment, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1585, as amended, John A. Perez. Redevelopment.
Existing law dissolved redevelopment agencies and community
development 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 and to, among other things, repay enforceable
obligations, as defined, and to remit unencumbered balances of
redevelopment agency funds, including housing funds, to the county
auditor - controller for distribution to taxing entities.
Existing law authorizes the city, county, or city and county that
authorized the creation of a redevelopment agency to retain the housing
assets, functions, and powers previously performed by the
redevelopment agency, excluding amounts on deposit in the Low and
Moderate Income Housing Fund.
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AB 1585 —2—
This bill would modify the scope of the tern "enforceable obligation"
and modify provisions relating to the transfer of housing funds and
responsibilities associated with dissolved redevelopment agencies. The
bill would provide that any amounts on deposit in the Low and Moderate
Income Housing Fund of a dissolved redevelopment agency be
transferred to specified entities. The bill would make conforming
changes.
Existing law provides that, upon a specified date, agreements,
contracts, or arrangements between the city or county, or city and county
that created the redevelopment agency and the redevelopment agency
are invalid. Notwithstanding this provision, an agreement that provided
loans or other startup funds for the agency that was entered into within
2 years of the formation of the agency is valid and binds the successor
agency.
The bill would expand this exception to include an agreement
involving a loan specific to a project area and other specified obligations.
The bill would provide that other loan agreements entered into between
the redevelopment agency and the city, county, or city and county that
created it are deemed to be enforceable obligations, except as specified. .
The bill would further expand upon, and clarify the scope of the
successor agency's and the oversight board's responsibilities.
This bill would declare that it is to take effect immediately as an
urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State - mandated local program: no.
Ae people of the State of California do enact as follows:
1 SECTION 1. Section 34171 of the Health and Safety Code is
2 amended to read:
3 34171. The following terms shall have the following meanings:
4 " (a) "Administrative budget" means the budget for administrative
5 costs of the successor agencies as provided in Section 34177.
6 (b) "Administrative cost allowance" means an amount that,
7 subject to the approval of the oversight board, is payable from
8 property tax revenues of up to 5 percent of the property tax
9 allocated to the former redevelopment agency and successor agency
10 for the 2011 -12 fiscal year and up to 3 percent of the property tax
11 allocated to the Redevelopment Obligation Retirement Fund money
12 that is allocated.to the successor agency for each fiscal year
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thereafter, except as provided by subdivision (Z) of Section 34180;
provided, however, that the amount shall not be less than two
hundred fifty thousand dollars ($250,000) for any fiscal year or
such lesser amount as agreed to by the successor agency. However,
the allowance amount shall exclude any administrative costs that
can be paid from bond proceeds or from sources other than property
tax. Employee costs associated with work on specific project
implementation activities, including, but not limited to, construction
inspection, project management, or actual construction, shall be
considered project- specific costs and are not administrative costs.
(c) `Designated local authority" shall mean a public entity.
formed pursuant to subdivision (d) of Section 34173.
(d) (1) `Enforceable obligation" means any of the following:
(A) Bonds, as defined by Section 33602 and bonds issued
pursuant to Section 5850 of the Government Code, including the
required annual debt service, reserve set - asides, and any other
payments required under the indenture or similar documents
governing the issuance of the outstanding bonds of the former
redevelopment agency.
(B) Loans of moneys borrowed by the redevelopment agency
for a lawful purpose, to the extent they are legally required to be
repaid pursuant to a required repayment schedule or other
mandatory loan terms.
(C) Payments required by the federal government, preexisting
obligations to the state or obligations imposed by state law, other
than passthrough payments that are made by the county
auditor - controller pursuant to Section 34183, or legally enforceable
payments required in comiection with the agencies' employees,
including, but not limited to, pension payments, pension obligation
debt service, unemployment payments, or other obligations
conferred through a collective bargaining agreement. Costs incurred
to fulfill collective bargaining agreements for layoffs or
terminations of city employees who performed work directly on
behalf of the former redevelopment agency shall be considered
enforceable obligations payable from properly tax funds. The
obligations to employees specified in this subparagraph shall
remain enforceable obligations payable from properly tax funds
for any employee to whom those obligations apply if that employee
is transferred to the entity assuming the housing functions of the
former redevelopment agency pursuant to Section 34176. The
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successor agency or designated local authority shall enter into an
agreement with the housing entity to reimburse it for any costs of
the employee obligations.
(D) Judgments or settlements entered by a competent court of
law or binding arbitration decisions against the former
redevelopment agency, other than passthrough payments that are
made by the county auditor - controller pursuant to Section 34183:
Along with the successor agency, the, oversight board shall have
the authority and standing to appeal any judgment or to set aside
any settlement or arbitration decision.
(E) Any legally binding and enforceable agreement or contract
that is not otherwise void as violating the debt limit or public
policy. However, nothing in this act shall prohibit either the
successor agency, with the approval or at the direction of the
oversight board, or the oversight board itself from terminating any
existing agreements or contracts and providing any necessary and
required compensation or remediation for such termination.
(F) Contracts or agreements necessary for the administration or
operation of the successor agency, in accordance with this part,
including, but not limited to, agreements to purchase or rent office
space, equipment and supplies, and pay - related expenses pursuant
to Section 33127 and for carrying insurance pursuant to Section
33134.
(G) Amounts borrowed from or payments owing to the Low
and Moderate Income Housing Fund of a redevelopment agency,
which had been deferred as of the effective date of the act adding
this part; provided, however, that the repayment schedule is
approved by the oversight board. Repayments shall be made to
the Low and Moderate Income Housing Fund maintained by the
entity assuming the housing functions formerly performed by the
redevelopment agency, as described in Section 34176.
(2) (A) Except as specifically provided in this part, "enforceable
obligation" does not include any agreements, contracts, or
arrangements between the city, county, or city and county that
created the redevelopment agency and the former redevelopment
agency. However, written agreements entered into (i) at the time
of issuance, but in no event later than December 31, 2010, of
indebtedness obligations, and (ii) solely for the purpose of securing
or repaying those indebtedness obligations may be deemed
enforceable obligations for purposes of this part.
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1 (B) Loan agreements entered into between the redevelopment
2 agency and the city, county, or city and county that created it,
3 within two years of the date of creation of the redevelopment
4 agency, or within two years of the date of the creation of a project
5 area if the loan is specific to that project area, and any obligations
6 imposed by paragraph (1) of subdivision (d) of Section 33691 may
7 be deemed to be enforceable obligations.
8 (C) Other loan agreements entered into between the
9 redevelopment agency and the city, county, or city and county that
10 created it shall be deemed to be enforceable obligations, if the
11 conditions of subdivision (k) of Section 34180 are met.
12 (3) Contracts or agreements between the former redevelopment
13 agency and other public agencies, to perform services or provide
14 funding for governmental or private services or capital projects
15 outside of redevelopment project areas that do not provide benefit
16 to the redevelopment proj ect and thus were not properly authorized
17 under Part 1 (commencing with Section 33000) shall be deemed
18 void on the effective date of this part; provided, however, that such
19 contracts or agreements for the provision of housing properly
20 authorized under Part 1 (commencing with Section 33000) shall
21 not be deemed void.
22 (e) "Indebtedness obligations" means bonds, notes, certificates
23 of participation, or other evidence of indebtedness, issued or
24 delivered by the redevelopment agency, or by a joint exercise of
25 powers authority, created by the redevelopment agency, to
26 third -party investors or bondholders to finance or refinance
27 redevelopment projects undertaken by the redevelopment agency
28 in compliance with the Community Redevelopment Law (Part 1
29 (commencing with Section 33000)).
30 (f) "Oversight board" shall mean each entity established pursuant
31 to Section 34179.
32 (g) "Recognized obligation" means an obligation listed in the
33 Recognized Obligation Payment Schedule.
34 (h) "Recognized Obligation Payment Schedule" means the
35 document setting forth the minimum payment amounts and due
36 dates of payments required by enforceable obligations for each
37 six -month fiscal period or annual period as provided in subdivision
38 (Z) of Section 34177.
39 (i) "School entity" means any entity defined as such in
40 subdivision (f) of Section 95 of the Revenue and Taxation Code.
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—6—
0) "Successor agency" means the county, city, or city and county
that authorized the creation of each redevelopment agency acting
in its separate capacity as a successor agency or another entity as
provided in Section 34173.
(lc) "Taxing entities" means cities, counties, a city and county,
special districts, and school entities, as defined in subdivision (f)
of Section 95 of the Revenue and Taxation Code, that receive
passthrough payments and distributions of property taxes pursuant
to the provisions of this part.
SEC. 2. Section 34173 of the Health and Safety Code is
amended to read:
34173. (a) Successor agencies, as defined in this part, are
hereby designated as successor entities to the former redevelopment
separate body For purposes of this part, a successor agency is a
public entity separate from the entity or entities that authorized
the creation ofeach redevelopment agency that acts, by resolution,
on its own behalf and shall have all the powers and duties set forth
herein, the power to sue and be sued, and such additional powers
as may be conferred upon it. Each successor agency shall be
deemed to be a local entity for purposes of the Ralph M. Brown
Act (Chapter 9 (commencing with Section 54950) of Part I of
Division 2 of Title 5 of the Government Code).
(b) Except for those provisions of the Cormmunity
Redevelopment Law that are repealed, restricted, or revised
pursuant to the act adding this part, all authority, rights, powers,
duties, and obligations previously vested with the former
redevelopment agencies, under the Cormmmity Redevelopment
Law, are hereby vested in the successor agencies.
(c) (1) Where the redevelopment agency was in the form of a
joint powers authority, and where the joint powers agreement
governing the formation of the joint powers authority addresses
the allocation of assets and liabilities upon dissolution of the joint
powers authority, then each of the entities that created the former
redevelopment agency may be a successor agency within the
meaning of this part and each shall have a share of assets and
liabilities based on the provisions of the joint powers, agreement.
(2) Where the redevelopment agency was in the form of a joint
powers authority, and where the joint powers agreement governing
the formation of the joint powers authority does not address the
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allocation of assets and liabilities upon dissolution of the joint
powers authority, then each of the entities that created the former
redevelopment agency may be a successor agency within the
meaning of this part, a proportionate share of the assets and
liabilities shall be based on the assessed value in the project areas
within each entity's jurisdiction, as determined by the county
assessor, in its jurisdiction as compared to the assessed value of
land within the boundaries of the project areas of the former
redevelopment agency.
(d) (1) A city, county, city and county, or the entities forming
the joint powers authority that authorized the creation of each
redevelopment agency may elect not to serve as a successor agency
under this part. A city, county, city and county, or any member of
a joint powers authority that elects not to serve as a successor
agency under this part must file a copy of a duly authorized
resolution of its governing board to that effect with the county
auditor - controller no later than January 13, 2012.
(2) The determination of the fast local agency that elects to
become the successor agency shall be made by the county
auditor - controller based on the earliest receipt by the county
auditor - controller of a copy of a duly adopted resolution of the
local agency's governing board authorizing such an election. As
used in this section, "local agency" means any city, county, city
and county, or special district in the county of the former
redevelopment agency.
(3) If no local agency elects to serve as a successor agency for
a dissolved redevelopment agency, a public body, referred to herein
as a "designated local authority" shall be immediately formed,
pursuant to this part, in the county and shall be vested with all the
powers and duties of a successor agency as described in this part.
The Governor shall appoint three residents of the county to serve
as the governing board of the authority. The designated local
authority shall serve as successor agency until a local agency elects
to become the successor agency in accordance with this section.
(4) A city, county, or city and county, or the entities forming
the joint powers authority that authorized the creation of a
redevelopment agency and that elected not to serve as the successor
agency under this part, may subsequently reverse this decision and
agree to serve as the successor agency pursuant to this section.
Any reversal of this decision shall not become effective for 60 days
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after notice has been given to the current successor agency and
the oversight board and shall not invalidate any action of the
successor agency or oversight board taken prior to the effective
date of the transfer of responsibility.
(e) The liability of any successor agency, acting pursuant to the
powers granted under the act adding this part, shall be limited to
the extent of the total sum of property tax revenues it receives
pursuant to this part and the value of assets transferred to it as a
successor agency fora dissolved redevelopment agency.
SEC. 3. Section 34176 of the Health. and Safety Code is
amended to read:
34176. (a) The city, county, or city and county that authorized
the creation of a redevelopment agency may elect to retain'the
housing assets and functions previously performed by the
redevelopment agency. If a city, county, or city and county elects
to retain the responsibility for performing housing functions
previously performed by a redevelopment agency, all rights,
powers, duties, and obligafiotts assets, liabilities, duties, and
obligations, excluding enforceable obligations of the successor
agency, associated with the housing activities of the agency,
including any amounts on deposit in the Low and Moderate Income
Housing Fund, shall be transferred to the city, county, or city and
county. Any funds transferred to the city, county, or city and county
pursuant to this subdivision shall be maintained in a separate Low
and Moderate Income Housing Fund and expended pursuant to
the provisions of the Community Redevelopment Law relating to
the Low and Moderate Income Housing Fund.
(b) If a city, county, or city and county does not elect to retain
the responsibility for performing housing functions previously
performed by a redevelopment agency, all rights, powers, assets,
liabilities, duties, and obligations, excluding enforceable
obligations of the successor agency, associated with the housing
activities of the agency, including any amounts in the Low and
Moderate Income Housing Fund, shall be transferred as follows:
(1) Where there is one local housing authority in the territorial
jurisdiction of the former redevelopment agency, to that local
housing authority.
(2) Where there is more than one local housing authority in the
territorial jurisdiction of the former redevelopment agency, to the
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local housing authority selected by the city, county, or city and
county that authorized the creation of the redevelopment agency.
(3) Where there. is no local housing authority in the territorial
jurisdiction of the former redevelopment agency or where the local
housing authority selected does not accept the responsibility for
performing housing functions previously performed by the former
redevelopment agency, to the Department of Housing and
Community Development. Funds shall be deposited into the State
Low and Moderate Income Housing Trust Fund and awarded on
a competitive basis to projects within the counties in which the
funds were collected. Priority shall be given to eligible projects
for extremely low, very low, and low- income projects.
(c) Cormnencing on the operative date of this part, the entity
assuming the housing functions formerly performed by the
redevelopment agency shall enforce affordability covenants and
perform related activities pursuant to applicable provisions of the
Community Redevelopment Law (Part 1 (commencing with
Section 33000), including, but not limited to, Section 33418.
(d) The succeeding housing entity shall contract to expend at
least 80 percent of the moneys in the Low and Moderate hncome
Housing Fund within two years of the date of receipt of those
moneys. If within four years of the date of receipt of those moneys
the succeeding housing entity has not spent the money in the Low
and Moderate Income Housing Fund, then,the excess amount,
minus the amount necessarily reserved for the ongoing monitoring
and maintenance of affordable housing projects, shall be transferred
to the State Low and Moderate Income Housing Trust Fund, which
is hereby created, for expenditure by the Department of Housing
and Community Development for the purpose of increasing the
supply of low- and moderate- income housing in the county with
priority given to extremely low, very low, and low- income projects.
Excess funds shall not be transferred to the department if the
succeeding housing entity applies for, and receives, a waiver from
the department. If a waiver is granted, funds shall remain with the
entity for an additional two years from the date of waiver approval.
In approving a waiver, the department shall consider, among other
factors, whether the city, county, or city and, county, or housing
authority has a site specific project plan with local approvals,
including the issuance of building permits, whether the project has
secured financing, and evidence that some funds have been
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—10—
expended from the Low and Moderate Income Housing Fund. A
succeeding housing entity may reapply at the end of the two -year
period for a renewal of the previously granted waiver.
(e) A succeeding housing entity may transfer all or a portion of
the moneys in the Low and Moderate Income Housing Fund to
another succeeding housing entity within the county where the
moneys were collected, to be spent on affordable housing if all of
the following conditions are met:
(1) The funds shall be spent on projects that primarily benefit
low- income families or families that are below low income.
(2) Both succeeding housing entities involved in the transfer
adopt a resolution detailing the need for the transfer of funds and
the intended use of the funds by the receiving jurisdiction.,
(3) The funds shall be spent in compliance with subdivision (d).
(f) The succeeding housing entity shall, within 45 days of the
date the act amending this section takes effect or 45 days from
receipt of moneys for the Low and Moderate Income Housing
Fund, whichever date is later, notify the department of the amount
of moneys on deposit in the Low and Moderate Income Housing
Fund and that entity's plan for spending the funds. Two years from
this date, the succeeding housing entity shall report to the
department the percentage of funds that it has entered into contract
to spend. Within four years of receipt of the funds, the succeeding
housing entity shall report to the department if there are remaining
moneys in the Low and Moderate Income Housing Fund and if it
will apply for a waiver specified in subdivision (d) or whether the
excess amount will be transferred to the department.
(g) For purposes of this section, "succeeding housing entity"
means the entity that assumes responsibility for retaining the
housing assets and functions previously performed by a
redevelopment agency, a :s described in subdivisions (a) and (b).
SEC. 4. 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
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1 shall be the last schedule adopted by the redevelopment agency
2 under Section 34169. However, payments associated with
3 obligations excluded from the definition of enforceable obligations
4 by paragraph (2) of subdivision (e) of Section 34171 shall be
5 excluded from the enforceable obligations payment schedule and
6 be removed from the last schedule adopted by the redevelopment
7 agency under Section 34169 prior to the successor agency adopting
8 it as its enforceable obligations payment schedule pursuant to this
9 subdivision. The enforceable obligation payment schedule may
10 be amended by the successor agency at any public meeting and
11 shall be subject to the approval of the oversight board as soon as
12 the board has sufficient members to form a quorum.
13 (2) The Department of Finance and the Controller shall each
14 have the authority to require any documents associated with the
15 enforceable obligations to be provided to them in a manner of thee.
16 choosing. Any taxing entity, the depailment, and the Controller
17 shall each have standing to file a judicial action to prevent a
18 violation under this part and to obtain injunctive or other
19 appropriate relief.
20 (3) Commencing on the date the Recognized Obligation Payment
21 Schedule is valid pursuant to subdivision (0, only those payments
22 listed in the Recognized Obligation Payment Schedule may be
23 made by the successor agency from the funds specified in the
24 Recognized Obligation Payment Schedule. In addition,
25 commencing on the date the Recognized Obligation Payment
26 Schedule is valid pursuant to subdivision (t), the Recognized
27 Obligation Payment Schedule shall supersede the Statement of
28 Indebtedness, which shall no longer be prepared nor have any
29 effect under the Community Redevelopment Law.
30 (4) Nothing in the act adding this part is to be construed as
31 preventing a successor agency, with the prior approval of the
32 oversight board, as described in Section 34179, from malting
33 payments for enforceable obligations from sources other than those
34 listed in the Recognized Obligation Payment Schedule.
35 (5) From February 1, 2012, to July 1, 2012, a successor agency
36 shall have no authority and is hereby prohibited from accelerating
37 payment or malting any lump -sum payments that are intended to
38 prepay loans unless such accelerated repayments were required
39 prior to the effective date of this part.
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1 (b) Maintain reserves in the amount required by indentures,
2 trust indentures, or similar documents governing the issuance of
3 outstanding redevelopment agency bonds.
4 (c) Perform obligations required pursuant to any enforceable
5 obligation.
6 (d) Remit unencumbered balances of redevelopment agency
7 funds to the county auditor - controller for distribution to the taxing
8 entities. In malting the distribution, the county auditor - controller
9 shall utilize the same methodology for allocation and distribution
10 of property tax revenues provided in Section 34188.
11 (e) Dispose of assets and properties of the former redevelopment
12 agency as directed by the oversight board; provided, however, that
13 the oversight board may instead direct the successor agency to
14 transfer ownership of certain assets pursuant to subdivision (a) of
15 Section 34181. The disposal is to be done in an expeditious but
16 orderly manner that preserves the value of the asset. Proceeds from
17 asset sales and related funds that are no longer needed for approved
18 development projects or to otherwise wind down the affairs of the
19 agency, each as determined by the oversight board,. shall be
20 transferred to the county auditor - controller for distribution as
21 property tax proceeds under Section 34188.,
22 (f) Enforce all former redevelopment agency rights for the
23 benefit of the taxing entities, including, but not limited to,
24 continuing to collect loans, rents, and other revenues that were due
25 to the redevelopment agency.
26 (g) Effectuate transfer of housing functions and assets to the
27 appropriate entity designated pursuant to Section 34176.
28 (h) Expeditiously wind down the affairs of the redevelopment
29 agency pursuant to the provisions of this part and in accordance
30 with the direction of the oversight board.
31 (i) Continue to oversee development of properties until the
32 contracted work has been completed or the contractual obligations
33 of the former redevelopment agency can be transferred to other
34 parties. Bond proceeds shall be used for the purposes for which
35 bonds were sold unless the purposes can no longer be achieved,
36 in which case, the proceeds may be used to defease the bonds.
37 0) Prepare a proposed administrative budget and submit it to
38 the oversight board for its approval. The proposed administrative
39 budget shall include all of the following:
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(1) Estimated amounts for successor agency administrative costs
for the upcoming six -month 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..
(lc) 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.
(Z) (1) Before each six -month fiscal period, 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 draft Recognized Obligation Payment Schedule is
prepared by the successor agency for the enforceable obligations
of the former redevelopment agency by. March 1, 2012. From
January 1, 2012, to June 30, 2012, inclusive, the initial draft of
that schedule shall project the dates and amounts of scheduled
payments for each enforceable obligation, and shall be reviewed
and certified, as to its accuracy, by an external auditor designated
pursuant to Section 34182.
(B) The certified Recognized Obligation Payment Schedule is
submitted to and duly approved by the oversight board.
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(C) A copy of the approved Recognized Obligation Payment
Schedule is submitted to the county auditor- controller and both
the Controller's office and the Department of Finance and be posted
on the successor agency's Internet Web site.
(3) The Recognized Obligation Payment Schedule shall be
forward looking to the next six months. 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. However,
the first Recognized Obligation Payment Schedule submitted for
the year may, if necessary, include the total amount of payments
required for an enforceable obligation for the next two six -month
periods and, in the case of debt obligations, may include, if
necessary, the amount of the annual debt service,' reserve set - asides,
and any other amounts required under indenture or similar
docurnents. 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.
(m) Cause a postaudit of the financial transactions and records
of the successor agency to be made at least annually by a certified
public accountant.
SEC. 5. Section 34179 of the Health and Safety Code is
amended to read:
34179. (a) Each successor agency shall have an oversight
board composed of seven members. The members shall elect one
of their members as the chairperson and shall report the name of
the chairperson and other members to the Department of Finance
on or before May 1, 2012. Members shall be selected as follows:
(1) One member appointed by the county board of supervisors.
(2) One member appointed by the mayor for the city that formed
the redevelopment agency.
(3) One member appointed by the special district having the
largest property tax share within the redevelopment project areas
of the forner redevelopment agency, which is of the type of special
district that is eligible to receive property tax revenues pursuant
to Section 34188.
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(4) One member appointed by the county superintendent of
education to represent schools if the superintendent is elected. If
the county superintendent of education is appointed, then the
appointment made pursuant to this paragraph shall be made by the
county board of education.
(5) One member appointed by the Chancellor of the California
Community Colleges to represent community college districts in
the county.
(6) One member of the public appointed by the county board
of supervisors.
(7) One member representing the employees of the former
redevelopment agency appointed by the mayor or chair of the
board of supervisors, as the case may be, from the recognized
employee organization representing the largest number of former
redevelopment agency employees employed by the successor
agency at that time. In the case where city or county employees
performed administrative duties of the former redevelopment
agency, the appointment shall be made from the recognized
employee organization representing those employees. If a
recognized employee organization does not exist for either the
employees of the former redevelopment agency or the city or
county employees performing administrative duties of the former
redevelopment agency, the appointment shall be made from among
the employees of the successor agency. In voting to approve a
contract as an enforceable obligation, a member appointed pursuant
to this paragraph shall not be deemed to be interested in the contract
by virtue of being an employee of the successor agency or,
community. for purposes of Section 1090 of the Government Code.
(8) If the county or a joint powers agency formed the
redevelopment agency, then the largest city by acreage in the
territorial jurisdiction of the former redevelopment agency may
select one member. If there are no cities with territory in a project
area of the redevelopment agency,. the county superintendent of
education may appoint an additional member to represent the
public.
(9) If there are no special districts of the type that are eligible
to receive properly tax pursuant to Section 34188, within the
territorial jurisdiction of the former redevelopment agency, then
the county may appoint one member to represent the public.
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(10) Where a redevelopment agency was formed by an entity
that is both a charter city and a county, the oversight board shall
be composed of seven members selected as follows: three members
appointed by the mayor of the city, where such appointment is
subject to confirmation by the county board of supervisors, one
member appointed by the largest special district, by property tax
share, with territory in the territorial jurisdiction of the former
redevelopment agency, which is the type of special district that is
eligible to receive property tax revenues pursuant to Section 34188,
one member appointed by the county superintendent of education
to represent schools, one member appointed by the Chancellor of
the California Community Colleges to represent community college
districts, and one member representing employees of the former
redevelopment agency appointed by the mayor of the city where
such an appointment is subject to confirmation by the county board
of supervisors, to represent the largest number of former
redevelopment agency employees employed by the successor
agency at that time.
(b) The Governor may appoint individuals to fill any oversight
board member position described in subdivision (a) that has not
been filled by May 15, 2012, or any member position that remains
vacant for more than 60 days.
(c) The oversight board may direct the staff of the successor
agency to perform work in furtherance of the oversight board's
duties and responsibilities under this part. The successor agency
shall pay for all of the costs of meetings of the oversight board
and may include such costs in its administrative budget. Oversight
board members shall serve without compensation orrehnbursement
for expenses.
(d) Oversight board members shall have personal immunity
from suit for their actions taken within the scope of their
responsibilities as oversight board members.
(e) A majority of the total membership of the oversight board
shall constitute a quorum for the transaction of business. A maj ority
vote of the total membership of the oversight board is required for
the oversight board to take action. The oversight board shall be
deemed to be a local entity for purposes of the Ralph M. Brown
Act, the California Public Records Act, and the Political Reform
Act of 1974. All actions taken by the oversight board shall be
adopted by resolution.
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(f) All notices required by law for proposed oversight board
actions shall also be posted on the successor agency's Internet
Web site or the oversight board's Internet Web site.
(g) Each member of an oversight board shall serve at the
pleasure of the entity that appointed such member.
(h) The Department of Finance may review an oversight board
action taken pursuant to this part. As such, all oversight board
actions shall not be effective for three business days, pending a
request for review by the department. Each oversight board shall
designate an official to whom the department may make such
requests and who shall provide the department with the telephone
number and email contact information for the purpose of
communicating with the department pursuant to this subdivision.
In the event that the department requests a review of a given
oversight board action, it shall have 10 days from the date of its
request to approve the oversight board action or return it to the
oversight board for reconsideration and such oversight board action
shall not be effective until approved by the department. In the
event that the department returns the oversight board action to the
oversight board for reconsideration, the oversight board shall
resubmit the modified action for department approval and the
modified oversight board action shall not become effective until
approved by the department.
(i) Oversight boards shall have fiduciary responsibilities to
holders of enforceable obligations and the taxing entities that
benefit from distributions of property tax and other revenues
pursuant to Section 34188. Further, the provisions of Division 4
(commencing with Section 1000) of the Government Code shall
apply to oversight boards. Notwithstanding Section 1099 of the
Government Code, or any other law, any individual may
simultaneously be appointed to up to five oversight boards and
may hold an office in a city, county, city and county, special
district, school district, or community college district.
0) Commencing on and after July 1, 2016, in each county where
more than one oversight board was created by operation of the act
adding this part, there shall be only one oversight board appointed
as follows:
(1) One member may be appointed by the county board of
supervisors.
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1 (2) One member may be appointed by the city selection
2 committee established pursuant to Section 50270 of the
3 Government Code. In a city and county, the mayor may appoint
4 one member.
5 (3) One member may be appointed by the independent special
6 district selection committee established pursuant to Section 56332
7 of the Government Code, for the types of special districts that are
8 eligible to receive property tax revenues pursuant to Section 34188.
9 (4) One member maybe appointed by the county superintendent
10 of education to represent schools if the superintendent is elected.
11 If the county superintendent of education is appointed, then the
12 appointment made pursuant to this paragraph shall be made by the
13 county board of education.
14 (5) One member may be appointed by the Chancellor of the
15 California Community Colleges to represent community college
16 districts in the county.
17 (6) One member of the public may be appointed by the county
18 board of supervisors.
19 (7) One member maybe appointed by the recognized employee
20 organization representing the largest number of successor agency
21 employees in the county.
22 (k) The Governor may appoint individuals to fill any oversight
23 board member position described in subdivision 0) that has not
24 been filled by July 15, 2016, or any member position that remains
25 vacant for more than 60 days.
26 (0 Commencing on and after July 1, 2016, in each county where
27 only one oversight board was created by operation of the act adding
28 this part, then there will be no change to the composition of that
29 oversight board as a result of the operation of subdivision (b).
30 (in) Any oversight board for a given successor agency shall
31 cease to exist when all of the indebtedness of the dissolved
32 redevelopment agency has been repaid.
33 SEC. 6. Section 34180 of the Health and Safety Code is
34 amended to read:
35 34180. All of the following successor agency actions shall first
36 be approved by the oversight board:
37 (a) The establishment of new repayment terms for outstanding
38 loans where the terns have not been specified prior to the date of
39 this part.
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(b) Refunding of outstanding bonds or other debt of the former
redevelopment agency by successor agencies in order to provide
for savings or to finance debt service spikes; provided, however,
that no additional debt is created and debt service is not accelerated.
(c) Entering into a financing agreement, including the issuance
of bonds, to fund required payments under an enforceable
obligation that exceed the amount of property tax revenue available
to the successor agency during the payment period. This
subdivision shall not be deemed to authorize a successor agency
to create an additional enforceable obligation, as defined by this
part, other than for necessary financing costs.
(d) Setting aside of amounts in reserves as required by
indentures, trust indentures, or shnilar documents governing the
issuance of outstanding redevelopment agency bonds.
(e) Merging of project areas.
(f) Continuing the acceptance of federal or state grants, or other
forms of financial assistance from either public or private sources,
where assistance is conditioned upon the provision of matching
funds, by the successor entity as successor to the former
redevelopment agency, in an amount greater than 5 percent of the
total grant amount.
(g) (1) If a city, county, or city and county wishes to retain any
properties or other assets for fixture redevelopment activities,
funded from its own funds and under its own auspices, it must
reach 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 Section 34188,. for the
value of the property retained.
(2) If no other agreement is reached on valuation of the retained
assets, the value will be the fair market value as of the 2011
property tax lien date as determined by the county assessor.
(h) Establishment of the Recognized Obligation Payment
Schedule.
(i) A request by the successor agency to enter into an agreement
with the city, county, or city and county that formed the
redevelopment agency that it is succeeding.
0) A request by a successor agency or taxing entity to pledge,
or to enter into an agreement for the pledge of, property tax
revenues pursuant to subdivision (b) of Section 34178.
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(Ic) A loan between a city, county, or city and county and a
redevelopment agency as an enforceable obligation pursuant to
subparagraph (C) of paragraph (2) of subdivision (d) of Section
34171, provided that the oversight board makes a finding that the
loan was for legitimate redevelopment purposes and conditions
its approval on the loan being repaid to the city, county, or city
and county in accordance with a defined schedule over areasonable
term of years at an interest rate not to exceed the interest rate earned
by funds deposited into the Local Agency Investment Fund.
(0 The approval of temporary increases in the administrative
cost allowance to carry out the requirements of an enforceable
obligation, to cover litigation costs, or to maintain and preserve
the value of assets while in the possession of the successor agency.
SEC. 7. Section .34181 of the Health and Safety Code is
amended to read:
34181. The oversight board shall direct the successor agency
to do all of the following:
(a) Compile a complete inventory of existing real property assets
of the former redevelopment agency, by project area. The inventory
shall include general categories of real property assets, the purpose
for which they were originally acquired, the original purchase price
of each asset and the estimated current market value. Prior to the
disposal of any real property asset, the oversight board shall receive
and review the inventory compiled by the successor agency, and
adopt a policy or strategy for the disposal or transfer of such assets
consistent with the requirements of subdivision (b).
(b) Dispose of all assets and properties of the former
redevelopment agency that were funded by tax increment revenues
of the dissolved redevelopment agency, other than those
transferred pursuant to subdivision (d); provided, however, that
the oversight board may instead direct the successor agency to
transfer ownership of those assets that were constructed and used
for a governmental purpose, such as roads, school buildings, parks,
and fire stations, or are integral to the operation of a governmental
purpose asset, such as a parking facility, to the appropriate public
jurisdiction pursuant to existing agreements, if any, relating to the
construction or use of such an asset. Any compensation to be
provided to the successor agency for the transfer of the asset shall
be governed by agreements, if any, relating to the construction or
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use of that asset. Disposal shall be done in an expeditious but
orderly manner that preserves the value of the asset.
(c) Cease performance in connection with and terminate all
existing agreements that do not qualify as enforceable obligations.
(d) Transfer housing responsibilities and all rights, powers,
assets, liabilities, duties, and obligations, excluding enforceable
obligations of the successor agency, but including any amounts
on deposit in the Low and Moderate Income Housing Fund to the
appropriate entity pursuant to Section 34176.
(e) Terminate any agreement, between the dissolved
redevelopment agency and any public entity located in the same
county, obligating the redevelopment agency to provide funding
for any debt service obligations of the public entity or for the
construction or operation of facilities owned or operated by such
public entity, in any instance where the oversight board has found
that early termination would be in the best interests of the taxing
entities.
(f) Determine whether any contracts, agreements, or other
arrangements between the dissolved redevelopment agency and
any private parties should be terminated or renegotiated to reduce
liabilities and increase net revenues, to the taxing entities, and
present proposed termination or amendment agreements to the
oversight board for its approval. The board may approve any
amendments to or early termination of such agreements where it
finds that amendments or early termination would be in the best
interests of the taxing entities.
SEC. 8. Section 34182 of the Health and Safety Code is
amended to read:
34182. (a) (1) The county auditor - controller shall conduct or
cause to be conducted an agreed -upon procedures audit of each
redevelopment agency in the county that is subject to this part, to
be completed by July 1, 2012.
(2) The purpose of the audits shall be to establish each
redevelopment agency's assets and liabilities, to document and
determine each redevelopment agency's passthrough payment
obligations to other taxing agencies, and to document and
determine both the amount and the terms of any indebtedness
incurred by the redevelopment agency and certify the initial
Recognized Obligation Payment Schedule.
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(3) The county auditor - controller may charge the Redevelopment
Property Tax Trust Fund for any costs incurred by the county
auditor - controller pursuant to this part.
(b) By July 15, 2012, the county auditor - controller shall provide
the Controller's office a copy of all audits performed pursuant to
this section. The county auditor - controller shall maintain a copy
of all documentation and working papers for use by the Controller.
(c) (1) The county auditor - controller shall determine the amount
of property taxes that would have been allocated to each
redevelopment agency in the county had the redevelopment agency
not been dissolved pursuant to the operation of the act adding this
part. These amounts are deemed property tax revenues within the
meaning of subdivision (a) of Section 1 of Article XIIIA of the
California Constitution and are available for allocation and
distribution in accordance with the provisions of the act adding
this part. The county auditor - controller shall calculate the property
tax revenues using current assessed values on the last equalized
roll on August 20, pursuant to Section 2052 of the Revenue and
Taxation Code, and pursuant to statutory formulas or contractual
agreements with other taxing agencies, as of the effective date of
this section, and shall deposit that amount along with unitary and
supplemental tax increment due to the former redevelopment
agency in the Redevelopment Property Tax Trust Fund.
(2) Each county auditor - controller shall administer the
Redevelopment Property Tax Trust Fund for the benefit of the
holders of former redevelopment agency enforceable obligations
and the taxing entities that receive passthrough payments and
distributions of property taxes pursuant to this part.
(3) In connection with the allocation and distribution by the
county auditor - controller of property tax revenues deposited in the
Redevelopment Property Tax Trust Fund, in compliance with this
part, the county auditor - controller shall prepare estimates of
amounts to be allocated and distributed, and provide those estimates
to both the entities receiving the distributions and the Department
of Finance, no later than November 1 and May 1 of each year.
(4) Each county auditor - controller shall disburse proceeds of
asset sales or reserve balances, which have been received from the
successor entities pursuant to Sections 34177 and 34187, to the
taxing entities. In malting such a distribution, the county
auditor - controller shall utilize the same methodology for allocation
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1 and distribution of property tax revenues provided in Section
2 34188.
3 (d) By October 1, 2012, the county auditor - controller shall report
4 the following information to the Controller's office and the Director
5 of Finance:
6 (1). The sums of property tax revenues remitted to the
7 Redevelopment Property Tax Trust Fund related to each former
8 redevelopment agency.
9 (2) The sums of property tax revenues remitted to each agency
10 under paragraph (1) of subdivision (a) of Section 34183.
11 (3) The sums ofproperty tax revenues remitted to each successor
12 agency pursuant to paragraph (2) of subdivision (a) of Section
13 34183.
14 (4) The sums of property tax revenues paid to each successor
15 agency pursuant to paragraph (3) of subdivision (a) of Section
16 34183.
17 (5) The sums paid to each city, county, and special district, and
18 the total amount allocated for schools pursuant to paragraph (4)
19 of subdivision (a) of Section 34183.
20 (6) Any amounts deducted from other distributions pursuant to
21 subdivision (b) of Section34183.
22 (e) A county auditor - controller may charge the Redevelopment
23 Property Tax Trust Fund for the costs of administering the
24 provisions of this part.
25 (f) The Controller may audit and review any county
26 auditor - controller action taken pursuant to the act adding this part.
27 As such, all county auditor - controller actions shall not be effective
28 for duce business days, pending a request for review by the
29 Controller. In the event that the Controller requests a review of a
30 given county auditor - controller action, he or she shall have 10 days
31 from the date of his or her request to approve the county
32 auditor - controller's action or return it to the county
33 auditor - controller for reconsideration and such county
34 auditor - controller action shall not be effective until approved by
35 the Controller. In the event that the Controller returns the county
36 auditor - controller's action to the county auditor - controller for
37 reconsideration, the county auditor - controller must resubmit the
38 modified action for Controller approval and such modified county
39 auditor - controller action shall not become effective until approved
40 by the Controller.
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AB 1585
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SEC: 9. Section 34183 of the Health and Safety Code is
amended to read:
34183. (a) Notwithstanding any other law, from February 1,
2012, to July 1, 2012, and for each fiscal year thereafter, the county
auditor - controller shall, after deducting administrative costs
allowed under Section 34182 and Section 95.3 of the Revenue and
Taxation Code, allocate moneys in each Redevelopment Property
Tax Trust Fund as follows:
(1) Subject to any prior deductions required by subdivision (b),
first; the county auditor- controller shall remit fiom the
Redevelopment Property Tax Trust Fund to each local agency and
school entity an amount of property tax revenues in an amount
equal to that which would have been received under Section 33401,
33492.140, 33607, 33607.5, 33607.7, or 33676, as those sections
read on January 1, 2011, or pursuant to any passthrough agreement
between a redevelopment agency and a taxing jurisdiction that
was entered into prior to January 1, 1994, that would be in force
during that fiscal year, had the redevelopment agency existed at
that time. The amount of the payments made pursuant to this
paragraph shall be calculated solely on the basis of passthrough
payment obligations, existing prior to the effective date of this part
and continuing as obligations of successor entities, shall occur no
later than May 16, 2012, and no later than June 1, 2012, and each
January 16 and June 1 thereafter. Notwithstanding subdivision (e)
of Section 33670, that portion of the taxes in excess of the amount
identified in subdivision (a) of Section 33670, which are
attributable to a tax rate levied by a taxing agency for the purpose
of producing revenues in an amount sufficient to make annual
repayments of the principal of, and the interest on, any bonded
indebtedness for the acquisition or improvement of real property
shall be allocated to, and when collected shall be paid into, the
fund of that taxing agency.
(2) (A) Second, on May 16, 2012, and June 1, 2012, and each
January 16 and June 1 thereafter, to each successor agency for
payments listed in its Recognized Obligation Payment Schedule
for the six -month fiscal period beginning January 1, 2012, or July
1, 2012, and each January 16 and June 1 thereafter, in the following
order of priority:
(i) Debt service payments scheduled to be made for tax
allocation bonds.
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(ii) Payments scheduled to be made on revenue bonds, but only
to the extent the revenues pledged for them are insufficient to make
the payments and only where the agency's tax increment revenues
were also pledged for the repayment of the bonds.
(iii) Payments scheduled for other debts and obligations listed
in the Recognized Obligation Payment Schedule that are required
to be paid from former tax increment revenue.
(B) For purposes of allocations made pursuant to this paragraph,
the auditor - controller shall reserve additional fiords in the
Redevelopment Property Tax Trust Fund at the time of the January
16 allocation, if necessary, to cover payments made in the second
half of the calendar year, as described in the Recognized Obligation
Payment Schedule, that are in excess of the amounts anticipated
to be deposited in the Redevelopment Property Tax Trust Fund
from the allocation that is received in May or June.
(3) Thud, on May 16, 2012, and June 1, 2012, and each January
16 and June 1 thereafter, to each successor agency for the
administrative cost allowance, as defined in Section 34171, for
administrative costs set forth in an approved administrative budget
for those payments required to be paid from former tax increment
revenues.
(4) Fourth, on May 16, 2012, and June 1, 2012, and each January
16 and June I thereafter, any moneys remaining in the
Redevelopment Property Tax Trust Fund after the payments and
transfers authorized by paragraphs (1) to (3), inclusive, shall be
distributed to local agencies and school entities in accordance with
Section 34188.
(b) If the successor agency reports, no later.than April 1, 2012,
and May 1, 2012, and each December 1 and May 1 thereafter, to
the county auditor - controller that the total amount available to the
successor agency from the Redevelopment Property Tax Trust
Fund allocation to that successor agency's Redevelopment
Obligation Retirement Fund, from other funds transferred from
each redevelopment agency, and from funds that have or will
become available through asset sales and all redevelopment
operations, are insufficient to fund the payments required by
paragraphs (1) to (3), inclusive, of subdivision (a) in the next
six -month fiscal period, the county auditor - controller shall notify
the Controller and the Department of Finance no later than 10 days
from the date of that notification. The county auditor - controller
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shall verify whether the successor agency will have sufficient funds
from which to service debts according to the Recognized
Obligation Payment Schedule and shall report the findings to the
Controller. If the Controller concurs that there are insufficient
funds to pay required debt service, the amount of the deficiency
shall be deducted first from the amount remaining to be distributed
to taxing entities pursuant to paragraph (4), and if that amount is
exhausted, from amounts available for distribution for
administrative costs in paragraph (3). If an agency, pursuant to the
provisions of Section 33492.15, 33492.72, 33607.5, 33671.5,
33681.15, or 33688, made passthrough payment obligations
subordinate to debt service payments required for enforceable
obligations, funds for servicing bond debt may be deducted from
the amounts for passthrough payments under paragraph (1), as
provided in those sections, but only to the extent that the amounts
remaining to be distributed to taxing entities pursuant to paragraph
(4) and the amounts available for distribution for administrative
costs in paragraph (3) have all been exhausted.
(c) The county treasurer may loan any funds from the county
treasury that are necessary to ensure prompt payments of
redevelopment agency debts.
(d) The Controller may recover the costs of audit and oversight
required under this part from the Redevelopment Property Tax
Trust Fund by presenting an invoice therefor to the county
auditor - controller who shall set aside sufficient funds for and
disburse the claimed amounts prior to malting the next distributions
to the taxing jurisdictions pursuant to Section 34188. Subject to
the approval of the Director ofFinance, the budget of the Controller
may be augmented to reflect the reimbursement, pursuant to
Section 28.00 of the Budget Act.
SEC. 10. Section 34187 of the Health and Safety Code is
amended to read:
34187. Cormnencing May 1, 2012, whenever a recognized
obligation that had been identified in the Recognized Payment
Obligation Schedule is paid off or refired, either through early
payment or payment at maturity, the county auditor - controller
shall distribute to the taxing entities, in accordance with the
provisions of the Revenue and Taxation Code, all property tax
revenues that were associated with the payment of the recognized
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obligation to the extent not currently required for the payment of
other recognized obligations.
SEC. 11. Section 34189 of the Health and Safety Code is
amended to read:
34189. (a) Commencing on the effective date of this part, all
provisions of the Community Redevelopment Law that depend on
the allocation of tax increment to redevelopment agencies,
including, but not limited to, Sections 33445, 33640, 33641, 33645,
and subdivision (b) of Section 33670, shall be inoperative.
(b) To the extent that a provision of Part 1 (commencing with
Section 33000), Part 1.5 (commencing with Section 34000), Part
1.6 (commencing with Section 34050), and Part 1.7 (commencing
with Section 34100) conflicts with this part, the provisions of this
part shall control. Further, if a provision of Part 1 (commencing
with Section 33000), Part 1.5 (commencing with Section 34000),
Part 1.6. ( commmencing with Section 34050), or Part 1.7
(commencing with Section 34100) provides an authority that the
act adding this part is restricting or eliminating, the restriction and
elimination provisions of the act adding this part shall control.
(c) It is intended that the provisions of this part shall be read in
a manner as to avoid duplication of payments.
SEC. 12. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to . effeefaate the orderly implementation of
responsibilities associated with dissolved redevelopment agencies,
it is necessary that this act take immediate effect.
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AB 1585 (Perez) as Amended March 21
Major Policy and Technical Clean -up to AB X126
Bill Summary
AB 1585, as amended March 21, includes many technical and substantive fixes to AB Xl
26, last year's redevelopment dissolution bill. The Assembly passed the bill, 58 -7, and
was sent to the Senate. AB 1585 contains an urgency clause so that it would go into
effect upon passage through both houses and signing by the Governor.
CRA and the League of California Cities have worked with the bill's author and
legislative staff to ensure it includes changes critical to resolving numerous problems
resulting from the dissolution of redevelopment agencies. AB 1585's important
provisions:
Ensure Preservation of Funding for Affordable Housing
• Funds in the Low- and Moderate - Income Housing Fund (L &M) would be
retained for use by the successor housing agency. The funds can only be spent on
specified affordable housing functions. If there is no entity, requires the funds to
be transferred to the State Department of Housing and Community Development
(HCD).
• The successor housing agency must contract to expend 80% of the funds within
two years and spend these funds within four years. The agency can petition HCD
for an extension of that time, or the unspent finds will be transferred to HCD for
use on low- income housing programs within the same county.
• Other helpful clarifications governing the administration of affordable housing
funding and related programs are included.
Ensure Loan Repayments to help provide Local Services
• Oversight boards are granted flexibility to allow local governments to retain
redevelopment assets that serve a governmental purpose, such as police stations
and parks, and to approve repayment, subject to an interest rate cap, of legitimate
loans that cities or counties made to their redevelopment agencies.
o The following types of outstanding loans between a city or county and a
redevelopment agency can be considered as an "enforceable obligation ":
• Loan agreements between the former RDA and the city, county, or city
and county that created it, made within two years of the date of the
creation of a project area, if the loan was for the project area;
• Loans made from the city or county to the former RDA to make a payment
to the State's Supplemental Educational Revenue Augmentation Fund
(SERAF); and
• Any other loan, provided the oversight board snakes a finding that the loan
was for legitimate redevelopment purposes; the oversight board may also
condition its approval on a the loan being repaid on a defined schedule
over a reasonable term, at an interest rate not to exceed the interest rate
earned by funds deposited into the Local Agency Investment Fund.
Preserve Asset Value and Avoid Potential "Fire Sale" Phenomenon
• A complete inventory of existing real property assets, by project area, is required
and would include the general categories of such assets, the purpose for which
they were originally acquired the original purchase price and the estimate current
market value.
• The oversight board would be authorized to direct the transfer of assets integral
for a govermnental purpose, such as a parking facility, to an appropriate
governmental jurisdiction.
• The oversight board would be required to adopt a strategy for disposal or transfer
of assets in an expeditious but orderly manner that preserves the assets' value.
• The oversight board is required to receive and review the inventory and adopt the
strategy for disposal or transfer of assets prior to disposing of any assets.
Improves Process to Avoid Possible Bond Defaults
• A successor agency would be able to use the initial estimated obligation
repayment schedule (FOPS) until a final recognized obligation payment schedule
(BOPS) is adopted.
• A full year of bond debt service requirements and other obligations may be
provided on the first six -month enforceable obligation list, and requires the
auditor - controller to ensure that sufficient funds are reserved to make necessary
payments.
• Successor agencies can refinance outstanding debt when obligations exceed
available revenue, with the approval of an oversight board.
Other Important Procedural and Technical Changes
• Clarification provides that a successor agency is a legally distinct and separate
body that acts by resolution, can sue and be sued, and can have additional powers
that may be conferred upon it.
• Provides clarification that employee costs associated with specific project
implementation activities are not subject to the existing 5% administrative cap.
• Clarification regarding selection of oversight board members from special
districts and former employees of the redevelopment agency is provided.
Proposed Post -RDA Budget Trailer Bill Raises Major Concerns
Further Limits Local Control, Reduces Payments for Enforceable Obligations and Shifts Housing
and Other Reserves to Benefit State
As the League and successor agencies await further clarification of how the approaching log jam over
approval of local ROPS will be resolved by the Department of Finance (DOF) before the June 1 property
tax distribution, DOF has distributed a proposed budget trailer bill that further erodes local control by
successor agencies and oversight boards, requires payment of unencumbered cash and appears to
reduce the June 1 payment to successor agencies for approved purposes to compensate for
"underpayments" to local taxing agencies last December.
In contrast to AB 1585 (Perez), which was the subject of extensive work by a special post -RDA task force
appointed by Speaker John Perez and deliberation by multiple Assembly committees, the proposed DOF
budget trailer bill was developed without input from the League (or perhaps other stakeholders). While the
proposal addresses some important problems caused by AB x1 26, it diverts any remaining
unencumbered cash from the successor agencies (including housing funds), limits the authority of
oversight boards to approve contracts, and gives the final approval of all matters to DOF. The bill's
prominent features include:
1. Reduction in June 1 Property Tax Payment to Successor Agencies to Retroactively Pay
for December 2011 "Underpayment" to Taxing Agencies. Directs county auditor - controllers
to reduce June 1 payments to successor agencies to retroactively compensate local taxing
agencies for alleged "underpayment" in December 2011 while AB x1 26 was not in effect due to
the California Supreme Court's stay in California Redevelopment Association v. Matosantos.
While DOF estimated for the May Revise that approximately $1.5 billion in tax increment will be
paid to local taxing agencies in FY 2011 -12, of which $880 million (58 percent) will go to
schools /state. This provision could result in a dramatic reduction in payments to successor
agencies statewide for approved enforceable obligations on June 1 by up to $750 million.
Empowers DOF with Final Decision Making Authority. Codifies DOF's interpretation of its
broad and final powers in all matters concerning enforceable obligations and the distribution of
unencumbered cash assets not needed for such obligations. The bill specifically removes the
powers of local oversight boards to approve contracts authorized by current law (e.g., contracts
between a city and the successor agency) without DOF approval. Sets new deadline for
submission of future ROPS by successor agencies (45 days in advance of property tax
distribution date), and gives DOF up until five days before that date to remove an item from a
ROPS before approval.
3. Diversion of Unencumbered Cash Reserves, Including Housing Funds, to Implement
Governor's May Revise. Requires successor agencies to transfer all accumulated
unencumbered cash reserves (estimated at $1.6 billion in FY 2012 -13 by DOF), including
affordable housing set -aside funds, to county auditor - controllers by dates certain in the upcoming
fiscal year. Does not apply to bond reserves, grant funds, funds needed to pay approved
enforceable obligations or real estate assets.
4. Clawback of "Improper" Payments to Cities or Private Parties; Use of Sales or Property
Tax to Reimburse Improper Payments. Provides clear authorization to DOF, State Controller
or county auditor - controllers to claw -back payments that it deems to have been made
"improperly" by redevelopment agencies or successor agencies. Includes the ability to off -set any
amounts owed through deduction of a city's sales tax or property tax payments (arguably
unconstitutional provisions).
5. Clarification on Bonds, Environmental Immunities and Housing
Bond Refunding and Spending Bond Proceeds. Authorizes successor agencies, with
oversight board approval, to refund redevelopment tax allocation bonds and contract to
expend funds (including bond proceeds) in compliance with an enforceable obligation
(e.g., bonds).
Environmental Immunities. Transfers immunities under the Polanco Redevelopment Act
formerly held by redevelopment agency to the successor agency with responsibility for
brownfield assets.
Housing Provisions. Contains new definition of "housing assets" that allows successor
housing agency to retain rents, loan repayments and payment from developers.
6. Legal Status of Successor Agency and Oversight Board Clarified. Clarifies that successor
agency is a separate legal entity with separate legal name and power to sue and be sued.
Provides that oversight boards are not separate entities, but that as the "second governing body"
of the work of the successor agency that it has the right to control city employees that are
assigned to work on the affairs of the successor agency.
The full bill can be viewed at this website:
http:/Iwww.dof.ca.gov/budgeting/trailer bill language /business transportation and housing /documents/
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