Existing law requires, from February 1, 2012, to July 1, 2012, inclusive, and for each fiscal year thereafter, the county auditor-controller in each county to allocate property tax revenues in the countys Redevelopment Property Tax Trust Fund, established to receive revenues equivalent to those that would have been allocated to former redevelopment agencies had those agencies not been dissolved, towards the payment of enforceable obligations and among entities that include, among others, a city, county, or city and county.

This bill would authorize a city or county to reject its allocations of property tax revenues that it would otherwise receive pursuant to specified statutory provisions governing the dissolution of redevelopment agencies. The bill would except from this authorization a city, county, or city and county that became the successor agency to the redevelopment agency and did not receive a finding of completion from the Department of Finance, as specified, and any designated local authority of a redevelopment agency, formed as specified, that did not receive the finding of completion from the Department of Finance. The bill would direct those rejected distributions of property tax revenues to an affordable housing special beneficiary district, established as a temporary and distinct local governmental entity for the express purposes of receiving rejected distributions of property tax revenues and providing financing assistance to promote affordable housing within its boundaries. The bill would require a beneficiary district to be governed by a 5-member board and comply with specified open meeting and public record laws. The bill would automatically require a beneficiary district to cease to exist on a specifically calculated date and prohibit a beneficiary district from undertaking any obligation that requires its action past that date. The bill would transfer any funds and public records of a beneficiary district remaining after the date the beneficiary district ceases to exist to the city or county that rejected its distributions of property tax revenues that were thereafter directed to that beneficiary district, as specified.

Existing law requires, from February 1, 2012, to July 1, 2012, inclusive, and for each fiscal year thereafter, the county auditor-controller in each county to allocate property tax revenues in the countys Redevelopment Property Tax Trust Fund, established to receive revenues equivalent to those that would have been allocated to former redevelopment agencies had those agencies not been dissolved, towards the payment of enforceable obligations and among entities that include, among others, a city, county, or city and county.

This bill would authorize a city or county to reject its allocations of property tax revenues that it would otherwise receive pursuant to specified statutory provisions governing the dissolution of redevelopment agencies. The bill would except from this authorization a city, county, or city and county that became the successor agency to the redevelopment agency and did not receive a finding of completion from the Department of Finance, as specified, and any designated local authority of a redevelopment agency, formed as specified, that did not receive the finding of completion from the Department of Finance. The bill would direct those rejected distributions of property tax revenues to an affordable housing special beneficiary district, established as a temporary and distinct local governmental entity for the express purposes of receiving rejected distributions of property tax revenues and providing financing assistance to promote affordable housing within its boundaries. The bill would require a beneficiary district to be governed by a 5-member board and comply with specified open meeting and public record laws. The bill would automatically require a beneficiary district to cease to exist on a specifically calculated date and prohibit a beneficiary district from undertaking any obligation that requires its action past that date. The bill would transfer any funds and public records of a beneficiary district remaining after the date the beneficiary district ceases to exist to the city or county that rejected its distributions of property tax revenues that were thereafter directed to that beneficiary district, as specified.

Existing law requires, from February 1, 2012, to July 1, 2012, inclusive, and for each fiscal year thereafter, the county auditor-controller in each county to allocate property tax revenues in the countys Redevelopment Property Tax Trust Fund, established to receive revenues equivalent to those that would have been allocated to former redevelopment agencies had those agencies not been dissolved, towards the payment of enforceable obligations and among entities that include, among others, a city and the county or the city and county.

This bill would authorize a city or county to reject its allocations of property tax revenues that it would otherwise receive pursuant to specified statutory provisions governing the dissolution of redevelopment agencies. The bill would except from this authorization a city, county, or city and county that became the successor agency to the redevelopment agency and did not receive a finding of completion from the Department of Finance, as specified, and any designated local authority of a redevelopment agency, formed as specified, that did not receive the finding of completion from the Department of Finance. The bill would direct those rejected distributions of property tax revenues to an affordable housing special beneficiary district, established as a temporary and distinct local governmental entity for the express purposes of receiving a rejected distribution distributions of property tax proceeds revenues and promoting providing financing assistance to promote affordable housing by providing financing assistance within its boundaries. The bill would require a beneficiary district to be governed by a 5-member board and comply with specified open meeting and public record laws. The bill would automatically require a beneficiary district to cease to exist on the 90th calendar day after the date the county auditor-controller makes the final transfer of the distribution of property tax revenues to the beneficiary district, on a specifically calculated date and prohibit a beneficiary district from undertaking any obligation that requires its action past that date. The bill would transfer any funds and public records of a beneficiary district remaining after the date the beneficiary district ceases to exist to the city or county that rejected the of its property tax revenues that were thereafter directed to that beneficiary district, as specified.

Existing law requires, from February 1, 2012, to July 1, 2012, inclusive, and for each fiscal year thereafter, the county auditor-controller in each county to allocate property tax revenues in the countys Redevelopment Property Tax Trust Fund, established to receive revenues equivalent to those that would have been allocated to former redevelopment agencies had those agencies not been dissolved, towards the payment of enforceable obligations and among entities that include, among others, a city and the county or the city and county.

This bill would authorize a city or county that formed a redevelopment agency and became the successor agency that received a finding of completion from the Department of Finance to reject its allocations of property tax revenues from the trust fund. that it would otherwise receive pursuant to specified statutory provisions governing the dissolution of redevelopment agencies. The bill would except from this authorization a city, county, or city and county that became the successor agency to the redevelopment agency and did not receive a finding of completion from the Department of Finance, as specified, and any designated local authority of a redevelopment agency, formed as specified, that did not receive the finding of completion from the Department of Finance. The bill would direct those rejected property tax revenues to an affordable housing special beneficiary district, established as a temporary and distinct local governmental entity for the purposes of receiving a rejected distribution of property tax proceeds and promoting affordable housing by providing financing assistance within its boundaries. The bill would require a beneficiary district to be governed by a 5-member board and comply with specified open meeting and public record laws. The bill would require a beneficiary district to cease to exist on the 90th calendar day after the date the county auditor-controller makes the final transfer of the distribution of property tax revenues to the beneficiary district, and prohibit a beneficiary district from undertaking any obligation that requires its action past that date. The bill would transfer any funds and public records of a beneficiary district remaining after the date the beneficiary district ceases to exist to the city or county that rejected the of property tax revenues thereafter directed to that district, as specified.

Existing law establishes various programs providing assistance for, among other things, emergency housing, multifamily housing, farmworker housing, veteran housing, home ownership for very low and low-income households, and downpayments for first-time homebuyers. Additionally, the Housing Authorities Law establishes public corporations known as housing authorities within each city and county in this state, and authorizes these housing authorities to undertake various actions for the purpose of increasing the availability of housing.

This bill would state the intent of the Legislature to enact legislation that would allow local governments to provide additional funding for affordable housing.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2031

Author:(Bonta and Atkins)

As Amended Ver:August 19, 2016

Majority vote

Original Committee Reference: H. & C.D.

SUMMARY: Authorizes a city or county that formed a redevelopment agency (RDA) that has received a finding of completion from Department of Finance (DOF), to bond against the property tax revenues it receives as a result of redevelopment dissolution for affordable housing purposes, without voter approval. Specifically, this bill:

1. Defines "affordable housing" to mean a dwelling available for purchase or lease by persons and families who qualify as low-, very low-, extremely low- and moderate income.
2. Defines "distributions of property tax revenues" to mean all additional property tax revenues a city or county is entitled to receive as a result of the dissolution of RDAs.
3. Defines "beneficiary district" to mean an affordable housing special beneficiary district that exists for a limited duration as a distinct local government entity for the purposes of receiving the rejected distribution of property tax revenues of a city or county and providing financial assistance to promote affordable housing within its boundaries.
4. Authorizes a city or county that formed a RDA and is the successor agency that received a finding of completion after dissolving its RDA from DOF to adopt an ordinance or resolution to reject its distribution of property tax revenues as a result of redevelopment dissolution.
5. Provides that once a city or county rejects its distribution of property taxes and it is redirected to a beneficiary district it has no claim or control over it except for its role in governing the beneficiary district.
6. Requires the county auditor-controller upon request to transfer all of a city's or county's rejected property taxes to the beneficiary district.
7. Provides that a beneficiary district can only promote the development of affordable housing within its boundaries.
8. Allows a beneficiary district to promote the development of affordable housing by doing any of the following:
   1. Issuing bonds to be repaid from the property tax revenues directed to the beneficiary district;
   2. Providing financial assistance for the development of affordable housing, including but not limited to, providing loans, grants, and other financial incentives and support;
   3. Taking other actions the board determines will promote the development of affordable housing within its boundaries;
   4. Prohibits a beneficiary district from undertaking any obligation that requires an action after the date it ceases to exist including issuing a bond that requires any repayment of the bond obligation.
9. Requires a beneficiary district to comply with the Ralph M. Brown Act.
10. Provides that when a beneficiary district ceases to exist, its public record will be the property of the city or county that rejected its distribution of property tax proceeds.
11. Provides that beginning when a successor entity receives a finding of completion, there exists within the same geographical boundaries of the jurisdiction of the successor agency a beneficiary district.
12. Provides that a beneficiary district ceases to exist on the 90th calendar day after the date that the county auditor-controller makes the final transfer of distributed property tax revenues to the beneficiary district.
13. Provides that on or after the date a beneficiary district ceases to exist the beneficiary district will no longer have authority to conduct any business include but not limited to taking an action or making any payment, and any funds of the beneficiary district will automatically transfer to the city or county that rejected its distribution of property tax revenues that had been redirected to the beneficiary district.
14. Provides that any legal right of the beneficiary district on or after the date that it ceases to exist, including but not limited to, the right to repayment of a loan made by the beneficiary district is the right of the city or county that created it.
15. Provides that a beneficiary district will be governed by a Board composed of the following five members:
    1. Three members of the city council, if the city council formed the RDA and become the successor agency to the RDA; or
    2. Three members of the county board of supervisors, if the county formed the RDA and become the successor agency to the RDA; and
    3. The treasurer of the city or county that formed the RDA and become the successor agency to the RDA; and
    4. One member of the public who lives within the boundaries of beneficiary district who is appointed by the city or county that formed the RDA and become the successor agency.
16. Provides that the Board members will serve a term of four years from the date of appointment and vacancies on the Board will be filled by the appointing authority for a new four year term.
17. Provides that the Board will select one of its members as chairperson.
18. Provides that Board members will serve without compensation.
19. Provides that the terms of the Board members expire once the beneficiary district ceases to exist.

The Senate amendments:

1. Make clear that only a city or county that formed a RDA that has received a finding of completion from Department of Finance (DOF) is authorized to bond against the property tax revenues it receives as a result of redevelopment dissolution for affordable housing purposes.
2. Provide that a beneficiary district ceases to exist either three months after the DOF approves a request to dissolve the successor entity or twentieth anniversary from the date that the successor entity receives a finding of completion.
3. Make technical amendments

FISCAL EFFECT: None

COMMENTS: In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Statewide, redevelopment redirected 12% of property taxes 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, AB 26 X1(Blumenfield), Chapter 5 and AB 27 X1 (Blumenfield), Chapter 6, both of the 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 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.

When RDAs were dissolved, successor agencies were established to wind down their obligations and responsibilities. Generally, the city or county that formed the RDA serves as the successor agency. Successor agencies are required to receive a "finding of completion" from DOF. In order to receive a finding of completion, a successor agency has to undergo due diligence reviews and make required payments to DOF. Once it receives a finding of completion, a successor agency has additional discretion regarding former agency 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.

RDAs froze the property tax rate at the time they were created and captured any increase in property taxes to pay for their activities. Dissolution redirected those property taxes into a Redevelopment Property Tax Trust Fund (RPTTP) which the county-auditor controller distributes to the taxing entities including cities, counties, and special districts. This bill would allow a city or county that serves as the successor agency to a RDA that has received a finding of completion from DOF, to redirect the property taxes it receives as a result of redevelopment dissolution, also known as "boomerang funds," to a beneficiary district. The boomerang funds would be redirected before they are deposited into the city's or county's general fund. A beneficiary district could bond against the revenues from the boomerang funds, provide loans and grants for an affordable housing development, or take other actions that the board of the beneficiary district determines support the development of affordable housing within its boundaries. Because the property taxes are deposited into the beneficiary district and not into the city's or county's general fund no voter approval is required to allow the affordable housing beneficiary district to bond against the income stream from the ongoing property tax distribution. The geographic boundaries of the affordable housing beneficiary district are limited to the jurisdiction of the city or county that serves as the successor agency. A five member Board made of up three representatives of either the city or county, the treasurer of the city or county, and one member of the public would oversee the activities of a housing beneficiary district. Once the duties of the successor agency are complete and all of the bonds and obligations of the former RDA are paid then the beneficiary district would cease to exist and any money held by the beneficiary district will transfer to the city or county that created it.

Purpose of this bill: According to the author, "the proposal is to give cities and counties the authority to approve issuance of affordable housing bonds to be paid for with any portion of its "net available revenue" without voter approval. The net available revenue is referred to as "boomerang funds" distributed by the county auditor-controller to cities from the Redevelopment Property Tax Trust Fund (RPTTF). There is no fiscal impact to the State's general fund and no property taxes would be diverted from the other taxing entities."

Analysis Prepared by: Lisa Engel / H. & C.D. / (961) 319-2085 FN: 0004842

 THIRD READING  

Bill No: AB 2031

Author: Bonta (D) and Atkins (D), et al.

Amended: 8/19/16 in Senate

Vote: 21

SENATE TRANS. & HOUSING COMMITTEE: 8-3, 6/14/16

AYES: Beall, Allen, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski

NOES: Cannella, Bates, Gaines

SENATE GOVERNANCE & FIN. COMMITTEE: 4-2, 6/29/16

AYES: Hertzberg, Beall, Hernandez, Lara

NOES: Nguyen, Moorlach

NO VOTE RECORDED: Pavley

ASSEMBLY FLOOR: 51-27, 5/12/16 - See last page for vote

SUBJECT: Local government: affordable housing: financing

SOURCE: City of Oakland
Non-profit Housing Association of Northern California

DIGEST: This bill authorizes a city or county that formed a redevelopment agency (RDA) that has received a finding of completion from the Department of Finance (DOF) to bond against the property tax revenues it receives as a result of RDA dissolution for affordable housing purposes, without voter approval.

Senate Floor Amendments of 8/19/16 change the entity that controls the termination of the beneficiary district from the state auditor-controller to the DOF. These changes state that the beneficiary district shall cease to exist on the earlier of the 90th calendar day after the date the DOF approves a request to dissolve the successor entity, or the 20th anniversary of the date that the successor entity received a finding of completion. The amendments also make clarifying changes.

ANALYSIS:

Existing law:

1. Dissolves RDAs as of February 1, 2012, and institutes a process for winding down their activities.
2. 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:
3. 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.
4. The successor agency has paid the full amount as determined during the July true-up process.
5. 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.
6. Allows the successor agency, upon receiving the finding of completion, to:
7. Retain dissolved RDA assets.
8. Place loan agreements between the former RDA and sponsoring entity on the Recognized Obligation Payments Schedule, as an enforceable obligation, provided the oversight board makes a finding that the loan was for legitimate redevelopment purposes.
9. Utilize proceeds derived from bonds issued prior to January 1, 2011, in a manner consistent with the original bond covenants.
10. Requires, after DOF issues a finding of completion, the 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.

This bill:

1. Defines “affordable housing” as a dwelling for purchase or lease by persons of families who qualify as low- or moderate-income households, very low-income households, or extremely low-income households.
2. Defines “beneficiary district” as an affordable housing special beneficiary district that exists for a limited duration as a distinct local governmental entity for the purposes of receiving rejected distributions of property tax revenues and providing financial assistance to promote affordable housing within its boundaries.
3. Defines “distributions of property tax revenues” to mean all property tax revenues a city or county is entitled to receive as a result of the dissolution of RDAs.
4. Authorizes a city or county that formed an RDA and is the successor agency that received a finding of completion from DOF after dissolving its RDA to adopt an ordinance or resolution to reject its distribution of property tax revenues and redirect those revenues to a beneficiary district. Once the funds are rejected and redirected, the local jurisdiction no longer has control over it.
5. Requires the county auditor-controller, upon request, to transfer all of a city’s or county’s rejected property taxes to the beneficiary district and provides that a beneficiary district can use any funds provided to it for the express purpose of promoting the development of affordable housing within its boundaries.
6. Allows a beneficiary district to promote the development of affordable housing by doing any of the following:
7. Issuing bonds to be repaid from the property tax revenues directed to the beneficiary district.
8. Providing financial assistance for the development of affordable housing, including, but not limited to, providing loans, grants, and other financial incentives and support.
9. Taking other actions the board determines will promote the development of affordable housing within its boundaries.
10. Prohibits a beneficiary district from undertaking any obligation that requires an action after the date it ceases to exist, including issuing a bond that requires any repayment of the bond obligation.
11. Requires a beneficiary district to comply with the Ralph M. Brown Act and the California Public Records Act.
12. Provides that beneficiary district shall cease to exist on the earlier of the 90th calendar day after the date the DOF approves a request to dissolve the successor entity, or the 20th anniversary of the date that the successor entity received a finding of completion. When a beneficiary district ceases to exist, its public record will be the property of the city or county that rejected its distribution of property tax proceeds.
13. Provides that on or after the date a beneficiary district ceases to exist, the beneficiary district will no longer have authority to conduct any business, including, but not limited to, taking an action or making any payment, and any funds of the beneficiary district will automatically transfer to the city or county that rejected its distribution of property tax revenues that had been redirected to the beneficiary district.
14. Provides that a beneficiary district will be governed by a board composed of the following five members:
15. Three members of the city council, if the city council formed the RDA and became the successor agency to the RDA; or three members of the county board of supervisors, if the county formed the RDA and became the successor agency to the RDA.
16. The treasurer of the city or county that formed the RDA and became the successor agency to the RDA.
17. One member of the public who lives within the boundaries of the beneficiary district.
18. Provides that this bill shall not apply to any city, county, or city and county that formed a redevelopment agency if the successor agency did not receive a finding of completion.

Background

1. RDAs. Historically, Community Redevelopment Law allowed a local government to establish a redevelopment area and capture all of the increase in property taxes generated within the area (referred to as “tax increment”) over a period of decades. The law required RDAs to deposit 20% of tax increment into a low- and moderate-income housing fund to be used to increase, improve, and preserve the community’s supply of low- and moderate-income housing available at an affordable-housing cost.

In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs to deliver more property taxes to other local agencies. Ultimately, the Legislature acted and RDAs were dissolved as of February 1, 2012. When RDAs were dissolved, successor agencies were established to wind down their obligations and responsibilities. Generally, the city or county that formed the RDA serves as the successor agency. Successor agencies are required to receive a “finding of completion” from DOF, which requires undergoing due diligence reviews and making payments to DOF. Once it receives a finding of completion, a successor agency has additional discretion regarding former agency 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.

1. Boomerang funds. RDAs froze the property tax rate at the time they were created and captured any increase in property taxes to pay for their activities. Dissolution redirected those property taxes into a Redevelopment Property Tax Trust Fund, which the county auditor-controller distributes to the taxing entities, including cities, counties, and special districts.

This bill allows a city or county that serves as the successor agency to an RDA that has received a finding of completion from the DOF to redirect the property taxes it receives as a result of redevelopment dissolution, also known as “boomerang funds,” to a beneficiary district. The boomerang funds would be redirected before they are deposited into the city’s or county’s general fund. A beneficiary district could bond against the revenues from the boomerang funds, provide loans and grants for an affordable housing development, or take other actions that the board of the beneficiary district determines support the development of affordable housing within its boundaries. According to the sponsor, permitting the beneficiary district to bond on these boomerang funds would provide more money up front for the construction of affordable housing projects. Because the property taxes are deposited into the beneficiary district and not into the city’s or county’s general fund, no voter approval is required to allow the affordable housing beneficiary district to bond against the income stream from the ongoing property tax distribution.

1. Beneficiary districts. The geographic boundaries of the affordable housing beneficiary district are limited to the jurisdiction of the city or county that serves as the successor agency. A five-member board made up of representatives of either the city or county, the treasurer of the city or county, and one member of the public would oversee the activities of a housing beneficiary district. Once the duties of the successor agency are complete and all the bonds and obligations of the former RDA are paid, then the beneficiary district would cease to exist and any money held by the beneficiary district would transfer to the city or county that created it.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 8/19/16)

City of Oakland (co-source)

Non-profit Housing Association of Northern California (co-source)

American Federation of State, County and Municipal Employees

Burbank Housing Development Corporation

California Apartment Association

California Coalition for Rural Housing

California Housing Consortium

California Housing Partnership Corporation

City of Oakland

City of Walnut Creek

Community Housing Opportunities Corporation

Community Loan Fund

East Bay Asian Local Development Corporation

East Bay Developmental Disabilities Legislative Coalition

Equity Community Builders

EveryOne Home

Housing Leadership Council of San Mateo County

MidPen Housing

Northern California Community Loan Fund

Peoples’ Self Help Housing

Sacramento Housing Alliance

San Diego Housing Federation

Sonoma County Board of Supervisors

The Arc and United Cerebral Palsy California Collaboration

OPPOSITION: (Verified 8/19/16)

Howard Jarvis Taxpayers Association

ARGUMENTS IN SUPPORT: According to the author, it takes years to put enough affordable housing on the market to make an impact on prices. Additionally, with the dissolution of RDAs, and no permanent source of funding from the state to support the construction of affordable housing, there is no ongoing revenue to subsidize the construction of affordable and workforce housing. This bill empowers local governments to rapidly address the affordable housing crisis. The bill allows cities to pass an ordinance to issue bonds for affordable housing without raising taxes or diverting property taxes from other sources. This bill allows cities to tap any portion of their net available revenue to use bonds for affordable housing. The net available, also known as “boomerang funds,” is distributed by the county auditor-controller to cities from the Redevelopment Property Tax Trust Fund. By front-loading projects with a bond, cities can build more units more quickly and address displacement.

ARGUMENTS IN OPPOSITION: According to the Howard Jarvis Taxpayers Association, while no money will be diverted from other local agencies to pay off these bonds, it represents poor fiscal policy. These bonds will be on the books for decades, and ultimately, directly or indirectly, will be the responsibility of the taxpayers to pay off. The California Constitution requires a two-thirds vote for most local government bond debt. This bill establishes a bad precedent not only by removing the vote requirement, but also because it opens the door for other taxes or other forms of property assessment.

ASSEMBLY FLOOR: 51-27, 5/12/16

AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Waldron, Weber, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Wilk

NO VOTE RECORDED: Burke, Jones-Sawyer

Prepared by: Alison Dinmore / T. & H. / (916) 651-4121

8/22/16 22:41:13

**** END ****

 THIRD READING  

Bill No: AB 2031

Author:

: 8/2

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 8-3, 6/14/16

AYES: Beall, Allen, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski

NOES: Cannella, Bates, Gaines

SENATE GOVERNANCE & FIN. COMMITTEE: 4-2, 6/29/16

AYES: Hertzberg, Beall, Hernandez, Lara

NOES: Nguyen, Moorlach

NO VOTE RECORDED: Pavley

ASSEMBLY FLOOR: 51-27, 5/12/16 - See last page for vote

SUBJECT:

SOURCE: City of Oakland

Non-profit Housing Association of Northern California

DIGEST: This bill authorizes a city or county that formed a redevelopment agency (RDA) that has received a finding of completion from the Department of Finance (DOF) to bond against the property tax revenues it receives as a result of RDA dissolution for affordable housing purposes, without voter approval.

ANALYSIS:

Existing law:

1. Dissolves RDAs as of February 1, 2012, and institutes a process for winding down their activities.
2. 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:
3. 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.
4. The successor agency has paid the full amount as determined during the July true-up process.
5. 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.
6. Allows the successor agency, upon receiving the finding of completion, to:
7. Retain dissolved RDA assets.
8. Place loan agreements between the former RDA and sponsoring entity on the Recognized Obligation Payments Schedule, as an enforceable obligation, provided the oversight board makes a finding that the loan was for legitimate redevelopment purposes.
9. Utilize proceeds derived from bonds issued prior to January 1, 2011, in a manner consistent with the original bond covenants.
10. Requires, after DOF issues a finding of completion, the 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.

This bill:

1. Defines “affordable housing” as a dwelling for purchase or lease by persons of families who qualify as low- or moderate-income households, very low-income households, or extremely low-income households.
2. Defines “beneficiary district” as an affordable housing special beneficiary district that exists for a limited duration as a distinct local governmental entity for the purposes of receiving rejected distributions of property tax revenues and providing financial assistance to promote affordable housing within its boundaries.
3. Defines “distributions of property tax revenues” to mean all property tax revenues a city or county is entitled to receive as a result of the dissolution of RDAs.
4. Authorizes a city or county that formed an RDA and is the successor agency that received a finding of completion from DOF after dissolving its RDA to adopt an ordinance or resolution to reject its distribution of property tax revenues and redirect those revenues to a beneficiary district. Once the funds are rejected and redirected, the local jurisdiction no longer has control over it.
5. Requires the county auditor-controller upon request to transfer all of a city’s or county’s rejected property taxes to the beneficiary district and provides that a beneficiary district can only promote the development of affordable housing within its boundaries.
6. Allows a beneficiary district to promote the development of affordable housing by doing any of the following:
7. Issuing bonds to be repaid from the property tax revenues directed to the beneficiary district.
8. Providing financial assistance for the development of affordable housing, including, but not limited to, providing loans, grants, and other financial incentives and support.
9. Taking other actions the board determines will promote the development of affordable housing within its boundaries.
10. Prohibits a beneficiary district from undertaking any obligation that requires an action after the date it ceases to exist, including issuing a bond that requires any repayment of the bond obligation.
11. Requires a beneficiary district to comply with the Ralph M. Brown Act and the California Public Records Act.
12. Provides that when a beneficiary district ceases to exist, its public record will be the property of the city or county that rejected its distribution of property tax proceeds.
13. Provides that on or after the date a beneficiary district ceases to exist, the beneficiary district will no longer have authority to conduct any business, including, but not limited to, taking an action or making any payment, and any funds of the beneficiary district will automatically transfer to the city or county that rejected its distribution of property tax revenues that had been redirected to the beneficiary district.
14. Provides that a beneficiary district will be governed by a board composed of the following five members:
15. Three members of the city council, if the city council formed the RDA and became the successor agency to the RDA; or three members of the county board of supervisors, if the county formed the RDA and became the successor agency to the RDA.
16. The treasurer of the city or county that formed the RDA and became the successor agency to the RDA.
17. One member of the public who lives within the boundaries of the beneficiary district.
18. Provides that this bill shall not apply to any city, county, or city and county that formed a redevelopment agency if the successor agency did not receive a finding of completion.

Background

1. RDAs. Historically, Community Redevelopment Law allowed a local government to establish a redevelopment area and capture all of the increase in property taxes generated within the area (referred to as “tax increment”) over a period of decades. The law required RDAs to deposit 20% of tax increment into a low- and moderate-income housing fund to be used to increase, improve, and preserve the community’s supply of low- and moderate-income housing available at an affordable-housing cost.

In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs to deliver more property taxes to other local agencies. Ultimately, the Legislature acted and RDAs were dissolved as of February 1, 2012. When RDAs were dissolved, successor agencies were established to wind down their obligations and responsibilities. Generally, the city or county that formed the RDA serves as the successor agency. Successor agencies are required to receive a “finding of completion” from DOF, which requires undergoing due diligence reviews and making payments to DOF. Once it receives a finding of completion, a successor agency has additional discretion regarding former agency 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.

1. Boomerang funds. RDAs froze the property tax rate at the time they were created and captured any increase in property taxes to pay for their activities. Dissolution redirected those property taxes into a Redevelopment Property Tax Trust Fund, which the county auditor-controller distributes to the taxing entities, including cities, counties, and special districts.

This bill allows a city or county that serves as the successor agency to an RDA that has received a finding of completion from the DOF to redirect the property taxes it receives as a result of redevelopment dissolution, also known as “boomerang funds,” to a beneficiary district. The boomerang funds would be redirected before they are deposited into the city’s or county’s general fund. A beneficiary district could bond against the revenues from the boomerang funds, provide loans and grants for an affordable housing development, or take other actions that the board of the beneficiary district determines support the development of affordable housing within its boundaries. According to the sponsor, permitting the beneficiary district to bond on these boomerang funds would provide more money up front for the construction of affordable housing projects. Because the property taxes are deposited into the beneficiary district and not into the city’s or county’s general fund, no voter approval is required to allow the affordable housing beneficiary district to bond against the income stream from the ongoing property tax distribution.

1. Beneficiary districts. The geographic boundaries of the affordable housing beneficiary district are limited to the jurisdiction of the city or county that serves as the successor agency. A five-member board made up of representatives of either the city or county, the treasurer of the city or county, and one member of the public would oversee the activities of a housing beneficiary district. Once the duties of the successor agency are complete and all the bonds and obligations of the former RDA are paid, then the beneficiary district would cease to exist and any money held by the beneficiary district would transfer to the city or county that created it.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 8/2/16)

City of Oakland (co-source)

Non-profit Housing Association of Northern California (co-source)

American Federation of State, County and Municipal Employees

Burbank Housing Development Corporation

California Apartment Association

California Coalition for Rural Housing

California Housing Consortium

California Housing Partnership Corporation

City of Oakland

City of Walnut Creek

Community Housing Opportunities Corporation

Community Loan Fund

East Bay Asian Local Development Corporation

East Bay Developmental Disabilities Legislative Coalition

Equity Community Builders

EveryOne Home

Housing Leadership Council of San Mateo County

MidPen Housing

Northern California Community Loan Fund

Peoples’ Self Help Housing

Sacramento Housing Alliance

San Diego Housing Federation

Sonoma County Board of Supervisors

The Arc and United Cerebral Palsy California Collaboration

OPPOSITION: (Verified 8/2/16)

Howard Jarvis Taxpayers Association

ARGUMENTS IN SUPPORT: According to the author, it takes years to put enough affordable housing on the market to make an impact on prices. Additionally, with the dissolution of RDAs, and no permanent source of funding from the state to support the construction of affordable housing, there is no ongoing revenue to subsidize the construction of affordable and workforce housing. This bill empowers local governments to rapidly address the affordable housing crisis. The bill allows cities to pass an ordinance to issue bonds for affordable housing without raising taxes or diverting property taxes from other sources. This bill allows cities to tap any portion of their net available revenue to use bonds for affordable housing. The net available, also known as “boomerang funds,” is distributed by the county auditor-controller to cities from the Redevelopment Property Tax Trust Fund. By front-loading projects with a bond, cities can build more units more quickly and address displacement.

ARGUMENTS IN OPPOSITION: According to the Howard Jarvis Taxpayers Association, while no money will be diverted from other local agencies to pay off these bonds, it represents poor fiscal policy. These bonds will be on the books for decades, and ultimately, directly or indirectly, will be the responsibility of the taxpayers to pay off. The California Constitution requires a two-thirds vote for most local government bond debt. This bill establishes a bad precedent not only by removing the vote requirement, but also because it opens the door for other taxes or other forms of property assessment.

ASSEMBLY FLOOR: 51-27, 5/12/16

AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Waldron, Weber, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Wilk

NO VOTE RECORDED: Burke, Jones-Sawyer

Prepared by:

8/3/16 18:54:30

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

Local government: affordable housing: financing

Allows a city or county to reject allocations of specified revenues resulting from redevelopment agencies’ dissolution to make those revenues available to develop affordable housing.

Background

Until 2011, the Community Redevelopment Law allowed local officials to set up redevelopment agencies (RDAs), prepare and adopt redevelopment plans, and finance redevelopment activities. Citing a significant State General Fund deficit, Governor Brown’s 2011-12 budget proposed eliminating RDAs and returning billions of dollars of property tax revenues to schools, cities, and counties to fund core services. Among the statutory changes that the Legislature adopted to implement the 2011-12 Budget, ABX1 26 (Blumenfield, 2011) dissolved all RDAs. The California Supreme Court's 2011 ruling in California Redevelopment Association v. Matosantos upheld ABX1 26, but invalidated ABX1 27 (Blumenfield, 2011), which would have allowed most RDAs to avoid dissolution.

AB X1 26 established successor agencies to manage the process of unwinding former RDAs’ affairs. With limited exceptions, the city or county that created each former RDA now serves as that RDA’s successor agency. Each successor agency has an oversight board that is responsible for supervising it and approving its actions. The Department of Finance (DOF) can review and request reconsideration of an oversight board’s decisions.

If a successor agency complies with state laws that require it to remit specified RDA property tax allocations and cash assets identified through a “due diligence review” process, it receives a “finding of completion” from the DOF (AB 1484, Assembly Budget Committee, 2012).

One of the successor agencies’ primary responsibilities is to make payments for enforceable obligations entered into by former RDAs. Subject to statutory requirements, successor agencies’ obligations are payable out of a Redevelopment Property Tax Trust Fund (RPTTF), which contains the revenues that would have been allocated as tax increment to a former RDA. After all preexisting legal commitments and statutory obligations funded from the RPTTF are made pursuant to state law, periodic distributions of the remaining revenues in the RPTTF are made to other taxing entities within the former RDA’s territory.

The loss of the ongoing funding for affordable housing that RDAs used to provide has left many local officials with few tools they can use to respond to their communities’ affordable housing needs. Some officials want to be able to dedicate the revenues that their cities and counties receive as a part of the RDA dissolution process to developing affordable housing.

Proposed Law

Assembly Bill 2031 creates an affordable housing beneficiary district within the geographical boundaries of each successor agency that has received a finding of completion.

AB 2031 defines an “affordable housing beneficiary district” as a district that exists for a limited duration as a distinct local governmental entity for the purposes of receiving rejected distributions of property tax revenues and providing financing assistance to promote affordable housing within its boundaries.

AB 2031 requires a beneficiary district to be governed by a five-member board comprised of:

• Three members of the city council or board of supervisors that formed the former redevelopment agency;
• The treasurer of the city or county that formed the former redevelopment agency; and,
• A member of the public who lives within the boundaries of the beneficiary district.

AB 2031 specifies the manner in which the beneficiary districts’ board members must be appointed and board vacancies filled, establishes four-year terms for board members, prohibits board members from receiving compensation, and requires board members to elect a chairperson.

AB 2031 allows a city or county that became the successor agency to a former redevelopment agency and received a finding of completion to reject, by adopting an ordinance or resolution, its distributions of property tax revenues from the trust fund. AB 2031 requires the county auditor-controller to transfer to the beneficiary district all of the distribution of property tax revenues from the trust fund that the city or county rejected. With a specified exception, AB 2031 prohibits a city or county that rejects its distributions of property tax revenues from having any claim to, or control over, the distributions of property tax revenues it may have otherwise received pursuant to specified statutes governing former RDAs’ dissolution.

AB 2031 requires that a beneficiary district must only promote the development of affordable housing within its boundaries. AB 2031 defines “affordable housing” as a dwelling available for purchase or lease by persons and families who qualify as low or moderate income, very low income households, or extremely low income households, as those categories are defined in specified statutes. AB 2031 directs that a beneficiary district may promote the development of affordable housing by doing any of the following:

• Issuing bonds to be repaid from the property tax revenues directed to the district.
• Providing financial assistance for the development of affordable housing, including, but not limited to, providing loans, grants, and other financial incentives and support.
• Taking other actions that the board determines will promote the financing of the development of affordable housing within its boundaries.

AB 2031 requires a beneficiary district to comply with specified open meeting and public records statutes.

AB 2031 prohibits a beneficiary district from undertaking any obligation that requires an action after the date it will cease to exist, including, but not limited to, issuing a bond that requires any repayment of the bond obligation after the date the beneficiary district will cease to exist.

AB 2031 requires that:

• A beneficiary district must cease to exist on the 90th calendar day after the date the county auditor-controller makes the final transfer of distributed property tax revenues to the beneficiary district.
• On and after the date a beneficiary district ceases to exist, the beneficiary district must not have the authority to conduct any business, including taking any action or making any payment
• Any funds of the beneficiary district must automatically transfer to the city or county that rejected its distributions of property tax revenues that were thereafter directed to the district.
• The terms of the members of the board of a beneficiary district shall expire on the date the beneficiary district ceases to exist.
• Any legal right of the beneficiary district on or after the date the beneficiary district ceases to exist, including the right to repayment pursuant to a loan made by the beneficiary district, is the right of the city or county that rejected its distributions of property tax revenues that was thereafter directed to the district.
• When a beneficiary district ceases to exist, a public record of the beneficiary district shall be the property of the city or county that rejected its distribution of property tax proceeds.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. Redevelopment agencies’ dissolution left California without any permanent source of funding to support the construction of affordable housing. AB 2031 empowers local governments to address the affordable housing crisis using revenues generated by the former RDAs’ dissolution. The bill allows eligible cities and counties to pass an ordinance to issue bonds for affordable housing without raising taxes or diverting property taxes from other sources. AB 2031 allows cities and counties to tap the revenues they receive from a Redevelopment Property Tax Trust Fund to repay bonds for affordable housing. By front-loading projects with a bond, cities and counties can build a larger number of affordable housing units more quickly and address displacement.

2. Voter approval for local debts. State law requires supermajority voter approval for debt that encumbers general purpose revenues. Two-thirds of voters must approve before a city or county can commit a portion of the property tax revenues that flow into its general fund, as a limited obligation, to repay bonds used to build infrastructure. The financing approach authorized by AB 2031, by diverting revenues before they are placed into a government’s general fund and requiring debt to be issued through a special district, may thread the needle of avoiding any legal requirements to obtain two-thirds voter approval. However, as a matter of policy, a city or county’s decision to “reject” net available revenues that would otherwise flow into its general fund so that those revenues can instead repay affordable housing bonds warrants the same voter scrutiny that state law requires for limited obligation bonds. AB 2031 may erode the California Constitution’s voter approval requirement for public debt.

3. Too narrow? AB 2031 may unintentionally exclude some cities and counties from the authority granted by the bill. Specifically, the bill allows property tax allocations from a RPTTF to be rejected only by “a city or county that became the successor agency to a former redevelopment agency.” This language could exclude the City of Los Angeles, which elected not to become the successor agency to its former redevelopment agency. In addition to Los Angeles, six other local governments did not become successor agencies, but instead allowed an appointed “designated local authority” to take responsibility for unwinding the affairs of their former RDAs. The bill’s narrow language also may exclude counties that never formed an RDA, but that receive allocations from a RPTTF. The Committee may wish to consider amending AB 2031 to apply the bill’s provisions to:

• Any city or county in which the former RDA’s successor entity has received a finding of completion, regardless of whether the city or county is the successor agency, and
• Any county that receives RPTTF allocations to use the bill’s authority, regardless of whether that county had ever formed an RDA.

4. Let’s get technical. AB 2031 specifically defines what the phrase “distribution of property tax revenues” means for the purposes of the bill’s provisions. With one exception, the bill consistently refers to distributions of property tax revenues. To make the bill’s language more consistent, the Committee may wish to consider amending AB 2031 to substitute the term property tax “revenues” in place of the reference to property tax “proceeds” on page 5, line 17.

5. Double-referred. The Senate Rules Committee has ordered a double-referral of AB 2031, first to the Senate Committee on Transportation & Housing, which has jurisdiction over bill relating to housing policy, and then to the Senate Governance & Finance Committee, which has jurisdiction over bills relating to local government bonds. The Senate Transportation & Housing Committee passed AB 2031 at its June 14, 2016 hearing on a 8-3 vote.

Assembly Actions

Assembly Housing and Community Development Committee: 5-2

Assembly Local Government Committee: 7-1

Assembly Floor: 51-27

Senate Transportation and Housing Committee: 8-3

Support and Opposition

(6/23/16)

Support: American Federation of State, County and Municipal Employees (AFSCME); Burbank Housing Development Corporation; California Apartment Association; California Coalition for Rural Housing; California Housing Consortium; California Housing Partnership Corporation; Cities of Oakland and Walnut Creek; Community Housing Opportunities Corporation; East Bay Asian Local Development Corporation; East Bay Developmental Disabilities Legislative Coalition; Equity Community Builders; EveryOne Home; Housing Leadership Council of San Mateo County; MidPen Housing; Non-profit Housing Association of Northern California; Northern California Community Loan Fund; Peoples’ Self Help Housing; Sacramento Housing Alliance; San Diego Housing Federation; Sonoma County Board of Supervisors; The Arc and United Cerebral Palsy California Collaboration.

Opposition: Howard Jarvis Taxpayers Association.

-- END --

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2015 - 2016 Regular

Bill No: AB 2031 Hearing Date: 6/14/2016

SUBJECT: Affordable Housing Special Beneficiary Districts

DIGEST: This bill authorizes a city or county that formed a redevelopment agency (RDA) that has received a finding of completion from the Department of Finance (DOF) to bond against the property tax revenues it receives as a result of RDA dissolution for affordable housing purposes, without voter approval.

ANALYSIS:

Existing law:

1. Dissolves RDAs as of February 1, 2012, and institutes a process for winding down their activities.
2. 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:
3. 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
4. The successor agency has paid the full amount as determined during the July true-up process
5. 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
6. Allows the successor agency, upon receiving the finding of completion, to:
7. Retain dissolved RDA assets
8. Place loan agreements between the former RDA and sponsoring entity on the Recognized Obligation Payments Schedule (ROPS), as an enforceable obligation, provided the oversight board makes a finding that the loan was for legitimate redevelopment purposes
9. Utilize proceeds derived from bonds issued prior to January 1, 2011, in a manner consistent with the original bond covenants
10. Requires, after DOF issues a finding of completion, the 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.

This bill:

1. Defines “affordable housing” as a dwelling for purchase or lease by persons of families who qualify as low or moderate income, very low-income households, or extremely low-income households.
2. Defines “beneficiary district” as an affordable housing special beneficiary district that exists for a limited duration as a distinct local governmental entity for the purposes of receiving rejected distributions of property tax revenues and providing financial assistance to promote affordable housing within its boundaries.
3. Defines “distributions of property tax revenues” to mean all property tax revenues a city or county is entitled to receive as a result of the dissolution of RDAs.
4. Authorizes a city or county that formed an RDA and is the successor agency that received a finding of completion after dissolving its RDA from DOF to adopt an ordinance or resolution to reject its distribution of property tax revenues and redirect those revenues to a beneficiary district. Once the funds are rejected and redirected, the local jurisdiction no longer has control over it.
5. Requires the county auditor-controller upon request to transfer all of a city’s or county’s rejected property taxes to the beneficiary district and provides that a beneficiary district can only promote the development of affordable housing within its boundaries.
6. Allows a beneficiary district to promote the development of affordable housing by doing any of the following:
7. Issuing bonds to be repaid from the property tax revenues directed to the beneficiary district
8. Providing financial assistance for the development of affordable housing, including but not limited to providing loans, grants, and other financial incentives and support
9. Taking other actions the board determines will promote the development of affordable housing within its boundaries
10. Prohibits a beneficiary district from undertaking any obligation that requires an action after the date it ceases to exist, including issuing a bond that requires any repayment of the bond obligation
11. Requires a beneficiary district to comply with the Ralph M. Brown Act and the California Public Records Act.
12. Provides that when a beneficiary district ceases to exist, its public record will be the property of the city or county that rejected its distribution of property tax proceeds.
13. Provides that on or after the date a beneficiary district ceases to exist, the beneficiary district will no longer have authority to conduct any business including but not limited to taking an action or making any payment, and any funds of the beneficiary district will automatically transfer to the city or county that rejected its distribution of property tax revenues that had been redirected to the beneficiary district.
14. Provides that a beneficiary district will be governed by a board composed of the following five members:
15. Three members of the city council, if the city council formed the RDA and became the successor agency to the RDA; or three members of the county board of supervisors, if the county formed the RDA and became the successor agency to the RDA
16. The treasurer of the city or county that formed the RDA and became the successor agency to the RDA
17. One member of the public who lives within the boundaries of the beneficiary district

COMMENTS:

1) Purpose of the bill. According to the author, it takes years to put enough affordable housing on the market to make an impact on prices. Depending on the project, construction can take a few weeks to several months. In addition, average approval time is eight months to a year in cities like San Francisco and Los Angeles. Finally, with the dissolution of redevelopment agencies, and no permanent source of funding from the state to support the construction of affordable housing, there is no ongoing revenue to subsidize the construction of affordable and workforce housing.

This bill empowers local governments to rapidly address the affordable housing crisis. The bill allows cities to pass an ordinance to issue bonds for affordable housing without raising taxes or diverting property taxes from other sources. AB 2031 allows cities to tap any portion of their net available revenue to use bonds for affordable housing. The net available, also known as “boomerang funds,” is distributed by the county auditor-controller to cities from the Redevelopment Property Tax Trust Fund (RPTTF). By front-loading projects with a bond, cities can build more units more quickly and address displacement.

2) Background of RDAs. Historically, Community Redevelopment Law allowed a local government to establish a redevelopment area and capture all of the increase in property taxes generated within the area (referred to as “tax increment”) over a period of decades. The law required redevelopment agencies to deposit 20% of tax increment into a low- and moderate-income housing fund to be used to increase, improve, and preserve the community’s supply of low- and moderate-income housing available at an affordable-housing cost.

In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs to deliver more property taxes to other local agencies. Ultimately, the legislature acted and RDAs were dissolved as of February 1, 2012.

When RDAs were dissolved, successor agencies were established to wind down their obligations and responsibilities. Generally, the city or county that formed the RDA serves as the successor agency. Successor agencies are required to receive a “finding of completion” from DOF, which requires undergoing due diligence reviews and making payments to DOF. Once it receives a finding of completion, a successor agency has additional discretion regarding former agency 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.

3) Boomerang funds. RDA froze the property tax rate at the time they were created and captured any increase in property taxes to pay for their activities. Dissolution redirected those property taxes into a Redevelopment Property Tax Trust Fund (RPTTP), which the county auditor-controller distributes to the taxing entities, including cities, counties, and special districts.

This bill would allow a city or county that serves as the successor agency to an RDA that has received a finding of completion from the DOF to redirect the property taxes it receives as a result of redevelopment dissolution, also known as “boomerang funds," to a beneficiary district. The boomerang funds would be redirected before they are deposited into the city’s or county’s general fund. A beneficiary district could bond against the revenues from the boomerang funds, provide loans and grants for an affordable housing development, or take other actions that the board of the beneficiary district determines support the development of affordable housing within its boundaries. According to the sponsor, permitting the beneficiary district to bond on these boomerang funds would provide more money up front for the construction of affordable housing projects. Because the property taxes are deposited into the beneficiary district and not into the city’s or county’s general fund, no voter approval is required to allow the affordable housing beneficiary district to bond against the income stream from the ongoing property tax distribution.

4) Beneficiary districts. The geographic boundaries of the affordable housing beneficiary district are limited to the jurisdiction of the city or county that serves as the successor agency. A five-member board made up of representatives of either the city or county, the treasurer of the city or county, and one member of the public would oversee the activities of a housing beneficiary district. Once the duties of the successor agency are complete and all the bonds and obligations of the former RDA are paid, then the beneficiary district would cease to exist and any money held by the beneficiary district would transfer to the city or county that created it.

5) Opposition. According to the Howard Jarvis Taxpayers Association, while no money will be diverted from other local agencies to pay off these bonds, it represents poor fiscal policy. These bonds will be on the books for decades, and ultimately, directly or indirectly, will be the responsibility of the taxpayers to pay off. The California Constitution requires a two-thirds vote for most local government bond debt. This bill establishes a bad precedent not only by removing the vote requirement, but also because it opens the door for other taxes or other forms of property assessment.

6) Double-referral. This bill has been double-referred to this committee and the Senate Governance and Finance Committee.

Assembly Votes:

Floor: 51-27

L.Gov: 7-1

H&CD: 5-2

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

POSITIONS: (Communicated to the committee before noon on Wednesday,

June 8, 2016.)

SUPPORT:

City of Oakland (co-sponsor)

Non-profit Housing Association of Northern California (co-sponsor)

American Federation of State, County and Municipal Employees (AFSCME)

Burbank Housing Development Corporation

California Apartment Association

California Coalition for Rural Housing

California Housing Consortium

California Housing Partnership Corporation

City of Walnut Creek

Community Housing Opportunities Corporation

East Bay Asian Local Development Corporation

East Bay Developmental Disabilities Legislative Coalition

Equity Community Builders

EveryOne Home

Housing Leadership Council of San Mateo County

MidPen Housing

Northern California Community Loan Fund

Peoples’ Self Help Housing

Sacramento Housing Alliance

San Diego Housing Federation

Sonoma County Board of Supervisors

The Arc and United Cerebral Palsy California Collaboration

OPPOSITION:

Howard Jarvis Taxpayers Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2031

Author:(Bonta and Atkins)

As Amended Ver:March 17, 2016

Majority vote

SUMMARY: Authorizes a city or county that formed a redevelopment agency (RDA) that has received a finding of completion from Department of Finance (DOF), to bond against the property tax revenues it receives as a result of redevelopment dissolution for affordable housing purposes, without voter approval. Specifically, this bill:

1. Defines "affordable housing" to mean a dwelling available for purchase or lease by persons and families who qualify as low-, very low-, extremely low- and moderate income.
2. Defines "distributions of property tax revenues" to mean all additional property tax revenues a city or county is entitled to receive as a result of the dissolution of RDAs.
3. Defines "beneficiary district" to mean an affordable housing special beneficiary district that exists for a limited duration as a distinct local government entity for the purposes of receiving the rejected distribution of property tax revenues of a city or county and providing financial assistance to promote affordable housing within its boundaries.
4. Authorizes a city or county that formed a RDA and is the successor agency that received a finding of completion after dissolving its RDA from DOF to adopt an ordinance or resolution to reject its distribution of property tax revenues as a result of redevelopment dissolution.
5. Provides that once a city or county rejects its distribution of property taxes and it is redirected to a beneficiary district it has no claim or control over it except for its role in governing the beneficiary district.
6. Requires the county auditor-controller upon request to transfer all of a city's or county's rejected property taxes to the beneficiary district.
7. Provides that a beneficiary district can only promote the development of affordable housing within its boundaries.
8. Allows a beneficiary district to promote the development of affordable housing by doing any of the following:
   1. Issuing bonds to be repaid from the property tax revenues directed to the beneficiary district;
   2. Providing financial assistance for the development of affordable housing, including but not limited to, providing loans, grants, and other financial incentives and support;
   3. Taking other actions the board determines will promote the development of affordable housing within its boundaries;
   4. Prohibits a beneficiary district from undertaking any obligation that requires an action after the date it ceases to exist including issuing a bond that requires any repayment of the bond obligation.
9. Requires a beneficiary district to comply with the Ralph M. Brown Act.
10. Provides that when a beneficiary district ceases to exist, its public record will be the property of the city or county that rejected its distribution of property tax proceeds.
11. Provides that beginning when a successor entity receives a finding of completion, there exists within the same geographical boundaries of the jurisdiction of the successor agency a beneficiary district.
12. Provides that a beneficiary district ceases to exist on the 90th calendar day after the date that the county auditor-controller makes the final transfer of distributed property tax revenues to the beneficiary district.
13. Provides that on or after the date a beneficiary district ceases to exist the beneficiary district will no longer have authority to conduct any business include but not limited to taking an action or making any payment, and any funds of the beneficiary district will automatically transfer to the city or county that rejected its distribution of property tax revenues that had been redirected to the beneficiary district.
14. Provides that any legal right of the beneficiary district on or after the date that it ceases to exist, including but not limited to, the right to repayment of a loan made by the beneficiary district is the right of the city or county that created it.
15. Provides that a beneficiary district will be governed by a Board composed of the following five members:
    1. Three members of the city council, if the city council formed the RDA and become the successor agency to the RDA; or
    2. Three members of the county board of supervisors, if the county formed the RDA and become the successor agency to the RDA; and
    3. The treasurer of the city or county that formed the RDA and become the successor agency to the RDA; and
    4. One member of the public who lives within the boundaries of beneficiary district who is appointed by the city or county that formed the RDA and become the successor agency.
16. Provides that the Board members will serve a term of four years from the date of appointment and vacancies on the Board will be filled by the appointing authority for a new four year term.
17. Provides that the Board will select one of its members as chairperson.
18. Provides that Board members will serve without compensation.
19. Provides that the terms of the Board members expire once the beneficiary district ceases to exist.

FISCAL EFFECT: None

COMMENTS:

In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Statewide, redevelopment redirected 12% of property taxes 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, AB 26 X1(Blumenfield), Chapter 5 and AB 27 X1 (Blumenfield), Chapter 6 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 ABX1 26. However, the 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.

When RDAs were dissolved, successor agencies were established to wind down their obligations and responsibilities. Generally, the city or county that formed the RDA serves as the successor agency. Successor agencies are required to receive a "finding of completion" from DOF. In order to receive a finding of completion, a successor agency has to undergo due diligence reviews and make required payments to DOF. Once it receives a finding of completion, a successor agency has additional discretion regarding former agency 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.

RDAs froze the property tax rate at the time they were created and captured any increase in property taxes to pay for their activities. Dissolution redirected those property taxes into a Redevelopment Property Tax Trust Fund (RPTTP) which the county-auditor controller distributes to the taxing entities including cities, counties, and special districts. This bill would allow a city or county that serves as the successor agency to a RDA that has received a finding of completion from DOF, to redirect the property taxes it receives as a result of redevelopment dissolution, also known as "boomerang funds," to a beneficiary district. The boomerang funds would be redirected before they are deposited into the city's or county's general fund. A beneficiary district could bond against the revenues from the boomerang funds, provide loans and grants for an affordable housing development, or take other actions that the board of the beneficiary district determines support the development of affordable housing within its boundaries. Because the property taxes are deposited into the beneficiary district and not into the city's or county's general fund no voter approval is required to allow the affordable housing beneficiary district to bond against the income stream from the ongoing property tax distribution. The geographic boundaries of the affordable housing beneficiary district are limited to the jurisdiction of the city or county that serves as the successor agency. A five member Board made of up three representatives of either the city or county, the treasurer of the city or county, and one member of the public would oversee the activities of a housing beneficiary district. Once the duties of the successor agency are complete and all of the bonds and obligations of the former RDA are paid then the beneficiary district would cease to exist and any money held by the beneficiary district will transfer to the city or county that created it.

Purpose of this bill: According to the author, "the proposal is to give cities and counties the authority to approve issuance of affordable housing bonds to be paid for with any portion of its "net available revenue" without voter approval. The net available revenue is referred to as "boomerang funds" distributed by the county auditor-controller to cities from the Redevelopment Property Tax Trust Fund (RPTTF). There is no fiscal impact to the State's general fund and no property taxes would be diverted from the other taxing entities."

Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0002936

Date of Hearing: May 4, 2016

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Susan Talamantes Eggman, Chair

ABPCA Bill Id:AB 2031 (

Author:Bonta and Atkins) – As Amended Ver:March 17, 2016

SUBJECT: Local government: affordable housing: financing.

SUMMARY: Allows a successor agency to create an affordable housing beneficiary district for the purpose of receiving rejected distributions of property tax revenues and providing financing assistance to promote affordable housing within its boundaries. Specifically, this bill:

1. Defines the following terms:
   1. “Affordable housing” to mean a dwelling available for purchase or lease by persons and families who qualify as low- or moderate-income, very low-income households, or extremely low-income households, as defined;
   2. “Beneficiary district” to mean an affordable housing special beneficiary district that exists for a limited duration as a distinct local governmental entity for the purposes of receiving rejected distributions of property tax revenues and providing financing assistance to promote affordable housing within its boundaries; and,
   3. “Distributions of property tax revenues” means all property tax revenues a city or county would be entitled to receive pursuant to state law regarding the dissolution of RDAs.
2. Specifies that when a successor entity receives a finding of completion pursuant to redevelopment agency (RDA) dissolution law, that there exists, within the same geographical boundaries of the jurisdiction of that successor agency, an affordable housing special beneficiary district (beneficiary district).
3. Allows a city or county that formed a redevelopment agency (RDA) and became the successor agency that received a finding of completion to, by ordinance or resolution, reject its distributions of property tax revenues from the trust fund. Requires that on or after the date that a city or county rejects its distributions of property tax revenues, the city or county shall not have any claim to, or control over, the distributions of property tax revenues it would have otherwise received, the county auditor-controller to transfer all of that distribution of property tax revenues to the beneficiary district.
4. Requires a beneficiary district to only promote the development of affordable housing within its boundaries, and allows the beneficiary district to do this by any of the following:
   1. Issue bonds to be repaid from the property tax revenues directed to the district;
   2. Provide financial assistance for the development of affordable housing, including, but not limited to, providing loans, grants, and other financial incentives and support; and,
   3. Take other actions the board determines will promote the financing of development of affordable housing within its boundaries.
5. Requires a beneficiary district to be governed by a Board composed of the following five members:
   1. Three members of the city council, if a city formed the RDA and became the successor agency that received the finding of completion, or three members of the board of supervisors, if a county formed the RDA and became the successor agency that received the finding of completion. Specifies that the three members shall be appointed by the city council or board of supervisors;
   2. The treasurer of the city or county that formed the RDA and became the successor agency that received the finding of completion; and,
   3. One member of the public who lives within the boundaries of the beneficiary district who is appointed by the city council or county board of supervisors of the city or county that formed the RDA that became the successor agency that received a finding of completion.
6. Requires the Board to elect one of its members as the chairperson.
7. Provides that each member shall serve a term of four years from the date of his or her appointment, and specifies that vacancies on the Board shall be filled by the appointing authority for a new four-year term. Allows a member to be reappointed.
8. Prohibits a Board member from receiving compensation.
9. Prohibits a beneficiary district from undertaking any obligation that requires an action after the date it will cease to exist, including, but not limited to, issuing a bond that requires any repayment of the bond obligation after the date the beneficiary district will cease to exist.
10. Provides that a beneficiary district ceases to exist on the 90^th calendar day after the date the county auditor-controller makes the final transfer of distributed property tax revenues to the beneficiary district. Provides that on and after the date a beneficiary district ceases to exist, that the beneficiary district shall not have the authority to conduct any business, including, but not limited to, taking any action or making any payment, and any funds of the beneficiary district shall automatically transfer to the city or county that rejected its distributions of property tax revenues that were thereafter directed to the district.
11. Provides that the terms of the members of the Board of a beneficiary district shall expire on the date the beneficiary district ceases to exist.
12. Provides that any legal right of the beneficiary district on or after the date the beneficiary district ceases to exist, including, but not limited to, the right to repayment pursuant to a loan made by the beneficiary district, is the right of the city or county that rejected its distributions of property tax revenues that was thereafter directed to the district.
13. Requires a beneficiary district to comply with the Ralph M. Brown Act and the California Public Records Act.
14. Requires a public record of the beneficiary district to be the property of the city or county that rejected its distribution of property tax proceeds, when a beneficiary district ceases to exist.

EXISTING LAW:

1. Dissolves RDAs as of February 1, 2012, and institutes a process for winding down their activities.
2. Requires the Department of Finance (DOF) to issue a finding of completion to the successor agency, within five business days, once the following conditions have been met and verified:
   1. 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,
   2. The successor agency has paid the full amount as determined during the July True-up process; or,
   3. 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.
3. Allows the successor agency, upon receiving the finding of completion, to:
   1. Retain dissolved RDA assets;
   2. 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,
   3. Utilize proceeds derived from bonds issued prior to January 1, 2011, in a manner consistent with the original bond covenants.
4. Requires, after DOF issues a finding of completion, the 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: None

COMMENTS:

1. Bill Summary. This bill would allow a city or county that serves as the successor agency to an RDA that has received a finding of completion from DOF, to redirect the property taxes it receives as a result of redevelopment dissolution, also known as "boomerang funds," to a beneficiary district. The boomerang funds would be redirected before they are deposited into the city's or county's general fund. A beneficiary district could bond against the revenues from the boomerang funds, provide loans and grants for an affordable housing development, and take other actions that the Board of the beneficiary district determines support the development of affordable housing within its boundaries.

Because the property taxes are deposited into the beneficiary district and not into the city's or county's general fund, no voter approval is required to allow the affordable housing beneficiary district to bond against the income stream from the ongoing property tax distribution. The geographic boundaries of the affordable housing beneficiary district are limited to the jurisdiction of the city or county that serves as the successor agency. A five- member Board made up of three representatives of either the city or county, the treasurer of the city or county, and one member of the public would oversee the activities of a housing beneficiary district. Once the duties of the successor agency are complete and all of the bonds and obligations of the former RDA are paid, then the beneficiary district would cease to exist and any money held by the beneficiary district will transfer to the city or county that created it.

This bill is sponsored by the City of Oakland.

1. Author’s Statement. According to the author, “The proposal is to give cities and counties the authority to approve issuance of affordable housing bonds to be paid for with any portion of its ‘net available revenue’ without voter approval. The net available revenue is referred to as ‘boomerang funds’ distributed by the county auditor-controller to cities from the Redevelopment Property Tax Trust Fund (RPTTF). There is no fiscal impact to the State's general fund and no property taxes would be diverted from the other taxing entities."
2. Background. When RDAs were dissolved, successor agencies were established to wind down their obligations and responsibilities. Generally, the city or county that formed the RDA serves as the successor agency. Successor agencies are required to receive a "finding of completion" from DOF. In order to receive a finding of completion, a successor agency has to undergo due diligence reviews and make required payments to DOF. Once it receives a finding of completion, a successor agency has additional discretion regarding former agency 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.

RDAs froze the property tax rate at the time they were created and captured any increase in property taxes to pay for their activities. Dissolution redirected those property taxes into an RPTTP, which the county-auditor controller distributes to the taxing entities, including cities, counties, and special districts.

1. Arguments in Support. Supporters argue that this bill will authorize successor agencies to direct the incoming allocation of property tax revenues to an affordable housing special beneficiary district, a creative solution that will greatly help restore affordable housing funding lost when over 400 RDAs were eliminated in 2012.
2. Arguments in Opposition. Howard Jarvis Taxpayers Association argues that this bill sets a bad precedent, not only by not requiring a vote, but also because it opens the door for a scheme like this to occur with taxes or other forms of property assessment.
3. Double-Referral. This bill was heard by the Housing and Community Development Committee on April 27, 2013, where it passed with a 5-2 vote.

REGISTERED SUPPORT / OPPOSITION:

Support

City of Oakland [SPONSOR]

California Apartment Association

Burbank Housing Development Corporation

City of Walnut Creek

Community Housing Opportunities Corporation

East Bay Asian Local Development Corporation

Equity Community Builders

EveryOne Home

Housing Leadership Council of San Mateo County

MidPen Housing Corporation

Non-profit Housing Association of Northern California

Northern California Community Loan Fund

San Diego Housing Federation

Sonoma County

Opposition

Howard Jarvis Taxpayers Association

Analysis Prepared by: Debbie Michel / L. GOV. / (916) 319-3958

Date of Hearing: April 27, 2016

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

ABPCA Bill Id:AB 2031 (

Author:Bonta) – As Amended Ver:March 17, 2016

SUBJECT: Local government: affordable housing: financing

SUMMARY: Authorizes a city or county that formed a redevelopment agency (RDA) that has received a finding of completion from Department of Finance (DOF), to bond against the property tax revenues it receives as a result of redevelopment dissolution for affordable housing purposes, without voter approval. Specifically, this bill:

1. Defines "affordable housing" to mean a dwelling available for purchase or lease by persons and families who qualify as low-, very low-, extremely low- and moderate income.
2. Defines "distributions of property tax revenues" to mean all additional property tax revenues a city or county is entitled to receive as a result of the dissolution of RDAS.
3. Defines "beneficiary district" to mean an affordable housing special beneficiary district that exists for a limited duration as a distinct local government entity for the purposes of receiving the rejected distribution of property tax revenues of a city or county and providing financial assistance to promote affordable housing within its boundaries.
4. Authorizes a city or county that formed a RDA and is the successor agency that received a finding of completion after dissolving its RDA from DOF to adopt an ordinance or resolution to reject its distribution of property tax revenues as a result of redevelopment dissolution.
5. Provides that once a city or county rejects its distribution of property taxes and it is redirected to a beneficiary district it has no claim or control over it except for its role in governing the beneficiary district.
6. Requires the county auditor-controller upon request to transfer all of a city's or county's rejected property taxes to the beneficiary district.
7. Provides that a beneficiary district can only promote the development of affordable housing within its boundaries.
8. Allows a beneficiary district to promote the development of affordable housing by doing any of the following:
9. Issuing bonds to be repaid from the property tax revenues directed to the beneficiary district;
10. Providing financial assistance for the development of affordable housing, including but not limited to, providing loans, grants, and other financial incentives and support;
11. Taking other actions the board determines will promote the development of affordable housing within its boundaries;
12. Prohibits a beneficiary district from undertaking any obligation that requires an action after the date it ceases to exist including issuing a bond that requires any repayment of the bond obligation.
13. Requires a beneficiary district to comply with the Ralph M. Brown Act.
14. Provide that when a beneficiary district ceases to exist, its public record will be the property of the city or county that rejected its distribution of property tax proceeds.
15. Provides that beginning when a successor entity receives a finding of completion, there exists within the same geographical boundaries of the jurisdiction of the successor agency a beneficiary district.
16. Provides that a beneficiary district ceases to exist on the 90^th calendar day after the date that the county auditor-controller makes the final transfer of distributed property tax revenues to the beneficiary district.
17. Provides that on or after the date a beneficiary district ceases to exist the beneficiary district will no longer have authority to conduct any business include but not limited to taking an action or making any payment, and any funds of the beneficiary district will automatically transfer to the city or county that rejected its distribution of property tax revenues that had been redirected to the beneficiary district.
18. Provides that any legal right of the beneficiary district on or after the date that it ceases to exist, including but not limited to, the right to repayment of a loan made by the beneficiary district is the right of the city or county that created it.
19. Provides that a beneficiary district will be governed by a Board composed of the following five members:
20. Three members of the city council, if the city council formed the RDA and become the successor agency to the RDA; or
21. Three members of the county board of supervisors, if the county formed the RDA and become the successor agency to the RDA; and
22. The treasurer of the city or county that formed the RDA and become the successor agency to the RDA; and
23. One member of the public who lives within the boundaries of beneficiary district who is appointed by the city or county that formed the RDA and become the successor agency.
24. Provides that the Board members will serve a term of four years from the date of appointment and vacancies on the Board will be filled by the appointing authority for a new four year term.
25. Provides that the Board will select one of its members as chairperson.
26. Provides that Board members will serve without compensation.
27. Provides that the terms of the Board members expire once the beneficiary district ceases to exist.

EXISTING LAW:

1. Dissolves RDAs as of February 1, 2012 and institutes a process for winding down their activities.
2. 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:
   1. 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,
   2. The successor agency has paid the full amount as determined during the July True-up process; or,
   3. 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.
3. Allows the successor agency, upon receiving the finding of completion, to:
   1. Retain dissolved RDA assets;
   2. 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,
   3. Utilize proceeds derived from bonds issued prior to January 1, 2011, in a manner consistent with the original bond covenants.
4. Requires, after DOF issues a finding of completion, the 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: None.

COMMENTS:

In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Statewide, redevelopment redirected 12% of property taxes 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, ABX1 26 (Blumenfield), Chapter 5 and ABX1 27 (Blumenfield), Chapter 6 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 ABX1 26. However, the Court did grant CRA's petition with respect to ABX1 27. As a result, all RDAs were required to dissolve as of February 1, 2012.

When RDAs were dissolved, successor agencies were established to wind down their obligations and responsibilities. Generally, the city or county that formed the RDA serves as the successor agency. Successor agencies are required to receive a "finding of completion" from DOF. In order to receive a finding of completion, a successor agency has to undergo due diligence reviews and make required payments to DOF. Once it receives a finding of completion, a successor agency has additional discretion regarding former agency 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.

RDAs froze the property tax rate at the time they were created and captured any increase in property taxes to pay for their activities. Dissolution redirected those property taxes into a Redevelopment Property Tax Trust Fund (RPTTP) which the county-auditor controller distributes to the taxing entities including cities, counties, and special districts. This bill would allow a city or county that serves as the successor agency to a RDA that has received a finding of completion from DOF, to redirect the property taxes it receives as a result of redevelopment dissolution, also known as "boomerang funds," to a beneficiary district. The boomerang funds would be redirected before they are deposited into the city's or county's general fund. A beneficiary district could bond against the revenues from the boomerang funds, provide loans and grants for an affordable housing development, or take other actions that the board of the beneficiary district determines support the development of affordable housing within its boundaries. Because the property taxes are deposited into the beneficiary district and not into the city's or county's general fund no voter approval is required to allow the affordable housing beneficiary district to bond against the income stream from the ongoing property tax distribution. The geographic boundaries of the affordable housing beneficiary district are limited to the jurisdiction of the city or county that serves as the successor agency. A five member Board made of up three representatives of either the city or county, the treasurer of the city or county, and one member of the public would oversee the activities of a housing beneficiary district. Once the duties of the successor agency are complete and all of the bonds and obligations of the former RDA are paid then the beneficiary district would cease to exist and any money held by the beneficiary district will transfer to the city or county that created it.

Purpose of this bill: According to the author, "the proposal is to give cities and counties the authority to approve issuance of affordable housing bonds to be paid for with any portion of its “net available revenue” without voter approval. The net available revenue is referred to as "boomerang funds" distributed by the county auditor-controller to cities from the Redevelopment Property Tax Trust Fund (RPTTF). There is no fiscal impact to the State's general fund and no property taxes would be diverted from the other taxing entities."

Arguments in support: According to supporters, "since the dissolution of redevelopment agencies no permanent source of funds from the State has been made available to support the construction of much need affordable housing. What local governments need, is a stable ongoing source of funding in order to build and support the construction of affordable and workforce housing immediately. This bill offers a mechanism for meeting California's high demand for affordable housing development by allowing cities to bond against the revenue stream without raising taxes or diverting property taxes from other taxing entities and there is no fiscal impact to the State's general fund."

Double referred: If AB 2031 passes this committee, the bill will be referred to the Committee on Local Government.

REGISTERED SUPPORT / OPPOSITION:

Support

City of Oakland (Sponsor)

Non-profit Housing Association of California (Co- Sponsor)

American Federation of State, County and Municipal Employees

Burbank Housing Development Corporation

California Apartment Association

California Coalition for Rural Housing

California Housing Consortium

California Housing Partnership Corporation

City of Walnut Creek

Community Housing Opportunities Corporation

East Bay Asian Local Development Corporation

Equity Community Builders

EveryOne Home

Housing Leadership Council of San Mateo County

MidPen Housing

Northern California Community Loan Fund

San Diego Housing Federation

Sonoma County Board of Supervisors

Opposition

Howard Jarvis Taxpayers Association

Analysis Prepared by: Lisa Engel / H. & C.D. / (961) 319-2085