HomeMy WebLinkAbout03 INFORMATION ON ASSEMBLY BILL 1484Agenda Item 3
AGENDA REPORT
ersieht Board of the Successor Agency to the
Tusjin Community Redevelopment Agency
M,A
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No action necessary.
Attached is information regarding recently adopted Assembly Bill 1484 which was
signed by the Governor on June 27, 2012. Attached is also a copy of an analysis
prepared by Brent Hawkins (for the Community Redevelopment Association Board of
Directors) as well as background reports on the bill that went to the Senate Rules
Committee and Senate Committee on Budget and Fiscal Review.
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Christine Shingl6fdii
Assistant Executive Director
OVERVIEW OF AB 1484
AB 1484 is the budget trailer bill that implements clean -up of AB1X 26 and related
redevelopment law changes. It is long (in excess of 75 pages); complex, poorly drafted (in most
cases) and we have had less than 36 hours to review it. Consequently, this overview can only
summarize the most significant aspects of the bill and does not pretend to be a comprehensive
description. At this writing, the bill has been passed by the Senate and Assembly and sent to the
Governor for signature.
I. Reconciliation, Clawback and Safe Harbor
One of the most significant features of the bill is an attempt to establish a process that
would identify current successor agency assets not needed to pay enforceable obligations and
transfer them to county auditors for distribution to taxing entities in the 2012 -13 fiscal year. In
return for satisfactorily completing this process, successor agencies would get some relief on
issues such as expenditure of unencumbered bond proceeds and repayment of city /agency loans
(the so- called "safe harbor "). While this concept has some appeal, the process established by
AB 1484 is unworkable and the safe harbor would in fact provide little meaningful relief to
successor agencies.
A. Reconciliation
Section 17 of the bill adds Section 34179.5 which requires successor agencies to employ
a licensed accountant approved by the county auditor - controller to conduct a review to determine
the unobligated balances held by the successor agency and available for transfer to taxing
entities. Alternatively, an audit provided by the county auditor - controller that provides the
required information may be used to comply with this section with the concurrence of the
oversight board. The bill does not say which party has the right to exercise the option.
The successor agency must submit the completed review to the oversight board, the
county auditor - controller, the State Controller and the Department of Finance ( "DOF") not later
than October 1, 2012, for the low and moderate income housing fund, and no later than
December 15, 2012, for all other funds. The oversight board must hold a public hearing on the
report and review, approve and transmit to DOF and the county auditor- controller its
determination of the amount of cash and cash equivalents available for disbursement to taxing
entities by October 15, 2012, for the low and moderate income housing fund, and by January 15,
2013, for all other funds.
DOF reviews the report and may modify any amounts based on its own review. DOF is
required to complete its review no later than November 9, 2012, for the low and moderate
income housing fund, and April 1, 2013, for all other funds. The successor agency may request
to meet and confer with DOF to resolve disputes regarding DOF's revisions or determinations.
DOF must either confirm or modify its decision within 30 days after receipt of a request to meet
and confer.
The successor agency must transmit to the county auditor - controller the amount of funds
determined by DOF within 5 working days of receipt of the determination by DOF or completion
of the meet and confer process. Upon full payment of the required amounts, DOF must issue a
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"finding of completion." Issuance of this finding of completion entitles the successor agency to
the benefits of the safe harbor provisions discussed in paragraph C., below.
Complying with these reconciliation provisions will require the preparation of a
long -term cash flow projection. Preparation of the projection will likely take longer than the bill
allows. Moreover, it will only be a projection. Letting go of funds in hand that may be needed
- in the future to pay enforceable obligations on the basis of a projection which could be wrong in
its assumptions or made obsolete by subsequent events could result in a future inability to pay
those enforceable obligations.
B. Clawback
If the successor agency fails to remit the amount determined by DOF within the time
specified, several optional remedies are provided to recover the funds. These include an offset of
sales and property taxes payable to the host city or county. We believe the clawback provisions
AB 1484 violate provisions of Proposition IA which limit the Legislature's authority to modify
the manner in which property taxes are allocated or change the method of distribution of sales
taxes.
C. Safe Harbor
Section 35 of the bill adds what are referred to as "post- compliance provisions," which
apply to successor agencies that have received a finding of completion by DOF. These include:
1. The ability to retain real property, but only after approval of a long range property
management plan by DOF.
2. Loan agreements between the city and the former redevelopment agency will be
deemed enforceable obligations, if approved by the oversight board, provided no repayments can
be made prior to the 2013 -14 fiscal year and the amount of repayments would be limited to an
amount equal to one -half the difference between the amount of property taxes from the
Redevelopment Property Tax Trust Fund distributed to taxing agencies in the applicable fiscal
year and the amount of such taxes distributed to taxing agencies in fiscal year 2012 -13. In cases
where the successor agency is receiving all property taxes to pay enforceable obligations, the
repayment would be $0. In many other cases, the amount of the repayment would be severely
restricted. Repayments would have to be used first to repay amounts borrowed from the low and
moderate income housing fund and 20% of all repayments would have to be transferred to the
low and moderate income housing asset fund. Few agencies would benefit from these
provisions.
3. Unencumbered proceeds from bonds issued prior to January 1, 2011, could be
used for the purposes for which they were sold. The fate of unencumbered bond proceeds issued
after January 1, 2011, is still unknown.
H. Pass - through Payment True -up for FY 2011 -12
Section 26 of the bill adds Section 34183.5(a) to the Health and Safety Code describing a
procedure for "truing -up" pass- through payments due for the 2011 -12 fiscal year. If a
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redevelopment agency or successor agency did not pay any portion of a pass- through payment
due in 2011 -12 fiscal year (including both statutory and contractual pass - through payments) and
the county auditor - controller did not make such payments for the redevelopment
agency /successor agency, the county auditor - controller is required to make the payments to
taxing agencies and reduce the payments to successor agencies in the next allocation of property
taxes from the Redevelopment Property Tax Trust Fund. If the amount of available property
taxes is insufficient, the reductions may be continued in subsequent distributions from the
Redevelopment Property Tax Trust Fund.
If a redevelopment agency or successor agency did not make a pass- through payment due
in fiscal year 2011 -12, but the county auditor - controller did make the payment to taxing entities,
then the county auditor - controller is required to deduct from the next allocation of property taxes
to the successor agency the amount of the payment made on behalf of the redevelopment
agency /successor agency, not to exceed one -half of the amount of the pass - through payments for
2011 -12. If the amount of available property taxes is not sufficient to make the required
deduction, then the county auditor - controller may make deductions from property taxes that
would otherwise be allocated to the successor agency in subsequent allocations.
III. Property Tax Distribution True -up for January 1, 2012 — June 30, 2012.
Section 26 of the bill also adds Section 34183.5(b) to the Health and Safety Code
describing a procedure for recovering payments which should have been, but were not, made to
taxing entities from the Redevelopment Property Tax Trust Fund for the period January 1, 2012
to June 30, 2012. According to the bill, county auditor - controllers should have deducted from
the June 1, 2012 distribution of property taxes to successor agencies an amount equivalent to the
amount each taxing entity was entitled to receive for the period January 1, 2012 to June 30, 2012.
By July 9, 2012, county auditor - controllers must determine the amount, if any, that is owed by
each successor agency to taxing entities and send a demand for payment. Successor agencies are
required to make the payment by July 12, 2012 and county auditor- controllers are required to
distribute the payments to taxing agencies by July 16, 2012. If a successor agency fails to make
the payment demanded by July 12, DOF or any taxing entity can file a petition for writ of
mandate in Sacramento County Superior Court to compel the payment. Successor agencies
failing to make timely payment are subject to a penalty of 10% of the amount owed to the taxing
entity, plus 1.5% of the amount owed to taxing entities for each month the payments are not
made. The host city or county is subject to a further penalty of the same amount. A successor
agency that does not timely pay the amount required by this section shall not pay any obligations
other than debt service on bonds until full payment is made to the county auditor- controller. The
host city or county of a successor agency failing to make timely payments under this section
shall not receive the distribution of sales taxes scheduled for July 18, 2012, or any subsequent
distribution until the payment to the taxing entities is made.
Not only do these provisions appear to be in violation of Proposition IA, they conflict
with other sections of the bill which declare that successor agencies are separate public agencies
and the host city or county is not responsible financially for the actions of the successor agency
or former redevelopment agency. By virtue of the extremely short time frame and draconian
penalties, these provisions will be of immediate concern to affected successor agencies.
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IV. Bond Refunding
Section 13 of AB 1484 adds Section 34177.5 to the Health and Safety Code dealing with
refunding of bonds. In general, it permits successor agencies to refund bonds in order to:
(1) Provide savings to the successor agency, provided that the total interest cost to
maturity on the refunding bonds does not exceed the total remaining interest cost to maturity on
the bonds to be refunded, plus the remaining principal of the bonds to be refunded, and the
principal amount of the refunding bonds does not exceed the amount required to defease the
refunded bonds, establish customary debt service reserves and pay costs of issuance;
(2) Finance debt service spikes, including balloon maturities, provided that the
existing indebtedness is not accelerated, except to the extent necessary to achieve substantially
level debt service, and the principal amount of the bonds does not exceed the amount required to
service debt service spikes, including debt service reserves and costs of issuance;
(3) Amend an existing enforceable obligation under which the successor agency is
obligated to reimburse a political subdivision of the state for payment of debt service on a bond
of the political subdivision, or to pay all or a portion of debt service on the bond to provide
savings to the successor agency, subject to the same limitations noted above.
In addition, successor agencies are authorized to issue new bonds to make payments
under enforceable obligations when the enforceable obligations include the irrevocable pledge of
property taxes which were tax increment prior to AB 26.
These provisions were drafted by bond counsel in consultation with the League of
California Cities and are generally workable.
V. Housing Assets
Section 9 of the bill amends Health and Safety Code Section 34176 dealing with retention
of housing assets of the former redevelopment agency. It provides that if a city or county retains
the authority to perform housing functions, it also succeeds to the "housing assets," as defined.
Housing assets include real property acquired for affordable housing purposes, any funds
encumbered by an enforceable obligation to build or acquire low and moderate income housing
and receivables such as repayments of loans or grants from the low and moderate income
housing fund, including residual receipts payments from developers. The disposition of
mixed -use property including affordable housing is left to the oversight board.
The entity assuming the housing functions may expend unencumbered bond proceeds
from housing bonds issued prior to January 1, 2011.
VI. Pass - through "Haircuts"
Ambiguities in AB 26 have led to an ongoing dispute about pass - through payments to
taxing entities. Health and Safety Code Section 34183 requires the full amount of pass - through
payments to be made from the Redevelopment Property Tax Trust Fund. However, Section
34188 limits the amount of pass - through payments to taxing entities to their respective AB 8
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share. Calculating the payments pursuant to Section 34183 generally results in greater payments
to counties. Calculating the payments pursuant to Section 34188 generally results in greater
payments to cities. A committee of city attorneys has opined that following Section 34188 is
necessary to prevent constitutional violations. Section 36 of the bill includes a legislative
declaration that the amount of pass - through payments be determined pursuant to Section 34183.
VII. Clarification of Administrative Cost Allowance
Section 6 of the bill amends Health and Safety Code Section 34171 defining the meaning
of "administrative cost allowance." The cap on administrative cost allowance is amended to 5%
of the property taxes allocated to the successor agency on the ROPS covering the period
January 1, 21012, through June 30 , 2012, and 3% of the property tax allocated to the
Redevelopment Obligation Retirement Fund for each fiscal year thereafter, but not less than
$250,000, unless reduced by the oversight board. The administrative cost allowance excludes
administrative costs that can be paid from bond proceeds or from sources other than property tax,
litigation costs related to assets or obligations, settlements and judgments, and the cost of
maintaining assets prior to disposition. Employee costs associated with work on specific project
implementation activity is also not considered part of the administrative cost allowance.
Costs incurred to fulfill collective bargaining agreements for layoffs or terminations of
city employees who performed work on behalf of the former redevelopment agency are
considered enforceable obligations payable from property taxes.
VIII. Clarification on Polanco Act Authority
Section 7 of the bill clarifies the authority of the successor agency to carry out activity
under the Polanco Act. The successor agency succeeds to any existing cleanup plans and
liability limits, but may not initiate new activity under the Polanco Act.
IX. ROPS for First Half of 2013
Section I1 of the bill amends Health and Safety Code Section 34177 to provide specific
information relative to the ROPS for January 1, 2013 through June 30, 2013. The successor
agency must submit the ROPS to the oversight board no later than September 1, 2012.
DOF must make its review of the approved ROPS no later than 45 days after it is submitted.
Within 5 business days after DOF's determination, a successor agency may request additional
review by DOF and an opportunity to meet and confer on disputed items. DOF must notify the
successor agency of the outcome of its review at least 15 days before the date of property tax
distribution. If a successor agency does not timely submit the ROPS, the host city or county is
subject to a $10,000 fine for every day the ROPS is late and the administrative cost allowance for
the successor agency is reduced by 25 %.
County auditor - controllers must distribute funds from the Redevelopment Property Tax
Trust Fund in accordance with the DOF determination and may not withhold or segregate funds
for disputed items, unless required by a court order.
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SENATE RULES COMMITTEE AB 1484
Office of Senate Floor Analyses
1020 N Street, Suite 524
(916) 651-1520 Fax: (916) 327-4478
THIRD READING
Bill No: AB 1484
Author: Assembly Budget Committee
Amended: 6/25/12 in Senate
Vote: 21
ASSEMBLY FLOOR: Not relevant
SUBJECT: Budget Act of 2012: Redevelopment
SOURCE: Author
DIGEST: This bill addresses numerous issues related to the dissolution of
redevelopment agencies (RDAs) and related matters necessary for the
implementation of the Budget Act of 2012. The bill contains measures
necessary to achieve GF solutions of approximately $3.1 billion in the
budget year.
ANALYSIS: As part of the 2011-12 Budget agreement, the Legislature
took action to eliminate RDAs in AB 26 X I (Blumenfield), Chapter 5,
Statutes of 2011-12 First Extraordinary Session, and institute a new
alternative voluntary redevelopment program in AB 27 X1, (Blumenfield),
Chapter 6, Statutes of 2011-12 First Extraordinary Session. By virtue of AB
27 X1, RDAs could avoid elimination if the communities that formed them
agreed to participate in the alternative voluntary redevelopment program that
called for them to remit annual payments to K -12 education. The California
Redevelopment Association challenged the constitutionality of both pieces
of legislation. After an expedited review, the California Supreme Court
released its ruling December 29, 2011, holding that both AB 26 X1 and AB
27 X1 were invalid. As a result, RDAs were dissolved as of February 1,
2012, with their affairs to be resolved by successor agencies (SAs),
including the disposal of former RDA assets. Under current law, the
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elimination of RDAs will result in property tax revenues being used to pay
required payments on existing bonds and other obligations, make pass-
through payments to local governments, with remaining property tax
revenues to be allocated to cities, counties, special districts and school and
community college districts. The budget assumes that approximately $1.7
billion will be received by K -14 education and serve to offset the state's Prop
98 General Fund obligation, with an additional $1.4 billion to be received
from freed-up former RDA cash and cash-equivalent assets during the
budget year.
This bill is the redevelopment trailer bill for the 2012-13 Budget. It clarifies
certain matters associated with the dissolution of RDAs and addresses
substantive issues related to administrative processes, affordable housing
activities, repayment of loans from communities, use of existing bond
proceeds, and the disposition or retention of former RDA assets. In addition,
the bill includes a variety of measures designed to enhance compliance with
current law. The bill contains the following provisions:
1. Properly Assets, Loans and Bond Proceeds. The legislation allows SAs
that have received a "finding of completion" (FOC) from the Department
of Finance (DOF) additional discretion regarding former RDA real
property assets, loan repayments to the local government community that
formed the RDA (RDA communities) and use of proceeds from bonds
issued by the former RDA. The FOC requires that amounts due with
respect to cash and cash-equivalent assets, property tax allocations and
pass-through payment amounts are paid, as discussed below. The FOC is
an indication that all amounts determined to be due from the former RDA
or the SA have been paid and satisfied. SAs in receipt of a FOC will be
allowed to:
A. Retain non-governmental physical assets in a separate trust until DOF
has approved a long-range property management plan. The plan must
be submitted to the oversight board (OB) and DOF no more than six
months after the FOC has been issued and be based on an inventory of
assets including: purpose of acquisition; legal description; estimate of
current value; estimate of derived annual income; environmental
history; potential transit-related use; and history of development
proposals. The plan must also address the use or disposition of all the
properties in the trust, including: retention for future development;
sale of property; or use of property to fulfill an enforceable obligation
(EO).
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B. Include as EOs legitimate loans between the former RDA and the
RDA community, subject to approval of the OB. Interest on the loan
would be calculated at the Local Agency Investment rate, repaid
beginning 2013-14 over a reasonable number of years, with
repayment limited to amount equal to half the growth over the 2012-
13 property tax allocated to local governments. These repayments
would be subordinated to loan repayments to the Low and Moderate
Income Housing Fund (LMIHF) and subject to a 20 percent set-aside
for affordable housing.
C. Use certain existing proceeds stemming from bonds issued by the
former RDA on or before December 31, 2010 for purposes for which
the bonds were sold. If remaining bond proceeds cannot be spent in a
manner consistent with the bond covenant,, the proceeds would be
used to defease the bond.
2. Bond Issuance. The legislation refines the circumstances under which
refunding or other types of refinancing bonds to be issued by the SA
would be allowed. These refinements include limitations and restrictions
regarding: principal amount of debt; payment acceleration or
restructuring; total interest costs; and amount of property taxes pledged
as security. The bill states that certain bond issuances may be subject to
local government approval or agreements regarding subordination and
are subject to OB approval and review by DOF. Under the legislation,
SAs may seek a waiver from DOF of the two-year statute of limitations
that would generally apply.
3. Housing Successor Assets. The bill requires that a listing of housing
assets be submitted to DOF by August 1, 2012, with such assets to
include those transferred between February 1, 2012 and the submission
date of the listing. The bill requires that DOF review and object to any
asset or transfer, with any objections potentially subject to a meet and
confer resolution process. Assets transferred to the housing successor
entity are to be used for affordable housing activities, while disallowed
assets would go to the SA for disposal or retention pursuant to an
approved property management plan. The bill indicates that housing
assets includes:
A. Real and personal property acquired for low and moderate income
housing with any source of funds.
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B. Funds encumbered by an enforceable obligation to build or acquire
low and moderate income housing.
C. Loans or grant receivables funded from the LMIFIF from homebuyers,
homeowners, developers, or other parties.
D. Funds derived from rents or operation of properties acquired for low
and moderate income housing purposes by other parties financed with
any source of funds.
E. Streams of rents or other payments from low and moderate income
housing financed with any source of funds.
F. Repayments of loans or deferrals owed to the LMIHF .
G. Certain other properties deemed at the OBs discretion to be housing
assets,, such as mixed use developments that contribute to community
value or benefit local governments.
4. Housing Fund Loans and Bonds. The bill allows repayment of loans
made from the LMII-IF, which repayments could begin in 2013-14, but
would be limited to one-half of the annual growth over the 2012-13 level
in property taxes distributed to local governments. These repayments
would take priority over loan repayments to RDA communities (20
percent of those latter loan repayments are to be set aside for affordable
housing activities). The housing successor may use certain bond
proceeds derived from bonds issued before January 1, 2011, and secured
by the LMH-1F, for affordable housing projects.
5. Validation Actions. Under the legislation, the two-year time limit for
validation actions related to findings determinations of a former RDA,
redevelopment bonds and similar financings, and various related
redevelopment plans and efforts, would be tolled until DOF has issued a
FOC. The two-year limit would not apply once the FOC has been issued
by DOF.
6. Assets and Transfers. The legislation directs the Controller to examine
asset transfers that occurred after January 31, 2012. The bill directs each
SA to retain a licensed accountant to conduct a due diligence review
(DDR), or arrange for an audit by the county-auditor controller, of
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a
unobligated cash or cash equivalent balances that would be available for
transfer to local governments. The review must include value of assets
previously transferred from either the former RDA or the SA and the
entity to which such assets were transferred. DOF may adjust amounts
available for distribution to local governments and must provide an
explanation for any adjustment. The SA may request a meet and confer
resolution process for any disputed amounts. The SA is required to
transfer determined amounts to the county auditor-controller and report
such amounts to DOF. Assets identified for transfer but not transferred
could be subject to offset in an amount equivalent to asset value (as
discussed further below). The DDR must:
A. Reconcile assets, balances and liabilities of the SA with amounts
previously reported to the Controller.
B. Specify total funds, including the LMIHF, identified for distribution
to local governments after subtracting restricted amounts and non-
cash items.
C. Indicate the asset sum available for distribution to local governments.
D. Be submitted to the OB, the county auditor-controller and DOF for
review.
7. Property Tax Allocations. The bill specifies that if the former RDA or
SA did not pay property tax or certain pass-through payments due to
local governments for the 2011-12 fiscal year, or these amounts were
not remitted by the county auditor controller, such amounts will be
offset (as discussed further below) through future reductions in property
tax allocations, from available SA reserves or other funds, by
reductions in sales taxes allocable to the county, or by other means as
appropriate. The bill requires the county auditor-controller to provide a
report to DOF for each SA regarding the distribution that includes the
total funds available for allocation, the pass-through amounts, the
amounts distributed to SAs, and the amounts distributed to local
governments. The bill makes no changes in the current treatment of
pass-through amounts, and expresses the intent that full payment of
pass-through amounts are to be made.
8. Offsets for Unpaid Amounts. Under the bill, if amounts due to local
governments pursuant to the DDR, prior property tax allocations, and
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pass-through payments are not remitted, these amounts may be
recovered, as appropriate, by actions directed to the entity to which the
funds were transferred, the RDA community or the SA. These actions
could include an offset of either sales and use tax or property tax
allocations, or legal actions against any third party in receipt of the
funds. Offsets amounts found to be unwarranted by a court would
result in a reimbursement of that amount or a reversal of the offset, and
a penalty imposed on the state.
9. Successor Agencies. The bill clarifies that SAs are local public entities
separate from the RDA community, and which succeed to the
organizational status of the former RDA but without redevelopment
powers except those related to and necessary for the payment of EOs.
Under the bill, SAs are required to provide an annual post-audit of SA
financial transactions, and when all RDA debt is retired, dispose of all
assets, end pass-through payments and terminate. For SAs that do not
have a FOC from DOF, assets are to be disposed of with proceeds
benefiting local governments.
10. Oversight Boards. The bill clarifies OB membership qualifications of
the representative of the former employees of the RDA. It provides that
OB members are protected by the immunities applicable to public
entities and actions are to be taken by resolution. The bill allows OBs
to contract for administrative support and specifies that OBs cannot
reestablish loan agreements between the SA and community.
11. Polanco Act Provisions. The legislation provides that existing clean-up
plans and liability limits authorized under the Polanco Redevelopment
Act shall be transferred to the SA and may be transferred to the
successor housing entity at the respective entity's request.
12. RDA Communities. The bill would allow RDA communities that
elected not to be the SA to opt back in at a later date. It allows RDA
communities to grant loans to the SA for certain costs and be repaid out
of administrative costs or the property tax increment, upon approval of
the OB. In addition, the bill provides that RDA communities may use
the land use plans and functions of the RDA, provided that no new
project areas or expanded boundaries of project areas are created or
increase the amount of obligated property tax results.
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13. Administrative Costs. The bill clarifies that the five percent limit on
administrative costs is based initially on the property tax allocated for
the Recognized Obligation Payment Schedule (ROPS) and allows the
OB to reduce this amount upon SA approval. In addition,
administrative costs would exclude certain litigation expenses and
expenses related to employees costs associated with project specific
activities.
14. Enforceable Obligations. The bill allows for required bond reserves to
be included as EOs, along with costs associated with collective
bargaining agreements for layoffs or terminations, the transfer of
employees to the housing successor entity, and repayments of loans
from the LMIBF. It also specifies that once funding for an EO is
deleted or reduced by DOF, the funding may not be restored except as
agreed to through the meet and confer resolution process or pursuant to
court order. The bill allows SAs to petition DOF to provide written
confirmation that its determination regarding an enforceable obligation
is final and conclusive.
15. ROPS Timing and Reporting Issues. The bill provides for certain
changes regarding filing and reporting requirements for ROPs,
including: allowing SAs to amend the initial Enforceable Obligation
Payment Schedule (EOPS) to provide for continued payment of EOs
until the ROPS is approved by the OB and DOF; requiring the
submission by SAs of each ROPS to the county administrative officer,
county auditor-controller, and DOF at the same time it is submitted to
the OB; specifying ROPS for the January 1, 2012 through June 30,
2012 period are to include payments made or to be made by the former
RDA and SA from January 12012 and June 30, 2012; and directing
SAs to submit ROPS for the January 1, 2013 through June 30, 2013
period by September 1, 2012, and to submit the OB-approved ROPS for
the July 1, 2013 through December 31, 2013 to DOF and county
auditor-controller 90 days before the property tax distribution. Under
the bill, DOF is provided 45 days to make its determination of the EOs
on the ROPS and SAs are given the ability to request additional review
and a meet and confer resolution process with five days.
16. Other ROPS Issues. The bill specifies, if an SA that does not submit
ROPS by the deadlines, it may be fined or have its administrative cost
allowance reduced and DOF may direct the county-auditor controller
withhold amounts for payments on EOs. SAs must submit a copy of
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the ROPS to DOF in a manner provided by DOF. The bill indicates
that if DOF reviews and eliminates or modifies any item approved by
the OB, DOF shall provide notice to the SA and the county auditor —
controller as to the reasons for the action.
17. Severability. The bill states that if any provision of the act is held
invalid, the invalidity shall not affect other provisions of the act which
can be given effect without the invalid provision. Thus, provisions of
the act are severable.
18. Appropriation. The bill appropriates $22 million from the General
Fund for allocation by the Director of Finance, including an amount of
up to $2 million for allocation by the Administrative Office of the
Courts to the Superior Court of California, Sacramento. Allocation of
funds by the Director of Finance shall be effective no sooner than 30
days following after the director notifies the Joint Legislative Budget
Committee.
Comments
According to the Senate Budget and Fiscal Review Committee, the
legislation recognizes that the RDA dissolution actions adopted as part of the
2011 -12 budget resulted in significant changes in and disruption to local
governments' redevelopment activities. In addition, subsequent court
actions and decisions have had unintended impacts on timing of various
payments and reporting requirements and the ability of local governments to
comply with the new law. The bill also acknowledges that there has been
evidence of noncompliance with the law by some entities, particularly with
respect to the scheduling of enforceable obligations to be made from
property tax revenues and the transfer of former RDA assets. In view of this
situation and these events, the legislation is intended to clarify ambiguities,
fill in areas of incompleteness, and reconcile various deadlines that have
resulted from the 2011 legislation or are due to subsequent legal events. In
addition to providing a mechanism for helping to ensure compliance with
current law, the bill creates significant opportunities for local governments
to be repaid for past financial commitments to redevelopment, complete
various projects, and lay out future development plans using the substantial
amount of real property and other assets acquired by the former RDA.
FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: Yes
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FWAI M E 0
According to the Senate Budget and Fiscal Review Committee, provisions of
the bill are estimated to ensure the receipt of additional property tax
revenues by local governments, $3.2 billion of which would be received by
local school districts and provide corresponding General Fund relief. There
would also be receipt of additional funds and assets by local governments
beginning in 2013-14, relative to current law.
AGB:n 6/26/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Mark Leno, Chair
Bill No: AB 1484
Author: Committee on Budget
As Amended: June 26, 2012
Consultant: Mark Ibele
Fiscal: Yes
Hearing Date: June 26, 2012
Subject: Budget Act of 2012: Redevelopment
Summary: This bill addresses numerous issues related to the dissolution of redevelopment
agencies (RDAs) and related matters necessary for the implementation of the Budget Act of 2012.
The bill contains measures necessary to achieve GF solutions of approximately $3.1 billion in the
budget year.
Background: As part of the 2011 -12 budget agreement, the Legislature took action to eliminate
RDAs in AB 26 X1, Statutes of 2011 (Blumenfield) and institute a new alternative voluntary
redevelopment program in AB 27 X1, Statutes of 2011 (Blumenfield). By virtue of AB 27X1,
RDAs could avoid elimination if the communities that formed them agreed to participate in the
alternative voluntary redevelopment program that called for them to remit annual payments to K-
12 education. The California Redevelopment Association challenged the constitutionality of both
pieces of legislation. After an expedited review, the California Supreme Court released its ruling
December 29, 2011, holding that both AB 26 X1 and AB 27 X1 were invalid. As a result, RDAs
were dissolved as of February 1, 2012, with their affairs to be resolved by successor agencies
(SAs), including the disposal of former RDA assets. Under current law, the elimination of RDAs
will result in property tax revenues being used to pay required payments on existing bonds and
other obligations, make pass - through payments to local governments, with remaining property tax
revenues to be allocated to cities, counties, special districts and school and community college
districts. The budget assumes that approximately $1.7 billion will be received by K -14 education
and serve to offset the state's Prop 98 General Fund obligation, with an additional $1.4 billion to
be received from freed -up former RDA cash and cash - equivalent assets during the budget year.
Proposed Law: This bill is the redevelopment trailer bill for the 2012 -13 Budget. It clarifies
certain matters associated with the dissolution of RDAs and addresses substantive issues related
to administrative processes, affordable housing activities, repayment of loans from communities,
use of existing bond proceeds, and the disposition or retention of former RDA assets. In addition,
the bill includes a variety of measures designed to enhance compliance with current law. The bill
contains the following provisions:
1. Property Assets, Loans and Bond Proceeds. The legislation allows SAs that have
received a "finding of completion" (FOC) from the Department of Finance (DOF)
additional discretion regarding former RDA real property assets, loan repayments to the
local government community that formed the RDA (RDA communities) and use of
proceeds from bonds issued by the former RDA. The FOC requires that amounts due
with respect to cash and cash - equivalent assets, property tax allocations and pass - through
payment amounts are paid, as discussed below. The FOC is an indication that all
amounts determined to be due from the former RDA or the SA have been paid and
satisfied. SAs in receipt of a FOC will be allowed to:
-I-
a. Retain non - governmental physical assets in a separate trust until DOF has
approved a long -range property management plan. The plan must be submitted
to the oversight board (OB) and DOF no more than six months after the FOC has
been issued and be based on an inventory of assets including: purpose of
acquisition; legal description; estimate of current value; estimate of derived
annual income; environmental history; potential transit - related use; and history of
development proposals. The plan must also address the use or disposition of all
the properties in the trust, including: retention for future development; sale of
property; or use of property to fulfill an enforceable obligation (EO).
b. Include as EOs legitimate loans between the former RDA and the RDA
community, subject to approval of the OB. Interest on the loan would be
calculated at the Local Agency Investment rate, repaid beginning 2013 -14 over a
reasonable number of years, with repayment limited to amount equal to half the
growth over the 2012 -13 property tax allocated to local governments. These
repayments would be subordinated to loan repayments to the Low and Moderate
Income Housing Fund (LMIHF) and subject to a 20 percent set -aside for
affordable housing.
c. Use certain existing proceeds stemming from bonds issued by the former RDA
on or before December 31, 2010 for purposes for which the bonds were sold. If
remaining bond proceeds cannot be spent in a manner consistent with the bond
covenant, the proceeds would be used to defease the bond.
2. Band Issuance. The legislation refines the circumstances under which refunding or
other types of refinancing bonds to be issued by the SA would be allowed. These
refinements include limitations and restrictions regarding: principal amount of debt;
payment acceleration or restructuring; total interest costs; and amount of property taxes
pledged as security. The bill states that certain bond issuances may be subject to local
government approval or agreements regarding subordination and are subject to OB
approval and review by DOF. Under the legislation, SAs may seek a waiver from DOF
of the two -year statute of limitations that would generally apply.
3. Housing Successor Assets. The bill requires that a listing of housing assets be submitted
to DOF by August 1, 2012, with such assets to include those transferred between
February 1, 2012 and the submission date of the listing. The bill requires that DOF
review and object to any asset or transfer, with any objections potentially subject to a
meet and confer resolution process. Assets transferred to the housing successor entity are
to be used for affordable housing activities, while disallowed assets would go to the SA
for disposal or retention pursuant to an approved property management plan. The bill
indicates that housing assets includes:
a. Real and personal property acquired for low and moderate income housing with
any source of funds.
b. Funds encumbered by an enforceable obligation to build or acquire low and
moderate income housing.
c. Loans or grant receivables funded from the LMIHF from homebuyers,
homeowners, developers, or other parties.
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d. Funds derived from rents or operation of properties acquired for low and
moderate income housing purposes by other parties financed with any source of
funds.
e. Streams of rents or other payments from low and moderate income housing
financed with any source of funds.
E Repayments of loans or deferrals owed to the LMIHF.
g. Certain other properties deemed at the OBs discretion to be housing assets, such
as mixed use developments that contribute to community value or benefit local
governments.
4. Housing Fund Loans and Bonds. The bill allows repayment of loans made from the
LMIHF, which repayments could begin in 2013 -14, but would be limited to one -half of
the annual growth over the 2012 -13 level in property taxes distributed to local
governments. These repayments would take priority over loan repayments to RDA
communities (20 percent of those latter loan repayments are to be set aside for affordable
housing activities). The housing successor may use certain bond proceeds derived from
bonds issued before January 1, 2011, and secured by the LMIHF, for affordable housing
projects.
5. Validation Actions. Under the legislation, the two -year time limit for validation actions
related to findings determinations of a former RDA, redevelopment bonds and similar
financings, and various related redevelopment plans and efforts, would be tolled until
DOF has issued a FOC. The two -year limit would not apply once the FOC has been
issued by DOF.
6. Assets and Transfers. The legislation directs the Controller to examine asset transfers
that occurred after January 31, 2012. The bill directs each SA to retain a licensed
accountant to conduct a due diligence review (DDR), or arrange for an audit by the
county - auditor controller, of unobligated cash or cash equivalent balances that would be
available for transfer to local governments. The review must include value of assets
previously transferred from either the former RDA or the SA and the entity to which such
assets were transferred. DOF may adjust amounts available for distribution to local
governments and must provide an explanation for any adjustment. The SA may request a
meet and confer resolution process for any disputed amounts. The SA is required to
transfer determined amounts to the county auditor - controller and report such amounts to
DOF. Assets identified for transfer but not transferred could be subject to offset in an
amount equivalent to asset value (as discussed further below). The DDR must:
a. Reconcile assets, balances and liabilities of the SA with amounts previously
reported to the Controller.
b. Specify total funds, including the LMIHF, identified for distribution to local
governments after subtracting restricted amounts and non -cash items.
c. Indicate the asset sum available for distribution to local governments.
d. Be submitted to the OB, the county auditor - controller and DOF for review.
7. Property Tax Allocations. The bill specifies that if the former RDA or SA did not pay
property tax or certain pass - through payments due to local governments for the 2011 -12
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fiscal year, or these amounts were not remitted by the county auditor controller, such
amounts will be offset (as discussed further below) through future reductions in property
tax allocations, from available SA reserves or other funds, by reductions in sales taxes
allocable to the county, or by other means as appropriate. The bill requires the county
auditor-controller to provide a report to DOF for each SA regarding the distribution that
includes the total funds available for allocation, the pass-through amounts, the amounts
distributed to SAs, and the amounts distributed to local governments. The bill makes no
changes in the current treatment of pass-through amounts, and expresses the intent that
full payment of pass-through amounts are to be made.
8. Offsets for Unpaid Amounts. Under the bill, if amounts due to local governments
pursuant to the DDR, prior property tax allocations, and pass-through payments are not
remitted, these amounts may be recovered, as appropriate, by actions directed to the
entity to which the funds were transferred, the RDA community or the SA. These actions
could include an offset of either sales and use tax or property tax allocations, or legal
actions against any third party in receipt of the funds. Offsets amounts found to be
unwarranted by a court would result in a reimbursement of that amount or a reversal of
the offset, and a penalty imposed on the state.
9. Successor Agencies. The bill clarifies that SAs are local public entities separate from the
RDA community, and which succeed to the organizational status of the former RDA but
without redevelopment powers except those related to and necessary for the payment of
EOs. Under the bill, SAs are required to provide an annual post-audit of SA financial
transactions, and when all RDA debt is retired, dispose of all assets, end pass-through
payments and terminate. For SAs that do not have a FOC from DOF, assets are to be
disposed of with proceeds benefiting local governments.
10. Oversight Boards. The bill clarifies OB membership qualifications of the representative
of the former employees of the RDA. It provides that OB members are protected by the
immunities applicable to public entities and actions are to be taken by resolution. The
bill allows OBs to contract for administrative support and specifies that OBs cannot
reestablish loan agreements between the SA and community.
11. Polanco Act Provisions. The legislation provides that existing clean -up plans and
liability limits authorized under the Polanco Redevelopment Act shall be transferred to
the SA and may be transferred to the successor housing entity at the respective entity's
request.
12. RDA Communities. The bill would allow RDA communities that elected not to be the
SA to opt back in at a later date. It allows RDA communities to grant loans to the SA for
certain costs and be repaid out of administrative costs or the property tax increment, upon
approval of the OB. In addition, the bill provides that RDA communities may use the
land use plans and functions of the RDA, provided that no new project areas or expanded
boundaries of project areas are created or increase the amount of obligated property tax
results.
13. Administrative Costs. The bill clarifies that the five percent limit on administrative
costs is based initially on the property tax allocated for the Recognized Obligation
Payment Schedule (ROPS) and allows the OB to reduce this amount upon SA approval.
In addition, administrative costs would exclude certain litigation expenses and expenses
related to employees costs associated with project specific activities.
ME
14. Enforceable Obligations. The bill allows for required bond reserves to be included as
EOs, along with costs associated with collective bargaining agreements for layoffs or
terminations, the transfer of employees to the housing successor entity, and repayments
of loans from the LMIBF. It also specifies that once funding for an EO is deleted or
reduced by DOF, the funding may not be restored except as agreed to through the meet
and confer resolution process or pursuant to court order. The bill allows SAs to petition
DOF to provide written confirmation that its determination regarding an enforceable
obligation is final and conclusive.
15. ROPS Timing and Reporting Issues. The bill provides for certain changes regarding
filing and reporting requirements for ROPs, including: allowing SAs to amend the initial
Enforceable Obligation Payment Schedule (FOPS) to provide for continued payment of
EOs until the ROPS is approved by the OB and DOF; requiring the submission by SAs of
each ROPS to the county administrative officer, county auditor - controller, and DOF at
the same time it is submitted to the OB; specifying ROPS for the January 1, 2012 through
June 30, 2012 period are to include payments made or to be made by the former RDA
and SA from January 12012 and June 30, 2012; and directing SAs to submit ROPS for
the January 1, 2013 through June 30, 2013 period by September 1, 2012, and to submit
the OB- approved ROPS for the July 1, 2013 through December 31, 2013 to DOF and
county auditor - controller 90 days before the property tax distribution. Under the bill,
DOF is provided 45 days to make its determination of the EOs on the ROPS and SAs are
given the ability to request additional review and a meet and confer resolution process
with five days.
16. Other ROPS Issues. The bill specifies, if an SA that does not submit ROPS by the
deadlines, it may be fined or have its administrative cost allowance reduced and DOF
may direct the county- auditor controller withhold amounts for payments on EOs. SAs
must submit a copy of the RODS to DOF in a manner provided by DOF. The bill
indicates that if DOF reviews and eliminates or modifies any item approved by the OB,
DOF shall provide notice to the SA and the county auditor — controller as to the reasons
for the action.
17. Severability. The bill states that if any provision of the act is held invalid, the invalidity
shall not affect other provisions of the act which can be given effect without the invalid
provision. Thus, provisions of the act are severable.
18. Appropriation. The bill appropriates $22 million from the General Fund for allocation
by the Director of Finance, including an amount of up to $2 million for allocation by the
Administrative Office of the Courts to the Superior Court of California, Sacramento.
Allocation of funds by the Director of Finance shall be effective no sooner than 30 days
following after the director notifies the Joint Legislative Budget Committee.
Fiscal Effect: Provisions of the bill are estimated to ensure the receipt of additional property tax
revenues by local governments, $3.2 billion of which would be received by local school districts
and provide corresponding General Fund relief. There would also be receipt of additional funds
and assets by local governments beginning in 2013 -14, relative to current law.
Support: Unknown
Opposed: Unknown
Comments: The legislation recognizes that the RDA dissolution actions adopted as part of the
2011 -12 budget resulted in significant changes in and disruption to local governments'
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redevelopment activities. In addition, subsequent court actions and decisions have had
unintended impacts on timing of various payments and reporting requirements and the ability of
local governments to comply with the new law. The bill also acknowledges that there has been
evidence of noncompliance with the law by some entities, particularly with respect to the
scheduling of enforceable obligations to be made from property tax revenues and the transfer of
former RDA assets. In view of this situation and these events, the legislation is intended to
clarify ambiguities, fill in areas of incompleteness, and reconcile various deadlines that have
resulted from the 2011 legislation or are due to subsequent legal events. In addition to providing
a mechanism for helping to ensure compliance with current law, the bill creates significant
opportunities for local governments to be repaid for past financial commitments to
redevelopment, complete various projects, and lay out future development plans using the
substantial amount of real property and other assets acquired by the former RDA.
Assembly Bill No. 1484
CHAPTER 26
An act to amend Section 53760.1 of the Government Code, and to amend
Sections 33500, 33501, 34163, 34171, 34173, 34175, 34176, 34177, 34178,
34179, 34180, 34181, 34182, 34183, 34185, 34186, 34187, 34188, and
34189 of, to add Sections 34167.10, 34177.3, 34177.5, 34178.8, 34179.5,
34179.6, 34179.7, 34179.8, 34182.5, 34183.5, 34189.1, 34189.2, and 34189.3
to, to add Chapter 9 (commencing with Section 34191.1) to Part 1.85 of
Division 24 of, and to add and repeal Section 34176.5 of, the Health and
Safety Code, relating to community redevelopment, and making an
appropriation therefor, to take effect immediately, bill related to the budget.
[Approved by Governor June 27, 2012. Filed with
Secretary of State June 27, 2012.]
LEGISLATIVE COUNSEL'S DIGEST
AB 1484, Committee on Budget. Community redevelopment.
The Community Redevelopment Law authorizes the establishment of
redevelopment agencies in communities to address the effects of blight,
and, among other things, provides that an action may be brought to review
the validity of specified agency actions, findings, or determinations that
occurred after January 1, 2011, within 2 years of the triggering event.
This bill would toll the time limit for bringing an action until the
Department of Finance issues a finding of completion to the successor
agency.
Existing law dissolved redevelopment agencies and community
development agencies, as of February 1, 2012, and provides for the
designation of successor agencies, as defined. Existing law requires successor
agencies to wind down the affairs of the dissolved redevelopment agencies
and to, among other things, make payments due for enforceable obligations,
as defined, perform obligations required pursuant to any enforceable
obligation, dispose of all assets of the former redevelopment agency, and
to remit unencumbered balances of redevelopment agency funds, including
housing funds, to the county auditor - controller for distribution to taxing
entities.
Existing law authorizes the city, county, or city and county that authorized
the creation of a redevelopment agency to retain the housing assets,
functions, and powers previously performed by the redevelopment agency,
excluding amounts on deposit in the Low and Moderate Income Housing
Fund.
The bill would modify provisions relating to the transfer of housing
responsibilities associated with dissolved redevelopment agencies and would
define the term "housing asset" for these purposes. The bill would impose
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Ch. 26 —2—
new requirements on successor agencies with regard to the submittal of the
Recognized Obligation Payment Schedule, the conducting of a due diligence
review to determine the unobligated balances available for transfer to
affected taxing entities, and the recovery and subsequent remittance of funds
determined to have been transferred absent an enforceable obligation. The
bill would authorize the Department of Finance to issue a finding of
completion to a successor agency that completes the due diligence review
and meets other requirements. Upon receiving a finding of completion, the
bill would authorize the successor agency to participate in a loan repayment
program and limited property management activities.
Existing law authorizes the Department of Finance and the Controller to
require any documents associated with enforceable obligations to be provided
to them in a manner of their choosing.
The bill would authorize the county auditor - controller and the department,
under specified circumstances, to require the return of funds improperly
spent or transferred to a public entity and would authorize the department
and the Controller to require the State Board of Equalization and the county
auditor - controller to offset sales and use tax and property tax allocations,
respectively, to the local agency. The bill would authorize the Controller to
review the activities of a successor agency to determine if an improper asset
transfer had occurred between the successor agency and the city or county
that created the former redevelopment agency, and would require the
Controller to order the return of these assets if such an asset transfer did
occur.
The bill would impose new requirements on the county auditor- controller
relating to the allocation of property tax revenues to affected taxing entities
during a specified timeframe. By imposing additional duties upon local
public officials, the bill would create a state- mandated local program.
The bill would appropriate up to $22,000,000 to the Department of Finance
from the General Fund for costs associated with the bill, as specified.
The California Constitution requires the state to reimburse local agencies
and school districts for certain costs mandated by the state. Statutory
provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for
a specified reason.
This bill would declare that it is to take effect immediately as a bill
providing for appropriations related to the Budget Bill.
Appropriation: yes.
The people of the State of California do enact as follows:
SECTION 1. Section 53760.1 of the Government Code is amended to
read:
53760.1. As used in this article the following terms have the following
meanings:
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(a) "Chapter 9" means Chapter 9 (commencing with Section 901) of
Title 11 of the United States Code.
(b) "Creditor" means either of the following:
(1) An entity that has a noncontingent claim against a municipality that
arose at the time of or before the commencement of the neutral evaluation
process and whose claim represents at least five million dollars ($5,000,000)
or comprises more than 5 percent of the local public entity's debt or
obligations, whichever is less.
(2) An entity that would have a noncontingent claim against the
municipality upon the rejection of an executory contract or unexpired lease
in a Chapter 9 case and whose claim would represent at least five million
dollars ($5,000,000) or comprises more than 5 percent of the local public
entity's debt or obligations, whichever is less.
(c) "Debtor" means a local public entity that may file for bankruptcy
under Chapter 9.
(d) "Good faith" means participation by a party in the neutral evaluation
process with the intent to negotiate toward a resolution of the issues that
are the subject of the neutral evaluation process, including the timely
provision of complete and accurate information to provide the relevant
parties through the neutral evaluation process with sufficient information,
in a confidential manner, to negotiate the readjustment of the municipality's
debt.
(e) "Interested party" means a trustee, a committee of creditors, an
affected creditor, an indenture trustee, a pension fund, a bondholder, a union
that, under its collective bargaining agreements, has standing to initiate
contract or debt restructuring negotiations with the municipality, or a
representative selected by an association of retired employees of the public
entity who receive income from the public entity convening the neutral
evaluation. A local public entity may invite holders of contingent claims to
participate as interested parties in the neutral evaluation if the local public
entity determines that the contingency is likely to occur and the claim may
represent five million dollars ($5,000,000) or comprise more than 5 percent
of the local public entity's debt or obligations, whichever is less.
(f) "Local public entity" means any county, city, district, public authority,
public agency, or other entity, without limitation, that is a municipality as
defined in Section 101(40) of Title 11 of the United States Code
(bankruptcy), or that qualifies as a debtor under any other federal bankruptcy
law applicable to local public entities, and also includes a successor agency
to a redevelopment agency created pursuant to Part 1.85 (commencing with
Section 34170) of Division 24 of the Health and Safety Code. For purposes
of this article, "local public entity" does not include a school district.
(g) "Local public entity representative" means the person or persons
designated by the local public agency with authority to make
recommendations and to attend the neutral evaluation on behalf of the
governing body of the municipality.
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Ch. 26 —4—
(h) "Neutral evaluation" is a form of alternative dispute resolution that
may be known as mandatory mediation. A "neutral evaluator" may also be
known as a mediator.
SEC. 2. Section 33500 of the Health and Safety Code is amended to
read:
33500. (a) Notwithstanding any other provision of law, including Section
33501, an action may be brought to review the validity of the adoption or
amendment of a redevelopment plan at any time within 90 days after the
date of the adoption of the ordinance adopting or amending the plan, if the
adoption of the ordinance occurred prior to January 1, 2011.
(b) Notwithstanding any other provision of law, including Section 33501,
an action may be brought to review the validity of any findings or
determinations by the agency or the legislative body at any time within 90
days after the date on which the agency or the legislative body made those
findings or determinations, if the findings or determinations occurred prior
to January 1, 2011.
(c) Notwithstanding any other law, including Section 33501, an action
may be brought to review the validity of the adoption or amendment of a
redevelopment plan at any time within two years after the date of the
adoption of the ordinance adopting or amending the plan, if the adoption
of the ordinance occurred after January 1, 2011.
(d) Notwithstanding any other law, including Section 33501, an action
may be brought to review the validity of any findings or determinations by
the agency or the legislative body at any time within two years after the
date on which the agency or the legislative body made those findings or
determinations, if the findings or determinations occurred after January 1,
2011.
(e) The time limit for bringing an action under subdivision (c) or (d) shall
be tolled with respect to the adoptions, findings, and determinations of any
former redevelopment agency or its legislative body until the Department
of Finance has issued a finding of completion to the successor agency of
that former redevelopment agency pursuant to Section 34179.7. Subdivisions
(c) and (d) shall not apply to any adoption, finding, or determination of any
former redevelopment agency or its legislative body after the department
has issued a finding of completion to the successor agency of that former
redevelopment agency pursuant to Section 34179.7.
SEC. 3. Section 33501 of the Health and Safety Code is amended to
read:
33501. (a) An action maybe brought pursuant to Chapter 9 (commencing
with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to
determine the validity of bonds and the redevelopment plan to be financed
or refinanced, in whole or in part, by the bonds, or to determine the validity
of a redevelopment plan not financed by bonds, including without limiting
the generality of the foregoing, the legality and validity of all proceedings
theretofore taken for or in any way connected with the establishment of the
agency, its authority to transact business and exercise its powers, the
designation of the survey area, the selection of the project area, the
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formulation of the preliminary plan, the validity of the finding and
determination that the project area is predominantly urbanized, and the
validity of the adoption of the redevelopment plan, and also including the
legality and validity of all proceedings theretofore taken and (as provided
in the bond resolution) proposed to be taken for the authorization, issuance,
sale, and delivery of the bonds, and for the payment of the principal thereof
and interest thereon.
(b) Notwithstanding subdivision (a), an action to determine the validity
of a redevelopment plan, or amendment to a redevelopment plan that was
adopted prior to January 1, 2011, may be brought within 90 days after the
date of the adoption of the ordinance adopting or amending the plan.
(c) Any action that is commenced on or after January 1, 2011, which is
brought pursuant to Chapter 9 (commencing with Section 860) of Title 10
of Part 2 of the Code of Civil Procedure to determine the validity or legality
of any issue, document, or action described in subdivision (a), may be
brought within two years after any triggering event that occurred after
January 1, 2011. The time limit for bringing an action under this subdivision
shall be tolled with respect to the validity or legality of any issue, document,
or action described in subdivision (a) of any former redevelopment agency
or its legislative body until the Department of Finance has issued a finding
of completion to the successor agency of that former redevelopment agency
pursuant to Section 34179.7. This subdivision shall not apply to any
adoption, finding, or determination of any former redevelopment agency
or its legislative body after the department has issued a finding of completion
to the successor agency of that former redevelopment agency pursuant to
Section 34179.7.
(d) For the purposes of protecting the interests of the state, the Attorney
General and the Department of Finance are interested persons pursuant to
Section 863 of the Code of Civil Procedure in any action brought with
respect to the validity of an ordinance adopting or amending a redevelopment
plan pursuant to this section.
(e) For purposes of contesting the inclusion in a project area of lands that
are enforeeably restricted, as that term is defined in Sections 422 and 422.5
of the Revenue and Taxation Code, or lands that are in agricultural use, as
defined in subdivision (b) of Section 51201 of the Government Code, the
Department of Conservation, the county agricultural commissioner, the
county farm bureau, the California Farm Bureau Federation, and agricultural
entities and general farm organizations that provide a written request for
notice, are interested persons pursuant to Section 863 of the Code of Civil
Procedure, in any action brought with respect to the validity of an ordinance
adopting or amending a redevelopment plan pursuant to this section.
SEC. 4. Section 34163 of the Health and Safety Code is amended to
read:
34163. Notwithstanding Part i (commencing with Section 33000), Part
1.5 (commencing with Section 34000), Part 1.6 (commencing with Section
34050), and Part 1.7 (commencing with Section 34100), or any other law,
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Ch. 26 —6—
commencing on the effective date of this part, an agency shall not have the
authority to, and shall not, do any of the following:
(a) Make loans or advances or grant or enter into agreements to provide
funds or provide financial assistance of any sort to any entity or person for
any purpose, including, but not limited to, all of the following:
(1) Loans of moneys or any other thing of value or commitments to
provide financing to nonprofit organizations to provide those organizations
with financing for the acquisition, construction, rehabilitation, refinancing,
or development of multifamily rental housing or the acquisition of
commercial property for lease, each pursuant to Chapter 7.5 (commencing
with Section 33741) of Part 1.
(2) Loans of moneys or any other thing of value for residential
construction, improvement, or rehabilitation pursuant to Chapter 8
(commencing with Section 33750) of Part 1. These include, but are not
limited to, construction loans to purchasers of residential housing, mortgage
loans to purchasers of residential housing, and loans to mortgage lenders,
or any other entity, to aid in financing pursuant to Chapter 8 (commencing
with Section 33750).
(3) The purchase, by an agency, of mortgage or construction loans from
mortgage lenders or from any other entities.
(b) Enter into contracts with, incur obligations, or make commitments
to, any entity, whether governmental, tribal, or private, or any individual or
groups of individuals for any purpose, including, but not limited to, loan
agreements, passthrough agreements, regulatory agreements, services
contracts, leases, disposition and development agreements, joint exercise
of powers agreements, contracts for the purchase of capital equipment,
agreements for redevelopment activities, including, but not limited to,
agreements for planning, design, redesign, development, demolition,
alteration, construction, reconstruction, rehabilitation, site remediation, site
development or improvement, removal of graffiti, land clearance, and seismic
retrofits.
(c) Amend or modify existing agreements, obligations, or commitments
with any entity, for any purpose, including, but not limited to, any of the
following:
(1) Renewing or extending term of leases or other agreements, except
that the agency may extend lease space for its own use to a date not to exceed
six months after the effective date of the act adding this part and for a rate
no more than 5 percent above the rate the agency currently pays on a monthly
basis.
(2) Modifying terms and conditions of existing agreements, obligations,
or commitments.
(3) Forgiving all or any part of the balance owed to the agency on existing
loans or extend the term or change the terms and conditions of existing
loans.
(4) Making any future deposits to the Low and Moderate Income Housing
Fund created pursuant to Section 33334.3.
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(5) Transferring funds out of the Low and Moderate Income Housing
Fund, except to meet the minimum housing - related obligations that existed
as of January 1, 2011, to make required payments under Sections 33690
and 33690.5, and to borrow funds pursuant to Section 34168.5.
(d) Dispose of assets by sale, long -term lease, gift, grant, exchange,
transfer, assignment, or otherwise, for any purpose, including, but not limited
to, any of the following:
(1) Assets, including, but not limited to, real property, deeds of trust, and
mortgages held by the agency, moneys, accounts receivable, contract rights,
proceeds of insurance claims, grant proceeds, settlement payments, rights
to receive rents, and any other rights to payment of whatever kind.
(2) Real property, including, but not limited to, land, land under water
and waterfront property, buildings, structures, fixtures, and improvements
on the land, any property appurtenant to, or used in connection with, the
land, every estate, interest, privilege, easement, franchise, and right in land,
including rights -of -way, terms for years, and liens, charges, or encumbrances
by way of judgment, mortgage, or otherwise, and the indebtedness secured
by the liens.
(e) Acquire real property by any means for any purpose, including, but
not limited to, the purchase, lease, or exercising of an option to purchase or
lease, exchange, subdivide, transfer, assume, obtain option upon, acquire
by gift, grant, bequest, devise, or otherwise acquire any real property, any
interest in real property, and any improvements on it, including the
repurchase of developed property previously owned by the agency and the
acquisition of real property by eminent domain; provided, however, that
nothing in this subdivision is intended to prohibit the acceptance or transfer
of title for real property acquired prior to the effective date of this part.
(f) Transfer, assign, vest, or delegate any of its assets, funds, rights,
powers, ownership interests, or obligations for any purpose to any entity,
including, but not limited to, the community, the legislative body, another
member of a joint powers authority, a trustee, a receiver, a partner entity,
another agency, a nonprofit corporation, a contractual counterparty, a public
body, a limited - equity housing cooperative, the state, a political subdivision
of the state, the federal government, any private entity, or an individual or
group of individuals.
(g) Accept financial or other assistance from the state or federal
government or any public or private source if the acceptance necessitates
or is conditioned upon the agency incurring indebtedness as that term is
described in this part.
SEC. 5. Section 34167.10 is added to the Health and Safety Code, to
read:
34167.10. (a) Notwithstanding any other law, for purposes of this part
and Part 1.85 (commencing with Section 34170), the definition of a city,
county, or city and county includes, but is not limited to, the following
entities:
(1) Any reporting entity of the city, county, or city and county for
purposes of its comprehensive annual financial report or similar report.
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(2) Any component unit of the city, county, or city and county.
(3) Any entity which is controlled by the city, county, or city and county,
or for which the city, county, or city and county is financially responsible
or accountable.
(b) The following factors shall be considered in determining that an entity
is controlled by the city, county, or city and county, and are therefore
included in the definition of a city, county, or city and county for purposes
of this part and Part 1.85 (commencing with Section 34170):
(1) The city, county, or city and county exercises substantial municipal
control over the entity's operations, revenues, or expenditures.
(2) The city, county, or city and county has ownership or control over
the entity's property or facilities.
(3) The city, county, or city and county and the entity share common or
overlapping governing boards, or coterminous boundaries.
(4) The city, county, or city and county was involved in the creation or
formation of the entity.
(5) The entity performs functions customarily or historically performed
by municipalities and financed thorough levies of property taxes.
(6) The city, county, or city and county provides administrative and
related business support for the entity, or assumes the expenses incurred in
the normal daily operations of the entity.
(e) For purposes of this section, it shall not be relevant that the entity is
formed as a separate legal entity, nonprofit corporation, or otherwise, or is
not subject to the constitution debt limitation otherwise applicable to a city,
county, or city and county. The provisions in this section are declarative of
existing law as the entities described herein are and were intended to be
included within the requirements of this part and Part 1.85 (commencing
with Section 34170) and any attempt to determine otherwise would thwart
the intent of these two parts.
SEC. 6. Section 34171 of the Health and Safety Code is amended to
read:
34171. The following terms shall have the following meanings:
(a) "Administrative budget" means the budget for administrative costs
of the successor agencies as provided in Section 34177.
(b) "Administrative cost allowance" means an amount that, subject to
the approval of the oversight board, is payable from property tax revenues
of up to 5 percent of the property tax allocated to the successor agency on
the Recognized Obligation Payment Schedule covering the period January
1, 2012, through June 30, 2012, and up to 3 percent of the property tax
allocated to the Redevelopment Obligation Retirement Fund money that is
allocated to the successor agency for each fiscal year thereafter; provided,
however, that the amount shall not be less than two hundred fifty thousand
dollars ($250,000), unless the oversight board reduces this amount, for any
fiscal year or such lesser amount as agreed to by the successor agency.
However, the allowance amount shall exclude, and shall not apply to, any
administrative costs that can be paid from bond proceeds or from sources
other than property tax. Administrative cost allowances shall exclude any
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litigation expenses related to assets or obligations, settlements and judgments,
and the costs of maintaining assets prior to disposition. Employee costs
associated with work on specific project implementation activities, including,
but not limited to, construction inspection, project management, or actual
construction, shall be considered project - specific costs and shall not
constitute administrative costs.
(c) "Designated local authority" shall mean a public entity formed
pursuant to subdivision (d) of Section 34173.
(d) (1) "Enforceable obligation" means any of the following:
(A) Bonds, as defined by Section 33602 and bonds issued pursuant to
Chapter 10.5 (commencing with Section 5850) of Division 6 of Title 1 of
the Government Code, including the required debt service, reserve set - asides,
and any other payments required under the indenture or similar documents
governing the issuance of the outstanding bonds of the former redevelopment
agency. A reserve may be held when required by the bond indenture or
when the next property tax allocation will be insufficient to pay all
obligations due under the provisions of the bond for the next payment due
in the following half of the calendar year.
(B) Loans of moneys borrowed by the redevelopment agency for a lawful
purpose, to the extent they are legally required to be repaid pursuant to a
required repayment schedule or other mandatory loan terms.
(C) Payments required by the federal government, preexisting obligations
to the state or obligations imposed by state law, other than passthrough
payments that are made by the county auditor- controller pursuant to Section
34183, or legally enforceable payments required in connection with the
agencies' employees, including, but not limited to, pension payments,
pension obligation debt service, unemployment payments, or other
obligations conferred through a collective bargaining agreement. Costs
incurred to fulfill collective bargaining agreements for layoffs or terminations
of city employees who performed work directly on behalf of the former
redevelopment agency shall be considered enforceable obligations payable
from property tax funds. The obligations to employees specified in this
subparagraph shall remain enforceable obligations payable from property
tax funds for any employee to whom those obligations apply if that employee
is transferred to the entity assuming the housing functions of the former
redevelopment agency pursuant to Section 34176. The successor agency or
designated local authority shall enter into an agreement with the housing
entity to reimburse it for any costs of the employee obligations.
(D) Judgments or settlements entered by a competent court of law or
binding arbitration decisions against the former redevelopment agency,
other than passthrough payments that are made by the county
auditor - controller pursuant to Section 34183. Along with the successor
agency, the oversight board shall have the authority and standing to appeal
any judgment or to set aside any settlement or arbitration decision.
(E) Any legally binding and enforceable agreement or contract that is
not otherwise void as violating the debt limit or public policy. However,
nothing in this act shall prohibit either the successor agency, with the
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Ch. 26 _10—
approval or at the direction of the oversight board, or the oversight board
itself from terminating any existing agreements or contracts and providing
any necessary and required compensation or remediation for such
termination. Titles of or headings used on or in a document shall not be
relevant in determining the existence of an enforceable obligation.
(F) Contracts or agreements necessary for the administration or operation
of the successor agency, in accordance with this part, including, but not
limited to, agreements concerning litigation expenses related to assets or
obligations, settlements and judgements, and the costs of maintaining assets
prior to disposition, and agreements to purchase or rent office space,
equipment and supplies, and pay - related expenses pursuant to Section 33127
and for carrying insurance pursuant to Section 33134.
(G) Amounts borrowed from, or payments owing to, the Low and
Moderate Income Housing Fund of a redevelopment agency, which had
been deferred as of the effective date of the act adding this part; provided,
however, that the repayment schedule is approved by the oversight board.
Repayments shall be transferred to the Low and Moderate Income Housing
Asset Fund established pursuant to subdivision (d) of Section 34176 as a
housing asset and shall be used in a manner consistent with the affordable
housing requirements of the Community Redevelopment Law (Part 1
(commencing with Section 33000)).
(2) For purposes of this part, "enforceable obligation" does not include
any agreements, contracts, or arrangements between the city, county, or city
and county that created the redevelopment agency and the former
redevelopment agency. However, written agreements entered into (A) at
the time of issuance, but in no event later than December 31, 2010, of
indebtedness obligations, and (B) solely for the purpose of securing or
repaying those indebtedness obligations may be deemed enforceable
obligations for purposes of this part. Notwithstanding this paragraph, loan
agreements entered into between the redevelopment agency and the city,
county, or city and county that created it, within two years of the date of
creation of the redevelopment agency, may be deemed to be enforceable
obligations.
(3) Contracts or agreements between the former redevelopment agency
and other public agencies, to perform services or provide funding for
governmental or private services or capital projects outside of redevelopment
project areas that do not provide benefit to the redevelopment project and
thus were not properly authorized under Part 1 (commencing with Section
33000) shall be deemed void on the effective date of this part; provided,
however, that such contracts or agreements for the provision of housing
properly authorized under Part 1 (commencing with Section 33000) shall
not be deemed void.
(e) "Indebtedness obligations" means bonds, notes, certificates of
participation, or other evidence of indebtedness, issued or delivered by the
redevelopment agency, or by a joint exercise of powers authority created
by the redevelopment agency, to third -party investors or bondholders to
finance or refinance redevelopment projects undertaken by the
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redevelopment agency in compliance with the Community Redevelopment
Law (Part 1 (commencing with Section 33000)).
(f) "Oversight board" shall mean each entity established pursuant to
Section 34179.
(g) "Recognized obligation" means an obligation listed in the Recognized
Obligation Payment Schedule.
(h) "Recognized Obligation Payment Schedule" means the document
setting forth the minimum payment amounts and due dates of payments
required by enforceable obligations for each six -month fiscal period as
provided in subdivision (m) of Section 34177.
(i) "School entity" means any entity defined as such in subdivision (f)
of Section 95 of the Revenue and Taxation Code.
0) "Successor agency" means the successor entity to the former
redevelopment agency as described in Section 34173.
(k) "Taxing entities" means cities, counties, a city and county, special
districts, and school entities, as defined in subdivision (f) of Section 95 of
the Revenue and Taxation Code, that receive passthrough payments and
distributions of property taxes pursuant to the provisions of this part.
(1) "Property taxes" include all property tax revenues, including those
from unitary and supplemental and roll corrections applicable to tax
increment.
(m) "Department" means the Department of Finance unless the context
clearly refers to another state agency.
(n) "Sponsoring entity" means the city, county, or city and county, or
other entity that authorized the creation of each redevelopment agency.
(o) "Final judicial determination" means a final judicial determination
made by any state court that is not appealed, or by a court of appellate
jurisdiction that is not further appealed, in an action by any party.
SEC. 7. Section 34173 of the Health and Safety Code is amended to
read:
34173. (a) Successor agencies, as defined in this part, are hereby
designated as successor entities to the former redevelopment agencies.
(b) Except for those provisions of the Community Redevelopment Law
that are repealed, restricted, or revised pursuant to the act adding this part,
all authority, rights, powers, duties, and obligations previously vested with
the former redevelopment agencies, under the Community Redevelopment
Law, are hereby vested in the successor agencies.
(c) (1) If the redevelopment agency was in the form of a joint powers
authority, and if the joint powers agreement governing the formation of the
joint powers authority addresses the allocation of assets and liabilities upon
dissolution of the joint powers authority, then each of the entities that created
the former redevelopment agency may be a successor agency within the
meaning of this part and each shall have a share of assets and liabilities
based on the provisions of the joint powers agreement.
(2) If the redevelopment agency was in the form of a joint powers
authority, and if the joint powers agreement governing the formation of the
joint powers authority does not address the allocation of assets and liabilities
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Ch. 26 —12—
upon dissolution of the joint powers authority, then each of the entities that
created the former redevelopment agency may be a successor agency within
the meaning of this part, a proportionate share of the assets and liabilities
shall be based on the assessed value in the project areas within each entity's
jurisdiction, as determined by the county assessor, in its jurisdiction as
compared to the assessed value of land within the boundaries of the project
areas of the former redevelopment agency.
(d) (1) A city, county, city and county, or the entities forming the joint
powers authority that authorized the creation of each redevelopment agency
may elect not to serve as a successor agency under this part. A city, county,
city and county, or any member of a joint powers authority that elects not
to serve as a successor agency under this part must file a copy of a duly
authorized resolution of its governing board to that effect with the county
auditor- controller no later than January 13, 2012.
(2) The determination of the first local agency that elects to become the
successor agency shall be made by the county auditor- controller based on
the earliest receipt by the county auditor - controller of a copy of a duly
adopted resolution of the local agency's governing board authorizing such
an election. As used in this section, "local agency" means any city, county,
city and county, or special district in the county of the former redevelopment
agency.
(3) (A) Tf no local agency elects to serve as a successor agency for a
dissolved redevelopment agency, a public body, referred to herein as a
"designated local authority" shall be immediately formed, pursuant to this
part, in the county and shall be vested with all the powers and duties of a
successor agency as described in this part. The Governor shall appoint three
residents of the county to serve as the governing board of the authority. The
designated local authority shall serve as successor agency until a local
agency elects to become the successor agency in accordance with this
section.
(B) Designated local authority members are protected by the immunities
applicable to public entities and public employees governed by Part 1
(commencing with Section 810) and Part 2 (commencing with Section 814)
of Division 3.6 of Title 1 of the Government Code.
(4) A city, county, or city and county, or the entities forming the joint
powers authority that authorized the creation of a redevelopment agency
and that elected not to serve as the successor agency under this part, may
subsequently reverse this decision and agree to serve as the successor agency
pursuant to this section. Any reversal of this decision shall not become
effective for 60 days after notice has been given to the current successor
agency and the oversight board and shall not invalidate any action of the
successor agency or oversight board taken prior to the effective date of the
transfer of responsibility.
(e) The liability of any successor agency, acting pursuant to the powers
granted under the act adding this part, shall be limited to the extent of the
total sum of property tax revenues it receives pursuant to this part and the
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value of assets transferred to it as a successor agency for a dissolved
redevelopment agency.
(f) Any existing cleanup plans and liability limits authorized under the
Polanco Redevelopment Act (Article 12.5 (commencing with Section 33459)
of Chapter 4 of Part 1) shall be transferred to the successor agency and may
be transferred to the successor housing entity at that entity's request.
(g) A successor agency is a separate public entity from the public agency
that provides for its governance and the two entities shall not merge. The
liabilities of the former redevelopment agency shall not be transferred to
the sponsoring entity and the assets shall not become assets of the sponsoring
entity. A successor agency has its own name, can be sued, and can sue. All
litigation involving a redevelopment agency shall automatically be
transferred to the successor agency. The separate former redevelopment
agency employees shall not automatically become sponsoring entity
employees of the sponsoring entity and the successor agency shall retain
its own collective bargaining status. As successor entities, successor agencies
succeed to the organizational status of the former redevelopment agency,
but without any legal authority to participate in redevelopment activities,
except to complete any work related to an approved enforceable obligation.
Each successor agency shall be deemed to be a local entity for purposes of
the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of
Part 1 of Division 2 of Title 5 of the Government Code).
(h) The city, county, or city and county that authorized the creation of a
redevelopment agency may loan or grant funds to a successor agency for
administrative costs, enforceable obligations, or project - related expenses
at the city's discretion, but the receipt and use of these funds shall be
reflected on the Recognized Obligation Payment Schedule or the
administrative budget and therefore are subject to the oversight and approval
of the oversight board. An enforceable obligation shall be deemed to be
created for the repayment of those loans.
(i) At the request of the city, county, or city and county, notwithstanding
Section 33205, all land use related plans and functions of the former
redevelopment agency are hereby transferred to the city county, or city and
county that authorized the creation of a redevelopment agency; provided,
however, that the city, county, or city and county shall not create a new
project area, add territory to, or expand or change the boundaries of a project
area, or take any action that would increase the amount of obligated property
tax (formerly tax increment) necessary to fulfill any existing enforceable
obligation beyond what was authorized as of June 27, 2011.
SEC. 8. Section 34175 of the Health and Safety Code is amended to
read:
34175. (a) It is the intent of this part that pledges of revenues associated
with enforceable obligations of the former redevelopment agencies are to
be honored. It is intended that the cessation of any redevelopment agency
shall not affect either the pledge, the legal existence of that pledge, or the
stream of revenues available to meet the requirements of the pledge.
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(b) All assets, properties, contracts, leases, books and records, buildings,
and equipment of the former redevelopment agency are transferred on
February 1, 2012, to the control of the successor agency, for administration
pursuant to the provisions of this part. This includes all cash or cash
equivalents and amounts owed to the redevelopment agency as of February
1, 2012. Any legal or contractual restrictions on the use of these funds or
assets shall also be transferred to the successor agency.
SEC. 9. Section 34196 of the Health and Safety Code is amended to
read:
34176. (a) (1) The city, county, or city and county that authorized the
creation of a redevelopment agency may elect to retain the housing assets
and functions previously performed by the redevelopment agency. If a city,
county, or city and county elects to retain the authority to perform housing
functions previously performed by a redevelopment agency, all rights,
powers, duties, obligations, and housing assets, as defined in subdivision
(e), excluding any amounts on deposit in the Low and Moderate Income
Housing Fund and enforceable obligations retained by the successor agency,
shall be transferred to the city, county, or city and county.
(2) The entity assuming the housing functions of the former
redevelopment agency shall submit to the Department of Finance by August
1, 2012, a list of all housing assets that contains an explanation of how the
assets meet the criteria specified in subdivision (e). The Department of
Finance shall prescribe the format for the submission of the list. The list
shall include assets transferred between February 1, 2012, and the date upon
which the list is created. The department shall have up to 30 days from the
date of receipt of the list to object to any of the assets or transfers of assets
identified on the list. If the Department of Finance objects to assets on the
list, the entity assuming the housing functions of the former redevelopment
agency may request a meet and confer process within five business days of
receiving the department objection. If the transferred asset is deemed not
to be a housing asset as defined in subdivision (e), it shall be returned to
the successor agency and the provision of Section 34178.8 may apply. If a
housing asset has been previously pledged to pay for bonded indebtedness,
the successor agency shall maintain control of the asset in order to pay for
the bond debt.
(b) If a city, county, or city and county does not elect to retain the
responsibility for performing housing functions previously performed by a
redevelopment agency, all rights, powers, assets, duties, and obligations
associated with the housing activities of the agency, excluding enforceable
obligations retained by the successor agency and any amounts in the Low
and Moderate Income Housing Fund, shall be transferred as follows:
(1) If there is no local housing authority in the territorial jurisdiction of
the former redevelopment agency, to the Department of Housing and
Community Development.
(2) If there is one local housing authority in the territorial jurisdiction of
the former redevelopment agency, to that local housing authority.
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(3) If there is more than one local housing authority in the territorial
jurisdiction of the former redevelopment agency, to the local housing
authority selected by the city, county, or city and county that authorized the
creation of the redevelopment agency.
(c) Commencing on the operative date of this part, the entity that assumes
the housing functions formerly performed by the redevelopment agency
and receives the transferred housing assets may enforce affordability
covenants and perform related activities pursuant to applicable provisions
of the Community Redevelopment Law (Part 1 (commencing with Section
33000)), including, but not limited to, Section 33418.
(d) Except as specifically provided in Section 34191.4, any funds
transferred to the city, county, or city and county or designated entity
pursuant to this section, together with any funds generated from housing
assets, as defined in subdivision (e), shall be maintained in a separate Low
and Moderate Income Housing Asset Fund which is hereby created in the
accounts of the entity assuming the housing functions pursuant to this
section. Funds in this account shall be used in accordance with applicable
housing - related provisions of the Community Redevelopment Law (Part 1
(commencing with Section 33000)).
(e) For purposes of this part, "housing asset' includes all of the following:
(1) Any real property, interest in, or restriction on the use of real property,
whether improved or not, and any personal property provided in residences,
including furniture and appliances, all housing- related files and loan
documents, office supplies, software licenses, and mapping programs, that
were acquired for low- and moderate - income housing purposes, either by
purchase or through a loan, in whole or in part, with any source of funds.
(2) Any funds that are encumbered by an enforceable obligation to build
or acquire low- and moderate- income housing, as defined by the Community
Redevelopment Law (Part 1 (commencing with Section 33000)) unless
required in the bond covenants to be used for repayment purposes of the
bond.
(3) Any loan or grant receivable, funded from the Low and Moderate
Income Housing Fund, from homebuyers, homeowners, nonprofit or
for -profit developers, and other parties that require occupancy by persons
of low or moderate income as defined by the Community Redevelopment
Law (Part 1 (commencing with Section 33000)).
(4) Any funds derived from rents or operation of properties acquired for
low- and moderate- income housing purposes by other parties that were
financed with any source of funds, including residual receipt payments from
developers, conditional grant repayments, cost savings and proceeds from
refinancing, and principal and interest payments from homebuyers subject
to enforceable income limits.
(5) A stream of rents or other payments from housing tenants or operators
of low- and moderate- income housing financed with any source of funds
that are used to maintain, operate, and enforce the affordability of housing
or for enforceable obligations associated with low- and moderate - income
housing.
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(6) (A) Repayments of loans or deferrals owed to the Low and Moderate
Income Housing Fund pursuant to subparagraph (G) of paragraph (1) of
subdivision (d) of Section 34171, which shall be used consistent with the
affordable housing requirements in the Community Redevelopment Law
(Part 1 (commencing with Section 33000)).
(B) Loan or deferral repayments shall not be made prior to the 2013 -14
fiscal year. Beginning in the 2013 -14 fiscal year, the maximum repayment
amount authorized each fiscal year for repayments made pursuant to this
paragraph and subdivision (b) of Section 34191.4 combined shall be equal
to one -half of the increase between the amount distributed to taxing entities
pursuant to paragraph (4) of subdivision (a) of Section 34183 in that fiscal
year and the amount distributed to taxing entities pursuant to that paragraph
in the 2012 -13 base year. Loan or deferral repayments made pursuant to
this paragraph shall take priority over amounts to be repaid pursuant to
subdivision (b) of Section 34191.4.
(f) If a development includes both low- and moderate- income housing
that meets the definition of a housing asset under subdivision (e) and other
types of property use, including, but not limited to, commercial use,
governmental use, open space, and parks, the oversight board shall consider
the overall value to the community as well as the benefit to taxing entities
of keeping the entire development intact or dividing the title and control
over the property between the housing successor and the successor agency
or other public or private agencies. The disposition of those assets may be
accomplished by a revenue - sharing arrangement as approved by the oversight
board on behalf of the affected taxing entities.
(g) (1) (A) The entity assuming the housing functions pursuant to this
section may designate the use of and commit indebtedness obligation
proceeds that remain after the satisfaction of enforceable obligations that
have been approved in a Recognized Obligation Payment Schedule and that
are consistent with the indebtedness obligation covenants. The proceeds
shall be derived from indebtedness obligations that were issued for the
purposes of affordable housing prior to January 1, 2011, and were backed
by the Low and Moderate Income Housing Fund. Enforceable obligations
may be satisfied by the creation of reserves for the projects that are the
subject of the enforceable obligation that are consistent with the contractual
obligations for those projects, or by expending funds to complete the projects.
(B) The entity assuming the housing functions pursuant to this section
shall provide notice to the successor agency of any designations of use or
commitments of funds specified in subparagraph (A) that it wishes to make
at least 20 days before the deadline for submission of the Recognized
Obligation Payment Schedule to the oversight board. Commitments and
designations shall not be valid and binding on any party until they are
included in an approved and valid Recognized Obligation Payment Schedule.
The review of these designations and commitments by the successor agency,
oversight board, and Department of Finance shall be limited to a
determination that the designations and commitments are consistent with
bond covenants and that there are sufficient funds available.
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(2) Funds shall be used and committed in a manner consistent with the
purposes of the Low and Moderate Income Housing Asset Fund.
Notwithstanding any other law, the successor agency shall retain and expend
the excess housing obligation proceeds at the discretion of the succeeding
housing entity, provided that the successor agency ensures that the proceeds
are expended in a manner consistent with the indebtedness obligation
covenants and with any requirements relating to the tax status of those
obligations. The amount expended shall not exceed the amount of
indebtedness obligation proceeds available and such expenditure shall
constitute the creation of excess housing proceeds expenditures to be paid
from the excess proceeds. Excess housing proceeds expenditures shall be
listed separately on the Recognized Obligation Payment Schedule submitted
by the successor agency.
SEC. 10. Section 34176.5 is added to the Health and Safety Code, to
read:
34176.5. (a) Notwithstanding any other law, the Director of Finance is
authorized to contract with auditors, lawyers, and other types of advisors
and consultants to assist, advise, and represent the director and the
Department of Finance in any matter or action arising out of or contemplated
by this part or Part 1.8 (commencing with Section 34161). In furtherance
of this authorization, Sections 14827.1, 14827.2, and 14838 of the
Government Code, and Article 4 (commencing with Section 10335) of
Chapter 2 of Part 2 of Division 2 of and Section 10295 of, the Public
Contract Code shall not apply to any agreement entered into by the director
pursuant to this section.
(b) In addition to the waivers of statute provided in subdivision (a),
Section 6072 of the Business and Professions Code shall not apply to the
legal services agreement entered into by the director pursuant to this section.
(c) This section shall remain in effect only until January 1, 2014, and as
of that date is repealed, unless a later enacted statute, that is enacted before
January 1, 2014, deletes or extends that date.
SEC. 11. Section 34177 of the Health and Safety Code is amended to
read:
34177. Successor agencies are required to do all of the following:
(a) Continue to make payments due for enforceable obligations.
(1) On and after February 1, 2012, and until a Recognized Obligation
Payment Schedule becomes operative, only payments required pursuant to
an enforceable obligations payment schedule shall be made. The initial
enforceable obligation payment schedule shall be the last schedule adopted
by the redevelopment agency under Section 34169. However, payments
associated with obligations excluded from the definition of enforceable
obligations by paragraph (2) of subdivision (d) of Section 34171 shall be
excluded from the enforceable obligations payment schedule and be removed
from the last schedule adopted by the redevelopment agency under Section
34169 prior to the successor agency adopting it as its enforceable obligations
payment schedule pursuant to this subdivision. The enforceable obligation
payment schedule may be amended by the successor agency at any public
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Ch. 26 —18—
meeting and shall be subject to the approval of the oversight board as soon
as the board has sufficient members to form a quorum. In recognition of
the fact that the timing of the California Supreme Court's ruling in the case
California Redevelopment Association v. Matosamos (2011) 53 CalAth
231 delayed the preparation by successor agencies and the approval by
oversight boards of the January 1, 2012, through June 30, 2012, Recognized
Obligation Payment Schedule, a successor agency may amend the
Enforceable Obligation Payment Schedule to authorize the continued
payment of enforceable obligations until the time that the January 1, 2012,
through June 30, 2012, Recognized Obligation Payment Schedule has been
approved by the oversight board and by the Department of Finance.
(2) The Department of Finance and the Controller shall each have the
authority to require any documents associated with the enforceable
obligations to be provided to them in a manner of their choosing. Any taxing
entity, the department, and the Controller shall each have standing to file a
judicial action to prevent a violation under this part and to obtain injunctive
or other appropriate relief.
(3) Commencing on the date the Recognized Obligation Payment
Schedule is valid pursuant to subdivision (1), only those payments listed in
the Recognized Obligation Payment Schedule may be made by the successor
agency from the funds specified in the Recognized Obligation Payment
Schedule. In addition, after it becomes valid, the Recognized Obligation
Payment Schedule shall supersede the Statement of Indebtedness, which
shall no longer be prepared nor have any effect under the Community
Redevelopment Law (Part 1 (commencing with Section 33000)).
(4) Nothing in the act adding this part is to be construed as preventing a
successor agency, with the prior approval of the oversight board, as described
in Section 34179, from making payments for enforceable obligations from
sources other than those listed in the Recognized Obligation Payment
Schedule.
(5) From February 1, 2012, to July 1, 2012, a successor agency shall
have no authority and is hereby prohibited from accelerating payment or
making any lump -sum payments that are intended to prepay loans unless
such accelerated repayments were required prior to the effective date of this
part.
(b) Maintain reserves in the amount required by indentures, trust
indentures, or similar documents governing the issuance of outstanding
redevelopment agency bonds.
(c) Perform obligations required pursuant to any enforceable obligation.
(d) Remit unencumbered balances of redevelopment agency funds to the
county auditor - controller for distribution to the taxing entities, including,
but not limited to, the unencumbered balance of the Low and Moderate
Income Housing Fund of a former redevelopment agency. In making the
distribution, the county auditor - controller shall utilize the same methodology
for allocation and distribution of property tax revenues provided in Section
34188.
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(e) Dispose of assets and properties of the former redevelopment agency
as directed by the oversight board; provided, however, that the oversight
board may instead direct the successor agency to transfer ownership of
certain assets pursuant to subdivision (a) of Section 34181. The disposal is
to be done expeditiously and in a manner aimed at maximizing value.
Proceeds from asset sales and related funds that are no longer needed for
approved development projects or to otherwise wind down the affairs of
the agency, each as determined by the oversight board, shall be transferred
to the county auditor - controller for distribution as property tax proceeds
under Section 34188. The requirements of this subdivision shall not apply
to a successor agency that has been issued a finding of completion by the
Department of Finance pursuant to Section 34179.7.
(f) Enforce all former redevelopment agency rights for the benefit of the
taxing entities, including, but not limited to, continuing to collect loans,
rents, and other revenues that were due to the redevelopment agency.
(g) Effectuate transfer of housing functions and assets to the appropriate
entity designated pursuant to Section 34176.
(h) Expeditiously wind down the affairs of the redevelopment agency
pursuant to the provisions of this part and in accordance with the direction
of the oversight board.
(i) Continue to oversee development of properties until the contracted
work has been completed or the contractual obligations of the former
redevelopment agency can be transferred to other parties. Bond proceeds
shall be used for the purposes for which bonds were sold unless the purposes
can no longer be achieved, in which case, the proceeds may be used to
defease the bonds.
0) Prepare a proposed administrative budget and submit it to the oversight
board for its approval. The proposed administrative budget shall include all
of the following:
(1) Estimated amounts for successor agency administrative costs for the
upcoming six -month fiscal period.
(2) Proposed sources of payment for the costs identified in paragraph
0).
(3) Proposals for arrangements for administrative and operations services
provided by a city, county, city and county, or other entity.
(k) Provide administrative cost estimates, from its approved administrative
budget that are to be paid from property tax revenues deposited in the
Redevelopment Property Tax Trust Fund, to the county auditor - controller
for each six -month fiscal period.
(l) (1) Before each six -month fiscal period, prepare a Recognized
Obligation Payment Schedule in accordance with the requirements of this
paragraph. For each recognized obligation, the Recognized Obligation
Payment Schedule shall identify one or more of the following sources of
payment:
(A) Low and Moderate Income Housing Fund.
(B) Bond proceeds.
(C) Reserve balances.
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Ch. 26 —20—
(D) Administrative cost allowance.
(E) The Redevelopment Property Tax Trust Fund, but only to the extent
no other funding source is available or when payment from property tax
revenues is required by an enforceable obligation or by the provisions of
this part.
(F) Other revenue sources, including rents, concessions, asset sale
proceeds, interest earnings, and any other revenues derived from the former
redevelopment agency, as approved by the oversight board in accordance
with this part.
(2) A Recognized Obligation Payment Schedule shall not be deemed
valid unless all of the following conditions have been met:
(A) A Recognized Obligation Payment Schedule is prepared by the
successor agency for the enforceable obligations of the former redevelopment
agency. The initial schedule shall project the dates and amounts of scheduled
payments for each enforceable obligation for the remainder of the time
period during which the redevelopment agency would have been authorized
to obligate property tax increment had the a redevelopment agency not been
dissolved.
(B) The Recognized Obligation Payment Schedule is submitted to and
duly approved by the oversight board. The successor agency shall submit
a copy of the Recognized Obligation Payment Schedule to the county
administrative officer, the county auditor - controller, and the Department of
Finance at the same time that the successor agency submits the Recognized
Obligation Payment Schedule to the oversight board for approval.
(C) A copy of the approved Recognized Obligation Payment Schedule
is submitted to the county auditor - controller and both the Controller's office
and the Department of Finance and be posted on the successor agency's
Internet Web site.
(3) The Recognized Obligation Payment Schedule shall be forward
looking to the next six months. The first Recognized Obligation Payment
Schedule shall be submitted to the Controller's office and the Department
of Finance by April 15, 2012, for the period of January 1, 2012, to June 30,
2012, inclusive. This Recognized Obligation Payment Schedule shall include
all payments made by the former redevelopment agency between January
1, 2012, through January 31, 2012, and shall include all payments proposed
to be made by the successor agency from February 1, 2012, through June
30, 2012. Former redevelopment agency enforceable obligation payments
due, and reasonable or necessary administrative costs due or incurred, prior
to January 1, 2012, shall be made from property tax revenues received in
the spring of 2011 property tax distribution, and from other revenues and
balances transferred to the successor agency.
(m) The Recognized Obligation Payment Schedule for the period of
January 1, 2013, to June 30, 2013, shall be submitted by the successor
agency, after approval by the oversight board, no later than September 1,
2012. Commencing with the Recognized Obligation Payment Schedule
covering the period July 1, 2013, through December 31, 2013, successor
agencies shall submit an oversight board - approved Recognized Obligation
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Payment Schedule to the Department of Finance and to the county
auditor - controller no fewer than 90 days before the date of property tax
distribution. The Department of Finance shall make its determination of the
enforceable obligations and the amounts and funding sources of the
enforceable obligations no later than 45 days after the Recognized Obligation
Payment Schedule is submitted. Within five business days of the
department's determination, a successor agency may request additional
review by the department and an opportunity to meet and confer on disputed
items. The meet and confer period may vary; an untimely submittal of a
Recognized Obligation Payment Schedule may result in a meet and confer
period of less than 30 days. The department shall notify the successor agency
and the county auditor - controllers as to the outcome of its review at least
15 days before the date of property tax distribution.
(1) The successor agency shall submit a copy of the Recognized
Obligation Payment Schedule to the Department of Finance electronically,
and the successor agency shall complete the Recognized Obligation Payment
Schedule in the manner provided for by the department. A successor agency
shall be in noncompliance with this paragraph if it only submits to the
department an electronic message or a letter stating that the oversight board
has approved a Recognized Obligation Payment Schedule.
(2) If a successor agency does not submit a Recognized Obligation
Payment Schedule by the deadlines provided in this subdivision, the city,
county, or city and county that created the redevelopment agency shall be
subject to a civil penalty equal to ten thousand dollars ($10,000) per day
for every day the schedule is not submitted to the department. The civil
penalty shall be paid to the county auditor - controller for allocation to the
taxing entities under Section 34183. If a successor agency fails to submit a
Recognized Obligation Payment Schedule by the deadline, any creditor of
the successor agency or the Department of Finance or any affected taxing
entity shall have standing to and may request a writ of mandate to require
the successor agency to immediately perform this duty. Those actions may
be filed only in the County of Sacramento and shall have priority over other
civil matters. Additionally, if an agency does not submit a Recognized
Obligation Payment Schedule within ten days of the deadline, the maximum
administrative cost allowance for that period shall be reduced by 25 percent.
(3) If a successor agency fails to submit to the department an oversight
board - approved Recognized Obligation Payment Schedule that complies
with all requirements of this subdivision within five business days of the
date upon which the Recognized Obligation Payment Schedule is to be used
to determine the amount of property tax allocations, the department may
determine if any amount should be withheld by the county auditor - controller
for payments for enforceable obligations from distribution to taxing entities,
pending approval of a Recognized Obligation Payment Schedule. The county
auditor - controller shall distribute the portion of any of the sums withheld
pursuant to this paragraph to the affected taxing entities in accordance with
paragraph (4) of subdivision (a) of Section 34183 upon notice by the
department that a portion of the withheld balances are in excess of the
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Ch. 26 —22—
amount of enforceable obligations. The county auditor - controller shall
distribute withheld funds to the successor agency only in accordance with
a Recognized Obligation Payment Schedule approved by the department.
County auditor - controllers shall lack the authority to withhold any other
amounts from the allocations provided for under Section 34183 or 34188
unless required by a court order.
(n) Cause a postaudit of the financial transactions and records of the
successor agency to be made at least annually by a certified public
accountant.
SEC. 12. Section 34177.3 is added to the Health and Safety Code, to
read:
34177.3. (a) Successor agencies shall lack the authority to, and shall
not, create new enforceable obligations under the authority of the Community
Redevelopment Law (Part 1 (commencing with Section 33000)) or begin
new redevelopment work, except in compliance with an enforceable
obligation that existed prior to June 28, 2011.
(b) Successor agencies may create enforceable obligations to conduct
the work of winding down the redevelopment agency, including hiring staff,
acquiring necessary professional administrative services and legal counsel,
and procuring insurance.
(e) Successor agencies shall lack the authority to, and shall not, transfer
any powers or revenues of the successor agency to any other party, public
or private, except pursuant to an enforceable obligation on a Recognized
Obligation Payment Schedule approved by the department. Any such
transfers of authority or revenues that are not made pursuant to an
enforceable obligation on a Recognized Obligation Payment Schedule
approved by the Department of Finance are hereby declared to be void, and
the successor agency shall take action to reverse any of those transfers. The
Controller may audit any transfer of authority or revenues prohibited by
this section and may order the prompt return of any money or other things
of value from the receiving party.
(d) Redevelopment agencies that resolved to participate in the Voluntary
Alternative Redevelopment Program under Chapter 6 of the First
Extraordinary Session of the Statutes of 2011 were and are subject to the
provisions of Part 1.8 (commencing with Section 34161). Any actions taken
by redevelopment agencies to create obligations after June 27, 2011, are
ultra vires and do not create enforceable obligations.
(e) The Legislature finds and declares that the provisions of this section
are declaratory of existing law.
SEC. 13. Section 34177.5 is added to the Health and Safety Code, to
read:
34177.5. (a) In addition to the powers granted to each successor agency,
and notwithstanding anything in the act adding this part, including, but not
limited to, Sections 34162 and 34189, a successor agency shall have the
authority, rights, and powers of the redevelopment agency to which it
succeeded solely for the following purposes:
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(1) For the purpose of issuing bonds or incurring other indebtedness to
refund the bonds or other indebtedness of its former redevelopment agency
or of the successor agency to provide savings to the successor agency,
provided that (A) the total interest cost to maturity on the refunding bonds
or other indebtedness plus the principal amount of the refunding bonds or
other indebtedness shall not exceed the total remaining interest cost to
maturity on the bonds or other indebtedness to be refunded plus the
remaining principal of the bonds or other indebtedness to be refunded and
(B) the principal amount of the refunding bonds or other indebtedness shall
not exceed the amount required to defease the refunded bonds or other
indebtedness, to establish customary debt service reserves, and to pay related
costs of issuance. If the foregoing conditions are satisfied, the initial principal
amount of the refunding bonds or other indebtedness may be greater than
the outstanding principal amount of the bonds or other indebtedness to be
refunded. The successor agency may pledge to the refunding bonds or other
indebtedness the revenues pledged to the bonds or other indebtedness being
refunded, and that pledge, when made in connection with the issuance of
such refunding bonds or other indebtedness, shall have the same lien priority
as the pledge of the bonds or other obligations to be refunded, and shall be
valid, binding, and enforceable in accordance with its terms.
(2) For the purpose of issuing bonds or other indebtedness to finance
debt service spikes, including balloon maturities, provided that (A) the
existing indebtedness is not accelerated, except to the extent necessary to
achieve substantially level debt service, and (B) the principal amount of the
bonds or other indebtedness shall not exceed the amount required to finance
the debt service spikes, including establishing customary debt service
reserves and paying related costs of issuance.
(3) For the purpose of amending an existing enforceable obligation under
which the successor agency is obligated to reimburse a political subdivision
of the state for the payment of debt service on a bond or other obligation of
the political subdivision, or to pay all or a portion of the debt service on the
bond or other obligation of the political subdivision to provide savings to
the successor agency, provided that (A) the enforceable obligation is
amended in connection with a refunding of the bonds or other obligations
of the political subdivision so that the enforceable obligation will apply to
the refunding bonds or other refunding indebtedness of the political
subdivision, (B) the total interest cost to maturity on the refunding bonds
or other indebtedness plus the principal amount of the refunding bonds or
other indebtedness shall not exceed the total remaining interest cost to
maturity on the bonds or other indebtedness to be refunded plus the
remaining principal of the bonds or other indebtedness to be refunded, and
(C) the principal amount of the refunding bonds or other indebtedness shall
not exceed the amount required to defease the refunded bonds or other
indebtedness, to establish customary debt service reserves and to pay related
costs of issuance. The pledge set forth in that amended enforceable
obligation, when made in connection with the execution of the amendment
of the enforceable obligation, shall have the same lien priority as the pledge
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Ch. 26 —24—
in the enforceable obligation prior to its amendment and shall be valid,
binding, and enforceable in accordance with its terms.
(4) For the purpose of issuing bonds or incurring other indebtedness to
make payments under enforceable obligations when the enforceable
obligations include the irrevocable pledge of property tax increment,
formerly tax increment revenues prior to the effective date of this part, or
other funds and the obligation to issue bonds secured by that pledge. The
successor agency may pledge to the bonds or other indebtedness the property
tax revenues and other funds described in the enforceable obligation, and
that pledge, when made in connection with the issuance of the bonds or the
incurring of other indebtedness, shall be valid, binding, and enforceable in
accordance with its terms. This paragraph shall not be deemed to authorize
a successor agency to increase the amount of property tax revenues pledged
under an enforceable obligation or to pledge any property tax revenue not
already pledged pursuant to an enforceable obligation. This paragraph does
not constitute a change in, but is declaratory of, the existing law.
(b) The refunding bonds authorized under this section may be issued
under the authority of Article 11 (commencing with Section 53580) of
Chapter 3 of Part I of Division 2 of Title 5 of the Government Code, and
the refunding bonds may be sold at public or private sale, or to a joint powers
authority pursuant to the Marks -Roos Local Bond Pooling Act (Article 4
(commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of
the Government Code).
(e) (1) Prior to incurring any bonds or other indebtedness pursuant to
this section, the successor agency may subordinate to the bonds or other
indebtedness the amount required to be paid to an affected taxing entity
pursuant to paragraph (1) of subdivision (a) of Section 34183, provided that
the affected taxing entity has approved the subordinations pursuant to this
subdivision.
(2) At the time the successor agency requests an affected taxing entity
to subordinate the amount to be paid to it, the successor agency shall provide
the affected taxing entity with substantial evidence that sufficient funds will
be available to pay both the debt service on the bonds or other indebtedness
and the payments required by paragraph (1) of subdivision (a) of Section
34183, when due.
(3) Within 45 days after receipt of the agency's request, the affected
taxing entity shall approve or disapprove the request for subordination. An
affected taxing entity may disapprove a request for subordination only if it
finds, based upon substantial evidence, that the successor agency will not
be able to pay the debt service payments and the amount required to be paid
to the affected taxing entity. If the affected taxing entity does not act within
45 days after receipt of the agency's request, the request to subordinate shall
be deemed approved and shall be final and conclusive.
(d) An action may be brought pursuant to Chapter 9 (commencing with
Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to determine
the validity of bonds or other obligations authorized by this section, the
pledge of revenues to those bonds or other obligations authorized by this
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section, the legality and validity of all proceedings theretofore taken and,
as provided in the resolution of the legislative body of the successor agency
authorizing the bonds or other obligations authorized by this section,
proposed to be taken for the authorization, execution, issuance, sale, and
delivery of the bonds or other obligations authorized by this section, and
for the payment of debt service on the bonds or the payment of amounts
under other obligations authorized by this section. Subdivision (c) of Section
33501 shall not apply to any such action. The Department of Finance shall
be notified of the filing of any action as an affected party.
(e) Notwithstanding any other law, including, but not limited to, Section
33501, an action to challenge the issuance of bonds, the incurrence of
indebtedness, the amendment of an enforceable obligation, or the execution
of a financing agreement by a successor agency shall be brought within 30
days after the date on which the oversight board approves the resolution of
the successor agency approving the issuance of bonds, the incurrence of
indebtedness, the amendment of an enforceable obligation, or the execution
of a financing agreement authorized under this section.
(t) The actions authorized in this section shall be subject to the approval
of the oversight board, as provided in Section 34180. Additionally, an
oversight board may direct the successor agency to commence any of the
transactions described in subdivision (a) so long as the successor agency is
able to recover its related costs in connection with the transaction. After a
successor agency, with approval of the oversight board, issues any bonds,
incurs any indebtedness, or executes an amended enforceable obligation
pursuant to subdivision (a), the oversight board shall not unilaterally approve
any amendments to or early termination of the bonds, indebtedness, or
enforceable obligation. If, under the authority granted to it by subdivision
(h) of Section 34179, the Department of Finance either reviews and approves
or fails to request review within five business days of an oversight board
approval of an action authorized by this section, the scheduled payments
on the bonds or other indebtedness shall be listed in the Recognized
Obligation Payment Schedule and shall not be subject to further review and
approval by the department or the Controller. The department may extend
its review time to 60 days for actions authorized in this section and may
seek the assistance of the Treasurer in evaluating proposed actions under
this section.
(g) Any bonds, indebtedness, or amended enforceable obligation
authorized by this section shall be considered indebtedness incurred by the
dissolved redevelopment agency, with the same legal effect as if the bonds,
indebtedness, financing agreement, or amended enforceable obligation had
been issued, incurred, or entered into prior to June 29, 2011, in full
conformity with the applicable provisions of the Community Redevelopment
Law that existed prior to that date, shall be included in the successor agency's
Recognized Obligation Payment Schedule, and shall be secured by a pledge
of, and lien on, and shall be repaid from moneys deposited from time to
time in the Redevelopment Property Tax Trust Fund established pursuant
to subdivision (c) of Section 34172, as provided in paragraph (2) of
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Ch. 26 —26—
subdivision (a) of Section 34183. Property tax revenues pledged to any
bonds, indebtedness, or amended enforceable obligations authorized by this
section are taxes allocated to the successor agency pursuant to subdivision
(b) of Section 33670 and Section 16 of Article XVI of the California
Constitution.
(h) The successor agency shall make diligent efforts to ensure that the
lowest long -term cost financing is obtained The financing shall not provide
for any bullets or spikes and shall not use variable rates. The successor
agency shall make use of an independent financial advisor in developing
financing proposals and shall make the work products of the financial advisor
available to the Department of Finance at its request.
(i) If an enforceable obligation provides for an irrevocable commitment
of property tax revenue and where allocation of such revenues is expected
to occur over time, the successor agency may petition the Department of
Finance to provide written confirmation that its determination of such
enforceable obligation as approved in a Recognized Obligation Payment
Schedule is final and conclusive, and reflects the department's approval of
subsequent payments made pursuant to the enforceable obligation. If the
confirmation is granted, then the department's review of such payments in
future Recognized Obligation Payment Schedules shall be limited to
confirming that they are required by the prior enforceable obligation.
0) The successor agency may request that the department provide a
written determination to waive the two -year statute of limitations on an
action to review the validity of the adoption or amendment of a
redevelopment plan pursuant to subdivision (c) of Section 33500 or on any
findings or determinations made by the agency pursuant to subdivision (d)
of Section 33500. The department at its discretion may provide a waiver if
it determines it is necessary for the agency to fulfill an enforceable
obligation.
SEC. 14. Section 34178 of the Health and Safety Code is amended to
read:
34178. (a) Commencing on the operative date of this part, agreements,
contracts, or arrangements between the city or county, or city and county
that created the redevelopment agency and the redevelopment agency are
invalid and shall not be binding on the successor agency; provided, however,
that a successor entity wishing to enter or reenter into agreements with the
city, county, or city and county that formed the redevelopment agency that
it is succeeding may do so upon obtaining the approval of its oversight
board. A successor agency or an oversight board shall not exercise the
powers granted by this subdivision to restore funding for an enforceable
obligation that was deleted or reduced by the Department of Finance pursuant
to subdivision (h) of Section 34179 unless it reflects the decisions made
during the meet and confer process with the Department of Finance or
pursuant to a court order.
(b) Notwithstanding subdivision (a), any of the following agreements
are not invalid and may bind the successor agency:
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(1) A duly authorized written agreement entered into at the time of
issuance, but in no event later than December 31, 2010, of indebtedness
obligations, and solely for the purpose of securing or repaying those
indebtedness obligations.
(2) A written agreement between a redevelopment agency and the city,
county, or city and county that created it that provided loans or other startup
funds for the redevelopment agency that were entered into within two years
of the formation of the redevelopment agency.
(3) A joint exercise of powers agreement in which the redevelopment
agency is a member of the joint powers authority. However, upon assignment
to the successor agency by operation of the act adding this part, the successor
agency's rights, duties, and performance obligations under that joint exercise
of powers agreement shall be limited by the constraints imposed on successor
agencies by the act adding this part.
SEC. 15. Section 34178.8 is added to the Health and Safety Code, to
read:
34178.8. Commencing on the effective date of the act adding this section,
the Controller shall review the activities of successor agencies in the state
to determine if an asset transfer has occurred after January 31, 2012, between
the successor agency and the city, county, or city and county that created a
redevelopment agency, or any other public agency, that was not made
pursuant to an enforceable obligation on an approved and valid Recognized
Obligation Payment Schedule. If such an asset transfer did occur, to the
extent not prohibited by state and federal law, the Controller shall order the
available assets to be returned to the successor agency. Upon receiving that
order from the Controller, an affected local agency shall, as soon as
praeticable, reverse the transfer and return the applicable assets to the
successor agency. This section shall not apply to housing assets as defined
in subdivision (e) of Section 34176.
SEC. 16. Section 34179 of the Health and Safety Code is amended to
read:
34179. (a) Each successor agency shall have an oversight board
composed of seven members. The members shall elect one of their members
as the chairperson and shall report the name of the chairperson and other
members to the Department of Finance on or before May 1, 2012. Members
shall be selected as follows:
(1) One member appointed by the county board of supervisors.
(2) One member appointed by the mayor for the city that formed the
redevelopment agency.
(3) (A) One member appointed by the largest special district, by property
tax share, with territory in the territorial jurisdiction of the former
redevelopment agency, which is of the type of special district that is eligible
to receive property tax revenues pursuant to Section 34188.
(B) On or after the effective date of this subparagraph, the county
auditor - controller may determine which is the largest special district for
purposes of this section.
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Ch. 26 —28—
(4) One member appointed by the county superintendent of education to
represent schools if the superintendent is elected. If the county superintendent
of education is appointed, then the appointment made pursuant to this
paragraph shall be made by the county board of education.
(5) One member appointed by the Chancellor of the California
Community Colleges to represent community college districts in the county.
(6) One member of the public appointed by the county board of
supervisors.
(7) One member representing the employees of the former redevelopment
agency appointed by the mayor or chair of the board of supervisors, as the
case may be, from the recognized employee organization representing the
largest number of former redevelopment agency employees employed by
the successor agency at that time. In the case where city or county employees
performed administrative duties of the former redevelopment agency, the
appointment shall be made from the recognized employee organization
representing those employees. If a recognized employee organization does
not exist for either the employees of the former redevelopment agency or
the city or county employees performing administrative duties of the former
redevelopment agency, the appointment shall be made from among the
employees of the successor agency. In voting to approve a contract as an
enforceable obligation, a member appointed pursuant to this paragraph shall
not be deemed to be interested in the contract by virtue of being an employee
of the successor agency or community for purposes of Section 1090 of the
Government Code.
(8) If the county or a joint powers agency formed the redevelopment
agency, then the largest city by acreage in the territorial jurisdiction of the
former redevelopment agency may select one member. If there are no cities
with territory in a project area of the redevelopment agency, the county
superintendent of education may appoint an additional member to represent
the public.
(9) If there are no special districts of the type that are eligible to receive
property tax pursuant to Section 34188, within the territorial jurisdiction of
the former redevelopment agency, then the county may appoint one member
to represent the public.
(10) If a redevelopment agency was formed by an entity that is both a
charter city and a county, the oversight board shall be composed of seven
members selected as follows: three members appointed by the mayor of the
city, if that appointment is subject to confirmation by the county board of
supervisors, one member appointed by the largest special district, by property
tax share, with territory in the territorial jurisdiction of the former
redevelopment agency, which is the type of special district that is eligible
to receive property tax revenues pursuant to Section 34188, one member
appointed by the county superintendent of education to represent schools,
one member appointed by the Chancellor of the California Community
Colleges to represent community college districts, and one member
representing employees of the former redevelopment agency appointed by
the mayor of the city if that appointment is subject to confirmation by the
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county board of supervisors, to represent the largest number of former
redevelopment agency employees employed by the successor agency at that
time.
(b) The Governor may appoint individuals to fill any oversight board
member position described in subdivision (a) that has not been filled by
May 15, 2012, or any member position that remains vacant for more than
60 days.
(c) The oversight board may direct the staff of the successor agency to
perform work in furtherance of the oversight board's duties and
responsibilities under this part. The successor agency shall pay for all of
the costs of meetings of the oversight board and may include such costs in
its administrative budget. Oversight board members shall serve without
compensation or reimbursement for expenses.
(d) Oversight board members are protected by the immunities applicable
to public entities and public employees governed by Part 1 (commencing
with Section 810) and Part 2 (commencing with Section 814) of Division
3.6 of Title I of the Government Code.
(e) A majority of the total membership of the oversight board shall
constitute a quorum for the transaction of business. A majority vote of the
total membership of the oversight board is required for the oversight board
to take action. The oversight board shall be deemed to be a local entity for
purposes of the Ralph M. Brown Act, the California Public Records Act,
and the Political Reform Act of 1974. All actions taken by the oversight
board shall be adopted by resolution.
(f) All notices required bylaw for proposed oversight board actions shall
also be posted on the successor agency's Internet Web site or the oversight
board's Internet Web site.
(g) Each member of an oversight board shall serve at the pleasure of the
entity that appointed such member.
(h) The Department of Finance may review an oversight board action
taken pursuant to this part. Written notice and information about all actions
taken by an oversight board shall be provided to the department by electronic
means and in a manner of the department's choosing. An action shall become
effective five business days after notice in the manner specified by the
department is provided unless the department requests a review. Each
oversight board shall designate an official to whom the department may
make those requests and who shall provide the department with the telephone
number and e -mail contact information for the purpose of communicating
with the department pursuant to this subdivision. Except as otherwise
provided in this part, in the event that the department requests a review of
a given oversight board action, it shall have 40 days from the date of its
request to approve the oversight board action or return it to the oversight
board for reconsideration and the oversight board action shall not be effective
until approved by the department. In the event that the department returns
the oversight board action to the oversight board for reconsideration, the
oversight board shall resubmit the modified action for department approval
and the modified oversight board action shall not become effective until
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Ch. 26 —30—
approved by the department. If the department reviews a Recognized
Obligation Payment Schedule, the department may eliminate or modify any
item on that schedule prior to its approval. The county auditor - controller
shall reflect the actions of the department in determining the amount of
property tax revenues to allocate to the successor agency. The department
shall provide notice to the successor agency and the county auditor - controller
as to the reasons for its actions. To the extent that an oversight board
continues to dispute a determination with the department, one or more future
recognized obligation schedules may reflect any resolution of that dispute.
The department may also agree to an amendment to a Recognized Obligation
Payment Schedule to reflect a resolution of a disputed item; however, this
shall not affect a past allocation of property tax or create a liability for any
affected taxing entity.
(i) Oversight boards shall have fiduciary responsibilities to holders of
enforceable obligations and the taxing entities that benefit from distributions
of property tax and other revenues pursuant to Section 34188. Further, the
provisions of Division 4 (commencing with Section 1000) of the Government
Code shall apply to oversight boards. Notwithstanding Section 1099 of the
Government Code, or any other law, any individual may simultaneously be
appointed to up to five oversight boards and may hold an office in a city,
county, city and county, special district, school district, or community college
district.
0) Commencing on and after July 1, 2016, in each county where more
than one oversight board was created by operation of the act adding this
part, there shall be only one oversight board appointed as follows:
(1) One member may be appointed by the county board of supervisors.
(2) One member may be appointed by the city selection committee
established pursuant to Section 50270 of the Government Code. In a city
and county, the mayor may appoint one member.
(3) One member may be appointed by the independent special district
selection committee established pursuant to Section 56332 of the
Government Code, for the types of special districts that are eligible to receive
property tax revenues pursuant to Section 34188.
(4) One member may be appointed by the county superintendent of
education to represent schools if the superintendent is elected. If the county
superintendent of education is appointed, then the appointment made
pursuant to this paragraph shall be made by the county board of education.
(5) One member may be appointed by the Chancellor of the California
Community Colleges to represent community college districts in the county.
(6) One member of the public may be appointed by the county board of
supervisors.
(7) One member may be appointed by the recognized employee
organization representing the largest number of successor agency employees
in the county.
(k) The Governor may appoint individuals to fill any oversight board
member position described in subdivision 0) that has not been filled by July
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15, 2016, or any member position that remains vacant for more than 60
days.
(1) Commencing on and after July 1, 2016, in each county where only
one oversight board was created by operation of the act adding this part,
then there will be no change to the composition of that oversight board as
a result of the operation of subdivision (b).
(m) Any oversight board for a given successor agency shall cease to exist
when all of the indebtedness of the dissolved redevelopment agency has
been repaid.
(n) An oversight board may direct a successor agency to provide
additional legal or financial advice than what was given by agency staff.
(o) An oversight board is authorized to contract with the county or other
public or private agencies for administrative support.
(p) On matters within the purview of the oversight board, decisions made
by the oversight board supersede those made by the successor agency or
the staff of the successor agency.
SEC. 17. Section 34179.5 is added to the Health and Safety Code, to
read:
34179.5. (a) In furtherance of subdivision (d) of Section 34177, each
successor agency shall employ a licensed accountant, approved by the county
auditor - controller and with experience and expertise in local government
accounting, to conduct a due diligence review to determine the unobligated
balances available for transfer to taxing entities. As an alternative, an audit
provided by the county auditor - controller that provides the information
required by this section may be used to comply with this section with the
concurrence of the oversight board.
(b) For purposes of this section the following terms shall have the
following meanings:
(1) "Cash" and "cash equivalents" includes, but is not limited to, cash
in hand, bank deposits, Local Agency Investment Fund deposits, deposits
in the city or county treasury or any other pool, marketable securities,
commercial paper, United States Treasury bills, banker's acceptances,
payables on demand and amounts due from other parties as defined in
subdivision (c), and any other money owned by the successor agency.
(2) "Enforceable obligation" includes any of the items listed in
subdivision (d) of Section 34171, contracts detailing specific work to be
performed that were entered into by the former redevelopment agency prior
to June 28, 2011, with a third party that is other than the city, county, or
city and county that created the former redevelopment agency, and
indebtedness obligations as defined in subdivision (e) of Section 34171.
(3) "Transferred" means the transmission of money to another party that
is not in payment for goods or services or an investment or where the
payment is de minimus. Transfer also means where the payments are
ultimately merely a restriction on the use of the money.
(c) At a minimum, the review required by this section shall include the
following:
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Ch. 26 —32—
(1) The dollar value of assets transferred from the former redevelopment
agency to the successor agency on or about February 1, 2012.
(2) The dollar value of assets and cash and cash equivalents transferred
after January 1, 2011, through June 30, 2012, by the redevelopment agency
or the successor agency to the city, county, or city and county that formed
the redevelopment agency and the purpose of each transfer. The review
shall provide documentation of any enforceable obligation that required the
transfer.
(3) The dollar value of any cash or cash equivalents transferred after
January 1, 2011, through June 30, 2012, by the redevelopment agency or
the successor agency to any other public agency or private parry and the
purpose of each transfer. The review shall provide documentation of any
enforceable obligation that required the transfer.
(4) The review shall provide expenditure and revenue accounting
information and identify transfers and funding sources for the 2010 -11 and
2011 -12 fiscal years that reconciles balances, assets, and liabilities of the
successor agency on June 30, 2012 to those reported to the Controller for
the 2009 -10 fiscal year.
(5) A separate accounting for the balance for the Low and Moderate
Income Housing Fund for all other funds and accounts combined shall be
made as follows:
(A) A statement of the total value of each fund as of June 30, 2012.
(B) An itemized statement listing any amounts that are legally restricted
as to purpose and cannot be provided to taxing entities. This could include
the proceeds of any bonds, grant funds, or funds provided by other
governmental entities that place conditions on their use.
(C) An itemized statement of the values of any assets that are not cash
or cash equivalents. This may include physical assets, land, records, and
equipment. For the purpose of this accounting, physical assets may be valued
at purchase cost or at any recently estimated market value. The statement
shall list separately housing - related assets.
(D) An itemized listing of any current balances that are legally or
contractually dedicated or restricted for the funding of an enforceable
obligation that identifies the nature of the dedication or restriction and the
specific enforceable obligation. In addition, the successor agency shall
provide a listing of all approved enforceable obligations that includes a
projection of annual spending requirements to satisfy each obligation and
a projection of annual revenues available to fund those requirements. If a
review finds that future revenues together with dedicated or restricted
balances are insufficient to fund future obligations and thus retention of
current balances is required, it shall identify the amount of current balances
necessary for retention. The review shall also detail the projected property
tax revenues and other general purpose revenues to be received by the
successor agency, together with both the amount and timing of the bond
debt service payments of the successor agency, for the period in which the
oversight board anticipates the successor agency will have insufficient
property tax revenue to pay the specified obligations.
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(E) An itemized list and analysis of any amounts of current balances that
are needed to satisfy obligations that will be placed on the Recognized
Obligation Payment Schedules for the current fiscal year.
(6) The review shall total the net balances available after deducting the
total amounts described in subparagraphs (B) to (E), inclusive, ofparagraph
(5). The review shall add any amounts that were transferred as identified in
paragraphs (2) and (3) of subdivision (c) if an enforceable obligation to
make that transfer did not exist. The resulting sum shall be available for
allocation to affected taxing entities pursuant to Section 34179.6. It shall
be a rebuttable presumption that cash and cash equivalent balances available
to the successor agency are available and sufficient to disburse the amount
determined in this paragraph to taxing entities. If the review finds that there
are insufficient cash balances to transfer or that cash or cash equivalents are
specifically obligated to the purposes described in subparagraphs (B), (D),
and (E) of paragraph (5) in such amounts that there is insufficient cash to
provide the full amount determined pursuant to this paragraph, that amount
shall be demonstrated in an additional itemized schedule.
SEC. 18. Section 34179.6 is added to the Health and Safety Code, to
read:
34179.6. The review required pursuant to Section 34179.5 shall be
submitted to the oversight board for review. The successor agency shall
submit a copy of the Recognized Obligation Payment Schedule to the county
administrative officer, the county auditor - controller, and the Department of
Finance at the same time that the successor agency submits the review to
the oversight board for review.
(a) By October 1, 2012, each successor agency shall provide to the
oversight board, the county auditor - controller, the Controller, and the
Department of Finance the results of the review conducted pursuant to
Section 34179.5 for the Low and Moderate Income Housing Fund and
specifically the amount of cash and cash equivalents determined to be
available for allocation to taxing entities. By December 15, 2012, each
successor agency shall provide to the oversight board, the county
auditor - controller, the Controller, and the department the results of the
review conducted pursuant to Section 34179.5 for all of the other fund and
account balances and specifically the amount of cash and cash equivalents
determined to be available for allocation to taxing entities. The department
may request any supporting documentation and review results to assist in
its review under subdivision (d). The department may specify the form and
manner information about the review shall be provided to it.
(b) Upon receipt of the review, the oversight board shall convene a public
comment session to take place at least five business days before the oversight
board holds the approval vote specified in subdivision (c). The oversight
board also shall consider any opinions offered by the county
auditor - controller on the review results submitted by the successor agencies.
(c) By October 15, 2012, for the Low and Moderate Income Housing
Fund and by January 15, 2013, for all other funds and accounts, the oversight
board shall review, approve, and transmit to the department and the county
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Ch. 26 —34—
auditor- controller the determination of the amount of cash and cash
equivalents that are available for disbursement to taxing entities as
determined according to the method provided in Section 34179.5. The
oversight board may adjust any amount provided in the review to reflect
additional information and analysis. The review and approval shall occur
in public sessions. The oversight board may request from the successor
agency any materials it deems necessary to assist in its review and approval
of the determination. The oversight board shall be empowered to authorize
a successor agency to retain assets or funds identified in subparagraphs (B)
to (E), inclusive, of paragraph (5) of subdivision (c) of Section 34179.5. An
oversight board that makes that authorization also shall identify to the
department the amount of funds authorized for retention, the source of those
funds, and the purposes for which those funds are being retained. The
determination and authorization to retain funds and assets shall be subject
to the review and approval of the department pursuant to subdivision (d).
(d) The department may adjust any amount associated with the
determination of the resulting amount described in paragraph (6) of
subdivision (c) of Section 34179.5 based on its analysis and information
provided by the successor agency and others. The department shall consider
any findings or opinions of the county auditor - controllers and the Controller.
The department shall complete its review of the determinations provided
pursuant to subdivision (e) no later than November 9, 2012, for the Low
and Moderate Income Housing Fund and also shall notify the oversight
board and the successor agency of its decision to overturn any decision of
the oversight board to authorize a successor agency to retain assets or funds
made pursuant to subdivision (c). The department shall complete its review
of the determinations provided pursuant to subdivision (c) no later than
April 1, 2013, for the other funds and accounts and also shall notify the
oversight board and the successor agency of its decision to overturn any
oversight board authorizations made pursuant to subdivision (c). The
department shall provide the oversight board and the successor agency an
explanation of its basis for overturning or modifying any findings,
determinations, or authorizations of the oversight board made pursuant to
subdivision (c).
(e) The successor agency and the entity or entities that created the former
redevelopment agency may request to meet and confer with the department
to resolve any disputes regarding the amounts or sources of funds identified
as determined by the department. The request shall be made within five
business days of the transmission, and no later than November 16, 2012,
for the determination regarding the Low and Moderate Income Housing
Fund, to the successor agency or the designated local authority of the
department's determination, decisions, and explanations and shall be
accompanied by an explanation and documentation of the basis of the
dispute. The department shall meet and confer with the requesting party
and modify its determinations and decisions accordingly. The department
shall either confirm or modify its determinations and decisions within 30
days of the request to meet and confer.
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(f) Each successor agency shall transmit to the county auditor - controller
the amount of funds required pursuant to the determination of the department
within five working days of receipt of the notification under subdivision (c)
or (e) if a meet and confer request is made. Successor agencies shall make
diligent efforts to recover any money determined to have been transferred
without an enforceable obligation as described in paragraphs (2) and (3) of
subdivision (c) of Section 341795. The department shall notify the county
auditor - controllers of its actions and the county auditor - controllers shall
disburse the funds received from successor agencies to taxing entities
pursuant to Section 34188 within five working days of receipt. Amounts
received after November 28, 2012, and April 10, 2013, may be held and
disbursed with the regular payments to taxing entities pursuant to Section
34183.
(g) By December 1, 2012, the county auditor - controller shall provide the
department a report specifying the amount submitted by each successor
agency pursuant to subdivision (d) for low- and moderate- income housing
funds, and specifically noting those successor agencies that failed to remit
the full required amount. By April 20, 2013, the county auditor - controller
shall provide the department a report detailing the amount submitted by
each successor agency pursuant to subdivision (d) for all other funds and
accounts, and specifically noting those successor agencies that failed to
remit the full required amount.
(h) If a successor agency fails to remit to the county auditor- controller
the sums identified in subdivisions (d) and (0, by the deadlines specified
in those subdivisions, the following remedies are available:
(1) (A) If the successor agency cannot promptly recover the funds that
have been transferred to another public agency without an enforceable
obligation as described in paragraphs (2) and (3) of subdivision (c) of Section
34179.5, the funds may be recovered through an offset of sales and use tax
or property tax allocations to the local agency to which the funds were
transferred. To recover such funds, the Department of Finance may order
the State Board of Equalization to make an offset pursuant to subdivision
(a) of Section 34179.8. If the Department of Finance does not order a sales
tax offset, the county auditor - controller may reduce the property tax
allocations to any local agency in the county that fails to repay funds pursuant
to subdivision (e) of Section 34179.8.
(B) The county auditor- controller and the department shall each have
the authority to demand the return of funds improperly spent or transferred
to a private person or other private entity. If funds are not repaid within 60
days, they may be recovered through any lawful means of collection and
are subject to a ten percent penalty plus interest at the rate charged for late
personal income tax payments from the date the improper payment was
made to the date the money is repaid.
(C) If the city, county, or city and county that created the former
redevelopment agency is also performing the duties of the successor agency,
the Department of Finance may order an offset to the distribution provided
to the sales and use tax revenue to that agency pursuant to subdivision (a)
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Ch. 26 —36—
of Section 34179.8. This offset shall be equal to the amount the successor
fails to remit pursuant to subdivision (f). If the Department of Finance does
not order a sales tax offset, the county auditor - controller may reduce the
property tax allocations of the city, county, or city and county that created
the former redevelopment agency pursuant to subdivision (c) of Section
34179.8.
(D) The department and the county auditor - controller shall coordinate
their actions undertaken pursuant to this paragraph.
(2) Alternatively or in addition to the remedies provided in paragraph
(1), the department may direct the county auditor - controller to deduct the
unpaid amount from future allocations of property tax to the successor
agency under Section 34183 until the amount of payment required pursuant
to subdivision (d) is accomplished.
(3) If the Department of Finance determines that payment of the full
amount required under subdivision (d) is not currently feasible or would
jeopardize the ability of the successor agency to pay enforceable obligations
in a timely manner, it may agree to an installment payment plan.
(i) (1) If a legal action contesting a withholding effectuated by the State
Board of Equalization pursuant to subparagraphs (B), (C), or (B) and (C)
of paragraph (2) of subdivision (b) of Section 34183.5 is successful and
results in a final judicial determination, the court shall order the state to pay
to the prevailing party a penalty equal to a percentage of the amount of
funds found by the court to be improperly withheld, as provided in Section
34179.8. This percentage shall be equivalent to the number of months the
funds have been found by the court to be improperly withheld, not to exceed
10 percent.
(2) If a legal action contesting an offset effectuated by the State Board
of Equalization or the county auditor - controller pursuant to subdivision (h)
is successful and results in a final judicial determination, the court shall
order the state or the county auditor - controller to pay to the prevailing party
a penalty equal to 10 percent of the amount of funds found by the court to
be improperly offset, as provided in Section 34179.8.
0) If a legal challenge to invalidate any provision in subdivision (h) or
subparagraph (B) or (C), or subparagraphs (B) and (C) of paragraph (2) of
subdivision (b) of Section 34183.5 is successful and results in a final judicial
determination, the invalidated provision shall become inoperative and
subdivision (i) shall become inoperative with respect to the invalidated
provision.
SEC. 19, Section 34179.7 is added to the Health and Safety Code, to
read:
34179.7. Upon full payment of the amounts determined in subdivision
(d) or (e) of Section 34179.6 as reported by the county auditor - controller
pursuant to subdivision (g) of Section 34179.6 and of any amounts due as
determined by Section 34183.5, or upon a final judicial determination of
the amounts due and confirmation that those amounts have been paid by
the county auditor - controller, the department shall issue, within five business
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days, a finding of completion of the requirements of Section 34179.6 to the
successor agency.
SEC. 20. Section 34179.8 is added to the Health and Safety Code, to
read:
34179.8. (a) If an offset or withholding of sales and use tax is ordered
by the Department of Finance pursuant to this part, the State Board of
Equalization shall reduce the distribution of sales and use taxes collected
under Chapter 1 (commencing with Section 7200) of fart 1.5 of Division
2 of the Revenue and Taxation Code to the entity that is the subject of the
offset or withholding and shall direct the Controller to issue a warrant in
the amount of any offset pursuant to subdivision (h) of Section 34179.6 to
the county auditor- controller. The county auditor - controller shall distribute
this amount to the taxing entities for the former redevelopment area
according to Section 34188.
(b) (1) If a court has issued a final judicial determination or the
department determines that some or all of the amount collected through the
offset of sales and use tax has been paid by another means and no additional
amount is owed, the court or the department shall notify the State Board of
Equalization of that determination. Upon notification, the State Board of
Equalization shall reverse the relevant amount of sales and use tax offset,
add any penalty payable under subdivision (i) of Section 34179.6, and adjust
the next distribution of sales and use tax to the affected local entity by
reducing the allocation of tax to the General Fund and increasing the
distribution to the local entity by that sum.
(2) The board shall inform the Controller of the reversal of the offset of
sales and use tax undertaken pursuant to paragraph (1). The Controller shall
send a demand for payment to the county auditor - controller for the amount
of the offset reversal, excluding any penalty amount determined by the court
pursuant to subdivision (i) of Section 34179.6 to be applicable to the offset.
The auditor - controller shall reduce allocations to taxing entities in the next
distributions under Section 34188 until the amount of the reversed offset is
recovered and shall pay such recovered amounts to the State Controller for
deposit in the General Fund.
(c) (1) If an offset of property tax is ordered by the county
auditor - controller pursuant to this part, the auditor - controller shall reduce
the distribution of property taxes to the entity that is the subject of the offset
and shall distribute the amount to the taxing entities for the former
redevelopment area according to Section 34188.
(2) If a court has issued a final judicial determination or the department
determines that some or all of the amount collected through the offset made
pursuant to paragraph (1) has been paid by another means and no additional
amount is owed, the court or the department shall notify the county
auditor - controller of that determination. Upon notification, the county
auditor - controller shall reverse the relevant amount of property tax revenues
offset in the next distribution of property tax to the affected local entity by
reducing the allocation of tax to the taxing entities of the former
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Ch. 26 —38—
redevelopment area under Section 34188 and increasing the distribution of
property taxes to the local entity that was subject to the offset.
SEC. 21. Section 34180 of the Health and Safety Code is amended to
read:
34180. All of the following successor agency actions shall first be
approved by the oversight board:
(a) The establishment of new repayment terms for outstanding loans
where the terms have not been specified prior to the date of this part. An
oversight board shall not have the authority to reestablish loan agreements
between the successor agency and the city, county, or city and county that
formed the redevelopment agency except as provided in Chapter 9
(commencing with Section 34191.1).
(b) The issuance of bonds or other indebtedness or the pledge or
agreement for the pledge of property tax revenues (formerly tax increment
prior to the effective date of this part) pursuant to subdivision (a) of Section
34177.5.
(c) Setting aside of amounts in reserves as required by indentures, trust
indentures, or similar documents governing the issuance of outstanding
redevelopment agency bonds.
(d) Merging of project areas.
(e) Continuing the acceptance of federal or state grants, or other forms
of financial assistance from either public or private sources, if that assistance
is conditioned upon the provision of matching funds, by the successor entity
as successor to the former redevelopment agency, in an amount greater than
5 percent.
(f) (1) If a city, county, or city and county wishes to retain any properties
or other assets for future redevelopment activities, funded from its own
funds and under its own auspices, it must reach a compensation agreement
with the other taxing entities to provide payments to them in proportion to
their shares of the base property tax, as determined pursuant to Section
34188, for the value of the property retained.
(2) If no other agreement is reached on valuation of the retained assets,
the value will be the fair market value as of the 2011 property tax lien date
as determined by an independent appraiser approved by the oversight board.
(g) Establishment of the Recognized Obligation Payment Schedule.
(h) A request by the successor agency to enter into an agreement with
the city, county, or city and county that formed the redevelopment agency
that it is succeeding. An oversight board shall not have the authority to
reestablish loan agreements between the successor agency and the city,
county, or city and county that formed the redevelopment agency except as
provided in Chapter 9 (commencing with Section 34191.1). Any actions to
reestablish any other agreements that are in furtherance of enforceable
obligations, with the city, county, or city and county that formed the
redevelopment agency are invalid until they are included in an approved
and valid Recognized Obligation Payment Schedule.
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(i) A request by a successor agency or taxing entity to pledge, or to enter
into an agreement for the pledge of, property tax revenues pursuant to
subdivision (b) of Section 34178.
0) Any document submitted by a successor agency to an oversight board
for approval by any provision of this part shall also be submitted to the
county administrative officer, the county auditor - controller, and the
Department of Finance at the same time that the successor agency submits
the document to the oversight board.
SEC. 22. Section 34181 of the Health and Safety Code is amended to
read:
34181. The oversight board shall direct the successor agency to do all
of the following:
(a) Dispose of all assets and properties of the former redevelopment
agency; provided, however, that the oversight board may instead direct the
successor agency to transfer ownership of those assets that were constructed
and used for a governmental purpose, such as roads, school buildings, parks,
police and fire stations, libraries, and local agency administrative buildings,
to the appropriate public jurisdiction pursuant to any existing agreements
relating to the construction or use of such an asset. Any compensation to
be provided to the successor agency for the transfer of the asset shall be
governed by the agreements relating to the construction or use of that asset.
Disposal shall be done expeditiously and in a manner aimed at maximizing
value. Asset disposition may be accomplished by a distribution of income
to taxing entities proportionate to their property tax share from one or more
properties that may be transferred to a public or private agency for
management pursuant to the direction of the oversight board.
(b) Cease performance in connection with and terminate all existing
agreements that do not qualify as enforceable obligations.
(c) Transfer housing assets pursuant to Section 34176.
(d) Terminate any agreement, between the dissolved redevelopment
agency and any public entity located in the same county, obligating the
redevelopment agency to provide funding for any debt service obligations
of the public entity or for the construction, or operation of facilities owned
or operated by such public entity, in any instance where the oversight board
has found that early termination would be in the best interests of the taxing
entities.
(e) Determine whether any contracts, agreements, or other arrangements
between the dissolved redevelopment agency and any private parties should
be terminated or renegotiated to reduce liabilities and increase net revenues
to the taxing entities, and present proposed termination or amendment
agreements to the oversight board for its approval. The board may approve
any amendments to or early termination of those agreements if it finds that
amendments or early termination would be in the best interests of the taxing
entities.
(f) All actions taken pursuant to subdivisions (a) and (c) shall be approved
by resolution of the oversight board at a public meeting after at least 10
days' notice to the public of the specific proposed actions. The actions shall
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Ch. 26 —40—
be subject to review by the Department of Finance pursuant to Section 34179
except that the department may extend its review period by up to 60 days.
If the department does not object to an action subject to this section, and if
no action challenging an action is commenced within 60 days of the approval
of the action by the oversight board, the action of the oversight board shall
be considered final and can be relied upon as conclusive by any person. If
an action is brought to challenge an action involving title to or an interest
in real property, a notice of pendency of action shall be recorded by the
claimant as provided in Title 4.5 (commencing with Section 405) of Part 2
of the Code of Civil Procedure within a 60 -day period.
SEC. 23. Section 34182 of the Health and Safety Code is amended to
read:
34182. (a) (1) The county auditor - controller shall conduct or cause to
be conducted an agreed -upon procedures audit of each redevelopment agency
in the county that is subject to this part, to be completed by October 1, 2012.
(2) The purpose of the audits shall be to establish each redevelopment
agency's assets and liabilities, to document and determine each
redevelopment agency's passthrough payment obligations to other taxing
entities, and to document and determine both the amount and the terms of
any indebtedness incurred by the redevelopment agency pursuant to the
initial Recognized Obligation Payment Schedule.
(3) The county auditor - controller may charge the Redevelopment Property
Tax Trust Fund for any costs incurred by the county auditor - controller
pursuant to this part.
(b) By October 5, 2012, the county auditor - controller shall provide the
Controller's office and the Department of Finance a copy of all audits
performed pursuant to this section. The county auditor - controller shall
maintain a copy of all documentation and working papers for use by the
Controller.
(c) (1) The county auditor - controller shall determine the amount of
property taxes that would have been allocated to each redevelopment agency
in the county had the redevelopment agency not been dissolved pursuant to
the operation of the act adding this part. These amounts are deemed property
tax revenues within the meaning of subdivision (a) of Section 1 of Article
XIII A of the California Constitution and are available for allocation and
distribution in accordance with the provisions of the act adding this part.
The county auditor - controller shall calculate the property tax revenues using
current assessed values on the last equalized roll on August 20, pursuant to
Section 2052 of the Revenue and Taxation Code, and pursuant to statutory
formulas or contractual agreements with other taxing entities, as of the
effective date of this section, and shall deposit that amount in the
Redevelopment Property Tax Trust Fund.
(2) Each county auditor - controller shall administer the Redevelopment
Property Tax Trust Fund for the benefit of the holders of former
redevelopment agency enforceable obligations and the taxing entities that
receive passthrough payments and distributions of property taxes pursuant
to this part.
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(3) In connection with the allocation and distribution by the county
auditor - controller of property tax revenues deposited in the Redevelopment
Property Tax Trust Fund, in compliance with this part, the county
auditor - controller shall prepare estimates of amounts of property tax to be
allocated and distributed and the amounts of passthrough payments to be
made in the upcoming six -month period, and provide those estimates to
both the entities receiving the distributions and the Department of Finance,
no later than October 1 and April I of each year.
(4) Each county auditor - controller shall disburse proceeds of asset sales
or reserve balances, which have been received from the successor entities
pursuant to Sections 34177 and 34187, to the taxing entities. In making such
a distribution, the county auditor - controller shall utilize the same
methodology for allocation and distribution of property tax revenues
provided in Section 34188.
(d) By October 1, 2012, the county auditor - controller shall report the
following information to the Controller's office and the Director of Finance:
(1) The sums of property tax revenues remitted to the Redevelopment
Property Tax Trust Fund related to each former redevelopment agency.
(2) The sums of property tax revenues remitted to each agency under
paragraph (1) of subdivision (a) of Section 34183.
(3) The sums of property tax revenues remitted to each successor agency
pursuant to paragraph (2) of subdivision (a) of Section 34183.
(4) The sums of property tax revenues paid to each successor agency
pursuant to paragraph (3) of subdivision (a) of Section 34183.
(5) The sums paid to each city, county, and special district, and the total
amount allocated for schools pursuant to paragraph (4) of subdivision (a)
of Section 34183.
(6) Any amounts deducted from other distributions pursuant to
subdivision (b) of Section 34183.
(e) A county auditor- controller may charge the Redevelopment Property
Tax Trust Fund for the costs of administering the provisions of this part.
(f) The Controller may audit and review any county auditor - controller
action taken pursuant to the act adding this part. As such, all county
auditor - controller actions shall not be effective for three business days,
pending a request for review by the Controller. In the event that the
Controller requests a review of a given county auditor - controller action, he
or she shall have 10 days from the date of his or her request to approve the
county auditor - controller's action or return it to the county auditor - controller
for reconsideration and the county auditor - controller's action shall not be
effective until approved by the Controller. In the event that the Controller
returns the county auditor - controller's action to the county auditor - controller
for reconsideration, the county auditor - controller must resubmit the modified
action for Controller approval and the modified county auditor- controller's
action shall not become effective until approved by the Controller.
SEC. 24. Section 34182.5 is added to the Health and Safety Code, to
read:
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Ch. 26 —42—
34182.5. A county auditor - controller may review the Recognized
Obligation Payment Schedules and object to the inclusion of any items that
are not demonstrated to be enforceable obligations and may object to the
funding source proposed for any items. This review may take place prior
to the submission of the Recognized Obligation Payment Schedule to the
oversight board or subsequent to oversight board action. The county
auditor - controller shall promptly transmit notice of any of those objections
to the successor agency, the oversight board, and the Department of Finance.
Notice shall be given at least 60 days prior to an allocation date specified
in Section 34183, except that for the January 1, 2013 to June 30, 2013
Recognized Obligation Payment Schedule, notice shall be given no later
than October 1, 2012. If an oversight board disputes the finding of the county
auditor- controller, it may refer the matter to the Department of Finance for
a determination of what will be approved for inclusion in the Recognized
Obligation Payment Schedule.
SEC. 25. Section 34183 of the Health and Safety Code is amended to
read:
34183. (a) Notwithstanding any other law, from February 1, 2012, to
July 1, 2012, and for each fiscal year thereafter, the county auditor - controller
shall, after deducting administrative costs allowed under Section 34182 and
Section 95.3 of the Revenue and Taxation Code, allocate moneys in each
Redevelopment Property Tax Trust Fund as follows:
(1) Subject to any prior deductions required by subdivision (b), first, the
county auditor - controller shall remit from the Redevelopment Property Tax
Trust Fund to each local agency and school entity an amount of property
tax revenues in an amount equal to that which would have been received
under Section 33401, 33492.140, 33607, 33607.5, 33607.7, or 33676, as
those sections read on January 1, 2011, or pursuant to any passthrough
agreement between a redevelopment agency and a taxing entity that was
entered into prior to January 1, 1994, that would be in force during that
fiscal year, had the redevelopment agency existed at that time. The amount
of the payments made pursuant to this paragraph shall be calculated solely
on the basis of passthrough payment obligations, existing prior to the
effective date of this part and continuing as obligations of successor entities,
shall occur no later than May 16, 2012, and no later than June 1, 2012, and
each January 2 and June 1 thereafter. Notwithstanding subdivision (e) of
Section 33670, that portion of the taxes in excess of the amount identified
in subdivision (a) of Section 33670, which are attributable to a tax rate
levied by a taxing entity for the purpose of producing revenues in an amount
sufficient to make annual repayments of the principal of, and the interest
on, any bonded indebtedness for the acquisition or improvement of real
property shall be allocated to, and when collected shall be paid into, the
fund of that taxing entity. The amount of passthrough payments computed
pursuant to this section, including any passthrough agreements, shall be
computed as though the requirement to set aside funds for the Low and
Moderate Income Housing Fund was still in effect.
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(2) Second, on June 1, 2012, and each January 2 and June 1 thereafter,
to each successor agency for payments listed in its Recognized Obligation
Payment Schedule for the six -month fiscal period beginning January 1,
2012, and July 1, 2012, and each January 2 and June 1 thereafter, in the
following order of priority:
(A) Debt service payments scheduled to be made for tax allocation bonds.
(B) Payments scheduled to be made on revenue bonds, but only to the
extent the revenues pledged for them are insufficient to make the payments
and only if the agency's tax increment revenues were also pledged for the
repayment of the bonds.
(C) Payments scheduled for other debts and obligations listed in the
Recognized Obligation Payment Schedule that are required to be paid from
former tax increment revenue.
(3) Third, on June 1, 2012, and each January 2 and June 1 thereafter, to
each successor agency for the administrative cost allowance, as defined in
Section 34171, for administrative costs set forth in an approved
administrative budget for those payments required to be paid from former
tax increment revenues.
(4) Fourth, on June 1, 2012, and each January 2 and June 1 thereafter,
any moneys remaining in the Redevelopment Property Tax Trust Fund after
the payments and transfers authorized by paragraphs (1) to (3), inclusive,
shall be distributed to local agencies and school entities in accordance with
Section 34188.
(b) If the successor agency reports, no later than April 1, 2012, and May
1, 2012, and each December 1 and May 1 thereafter, to the county
auditor - controller that the total amount available to the successor agency
from the Redevelopment Property Tax Trust Fund allocation to that successor
agency's Redevelopment Obligation Retirement Fund, from other funds
transferred from each redevelopment agency, and from funds that have or
will become available through asset sales and all redevelopment operations,
are insufficient to fund the payments required by paragraphs (1) to (3),
inclusive, of subdivision (a) in the next six -month fiscal period, the county
auditor- controller shall notify the Controller and the Department of Finance
no later than 10 days from the date of that notification. The county
auditor - controller shall verify whether the successor agency will have
sufficient funds from which to service debts according to the Recognized
Obligation Payment Schedule and shall report the findings to the Controller.
If the Controller concurs that there are insufficient funds to pay required
debt service, the amount of the deficiency shall be deducted first from the
amount remaining to be distributed to taxing entities pursuant to paragraph
(4), and if that amount is exhausted, from amounts available for distribution
for administrative costs in paragraph (3). If an agency, pursuant to the
provisions of Section 33492.15, 33492.72, 33607.5, 33671.5, 33681.15, or
33688 or as expressly provided in a passthrough agreement entered into
pursuant to Section 33401, made passthrough payment obligations
subordinate to debt service payments required for enforceable obligations,
funds for servicing bond debt may be deducted from the amounts for
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Ch. 26 —44—
passthrough payments under paragraph (1), as provided in those sections,
but only to the extent that the amounts remaining to be distributed to taxing
entities pursuant to paragraph (4) and the amounts available for distribution
for administrative costs in paragraph (3) have all been exhausted.
(c) The county treasurer may loan any funds from the county treasury to
the Redevelopment Property Tax Trust Fund of the successor agency for
the purpose of paying an item approved on the Recognized Obligation
Payment Schedule at the request of the Department of Finance that are
necessary to ensure prompt payments of redevelopment agency debts. An
enforceable obligation is created for repayment of those loans.
(d) The Controller may recover the costs of audit and oversight required
under this part from the Redevelopment Property Tax Trust Fund by
presenting an invoice therefor to the county auditor - controller who shall set
aside sufficient funds for and disburse the claimed amounts prior to making
the next distributions to the taxing entities pursuant to Section 34188. Subject
to the approval of the Director of Finance, the budget of the Controller may
be augmented to reflect the reimbursement, pursuant to Section 28.00 of
the Budget Act.
(e) Within 10 days of each distribution of property tax, the county
auditor - controller shall provide a report to the department regarding the
distribution for each successor agency that includes information on the total
available for allocation, the passthrough amounts and how they were
calculated, the amounts distributed to successor agencies, and the amounts
distributed to taxing entities in a manner and form specified by the
department. This reporting requirement shall also apply to distributions
required under subdivision (b) of Section 34183.5.
SEC. 26, Section 34183.5 is added to the Health and Safety Code, to
read:
34183.5. (a) The Legislature hereby finds and declares that due to the
delayed implementation of this part due to the California Supreme Court's
ruling in the case California Redevelopment Association v. Matosantos et
al. (2011) 53 CalAth 231, some disruption to the intended application of
this part and other law with respect to passthrough payments may have
occurred.
(1) If a redevelopment agency or successor agency did not pay any portion
of an amount owed for the 2011 -12 fiscal year to an affected taxing entity
pursuant to Section 33401, 33492.140, 33607, 33607.5, 33607.7, or 33676,
or pursuant to any passthrough agreement entered into before January 1,
1994, between a redevelopment agency and an affected taxing entity, and
to the extent the county auditor - controller did not remit the amounts owed
for passthrough payments during the 2011 -12 fiscal year, the county
auditor - controller shall make the required payments to the taxing entities
owed passthrough payments and shall reduce the amounts to which the
successor agency would otherwise be entitled pursuant to paragraph (2) of
subdivision (a) of Section 34183 at the next allocation of property tax under
this part, subject to the provisions of subdivision (b) of Section 34183. If
the amount of available property tax allocation to the successor agency is
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not sufficient to make the required payment, the county auditor - controller
shall continue to reduce allocations to the successor agency under paragraph
(2) of subdivision (a) of Section 34183 until the time that the owed amount
is fully paid. Alternately, the county auditor - controller may accept payment
from the successor agency's reserve funds for payments of passthrough
payments owed as defined in this subdivision.
(2) If a redevelopment agency did not pay any portion of the amount
owed for the 2011 -12 fiscal year to an affected taxing entity pursuant to
Section 33401, 33492.140, 33607, 33607.5, 33607.7, or 33676, or pursuant
to any passthrough agreement entered into before January 1, 1994, between
a redevelopment agency and an affected taxing entity, but the county
auditor- controller did pay the difference that was owing, the auditor
controller shall deduct from the next allocation of property tax to the
successor agency under paragraph (2) of subdivision (a) of Section 34183,
the amount of the payment made on behalf of the successor agency by the
county auditor - controller, not to exceed one -half the amount of passthrough
payments owed for the 2011 -12 fiscal year. If the amount of available
property tax allocation to the successor agency is not sufficient to make the
required deduction, the county auditor - controller shall continue to reduce
allocations to the successor agency under paragraph (2) of subdivision (a)
of Section 34183 until the time that the amount is fully deducted.
Alternatively, the auditor - controller may accept payment from the successor
agency's reserve funds for deductions of passthrough payments owed as
defined in this subdivision. Amounts reduced from successor agency
payments under this paragraph are available for the purposes of paragraphs
(2) to (4), inclusive, of subdivision (a) of Section 34183 for the six -month
period for which the property tax revenues are being allocated.
(b) In recognition of the fact that county auditor - controllers were unable
to make the payments required by paragraph (4) of subdivision (a) of Section
34183 for the period January 1, 2012, through June 30, 2012, on January
16, 2012, due to the California Supreme Court's ruling in the case of
California Redevelopment Association v. Matosantos (2011) 53 CalAth
231, in addition to taking the actions specified in Section 34183 with respect
to the June 1 property tax allocations, county auditor - controllers should
have made allocations as provided in paragraph (1).
(1) From the allocations made on June 1, 2012, for the Recognized
Obligation Payment Schedule covering the period July 1, 2012, through
December 31, 2012, deduct from the amount that otherwise would be
deposited in the Redevelopment Property Tax Trust Fund on behalf of the
successor agency an amount equivalent to the amount that each affected
taxing entity was entitled to pursuant to paragraph (4) of subdivision (a) of
Section 34183 for the period January 1, 2012, through June 30, 2012. The
amount to be retained by taxing entities pursuant to paragraph (4) of
subdivision (a) of Section 34183 for the January 1, 2012, through June 30,
2012, period is determined based on the Recognized Obligation Payment
Schedule approved by the Department of Finance pursuant to subdivision
(h) of Section 34179 and any amount determined to be owed pursuant to
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Ch. 26 —46—
subdivision (b). Any amounts so computed shall not be offset by any
shortages in funding for recognized obligations for the period covering July
1, 2012, through December 31, 2012.
(2) (A) If an affected taxing entity has not received the full amount to
which it was entitled pursuant to paragraph (4) of subdivision (a) of Section
34183 of the property tax distributed for the period January 1, 2012, through
June 30, 2012, and paragraph (1), no later than July 9, 2012, the county
auditor - controller shall determine the amount, if any, that is owed by each
successor agency to taxing entities and send a demand for payment from
the funds of the successor agency for the amount owed to taxing entities if
it has distributed the June 1, 2012, allocation to the successor agencies. No
later than July 12, 2012, successor agencies shall make payment of the
amounts demanded to the county auditor - controller for deposit into the
Redevelopment Property Tax Trust Fund and subsequent distribution to
taxing entities. No later than July 16, 2012, the county auditor - controller
shall make allocations of all money received by that date from successor
agencies in amounts owed to taxing entities under this paragraph to taxing
entities in accordance with Section 34183. The county auditor - controller
shall make allocations of any money received after that date under this
paragraph within five business days of receipt. These duties are not
discretionary and shall be carried out with due diligence.
(B) If a county auditor- controller fails to determine the amounts owed
to taxing entities and present a demand for payment by July 9, 2012, to the
successor agencies, the Department of Finance or any affected taxing entity
may request a writ of mandate to require the county auditor- controller to
immediately perform this duty. Such actions may be filed only in the County
of Sacramento and shall have priority over other civil matters. Any county
in which the county auditor- controller fails to perform the duties under this
paragraph shall be subject to a civil penalty of 10 percent of the amount
owed to taxing entities plus 1.5 percent of the amount owed to taxing entities
for each month that the duties are not performed. The civil penalties shall
be payable to the taxing entities under Section 34183. Additionally, any
county in which the county auditor - controller fails to make the required
determinations and demands for payment under this paragraph by July 9,
2012, or fails to distribute the full amount of funds received from successor
agencies as required by this paragraph shall not receive the distribution of
sales and use tax scheduled for July 18, 2012, or any subsequent payment,
up to the amount owed to taxing entities, until the county auditor - controller
performs the duties required by this paragraph.
(C) If a successor agency fails to make the payment demanded under
subparagraph (A) by July 12, 2012, the Department of Finance or any
affected taxing entity may file for a writ of mandate to require the successor
agency to immediately make this payment. Such actions may be filed only
in the County of Sacramento and shall have priority over other civil matters.
Any successor agency that fails to make payment by July 12, 2012, under
this paragraph shall be subject to a civil penalty of 10 percent of the amount
owed to taxing entities plus one and one -half percent of the amount owed
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to taxing entities for each month that the payments are not made.
Additionally, the city or county or city and county that created the
redevelopment agency shall also be subject to a civil penalty of 10 percent
of the amount owed to taxing entities plus 1.5 percent of the amount owed
to taxing entities for each month the payment is late. The civil penalties
shall be payable to the taxing entities under Section 34183. If the Department
of Finance finds that the imposition of penalties will jeopardize the payment
of enforceable obligations it may request the court to waive some or all of
the penalties. A successor agency that does not pay the amount required
under this subparagraph by July 12, 2012, shall not pay any obligations
other than bond debt service until full payment is made to the county
auditor - controller. Additionally, any city, county or city and county that
created the redevelopment agency that fails to make the required payment
under this paragraph by July 12, 2012, shall not receive the distribution of
sales and use tax scheduled for July 18, 2012, or any subsequent payment,
up to the amount owed to taxing entities, until the payment required by this
paragraph is made.
(D) The Legislature hereby finds and declares that time is of the essence.
Funds that should have been received and were expected and spent in
anticipation of receipt by community colleges, schools, counties, cities, and
special districts have not been received resulting in significant fiscal impact
to the state and taxing entities. Continued delay and uncertainly whether
funds will be received warrants the availability of extraordinary relief as
authorized herein.
(3) If an affected taxing entity has not received the full amount to which
it was entitled pursuant to paragraph (4) of subdivision (a) of Section 34183
for the period January 1, 2012, through June 30, 2012, and paragraph (1),
the county auditor - controller shall reapply the provisions of paragraph (1)
to each subsequent property tax allocation until such time as the affected
taxing entity has received the full amount to which it was entitled pursuant
to paragraph (4) of subdivision (a) of Section 34183 for the period January
1, 2012, through June 30, 2012.
SEC. 27. Section 34185 of the Health and Safety Code is amended to
read:
34185. Commencing on June 1, 2012, and on each January 2 and June
1 thereafter, the county auditor - controller shall transfer, from the
Redevelopment Property Tax Trust Fund of each successor agency into the
Redevelopment Obligation Retirement Fund of that agency, an amount of
property tax revenues equal to that specified in the Recognized Obligation
Payment Schedule for that successor agency as payable from the
Redevelopment Property Tax Trust Fund subject to the limitations of
subdivision (l) of Section 34177 and Section 34183,
SEC. 28. Section 34186 of the Health and Safety Code is amended to
read:
34186. (a) Differences between actual payments and past estimated
obligations on recognized obligation payment schedules shall be reported
in subsequent recognized obligation payment schedules and shall adjust the
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Ch. 26 —48—
amount to be transferred to the Redevelopment Obligation Retirement Fund
pursuant to this part. These estimates and accounts shall be subject to audit
by county auditor- controllers and the Controller.
(b) Differences between actual passthrough obligations and property tax
amounts and the amounts used by the county auditor - controller in
determining the amounts to be allocated under Sections 34183 and 34188
for a prior six -month period shall be applied as adjustments to the property
tax and passthrough amounts in subsequent periods as they become known.
County auditor - controllers shall not delay payments under this part to
successor agencies or taxing entities based on pending transactions, disputes,
or for any other reason, other than a court order, and shall use the Recognized
Obligation Payment Schedule approved by the Department of Finance and
the most current data for passthroughs and property tax available prior to
the statutory distribution dates to make the allocations required on the dates
required.
SEC. 29. Section 34187 of the Health and Safety Code is amended to
read:
34187. (a) (1) Commencing May 1, 2012, whenever a recognized
obligation that had been identified in the Recognized Payment Obligation
Schedule is paid off or retired, either through early payment or payment at
maturity, the county auditor - controller shall distribute to the taxing entities,
in accordance with the provisions of the Revenue and Taxation Code, all
property tax revenues that were associated with the payment of the
recognized obligation.
(2) Notwithstanding paragraph (1), the Department of Finance may
authorize a successor agency to retain property tax that otherwise would be
distributed to affected taxing entities pursuant to this subdivision, to the
extent the department determines the successor agency requires those funds
for the payment of enforceable obligations. Upon making a determination,
the department shall provide the county auditor - controller with information
detailing the amounts that it has authorized the successor agency to retain.
Upon determining the successor agency no longer requires additional funds
pursuant to this subdivision, the department shall notify the successor agency
and the county auditor - controller. The county auditor - controller shall then
distribute the funds in question to the affected taxing entities in accordance
with the provisions of the Revenue and Taxation Code.
(b) When all of the debt of a redevelopment agency has been retired or
paid off, the successor agency shall dispose of all remaining assets and
terminate its existence within one year of the final debt payment. When the
successor agency is terminated, all passthrough payment obligations shall
cease and no property tax shall be allocated to the Redevelopment Property
Tax Trust Fund for that agency.
SEC. 30. Section 34188 of the Health and Safety Code is amended to
read:
34188. For all distributions of property tax revenues and other moneys
pursuant to this part, the distribution to each taxing entity shall be in an
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amount proportionate to its share of property tax revenues in the tax rate
area in that fiscal year, as follows:
(a) (1) For distributions from the Redevelopment Property Tax Trust
Fund, the share of each taxing entity shall be applied to the amount of
property tax available in the Redevelopment Property Tax Trust Fund after
deducting the amount of any distributions under paragraphs (2) and (3) of
subdivision (a) of Section 34183.
(2) For each taxing entity that receives passthrough payments, that agency
shall receive the amount of any passthrough payments identified under
paragraph (1) of subdivision (a) of Section 34183, in an amount not to
exceed the amount that it would receive pursuant to this section in the
absence of the passthrough agreement. However, to the extent that the
passthrough payments received by the taxing entity are less than the amount
that the taxing entity would receive pursuant to this section in the absence
of a passthrough agreement, the taxing entity shall receive an additional
payment that is equivalent to the difference between those amounts.
(b) Property tax shares of local agencies shall be determined based on
property tax allocation laws in effect on the date of distribution, without the
revenue exchange amounts allocated pursuant to Section 97.68 of the
Revenue and Taxation Code, and without the property taxes allocated
pursuant to Section 97.70 of the Revenue and Taxation Code.
(c) The total school share, including passthroughs, shall be the share of
the property taxes that would have been received by school entities, as
defined in subdivision (f) of Section 95 of the Revenue and Taxation Code,
in the jurisdictional territory of the former redevelopment agency, including,
but not limited to, the amounts specified in Sections 97.68 and 97.70 of the
Revenue and Taxation Code.
(d) This section shall not be construed to increase any allocations of
excess, additional, or remaining funds that would otherwise have been
allocated to cities, counties, cities and counties, or special districts pursuant
to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of
Section 97.2, clause (i) of subparagraph (B) of paragraph (4) of subdivision
(d) of Section 97.3, or Article 4 (commencing with Section 98) of Chapter
6 of Part 0.5 of Division 1, of the Revenue and Taxation Code, had this
section not been enacted.
SEC. 31. Section 34189 of the Health and Safety Code is amended to
read:
34189. (a) Commencing on the effective date of this part, all provisions
of the Community Redevelopment Law that depend on the allocation of tax
increment to redevelopment agencies, including, but not limited to, Sections
33445, 33640, 33641, 33645, and subdivision (b) of Section 33670, shall
be inoperative, except as those sections apply to a redevelopment agency
operating pursuant to Part 1.9 (commencing with Section 34192).
(b) To the extent that a provision of Part 1 (commencing with Section
33000), Part 1.5 (commencing with Section 34000), Part 1.6 (commencing
with Section 34050), and Part 1.7 (commencing with Section 34100)
conflicts with this part, the provisions of this part shall control. Further, if
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Ch. 26 —50—
a provision of Part I (commencing with Section 33000), Part 1.5
(commencing with Section 34000), Part 1.6 (commencing with Section
34050), or Part 1.7 (commencing with Section 34100) provides an authority
that the act adding this part is restricting or eliminating, the restriction and
elimination provisions of the act adding this part shall control.
(c) It is intended that the provisions of this part shall be read in a manner
as to avoid duplication of payments.
SEC. 32. Section 34189.1 is added to the Health and Safety Code, to
read:
34189.1. No party, public or private, may pursue, nor does a court have
jurisdiction over, a validation action with respect to any action of a
redevelopment agency or a successor agency to a redevelopment agency
that took place on or after January 1, 2011, unless the Department of Finance
and the Controller, representing interests of the State of California and each
of the taxing entities who could be affected financially by the action, has
been properly noticed. All actions shall be filed in the County of Sacramento.
SEC. 33. Section 34189.2 is added to the Health and Safety Code, to
read:
34189.2. A successor agency or any party to an enforceable obligation
as defined under this part shall properly notice the state with respect to a
validation action involving any enforceable obligation or matter of title to
an asset that belonged to a redevelopment agency. For such an action to be
properly filed, both the Controller and the Director of Finance shall be
noticed and actions shall be filed in the County of Sacramento.
SEC. 34. Section 34189.3 is added to the Health and Safety Code, to
read:
34189.3. An action contesting any act taken or determinations or
decisions made pursuant to this part or Part 1.8 (commencing with Section
3416 1) may be brought in superior court and shall be filed in the County of
Sacramento.
SEC. 35. Chapter 9 (commencing with Section 34191.1) is added to Part
1.85 of Division 24 of the Health and Safety Code, to read:
CHAPTER 9. POSTCOMPLIANCE PROVISIONS
34191.1. The provisions of this chapter shall apply to a successor agency
upon that agency's receipt of a finding of completion by the Department of
Finance pursuant to Section 34179.7.
34191.3. Notwithstanding Section 34191.1, the requirements specified
in subdivision (e) of Section 34177 and subdivision (a) of Section 34181
shall be suspended, except as those provisions apply to the transfers for
governmental use, until the Department of Finance has approved a long -range
property management plan pursuant to subdivision (b) of Section 34191.5,
at which point the plan shall govern, and supersede all other provisions
relating to, the disposition and use of the real property assets of the former
redevelopment agency. If the department has not approved a plan by January
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1, 2015, subdivision (e) of Section 34177 and subdivision (a) of Section
34181 shall be operative with respect to that successor agency.
34191.4. The following provisions shall apply to any successor agency
that has been issued a finding of completion by the Department of Finance:
(a) All real property and interests in real property identified in
subparagraph (C) of paragraph (5) of subdivision (c) of Section 34179.5
shall be transferred to the Community Redevelopment Property Trust Fund
of the successor agency upon approval by the Department of Finance of the
long -range property management plan submitted by the successor agency
pursuant to subdivision (b) of Section 34191.7 unless that property is subject
to the requirements of any existing enforceable obligation.
(b) (1) Notwithstanding subdivision (d) of Section 34171, upon
application by the successor agency and approval by the oversight board,
loan agreements entered into between the redevelopment agency and the
city, county, or city and county that created by the redevelopment agency
shall be deemed to be enforceable obligations provided that the oversight
board makes a finding that the loan was for legitimate redevelopment
purposes.
(2) If the oversight board finds that the loan is an enforceable obligation,
the accumulated interest on the remaining principal amount of the loan shall
be recalculated from origination at the interest rate earned by funds deposited
into the Local Agency Investment Fund. The loan shall be repaid to the city,
county, or city and county in accordance with a defined schedule over a
reasonable term of years at an interest rate not to exceed the interest rate
earned by funds deposited into the Local Agency Investment Fund. The
annual loan repayments provided for in the recognized obligations payment
schedules shall be subject to all of the following limitations:
(A) Loan repayments shall not be made prior to the 2013 -14 fiscal year.
Beginning in the 2013 -14 fiscal year, the maximum repayment amount
authorized each fiscal year for repayments made pursuant to this subdivision
and paragraph (7) of subdivision (e) of Section 34176 combined shall be
equal to one -half of the increase between the amount distributed to the taxing
entities pursuant to paragraph (4) of subdivision (a) of Section 34183 in that
fiscal year and the amount distributed to taxing entities pursuant to that
paragraph in the 2012 -13 base year. Loan or deferral repayments made
pursuant to this subdivision shall be second in priority to amounts to be
repaid pursuant to paragraph (7) of subdivision (e) of Section 34176.
(B) Repayments received by the city, county or city and county that
formed the redevelopment agency shall first be used to retire any outstanding
amounts borrowed and owed to the Low and Moderate Income Housing
Fund of the former redevelopment agency for purposes of the Supplemental
Educational Revenue Augmentation Fund and shall be distributed to the
Low and Moderate Income Housing Asset Fund established by subdivision
(d) of Section 34176.
(C) Twenty percent of any loan repayment shall be deducted from the
loan repayment amount and shall be transferred to the Low and Moderate
Income Housing Asset Fund, after all outstanding loans from the Low and
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Moderate Income Housing Fund for purposes of the Supplemental
Educational Revenue Augmentation Fund have been paid.
(c) (1) Bond proceeds derived from bonds issued on or before December
31, 2010, shall be used for the purposes for which the bonds were sold.
(2) (A) Notwithstanding Section 34177.3 or any other conflicting
provision of law, bond proceeds in excess of the amounts needed to satisfy
approved enforceable obligations shall thereafter be expended in a manner
consistent with the original bond covenants. Enforceable obligations may
be satisfied by the creation of reserves for projects that are the subject of
the enforceable obligation and that are consistent with the contractual
obligations for those projects, or by expending funds to complete the projects.
An expenditure made pursuant to this paragraph shall constitute the creation
of excess bond proceeds obligations to be paid from the excess proceeds.
Excess bond proceeds obligations shall be listed separately on the
Recognized Obligation Payment Schedule submitted by the successor
agency.
(B) If remaining bond proceeds cannot be spent in a manner consistent
with the bond covenants pursuant to subparagraph (A), the proceeds shall
be used to defease the bonds or to purchase those same outstanding bonds
on the open market for cancellation.
34191.5. (a) There is hereby established a Community Redevelopment
Property Trust Fund, administered by the successor agency, to serve as the
repository of the former redevelopment agency's real properties identified
in subparagraph (C) of paragraph (5) of subdivision (c) of Section 34179.5.
(b) The successor agency shall prepare a long -range property management
plan that addresses the disposition and use of the real properties of the former
redevelopment agency. The report shall be submitted to the oversight board
and the Department of Finance for approval no later than six months
following the issuance to the successor agency of the finding of completion.
(c) The long -range property management plan shall do all of the
following:
(1) Include an inventory of all properties in the trust. The inventory shall
consist of all of the following information:
(A) The date of the acquisition of the property and the value of the
property at that time, and an estimate of the current value of the property.
(B) The purpose for which the property was acquired.
(C) Parcel data, including address, lot size, and current zoning in the
former agency redevelopment plan or specific, community, or general plan.
(D) An estimate of the current value of the parcel including, if available,
any appraisal information.
(E) An estimate of any lease, rental, or any other revenues generated by
the property, and a description of the contractual requirements for the
disposition of those funds.
(F) The history of environmental contamination, including designation
as a Brownfield site, any related environmental studies, and history of any
remediation efforts.
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(G) A description of the property's potential for transit- oriented
development and the advancement of the planning objectives of the successor
agency.
(H) A brief history of previous development proposals and activity,
including the rental or lease of property.
(2) Address the use or disposition of all of the properties in the trust.
Permissible uses include the retention of the property for governmental use
pursuant to subdivision (a) of Section 34181, the retention of the property
for future development, the sale of the property, or the use of the property
to fulfill an enforceable obligation. The plan shall separately identify and
list properties in the trust dedicated to governmental use purposes and
properties retained for purposes of fulfilling an enforceable obligation. With
respect to the use or disposition of all other properties, all of the following
shall apply:
(A) If the plan directs the use or liquidation of the property for a project
identified in an approved redevelopment plan, the property shall transfer to
the city, county, or city and county.
(B) If the plan directs the liquidation of the property or the use of revenues
generated from the property, such as lease or parking revenues, for any
purpose other than to fulfill an enforceable obligation or other than that
specified in subparagraph (A), the proceeds from the sale shall be distributed
as property tax to the taxing entities.
(C) Property shall not be transferred to a successor agency, city, county,
or city and county, unless the long -range property management plan has
been approved by the oversight board and the Department of Finance.
SEC. 36. The Legislature finds and declares as follows:
(a) Certain provisions of Assembly Bill 26 of the 2011 -12 First
Extraordinary Session of 2011 (Ch. 5, 2011 -12 First Ex. Sess.) are internally
inconsistent, or uncertain in their meaning, with regard to the calculation
of the amount to be paid by a county auditor- controller from the
Redevelopment Property Tax Trust Fund to meet passthrough payment
obligations to local agencies and school entities.
(b) Consistent with the statement in Section 34183 of the Health and
Safety Code, as added by the measure identified in subdivision (a), that the
provisions of that section are to apply "[n]otwithstanding any other law,"
it was the intent of the Legislature in enacting that measure that the amount
of the passthrough payments that are addressed by that section be determined
in the manner specified by paragraph (1) of subdivision (a) of Section 34183
of the Health and Safety Code, and that the amount so calculated not be
reduced or adjusted pursuant to the operation of any other provision of that
measure.
SEC. 37. If any provision of this act or the application thereof to any
person or circumstance is held invalid, the invalidity shall not affect other
provisions or applications of this act which can be given effect without the
invalid provision or application and to this end, the provisions of this act
are severable.
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Ch. 26 —54—
SEC. 38. There is hereby appropriated up to twenty -two million dollars
($22,000,000) from the General Fund, for allocation to departments by the
Director of Finance in furtherance of the objectives of this act. Up to two
million dollars ($2,000,000) of this amount may be allocated to the Director
of the Trial Court Trust Fund for allocation by the Administrative Office
of the Courts to the Superior Court of California, County of Sacramento for
work associated with Part 1.85 (commencing with Section 34170) of Division
24 of the Health and Safety Code. An allocation of funds approved by the
Director of Finance under this item shall become effective no sooner than
30 days after the director files written notification thereof with the
Chairperson of the Joint Legislative Budget Committee, and the chairpersons
of the fiscal committees in each house of the Legislature, or no sooner than
any lesser time the chairperson of the joint committee, or his or her designee,
may in each instance determine.
SEC. 39. No reimbursement is required by this act pursuant to Section
6 of Article XIII B of the California Constitution because this act provides
for offsetting savings to local agencies or school districts that result in no
net costs to the local agencies or school districts, within the meaning of
Section 17556 of the Government Code.
SEC. 40. This act is a bill providing for appropriations related to the
Budget Bill within the meaning of subdivision (e) of Section 12 of Article
IV of the California Constitution, has been identified as related to the budget
in the Budget Bill, and shall take effect immediately.
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