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HomeMy WebLinkAbout2013-05-14 - AGENDA REPORTS - REDEVELOPMENT SUCCESSOR AGENCY (2)Agenda Item: 7 CITY OF SANTA CLARITA AGENDA REPORT CONSENT CALENDAR City Manager Approval: ^ Item to be presented by: Casey Bingham DATE: May 14, 2013 SUBJECT: STATE LEGISLATION: AB 564 (MULLIN) COMMUNITY REDEVELOPMENT: SUCCESSOR AGENCIES DEPARTMENT: City Manager's Office RECOMMENDED ACTION City Council adopt the recommendation of the City Council Legislative Committee and adopt a "support" position for Assembly Bill 564 (Mullin) and transmit letters of support to Assemblyman Mullin, Santa Clarita's State Legislative delegation, appropriate Legislative committees, Governor Brown, and the League of California Cities. BACKGROUND AB 564 was introduced by Assemblyman Mullin on February 20, 2013. Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies. Existing law requires those successor agencies to wind down the affairs of the dissolved redevelopment agencies and to, among other things, make payments due for enforceable obligations. Each successor agency is responsible for drafting a Recognized Obligation Payments Schedule (ROPS) delineating the enforceable obligations payable on a 6 -month basis (January to June, and July to December of each year) and their source of payment. ROPS are subject to the approval of the local oversight board and, upon approval by that board, existing law requires the Department of Finance (DOF) to review and approve the ROPS. The City of Santa Clarita took on the role of Successor Agency to its former Redevelopment Agency and has spent the last year following the stringent provisions of the legislation that eliminated redevelopment. The Successor Agency's Oversight Board meets on a regular basis when items necessitate review and action. a�?CICdFD As part of the winding down of redevelopment agencies, AB 1484 (Blumenfeld), Chapter 26, Statutes of 2012 made various statutory changes associated with the dissolution of redevelopment agencies. One of the provisions in AB 1484 allowed successor agencies that have received a "finding of completion" from the DOF to have additional discretion regarding former agency real property assets, loan repayments to the local government community that formed the agency, and use of proceeds from bonds issued by the former redevelopment agency. In order to receive what is called a "finding of completion," the successor agency must undergo specified due diligence reviews and make the required payments to the DOR AB 564 would prohibit the DOF, once a finding of completion is issued, from future modification or reversal of an action of approval by an oversight board for specified enforceable obligations of a successor agency. Existing law also requires each successor agency to prepare a long-range property management plan that addresses the disposition and use of the real properties of the former redevelopment agency. Existing law provides for the transfer of property, and the liquidation of property and the use of proceeds, in a specified manner. AB 564 would also prohibit the DOF from taking any future action to modify a transfer of property, or the liquidation of property and the use of proceeds, if the transfer, liquidation, or use of proceeds is consistent with the approved long-range property management plan of the successor agency The Legislative Committee recommends supporting AB 564 because it gives the City's Successor Agency a sense of security that once a long term item, including the repayment of City loans and the use of bond proceeds, is on the ROPS that may span over numerous ROPS cycles has been approved by the Oversight Board, the DOF cannot come back during any future ROPS periods and deny that item. This has happened to the City previously on an item. On ROPS II, the City had an $115,000 payment to Southern California Edison related to the Downtown Newhall roundabout project that was deemed to be an enforceable obligation. The City's Successor Agency was not sure they could spend the funds in time for that ROPS period and subsequently placed that same exact item on ROPS Ill. During the DOF's review process, the DOF determined that it was no longer an enforceable obligation and would not allow the City to spend the funds during the ROPS III period. Fortunately the City was able to spend the funds during the time authorized to spend the money, but it demonstrated a lack of consistency in decision making when the DOF suddenly changed their minds on an already approved enforceable obligation. Furthermore, there have been other instances where the City's Successor Agency has transmitted the same item several times to the DOF and was required to spend time with DOF staff reviewing items that have already received a notice of completion. The League of California Cities is in support of this legislation because if passed, AB 564 provides stability for all successor agencies with established and already approved ROPS payment schedules and Long Range Asset Management Plans. The successor agencies could simply implement their approved plans once they have a finding of completion without the DOF disrupting or reversing those asset transfers and sales along with repaying city loans. On April 19, 2013, the City Council Legislative Committee met and voted to recommend a support position to the full City Council at the May 14 meeting. ALTERNATIVE ACTIONS 1. Adopt an oppose position on AB 564. 2. Take no position on AB 564. 3. Other direction as determined by the City Council. FISCAL IMPACT No additional resources are needed to implement the recommended action. ATTACHMENTS AB 564 Text I AMENDED IN ASSEMBLY MARCH 12, 2013 CALIFORNIA LEGISLATURE -2013-14 REGULAR SESSION ASSEMBLY BILL No. 564 Introduced by Assembly Member Mullin February 20, 2013 An act to amend Sections 34191.4 and 34191.5 of the Health and Safety Code, relating to community redevelopment. LEGISLATIVE COUNSEL'S DIGEST AB 564, as amended, Mullin. Community redevelopment: successor agencies. 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 requires each successor agency to have an oversight board to approve certain actions of the successor agency, including the approval of an enforceable obligation. Existing law requires the Department of Finance to review the actions of an oversight board. Existing law prescribes when an action of an oversight board shall become effective, subject to approval by the Department of Finance. Existing law provides that certain loan agreements entered into between a redevelopment agency and the city, county, or city and county 98 I AB 564 —2— that 2— that created the redevelopment agency are deemed enforceable obligations. Existing law provides that bond proceeds derived from bonds issued by a redevelopment agency on or before December 31, 2012, are to be used for the purposes for which the bonds are sold. Existing law provides that enforceable obligations may be satisfied by the creation of reserves for projects that are the subject of the enforceable obligation, as specified. Existing law provides that an expenditure made pursuant to these provisions constitutes the creation of excess bond proceeds obligations. This bill would prohibit the Department of Finance from taking any future action to modify the enforceable obligations described above following the effective date of the approval of those enforceable obligations after review by the oversight board and the department. Existing law establishes a Community Redevelopment Property Trust Fund, administered by the successor agency, to serve as the repository of the former redevelopment agency's real properties. Existing law requires the successor agency to prepare a long-range property management plan that addresses the disposition and use of the real properties of the former redevelopment agency. Existing law provides for the transfer of property, and the liquidation of property and the use of proceeds, in a specified manner. This bill would prohibit the Department of Finance from taking any future action to modify a transfer of property, or the liquidation of property and the use of proceeds, as described above, if the transfer, liquidation, or use of proceeds is consistent with the approved plan of the successor agency. Vote: majority. Appropriation: no. Fiscal committee: yes. State -mandated local program: no. The people of the State of California do enact as follows: SECTION 1. Section 34191.4 of the Health and Safety Code is amended to read: 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 98 S 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 — 3 — AB 564 Department of Finance of the long-range property management plan submitted by the successor agency pursuant to Seet;on 34191.5 ersubdivision (b) of'Section34f9h734191.5, 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 98 AB 564 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 —4— 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 Moderate Income Housing Fund for purposes of the Supplemental Educational Revenue Augmentation Fund have been paid. (3) Following the effective date of an oversight board's approval of an enforceable obligation pursuant to this subdivision, as determined pursuant to subdivision (h) of Section 34179, the oversight board's action shall be final and may be,relied upon by all public and private entities, and may not be modified'or reversed by any future action of the Department of Finance. (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. (3) Following the effective date ofan oversight'boa'rd's approval of an enforceable obligation pursuant to this subdivision, as determined pursuant to subdivision (h) of Section 34179, the oversight board's action shall be final and may be relied upon by 98 -5— AB 564 I all public and private entities, and may not be modified or reversed 2 by any future action of the Department of Finance. 3 SEC. 2. Section 34191.5 of the Health and Safety Code is 4 amended to read: 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 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. (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. 98 AB 564 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 —6— (21 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) I f 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. (d) After approval by the Department of Finance. an action taken pursuantto subparagraph (A) or (B).of paragraph (2) of subdivision (c). that is consistent with the approved plan may not be modified or reversed by future action of the Department of Finance, and may be relied upon by all public and private entities. 99