LOS ANGELES -- California lawmakers wrapped up their legislative session last week, and some bills affecting public finance have reached Gov. Jerry Brown’s desk, while others have been put on hold until next year.
At the request of the governor, several bills aimed at reviving redevelopment financing in California have been delayed to allow for further discussions on the issue. These bills will be taken up again in the next legislative session, which convenes on Jan. 7.
Such legislation has been proposed by lawmakers as a way to provide local governments with alternate methods to finance development, following the statewide shutdown of redevelopment agencies under 2011 legislation.
Senate Bill 33, introduced by Sen. Lois Wolk, D-Davis, had passed the Senate and was making its way through the Assembly before being “ordered inactive” on Wednesday.
According to a spokesperson in Wolk’s office, the legislation was made into a two-year bill to allow for further discussion with the governor’s office. The bill will be taken up again next year.
Wolk’s bill aims to reinvent infrastructure financing districts and allow municipalities to return to funding projects by using tax increment. It would remove the current requirement for voters to approve districts’ formation or issuing bonds for projects and extend the term of IFD bonds from 30 years to 40 years.
“SB 33 removes key impediments to forming IFDs, gives local officials the flexibility and decision-making authority to determine project priorities at the ground level, and works to ensure IFDs are fiscally accountable to their communities,” Wolk has said of the bill.
Under current state law, IFDs can divert property tax increment revenues for 30 years to finance highways, transit, water systems, sewer projects, flood control, child care facilities, libraries, parks and solid waste facilities. They cannot pay for maintenance, repairs, operating costs, and services.
Current law requires two-thirds voter approval to form an IFD, and two-thirds voter approval for the IFD to issue bonds. Majority voter approval is also required to set the IFD’s appropriations limit.
The IFD law has been in place since 1990, but has only been used a handful of times. In 1999 Carlsbad formed a district to fund the public works for a hotel. In 2011, a law created a special exemption allowing San Francisco to create an IFD without voter approval to finance waterfront improvements.
Another bill that would remove voter-approval requirements is SB 628, introduced by Sen. Jim Beall, D-San Jose. His bill is aimed particularly at transit projects.
Beall’s legislation passed in both houses, but was also made into a two-year bill to allow for further discussions with the governor’s office.
Other IFD legislation that will be revisited next year includes SB 1, by Senate President pro Tem Darrell Steinberg, D-Sacramento, Assembly Bill 243 by Assembly Member Roger Dickinson, D-Sacramento, and AB 229 by Assembly Speaker John Perez, D-Los Angeles.
SB 1, which is similar to a bill Brown vetoed last year, would create Sustainable Communities Investment Authorities that could use property tax increment and would allow local governments to create an authority by entering into a joint powers agreement. They would also be able to use current local redevelopment law, minus the payments of tax increment from other taxing entities, such as schools.
AB 243 would authorize the creation of an infrastructure and revitalization financing district and the issuance of debt with 55% voter approval. Similarly, AB 229 would authorize the creation by a city, county, or joint powers authority of an infrastructure and revitalization financing district, and the issuance of debt with two thirds voter approval.
Last year, Brown vetoed similar legislation, saying it would be “premature” to return to economic development financing and encourage cities to focus on using the new tools rather than finishing the job of unwinding development. The 400-plus redevelopment agencies were dissolved by the Legislature amid criticism that the agencies had taken an unfair portion of the property tax base.
A spokesperson for the governor said he generally does not comment on pending legislation.
Two bills aimed at clarifying issues that have arisen during the course of the redevelopment dissolution process reached the governor’s desk.
AB 662, proposed by Assembly Majority Leader Toni Atkins, D-San Diego, would allow the creation of IFDs in former redevelopment areas, which was prohibited prior to the elimination of redevelopment agencies. It would also allow for reimbursement of administrative costs for counties that have taken over housing duties of former RDAs, the amendment of project contracts as long as they do not incur additional costs, and the use of proceeds from bonds tied to an approved project.
It would also allow for the continuation of former redevelopment projects that are listed in community or five-year implementation plans.
“The process of winding down redevelopment is very complex and, as successor agencies in cities move through this process, they have encountered ambiguous and unanticipated situations,” Atkins said. “AB 662 is intended to address many of those concerns and provide an increased level of certainty, practicality, and fairness.”
The other bill that addresses issues in the dissolution process is AB 564 by Assembly Member Kevin Mullin, D-South San Francisco.
Redevelopment successor agencies are required to undergo a series of reviews and audits overseen by the State Department of Finance before receiving a “finding of completion.”
Mullin’s bill would provide certainty to successor agencies that the benefits offered under this finding of completion can be relied on and clarify the statute to reflect legislative intent. Benefits include the ability to transfer former RDA-owned properties to the city or county for redevelopment, the ability to repay city loans made by the RDA, and the ability to use unspent bond proceeds issued by RDAs before Dec. 31, 2010.
The bill passed both floors with unanimous votes and was sent to the governor on Thursday.
The League of California Cities, which supports the bill, sent a letter to Gov. Brown on Friday, requesting his signature. In the letter, Daniel Carigg, the league’s legislative director, noted that the number of agencies that have received the finding of completion now totals 256.
“These communities have demonstrated their good faith and are looking to move forward,” Carigg said. “While it is still early in the process, there is an opportunity to act proactively and ensure that DOF review of local agency access to these benefits can be relied upon.”
The legislature also passed a Perez bill that would reduce the amount of mortgage bonds authorized under the Veterans’ Bond Act of 2008 to $300 million from $900 million and instead authorize $600 million in bonds for affordable, multifamily housing for veterans.
If signed by the governor, the measure would be put before voters in June.
Progress was made on two water bond bills to replace the $11 billion state water bond scheduled to go before voters in 2014, although neither passed both houses.
Both the Assembly and the Senate have introduced legislation that would scale back the authorization. Wolk proposed SB 42, a $5.6 billion state water bond, which has been amended to $6.5 billion. It would not include money for the controversial proposal to build twin tunnels to take water exports under the Sacramento-San Joaquin Delta.
Assemblyman Anthony Rendon, D-Lakewood, has also proposed a $6.5 billion water bond. Both are two-year bills and will be taken up again during next year’s session. Rendon’s bill is further along in the legislative process, having been passed in the Assembly and sent to the Senate. Wolk’s bill is still working its way through the Senate.
The governor has until Oct. 13 to sign or veto bills.