|Budget Proposals Impact Property Tax Increment|
Furthermore, the trailer bill includes prohibitions on successor agencies relative to new loans, advances, or agreements to nonprofit organizations, including residential construction. Additional prohibitions include new contracts, obligations and commitments for loan agreements for any purpose, and would also prohibit successor agencies from amending or modifying agreements, obligations or commitments for specified purposes.
While the Brown Administration presented its redevelopment trailer bill as providing technical and clarifying amendments to Assembly Bill X1 26 in advance of the approaching June 1st allocation of revenues to special districts and other local agencies, the League of California Cities and housing advocates decried the Administration’s proposal as “overly restrictive” and claimed it would lead to fiscal problems for many cities. Mayor David Glass of Petaluma testified that his city may have to file for bankruptcy, should the Administration’s trailer bill be adopted, and argued for a venue for dispute resolution or appeal outside of the court system.
Assembly Bill X1 26 clearly gives the Department of Finance the authority to review, accept and/or deny any and all actions taken by successor agencies and the Oversight Boards relative to the disposition of assets and enforceable obligations and has over 60 auditors reviewing all such actions. Those auditors have rejected or requested information on millions of dollars of enforceable obligations and most recently questioned $1.85 billion of such enforceable obligations from Orange County alone.
Assembly and Senate Budget Subcommittees are scheduled to continue meeting this week. In the end, the Brown Administration and legislative leaders will craft the final language for the redevelopment trailer bill.
CSDA will continue to engage on all legislative activity surrounding the redevelopment wind-down process, including a number of bills on the subjects. CSDA supports Assembly Bill 2144 by Assembly Speaker Perez, which allows for the creation of Infrastructure and Revitalization Financing Districts and expands the types of public capital facilities or projects that may be funding by these districts. Key to CSDA’s support for Assembly Bill 2144 is the provision that allows affected taxing entities to either opt-in or opt-out of the use of tax increment financing. Assembly Bill 2144 recently passed the Assembly and is pending in the Senate.
Regarding tax increment financing, CSDA initially adopted an Oppose Unless Amended position on Senate President Steinberg’s Senate Bill 1156, which allows cities and counties to form Community Development and Housing joint powers authorities and grants those JPAs the authority to utilize tax increment financing. However, Senator Steinberg submitted amendments last week that are intended to prevent the renewed diversion of property tax increment from special districts. With these amendments, Senate Bill 1156 passed off the Senate Appropriations Committee’s Suspense File on May 24. CSDA’s Legislative Committee will now reassess its position on the bill.