Calif’s Willingness to Improve Redevelopment Dissolution Process Remains to Be Seen

SACRAMENTO – Several legislative “clean-up” measures have been introduced this session to address problems with the complicated and frustrating redevelopment dissolution process.

The state’s efforts overseeing the dismantling of more than 385 redevelopment agencies (RDA) have been severely flawed. While there have been prior efforts to improve the process, most have stalled or been rejected by an Administration focused on more rigid interpretations benefiting the state’s financial bottom line. This dynamic has left little recourse for local agencies but to seek resolution in the courts.

It is unclear if things may be changing. With the state budget now stabilized, the Administration has signaled a willingness to explore the creation of new economic development tools. The Infrastructure Finance District (IFD) proposal floated in Gov. Jerry Brown’s FY 2014–15 budget proposal has many limitations, but may represent the beginning of a discussion. It remains to be seen if there is a similar willingness to improve the redevelopment dissolution process.

The following is a listing of several RDA dissolution clean-up proposals introduced by some prominent members of the Legislature in the 2014 legislative session:

SB 1129 (Steinberg): Successor Agencies and Oversight Board Approval

Authored by Senate President Pro Tem Darrell Steinberg (D-Sacramento), SB 1129 makes the following changes to existing law relating to successor agencies:

– 2011 Bonds: Allows a successor agency to use proceeds of bonds issued during 2011 under the following conditions: (a) bond proceeds are used for the purposes for which they were sold; (b) the successor agency’s oversight board approves the bond proceeds’ usage; and (c) the oversight board makes a finding, in consultation with the appropriate metropolitan planning organization (MPO) that the use of the bonds is consistent with the sustainable communities strategy adopted by the MPO.

– Long Range Property Management Plans (LRPMP): Currently, successor agencies must submit a LRPMP for approval by the oversight board and the Department of Finance (DOF) within six months after DOF issues a Finding of Completion. This bill: (a) removes the existing statutory deadline of Jan. 1, 2015 for DOF to approve these plans, thereby avoiding the default of having the original provisions of RDA dissolution legislation ABx1 26 (Blumenfield, 2011) govern the disposal of real property; (b) provides that a compensation agreement with the taxing entities is not required when property is transferred to the city/county for a project identified in the redevelopment plan; specifies that DOF review of the plan is limited to whether the plan makes a good faith effort to include the contents required by existing law; and (d) requires DOF to approve LRPMPs as expeditiously as possible.

– New Benefits for Agencies with Finding of Completion: Adds the following new benefits for successor agencies receiving a finding of completion: (a) requires DOF to receive oversight board approval prior to DOF’s removal of an enforceable obligation from a Recognized Obligation Payment Schedules (ROPS); and (b) authorizes a successor agency to enter into or amend existing contracts and agreements, and administer projects in connection with an approved enforceable obligation, if the contract, agreement, or project will not commit new property tax funds, and will not otherwise reduce property tax payments to taxing entities.

Learn about other RDA dissolution clean-up proposals at cacities.org.