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Assembly Budget Sub Committee 4 Expresses Concerns with DOF Redevelopment Trailer Bill

May 23, 2012

Today the Assembly Budget Sub Committee 4 met to discuss the Department of Finance’s (DOF) proposed redevelopment trailer bill language.

 

During the hearing the chair of the committee, Assembly Member Joan Buchanan (D-San Ramon), expressed the committee’s significant reservations about the bill’s approach and the desire for a more balanced solution. The committee ultimately held the item open for further discussion.

Assembly Member Roger Dickinson (D-Sacramento) and Assembly Member Michael Allen (D-Santa Rosa) asked questions about several issues that the League and other stakeholders, including housing advocates, have raised regarding process and transparency.

Assembly Member Toni Atkins (D-San Diego), who was sitting in on the committee and spearheading the Assembly’s redevelopment task force, also took issue with provisions that limit to ability of cities to dispute DOF’s decisions and appeal denied enforceable obligations, saying that the intent of ABx1 26 was not being respected.

Chair Buchanan was especially concerned with the denial of loans or “cooperative agreements” made in good faith between cities and former redevelopment agencies.

“I think we're leaving cities on the hook,” said Assembly Member Buchanan.

Petaluma Mayor David Glass also testified before the committee and expressed his city’s concerns with the language, in particular the claw back provisions.

Under the proposed trailer bill language construction for the East Washington Project on Highway 101 in Petaluma would be halted. Despite the fact that the project is fully funded and was approved in 2005, the funds are classified as “unencumbered” by DOF. The city stands to lose millions of dollars that have already been spent on its planning and construction.

“We’re in dire straits,” said Mayor Glass. “We followed the rules as we knew them. We can’t deliver money on a claw back that we don’t have. There has got to be a better way.”

Mayor Glass, the League and housing advocates urged the committee to consider Speaker John Pérez’s bill, AB 1585, as a responsible alternative to the proposed trailer bill. AB 1585 is the most developed clean-up bill to AB 1x 26 pending in the Legislature. The bill contains appropriate policy and technical clarifications to reduce confusion and provide greater direction to successor agencies, oversight boards and successor housing entities. Importantly, the bill requires repayment of former loans by cities to former redevelopment agencies, preserves remaining affordable housing funding, preserves asset value, and makes important changes to improve the functioning of successor agencies and avoid bond defaults.  AB 1585 is currently stalled in the Senate.

League Legislative Director Dan Carrigg also testified on the problems with the draft bill including the increased powers given to DOF.  While the language has been presented as technical and clarifying, it undoes a number of provisions of AB 1 x 26. While AB 1 x 26 created a process where oversight boards were able to make local decisions about enforceable obligations, the trailer bill language would give DOF the enhanced authority to decide the fate of any enforceable obligation.

Carrigg noted that one of the critical flaws with the language is that there are no clear standards for denials and no due process for successor agencies that are denied.

Next Steps

The committee requested further information from DOF on enforceable obligations including process and the number of projects denied and approved and asked witnesses to provide specific information about flaws in the bill. The committee will likely take this issue back up next week. The League is also currently analyzing an updated draft of the trailer bill language which was recently released by DOF.

 

 



 
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