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League Testifies on Overly Aggressive DOF Redevelopment Proposal, Urges Legislature to Continue Legislative Fix to AB 1 X 26

May 21, 2012

The Department of Finance’s (DOF) redevelopment trailer bill was taken up briefly today by the Senate Budget Subcommittee #4.


The short session ended with Committee Chair Gloria Negrete McLeod (D-Chino) holding the item open until Thursday. Released just last week, the draft DOF bill would make major changes to the redevelopment dissolution statutes that would weaken the discretion of local oversight boards and significantly expand the already substantial power of the DOF, including granting it the unprecedented ability to divert local sales and property taxes when it determines successor agencies have “improperly” transferred funds to other agencies or private parties. For more details on the language, please see “Proposed Post-RDA Budget Trailer Bill Raises Major Concerns” in the May 17 issue of CA Cities Advocate

In today’s Senate Sub Committee #4 hearing, League Legislative Director Dan Carrigg began his remarks by saying that the committee had before it a very important decision in the redevelopment agency dissolution process. He said the dissolution of California’s 400-plus redevelopment agencies by AB 1 x 26 has been fraught with confusion, but local oversight boards were beginning to exercise the discretion delegated to them to act on behalf of the local taxing agencies. In many cases DOF has refused to approve actions by the oversight boards because they disagree and want to score the funds to meet the state’s short-term budget goals.

Carrigg pointed out that over the past few months a number of bills have been introduced in the Legislature designed to address some of the problems with AB 1 x 26, while still providing the state with budget relief. AB 1585 (Pérez), SB 986 (Dutton) and SB 1335 (Pavley), SB 1151 (Steinberg) and SB 1156 (Steinberg), all offer a policy-centered approach to these issues. These legislative proposals recognize that redevelopment agencies offered value to California, and not just in the dollars the state reaped for its budget deficit.  

In addition to the power to declare local expenditures “improper” and to divert local sales and property taxes, the DOF’s proposal would sweep all remaining affordable housing and other funds to benefit the state and empower DOF and county auditor-controllers with authority to resolve all matters of dispute involving ROPS and enforceable obligations in favor of the state without regard to priorities set by local oversight boards.

Carrigg concluded his remarks by asking the committee members to consider what is in the best interest of California’s economy. “We urge the Legislature not to take the aggressive approach proposed by the department of Finance but work through the issues in a more balanced way that allows retention of assets and projects that make policy sense while achieving budget savings for the state.”

The League will provide updates on redevelopment throughout the week as developments occur.

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