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RDA Trailer Bill Finally in Print as AB 113

League Continues to Maintain Oppose, Unless Amended Position on Divisive Measure Containing Provisions that Break Promises to Cities

June 19, 2015
Since January when the Administration’s Redevelopment Dissolution “simplification” proposal first emerged the League has been trying to advocate for and protect the interests of cities across a broad swath of issues.
Regrettably legislators are now being presented with a divisive proposal that is less about “simplification” and more about reversing existing laws and court decisions, while offering offsetting special beneficial provisions and carve outs.
AB 113, the redevelopment budget trailer bill came into print Thursday and the League’s position remains oppose unless amended.
The backdrop is the significant harm caused to cities by the elimination of redevelopment agencies effective in February 2012. The policy harm to California’s urban renewal efforts, including infrastructure upgrades, brownfield remediation, transit oriented development, affordable housing and local economic development will linger for decades.
The dissolution process has been fraught with controversy. Applicable laws were drafted in a manner that, while there was a veneer of local input via oversight boards, all power was concentrated at the state Department of Finance (DOF) with no oversight of their decisions other than the courts.  
AB 1484 ( 2012) gave additional enforcement powers and “sticks” to DOF, but legislators also requested and obtained several incentives or “carrots” that would be offered to local agencies that worked collaboratively with DOF to expedite the dissolution process. Those agencies that cooperated would be issued a DOF “finding of completion” and then be eligible to have loans previously issued by cities to their redevelopment agencies repaid at a reasonable interest rate reflective of what cities would have otherwise earned in the conservative Local Agency Investment Fund (LAIF) managed by the state Treasurer. 
The provisions of AB 113 can be divided into three areas:
  • Harmful: Reversing and constricting previous incentives and due process offered to cities. These include efforts to narrow the definition of “loans” to be repaid and reduce interest rates. Other provisions further insulate DOF decisions from review via an exemption from the Administrative Procedures Act and limiting local agencies’ ability to pay for attorneys in Court. Besides moving the goal posts and changing the rules, these provisions cause the greatest harm to the interests of affected agencies, and are of most concern to the League.
  • Helpful/Leverage: Offering changes to the dissolution laws to address unresolved issues such as allowing communities to access some proceeds of redevelopment bonds issued in 2011, and clarifying issues with special property tax rates approved by voters for pensions. The Administration at the May Revise added other special provisions that are not connected at all to redevelopment. These proposals are clearly helpful to the affected agencies, but are being leveraged against the harmful changes.
  • Mild Simplification: Making mild changes to statute that in isolation would be noncontroversial and match up with the term “simplification.”
The underlying frustration for many cities with these provisions is the effort to reduce existing incentives to cities in AB 1484 as a reward for expeditiously resolving issues and obtain a DOF “finding of completion.” Now that many agencies have made the concessions necessary to obtain these findings, it is simply wrong to move the goalposts and change the rules.  It is regrettable that this proposal is being presented to legislators in such a divisive format. 
As of today, it appears that concerns raised by cities have caused many legislators to pause and question the proposal that has been put before them. Some have expressed concern about being asked to vote on provisions that would reverse existing laws and court decisions and cause further harm to their cities. The League continues to urge the Legislature to reject the harmful aspects of this proposal on cities, so that a more balanced and equitable proposal can be crafted.
Next Steps
This measure was not taken up on Friday, and it remains unclear what the next steps may be. The Administration is working hard to round up votes for the measure as is, but some Assembly members have been discussing the possibility of a working group to review the measure and propose revisions. The League will keep its members informed on any future developments.

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