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SB 107 Redevelopment Dissolution Bill Signed

League Releases Summary of New Law

September 23, 2015
Gov. Jerry Brown on Tuesday signed SB 107, which contains significant changes to redevelopment dissolution laws and several unrelated items.
 
While the 104-page bill surfaced in print on Friday, Sept. 11, the last day of session, aspects of this proposal had been discussed and debated since January when the Administration first unveiled a proposal that conveyed benefits and resolved issues for some agencies, while harming others. 
 
From January until mid-May the proposal only dealt with redevelopment dissolution; however, the politics became more complicated when the Administration added in four unrelated and strongly-supported provisions containing solutions to outstanding tax-allocation issues for several Central Valley counties, San Benito County, four cities in Santa Clara County, and four recently incorporated cities.
 
Juxtaposed against the proposal’s beneficial features and their supporters were more than 100 cities opposed to provisions that sought to reverse and revise key provisions of dissolution laws and court decisions affecting loan repayment and interest rates offered to local agencies obtaining a Department of Finance (DOF) finding of completion. The League strived from the outset to limit the enormous financial harm such changes would cause to the affected agencies.
 
For most of the year, this proposal had no bill number, just various versions of legislative counsel drafts. Finally, on June 18 a bill was put into print as AB 113. While proposed as a "budget trailer bill," it was not adopted with the budget due to concerns from Senate Budget Committee members. Assembly members had also voiced concerns, and a subgroup of Assembly Democrats met privately for several months to consider options. 
 
SB 107 emerged on the last day of session and was quickly routed without a hearing to the Assembly Floor where it passed after some debate. Given the speed in which the bill proceeded, the League and its attorneys had little time to fully analyze the proposal including changes to the loan repayment provisions that had concerned many cities. 
 
Later that afternoon, the Senate Budget Committee heard the bill where the supporters of the various beneficial provisions dominated the discussions. During the hearing, the League’s representative and several others raised issues with the loan repayment provisions. The League specifically pointed out that the language in the bill appearing to cap total loan repayments at $5 million was in conflict with statements made by DOF staff that it was intended to be “per loan.” This contributed to a discussion that led to the item being addressed in a Letter to the Journal.
 
Cities can view the committee’s discussion on SB 107 and witness testimony online.
 
The legislative debates are now over and SB 107 is law. The beneficial provisions will be helpful to individual agencies, and other clarifications and process changes can improve aspects of the dissolution process. Yet other communities will likely still be harmed. How DOF will interpret many of these new changes is unknown. SB 107 does represent an improvement over earlier versions and some legislators were able to secure commitments from DOF to address specific unresolved issues for their cities. 
 
In short, SB 107 represents the latest chapter in the difficult process of redevelopment dissolution. 
 
The League’s attorneys have drafted a summary of SB 107.


 
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