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Flawed RDA Proposal Fails to Move in Senate; Will Assembly Develop an Alternative?

August 28, 2015
It was déjà vu all over again on Wednesday when the Senate Budget and Fiscal Review Committee cancelled its Aug. 27 hearing on AB 113 (Committee on Budget), the Department of Finance (DOF)-sponsored redevelopment dissolution bill.
One hundred and fifteen cities oppose this measure due to the significant financial harm it would cause. This was the second time this bill has stalled; the same committee previously cancelled its July 13 hearing a few hours prior to the hearing. Despite many meetings with senators, DOF refused to budge on key issues relating to repaying city loans. Thus the bill failed to proceed due to a lack of votes. Cities should thank their senators for their thoughtful and principled approach. The focus now shifts to whether the Assembly will develop a more workable alternative.

Thursday afternoon the League learned directly from Assembly Democrat legislators who are part of an informal working group looking into the issues surrounding AB 113 that they are developing an alternative RDA proposal. This proposal is expected to be discussed with Assembly Speaker Toni Atkins (D-San Diego) on Monday and vetted with the Assembly Democratic Caucus on Tuesday, Sept. 1. It is unclear what these changes will be, but many Assembly members have previously voiced concerns with the RDA proposal and its harmful impacts on the repayment of city loans.
The real unknown is whether DOF would now be willing to work on a reasonable solution to the outstanding issues. This could be done either by allowing the courts to continue to provide guidance on the definition of “loan” and how to calculate interest rates, such as the courts ruled in the recent cases affecting Watsonville and Glendale, or by inserting language in the law that actually reflects what the courts have ruled. 
From the outset the bill has been divisive, containing provisions that are beneficial to specific cities and other provisions added in May that have nothing to do with redevelopment dissolution. These non-RDA provisions (negative bailout, San Benito County and Santa Clara city tax equity and a fix to assist recent incorporations) all have merit and should be addressed separately. It is bad policy to tie these unrelated issues to a bill that would unfairly rewrite laws enacted in 2012 through AB 1484. A copy of the League’s oppose letter is available on the League’s website.   
Next Steps
Cities that oppose AB 113 should communicate immediately with their Assembly members (both Democrat and Republican) to remind them of the specific negative impacts that AB 113 would cause to their community and to ask them to check back with their cities make sure that any new proposals developed are truly helpful. 
Redevelopment dissolution has been difficult enough. With the opportunity to continue to work on these issues in the fall, this is not the time to rush and cut a bad deal.

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