Topic: redevelopment
Deadline to Submit Housing Assets List to DOF is August 1
The successor to housing assets and functions (“Housing Successor“) of a dissolved redevelopment agency is required under SB 1484 to submit a list of housing assets to the State Department of Finance by August 1, 2012. The list should include all housing assets received by the Housing Successor after February 1, 2012 until the date the list is prepared. The form to use to list housing assets is posted on the Department of Finance website. Click here for the form.
A summary of AB 1484 is on the CRA website.
Federal Government Gets Behind Adaptive Reuse
Old Post Office - Trump organization has acquired redevelopment rights for the historic federal structure.
Despite recommending sharp decreases in government spending across the board, President Obama’s budget for 2013 provides for a near-level $93.3 million for the EPA’s Brownfields Program, which provides funding for clean up and reinvestment in brownfield sites.
In addition, in a showing of bipartisan cooperation, the U.S. House of Representatives recently passed the Civilian Property Realignment Act. Intended to be a cost saving measure that would increase the government’s treasury by selling property and reducing building operating costs, the Act also encourages the adaptive reuse of government property. As government buildings, such as former post offices, are put on the market, savvy investors will be able to re-purpose the buildings for hotels, apartments and office structures. When the basic building frame already exists, developers don’t have to construct a project from the ground up, which provides opportunity for significant savings.
The development industry welcomes federal support for adaptive reuse. But enterprising developers can find state and local government incentives as well – incentives aimed at revitalizing urban cores. Watch for future posts detailing some of these programs and opportunities.
9 Proposed Modifications Under AB 1585 – Trailer Legislation for AB 26
John Perez, California State Assembly Speaker, recently introduced AB 1585, a companion bill to SB 654, which would expand the term “Enforceable Obligations” and change the allocation of housing funds as outlined under AB 26.
9 Modifications Under AB 1585:
- Would permit temporary increases in administrative costs to cover litigation and asset preservation efforts of the successor agencies, without limiting the amounts or temporary time period.
- Would add three new agreements to the list of City-Agency contracts that are otherwise null: a loan made within two years of a project area being formed if the loan was for that project area; certain SERAF loans; and other loans between City-Agency “established” so long as the oversight board determines that the loan was for legitimate redevelopment purposes, had economic substance, and was based on reasonable repayment terms. It is unclear whether this provision relates to loans created after the effective date of AB 26 or before.
- Would transfer the Low Income Housing Fund to the successor housing agency to be used as set forth in the Community Redevelopment Act.
- Would require (rather than permit) the successor housing agency to enforce affordability covenants.
- If 80% of Low Income Housing Fund moneys are not expended or encumbered within three years, the excess amount (less amounts reserved for ongoing monitoring and maintenance) would be allocated to the county auditor to be used for housing purposes.
- If the redevelopment agency staff is actually city staff, then the union member on the oversight board would be a representative of the union representing the city staff.
- The oversight board would have to approve long-term bond issues (for any financing arrangement that requires payments more than is received in any year).
- The successor agency would have to inventory all real property assets by project area. The oversight board would be required to adopt a policy or strategy for the disposal or transfer of such assets.
- The successor agency would be permitted to reserve funds from the January 16 allocation to cover costs arising in the second half of the calendar year that will not be disbursed in subsequent allocations.
The bill is currently in draft form, but is expected to be sent to committee soon. We will continue to monitor AB 1585 as it progresses through the Legislature.
Three Named to L.A. Successor Agency
When the City of Los Angeles voted against becoming the Successor Agency to the Community Redevelopment Agency of Los Angeles (CRA/LA), it fell to Governor Jerry Brown to choose the three local residents to fill the roll of Successor Agency. Under the provisions of ABx1 26, which dissolved all California redevelopment agencies as of February 1, the new appointees will form a “designated local authority” that will assume certain duties associated with the terminated CRA/LA. These duties include disposing of agency assets, paying existing bond debt and assuming control over the previous redevelopment agency staff.
Governor Brown appointed Timothy McOsker, Nelson Rising and Mee Semcken to serve as the Successor Agency to the CRA/LA.
For more information about each of the appointees, as well as the appointees in Merced, Stanislaus and Ventura Counties, please see the Governor’s press release here.
Real Estate Development and the Demise of California’s RDAs
As everyone is now so keenly aware, the California Supreme Court upheld Assembly Bill ABX1 26 (“AB 26”), which provides for the termination of all California redevelopment agencies (“RDAs”). On February 1, 2012, RDAs were effectively, dissolved and all Enforceable Obligations were transferred to Successor Agencies. For those real estate stakeholders in existing relationships with RDAs – specifically those holders of notes or bonds tied to a redevelopment project, a development agreement with an RDA, or a loan with the RDA, or an owner of property located in an RDA project area that is under contract to be acquired – the impact can be immediate.
Please see Goodwin Procter’s white paper, “Real Estate Development and the Demise of California’s RDAs” for information on AB 26 and the aftermath of the California Supreme Court decision.
SB 654 Passes in Senate, Moves to Assembly
SB 654 survived a Senate vote late Tuesday, Feb. 1. The bill would allow California cities that had community redevelopment agencies to spend its affordable housing set-aside funds. Although several other bills seeking to extend the life of redevelopment agencies have failed, SB 654 now moves to the Assembly. If the bill passes, local governments will be permitted to spend an estimated $1.4 billion for housing projects.
More information can be found here.
City of LA Votes Against Becoming Successor Agency to CRA/LA
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In a lengthy session this week, the City Council of the City of Los Angeles, CA voted against assuming the obligations of the Community Redevelopment Agency of Los Angeles (CRA/LA) to become the successor agency under the provisions of ABx1 26.
The passing of ABx1 26 and the subsequent fallout has put several projects into a precarious position, including 10 projects in Los Angeles County show in the graphic on the left.
An article about the Council’s decision can be found in today’s Los Angeles Times. To hear the discussion about the Council’s decision and the next steps, watch the on-demand video of the meeting here.
Weekly Quick Hits – Redevelopment Fall-Out Edition
In light of the California Supreme Court’s decision regarding ABx1 26 and ABx1 27, which permits the dissolution of redevelopment agencies to proceed, we have aggregated some of the news items on that topic from third-party sources.
Rescuing Redevelopment – An Op-Ed in the Los Angeles Times that advocates adopting a bill to extend the time period for abolishing redevelopment agencies and salvage the positive features of the community redevelopment law. (Los Angeles Times)
Unintended Consequences of New RDA Bills – This Op-Ed explores the unintended consequences of new bills that may reignite some of the alleged ills that were ostensibly eliminated by the Supreme Court’s ruling. (Silicon Valley Mercury News)
RDA Doors and Benefits Close – In addition to funding, California redevelopment agencies provided stimulus for jobs and economic development that now must be recovered through another mechanism. (Contra Costa Times)
On Hold: Projects Hit the Brakes with Redevelopment Decision – This article discusses the many projects that are now stalled following the court’s ruling to allow the shutdown of redevelopment agencies. (Bakersfield Californian)
GP ALERT: CA Supreme Court Upholds Legislation Disbanding Redevelopment Agencies
On December 29, 2011, the California Supreme Court upheld legislation that disbanded redevelopment agencies (RDAs) and allowed the State of California to take $1.7 billion in redevelopment funds, funneling it into the State’s General Fund. The court then struck down legislation that would have allowed redevelopment agencies to stay in business by paying a fee to the State. The combined effect of the ruling is that redevelopment agencies in California will no longer exist once the transition to successor agencies has been completed. RDA advocates have stated that this is the worst possible outcome for RDAs.
For more details and descriptions of the Redevelopment Bills at issue, view the full alert here.
CA Files Redevelopment Lawsuit Response
Yesterday, the State of California filed its response to a lawsuit filed by the California Redevelopment Association (CRA) and the League of California Cities challenging the constitutionality of ABX1 26 and ABX1 27 (See July 18 post, Public Finance Update: Lawsuit Challenging CA Redevelopment Bills Imminent).
The State agrees with the plaintiffs’ request to have the Supreme Court assume original jurisdiction on the case and calls for an expedited briefing schedule. However, the State opposes the request for a stay, claiming that a stay would “wreak havoc on the operation of the state” and requests that the Court deny the plaintiffs’ petition on the merits.
View the State’s formal response in its entirety here.
