BILL ANALYSIS
AB 2157
Page 1
Date of Hearing: April 26, 2006
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Gene Mullin, Chair
AB 2157 (Chu) - As Introduced: February 21, 2006
SUBJECT : Redevelopment: El Monte
SUMMARY : Allows the El Monte Redevelopment Agency to amend its
redevelopment plan for the purposes of a transit oriented
redevelopment project without making a finding of blight and
without complying with any existing law provisions (except
public notice requirements) with respect to amendments and time
extensions. Specifically, this bill :
1)Allows the City of El Monte Redevelopment Agency (RA), for the
purposes of transit oriented redevelopment, to amend its
redevelopment plan according to the following:
a) Without a finding of blight;
b) Extend the life of the project area indefinitely;
c) Remove the time limit on incurring debt.
d) Increase from $44 million to $65 million the amount of
allowable bonded indebtedness for one or more transit
oriented redevelopment projects.
e) Increases to $150 million the amount of tax increment
allocated to the RA.
2)Defines "transit oriented redevelopment project" as:
a) Located on land within the downtown El Monte
redevelopment project area.
b) The land is either owned or leased by the state, the
Metropolitan Transportation Authority, the City of El Monte
(City) or the RA.
c) Providing the following:
i) Public infrastructure;
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ii) Relocation of a fire station;
iii) Construction of a new public parking structure;
iv) Acquisition of new public park lands;
v) Public street improvements on Santa Anita Avenue;
vi) Public mass transit bus and rail facilities; or
vii) Private development activity by agreement with the
City or the Redevelopment Agency.
3)Alters the "pass through agreements" (if El Monte exercises
the authority granted to it by
AB 2157) for each affected taxing entity except for the County
of Los Angeles, the Los Angeles Flood Control District, and
the Los Angeles County Consolidated Fire Protection District.
4)Provides that the El Monte Redevelopment Agency must follow
the procedural (notice and hearing) requirements as provided
by SB 211 (Torlakson), Chapter 741, Statutes of 2001.
5)Provides findings and declarations describing the parcels to
be affected by the redevelopment plan described by this bill.
6)Declares that this redevelopment project to be sited on
publicly owned lands in Downtown El Monte near the El Monte
Busway Terminal, that does not require acquisition of private
land or displacement of private business or residence,
presents a unique opportunity for the San Gabriel Valley and
the state to realize the goals of blight elimination and
transit oriented development.
EXISTING LAW
1)Allows, with respect to redevelopment plans adopted prior to
January 1, 1994, agencies to repeal the time limit for
incurring indebtedness and to extend time limits for
redevelopment plan expiration and for receiving tax increment
revenues, for purposes of repaying debt used to improve areas
of substantial blight, for up to 10 additional years if
specified conditions are met (Health and Safety Code
33333.6).
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2)Establishes that the conditions for obtaining the extensions
allowed by 1) above include:
a) A finding by the agency that significant blight remains
and cannot be eliminated without an extension.
b) A housing element in compliance with state law.
c) Increasing from 20% to 30% the tax increment revenue
earmarked to provide low and moderate income housing.
d) Complying with a specified process involving public
notice and hearings, and submitting a report justifying the
time extension to each local affected taxing entity, the
Department of Finance (DOF), and the Department of Housing
and Community Development (HCD).
(Health and Safety Code 33333.10)
3)Requires the agency hold public hearings prior to adopting an
amendment
(Health and Safety Code 33333.11).
4)Authorizes the Attorney General to participate in the
extension process
(Health and Safety Code 33333.11).
5)Authorizes the Attorney General to bring a civil action to
determine the validity of the proposed extension (Health and
Safety Code 33333.11).
FISCAL EFFECT : Unknown, but given the increased amount of tax
increment to be transferred to the El Monte Redevelopment Agency
the state general fund would likely be required to increase
transfers back to the County of Los Angeles in order to
reimburse public education costs.
COMMENTS :
According to the findings and declarations in AB 2157, the El
Monte Busway Terminal is located in the City of El Monte and is
one of the largest public mass transportation facilities for bus
commuters in the state. The El Monte Busway connects the El
Monte Busway Terminal in the City of El Monte to the Los Angeles
Union Passenger Terminal in the City of Los Angeles. The El
Monte Busway Terminal is situated on lands owned by the State of
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California. The El Monte Busway Terminal is adjacent to other
lands that are owned by the Los Angeles County Metropolitan
Transportation Authority and the City of El Monte.
In 1986 the State of California, the Southern California Rapid
Transit District, and the RA entered into a memorandum of
understanding to study potential mixed use public mass transit
oriented development proposals focused on the lands surrounding
the El Monte Busway Terminal. When the City of El Monte adopted
the redevelopment plan for the Downtown El Monte Redevelopment
Project in 1987, one of the stated redevelopment programs
identified in the redevelopment plan was to provide for transit
oriented development in the vicinity of the Busway Terminal.
According to the stated declarations in AB 2157 , the
demonstrable public benefit of providing for transit oriented
development in the vicinity of the El Monte Busway Terminal on
lands currently owned by public agencies, including the City of
El Monte, consisting of a mix of housing types, retail and
office professional uses oriented to the El Monte Busway
Terminal, and other civic uses including public park lands, is
being carefully studied by the City of El Monte in consultation
with other responsible public agencies, including the Department
of Transportation and the Los Angeles County Metropolitan
Transportation Authority.
Arguments in Support
According to the author, AB 2157 amends the California Community
Redevelopment Law to provide flexibility for the City of El
Monte and its redevelopment agency to plan and implement a
transit oriented development that will provide new jobs and
housing.
Under existing law, the El Monte Redevelopment Agency (RDA) may
only incur debt to eliminate blight and finance specific
redevelopment projects during the first 20 years following the
adoption of a redevelopment plan (no later than July 14, 2007).
Also, the existing redevelopment plan provides for a maximum of
$44 million for bonded indebtedness.
According to the author, recently, the RDA and the City of El
Monte, in consultation with the California Department of
Transportation (Caltrans) and the Metropolitan Transportation
Authority (MTA), have begun a cooperative process that may lead
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to a specific plan for a regional, mixed-use, transit oriented
development project. The concept could include commercial,
residential, and regional recreational uses. Such a project
would take advantage of the existing heavily used El Monte bus
terminal, and make efficient, urban, and economic use of
contiguous lands presently owned by the City, Caltrans and MTA.
A considerable amount of time will be required to complete the
planning and study process, including environmental review, for
such a project. According to the author, it is also likely that
no public financing for major parts of the new infrastructure in
support of such a project could be accomplished before the
current July 2007 deadline for incurring debt.
The author asserts that AB 2157 would allow the RDA and the City
to amend the existing redevelopment plan to: 1) eliminate the
deadline for incurring debt; 2) create a new debt ceiling of $65
million; 3) allow the RA to receive tax increment generated
within the transit oriented development to be used toward
project costs and new debt service costs specifically for the
transit oriented development without extending the time limit
for the effectiveness of the Plan.
According to the author, AB 2157 would maintain the existing
pass-through agreement with affected taxing agencies which
provides for flexibility in development of new financing
arrangements for the Specific Plan area and the Transit Village
project. During the life of the Plan, affected taxing entities
such as the school districts will receive significant benefits
in the form of new tax increment pass-through revenues from the
Specific Plan area if the Transit Village project (or portions
thereof) does in fact proceed, because significant portions of
the Specific Plan area are currently owned by public agencies
and therefore produce no property tax revenue. The development
of publicly-owned lands in the Project Area and within the
Specific Plan area presents an opportunity to achieve the goals
of the Transit Village Development Planning Act without
displacement or relocation of any private business or residence.
Arguments in Opposition
AB 2157 would allow the El Monte RDA, without a finding of
blight, to amend one of its redevelopment plans to carry out
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transit-oriented projects over an undetermined period of time.
This bill moves in the opposite direction from pending reform
legislation, seeking to place tighter restrictions on
redevelopment activities.
In 2001 the Legislature approved SB 211 (Torlakson), the result
of more than a year's negotiation, to allow extensions of
redevelopment activity. According to opponents, SB 211 achieved
a balanced and fair mechanism among the parties. If SB 211
requires additional work, opponents have offered to discuss
changes to existing law so long as it applies to all
redevelopment agencies.
According to the County of Los Angeles, AB 2157 would weaken
current law by creating an exception to the deadline on
incurring debt, and an exception to the lifetime dollar limit on
the amount of tax increment that may be diverted to
redevelopment from essential countywide services. As a result,
taxing entities within Los Angeles County would continue to lose
property tax increment funds that belong to the County and to
affected taxing entities once redevelopment projects are
completed.
The County of Los Angeles asserts that it has sought
negotiations with El Monte and has indicated a willingness to
come to some compromise however no such compromise has been
reached at this point.
In the wake of the Kelo v. New London, Conn . decision, and the
widespread public outcry that followed, the Legislature is
currently working on a number of redevelopment reforms that
would apply to extensions, amendments and mergers. Those bills
seek to tighten rather than loosen requirements on redevelopment
agencies. AB 2157 does the reverse.
Staff Comments
The committee may wish to consider whether the policy suggested
in this bill is consistent with the more cautious approach the
Legislature seems to be taking with respect to allowing
expansion of redevelopment agency activity. This committee
participated in several joint hearings in 2005 where witnesses
testified, indicating instances where redevelopment activity had
expanded beyond the original intent of the Redevelopment Act.
This bill deletes the requirement that a finding of blight be
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made by the agency, justifying the redevelopment project. The
committee may wish to consider whether that is good policy,
after the U.S. Supreme Court's controversial decision last year
in Kelo.
The committee may wish to inquire as to why existing law
provisions (under SB 211) which allow redevelopment agencies to
extend the period to incur debt for, up to, an additional 10
years upon a determination that blight exists, is not sufficient
in El Monte's case. It would seem that possibly it is to avoid
the required blight finding.
The committee may wish to take notice that both in the stated
declarations of the bill and the author's statement of need for
the bill, references are vague as to the outcome of the process
of negotiation with the parties to the proposed transit oriented
development. The bill language states that the "demonstrable
public benefit . . . is being carefully studied by the City of
El Monte and (others) . . . ." The author notes that "(the
parties) have begun a cooperative process that may lead to a
specific plan for a regional, mixed use, transit oriented
development project." The committee may wish to consider whether
it is sound public policy to make an exception to existing law
relating to blight findings, debt limits and deadlines when it
is not clear to what the parties will agree. The committee may
wish to require that the parties present a plan to the
Legislature with specific and articulated reasons why an
exception should be made. Is the rationale in this instance too
speculative?
The Legislature spent nearly two years studying and negotiating
changes to the time limitations on redevelopment plans. In 2001
that process resulted in SB 211 by Senator Torlakson. The
California Redevelopment Association, which represents the
interests of all redevelopment agencies in the state, helped
craft a balanced approach to address the needs of redevelopment
agencies statewide. The committee may wish to consider whether
carving out piecemeal exceptions to existing law, without clear
articulation as to why such is necessary, is a sound approach to
policy.
Similar Legislation
AB 1167 (Chu) a very similar bill was introduced in 2005. That
bill would have, in addition to the provisions in AB 2157,
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allowed the RDA to extend the time limit on the effectiveness of
the redevelopment plan for up to 10 years. The author has not
included that provision in AB 2157; also AB 2157 maintains some
of the existing pass-through agreements.
AB 1167 was referred to the Assembly Committee on Housing and
Community Development as well as the Assembly Committee on Local
Government. Hearings were cancelled at the request of the
author. AB 1167 died pursuant to Art. IV, Sec. 10(c) of the
Constitution.
Double referred : The Assembly Committee on Rules referred AB
2157 to Housing and Community Development Committee and Local
Government Committee. If AB 2157 passes this committee, the
bill must be referred to the Assembly Committee on Local
Government.
REGISTERED SUPPORT / OPPOSITION :
Support
City of El Monte (Sponsor)
Opposition
County of Los Angeles
Western Center on Law and Poverty
Analysis Prepared by : Hubert Bower / H. & C.D. / (916)
319-2085