Governor Brown Signs AB 1963, Extending Deadline for Approval of Long-Range Property Management Plans

Special Report courtesy of Burke, Williams & Sorensen, LLP.

On July 18, 2014, the Governor signed into law Assembly Bill 1963 (Atkins) (Chapter 146, Statutes of 2014). The bill was adopted as an urgency measure, and goes into immediate effect. 

The legislation does two things: first, it extends to January 1, 2016, the deadline by which the Department of Finance must approve a successor agency's long-range property management plan ("LRPMP") in order to avoid reinstatement of the "fire sale" provisions of Assembly Bill x1 26. The law provides that the forced property sale provisions set forth in Health and Safety Code Sections 34177(e) and 34181(a) are suspended until the Department approves an LRPMP, but that the requirements are reinstated if a plan is not approved by January 1, 2016. The original deadline was January 1, 2015. The "fire sale" provisions require all former redevelopment agency property other than housing assets, governmental use properties, and properties that are governed by enforceable obligations, to be disposed of "expeditiously and in a manner aimed at maximizing value," with the sale proceeds to be distributed to the taxing entities. In contrast, successor agencies that have received a "finding of completion" following their payment of sums the Department has determined are due as a result of the due diligence review process, can prepare an LRPMP that permits properties to be transferred to the sponsoring jurisdiction for development consistent with redevelopment and community plans. According to the Department of Finance's website, as of July 15, 2014, the Department had issued a finding of completion to 313 successor agencies, and as of July 1, the Department had approved long-range property management plans for 125 jurisdictions. 

The new legislation also repeals Health and Safety Code Section 34178.8. That Section had required the State Controller to review successor agency activities to determine whether asset transfers had occurred after January 31, 2012 between the successor agency and its sponsoring jurisdiction or any other public entity, and to order the reversal of transfers that were not made pursuant to an enforceable obligation listed on an approved Recognized Obligation Payment Schedule. 

Health & Safety Code Section 34167.5, which requires the State Controller to conduct a review of redevelopment agency asset transfers undertaken after January 1, 2011, remains in effect. The review undertaken pursuant to that Section is limited to transfers occurring between January 1, 2011 and January 31, 2012, since all redevelopment agencies were dissolved effective February 1, 2012. According to the State Controller's website, as of July 17, 2014, the State Controller had completed 175 asset transfer reviews, and an additional 195 were in process. 

The repeal of Section 34178.8 will provide greater certainty to entities that acquire property pursuant to long-range property management plans and to title companies that issue policies in connection with property transactions involving former redevelopment agency property.

For more information, email Burke partner, Susan E. Bloch, or call her at 800.333.4297.