Governor Brown Signs Bill Letting Cities Create New Agency With Redevelopment Powers -- Incl. "Tax Increment," Debt Financing + Eminent Domain -- Read Full Bill Text
Lets cities create a "Community Revitalization and Investment Authority" in areas where not less than 80% of land in census tracts has median household income less than 80% of statewide annual median income PLUS three of these four: (1) Unemployment 3% above statewide median; (2) crime rates 5% above statewide median; (3) deteriorated/inadequate infrastructure incl. streets, sidewalks, water supply, sewer treatment, parks; (4) deteriorated comm'l or residential structures
Governing board would be three members of city's legislative body (Council) chosen by the legislative body plus two "public" members chosen by the legislative body who must live/work withint the community revitalization and investment area.
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(Oct. 1, 2015) -- Governor Jerry Brown has signed a bill (AB 2) that would effectively let CA cities create new bodies with many of the same -- praised or panned, depending on one's viewpoint -- powers of now dissolved Redevelopment Agencies including "tax increment" financing, freezing property tax revenue and diverting increases to finance debt for government-chosen projects in areas meeting certain criteria somewhat more specific than the former vague "blight" definition that empowered former RDAs.
The legislation -- now signed into law -- lets cities, on a vote of their City Council, adopt a resolution creating a "Community Revitalization and Investment Authority" (CRIA) to administer economic development and affordable housing programs and use property tax increment increases to finance implementation of a "community revitalization plan."
A CRIA is allowed in areas where not less than 80% of land in census tracts have a median household income less than 80% of statewide annual median income AND three of these four apply: (1) Unemployment 3% above statewide median; (2) crime rates 5% above statewide median; (3) deteriorated/inadequate infrastructure incl. streets, sidewalks, water supply, sewer treatment, parks; (4) deteriorated commercial or residential structures.
The new CRIAs would also have the power of eminent domain: to take private property for what government bodies call public benefits.
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The bill specifies that the CRIA's governing board shall consist of three members of city's legislative body (City Council) chosen by the legislative body plus two "public" members chosen by the legislative body who must live/work withint the community revitalization and investment area.
An Assembly legislative analysis on final passage noted that like former Redevelopment agencies, the bill will let the new authorities freeze property taxes at the time they approve a plan for revitalizing the area; the authority will then collect the tax increment or increased property taxes generated after that point and can use it on activities it favors.
The legislation also requires the taxing entities in the area (city, county, etc.) to agree to divert tax increment to the authority; local government entities that initially participate can opt out by giving the auditor-controller sixty days' notice but the auditor controller will continue to collect the local government entities' portions of tax increment until any debts issued have been repaid...and no portion of local schools' share of tax increment may go to the authority.
To view the full text of the legislation now signed into law, click here.
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Exactly how Long Beach city officials might apply this new law -- which can be implemented with a resolution on a Council majority vote -- remains to be seen. Also unclear is exactly what area(s) may or may not end up within a "Community revitalization and Investment Authority" area...where development decisions, including the potential use of eminent domain, and the use of public money to enable private developments would again be guided by city staffers with decisions approved by elected officials or appointees they approve.
When the bill was being debated, among the arguments pro and con were:
[Ass'y legislative analysis text] Arguments in support: Supporters argue that eliminating redevelopment agencies did not eliminate the need for California communities to build more affordable housing, eliminate blight,
foster business activity, clean up contaminated brownfields, and create jobs. This bill is a tool
that can be used in the state's disadvantaged communities, which was the original focus of
redevelopment. Supporters contend that the bill will ensure public accountability by requiring an
authority to conduct an annual review and reporting process, and periodically allows local
residents to prohibit an authority from taking further actions. While it is unrealistic to expect
that a single economic development tool will work in all California communities, in supporters'
view this bill is a viable option for bringing investments to communities that are in need of vital
services.
Arguments in opposition: Opponents are concerned that this bill would set up new government
entities with the power of eminent domain, and contend that the beneficiaries of these property
takings are often developers and large business interests. They oppose provisions in this bill
which allow authorities to use land acquisition and management powers that largely replicate
powers exercised by former redevelopment agencies. Opponents also question the need for the
bill, as last year the Legislature passed SB 628 (Beall), Chapter 785, Statutes of 2014, which
provided local governments with new tax increment financing tools to pay for local economic
development by forming an enhanced infrastructure financing district (EIFD). EIFDs do not
give local governments the power of eminent domain.
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The State Senate's legislative analysis listed the following support/opposition:
SUPPORT: (Verified 9/4/15)
African American Caucus, League of California Cities
American Planning Association, California Chapter
The ARC California
Asian and Pacific Islander Caucus, League of California Cities
Building Owners and Managers Association of California
California Apartment Association
California Asian Pacific Chamber of Commerce
California Association for Local Economic Development
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Coalition for Rural Housing
California Special Districts Association
Cities of Hesperia, Indian Wells, Lakewood, Mendota, Rosemead, Sacramento, Salinas, and Thousand Oaks
Glendale City Employees Association
Housing California
International Council of Shopping Centers
Latino Caucus, League of California Cities
Leading Age California
League of California Cities
LIUNA Locals 777 and 792
NAIOP of California, the Commercial Real Estate Development Association
Organization of SMUD Employees
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Transportation Agency of Monterey County
United Cerebral Palsy California Collaboration
OPPOSITION: (Verified 9/4/15)
California Alliance to Protect Private Property Rights
Fieldstead and Company
On final passage, Assemblyman Patrick O'Donnell (D., Long Beach) voted "yes"; State Senator Ricardo Lara (D, Long Beach-Huntington Park) didn't cast a recorded vote although he voted for the measure at Committee levels; state Senator Janet Nguyen (R, SE-LB/West OC) voted "no.".
