BILL ANALYSIS SENATE LOCAL GOVERNMENT COMMITTEE Senator Dave Cox, Chair BILL NO: AB 1641 HEARING: 6/30/10 AUTHOR: Hall FISCAL: No VERSION: 6/24/10 CONSULTANT: Detwiler REDEVELOPMENT AND BLIGHT Background and Existing Law The Community Redevelopment Law allows local officials to set-up redevelopment agencies, prepare and adopt redevelopment plans, and finance redevelopment activities. Before redevelopment officials can wield their extraordinary powers of property tax increment funding and property management (including eminent domain), they must determine if an area is blighted. The definition of blight, and how redevelopment officials apply it in specific local settings, is the pivot around which redevelopment powers turn. Until 1994, state law did not explicitly define blight. Instead, the statute described the characteristics of blight. This lack of statutory precision allowed local officials to adapt a statewide law to fit local circumstances. It also permitted some local officials to find blight where critics and the courts did not. In 1993, the Legislature passed the most important redevelopment reform bill in a decade. AB 1290 (Isenberg, 1993) enacted the first statutory definition of blight. Partially in reaction to the protests following the U. S. Supreme Court's Kelo decision the Legislature tightened the blight definition (SB 1206, Kehoe, 2006). A blighted area must be predominantly urbanized with a combination of conditions that are so prevalent and substantial that they can cause a serious physical and economic burden which can't be helped without redevelopment. In addition, a blighted area must have at least one of four conditions of physical blight and at least one of seven conditions of economic blight. Predominantly urbanized means that at least 80% of the land in the project area: Has been or is developed for urban uses (consistent with zoning), or AB 1641 -- 6/24/10 -- Page 2 Is an integral part of an urban area, surrounded by developed parcels. The four conditions of physical blight are: Unsafe or unhealthy buildings. Conditions that prevent or hinder the viable use of buildings or lots. Incompatible land uses that prevent development of parcels. Irregular and inadequately sized lots in multiple ownerships. AB 1641 -- 6/24/10 -- Page 3 The seven conditions of economic blight are: Depreciated or stagnant property values. Impaired property values because of hazardous wastes. Abnormally high business vacancies, low lease rates, or a high number of abandoned buildings. Serious lack of necessary neighborhood commercial facilities. Serious residential overcrowding. An excess of adult-oriented businesses that result in problems. A high crime rate that is a serious threat to public safety and welfare. A blighted area that meets these physical and economic conditions may also be characterized by inadequate public improvements or inadequate water or sewer utilities. Some of the 11 public housing projects owned by the Housing Authority of the City of Los Angeles are outside the Los Angeles Community Redevelopment Agency's 23 redevelopment project areas. City officials want to coordinate their housing and redevelopment efforts. They are considering creating new redevelopment project areas to take in public housing projects, including the Jordan Downs and Nickerson Gardens housing projects built before 1960. City officials want to replace the existing housing with mixed-use development. Because public housing projects get federal subsidies, the Housing Authority must keep the units decent, sanitary, and safe. Los Angeles officials worry that they might jeopardize the federal subsidies if they declare the housing projects as "blighted" under state redevelopment law. Proposed Law Assembly Bill 1641 declares that a blighted area that contains characteristics of physical and economic blight may also include housing constructed as a government-owned housing project, constructed before January 1, 1960. If a redevelopment agency uses this explanation of blight, AB 1641 requires the agency to follow redevelopment law and follow additional requirements for replacement housing and limit the displacement of households. AB 1641 -- 6/24/10 -- Page 4 Comments 1. A defining moment . Blight is the gateway to redevelopment. Unless they can document blight, redevelopment officials can't get access to the state subsidies that support property tax increment financing and they can't use their extraordinary eminent domain authority. The 1993 reforms and the 2006 revisions demonstrate the Legislature's insistence that redevelopment officials respect the statutory "blight" definition. Without expanding that definition, AB 1641 demonstrates that older, government-built public housing can be part of a blighted area. This nuanced approach should avoid jeopardizing federal housing subsidies while still allowing Los Angeles officials to use redevelopment's extraordinary powers. 2. Housing requirements . For over 30 years, state law has required redevelopment officials to spend money on affordable housing, replace housing destroyed by redevelopment projects, and relocate displaced tenants. As Los Angeles officials approach the redevelopment of public housing projects, AB 1641 ensures that they will go beyond the requirements of existing law to protect low-income tenants. 3. Double-referred . The Senate Local Government Committee shares policy jurisdiction over redevelopment activities with the Senate Transportation Committee. Because AB 1641 affects redevelopment agencies' obligations to provide replacement housing and tenant relocation benefits as well as the statutory "blight" definition, the Senate Rules Committee ordered the bill's double-referral. The Senate Transportation and Housing Committee passed AB 1641 on June 22. The Senate Local Government Committee will hear the bill on June 30. Assembly Actions Assembly Housing & Community Development Committee: 6-3 Assembly Floor: 46-26 AB 1641 -- 6/24/10 -- Page 5 Support and Opposition (6/24/10) Support : City of Los Angeles. Opposition : Unknown.