BILL ANALYSIS                                                                                                                                                                                                    



                                        
                       SENATE LOCAL GOVERNMENT COMMITTEE
                            Senator Dave Cox, Chair


          BILL NO:  AB 1791                     HEARING:  6/16/10
          AUTHOR:  Monning                      FISCAL:  No
          VERSION:  5/24/10                     CONSULTANT:  Detwiler
          
                           REDEVELOPMENT AT FORT ORD

                           Background and Existing Law  

          When the number of redevelopment agencies and project areas  
          exploded after Proposition 13 (1978), county officials  
          complained that cities were declaring farmland and open  
          space as "blighted" and including the properties in  
          so-called bare land redevelopment projects.  Legislators  
          responded by requiring redevelopment project areas to be  
          "predominantly urbanized."  At least 80% of the land in a  
          project area must have been or is developed for urban uses  
          or is integral to developed urban areas (AB 322, Costa,  
          1983).

          A decade later, legislators worried that redevelopment  
          officials were accelerating the fiscalization of land use  
          by using their powers to approve development projects on  
          undeveloped land to generate sales tax revenues.   
          Legislators responded by prohibiting redevelopment  
          officials from providing any direct assistance to auto  
          dealerships and to the development of five acres or more  
          which had not been developed for urban uses and which  
          generate sales or use tax revenues.  However, that ban  
          doesn't apply to office, hotel, manufacturing, and  
          industrial developments (AB 1290, Isenberg, 1993).  A later  
          bill also banned direct redevelopment assistance to casinos  
          (AB 2063, Isenberg, 1996).

          The end of the Cold War forced the Pentagon to adjust to  
          new geopolitical realities.  Federal officials closed or  
          realigned nearly three dozen military bases in California.   
          To coordinate the transition of the former Fort Ord  
          (Monterey County), the Legislature created the Fort Ord  
          Reuse Authority (FORA) to adopt a Fort Ord Reuse Plan.  The  
          County of Monterey and the cities that cover the former  
          base must conform their general plans and zoning to FORA's  
          reuse plan (SB 899, Mello, 1994).  FORA adopted its Final  
          Base Reuse Plan in 1997.





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          To accelerate the redevelopment of former military bases,  
          legislators passed several bills, including special  
          legislation for the former Fort Ord.  FORA can establish  
          the Redevelopment Agency of Fort Ord with its own  
          redevelopment project areas.  Alternatively, the  
          redevelopment agencies established by the County of  
          Monterey and the cities that cover the former Army base can  
          set up their own redevelopment project areas (SB 1600,  
          Mello, 1994).
           
          The Final Base Reuse Plan for Fort Ord lays out the future  
          land uses for the 45-square mile former Army base,  
          including areas for housing, commerce, recreation, public  
          uses, and open space.  Of particular interest is the  
          development of about 60 acres near the former base's main  
          gate as a "life-style regional retail center."  However,  
          FORA and local officials point out that because this  
          property isn't "predominantly urbanized," redevelopment  
          officials can't provide direct assistance to potential  
          private builders.

          At the September 2009 joint hearing of the Assembly and  
          Senate Local Government Committee, FORA and local officials  
          told legislators that without redevelopment subsidies, it  
          will be difficult to interest private investors in building  
          the Seaside Main Gate project.  Besides the Main Gate  
          project, there are about 300 other acres of undeveloped  
          land that the Final Base Reuse Plan designated for land  
          uses that generate sales taxes.  The officials want an  
          exemption from the state law that prohibits redevelopment  
          officials from providing direct assistance to sales tax  
          generating land uses on previously undeveloped property.


                                   Proposed Law  

          Assembly Bill 1791 exempts specified territory in a  
          redevelopment project area within Fort Ord from the state  
          law that prohibits redevelopment officials from providing  
          direct assistance to the development of five acres or more  
          which had not been developed for urban uses and which will  
          generate sales tax revenues.  

          For territory to qualify, the Fort Ord Reuse Authority's  
          Final Base Reuse Plan, as the plan existed on January 1,  
          2010, must designate the territory as a:





          AB 1791 -- 5/24/10 -- Page 3



                 Planned development mixed-use district.
                 Business park with light industrial, office, and  
               research and development mixed uses.
                 Neighborhood retail space.
                 Regional retail space.
                 Space designated for visitor services use.

          Before a redevelopment agency can use this exclusion, AB  
          1791 requires the agency to adopt a resolution which finds  
          that:
                 Its community has adopted a general plan housing  
               element which the State Department of Housing and  
               Community Development has determined substantially  
               complies with state law.
                 For the past three fiscal years, the agency has not  
               been included by the State Controller's Office on a  
               list of redevelopment agencies that have not corrected  
               major audit violations.
                 The agency has not accumulated an excess surplus in  
               its Low and Moderate Income Housing Fund.































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                                     Comments  

          1.   Building on success  .  Unlike many former military  
          bases, the conversion of Fort Ord to productive civilian  
          uses has earned broad support.  Careful preparation and  
          thoughtful collaboration produced a base reuse plan that  
          won the support of the county government and the affected  
          cities.  Moving from the planning phase into  
          implementation, each of the underlying cities and the  
          county has its own redevelopment agency to promote private  
          investment in housing, education, commercial, and  
          industrial uses.  In addition, the base reuse plan reserved  
          large areas for recreation, habitat conservation, and other  
          open spaces.  To accelerate the development of key parcels,  
          AB 1791 exempts five categories of commercial development  
          from the statutory ban on providing redevelopment aid to  
          previously undeveloped property.  Without priming the  
          economic development pump, it may take years before those  
          acres attract private real estate investors.  Building  
          those high-profile projects will generate the property tax  
          increment revenues needed to redevelop the rest of Fort  
          Ord.

          2.   Redevelopment, not development  .  Blight is the gateway  
          to redevelopment.  The Legislature gave redevelopment  
          officials the extraordinary powers of eminent domain and  
          property tax increment revenues so they can eradicate the  
          physical and economic blight that drags down older suburbs  
          and central cities.  Redevelopment was never meant to  
          subsidize private construction on bare land.  The 1983,  
          1993, and 2006 statutory reforms were reactions to what  
          legislators perceived as local misuses of state  
          redevelopment law.  State law specifically prevents  
          redevelopment officials from directly aiding commercial  
          development on larger parcels of undeveloped property that  
          produce sales taxes.  AB 1791 is the first exemption to  
          that 1993 reform, but it won't be the last.  Why shouldn't  
          other former military bases ask for the same special  
          treatment?  If local officials can subsidize retail at the  
          former Fort Ord, why not at the former Mather AFB, Concord  
          Naval Weapons Station, Mare Island Naval Shipyard, or NAS  
          Alameda?  Why not let the Richmond Community Redevelopment  
          Agency subsidize the proposed casino at the former Naval  
          Fuel Depot Point Molate?  It's a slippery slope.

          3.   Sales tax generators  .  The fiscalization of land use  





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          occurs when public officials base their land use decisions  
          on development projects' costs and revenue consequences,  
          not on the need for jobs, affordable housing, environmental  
          quality, or resource conservation.  When legislators  
          thought that local officials were luring big box stores,  
          car dealers, casinos, and other sales tax generating land  
          uses into redevelopment project areas, they put a stop to  
          those subsidies.  FORA's reuse plan identifies six  
          categories of commercial land uses that could generate  
          sales taxes and AB 1791 exempts all of them except  
          "convenience retail."  If legislators accept the argument  
          that builders need public subsidies to jump-start private  
          investment at Fort Ord, the Committee may wish to consider  
          why local officials should subsidize the redevelopment of  
          vacant land for "neighborhood retail" and "visitor serving"  
          projects?  Why not just focus on mixed-use development,  
          industrial projects, and regional retail?

          4.   A Mammoth problem  .  In its 2000 Friends of Mammoth  
          decision, the Fourth District Court of Appeals explored the  
          redevelopment statute's requirement for predominantly  
          urbanized project areas.  That decision rejected the Town  
          of Mammoth Lakes' attempt to count the undeveloped parts of  
          a golf course, a community college site, and a local  
          airport as predominantly urbanized.  Relying on earlier  
          decisions, including the 2000 Murrieta case and the 1984  
          Honey Springs decision, the Court concluded that not-vacant  
          isn't the same as urbanized.  FORA and local officials  
          recognize that some of the land planned for future  
          commercial uses was never "urbanized" when Fort Ord was a  
          military base.  That's why the exemption in AB 1791 helps  
          to implement the base reuse plan.

          5.   Who gets what  ?  According to FORA, AB 1791 allows four  
          redevelopment agencies to subsidize sales tax generating  
          land uses on up to 364 acres of Fort Ord's 28,000 acres:
                         Planned        Business &NghbrhoodRegional   
          Visitor
           Agency                Mixed-Use  Industrial       Retail   Retail     
              Serving  
          Del Rey Oaks       0            0         0         05
          Marina           83        0         0         0  0
          Monterey (city)         0            0         0         00
          Monterey (county)     42      54          0       10   0
          Seaside          60         0         49          61     0  
               Totals         185       54        49        71   5





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          6.   Screening out the bad actors  .  None of the four  
          redevelopment agencies that AB 1791 helps can use the  
          bill's exemption until it meets the bill's three criteria  
          for (a) adopting a valid housing element, (b) avoiding  
          major redevelopment audit violations, and (c) avoiding an  
          excess surplus of affordable housing money.  The City of  
          Marina and the County of Monterey appear to pass those  
          tests.  However, the cities of Del Rey Oaks and Seaside  
          haven't adopted valid housing elements.  Further, Del Rey  
          Oaks' redevelopment agency has serious audit findings that  
          need correcting.  Until local officials fix their problems,  
          they won't be able to take advantage of AB 1791's  
          exemption.


                                 Assembly Actions  

          Assembly Local Government Committee:   7-2
          Assembly Floor:                    50-15































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                         Support and Opposition  (6/10/10)

           Support  :  Fort Ord Reuse Authority, County of Monterey,  
          Cities of Del Rey Oaks, Marina, Monterey, Pacific Grove,  
          Sand City, Seaside, Transportation Agency for Monterey  
          County.

           Opposition  :  LandWatch Monterey County, 3 individuals.