BILL ANALYSIS �
AB 1080
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Date of Hearing: April 17, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 1080 (Alejo) - As Amended: April 4, 2013
SUBJECT : Community Revitalization and Investment Authority
SUMMARY : Allows local governments to establish a Community
Revitalization and Investment Authority (Authority) in a
disadvantaged community to fund specified activities and allows
the Authority to collect tax increment. Specifically, this
bill :
1)Includes legislative findings regarding the intent of the
Legislature to create a planning and financing tool to support
the revitalization of disadvantaged communities.
2)Establishes an Authority as a public body to carry out a
community revitalization plan (plan) within a community
revitalization investment area (area).
3)Provides that for the purposes of receiving tax increment
revenues, pursuant to Article XVI of Section 16 of the
California Constitution, an Authority is a redevelopment
agency.
4)Allows an Authority to be created in either of the following
ways:
a) A city, county, or city and county may adopt a
resolution creating the Authority. The governing board must
include three members of the governing board of the city,
county, or city and county that created the authority and
two public members who live or work in the area; or
b) A city, county, city and county, and special district
may create an Authority by entering into a joint powers
agreement that shall establish the composition of the
governing board, which must include two public members who
live or work in the area.
1)Allows an Authority to establish an area if at least 80% of
the land, calculated by census tract, is characterized by both
of the following conditions:
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a) An annual median income that is less than 80% of the
statewide annual median income; and
b) Three of the following four conditions exist:
i. Unemployment that is at least 3% higher than the
statewide median unemployment rate;
ii. A crime rate that is 5% higher than the
statewide median crime rate;
iii. Deteriorated or inadequate infrastructure such
as streets, sidewalks, water supply, sewer treatment or
processing, and parks; and
iv. Deteriorated commercial or residential
structures.
1)Provides that the conditions in (b) above constitute blight
for the meaning of Community Redevelopment Law.
2)Provides that the Authority is not required to make a finding
or conduct a survey of blight.
3)Allows an Authority to establish an Area in a former military
base that is principally characterized by deteriorated or
inadequate infrastructure and structures.
4)Requires a governing board of an Authority established in a
former military base to include, as one of its public members,
a member of the military base closure commission.
5)Subjects an Authority to the Ralph M. Brown Act.
6)Allows an Authority to do any of the following:
a) Provide funding to rehabilitate, repair, upgrade, or
construct infrastructure;
b) Provide funding for low- and moderate-income housing;
c) Remedy or remove hazardous substances pursuant to the
Polanco Redevelopment Act;
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d) Provide for seismic retrofits of existing buildings;
e) Acquire and transfer property subject to eminent domain;
f) Prepare and adopt a plan for an area subject to
Community Redevelopment Law;
g) Issue bonds;
h) Borrow money, receive grants, or accept financial or
other assistance or investment from the state and federal
government or any private lending institution for any
project within its area of operation;
i) Receive funding from the California Environmental
Protection Agency under the Water Security, Clean Drinking
Water, Coastal and Beach Protection Act of 2002 and the
Cortese-Knox-Hertzberg Local Government Reorganization Act
of 2000;
j) Coordinate with a qualified community development entity
to maximize the benefit of New Markets Tax Credits;
aa) Appropriate funding that the governing body deems
appropriate for administrative expenses;
bb) Make loans or grants for owners or tenants to improve,
rehabilitate, or retrofit buildings or structures in the
area; and
cc) Provide direct assistance to businesses within the plan
in connection with new or existing facilities for
industrial or manufacturing uses.
1)Allows money appropriated to the Authority from the
legislative body or bodies that created the Authority for
administrative expenses to be paid as a loan or grant.
2)Provides that if the Authority is loaned funding for
administrative expenses, the property owners within the plan
area will be made third party beneficiaries of the repayment
of the loan.
3)Provides that in addition to the common understanding and
usual interpretation, the term "administrative expenses"
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includes, but is not limited to, expenses for planning and
dissemination of information.
4)Allows an Authority to adopt a plan to receive tax increment
generated in an area. The plan must include the following:
a) A statement of the principal goals and objectives;
b) A description of the deteriorated or inadequate
infrastructure within the area and a program for
construction, repair, or upgrade of existing
infrastructure;
c) A program to spend 20% of the tax increment collected to
increase, improve, and preserve the community's supply of
low- and moderate-income housing;
d) A program to remedy and remove a release of hazardous
substances;
e) A program to fund or facilitate economic revitalization
of the area; and
f) A fiscal analysis of the projected receipt of revenue
and projected expenses over a five year planning period.
1)Allows an Authority to transfer funding for affordable housing
to a private nonprofit corporation, housing authority, or the
entity that received the housing assets of the former
redevelopment agency within the territorial jurisdiction of
the local jurisdiction of the Authority, if it makes a finding
that the transfer will reduce administrative costs or expedite
the construction of affordable housing.
2)Establishes a public process for adopting a plan to receive
tax increment generated in an Area that must include the
following:
a)The Authority must hold two public hearings at least 30 days
apart;
b)The plan must be made available to the public and to each
property owner within the area at a meeting held at least 30
days prior to notice of the first public hearing;
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c)Notice of the first public hearing must be given at least once
a week for four weeks prior to the hearing in a newspaper of
general circulation and mailed to each property owner in the
proposed area of the plan.
d)Notice of the second public hearing must be given not less
than ten days prior to the date of the second hearing in a
newspaper of general circulation and mailed to each property
owner in the area of the plan.
1)Requires a notice informing the public and property owners in
the area of a public hearing to discuss the plan to receive
tax increment to include:
a)The specific boundaries of the proposed area;
b)The purpose of the plan;
c)The time and place of the public hearing; and
d)Requires that notice of the second hearing must include a
summary of the changes made to the plan from the first
hearing.
1)Allows the Authority to inform tenants of properties in the
area of the plan to receive tax increment in a manner of its
choosing.
2)Allows an Authority to adopt a plan by ordinance at the
conclusion of the second public hearing.
3)Allows an Authority to begin receiving tax increment funds
beginning on the first December 1 after the plan is adopted.
4)Allows any taxing entity other than a school entity that
receives property taxes in an area to adopt a resolution,
prior to the adoption of the plan, to direct the county
auditor-controller to allocate its share of tax increment
funds to the Authority.
5)Allows the resolution adopted by a taxing entity directing its
share of tax increment to the Authority to allocate less than
the full amount of tax increment, establish a maximum amount
of time in years, or limit the use of funds to specific
purposes or programs.
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6)Allows a taxing entity to repeal a resolution directing a
portion of its tax increment to the Authority by giving the
county auditor-controller 60 days' notice, except that the
auditor-controller will continue to allocate to the Authority
the portion of tax increment necessary to repay any debt
issued by the Authority that has not been fully repaid.
7)Requires that if an Area overlaps with a former redevelopment
agency the plan must specify that any tax increment collected
is subject to and subordinate to any preexisting enforceable
obligations of the former redevelopment agency.
8)Requires an Authority to complete an annual independent audit.
9)Requires an Authority to post a draft of the audit on their
website and mail it to the each of the taxing entities that
are contributing tax increment to the area.
10)Requires the annual audit to include:
a) A description of the projects undertaken in the fiscal
year and a comparison of the progress expected on those
projects compared to the actual progress;
b) A chart comparing the actual revenues and expenses
including administrative costs of the Authority to the
budgeted revenues and expenses;
c) Amount of tax increment revenues received;
d) Amount of revenues received and expended for low-and
moderate-income housing;
e) Assessment of the level of completion of the projects in
the plan; and
f) Amount of revenues expended to assist private
businesses.
1)Provides that if an Authority does not complete an annual
report then it cannot expend any tax increment funds it
receives.
2)Requires an Authority to hold a protest proceeding at the
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public hearing to review an annual report, every 10 years to
give property owners an opportunity to provide oral or written
protests against an Authority.
3)Requires an Authority to hold an election of the property
owners in the areas covered by the plan if a majority of the
owners protest, and not initiate any new projects until the
election is held.
4)Provides that a majority protest exists if protests have been
filed representing 50% of the assessed value of the area.
5)Requires the election to be held 90 days after the public
hearing and permits it to be held by mail-in ballot.
6)Prevents an Authority from taking any further action to
implement a plan if a majority of the property owners,
weighted proportional to the assessed value of their property
vote against the Authority.
7)Allows the Authority to continue to appropriate and expend
funds for contractual indebtedness and complete projects for
which expenditures of any kind have been made prior to the
effective date of the election.
EXISTING LAW
1)Dissolves redevelopment agencies as of February 1, 2012
(Health and Safety Code Section 34170).
2)Establishes the Community Redevelopment Law (CRL), which
governs the authority to establish a redevelopment agency and
the authority for a redevelopment agency to function as an
agency and to adopt and implement a redevelopment plan (Health
and Safety Code Section 33000 et seq.).
FISCAL EFFECT : Unknown
COMMENTS :
Background: In 2011, the Legislature approved and the Governor
signed two measures, ABX1 26 and ABX1 27 that together dissolved
redevelopment agencies as they existed at the time and created a
voluntary redevelopment program on a smaller scale. In
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response, the California Redevelopment Association (CRA), League
of California Cities, along with other parties, filed suit
challenging the two measures. The Supreme Court denied the
petition for peremptory writ of mandate with respect to ABX1 26.
However, the Court did grant CRA's petition with respect to ABX1
27. As a result, all redevelopment agencies were required to
dissolve as of February 1, 2012.
Over the last sixty years, redevelopment agencies used tax
increment to finance affordable housing, community development,
and economic development projects. The dissolution of
redevelopment agencies has created a void and an effort to
create new tools that would support community and economic
development activities.
This bill would allow local government entities, excluding
schools, to form a Community Revitalization and Investment
(Authority) to collect tax increment and issue debt. The
Authority could use its powers to invest in disadvantaged
communities with a high crime rate, high unemployment, and
deteriorated and inadequate infrastructure, commercial, and
residential buildings. Three of these four conditions would
constitute blight allowing Authorities to use the powers of
former redevelopment agencies. The area where the Authority
could invest would also have to have an annual median household
income that is less than 80% of the statewide annual median
income. This is different from redevelopment agencies that were
required to conduct a study and make a finding that blight
existed in a project area before they could use their
extraordinary powers to eradicate blight. Like redevelopment,
this bill would allow Authorities to freeze the property taxes
at the time the plan for revitalizing the area is approved. The
Authority will collect all the tax increment or the increase in
property taxes that are generated after that point and use it on
specified activities. Unlike redevelopment agencies, this bill
would require the taxing entities in the area including the
county, city, special districts, or a military base 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; however, the auditor
controller will continue to collect the local government
entities portions of tax increment until any debts issued up
until then have been repaid.
Purpose of this bill : According to the author, "redevelopment
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was a multi-purpose tool that focused over $6 billion per year
toward repairing and redeveloping urban cores, and building
affordable housing, especially those areas most economically and
physically disadvantaged. Since the dissolution of
redevelopment agencies, communities across California are
seeking an economic development tool to use. Multiple
legislative measures were introduced in 2012 after the
dissolution of redevelopment agencies in an effort to provide
local governments options for sustainable community economic
development. Four measures were approved by the Legislature.
However, all four were vetoed by Governor Brown at the end of
legislative session.
While the dissolution of former redevelopment agencies
continues, the pervasive question is, what economic development
tool can local governments use? This proposal provides a viable
option targeting the state's disadvantaged poorer areas and
neighborhoods."
Affordable housing provisions : Redevelopment agencies were
required to set aside 20% of tax increment generated in a
project area to increase, improve, or rehabilitate affordable
housing for low, very-low, and moderate income families and
individuals. In previous years, redevelopment generated up to
$1 billion for affordable housing in the state. AB 1080 would
require an Authority to reserve 20% of the tax increment
generated from a project area for affordable housing. The
committee may wish to consider if this percentage should be
increased to 25%? Although these new entities will not been
capturing the schools share of tax increment, affordable housing
is an important tool to assist in the revitalization of
disadvantaged communities.
The bill would also allow an Authority to transfer the funds
collected for affordable housing to a nonprofit corporation,
housing authority within the territorial jurisdiction that
created the authority, or the successor agency to a former
redevelopment agency. An Authority would have to make a finding
that transferring the funds and combining them with other
funding for housing would reduce administrative costs or
expedite the construction of affordable housing. The committee
may also wish to clarify that the funds generated in a project
area must stay in the project area.
The committee may also wish to consider if it is appropriate to
transfer public dollars to private nonprofit entity. Although
there are many good nonprofit housing developers they are not
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held to the same public meeting and disclosure requirements as
governmental entities. Additionally, the committee may wish to
clarify that if funds for affordable housing are transferred to
a housing authority or successor agency of the former
redevelopment agency that that entity must comply with all of
the requirements in the Community Redevelopment Law (CRL) to
spend those funds.
This bill also requires the Authority to comply with several
provisions of the CRL for how to spend the housing set-a-side
but leaves out some key provisions. The committee may wish to
clarify that an Authority is required to comply with all of the
housing provisions of the CRL. Those existing provisions not
covered include, but are not limited to, restrictions on
planning and administrative expenditures, imposing long-term
covenants, targeting the housing funds toward income levels, and
rules about displacement and relocation assistance.
Clarifying the exemption of schools : The author's intent is to
exclude the school's portion of property taxes from an
Authority. The bill is somewhat unclear on this point and the
committee may wish to further clarify by stating, in the
affirmative, that schools are not permitted to join an
Authority.
Related legislation : SB 1 (Steinberg) would have allowed local
governments to establish a Sustainable Communities Investment
Authority after July 1, 2012, to finance specified activities
within a sustainable communities investment area using tax
increment financing. This bill was vetoed by the Governor.
Committee amendments :
On page 6, line 34, delete "to a private nonprofit corporation,"
On page 10, line 35, delete "(e)" and insert "(f)"
On page 11, line 4, delete "(e)" and insert "(f)"
Include language that increases the percentage of funding for
housing to 25%
Double referred : If AB 1080 passes out of this committee, the
bill will be referred to the Committee on Local Government.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Building Industry Association
California Rural Legal Assistance Foundation
California Special Districts Association
City of Oceanside
City of Salinas
League of California Cities
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085