BILL ANALYSIS �
AB 1080
Page 1
Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1080 (Alejo) - As Amended: May 6, 2013
Policy Committee: Local
GovernmentVote:8-0
Housing and Community Development 5-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill allows local governments to establish a Community
Revitalization and Investment Authority (CRIA) to finance
specified activities within a community revitalization and
investment area. Specifically, this bill:
1)Allows cities and counties to form a CRIA and specifies that
it is subject to the provisions of the Community Redevelopment
Law (CRL). Makes a legislative finding of blight, which is a
necessary condition under CRL.
2)Provides for formation of the authority by an individual local
government entity or through a joint powers agreement, and
specifies the governing boards shall include two public
members. Provides that the authority is subject to existing
state laws, including the Political Reform Act, the California
Public Records Act and the Ralph M. Brown Act (open meetings).
Schools are prohibited from participating.
3)Specifies the activities and powers of a CRIA shall target
blighted areas, as defined.
4)Establishes a public process for adopting a plan to receive
tax increment generated in the CRIA area and adds requirements
for public hearings and public notice.
5)Allows any taxing entity, other than a school entity that
receives property taxes within the CRIA area to adopt a
resolution, prior to the adoption of the plan, to direct the
county auditor-controller to allocate its share of tax
AB 1080
Page 2
increment funds to the Authority.
6)Requires that if a CRIA 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.
7)Requires an Authority to complete an annual independent audit.
FISCAL EFFECT
Negligible state fiscal impact. There is a fiscal impact of
this bill although all affected local governments volunteer to
join the CRIA program.
COMMENTS
1)Purpose . Redevelopment was a multi-purpose scheme 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. The author notes, since the dissolution of
redevelopment agencies, communities across California are
seeking a new development scheme to use. The author contends
this proposal provides a viable option targeting the state's
disadvantaged poorer areas and neighborhoods.
2)Support . The California Special Districts Association, in
support, states property tax revenue cannot be diverted away
from local services to fund a CRIA unless the local agency
providing those services adopts a resolution consenting to the
diversion. This section is particularly well-crafted and
should be considered a model for other similar local financing
tools, such as infrastructure financing districts, because it
offers each local agency the flexibility to adjust the purpose
and amount of revenue that could be diverted. It also allows
a local agency to terminate the revenue diversion, with
notice, to the extent that it has not been pledged to debt
repayment. This flexibility will maximize the opportunities
for local agency participation.
3)Background. Post-World War II, redevelopment was created as a
scheme to combat urban decay and eradicate blight.
Redevelopment agencies were given fundamental tools, including
AB 1080
Page 3
the ability to acquire property through the power of eminent
domain, the authority to finance their activities by issuing
bonds and taking on debt, and the authority and obligation to
relocate people who have interests in the property acquired by
an agency. To establish redevelopment project areas, a
redevelopment agency was required to identify both physical
and economic blight in the project area that could not be
mitigated without the use tax increment.
In 2011, the Legislature approved and the governor signed two
measures, ABX1 26 and ABX1 27 that together dissolved
redevelopment agencies as they existed and created a voluntary
redevelopment program on a smaller scale. In response, the
California Redevelopment Association, 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 and granted
the petition with respect to ABX1 27. As a result, all
redevelopment agencies were required to dissolve as of
February 1, 2012 and there was no authority for any new
redevelopment program.
4)Tax increment financing. AB 1080 uses tax increment
financing, in addition to several other potential funding
sources. One of the challenges of using tax increment is
carving out the schools' portion of the tax increment.
Section 16 of Article XVI of the California Constitution
provides authority to reapportion property taxes among a city,
city and county, and district or other public corporation
(otherwise known as taxing agencies) for the purpose of
redevelopment. This bill excludes school districts and
special districts from "district" and "affected taxing entity"
for purposes of tax increment financing. This exclusion is
intended to protect the general fund by excluding schools, but
it may be unconstitutional to statutorily exclude schools and
special districts since the Constitution includes them in the
authorizing language for tax increment financing.
5)Related legislation. SB 1 (Steinberg) creates allows local
governments to establish a Sustainable Communities Investment
Authority to finance specified activities within a sustainable
communities investment area.
6)Previous legislation. Multiple legislative measures were
introduced in 2012 after the dissolution of redevelopment
AB 1080
Page 4
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.
One of them, SB 1156 (Steinberg) of 2012 was similar in
approach to AB 1080. SB 1156 was vetoed by Governor Brown,
who cited support for the concept of a successor to
redevelopment agencies but not at this time.
7)Amendment . The definition of school entities needs to be
clarified to ensure the school share of property tax will not
be affected by this bill.
8)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081