BILL ANALYSIS �
SB 470
Page 1
SENATE THIRD READING
SB 470 (Wright)
As Amended September 3, 2013
Majority vote
SENATE VOTE :36-0
HOUSING 5-2 LOCAL GOVERNMENT 7-2
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|Ayes:|Chau, Atkins, Brown, |Ayes:|Achadjian, Levine, Alejo, |
| |Quirk-Silva, Mullin | |Bradford, Gordon, Mullin, |
| | | |Rendon |
|-----+--------------------------+-----+--------------------------|
|Nays:|Beth Gaines, Maienschein |Nays:|Melendez, Waldron |
| | | | |
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APPROPRIATIONS 16-1
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|Ayes:|Gatto, Harkey, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, Eggman, | | |
| |Gomez, Hall, Holden, | | |
| |Linder, Pan, Quirk, | | |
| |Wagner, Weber | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Donnelly | | |
| | | | |
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SUMMARY : Gives cities, counties, or cities and counties the
authority that redevelopment agencies (RDAs) had under the
Polanco Redevelopment Act (the Polanco Act) to cleanup
brownfields and the authority to sell or lease land for an
economic opportunity, at less than market value, in the
jurisdiction of a former RDA. Specifically, this bill :
1)Includes legislative intent language.
2)Defines "economic opportunity" to mean any of the following:
a) Development agreements that create, retain or expend new
jobs that the legislative body finds will create or retain
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at least one full-time permanent job for every $35,000 of
city, county, or city and county investment in a project;
b) Development agreements that will increase the property
tax revenues to all taxing entities by at least 15% when
the project is at full implementation as compared to the
rate one year prior to the acquisition by a governmental
entity;
c) The creation of affordable housing if there are
demonstrated affordable housing needs as defined in the
approved housing element or regional housing needs
assessment (RHNA);
d) Projects that meet the goals of SB 375 (Steinberg),
Chapter 728, Statutes of 2008, is included in a sustainable
communities strategy, an alternative planning strategy or
implements the goals of those adopted plans; and
e) Transit priority projects.
1)Creates a process for a city, county, or city and county to
sell or lease properties that are returned to them as part of
the long-range property management plan of former RDA
properties for an economic development purpose.
2)Requires a legislative body to approve the sale or lease of a
property that is part of the long-range property management
plan for an economic purpose by resolution after a public
hearing that has been noticed for two consecutive weeks in the
newspaper.
3)Requires the city, county or city and county to provide a
report for the public to review and copy that includes the
following:
a) A copy of the proposed sale or lease;
b) The cost of the agreement to the city, county, or city
and county that includes land acquisition costs, clearance
costs, relocation costs, cost of improvements provided by
the local government's interest on any loans or bonds to
finance the agreements;
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c) The estimated value of the property to be sold or leased
as determined by the highest and best uses permitted under
the general plan or zoning;
d) The estimated value of the property to be sold or leased
with the conditions, covenants, and development costs
required by the sale or lease;
e) The purchase price or lease payments that the lessor
will be required to make during the term of the lease;
f) If the sale price or rental amount is less than fair
market value as determined by the highest and best use,
then the legislative body must provide an explanation for
the difference;
g) An explanation of why the sale or lease of the property
will result in the creation of economic opportunity.
1)Requires the resolution approving the sale or lease of the
property to be approved by a majority vote, or a two-thirds
vote if required by an adopted ordinance, a finding that the
sale or lease of the property will assist in the creation of
economic opportunity, and include one of the following:
a) The consideration is not less that the fair market reuse
value at its highest and best use; or
b) The consideration is not less than the fair reuse value
at the use and with the covenants and conditions and
development costs authorized by the sale or lease.
1)Provides that the provisions of this bill are an alternative
to any other authority granted to cities to dispose of
city-owned property.
2)Allows, under Community Redevelopment Law (CRL) for a RDA, a
city, county, or city and county to establish a program to
make loans to owners or tenants to rehabilitate commercial
buildings or structures.
3)Permits, as allowed under the CRL for a RDA, a city, county,
or city and county to assist with the financing facilities or
capital equipment as part of an agreement with a developer or
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rehabilitate a property that will be used for industrial or
manufacturing purposes.
4)Requires, as allowed under the CRL for a RDA, a city, county,
or city and county to make a finding, after a public hearing,
that assisting with the purchase of capital equipment or
facilities is necessary for the economic feasibility of the
development and cannot be achieved through the private market.
5)States the provisions of this bill are not intended to
authorize the use of eminent domain for economic development
purposes.
6)Gives a city, county, or city and county authority to clean up
contaminated properties under the Polanco Redevelopment Act
that within the boundaries of the former RDA.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, negligible fiscal impact.
COMMENTS :
In 2011, facing a severe budget shortfall, the Governor proposed
eliminating RDAs in order to deliver more property taxes to
other local taxing agencies. Redevelopment redirected 12% of
property taxes statewide away from schools and other local
taxing entities and into community development and affordable
housing. Ultimately, the Legislature approved and the Governor
signed two measures, AB 26 X1 (Blumenfield), Chapter 5, Statutes
of 2011-12 First Extraordinary Session and AB 27 X1
(Blumenfield), Chapter 6, Statutes of 2011-12 First
Extraordinary Session that together dissolved RDAs as they
existed at the time and created a voluntary redevelopment
program on a smaller scale. In response, the California
Redevelopment Association (CRA), the 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 AB 26 X1. However, the Court did
grant CRA's petition with respect to AB 27 X1. As a result,
all RDAs were required to dissolve as of February 1, 2012.
Purpose of this bill: According to the author, "local economic
development has remained stagnant since the dissolution of
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redevelopment. The ability of local governments and
partner-agencies to support transit-oriented development, assist
with affordable housing, create jobs or generally increase tax
revenues through sale of local land. This bill authorizes local
governments to promote economic opportunity using local dollars
through agreements that create, retain, or expand new jobs. It
gives local governments the ability to enter into land sale
agreements based upon "faire reuse value" at term defined and
achieved only if the local government can transparently prove
community benefits through a public review process and
verifiable to data. This bill will also reinstate the Polanco
Act to allow local governments to enter into collaborate
partnership and utilize unique powers to mitigate
environmentally tax brownfield sites."
Disposition of property: Under Community Redevelopment Law,
RDAs could sell or lease property at the "fair reuse value" or
an amount less than the value at the highest and best use
because a RDA imposed specific development conditions, covenants
and criteria that are more restrictive than what would be
permitted under the highest and best use. RDAs were required to
approve the sale or lease in a public hearing and disclose the
value of the property at the highest and best use as it compared
to the fair reuse value. This bill would allow cities and
counties to use this process to sell or lease properties that
were owned by the former redevelopment and are part of the
long-range property management plan approved by the Department
of Finance (DOF) as part of the dissolution of the RDA. The
city or county would be required to show that the new use of the
property would result in job creation, affordable housing, or an
increase in property taxes as a measure of economic development.
This authority gives local governments the ability to evaluate
the community and economic benefit to selling a property for
less than the market value.
Economic development: Redevelopment was created to eradicate
blight. In order to sell or lease a property at less than the
value at the highest and best use, RDAs were required to explain
how the sale for fair reuse value would reduce blight. This
bill requires that the city or county explain how the
disposition of the property will result in an economic benefit.
The bill also gives cities and counties the authority that RDAs
had to make loans for capital development after making a finding
at a public hearing that the assistance cannot be obtained for
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economically feasible terms in the private market.
The Polanco Act: In 1990, AB 3193 (Polanco), Chapter 1113 was
enacted to assist RDAs in responding to brownfield properties in
their redevelopment areas. It prescribes a process for RDAs to
follow when cleaning up a hazardous substance released in a
redevelopment project area. It also provides specified immunity
from liability for sites cleaned up under a cleanup plan
approved by DTSC or a regional water quality control board.
RDAs had the authority to take any actions that the agency
determined was necessary to address a release of hazardous
substances on or under property within a project area. In
return the agency, the developer of the property and the
subsequent owners received limited immunity from further cleanup
liability. This bill gives cities and counties similar
authority that RDAs had under the Polanco Act to remediate
properties that are in the jurisdiction of former redevelopment
project areas.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0002189