BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 470
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          SENATE THIRD READING
          SB 470 (Wright)
          As Amended  September 6, 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                  |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SENATE VOTE  :36-0  
            
          SUMMARY  :  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 a former  
          redevelopment agency (RDA), for an economic development purpose.  
           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 a former  
            redevelopment agency (RDA), 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  
            rehabilitate a property that will be used for industrial or  








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            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. 

           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  
          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  








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          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."

          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  
          economically feasible terms in the private market.   


           Analysis Prepared by  :    Lisa Engel / H. & C.D. / (916) 319-2085  



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