BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 2
Author: Alejo (D) and Eduardo Garcia (D), et al.
AmendedAmended:7/7/15 in Senate
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 5-1, 6/10/15
AYES: Hertzberg, Beall, Hernandez, Lara, Pavley
NOES: Moorlach
NO VOTE RECORDED: Nguyen
SENATE TRANS. & HOUSING COMMITTEE: 9-2, 7/14/15
AYES: Beall, Cannella, Allen, Galgiani, Leyva, McGuire,
Mendoza, Roth, Wieckowski
NOES: Bates, Gaines
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 63-13, 5/11/15 - See last page for vote
SUBJECT: Community revitalization authority
SOURCE: Author
DIGEST: This bill allows local governments to form Community
Revitalization and Investment Authorities to administer economic
development and affordable housing programs.
ANALYSIS: Existing law dissolves redevelopment agencies as of
February 1, 2012, and 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
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redevelopment plan.
This bill allows local government officials to establish a
Community Revitalization and Investment Authority (authority)
and use property tax increment revenues to finance the
implementation of a community revitalization plan within a
community revitalization and investment area. This bill
specifies: the process for creating an authority, criteria for
establishing a community revitalization and investment area, the
powers and duties that apply to an authority, the process for
adopting a community revitalization and investment plan, how tax
increment revenues are allocated to, and used by, an authority,
an authority's obligations relating to affordable housing, and
reporting, accountability, and audit requirements.
Specifically, this bill:
1) Allows local governments to form an authority in two ways:
a) A city, county, or city and county can adopt a
resolution creating an authority governed by a five-member
board that is appointed by the city, county, or city and
county's legislative body. Three board members must be
members of the city, county, or city and county's
legislative body and two must be public members who live
or work within the community revitalization and investment
area.
b) A city, county, city and county, and special district,
in any combination, may create an authority by entering
into a joint powers agreement. The authority's governing
body must be comprised of a majority of members from the
legislative bodies of the public agencies that created the
authority. The governing body must include at least two
public members who are appointed by a majority of the
authority's board and must live or work within the
community revitalization and investment area.
2) Prohibits:
a) School entities from participating in a community
revitalization and investment authority.
b) Redevelopment successor agencies from participating in
a community revitalization and investment authority.
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c) A city or county that created a former redevelopment
agency from forming a community revitalization and
investment authority, unless the former redevelopment
agency's successor agency has received a finding of
completion from the Department of Finance, and complies
with other specified conditions.
3) Allows an authority to carry out a community revitalization
and investment plan within a community revitalization and
investment area. The bill requires that at least 80% of the
land calculated by census tracts or census block groups
within the area must be characterized by both of the
following conditions:
a) An annual median household income that is less than
80% of the statewide annual median income.
b) Three of the following four conditions:
i) Nonseasonal unemployment that is at least 3%
higher than the statewide median, as defined by a
specified labor market report.
ii) Crime rates that are 5% higher than the
statewide median crime rate, as defined by a specified
Department of Justice report.
iii) Deteriorated or inadequate infrastructure such
as streets, sidewalks, water supply, sewer treatment or
processing, and parks.
iv) Deteriorated commercial or residential
structures.
4) Allows an Authority to carry out a community revitalization
and investment plan within a community revitalization and
investment area established within a former military base
that is principally characterized by deteriorated or
inadequate infrastructure and structures.
5) Allows the legislative body or bodies of the local
government or governments that created the authority to
appropriate any amount the legislative body or bodies deem
necessary for the administrative expenses and overhead of the
authority. The money appropriated may be paid to the
authority as a grant to defray the expenses and overhead, or
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as a loan to be repaid upon the terms and conditions as the
legislative body may provide. If appropriated as a loan, the
property owners within the plan area must be made third-party
beneficiaries of the repayment of the loan. This bill
specifies that the term, "administrative expense" includes
expenses of planning and dissemination of information.
6) Enumerates an authority's powers and allows an authority to
dedicate funding to specified infrastructure, low and
moderate income housing, brownfield cleanup, seismic
retrofits, property acquisition, construction of specified
structures for provision of air rights, and direct assistance
to businesses for industrial and manufacturing uses.
7) Deems an Authority to be a local public agency subject to
the Ralph M. Brown Act, the Public Records Act, and the
Political Reform Act.
8) Requires an Authority to adopt a community revitalization
and investment plan that may include a provision for the
receipt of tax increment funds generated within the area,
provided the plan includes seven specified elements.
9) Specifies the manner in which an authority must consider
adoption of the plan, including requiring public hearing, a
protest process and, in some cases, voter approval of the
plan through a specified election process.
10)Directs that an authority must consider and adopt a plan
amendment in accordance with the procedures that applied to
the consideration and adoption of the original plan.
11)Deems a community revitalization and investment authority to
be the "agency" described in Article XVI, Section 16 for
purposes of receiving tax increment revenues.
12)Allows a community revitalization and investment plan to
include a provision for the receipt of tax increment funds.
13)Allows any city, county, or special district that receives
ad valorem property taxes from property located within an
area to adopt a resolution directing the county
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auditor-controller to allocate some or all of its share of
tax increment funds within the area covered by the plan to
the authority. A resolution may be repealed by giving the
county auditor-controller 60 days' notice. However, the
county auditor-controller must continue to allocate the
taxing entity's taxes that have been pledged to repay debt
issued by the authority until the debt has been fully repaid.
14)Requires that, before adopting a resolution allocating a
share of its tax increment funds to an authority, a city,
county, or special district must approve a memorandum of
understanding with the authority governing the authority's
use of tax increment funds for administrative and overhead
expenses.
15)Requires that a provision for the receipt of tax increment
funds must become effective in the tax year that begins after
the December 1 following the adoption of the plan.
16)Specifies the manner in which a county auditor-controller
must allocate tax revenue to an authority upon adoption of a
plan that includes a provision for the receipt of tax
increment funds.
17)Requires that an authority's plan for an area that includes
land formerly or currently designated as part of a
redevelopment area must subordinate tax increment amounts
received by the authority to any preexisting enforceable
obligation, as defined in statute.
18)Requires that at least 25% of all tax increment revenues
that are allocated to the authority must be deposited into a
separate Low and Moderate Income Housing Fund and used by the
authority for the purposes of increasing, improving, and
preserving the community's supply of low- and moderate-income
housing available at affordable housing cost, as defined in
state law.
19)Allows an authority to exercise any or all of its powers for
the construction, rehabilitation, or preservation of
affordable housing for extremely low, very low, low- and
moderate-income persons or families.
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20)Enumerates detailed requirements governing the manner in
which an authority may manage and expend tax increment
revenues deposited into a Low and Moderate Income Housing
Fund.
21)Requires every community revitalization and investment plan
to contain a provision that whenever dwelling units housing
persons and families of low or moderate income are destroyed
or removed from the low- and moderate-income housing market
as part of a revitalization project the authority must,
within two years of such destruction or removal,
rehabilitate, develop, or construct, or cause to be
rehabilitated, developed, or constructed, for rental or sale
to persons and families of low or moderate income an equal
number of replacement dwelling units at affordable housing
costs, as defined by state law, within the territorial
jurisdiction of the authority.
22)Requires an authority to prepare a feasible method or plan
for relocating:
a) Families and persons to be temporarily or permanently
displaced from housing facilities in the plan area.
b) Nonprofit local community institutions to be
temporarily or permanently displaced from facilities used
for institutional purposes in the project area.
23)Requires an authority to annually review the community
revitalization and investment plan, prepare an independent
financial audit, and adopt an annual report in a public
hearing.
24)Require an authority to conduct a protest proceeding every
10 years. If between 25% and 50% of residents and property
owners file protest, the authority must not initiate any new
projects until an election of property owners and residents
is held. If a majority of the electorate votes against the
authority, it must not take any further action to implement
the plan.
25)Requires an authority to contract every five years for an
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independent audit to determine compliance with affordable
housing maintenance and replacement requirements, which must
be conducted according to guidelines established by the
Controller. An authority must provide a copy of the
completed audit to the Controller.
26)Requires, if an audit demonstrates a failure to comply with
the statutory requirements, that an authority must adopt and
submit to the Controller, as part of the audit, a plan to
achieve compliance with those provisions. The plan must
contain specified means of achieving compliance.
27)Requires the Controller to review and approve the compliance
plan, and require the plan to stay in effect until compliance
is achieved.
28)Enumerates penalties, including specified fines, which apply
to an authority that fails to provide a copy of a completed
audit to the Controller after receiving a written notice from
the Controller. The Attorney General may, at the
Controller's request, take action to collect the fines.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
Potentially major redirection of local property tax revenues
from participating local agencies, excluding schools, to a
CRIA over a period of decades. Since the bill prohibits
schools from participating, there is no state fiscal impact
related to the redirection of local property tax revenues.
Estimated one-time costs to the State Controller's Office
(SCO) of up to $100,000 before the end of 2021 (General Fund)
to establish guidelines for periodic financial and performance
audits that include provisions for determining compliance with
affordable housing requirements as well as secondary review
and compliance measures for failure to achieve initial
compliance on the regular audit schedule. (Staff assumes up to
1 PY of audit staff time)
Estimated periodic SCO costs in the range of $50,000 to
$100,000 (General Fund) on a periodic basis for accepting
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audits and reviewing and approving secondary compliance plans
submitted by agencies that fail to comply with initial audit
requirements. (Staff assumes up to 1PY of audit work on a
periodic basis). These costs would only be incurred to the
extent an agency is out of compliance.
SUPPORT: (Verified8/28/15)
African American Caucus, League of California Cities
American Planning Association, California Chapter
The ARC California
Asian and Pacific Islander Caucus, League of California Cities
Building Owners and Managers Association of California
California Apartment Association
California Asian Pacific Chamber of Commerce
California Association for Local Economic Development
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Coalition for Rural Housing
California Special Districts Association
Cities of Hesperia, Indian Wells, Lakewood, Mendota, Rosemead,
Sacramento, Salinas, Thousand Oaks
Glendale City Employees Association
Housing California
International Council of Shopping Centers
Latino Caucus, League of California Cities
Leading Age California
League of California Cities
NAIOP of California, the Commercial Real Estate Development
Association
Organization of SMUD Employees
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Transportation Agency of Monterey County
United Cerebral Palsy California Collaboration
OPPOSITION: (Verified8/28/15)
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California Alliance to Protect Private Property Rights
Fieldstead and Company
ARGUMENTS IN SUPPORT: Eliminating redevelopment agencies did
not eliminate the need for California communities to build more
affordable housing, eliminate blight, foster business activity,
clean up contaminated brownfields, and create jobs. This bill
establishes a new approach to local economic development and
housing policy that is focused on the state's disadvantaged
communities. This bill fosters collaboration between cities and
counties on local economic development efforts and mitigates the
zero-sum competition for scarce property tax revenues among
cities, counties, and school districts. To ensure public
accountability, the bill requires a community revitalization and
investment authority to conduct an annual review and reporting
process, and periodically allows local residents to prohibit an
Authority from taking further actions. While it is unrealistic
to expect that a single economic development tool will work in
all California communities, this bill is a viable option for
bringing vital investments to communities that most need
employment opportunities, crime reduction, upgraded
infrastructure, brownfield remediation, and affordable housing.
ARGUMENTS IN OPPOSITION: Last year, the Legislature enacted
SB 628 (Beall, Chapter 785, Statutes of 2014) to provide local
governments with new tax increment financing tools to pay for
local economic development by forming an enhanced infrastructure
financing district (EIFD). It is too early judge how well the
new EIFD structure will work for most local governments and this
bill's proponents assert that it would be unrealistic to expect
that a single approach to tax increment financing will meet the
needs of every local community. However, in light of SB 628's
recent enactment, it may be premature to enact another complex
set of statutes granting new tax increment financing powers to
local governments. One tool that this bill grants to local
governments that is not available through an EIFD is the power
to take private property through the power of eminent domain and
to pay for it using tax increment revenues. Some property
owners object to the way in which former RDAs used their eminent
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domain authority, arguing that RDAs' use of eminent domain hurt
businesses and depressed property values in some communities.
They oppose provisions in this bill which allow community
revitalization and investment authorities to use land
acquisition and management powers that largely replicate powers
exercised by former RDAs.
ASSEMBLY FLOOR: 63-13, 5/11/15
AYES: Achadjian, Alejo, Baker, Bloom, Bonilla, Bonta, Brown,
Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley,
Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin,
Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low, Maienschein,
Mathis, Mayes, McCarty, Medina, Mullin, Nazarian, O'Donnell,
Olsen, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Waldron,
Weber, Williams, Wood
NOES: Travis Allen, Bigelow, Brough, Chávez, Beth Gaines,
Harper, Jones, Linder, Melendez, Obernolte, Patterson, Wagner,
Wilk
NO VOTE RECORDED: Dahle, Gallagher, Grove, Atkins
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
8/31/15 12:47:43
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