BILL ANALYSIS Ó
AB 2492
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Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2492
(Alejo) -Amended April 14, 2016
SUBJECT: Community revitalization
SUMMARY: Makes changes to allow greater flexibility for the
creation community revitalization and investment authorities
(CRIA) and allows a CRIA to receive funding from the same
sources as an enhanced infrastructure financing district (EIFD).
Specifically, this bill:
1)Allows a CRIA to use a combination of both the United States
(US) Census Bureau census track and census block groups data
to identify a project area.
2)Allows a CRIA to use, at their discretion, statewide,
countrywide, or citywide levels of area median income to
identify a project area.
3)Clarifies the source of unemployment data required to identify
a CRIA project area.
4)Allows a CRIA to use the unemployment data from the periodic
American Community Survey published by the US Census Bureau in
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addition to the labor market information published by the
Employment Development Department (EDD) in March of the year
the CRIA plan is prepared.
5)Provides that in determining the crime rate of a proposed CRIA
project area the crime rate is based on the area's average
crime rate for violent or property crimes offenses as
documented by the records maintained by the law enforcement
agency in the jurisdiction.
6)Requires the crime rate to be calculated by taking the local
incidents of violent and property crimes or any offences
within those categories for the most recent calendar year for
which the Department of Justice maintains data and dividing it
by the total population of the proposed plan area and
multiplying that amount by 100,000.
7)Provides that if the local crime rate for the proposed plan
area exceeds the statewide average rate for either violent or
property crime, or any offense within these categories by more
than 5% then crime rate necessary to qualify as a CRIA project
area is considered met.
8)Gives a CRIA the same authority as an EIFD, to receive funds
allocated to it pursuant to a resolution adopted by a city,
county, or special district from:
a) the increased property tax revenues that the city,
county, or special district receives from the dissolution
of redevelopment agencies;
b) property taxes received by a city or county in lieu of
former vehicle license fee funds; or
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c) funds derived from various assessments that may be
imposed by special districts.
1)Makes other technical changes.
EXISTING LAW:
1)Authorizes local governments to create CRIA to use tax
increment revenue to improve the infrastructure, assist
businesses, and support affordable housing in disadvantaged
communities.
2)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.
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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.
3) Allows an authority to carry out a community revitalization
and investment plan (plan) within a community revitalization
and investment area. This 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
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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.
1) 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.
2) Requires an authority to adopt a plan that may include a
provision for the receipt of tax increment funds generated
within the area, provided the plan includes eight specified
elements.
3) 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.
4) Directs an authority to consider and adopt a plan amendment
in accordance with the procedures that applied to the
consideration and adoption of the original plan.
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5) Deems an authority to be the "agency" described in
California Constitution Article XVI, Section 16, for purposes
of receiving tax increment revenues.
6) Requires that at least 25% of all tax increment revenues
that are allocated to the authority from any participating
entity 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.
7) 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.
8) 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.
9) Requires every 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,
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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.
10)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; and
b) Nonprofit local community institutions to be
temporarily or permanently displaced from facilities used
for institutional purposes in the project area.
1) Requires the relocation plan to comply with the relocation
plan and assistance requirements of state law.
2) Requires an authority to annually review the plan, prepare
an independent financial audit, and adopt an annual report in
a public hearing.
3) Provides that if an authority fails to provide the annual
report, the authority shall not spend any funds received
pursuant to a resolution, as specified, until the authority
has provided the report, except for funds necessary to carry
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out its specified obligations regarding housing for persons
of low- and moderate-income.
FISCAL EFFECT: None.
COMMENTS:
Last year, AB 2 (Alejo) Chapter 2, Statues of 2015 authorized
cities and counties to created CRIAs to use tax increment
revenue to improve the infrastructure, assist businesses, and
support affordable housing in disadvantaged communities. A
CRIA can freeze the property taxes at the time the plan for
revitalizing the area is approved, collect all the tax increment
or the increase in property taxes that is generated after that
point and use it on specified activities. Unlike redevelopment
agencies, the taxing entities in the area including the county,
city, special districts, or a military base must agree to divert
tax increment to the CRIA. 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. No portion of the local schools'
share of tax increment may go to the authority. CRIA's must
set-aside 25% of revenues for affordable housing and must
replace any existing affordable housing units that are removed
as a result of their activities.
A CRIA may only be created in areas which are predominately
low-income and have a high unemployment and crime rate. At least
80% of a CRIA project area, based on US Census data must have an
annual median household income that is less than 80% of the
statewide annual median income. In addition, a CRIA must meet
three of the four following conditions:
1) the nonseasonal unemployment must be at least 3% higher
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than the statewide median, as defined by a specified labor
market report;
2) the crime rate must be 5% higher than the statewide
median crime rate, as defined by a specified Department of
Justice report;
3) there must be deteriorated or inadequate infrastructure
such as streets, sidewalks, water supply, sewer treatment
or processing, and parks; and
4) there must be deteriorated commercial or residential
structures.
According to the sponsor, the League of California Cities, this
bill is intended to clarify where CRIAs can be formed. The
sponsor worked with the EDD to update the mechanism for
determining the unemployment rate and the Department of Justice
(DOJ) to revise the means of determining the crime rate
necessary to meet the standard to qualify an area as a CRIA.
To establish a CRIA a city or county must determine that at
least 80% of the project area has an annual median income that
is less than 80% of the statewide average as determined by the
US Census. This bill would give a city or county the option of
using the statewide average or the citywide or countywide
average. This change provides a more precise standard and could
have the effect of expanding the area that could be included in
a CRIA. To establish a CRIA a city or county must also
establish that 80% of the project area meets three of four
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conditions: high unemployment, high crime rate, deteriorated
infrastructure, or deteriorated commercial or residential
structures.
In calculating the unemployment rate, in addition to using the
EDD's annual update, the city or county can rely upon the US
Census Data's American Community Survey. The American Community
Survey is a survey conducted by the U.S. Census Bureau. Unlike
the every-10-year census, this survey continues all year, every
year. The Survey is conducted by randomly sampling addresses in
every state, the District of Columbia, and Puerto Rico. Answers
are collected to form up-to-date statistics used by many
federal, state, tribal, and local leaders. To determine the
crime rate for a CRIA project area, existing law require a city
or county to use the statewide median crime rate as determined
by the Criminal Justice Statistics Center within DOJ, when data
is available on the California Attorney General's Internet Web
site. This bill would require a city or county to compare the
local data for violent or property crime offenses and compare
that against the statewide average.
Access to additional resources : SB 628 (Beall), Chapter, 785,
Statutes of 2014, allowed a city or county to create an EIFD, in
order to finance specified facilities and infrastructure
projects, using tax increment. SB 628 expanded, as compared to
existing IFD law, the public capital facilities or other
projects of communitywide significance that could be financed by
an EIFD, to include brownfield restoration and other
environmental mitigation, the development of projects on a
former military base, transit priority projects, and projects
that implement a sustainable communities strategy, among other
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infrastructure projects.
The city or county that creates an EIFD can choose to transfer
its portion of increased property tax revenues as a result of
redevelopment dissolution, property taxes received by the city
or county in lieu of former vehicle license fee funds, and funds
from various assessments that a special district imposes. AB
2492 allows a CRIA to also receive funds from these sources if a
city, county, or special district chooses to transfer them.
Prior Legislation:
AB 2 (Alejo) Chapter 2, Statues of 2015 authorized local
governments to create CRIA to use tax increment revenue to
improve the infrastructure, assist businesses, and support
affordable housing in disadvantaged communities.
SB 628 (Beall), Chapter 785, Statutes of 2014 allowed local
agencies to create EIDS to finance specified infrastructure
projects and facilities.
Double referred: If AB 2492 passes this committee, the bill will
be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION:
Support
California Association for Local Economic Development
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California Business Properties Association
League of California Cities
Opposition
California Alliance to Protect Private Property Rights
Howard Jarvis Taxpayers Association
Analysis Prepared by:Lisa Engel / H. & C.D. / (916) 319-2085