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