BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 2492 |Hearing | 6/15/16 |
| | |Date: | |
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|Author: |Alejo |Tax Levy: |No |
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|Version: |5/12/16 |Fiscal: |No |
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|Consultant|Weinberger |
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Community revitalization
Makes several changes to the statutes that allow local
governments to form and administer Community Revitalization and
Reinvestment Authorities to finance local economic development.
Background
From the early 1950s until they were dissolved in 2011,
California redevelopment agencies (RDAs) used property tax
revenues generated by growth in the assessed value of properties
in a project area - commonly known as tax increment revenues -
to finance their redevelopment activities. RDAs' dissolution
deprived many local governments of the primary tool they used to
eliminate physical and economic blight, finance new
construction, improve public infrastructure, rehabilitate
existing buildings, and increase the supply of affordable
housing.
In response to RDA's dissolution, the Legislature authorized
local governments to form new types of tax increment financing
districts to finance local economic development activities:
State law allows local government officials to create an
Enhanced Infrastructure Financing Districts (EIFD), which
is governed by a public finance authority, and use property
tax increment revenues to finance public capital facilities
or other specified projects of communitywide significance
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that provide significant benefits to the district or the
surrounding community (SB 628, Beall, 2014).
State law allows local government officials to establish
a Community Revitalization and Investment Authority (CRIA)
and use property tax increment revenues to finance the
implementation of a community revitalization plan within a
community revitalization and investment area (AB 2, Alejo,
2015).
Local officials who are beginning to implement the statutes
governing CRIAs want the Legislature to clarify some provisions
in those statutes and allow CRIAs to use some additional
financing powers that state law already grants to EIFDs.
Proposed Law
State law allows a CRIA to carry out a community revitalization
plan within a community revitalization and investment area
within which at least 80% of the land calculated by census
tracts or census block groups must be characterized by specified
conditions. Assembly Bill 2492 allows the use of a combination
of census tracts and census block groups to calculate whether
80% of the area within a revitalization and investment area is
characterized by specified conditions.
One condition that state law requires a community revitalization
and investment area to meet is that 80% of its area must be
characterized by an annual median household income that is less
than 80% of the annual median income. Assembly Bill 2492
specifies that CRIA officials can make this calculation using
statewide, countywide, or citywide annual median income.
Another condition specified in state law for the formation of a
community revitalization and investment area is nonseasonal
unemployment that is at least 3% higher than statewide median
unemployment, as defined by a specified report on labor market
information. Assembly Bill 2492 amends this language by
specifying that this condition requires an unemployment rate
that is at least three percentage points higher than the
statewide average annual unemployment rate. Assembly Bill 2492
allows a CRIA to use unemployment data from the periodic
American Community Survey published by the United States Census
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Bureau in determining the unemployment rate within the community
revitalization and investment area.
Another condition specified in state law for the formation of a
community revitalization and investment area is crime rates that
are 5% higher than the statewide median crime rate, as defined
by a specified annual report on criminal justice statistics.
Assembly Bill 2492 amends this language by specifying that this
condition requires crime rates, as documented by records
maintained by the law enforcement agency that has jurisdiction
in the proposed plan area for violent or property crime
offenses, that are at least 5% higher than the statewide
average crime rate for violent or property crime offenses.
Assembly Bill 2492 specifies the manner in which the crime rate
must be calculated and allows a community revitalization and
investment area to meet this condition 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%.
State law allows an EIFD to receive, in addition to tax
increment revenues, other sources of revenues that can be used
to finance economic development, including:
A specified share of property tax revenues, defined in
state law as "net available revenue," that a city, county,
or special district receives pursuant to the statutes
governing the dissolution of redevelopment agencies;
Property taxes received by a city or county in lieu of
former vehicle license fee funds; or
Revenues that local governments receive pursuant to
specified statutes authorizing local governments to impose
assessments, parcel taxes, and other charges for specified
purposes.
Assembly Bill 2492 gives CRIAs the same authority that state law
grants to EIFDs to use these additional revenue sources.
Assembly Bill 2492 makes several other clarifying and conforming
changes to state law.
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State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . AB 2492 will help local officials'
efforts to implement the provisions of law enacted by last
year's AB 2 (Alejo). As communities begin to form CRIAs they
are seeking some clarifications of ambiguous language in last
year's bill. In particular, AB 2 left some unanswered questions
about the data sources that can be used to determine some
criteria that must be fulfilled to form a community
revitalization and investment area. Clarifying these statutory
provisions will benefit California residents by helping local
officials use CRIAs to build more affordable housing, eliminate
blight, foster business activity, clean up contaminated
brownfields, and create jobs.
2. Eminent domain . One tool that state law grants to CRIAs
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 domain
authority, arguing that RDAs' use of eminent domain hurt
businesses and depressed property values in some communities.
They oppose AB 2492 due to concern that the bill will expand the
types of communities and neighborhoods in which local
governments can exercise the power of eminent domain for
economic development purposes by forming a CRIA.
3. Double referred . The Senate Rules Committee has ordered a
double referral of AB 2492, first to the Senate Governance &
Finance Committee, which has jurisdiction over the statutes
governing local governments' finances, and then to the Senate
Transportation & Housing Committee, which has jurisdiction over
CRIAs' use of tax increment financing for housing.
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Assembly Actions
Assembly Housing and Community Development Committee: 5-2
Assembly Local Government Committee: 6-2
Assembly Floor: 51-29
Support and
Opposition (6/9/16)
Support : League of California Cities; California Association
for Local Economic Development; California Business Properties
Association; Cities of Hollister, Thousand Oaks; Hollister
Downtown Association.
Opposition : California Alliance to Protect Private Property
Rights; Fieldstead and Company; Howard Jarvis Taxpayers
Association.
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