BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 2492 Hearing Date: 6/28/2014
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|Author: |Alejo |
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|Version: |5/12/2016 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Alison Dinmore |
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SUBJECT: Community revitalization
DIGEST: This bill makes several changes to the statutes that
allow local governments to form and administer Community
Revitalization and Reinvestment Authorities (CRIAs) to finance
local economic development.
ANALYSIS:
Existing law:
1)Authorizes local governments to create CRIAs to use tax
increment revenue to improve infrastructure, assist
businesses, and support affordable housing in disadvantaged
communities.
2)Allows an authority to carry out a community revitalization
and investment plan within a CRIA. It also 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:
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i. Non-seasonal unemployment that is at least 3%
higher than the statewide median, as specified
ii. Crime rates that are 5% higher than the
statewide median crime rate, as specified
iii. Deteriorated or inadequate infrastructure such
as streets, sidewalks, water supply, sewer treatment
or processing, and parks
iv. Deteriorated commercial or residential
structures
1)Provides that the CRIA may, among other things, do the
following:
a) Provide funding to rehabilitate, repair, upgrade, or
construct infrastructure.
b) Provide for seismic retrofits of existing buildings in
accordance with all applicable laws and regulations.
c) Acquire and transfer real property including through the
use of eminent domain. A CRIA must retain controls and
establish restrictions or covenants (such as affordability
requirements) running with the land sold or leased for
private use for such periods of time and under such
conditions as are provided in the community revitalization
and investment plan.
d) Issue bonds.
e) Borrow money, receive grants or accept financial or
other assistance or investment from the state or the
federal government or any other public agency or private
lending institution for any project within its area of
operation, and may comply with any conditions of the loan
or grant. A CRIA may qualify for funding as a
disadvantaged community.
f) Adopt a community revitalization and investment plan.
AB 2492 (Alejo) Page 3 of ?
g) Make loans or grants to owners or tenants to improve,
rehabilitate, or retrofit buildings or structures within
the plan area.
4) Requires that at least 25% of all tax revenues that are
allocated to the CRIA shall be deposited into a separate
Housing Fund and used for the purposes of increasing,
improving, and preserving the community's supply of low- and
moderate-income housing available at an affordable cost.
This bill:
1) Allows a CRIA to use a combination of both the U.S. Census
Bureau census track and census block groups' data to identify
a project area.
2)Allows a CRIA to use, at its discretion, statewide,
countywide, or citywide annual median income to identify a
project area.
3) Allows a CRIA to use unemployment data from the periodic
American Community Survey published by the U.S. Census Bureau,
in addition to the labor market information published by the
Employment Development Department (EDD) in March of the year
the CRIA plan is prepared.
4) Provides that crime rates are 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, as
defined by a specified Department of Justice report. The
crime rate shall be calculated by taking the local crime
incidents for violent or property crimes, or any offense
within those categories, for the most recent calendar year for
which the Department of Justice maintains data, divided by the
total population of the proposed plan area, multiplied by
100,000. 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 the condition shall be met.
5) Gives CRIAs the same authority as an Enhanced Infrastructure
AB 2492 (Alejo) Page 4 of ?
Financing District (EIFD), to receive funds allocated to it
pursuant a resolution adopted by a city, county, or special
district to transfer these funds from:
a) The increased property tax revenues that the city,
county, or special district receives from the dissolution
of redevelopment agencies (RDAs).
b) Property taxes received by a city or county in lieu of
former vehicle license fee funds, or
c) Funds derived from various assessments that may be
imposed by special districts.
COMMENTS:
1)Purpose of the bill. According to the author, after the
passage of AB 2 (Alejo, Chapter 2, Statutes of 2015) (see
Comment No.2 below), several localities had particular
concerns about implementation and definitions in that bill
that would affect their ability to create an authority. This
bill is an attempt to address those concerns, provide
technical changes, and clarify several provisions, including:
a) Which level of government can be used as a reference
point for annual median household income
b) Unemployment rates should be measured using average
annual unemployment rates
c) Crime rate as defined as violent or property crime that
is 5% above the statewide average rate, and how to
calculate it
d) Stating that a CRIA has the ability to receive
transferred funds received through resolutions passed by
cities, counties, or special districts
AB 2492 (Alejo) Page 5 of ?
1)Background on CRIAs. Last year, the Legislature passed and
the Governor signed AB 2, which authorized cities and counties
to create CRIAs to use tax increment financing to improve
infrastructure, assist businesses, and support affordable
housing in disadvantaged communities. A CRIA can freeze
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. No portion of the local schools'
share of tax increment may go to the authority. CRIAs 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.
CRIAs may only be created in areas which are predominantly
low-income and have a high unemployment and crime rate. At
least 80% of a CRIA project area, based on U.S. 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:
a) Non-seasonal unemployment is at least 3% higher than
statewide median unemployment.
b) Crime rates are 5% higher than statewide median crime
rates.
c) Deteriorated or inadequate infrastructure, such as
streets, sidewalks, water supply, sewer treatment or
processing, and parks.
d) Deteriorated commercial or residential structures.
3) Greater flexibility for the creation of a CRIA. According
to the sponsor, the League of California Cities, this bill is
intended to clarify where CRIAs can be created. The sponsor
worked with the Department of Justice to revise the means of
AB 2492 (Alejo) Page 6 of ?
determining the crime rate necessary to meet the standard to
qualify an area as a CRIA and the EDD to update the mechanism
for determining the unemployment rate. Further, the bill
ensures that a CRIA may also receive funds derived from other
city, county, or special district sources, subject to any
conditions those entities may impose on the use of these
funds. These options are already included in EIFD law, so
this change offers identical flexibility for a CRIA to also be
eligible to receive funds from these sources.
4) Disadvantaged communities. The committee received feedback
from the City of Cudahy, stating that it did not qualify under
the current requirements to establish a CRIA and requested
this bill be amended to clarify the appropriate data sets and
definitions to include disadvantaged communities. This change
would permit the City of Cudahy, which suffers from high
levels of poverty and socioeconomic disadvantages, and is
arguably an intended beneficiary of a CRIA, to qualify. The
author will accept an amendment providing that a CRIA may also
carry out a community revitalization plan within a community
revitalization and investment area if the census tracts or
census blocks, or both, in the area are identified as a
disadvantaged community as described in Health and Safety Code
39711.
5) Opposition. 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.
Others oppose this bill due to a concern that changes in this
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.
5) Double-referral. This bill was heard in the Senate
Governance and Finance Committee on June 15 and passed out on
a 5-2 vote.
Related Legislation:
AB 2 (Alejo, Chapter 2, Statutes of 2015) - authorized local
governments to create CRIA to use tax increment revenue to
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improve the infrastructure, asset businesses, and support
affordable housing in disadvantaged communities.
SB 628 (Beall, Chapter 785, Statutes of 2014) - allowed local
agencies to create EIFDs to finance specified infrastructure
projects and facilities.
Assembly Votes:
Floor:51-29
L.Gov:6-2
H&CD:5-2
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 22, 2016.)
SUPPORT:
League of California Cities (sponsor)
City of Thousand Oaks
OPPOSITION:
California Alliance to Protect Property Rights
Howard Jarvis Taxpayers Association
Fieldstead and Company
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