BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2492| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2492 Author: Alejo (D) and Eduardo Garcia (D) Amended: 6/30/16 in Senate Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 5-2, 6/15/16 AYES: Hertzberg, Beall, Hernandez, Lara, Pavley NOES: Nguyen, Moorlach SENATE TRANS. & HOUSING COMMITTEE: 9-2, 6/28/16 AYES: Beall, Cannella, Allen, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski NOES: Bates, Gaines ASSEMBLY FLOOR: 51-29, 5/31/16 - See last page for vote SUBJECT: Community revitalization SOURCE: Author DIGEST: This bill makes several changes to the statutes that allow a local government to form and administer a Community Revitalization and Reinvestment Authority (CRIA) to finance local economic development. ANALYSIS: Existing law: AB 2492 Page 2 1)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, including: a) 80% of the area in a community revitalization and investment area is characterized by an annual median household income that is less than 80% of the annual median income. b) Nonseasonal unemployment in a community revitalization and investment area that is at least 3% higher than statewide median unemployment, as defined by a specified report on labor market information. c) Crime rates in a community revitalization and investment area that are 5% higher than the statewide median crime rate, as defined by a specified annual report on criminal justice statistics. 2)Requires the California Environmental Protection Agency to identify disadvantaged communities for specified purposes. These communities must be identified based on geographic, socioeconomic, public health, and environmental hazard criteria, and may include either of the following: a) Areas disproportionately affected by environmental pollution and other hazards that can lead to negative public health effects, exposure, or environmental degradation. b) Areas with concentrations of people that are of low income, high unemployment, low levels of homeownership, high rent burden, sensitive populations, or low levels of educational attainment. AB 2492 Page 3 3)Allows an enhanced infrastructure financing district (EIFD) to receive, in addition to tax increment revenues, other sources of revenues that can be used to finance economic development, including: a) 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 (RDAs); b) Property taxes received by a city or county in lieu of former vehicle license fee funds; or c) Revenues that local governments receive pursuant to specified statutes authorizing local governments to impose assessments, parcel taxes, and other charges for specified purposes. This bill: 1)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. 2)Specifies that CRIA officials can make the annual median household income calculation using statewide, countywide, or citywide annual median income. 3)Specifies that the unemployment condition for forming a revitalization and investment area requires an unemployment rate that is at least three percentage points higher than the statewide average annual unemployment rate. AB 2492 Page 4 4)Allows a CRIA to use unemployment data from the periodic American Community Survey published by the United States Census Bureau in determining the unemployment rate within the community revitalization and investment area. 5)Specifies that the crime rate condition for forming a revitalization and investment area 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. 6)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%. 7)Allows a community revitalization and investment area to be formed if the census tracts or census block groups, as defined by the United States Census Bureau, within the area are situated within a disadvantaged community as described in state law. 8)Gives CRIAs the same authority that state law grants to EIFDs to use specified additional revenue sources. 9)Makes several other clarifying and conforming changes to state law. Background From the early 1950s until they were dissolved in 2011, California RDAs used property tax revenues generated by growth in the assessed value of properties in a project area - commonly AB 2492 Page 5 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 RDAs' 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 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 that provide significant benefits to the district or the surrounding community (SB 628, Beall, Chapter 785, Statutes of 2014). State law allows local government officials to establish a 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, Chapter 319, Statutes of 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. Comments Purpose of the bill. This bill 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 AB 2492 Page 6 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. 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 this bill 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No SUPPORT: (Verified7/6/16) California Association for Local Economic Development California Business Properties Association City of Cudahy City of Fountain Valley City of Hollister City of San Diego City of Thousand Oaks Hollister Downtown Association League of California Cities OPPOSITION: (Verified7/6/16) California Alliance to Protect Property Rights Fieldstead and Company AB 2492 Page 7 Howard Jarvis Taxpayers Association ARGUMENTS IN SUPPORT: Supporters argue that this bill will help local officials use CRIAs to build more affordable housing, eliminate blight, foster business activity, clean up contaminated brownfields, and create jobs. ARGUMENTS IN OPPOSITION: Opponents argue that 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. ASSEMBLY FLOOR: 51-29, 5/31/16 AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Gray, Grove, Hadley, Harper, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119 7/29/16 10:43:31 **** END ****