BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 2492|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   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:









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          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.








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          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.  









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          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  







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          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  







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          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







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          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


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