BILL ANALYSIS
AB 2065
Page 1
Date of Hearing: April 28, 2010
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 2065 (C. Calderon) - As Amended: April 8, 2010
SUBJECT : Redevelopment Agency of the City of Downey: plan
amendment
SUMMARY : Allows the City of Downey (the City) to add two
parcels to a redevelopment project area in the city by ordinance
and declares that the parcels are predominately urbanized and
meet the statutory definition of blight. Specifically, this
bill :
1)Makes legislative findings that extraordinary measures are
required in order to address the current economic recession
and the unusually high employment rate. That an amendment of
the territory specified in this bill to a project area of the
City will create 1,200 new clean-tech and career-ladder jobs,
encourage green technology production and further stimulate
economic revitalize in the region.
2)Allows the redevelopment agency of the City of Downey (the
agency) to add two parcels, as described, to the redevelopment
project area within the city.
3)States that the Legislature finds conclusively that the two
parcels described are predominately urbanized and meet the
definition of blight as defined by existing law (Health &
Safety Code Section 33030 and 33031).
4)Exempts the amendment of the redevelopment plan adding the two
parcels described from the requirements of the Community
Redevelopment Law (CRL) (Health & Safety Code Section 33000
et. al.).
5)Allows the agency to add the two parcels as described, by an
ordinance, adopted by the city council, containing the
following:
a) A limitation of the amount of tax dollars that may be
divided and allocated for the added project area to the
redevelopment agency;
AB 2065
Page 2
b) Taxes may not be added beyond the limitation described
unless the agency complies with the process required by
existing law (Health & Safety Code Section 33354.6) or if
it is necessary to meet the low-and moderate-income housing
obligations of the project area;
c) A time limitation on the redevelopment agency's
authority to establish loans, advances and indebtedness of
no more than 20 years from the effective date of the
ordinance unless the agency determines an extension is
required
d) Loans or indebtedness may be repaid over a longer than
20 years and allows the redevelopment agency to establish
additional debt beyond the time period if necessary to
comply with the low-and moderate-income housing
obligations;
e) A time limitation of 10 years may be extended to the
project area to establish debt, if the redevelopment agency
determines that:
i. Substantial blight remains in the project area,
ii. The blight cannot be eliminated without
establishing additional debt, and
iii. The blight cannot be reasonably eliminated
by private enterprise acting alone or through
alternatives to tax increment financing.
f) A 30-year time limit on the effectiveness of the
redevelopment plan on the project area after which the
redevelopment agency may only pay previously incurred
indebtedness, comply with the low-and moderate-income
housing obligations and enforce existing covenants and
contracts.
g) A 45-year time limit from the effective date of the
ordinance to prepay indebtedness with proceeds from the
property taxes on the redevelopment area as a whole, except
as necessary to meet the low-and moderate-income housing
obligations;
h) Provides conformity with the community's general plan;
AB 2065
Page 3
and
i) Provides any changes to the redevelopment plan created
by the addition of the project areas will be incorporated
into the Downing Landing specific plan in future
amendments.
6)Provides the amendment to the project plan adding the two
parcels described are not subject to the requirement of public
participation included in Community Redevelopment Law (Health
& Safety Code Section 33000 et. al.).
7)Provides that the ordinance described is not subject to
referendum.
8)Provides the California Environmental Quality Act (CEQA) shall
not apply to the amendment to the redevelopment plan adding
the two parcels described; however, CEQA does apply to the
individual projects required to implement the redevelopment of
the project area.
9)Permits the redevelopment agency once it begins collecting tax
increment but before incurring any bonded indebtedness to
subordinate the payments required to be made to affected
school districts or community college districts based on a
finding that the agency will have sufficient funds to pay both
the bonded debt payments and the school districts.
10) Makes findings that because of the unique circumstances of
the City a special statute is necessary.
EXISTING LAW
1)Provides if a redevelopment agency proposes to add new
territory to an existing redevelopment project area, to
increase the limitation on the number of dollars to be
allocated to the agency, to extend the time limit on
establishing indebtedness, to lengthen the of time when the
project is effective, or to add significant additional capital
improvements to the project, the agency must follow the
procedure for adopting a redevelopment plan (Health & Safety
Code Section 33354.6).
2)A redevelopment plan must include: a description of the
project area, a general statement of the proposed uses, how
AB 2065
Page 4
the redevelopment would be attained, how the proposed
redevelopment is consistent with the general plan, describe
generally the impact on the area's residents (Health & Safety
Code Section 33324).
3)Requires the city or county to form a project area committee
(PAC) if the redevelopment plan will effect a substantial
number of low- and moderate income residents and the plan
gives the agency authority to use eminent domain or the plan
contains one or more public projects that will displace
low-and moderate-income residents (Health & Safety Code
Section 33385).
4)Requires a redevelopment agency to complete an Environmental
Impact Report (EIR) on a project area and to send the EIR to
the appropriate taxing entities (Health & Safety Code Section
33352).
5)Requires a public hearing on the redevelopment plan before it
can be approved (Health & Safety Code Section 33348, 33360).
FISCAL EFFECT : Unknown.
COMMENTS :
Background : The City of Downey is seeking to add two parcels,
which are approximately 80 acres to a redevelopment project area
adopted in July 20, 1987. According to the sponsor, the two
parcels were formerly the site of a NASA facility that has been
vacant since 1998 and is now occasionally used as the set for
television commercials. According to the sponsor, Tesla Motors
has made a commitment to locate a manufacturing facility on the
site to build an-all-electric car, the Model S. According to
the City, Tesla has submitted applications to permit the site.
Tesla is renting the site from a private owner. The City has
committed to pay the rent on the facility and make some
infrastructure improvements on the site for $14 million. Tesla
estimates it will not make a profit on the production of the
Model S for five year.
The U.S. Department of Energy awarded Tesla Motors $465 million
in low-cost loans to finance production of the Model S, which is
slated to have a retail price of $57,400 and get up to 300 miles
on a charge. According to the sponsor, Tesla Motors has until
January 2012 to use the federal funds. In addition to this
AB 2065
Page 5
federal funding, through the California Alternative Energy and
Advanced Transportation Financing Authority, administered by the
CA State Treasurer, Tesla Motors will not have to pay sales tax
and use tax on the purchase of manufacturing equipment.
The Existing Process : California Redevelopment Law (CRL) allows
a community to amend a redevelopment project area to expand it
geographically if there is substantial evidence of blight. When
amending an existing plan to add new territory, a redevelopment
agency must follow the same procedures and is subject to the
same restrictions as for adopting a redevelopment plan.
Redevelopment agencies are required to hold a public meeting on
the proposed amendment consult and obtain input from community
members, and consult with the affected taxing entity, Department
of Finance and the Department of Housing & Community
Development. CRL requires redevelopment agencies to provide a
negative declaration or an environmental impact report to comply
with CEQA. Under existing law, opponents of a redevelopment
plan have 90 days to gather sufficient signature to qualify a
referendum petition on the plan adoption.
The City of Downey's Proposal : This bill would allow the City
to add two parcels to a current redevelopment project by
ordinance which would not be subject to referendum. The City
would not be required to make a finding of blight as required
under existing law; the Legislature would make the finding in
statute. The City would not be required to file a negative
declaration or an environmental impact report on the two
parcels.
Purpose of this bill : According to the author, this bill would
allow the City to adopt a new redevelopment project area via
ordinance, and thereby facilitate expedited construction of a
new Tesla Motors automotive manufacturing facility. The author
states, "This time savings is critical given Tesla Motors
aggressive timeline to begin manufacturing of its all electric
vehicle line in the City of Downey. This bill also recognizes
that it will assist in the creation of approximately 1,200 new
clean-tech and career-ladder jobs, encourage green technology
production and stimulate the overall economic revitalization of
the region."
Urgency Clause : The author would like to amend the bill to add
an urgency clause. The urgency is necessary, "for on going
negotiations with potential manufacturing facilities in the
AB 2065
Page 6
redevelopment zone and to provide economic stimulus to
revitalization the City of Downey.
Staff comments : This bill would circumvent established
redevelopment law including environmental review and the public
process established by community redevelopment law in order to
expedite the City's ability to collect tax increment financing
to help Tesla pay rent on its new facility and make some
infrastructure improvements. The committee may wish to consider
that the passage of this bill could lead to requests from other
cities/counties who wish to expedite the redevelopment planning
process.
The committee may wish to consider the following amendments
which narrow the bill and provide an opportunity for public
input and environmental review.
Committee Amendments :
1)Restrict the amount of tax increment the City can use to repay
the City's general fund for the purpose of paying Tesla
Motor's lease payments to $14 million.
2)Make clear that project area must meet the requirements of
Health & Safety Code Section 33334.2 and 33334.6 requiring the
agency to allocate 20% of all tax increment for the purposes
of low-and-moderate income housing.
3)Make clear that the time limitation to repay indebtedness of
45 years applies only to the added area and not to the entire
project area.
4)Make clear that the project area is subject to CEQA.
5)Delete the provision which allows the agency to subordinate
the bonded debt required to be paid to the affected school
districts or community college districts.
6)Make the ordinance subject to referendum.
Double referred : The Assembly Committee on Rules referred AB
2065 to the Committee on Housing and Community Development and
Local Government. If AB 2065 passes this committee, the bill
must be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION :
AB 2065
Page 7
Support
City of Downey
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085