BILL ANALYSIS
AB 2065
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Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 2065 (Charles Calderon) - As Amended: May 3, 2010
SUBJECT : Redevelopment Agency of the City of Downey: plan
amendment.
SUMMARY : Allows the City of Downey (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:
a) Extraordinary measures are required in order to address
the current economic recession and the unusually high
employment rate; and,
b) 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 (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 (two parcels) are predominately urbanized
and meet the definition of blight as defined in Community
Redevelopment Law (CRL).
4)Exempts the amendment of the redevelopment plan adding the two
parcels from the requirements of the CRL.
5)Allows the agency to add the two parcels, by an ordinance,
adopted by the city council, containing the following:
a) A limitation of the amount of tax increment dollars
(TIF) that may be divided and allocated for the added
project area to the redevelopment agency;
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b) A specification that the agency may only collect TIF to
repay the City and its general fund, for the purpose of
reimbursing the City for rental property expenses in the
added area, an amount not to exceed $30 million from the
added project area. This amount is only allocated after
the agency has set aside 20% of the collected TIF for its
low- and moderate-income housing obligations in the project
area;
c) States that taxes may not be added beyond the limitation
described unless the agency complies with the process
required by existing law or if it is necessary to meet the
low-and moderate-income housing obligations of the project
area;
d) 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;
e) That loans or indebtedness may be repaid over a period
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;
f) 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.
g) A 30-year time limit on the effectiveness of the
redevelopment plan on the added 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
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contracts.
h) A 45-year time limit from the effective date of the
ordinance to prepay indebtedness with proceeds from the
property taxes on the added area, except as necessary to
meet the low- and moderate-income housing obligations;
i) Provides conformity with the community's general plan;
j) Requires the agency to make payments from the added area
to affected taxing entities as prescribed in existing law;
and,
aa) Provides any changes to the redevelopment plan
created by the addition of the two parcels will be
incorporated into the Downing Landing specific plan in
future amendments.
6)Provides the amendment to the project plan adding the two
parcels are not subject to the requirement of public
participation included in CRL.
7)Provides that the ordinance described is not subject to
referendum.
8)Provides that the Legislature finds and determines that the
prior comprehensive environmental analysis conducted and
certified by the City through an environmental impact report
(EIR) for the Downey Landing Specific Plan (specific plan),
dated February 2002, meets the existing law requirements of
having an EIR for a redevelopment plan amendment, and that no
further analysis under the California Environmental Quality
Act (CEQA) is needed for the purpose of expanding the project
area plan.
9)Specifies that all projects, as defined in CEQA, that
implement the amended redevelopment plan are subject to CEQA,
including, but not limited to, specific plans and rezoning.
10)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.
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11)Makes the provisions of this measure inoperative on or after
January 1, 2012, if the City finds and declares that Tesla
Motors has not constructed a manufacturing operation on the
added parcels.
12)Makes findings that because of the unique circumstances of
the City a special statute is necessary.
13)Contains an urgency clause.
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 time of 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.
2) Requires a redevelopment plan to include: a) a
description of the project area; b), a general statement of
the proposed uses; c) how the redevelopment would be
attained; d) how the proposed redevelopment is consistent
with the general plan; and, e) generally describe the
impact on the area's residents.
3) Requires a redevelopment plan to include an explanation
of why the elimination of blight and the redevelopment of
the project area cannot reasonably be expected to be
accomplished by private enterprise acting alone or by the
legislative body's use of financing alternatives other than
tax increment financing.
4) Requires that a redevelopment plan also include a
description of the physical and economic conditions as
specified in the CRL that exist in the area that cause the
project area to be blighted.
5) Requires the description listed above to include a list
of the physical and economic conditions that exist within
the project area and a map showing where in the project the
conditions exist.
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6) Requires the description to contain specific,
quantifiable evidence that documents both of the following:
a) The physical and economic conditions as specified in
CRL; and,
b) That the described physical and economic conditions are
so prevalent and substantial that, collectively, they
seriously harm the entire project area.
7) Requires that every redevelopment plan be consistent
with the community's general plan.
8) Requires the city or county to form a project area
committee if the redevelopment plan will affect 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.
9) Requires a redevelopment agency to complete an EIR on a
project area.
10)Requires a public hearing on the redevelopment plan before
it can be approved.
FISCAL EFFECT : Unknown
COMMENTS :
1)The City of Downey is seeking to add two parcels, which are
approximately 80 acres to a redevelopment project area adopted
July 20, 1987. The 80 acres is part of a larger area, known
as the Downey Landing Project (Project) which is 160 acres
total. The Project site was once the Rockwell plant, a NASA /
Boeing facility that closed in 1999. In the City's specific
plan, developed in 2002 for the Project, the 160 acre area is
zoned for mixed used use. This Project consists of four
distinct districts: the Retail Center, the Media Center, the
Commerce Center, and the Kaiser Downey Medical Center. The
Retail Center, which is approximately 34 acres, has already
been developed and includes a variety of businesses such as
shops, restaurants, and offices. The Media Center houses
Downey Studios, a movie and television production studio. The
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Kaiser Downey Medical Center is home to a Kaiser Hospital.
The Commerce Center, which is not yet developed, is zoned for
permitted land uses such as small businesses, copy services,
data processing, tool repair, assembly-light manufacturing,
camera repair, motorcycle assembly/repair, and music
instrument repair. Any changes in use would require an
amendment to the Project's specific plan. The specific plan
also has a complementing EIR that was drafted to evaluate the
proposed uses listed in the specific plan. The specific plan
states that if an application is inconsistent with the
specific plan, a determination will be made as to the
appropriate required subsequent environmental documentation.
Existing law requires that every redevelopment plan be
consistent with the community's general plan. If AB 2065 were
to become law, the City would need to ensure that the Tesla
manufacturing facility is consistent with the City's general
plan, which may possibly require an amendment to the specific
plan to ensure such consistency. The Committee may wish to
ask where the City is at on making such changes.
2)According to the City, Tesla Motors has made a commitment to
locate a manufacturing facility on the part of the Downey
Landing site to build an-all-electric car, the Model S. The
City states that 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 years.
The U.S. Department of Energy awarded Tesla Motors $365
million in low-cost loans to finance equipment for the
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 City, Tesla Motors has until January 2012 to use the
federal funds. In addition to this federal funding, through
the California Alternative Energy and Advanced Transportation
Financing Authority, administered by the Callifornia State
Treasurer, Tesla Motors is expected to not have to pay sales
tax and use tax on the purchase of manufacturing equipment.
3)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
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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
a) hold a public meeting on the proposed amendment; b) consult
and obtain input from community members; and, c) 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
EIR to comply with CEQA. Under existing law, opponents of a
redevelopment plan have 90 days to gather sufficient
signatures to qualify a referendum petition on the plan
adoption.
4)According to the City, the original project area plan, Downey
Project Area Amendment No. 4 that these two new parcels would
be added to was adopted July 20, 1987. The current project
area has a tax increment cap of $165,000,000 and to date it
has collected $19,354,581 in tax increment. The original base
year tax on that project area is $917,893. Existing law
authorizes the redevelopment plan to be in effect for 40
years, plus 10 additional years to repay debt with tax
increment.
This bill would allow the City to add two parcels to a current
redevelopment project area
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 be allowed to utilize an
existing EIR from the specific plan to meet the statutory
requirement of having an EIR on a plan amendment. The
Committee may wish to consider whether the bill should be
amended to require the City of Downey to make specified
findings and to clarify that any subsequent projects in the
added redevelopment area shall be subject to review and
mitigation requirements under CEQA.
5)Support Arguments : 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
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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."
Opposition Arguments : Opposition could say that this bill
circumvents established redevelopment law including
environmental review and the public process established in the
CRL 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 or counties who wish to expedite
the redevelopment planning process. Further, the Committee
may wish to consider that if the City might be required to go
through the public process
of updating their specific plan to allow for this new use, why
shouldn't the City just go through the whole public process of
establishing the redevelopment area at the same time?
6)This bill was heard by the Housing and Community Development
Committee on April 28, 2010, where it passed with an 8-0 vote.
This bill has also been referred to the Appropriations
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Downey [SPONSOR]
Opposition
County of Los Angeles
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958