BILL ANALYSIS
AB 2531
Page 1
Date of Hearing: April 28, 2010
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 2531 (Fuentes) - As Amended: April 20, 2010
SUBJECT : Redevelopment: economic development
SUMMARY : Gives redevelopment agencies additional authority to
provide loans, loan guarantees and other financial assistance to
businesses, assist nonprofits and public agencies to establish
small business incubators, and clarifies the City of Los
Angeles' authority to apply for and administer federal funding
for economic development. Specifically, this bill :
1)Allows redevelopment agencies to provide direct assistance to
businesses through loans, loan guarantees, and other financial
assistance in connection with new or existing facilities
within redevelopment project areas for industrial and
manufacturing uses, for the provision or replacement of
machinery and equipment in those facilities.
2)Provides that the assistance is intended to retain or expand
the number of persons employed in the industrial or
manufacturing jobs and to achieve any of the following:
a) Reduce emissions of greenhouse gases;
b) Increase the use of clean, renewable, or alternative
energy;
c) Increase energy efficiency;
d) Increase the use of recycled and locally sourced
materials;
e) Increase the efficiency in water, wastewater and
stormwater systems;
f) Increase the efficiency of construction methods;
g) Reduce demolition and construction-induced pollution and
waste material generation;
h) Improve indoor air quality;
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i) Reduce building operation costs through increased
operation and maintenance efficiency; or
j) Reduce public infrastructure costs related to
development.
3)States that the Legislature finds and declares that a
fundamental purpose of redevelopment is to attract and retain
business in order to enhance employment opportunities.
4)Adds job training, job placement, apprenticeship and
pre-apprenticeship programs and services relating to
construction or to the operation of businesses in project
areas to the possible uses of redevelopment.
5)Allows a redevelopment agency to assist public agencies or
private nonprofit corporations to establish, construct and
maintain a small business incubator within the project area
for the purpose of redevelopment.
6)Allows a redevelopment agency to make loan guarantees to small
businesses located inside a project area for the purpose of
redevelopment.
7)Allows redevelopment agencies to construct buildings for
industrial or manufacturing purposes for job training, job
placement, apprenticeship and pre-apprenticeship programs and
services related to construction or to the operation of
businesses in project areas.
8)Allows the redevelopment agency of the City of Los Angeles to
do the following:
a) Prepare applications for state and federal grant
programs that relate to economic development and expend
grant funds inside or outside any redevelopment project
area within the jurisdiction of the agency and comply with
any conditions of the program; and
b) Accept any assistance from the state or federal
government or any public or private source and expend grant
funds inside or outside any redevelopment project area
within the jurisdiction of the agency and comply with any
conditions of the program;
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9)Prohibits a redevelopment agency from amending a redevelopment
plan to increase or extend the project time limits in order to
collect additional tax increment for the purpose of fulfilling
this Act.
10)States this Act is needed to clarify existing law and provide
agencies with additional authority to assist businesses but
may not be construed to restrict the authority that an agency
possessed prior to the effective date of the Act.
EXISTING LAW
1)Finds and declares that the fundamental purpose of
redevelopment is to expand the supply of low- and
moderate-income housing, expand employment opportunities for
jobless, underemployed low-income persons, and to provide an
environment for the social economic and psychological growth
and well-being of all citizens (Health & Safety Code Section
33071).
2)Redevelopment includes the alteration, improvement,
modernization, reconstructure or rehabilitation of existing
structures in a project area (Health & Safety Code Section
33021).
3)Allows a redevelopment agency to enter into agreements with
the federal government, an agency, or any other public body to
aid in the planning, undertaking, construction or operation of
a redevelopment project (Health & Safety Code Section 33220).
4)Allows a redevelopment agency to establish a program to
provide loans to owners or tenants to rehabilitate commercial
buildings or structures with in a project area (Health &
Safety Code Section 3344.5).
5)Allows a redevelopment agency to assist with the financing of
facilities or capital equipment, including but not necessary
limited to pollution control devices, provided the development
or rehabilitation of the property will be used for industrial
or manufacturing purposes (Health & Safety Code Section
33444.6).
FISCAL EFFECT : Unknown
AB 2531
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COMMENTS :
Background:
Legislative findings declare that the fundamental purpose of
redevelopment is to "expand the supply of low- and
moderate-income housing, employment opportunities and provide an
environment for social, economic and psychological growth and
well-being for all citizens."
Economic development : Under existing law, redevelopment
agencies can use tax increment to rehabilitate commercial
buildings or structures with in the project area and to assist
businesses in the financing of capital equipment provided that
the development or rehabilitation of the property will be used
for an industrial or manufacturing use. Redevelopment agencies
can also make loans to businesses to rehabilitate commercial
buildings or structures in a project area.
This bill would expand redevelopment agencies authority to
provide loans, loan guarantees and other financial assistance to
businesses in redevelopment project areas for industrial and
manufacturing uses if the assistance is intend to retain or
expand the number persons employed. The financial assistance
could be used by businesses to purchase or replace machinery or
equipment in their facility if it achieves any of the following:
a) Reduce emissions of greenhouse gases;
b) Increase the use of clean, renewable, or alternative
energy;
c) Increase energy efficiency;
d) Increase the use of recycled and locally sourced
materials;
e) Increase the efficiency in water, wastewater and
storm water systems;
f) Increase the efficiency of construction methods;
g) Reduce demolition and construction-induced pollution
and waste material generation;
h) Improve indoor air quality;
i) Reduce building operation costs through increased
operation and maintenance efficiency; or
j) Reduce public infrastructure costs related to
development.
AB 2531
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Job training and placement : Under existing law, redevelopment is
to be used for the "bricks and mortar" necessary to improve a
project area and eliminate blight. This bill would expand
redevelopment agencies authority to expend tax increment on job
training and apprenticeship programs. The bill also gives
redevelopment agencies the authority to construct buildings for
industrial or manufacturing uses that will allow for job
training and job placement.
Business incubators : Up until 1999, redevelopment agencies in
Long Beach, Healdsburg, Los Angeles, Oakland, and Signal Hill
were allowed to assist non-profits and public agencies in
establishing small business incubators, including provided loan
guarantees for small business in the project area. This bill
reestablishes this authority for all redevelopment agencies in
the state.
Federal funding for economic development : This bill also gives
the City of Los Angeles clear authority to apply for and accept
federal funding for economic development and to spend the funds
either inside or outside the project area. According to the
sponsor, the staff with expertise to apply for federal economic
grants and to implement the programs associated with the funds
is redevelopment agency staff. The bill is intended to clarify
that redevelopment staff can be used for this purpose.
The purpose of this bill : According to the sponsor, the City of
Los Angeles, this bill is an effort to expand the ability of
redevelopment agencies to create jobs in the emerging green
sector and create green sustainable communities. Under existing
law, redevelopment agencies have authority to provide financial
assistance to business and property owner to promote job
retention or expansion in connection with sustainable
manufacturing and industrial uses. The sponsor states that this
bill is in intended to "clarify and expand the authority of a
redevelopment agency to provide financial assistance to property
owners and business tenants to retrofit and rehabilitate
buildings in a redevelopment project area to retain or expand
manufacturing and industrial."
Committee amendments :
Existing law gives redevelopment agencies authority to provide
loans to businesses for capital equipment if the property will
be used for an industrial or manufacturing purpose. The sponsor
is seeking to allow redevelopment agencies to more directly
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assist businesses who want to replace equipment that will result
in some sort of environmental benefit like greenhouse gas
reduction or the use of alternative, renewable energy. The bill
also states the assistance is intended to retain or expand jobs.
The committee may wish to consider amendments to make the bill
clearer and to also require that the investment of the tax
increments has a reasonable expectation of producing jobs for
low- and moderate-income residents of the project area. The
committee also may wish to add a five year sunset date to this
bill.
1) On page 3, line 2, strike "support" and replace with
"result in"
2) On page 3, line 30, strike ",and other financial
assistance,"
3) On page 3, line 30, delete "and" and insert, "for"
4) On page 3, line 33, strike "intended to retain or expand
the number of person" and replace with "results in the
expansion of jobs for low-and moderate income residents of
the project area"
5) On page 4, delete Section 3.
6) On page 7, delete Section 10.
7) Add sunset on January 1, 2016.
Triple referred : The Assembly Committee on Rules referred AB
2531 to the Committee on Housing and Community Development,
Local Government and Appropriations. If AB 2502 passes this
committee, the bill must be referred to the Committee on Local
Government.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Los Angeles (sponsor)
California Redevelopment Association
City of Lakewood
Community Health Councils, Inc, Los Angeles
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Green LA Coalition
Hunger Action Los Angeles
International Brotherhood of Electrical Workers, Local 11,
Pasadena
Los Angeles Alliance for a New Economy
Los Angeles Conservation Corps
Los Angeles County Economic Development Corporation
Los Angeles County Federation of Labor, AFL-CIO
Public Health Law & Policy, Oakland
San Gabriel Valley Economic Partnership
The Valley Economic Alliance, Sherman Oaks
Valley Economic Development Center, Van Nuys
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085