BILL ANALYSIS
AB 2531
Page 1
Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 2531 (Fuentes) - As Amended: April 29, 2010
SUBJECT : Redevelopment: economic development.
SUMMARY : Creates a five-year program that provides
redevelopment agencies with 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)Expands the definition of redevelopment to include providing
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 direct assistance is reasonably expected to
result in the retention or expansion of 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;
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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.
3)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.
4)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.
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)Authorizes a redevelopment agency to establish a program to
provide loans, financial guarantees, or other financial
assistance to owners or tenants in a redevelopment area, for
any of the following purposes:
a) Rehabilitating commercial buildings or structures within
the project area;
b) Retaining or expanding employment in the project area;
c) Increasing energy efficiency of buildings in the project
area; or,
d) Other purposes as defined.
8)Allows a redevelopment agency to construct buildings for
industrial or manufacturing purposes for job training, job
placement, apprenticeship and pre-apprenticeship programs and
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services related to construction or to the operation of
businesses in project areas.
9)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;
10)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.
11)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.
12)Contains a sunset date of January 1, 2016, for all of the
provisions added by this measure.
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.
2)Defines "redevelopment" as the planning, development,
replanning, redesign, clearance, reconstruction, or
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rehabilitation, or any combination of these, of all or part of
a survey area, and the provision of those residential,
commercial, industrial, public, or other structures or spaces
as may be appropriate or necessary in the interest of the
general welfare, including recreational and other facilities
incidental or appurtenant to them.
3)Redevelopment includes the alteration, improvement,
modernization, reconstructure or rehabilitation of existing
structures in a project area.
4)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.
5)Allows a redevelopment agency to establish a program to
provide loans to owners or tenants to rehabilitate commercial
buildings or structures within a project area.
6)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.
FISCAL EFFECT : Unknown
COMMENTS :
1)Legislative findings in statute 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."
2)Under existing law, redevelopment agencies can use tax
increment to rehabilitate commercial buildings or structures
within 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.
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This bill would expand a redevelopment agency's authority to
provide loans, loan guarantees and other financial assistance
to businesses in a redevelopment project area for industrial
and manufacturing uses if the assistance is intended to retain
or expand the number of persons employed. The financial
assistance could be used by businesses to purchase or replace
machinery or equipment with technology that fits in the
category of green technology as described.
3)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 a redevelopment
agency's 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.
4)Support Arguments : 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. The sponsor
states that this bill is 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." Supporters
argue that AB 2531 would allow the tools of redevelopment to
be used more directly in creating new jobs and assisting
businesses. Supporters also see this measure as an economic
stimulus tool.
Opposition Arguments : Opposition could argue that the
specific intent of redevelopment law is for the eradication of
blight to protect the health, safety, and general welfare of
the people. In Regus v. City of Baldwin Park (1977) 70
Cal.App.3d 968, the court warned that by "misemploying the
extraordinary powers of urban renewal a redevelopment agency
captures pending tax revenues which it can then use as a
grubstake to subsidize commercial development within the
project area in the hope of striking it rich." The Committee
may wish to consider that through the expansion of how
redevelopment funding may be used under the provisions of this
measure, the Legislature could be moving away from the
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fundamental purpose of what redevelopment law is for.
5)This bill was heard by the Housing and Community Development
Committee on April 28, 2010, where it passed with a 5-0 vote.
This bill has also been referred to the Appropriations
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support Opposition
City of Los Angeles [SPONSOR] None on file
Cities of Palmdale and San Jose
Community Health & Education
Green LA Coalition
Los Angeles Alliance for a New Economy
Los Angeles Area Chamber of Commerce
Los Angeles Conservation Corps
Los Angeles County Federation of Labor, AFL-CIO
Los Angeles Economic Development Corporation
Mayor Anthony B. Santos, City of San Leandro
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958