BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2531|
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THIRD READING
Bill No: AB 2531
Author: Fuentes (D)
Amended: 8/3/10 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 3-2, 6/30/10
AYES: Kehoe, DeSaulnier, Price
NOES: Cox, Aanestad
ASSEMBLY FLOOR : 49-25, 6/2/10 - See last page for vote
SUBJECT : Redevelopment: economic development
SOURCE : Author
DIGEST : This bill authorizes the Community Redevelopment
Agency of the City of Los Angeles 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. This provision automatically expires
on January 1, 2018.
Senate Floor Amendments of 8/3/10 add clarifying language.
ANALYSIS : The Community Redevelopment Law allows local
officials to set-up redevelopment agencies, prepare and
adopt redevelopment plans, and finance redevelopment
activities. Redevelopment officials have access to two
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extraordinary powers to eradicate blight: State General
Fund subsidies that support property tax increment
financing and extraordinary eminent domain powers. The Law
repeatedly underscores the need for the public sector's
intervention when private enterprise cannot redevelop
blighted areas.
This bill allows redevelopment officials to provide
specified types of direct assistance to businesses within
redevelopment project areas until January 1, 2018, under
the Community Redevelopment Law.
This bill requires redevelopment officials to adopt a
resolution before February 1, 2011, of the fiscal year in
which they intend to assist businesses.
Current law describes three redevelopment activities:
1. The alteration, improvement, modernization,
reconstruction, or rehabilitation of structures.
2. The provision of open space, public or private
buildings, structures, and improvements.
3. The replanning, redesign, or development of undeveloped
areas that meet certain conditions.
Redevelopment officials want legislators to expand this
description so that they can provide direct assistance to
businesses and job programs.
This bill expands the statutory description of
redevelopment to include direct assistance to businesses in
connection with new or existing facilities within project
areas for industrial or manufacturing uses. This direct
assistance can include loans, loan guarantees, other
financial assistance, and providing or replacing machinery
or equipment where the assistance will either:
1. Result in retaining or expanding employment in
industrial or manufacturing jobs.
2. Or, achieve any of the following:
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Reduce greenhouse gas emissions.
Increase the use of clean, renewable, or
alternative energy.
Increase energy efficiency.
Increase the use of recycled and locally sourced
materials.
Increase efficiency in water, wastewater, and
stormwater systems.
Increase the efficiency of construction methods.
Reduce demolition and construction-induced
pollution and waste material generation.
Improve indoor air quality.
Reduce building operation costs through operation
and maintenance efficiency.
Reduce public infrastructure costs for
development.
Job training, job placement, apprenticeship and
preapprenticeship programs relating to construction
or business operations in project areas.
This bill requires the machinery, equipment, or personal
property to remain within the project area for either the
term of the agreement or the useful life of the machinery,
equipment, or property, as the redevelopment agency
determines.
This provision automatically expires on January 1, 2018.
Current law declares that the fundamental purpose of
redevelopment has three themes:
1. Expand the supply of affordable housing.
2. Expand job opportunities.
3. Provide an environment for social, economic, and
psychological growth and well-being.
Redevelopment officials want legislators to add a fourth
theme to this statutory declaration.
This bill adds the attraction and retention of businesses
in order to enhance employment opportunities to the
statutory declaration of redevelopment purposes. This
provision automatically expires on January 1, 2018.
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Current law tells community redevelopment agencies that
they have access to the services provided by city or county
planning, engineering, or other departments. If requested
by the city council or county board of supervisors,
redevelopment agencies can apply for federal housing and
community development grants and carry out those programs.
Current law tells redevelopment agencies that they can
accept financial assistance from public or private sources,
and they can accept other assistance for any redevelopment
project from the state or federal government, or public or
private sources.
The City of Los Angeles has a First Deputy Mayor who serves
as the Chief Executive for Economic and Business Policy,
advocating for investment and jobs by working with the
City's Department of Water and Power, the Port of Los
Angeles, and the Los Angeles World Airports. However, Los
Angeles does not have an economic or community development
department that coordinates municipal efforts to attract
and retain private investment and jobs. City officials
want their Redevelopment Agency to take on economic
development duties in addition to its existing
redevelopment efforts.
This bill allows the Community Redevelopment Agency of the
City of Los Angeles, if requested by the Los Angeles City
Council, to:
1. Prepare state and federal economic development grant
applications and to spend grant funds both inside
project areas and outside project areas, but within the
City.
2. Accept other assistance from the state and federal
government or public or private sources, and spend the
money for economic development activities both inside
project areas and outside project areas, but within the
City.
This authority for Los Angeles automatically expires on
January 1, 2018. This bill also contains a legislative
declaration regarding this special legislation for Los
Angeles.
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The redevelopment plan for every project area must include
a time limit for creating debt, a time limit on the receipt
of property tax increment revenues, a time limit on the
plan's effectiveness, a time limit on the use of eminent
domain, and a cap on the amount of property tax increment
revenues.
Redevelopment officials can extend or raise these limits,
but the extensions and increases usually boost the amount
of property tax increment revenues which, in turn,
increases the amount of the indirect subsidies paid by the
State General Fund. Redevelopment officials want to
reassure state officials that their request to tackle job
creation and business activities won't increase the state's
costs.
This bill prohibits redevelopment agencies from amending
their redevelopment plans to increase or extend the plans'
limits to implement the authority that this bill grants.
This provision automatically expires on January 1, 2018.
In the 1990s, the Legislature allowed five redevelopment
agencies to experiment with small business incubators.
Redevelopment officials in Healdsburg, Long Beach, Los
Angeles, Oakland, and Signal Hill could help other public
agencies and private nonprofit corporations establish small
business incubators, including providing loan guarantees.
Redevelopment officials had to report about these
activities to their city councils. None of the five
agencies used that temporary authority. This provision
sunsetted on July 1, 1999 (AB 1813 [McDonald], Chapter
1225, Statutes of 1993).
Redevelopment officials say that private lenders and the
federal Small Business Administration are unwilling or
unable to make capital available to small businesses. They
want to help set up small business incubators to stimulate
investment and create jobs.
This bill allows redevelopment agencies to help public
agencies and private nonprofit corporations establish small
business incubators. This bill allows redevelopment
agencies to provide loan guarantees to small businesses
located in project areas. This bill relies on an existing
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statute to define "small business." This provision
automatically expires on January 1, 2018.
Current law generally does not allow redevelopment agencies
to construct buildings for residential, commercial,
industrial, or other uses. However, redevelopment agencies
can build foundations and other structures as part of site
preparation. Nevertheless, current law specifically allows
redevelopment agencies to build:
Relocation housing.
Affordable housing, both inside and outside project
areas.
Public works inside project areas.
Public works outside project areas (SB 93 [Kehoe],
Chapter 555, Statutes of 2009).
School facilities inside project areas.
Transit and parking facilities in Los Angeles County and
larger cities.
Redevelopment agencies want the power to construct
buildings that they can fund under other provisions of
this bill.
This bill allows redevelopment agencies to construct
buildings for public agencies and private nonprofit
corporations with small business incubators. This bill
also allows redevelopment agencies to construct buildings
for industrial and manufacturing purposes if they meet the
bill's criteria for efficient and sustainable businesses.
This provision automatically expires on January 1, 2018.
Current law allows redevelopment agencies to loan money to
rehabilitate commercial buildings within project areas (AB
1290 [Isenberg], Chapter 942, Statutes of 1993).
Redevelopment officials want to expand their construction
financing powers.
This bill allows redevelopment agencies to provide loans,
financial guarantees, or other financial assistance to
owners or tenants in a project area for:
Rehabilitating commercial structures in the project area.
Retaining or expanding employment in the project area.
Increasing the energy efficiency of buildings in the
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project area.
New industrial or manufacturing buildings, providing or
replacing machinery equipment in those facilities, or job
programs in project areas.
This provision automatically expires on January 1, 2018.
Current law allows redevelopment agencies to finance
facilities and capital equipment within a project area.
However, redevelopment officials must find that the
assistance:
Is necessary for the development's economic feasibility.
Cannot be obtained on economically feasible terms in the
private market. (AB 1290 [Isenberg], Chapter 942,
Statutes of 1993). Redevelopment officials want to
expand their ability to finance facilities and equipment.
This bill allows redevelopment agencies to construct
industrial or manufacturing buildings if they meet the
bill's criteria for efficient and sustainable businesses.
This provision automatically expires on
January 1, 2018.
This bill requires the Legislative Analyst's Office (LAO)
to report to the Legislature by January 1, 2017, on how
redevelopment agencies used their new authority and
requires the LAO to consult with interested parties when
preparing this report.
Some redevelopment attorneys say that the current law may
already allow some of the activities authorized by this
bill. Because most of the bill's provisions sunset on
January 1, 2018, those attorneys do not want this bill to
create the impression that the sunset clauses eliminate the
statutory authorities that already exist. They want the
Legislature to clarify the bill's intent.
This bill declares that its purpose is to clarify existing
law and to provide additional temporary authority to
redevelopment agencies to help businesses retain and
attract new jobs. This bill declares that it should not be
construed to limit or restrict the authority that agencies
had before the bill.
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Comments
During the current recession, unemployment and
under-employment have increased to levels not seen in
recent years. Local officials want to use their
redevelopment powers to retain and create jobs,
particularly in the emerging green sector industries and
for sustainable development.
Already called the Great Recession, the current dismal
economy has produced the highest rates of unemployment and
under-employment in decades. Private firms have trouble
finding investors willing to lend capital to improve and
expand their operations. Local officials face increased
demands for public services while coping with declining
sales tax revenues and shrinking property tax bases. The
Legislature created redevelopment agencies so that local
officials could fight blight. Current law recognizes that
redevelopment agencies' intervention is essential when
private firms will not invest and other public programs
cannot fill the economic gaps. If there were ever a time
for redevelopment officials to focus their attention on the
retention and creation of new jobs, it would be during this
Great Recession. For the next seven years, this bill
allows local officials harness redevelopment agencies'
extraordinary powers to help private businesses keep
existing jobs and grow the workforce.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/2/10)
California Contract Cities Association
California Redevelopment Association
Cities of Banning, Burbank, Camarillo, Concord, Fairfield,
Fullerton, Fremont, Fountain Valley, Garden Grove,
Huntington Beach, Lakewood, La Quinta, Los Angeles,
Merced, Napa, Palmdale, Rancho Cucamonga, Salinas, San
Bernardino, San Jos?, San Leandro, Santa Cruz, Santa Fe
Springs, Sonoma, Taft, Thousand Oaks, Torrance, and Vista
Community Health Councils, Inc.
International Brotherhood of Electrical Workers Local 11
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League of California Cities
Los Angeles Area Chamber of Commerce
Los Angeles Conservation Corps
Los Angeles County Business Federation
Los Angeles County Federation of Labor AFL-CIO
Los Angeles Economic Development Corporation
Redevelopment agencies of Goleta, Lynwood, Merced County,
Napa, Rancho Cordova, and Tehachapi
San Carlos Chamber of Commerce
San Gabriel Valley Economic Partnership
Town of Apple Valley
Valley Economic Alliance
Valley Economic Development Center
Valley Industry and Commerce Association
OPPOSITION : (Verified 8/2/10)
California State Association of Counties
County of Los Angeles
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De
Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani,
Galgiani, Hall, Hayashi, Hernandez, Hill, Huber, Huffman,
Jones, Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, V.
Manuel Perez, Portantino, Ruskin, Salas, Saldana,
Skinner, Smyth, Solorio, Swanson, Torlakson, Torres,
Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Blakeslee, Conway,
Cook, DeVore, Emmerson, Fletcher, Fuller, Gaines,
Garrick, Gilmore, Hagman, Harkey, Jeffries, Logue,
Miller, Nestande, Niello, Nielsen, Norby, Silva, Tran,
Villines
NO VOTE RECORDED: Beall, Tom Berryhill, Knight, Lieu,
Audra Strickland, Vacancy
AGB:mw 8/4/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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