BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 93|
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THIRD READING
Bill No: SB 93
Author: Kehoe (D)
Amended: 3/10/09
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 5-0, 3/4/09
AYES: Wiggins, Cox, Aanestad, Kehoe, Wolk
SUBJECT : Redevelopment: payment for land or buildings
SOURCE : Author
DIGEST : This bill requires that before a redevelopment
agency can pay for public works either inside or outside a
project area, that the agency's legislative body find
specified findings based on substantial evidence in the
record.
ANALYSIS : State law generally prohibits redevelopment
agencies from constructing residential, commercial,
industrial, or other buildings. However, redevelopment
agencies may construct the foundations needed for those
buildings. Further, a redevelopment agency can pay for
public works projects if the agency's legislative body
(e.g., the underlying city council or county board of
supervisors) determines that:
1. The public works benefit the project area or the
immediate neighborhood. When substantially all of the
land in a project area is publicly owned, the
CONTINUED
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legislative body can determine that the improvement
benefits an adjacent project area.
2. No other reasonable means of financing are available.
3. Paying for the public works helps eliminate blight
inside the project area (or provides affordable housing)
and is consistent with the agency's implementation plan.
State law declares that these determinations are "final and
conclusive." Redevelopment plans adopted after October 1,
1976, and redevelopment plans amended after that date to
add territory to a project area must provide for the
acquisition of the land or the construction of the public
facilities.
When the underlying city or county or another public
corporation pays for public works, a redevelopment agency
can contract to reimburse the city, county, or other public
corporation and pay off the contract with property tax
increment revenues. When a parking authority, joint powers
entity, or public corporation pays for public works and
then leases the property to the underlying city or county,
a redevelopment agency can contract with the city or county
for reimbursement.
This bill requires that before a redevelopment agency can
pay for public works either inside or outside a project
area, the agency's legislative body find, based on
substantial evidence in the record, that:
1. Significant blight remains in the project area.
2. The blight cannot be eliminated without the public
works.
3. There is no other reasonable means of financing the
public works, including general obligation bonds,
revenue bonds, special assessment bonds, and Mello-Roos
Act bonds.
4. Paying for the public works is consistent with the
redevelopment agency's implementation plan.
This bill repeals the statutory declaration that local
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officials' determinations are final and conclusive. This
bill repeals the October 1, 1976 time restriction, thereby
requiring any redevelopment agency that wants to pay for
public works to include the land and facilities in its
redevelopment plan. This bill repeals the authority for a
redevelopment agency to pay for a public corporation's
public works projects. This bill limits the financing of
public works paid for by a parking authority, joint powers
entity, or public corporation to contracts before January
1, 2010. This bill inserts consistent references to
publicly owned land, buildings, facilities, structures, or
other improvements.
Background
In May 2005, the San Diego City Council adopted a
redevelopment plan for the 990-acre Grantville
Redevelopment Project Area. In July 2005, San Diego County
sued, alleging that the area did not meet the statutory
tests for physical blight and economic blight, that the
area was not predominantly urbanized, and that officials
failed to show that redevelopment was essential to
eliminate any blight.
In June 2008, the County and City agreed to a settle the
lawsuit challenging the Grantville Project Area. The San
Diego Redevelopment Agency will pay nearly $31.4 million
from the Grantville Project Area to the City of San Diego
for downtown transit line improvements. The Centre City
Development Corporation (the quasi-government entity that
manages redevelopment in downtown San Diego) will pay the
County of San Diego nearly $31.4 million for the North
Embarcadero Project Improvements on County-owned property.
The Centre City Development Corporation reported that the
payments to the County will be 80 percent of the property
tax revenues that the County would have received from the
Grantville Project Area. The July 2008 formal settlement
agreement noted that state law allows redevelopment
officials to pay for public works outside the project area
if local officials make determinations.
At Senator Kehoe's request, the Attorney General reviewed
the settlement agreement and raised two issues. First, the
Attorney General questioned whether Grantville funds should
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pay for the downtown trolley projects. Second, the
Attorney General noted that the settlement agreement "might
also be construed as an effort to bypass legal restrictions
on the use of redevelopment funds to settle litigation."
In September 2008, a local citizens group sued the City
over the settlement agreement. The case is pending and
there is no trial date.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 3/25/09)
American Federation of State, County and Municipal
Employees, AFL-CIO
California Rural Legal Assistance Foundation
Grantville Action Group (San Diego)
San Diego Councilmember Donna Frye
San Diego Councilmember Marti Emerald
San Diego Councilmember Sherri Lightner
Western Center on Law and Poverty
OPPOSITION : (Verified 3/31/09)
California Redevelopment Association
City of Palm Desert
San Jose Redevelopment Agency
AGB:mw 3/31/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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