BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1112 (Oropeza)
Hearing Date: 05/17/2010 Amended: 05/11/2010
Consultant: Mark McKenzie Policy Vote: L Gov 3-2
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BILL SUMMARY: SB 1112 would allow for a 10-year extension of
redevelopment activities within Project Area No. 1 of the Carson
Redevelopment Agency (RDA) for purposes of brownfield
remediation. The Carson RDA would collect property tax
increment revenues for an additional 10 years if certain
criteria are met.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Tax increment diversionAverage annual increased state funding
for General
schools of approximately $1,800 for 10
years
beginning in 2025-26 (see staff
comments)
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Current law generally allows a redevelopment agency plan to
operate for 40 years after the plan is adopted or until January
1, 2009, whichever is later. To pay for activities to eliminate
blight in redevelopment project areas, RDAs receive all
incremental growth in property tax on properties within the
project area, including amounts that would otherwise be
allocated to schools. RDAs continue to receive the tax
increment revenues for an additional 10 years beyond the 40-year
expiration date of the plan to pay off debt that was incurred to
finance redevelopment activities. Redevelopment agencies also
are able to extend their operations in older project areas for
each year in which the Legislature shifted property tax revenues
away from redevelopment agencies to Educational Revenue
Augmentation Funds (ERAFs) to alleviate state budget shortfalls.
Existing law, SB 211 (Torlakson), Chapter 741 of 2001, allows an
RDA to extend the time limits that apply to older project areas
for 10 years if additional blight remains that cannot be
eliminated without the time extension, and certain conditions
are met. In addition to other requirements, if the amended
redevelopment plan is approved, the RDA must deposit 30 percent
of its tax increment funds into its Low and Moderate Income
Housing Fund, rather than the 20 percent requirement under the
general statute, and focus affordable housing programs on low,
very low, and extremely low income housing during the time
extension.
The City of Carson has four active redevelopment project areas.
Project Area No. 1 was established in 1971 and contains 2,263
acres. The assessed value of the property in this area has more
than quadrupled since redevelopment activities began in 1971,
and the Carson RDA received over $10.6 million in tax increment
from this project area in 2007-08. In the oldest portion of
Project Area No. 1, there are 130 brownfield sites, covering 602
acres. Remediation of a former Class II landfill started in
2009 with
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SB 1112 (Oropeza)
completion expected in 2012. Private developers will build a
mixed-use project on this site, finishing in 2016. Because of
the statutory deadlines, redevelopment activities in the oldest
portion of Project Area No. 1 must stop in 2014 and property tax
increment revenues stop in 2024. This bill is intended to allow
the Carson RDA to collect an additional 10 years of tax
increment to continue the brownfield remediation efforts in
Project Area No. 1.
SB 1112 would authorize a 10-year extension of redevelopment
activities for one specific redevelopment project area in the
state: Project Area 1 of the Carson RDA. The authority in this
bill is nearly identical to the extension authority provided by
SB 211, and includes all of the same requirements and
restrictions with several key exceptions:
SB 1112 would not require the additional increment revenues
(30 percent rather than 20 percent) be deposited in the Low
and Moderate Income Housing Fund, or require focus on
specified low income housing.
SB 1112 would require redevelopment officials to determine
five conditions exist to qualify for the extension: (1) at
least 25 percent of the project area is a brownfield site as
specified in the Polanco Redevelopment Act; (2) the project
area will expire within five years; (3) brownfield sites add
significant costs and time to the elimination of blight; (4)
significant blight will remain on the project area without the
extension; and (5) contamination at brownfield sites was not
caused by redevelopment activity.
Carson officials indicate that the existing authority to extend
redevelopment activities for 10 years provided by SB 211 would
require the diversion of an additional 10 percent of increment
revenues for low income housing, which would hinder their
efforts to pay for remaining brownfield remediation. Staff
notes that a 10-year extension of the older portion of Project
Area No. 1 would provide an estimated $83 million from 2025-26
to 2034-35, including amounts that would otherwise be allocated
to schools. After deducting for mandatory pass-through
payments, the net impact on schools would be approximately $18
million over that period, an average of $1.8 million per year
for 10 years. Since this is revenue that would otherwise have
been allocated to schools, the state General Fund would cover
this amount.