California Legislature—2013–14 Regular Session

Assembly Bill No. 2280

Introduced by Assembly Member Alejo

(Principal coauthors: Assembly Members Atkins and Mullin)

(Coauthors: Assembly Members Dickinson, Holden, Perea, V. Manuel Pérez, Stone, and Ting)

(Coauthor: Senator Correa)

February 21, 2014

An act to add Part 1.87 (commencing with Section 34191.50) to Division 24 of the Health and Safety Code, relating to economic development.

LEGISLATIVE COUNSEL’S DIGEST

AB 2280, as introduced, Alejo. Community Revitalization and Investment Authorities.

The Community Redevelopment Law authorizes the establishment of redevelopment agencies in communities to address the effects of blight, as defined by means of redevelopment projects financed by the issuance of bonds serviced by tax increment revenues derived from the project area. Existing law dissolved redevelopment agencies and community development agencies, as of February 1, 2012, and provides for the designation of successor agencies to wind down the affairs of the dissolved agencies and to fulfill the enforceable obligations of those agencies.

Existing law also provides for various economic development programs that foster community sustainability and community and economic development initiatives throughout the state.

This bill would authorize certain local agencies, to form a community revitalization authority (authority) within a community revitalization and investment area, as defined to carry out provisions of the Community Redevelopment Law in that area for purposes related to, among other things, infrastructure, affordable housing, and economic revitalization. The bill would provide for the financing of these activities by, among other things, the issuance of bonds serviced by tax increment revenues, and would require the authority to adopt a community revitalization plan for the community revitalization and investment area that includes elements describing and governing revitalization activities. The bill would also provide for periodic audits of the authority with respect to affordable housing, conducted as provided by the Controller, and for annual public reports by the authority as well as periodic proceedings for the consideration of public protests.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

(a) Certain areas of the state are generally
characterized by buildings in which it is unsafe or unhealthy for
persons to live or work, conditions that make the viable use of
buildings or lots difficult, high business vacancies and lack of
employment opportunities, and inadequate public improvements,
water, or sewer utilities. It is the intent of the Legislature to create
a planning and financing tool to support the revitalization of these
communities.

(b) It is in the interest of the state to support the economic
revitalization of these communities through tax increment
financing.

(c) It is the intent of the Legislature to authorize the creation of
Community Revitalization and Investment Authorities to invest
tax increment revenue to relieve conditions of unemployment,
reduce high crime rates, repair deteriorated or inadequate
infrastructure, promote affordable housing, and improve conditions
leading to increased employment opportunities.

SEC. 2.  

Part 1.87 (commencing with Section 34191.50) is
added to Division 24 of the Health and Safety Code, to read:

 

PART 1.87.  Community Revitalization and
Investment Authorities

 

34191.50.  

As used in this part, the following terms have the
following meanings:

(a) “Authority” means the Community Revitalization and
Investment Authority created pursuant to this part.

(b) “Plan” means a community revitalization plan.

34191.51.  

(a) A community revitalization and investment
authority is a public body, corporate and politic, with jurisdiction
to carry out a community revitalization plan within a community
revitalization and investment area. The authority shall be deemed
to be an “agency” as defined in Section 33003 for purposes of
receiving tax increment revenues pursuant to Article XVI of
Section 16 of the California Constitution. The authority shall have
only those powers and duties specifically set forth in Section
34191.53.

(b) (1) An authority may be created in one of the following
ways:

(A) A city, county, or city and county may adopt a resolution
creating an authority. The composition of the governing board
shall be comprised as set forth in subdivision (c).

(B) A city, county, city and county, and special district, as
special district is defined in subdivision (m) of Section 95 of the
Revenue and Taxation Code, or any combination thereof, may
create an authority by entering into a joint powers agreement
pursuant to Chapter 5 (commencing with Section 6500) of Division
7 of Title 1 of the Government Code.

(2) (A) A school entity, as defined in subdivision (f) of Section
95 of the Revenue and Taxation Code, may not participate in an
authority created pursuant to this part.

(B) A successor agency, as defined in subdivision (j) of Section
34171, may not participate in an authority created pursuant to this
part, and an entity created pursuant to this part shall not receive
any portion of the property tax revenues or other moneys
distributed pursuant to Section 34188.

(3) A city or county that created a redevelopment agency that
was dissolved pursuant to Part 1.85 (commencing with Section
34170) of Division 24 shall not form an authority under this section
unless the successor agency or designated local authority for the
former redevelopment agency has received a finding of completion
from the Department of Finance pursuant to Section 34179.7.

(c) (1) The governing board of an authority created pursuant
to subparagraph (A) of paragraph (1) of subdivision (b) shall be
appointed by the legislative body of the city, county, or city and
county that created the authority and shall include three members
of the legislative body of the city, county, or city and county that
created the authority and two public members. The appointment
of the two public members shall be subject to the provisions of
Section 54974 of the Government Code. The two public members
shall live or work within the community revitalization and
investment area.

(2) The governing body of the authority created pursuant to
subparagraph (B) of paragraph (1) of subdivision (b) shall be
comprised of a majority of members from the legislative bodies
of the public agencies that created the authority and a minimum
of two public members who live or work within the community
revitalization and investment area. The majority of the board shall
appoint the public members to the governing body. The
appointment of the public members shall be subject to the
provisions of Section 54974 of the Government Code.

(d) An authority may carry out a community revitalization plan
within a community revitalization and investment area. Not less
than 80 percent of the land calculated by census tracts, or census
block groups, as defined by the United States Census Bureau,
within the area shall be characterized by both of the following
conditions:

(1) An annual median household income that is less than 80
percent of the statewide annual median income.

(2) Three of the following four conditions:

(A) Nonseasonal unemployment that is at least 3 percent higher
than statewide median unemployment, as defined by the report on
labor market information published by the Employment
Development Department in January of the year in which the
community revitalization plan is prepared.

(B) Crime rates that are 5 percent higher than the statewide
median crime rate, as defined by the most recent annual report of
the Criminal Justice Statistics Center within the Department of
Justice, when data is available on the California Attorney General’s
Internet Web site.

(C) Deteriorated or inadequate infrastructure such as streets,
sidewalks, water supply, sewer treatment or processing, and parks.

(D) Deteriorated commercial or residential structures.

(e) As an alternative to subdivision (d), an authority may also
carry out a community revitalization plan within a community
revitalization and investment area established within a former
military base that is principally characterized by deteriorated or
inadequate infrastructure and structures. Notwithstanding
subdivision (c), the governing board of an authority established
within a former military base shall include a member of the military
base closure commission as a public member.

(f) The conditions described in subdivisions (d) and (e) shall
constitute blight within the meaning of the Community
Redevelopment Law. The authority shall not be required to make
a finding of blight or conduct a survey of blight within the area.

(g) An authority created pursuant to this part shall be a local
public agency subject to the Ralph M. Brown Act (Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title
5 of the Government Code), the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code), and the Political Reform Act of
1974 (Title 9 (commencing with Section 81000) of the Government
Code).

(h) (1) At any time after the authority is authorized to transact
business and exercise its powers, the legislative body or bodies of
the local government or governments that created the authority
may appropriate the amounts the legislative body or bodies deem
necessary for the administrative expenses and overhead of the
authority.

(2) The money appropriated may be paid to the authority as a
grant to defray the expenses and overhead, or as a loan to be repaid
upon the terms and conditions as the legislative body may provide.
If appropriated as a loan, the property owners within the plan area
shall be made third-party beneficiaries of the repayment of the
loan. In addition to the common understanding and usual
interpretation of the term, “administrative expense” includes, but
is not limited to, expenses of planning and dissemination of
information.

34191.53.  

An authority may do all of the following:

(a) Provide funding to rehabilitate, repair, upgrade, or construct
infrastructure.

(b) Provide for low- and moderate-income housing.

(c) Remedy or remove a release of hazardous substances
pursuant to the Polanco Redevelopment Act (Article 12.5
(commencing with Section 33459) of Part 1 of Chapter 4 of
Division 24).

(d) Provide for seismic retrofits of existing buildings pursuant
to Section 33420.1.

(e) Acquire and transfer real property in accordance with
paragraph (4) of subdivision (a) of Section 33333.2, Article 7
(commencing with Section 33390) of Part 1 of Division 24, and
Sections 33340, 33349, 33350, 33435, 33436, 33437, 33437.5,
33438, 33439, 33440, 33442, 33443, 33444, 33444.5, 33444.6,
and 33445.

The authority shall retain controls and establish restrictions or
covenants running with the land sold or leased for private use for
such periods of time and under such conditions as are provided in
the plan. The establishment of such controls is a public purpose
under the provisions of this part.

(f) Issue bonds pursuant to Article 5 (commencing with Section
33640) of Chapter 6 of Part 1 of Division 24.

(g) Borrow money, receive grants, or accept financial or other
assistance or investment from the state or the federal government
or any other public agency or private lending institution for any
project or within its area of operation, and may comply with any
conditions of the loan or grant. An authority may qualify for
funding as a disadvantaged community as determined by the
California Environmental Protection Agency pursuant to Section
79505.5 of the Water Code or as defined by Section 56033.5 of
the Government Code. An authority may also enter into an
agreement with a qualified community development entity, as
defined by Section 45D(c) of the Internal Revenue Code, to
coordinate investments of funds derived from the New Markets
Tax Credit with those of the authority in instances where
coordination offers opportunities for greater efficiency of
investments to improve conditions described in subdivisions (d)
and (e) within the territorial jurisdiction of the authority.

(h) Adopt a community revitalization and investment plan
pursuant to Section 34191.55.

(i) Make loans or grants for owners or tenants to improve,
rehabilitate, or retrofit buildings or structures within the plan area.

(j) Except as specified in Section 33426.5, provide direct
assistance to businesses within the plan area in connection with
new or existing facilities for industrial or manufacturing uses.

34191.55.  

An authority shall adopt a community revitalization
and investment plan that may include a provision for the receipt
of tax increment funds generated within the area according to
Section 33670, provided the plan includes each of the following
elements:

(a) A statement of the principal goals and objectives of the plan.

(b) A description of the deteriorated or inadequate infrastructure
within the area and a program for construction of adequate
infrastructure or repair or upgrading of existing infrastructure.

(c) A program that complies with Sections 33334.2 and all other
housing-related provisions of the Community Redevelopment Law
(Part 1 (commencing with Section 33300) of Division 24). An
authority that includes a provision for the receipt of tax increment
revenues pursuant to Section 33670 in its Community
Revitalization and Investment Plan shall dedicate at least 25 percent
of allocated tax increment revenues for affordable housing
purposes. If the authority makes a finding that combining funding
received under this program with other funding for the same
purpose shall reduce administrative costs or expedite the
construction of affordable housing, then an authority may transfer
funding from the program to the housing authority within the
territorial jurisdiction of the local jurisdiction that created the
authority or to the entity that received the housing assets of the
former redevelopment agency pursuant to Section 34176; however,
Section 34176.1 shall not apply to funds transferred. Funding shall
be spent within the project area in which the funds were generated.
Any recipient of funds transferred pursuant to this subdivision
shall comply with all applicable provisions of the Community
Redevelopment Law.

(d) A program to remedy or remove a release of hazardous
substances, if applicable.

(e) A program to provide funding for or otherwise facilitate the
economic revitalization of the area.

(f) A fiscal analysis setting forth the projected receipt of revenue
and projected expenses over a five-year planning horizon.

(g) The time limits imposed by Section 33333.2.

(h) A program that does both of the following:

(1) Prohibits the number of housing units occupied by extremely
low, very low, and low-income households, including the number
of bedrooms in those units, at the time the plan is adopted, from
being reduced in the plan area during the effective period of the
plan.

(2) Requires the replacement of dwelling units that house
extremely low, very low, or low-income households pursuant to
subdivision (a) of Section 33413 within two years of their
displacement.

34191.57.  

(a) The authority shall consider adoption of the plan
at two public hearings that shall take place at least 30 days apart.
At the first public hearing, the authority shall hear all written and
oral comments but take no action. At the second public hearing,
the authority shall consider all written and oral comments and take
action to modify, adopt, or reject the plan.

(b) The draft plan shall be made available to the public and to
each property owner within the area at a meeting held at least 30
days prior to the notice given for the first public hearing. The
purposes of the meeting shall be to allow the staff of the authority
to present the draft plan, answer questions about the plan, and
consider comments about the plan.

(c) (1) Notice of the first public hearing shall be given by
publication not less than once a week for four successive weeks
in a newspaper of general circulation published in the county in
which the area lies and shall be mailed to each property owner
within the proposed area of the plan. Notice of the second public
hearing shall be given by publication not less than 10 days prior
to the date of the second public hearing in a newspaper of general
circulation published in the county in which the area lies and shall
be mailed to each property owner within the proposed area of the
plan. The notice shall do all of the following:

(A) Describe specifically the boundaries of the proposed area.

(B) Describe the purpose of the plan.

(C) State the day, hour, and place when and where any and all
persons having any comments on the proposed plan may appear
to provide written or oral comments to the authority.

(D) Notice of second public hearing shall include a summary
of the changes made to the plan as a result of the oral and written
testimony received at or before the public hearing and shall identify
a location accessible to the public where the plan to be presented
at the second public hearing can be reviewed.

(2) The authority may provide notice of the public hearings to
tenants of properties within the proposed area of the plan in a
manner of its choosing.

(d) At the hour set in the notice required by subdivision (a), the
authority shall consider all written and oral comments.

(e) The authority may adopt the plan at the conclusion of the
second public hearing by ordinance. The ordinance adopting the
plan shall be subject to referendum as prescribed by law for the
ordinances of the local jurisdiction that created the authority.

(f) The redevelopment plan referred to in Section 33670 shall
be the plan adopted pursuant to this section.

(g) The authority shall consider and adopt an amendment or
amendments to a plan in accordance with the provisions of this
section.

34191.59.  

(a) The plan adopted pursuant to Section 34191.57
may include a provision for the receipt of tax increment funds
according to Section 33670 in accordance with this section.

(b) The plan shall limit the taxes that are allocated to the
authority to those defined in Section 33670 collected for the benefit
of the taxing agencies that have adopted a resolution pursuant to
subdivision (d).

(c) The provision for the receipt of tax increment funds shall
become effective in the tax year that begins after the December 1
first following the adoption of the plan.

(d) At any time prior to or after adoption of the plan, any city,
county, or special district, other than a school entity as defined in
subdivision (n) of Section 95 of the Revenue and Taxation Code
or a successor agency as defined in subdivision (j) of Section
34171, that receives ad valorem property taxes from property
located within an area may adopt a resolution directing the county
auditor-controller to allocate its share of tax increment funds within
the area covered by the plan according to Section 33670 to the
authority. The resolution adopted pursuant to this subdivision may
direct the county auditor-controller to allocate less than the full
amount of the tax increment, establish a maximum amount of time
in years that the allocation takes place, or limit the use of the funds
by the authority for specific purposes or programs. A resolution
adopted pursuant to this subdivision may be repealed and be of no
further effect by giving the county auditor-controller 60 days’
notice; provided, however, that the county auditor-controller shall
continue to allocate to the authority the taxing entity’s share of ad
valorem property taxes that have been pledged to the repayment
of debt issued by the authority until the debt has been fully repaid.
Prior to adopting a resolution pursuant to this subdivision a city,
county, or special district shall approve a memorandum of
understanding with the authority governing the authority’s use of
tax increment funds for administrative and overhead expenses
pursuant to subdivision (h) of Section 34191.51.

(e) Upon adoption of a plan that includes a provision for the
receipt of tax increment funds according to Section 33670, the
county auditor-controller shall allocate tax increment revenue to
the authority as follows:

(1) If the authority was formed pursuant to subparagraph (A)
of paragraph (1) of subdivision (b) of Section 34191.51, the
authority shall be allocated each year specified in the plan that
portion of the taxes levied for each city, county, city and county,
and special district that has adopted a resolution pursuant to
subdivision (d), in excess of the amount specified in subdivision
(a) of Section 33670.

(2) If the authority was formed pursuant to subparagraph (B)
of paragraph (1) of subdivision (b) of Section 34191.51, the
authority shall be allocated each year specified in the plan that
portion of the taxes levied for each jurisdiction as provided in the
joint powers agreement in excess of the amount specified in
subdivision (a) of Section 33670.

(f) If an area includes, in whole or in part, land formerly or
currently designated as a part of a redevelopment project area, as
defined in Section 33320.1, any plan adopted pursuant to this part
that includes a provision for the receipt of tax increment revenues
according to Section 33670 shall include a provision that tax
increment amounts collected and received by an authority are
subject and subordinate to any preexisting enforceable obligation
as that term is defined by Section 34171.

34191.61.  

(a) The authority shall review the plan at least
annually and make any amendments that are necessary and
appropriate in accordance with the procedures set forth in Section
34191.57, and shall require the preparation of an annual
independent financial audit paid for from revenues of the authority.

(b) An authority shall adopt an annual report on or before June
30 of each year after holding a public hearing. Written copies of
the draft report shall be made available to the public 30 days prior
to the public hearing. The authority shall cause the draft report to
be posted in an easily identifiable and accessible location on the
authority’s Internet Web site and shall mail a written notice of the
availability of the draft report on the Internet Web site to each
owner of land and each resident within the area covered by the
plan and to each taxing entity that has adopted a resolution pursuant
to subdivision (d) of Section 34191.59. The notice shall be mailed
by first-class mail, but may be addressed to “occupant.”

(c) The annual report shall contain all of the following:

(1) A description of the projects undertaken in the fiscal year
and a comparison of the progress expected to be made on those
projects compared to the actual progress.

(2) A chart comparing the actual revenues and expenses,
including administrative costs, of the authority to the budgeted
revenues and expenses

(3) The amount of tax increment revenues received.

(4) The amount of revenues received for low- and
moderate-income housing

(5) The amount of revenues expended for low- and
moderate-income housing.

(6) An assessment of the status regarding completion of the
authority’s projects.

(7) The amount of revenues expended to assist private
businesses.

(d) If the authority fails to provide the annual report required
by subdivision (a), the authority shall not spend any funds received
pursuant to a resolution adopted pursuant to subdivision (d) of
Section 34191.59.

(e) Every 10 years, at the public hearing held pursuant to
subdivision (b), the authority shall conduct a protest proceeding
to consider whether the property owners and residents within the
plan area wish to present oral or written protests against the
authority. Notice of this protest proceeding shall be included in
the written notice of the hearing on the annual report and shall
inform the property owner and resident of his or her right to submit
an oral or written protest before the close of the public hearing.
The protest may state that the property owner or resident objects
to the authority taking action to implement the plan on and after
the date of the election described in subdivision (f). The authority
shall consider all written and oral protests received prior to the
close of the public hearing.

(f) If there is a majority protest, the authority shall call an
election of the property owners and residents in the area covered
by the plan, and shall not initiate or authorize any new projects
until the election is held. A majority protest exists if protests have
been filed representing over 50 percent of the combined number
of property owners and residents, at least 18 years of age or older,
in the area.

(g) An election required pursuant to subdivision (f) shall be held
within 90 days of the public hearing and may be held by mail-in
ballot. The authority shall adopt, at a duly noticed public hearing,
procedures for holding this election.

(h) If a majority of the property owners and residents vote
against the authority, then the authority shall not take any further
action to implement the plan on and after the date of the election
held pursuant to subdivision (e). This section shall not prevent the
authority from taking any and all actions and appropriating and
expending funds, including, but not limited to, any and all
payments on bonded or contractual indebtedness, to carry out and
complete projects for which expenditures of any kind had been
made prior to the date of the election.

34191.63.  

(a) Every five years the authority shall contract for
an independent audit to determine compliance with the affordable
housing maintenance and replacement requirements of subdivision
(h) of Section 34191.55, including provisions to ensure that the
requirements are met within each five-year period covered by the
audit. The audit shall be conducted according to guidelines
established by the Controller. A copy of the completed audit shall
be provided to the Controller. The Controller shall not be required
to review and approve the completed audits.

(b) Where the audit demonstrates a failure to comply with the
requirements of subdivision (h) of Section 34191.55 shall require
the authority to adopt and submit to the Controller, as part of the
audit, a plan to achieve compliance with those provisions as soon
as feasible, but in not less than two years following the findings.
The Controller shall review and approve the plan, and require the
plan to stay in effect until compliance is achieved. The Controller
shall ensure that the plan includes one or more of the following
means of achieving compliance:

(1) The expenditure of an additional 10 percent of gross tax
increment revenue on increasing, preserving, and improving the
supply of low-income housing.

(2) An increase in the production, by an additional 10 percent,
of housing for very low income households as required by
paragraph (2) of subdivision (b) of Section 33413.

(3) The targeting of expenditures pursuant to Section 33334.2
exclusively to rental housing affordable to, and occupied by,
persons of very low and extremely low income.

34191.64.  

(a) If an authority fails to provide a copy of the
completed audit to the Controller as required by Section 34191.63
within 20 days following receipt of a written notice of the failure
from the Controller, the authority shall forfeit to the state:

(1) Two thousand five hundred dollars ($2,500) in the case of
an authority with a total revenue, in the prior year, of less than one
hundred thousand dollars ($100,000), as reported in the Controller’s
annual financial reports.

(2) Five thousand five hundred dollars ($5,500) in the case of
an authority with a total revenue, in the prior year, of at least one
hundred thousand dollars ($100,000) but less than two hundred
fifty thousand dollars ($250,000), as reported in the Controller’s
annual financial reports.

(3) Ten thousand dollars ($10,000) in the case of an authority
with a total revenue, in the prior year, of at least two hundred fifty
thousand dollars ($250,000), as reported in the Controller’s annual
financial reports.

(b) If an authority fails to provide a copy of the completed audit
to the Controller as required by Section 34191.63 within 20 days
after receipt of a written notice pursuant to subdivision (a) for two
consecutive years, the authority shall forfeit an amount that is
double the amount of the forfeiture assessed pursuant to subdivision
(a).

(c) (1) If an authority fails to provide a copy of the completed
audit to the Controller as required by Section 34191.63 within 20
days after receipt of a written notice pursuant to subdivision (a)
for three or more consecutive years, the authority shall forfeit an
amount that is triple the amount of the forfeiture assessed pursuant
to subdivision (a).

(2) The Controller shall conduct, or cause to be conducted, an
independent financial audit report.

(3) The agency shall reimburse the Controller for the cost of
complying with this subdivision.

(d) Upon the request of the Controller, the Attorney General
shall bring an action for the forfeiture in the name of the people
of the State of California.

(e) Upon satisfactory showing of good cause, the Controller
shall waive the forfeiture requirements of this section.