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Solimar Research

It's Groundhog Day For Steinberg's Redevelopment Bill

Larry Sokoloff on
Apr 16, 2013

Like the plot of the Bill Murray movie, Groundhog Day, Sacramento politicians are back to the same story on redevelopment this year. It's a re-run of last year, with proponents of redevelopment re-introducing many of the same bills as last year. 

Attempts to resurrect redevelopment were a flop in 2012 when Governor Jerry Brown vetoed most redevelopment-related bills. This year, there is hope for a different ending, where Brown and his Democratic allies can find themselves in agreement on future steps to aid economic development at the local level. 

Last year's installment ended in late September, when Brown vetoed SB 1156, an attempt to resuscitate redevelopment by Senate President Pro Tem Darrell Steinberg. The measure, known as the sustainable communities bill, tried to bring back redevelopment as an infill development tool.

Last fall, though, Brown was in the thick of a battle to raise taxes through Proposition 30, and he turned down the measure along with several others. He said in his veto message that "expanding the scope of infrastructure financing districts is premature" and that he wanted redevelopment wound down and general fund savings achieved. 

But in the new session of the legislature, Steinberg signaled redevelopment's importance by introducing the old SB 1156 as the first bill of the session. Now known as SB 1, the bill is identical to last year's version. It passed the Senate Governance and Finance Committee on March 13 on a 4-2 party line vote, with one Democrat, Ed Hernandez, abstaining. The measure is next headed for a vote in the Senate Transportation and Housing committee, which has not yet scheduled a hearing, according to Brian Weinberger, a consultant to the Governance and Finance Committee. (The bill is being heard by a second committee because the subject matter crosses jurisdictions of both committees, according to Steve Shea, an aide to Steinberg.)

With little doubt about its passage in the legislature, SB 1 is expected to land on the governor's desk soon. 

In remarks on SB 1 to the committee, Steinberg said "the concerns that led to the veto are being resolved, and by late spring most of the successor agencies are likely to be deemed compliant with the asset dissolution requirements of AB 26X and AB 1484."

Steinberg noted that Proposition 30's passage left the state in 

"a much stronger fiscal position." He added, "I believe that 2013 will be the year that we can put that chapter behind us and find new ways to move forward and fill the void in local economic development and housing policy." 

So the real question is what Governor Brown will do. Will he continue to fight redevelopment? Or reward his party, which is expected to have a veto-proof majority when the bill gets to him? An aide to the governor refused comment on Brown's position on the bill, saying "we don't generally make comments on bills until they are on his desk."

Brown has told the newly emboldened State Legislature not to overplay its hand and overspend. Whether that attitude will carry over to redevelopment remains to be seen. 

But in Brown's veto message last year on SB 1156, he provided hope to redevelopment's proponents, by saying, "I am committed to working with the Legislature and interested parties on the important task of revitalizing our communities."

"I don't think any doors were slammed last year," said Dan Carrigg, legislative director of the League of California Cities.  

Steinberg's latest bill prevents redevelopment money from coming from local school districts, a problem that redevelopment agencies faced before redevelopment ended in February 2012. SB 1 also fits in with legislative mandates to promote infill development and low polluting industry in order to reduce global warning.

Under SB 1, new redevelopment agencies would be known as sustainable communities investment authorities, and would focus on developments in areas around mass transit, small walkable communities and clean manufacturing. In addition, 20% of the resources of the new agencies will be spent on affordable housing for low- and moderate-income families.  Steinberg's bill would require independent financial audits every five years. 

The new law is expected to focus development on urban cores, Carrigg said. However, he said that SB 1 and other new bills on redevelopment before the legislature won't recreate something "as robust as redevelopment."

"But cities will get more tools that help create a toolbox to respond to the challenge of urban California,"he said.

A Governance and Finance Committee analysis of the bill forsees fewer areas being eligible for redevelopment. "Not all cities and counties have territory within their jurisdictions that meets SB 1's relatively narrow requirements for the formation of project areas," the analysis says. In addition "...SB 1 will generate less tax increment revenue for local governments than was generated by redevelopment." 

Carrigg predicts it would take a few years before tax increment areas could be set up and then raise enough funds to finance new projects.

The outcome of SB 1 may be tied to a number of other bills on redevelopment that are expected to reach the governor's desk at the same time. Some of the bills are new, and others are similar to ones Brown vetoed last year.  Those bills include: 

  • SB 33 by Lois Wolk, D-Davis, which makes it easier for local governments to form infrastructure financing districts. A similar measure, SB 214, was vetoed by Brown last year. His veto message said the new law would have changed the focus to new tools "instead of winding down redevelopment."  
  • SB 391 by Mark DeSaulnier (D-Concord), which would generate $500 million in affordable housing funds. In contrast, under redevelopment, $1 billion in money for affordable housing was generated, Carrigg said. 
  • AB 294 by Chris Holden (D-Pasadena), which directs the California Infrastructure and Economic Development Bank to work with local government on transit-oriented development and affordable housing projects. The measure would also allow an infrastructure financing district to use the Educational Revenue Augmentation Fund portion of incremental tax revenue. 
  • AB 229 by Assembly Speaker John Perez (D-Los Angeles), which would expand types of local projects that are financed by existing infrastructure financing districts. Brown vetoed the similar AB 2144 in September. 
  • AB 243 by Roger Dickinson (D-Sacramento), which would authorize new redevelopment districts, and issuance of debt for those areas with 55% of the vote.   

Said Carrigg of the League of California Cities:  "I think we're early in the process.  Things can mature later in the year."

 

Pull-quote:

The outcome of SB 1 may be tied to a number of other bills on redevelopment that are expected to reach the governor's desk at the same time.