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Redevelopment Reform Measures Move Ahead During Budget Deadlock

While the Legislature remains deadlocked on Gov. Jerry Brown's budget proposal, it seems that what does not kill redevelopment may in fact make it stronger. Many observers had written the obituary for the state's redevelopment system back in March when Brown was insisting that the state had to recoup redevelopment's tax increment in order to help plug its $24 billion deficit. A late proposal by the California Redevelopment Agency and League of California Cities seemed to go nowhere. 

A flurry of activity this week suggests, however, that the fight to save redevelopment is very much alive. In particular, the rallying cry has been to reform, and not eliminate, redevelopment. Recently introduced legislation attempts to do just that. 


SB 286 - Wright

SB 286, sponsored by Senator Rod Wright (D-Los Angeles) has been amended to include CRA's package of redevelopment reform measures.  According to the CRA, the reform measures in SB 286 would add specificity to the types of information needed for making findings of blight; limit the percentage of total land area of a jurisdiction which may be included in project areas; exclude the schools share of property taxes in new project areas formed after January 1, 2012; prohibit uses of tax increment for specific purposes such as golf courses and never before developed parcels of land if 20 acres or more; add new requirements to five-year implementation plans and require agencies to focus activities on state priorities such as job creation, cleaning up contaminated property, basic infrastructure needs, and affordable housing; provide for more public oversight; require development of performance indicators to measure agency success; require performance audits of agencies by the State Auditor and provide funds for those reviews; and specifically prohibit the use of tax increment for non-redevelopment, non-agency operating costs.

The bill was heard in the Senate Governance and Finance Committee on May 5 but no action was taken. The bill has not yet moved forward in part because some members want to wait until the governor releases his May revise, due out on May 14. That day is the deadline for bills to be approved by committee in their house of origin. However, there is speculation that SB 286 may be allowed to miss this deadline due to the heated debate surrounding redevelopment.

CRA officials have said that SB 286, paired with SB 450, represents the most comprehensive reform of redevelopment in nearly two decades.  

SB 286 Analysis by Senate Governance and Finance Committee   

SB 450 - Lowenthal

In addition, and complementary, to the proposals in SB 286, Sen. Alan Lowenthal's (D-Long Beach) SB 450  addresses the use of redevelopment housing set-aside funds. SB 450 includes requirements to restrict the use of the Low- and Moderate-Income Housing Funds for planning and general administrative expenses. It also would provide funding for audits of redevelopment agency housing programs by the Department of Housing and Community Development, to allow the State Controller to conduct reviews of redevelopment agency audits and recommend suspension of auditors that are not conducting audits in accordance with the applicable standards and guidelines.  

CRA believes that these and other reforms will help redevelopment agencies to more efficiently utilize their affordable housing funds, track their accomplishments over the long term, and keep the public better informed of the agencies' affordable housing programs and developments.

SB 77 and AB 101

SB 77 and AB 101 are the budget bills that would eliminate redevelopment. Both are still technically alive in both houses. However, the Legislature appears to have reached an impasse and it is unclear whether either will come up for a vote. 

CRA/League Alternative Proposal

The CRA says that its proposal for agencies to voluntarily transfer funds has not yet been made into a bill because of the stall in budget talks. The CRA is waiting for the governor's revise to come out May 14, at which point budget talks may resume. The CRA says that its proposal does not depend on either SB 450 or SB 286. 

The CRA recently held a videoconference discussing all of these pending measures. A recording of that conference can be viewed here

Validating Acts

At the same time that reform measures have been advanced, lawmakers in the Senate Local Government Committee have taken measures that the CRA and League say would inappropriately weaken redevelopment agencies. The Validating Acts are largely procedural, usually bipartisan bills that affirm the state's support for certain local actions, including bond issuances by retroactively fixing inadvertent errors. Generally three such bills come out each year; this year they are SB 191, SB 192, and SB 193. 

While redevelopment has traditionally been covered by the validating acts, the current bill language excludes them. CRA and the League contend that this move represents an inappropriately partisan effort to support Gov. Brown's plan to eliminate redevelopment agencies. 

When Senator Lois Wolk presented the validating acts last Wednesday in the Assembly Local Government Committee, Assembly Member Alejo asked for amendments to all three bills.  Mr. Alejo reportedly said that he was concerned about the actions taken by some redevelopment agencies in recent months in reaction to the Governor's proposal to end redevelopment agencies.  He worried that the validating acts might be used inappropriately to attempt to protect questionable asset transfers and interagency borrowing.  

The CRA contends that this move was implemented at the behest of the Department of Finance following last week's Senate Government and Finance Committee hearing. It further contends that the exclusion represents retaliation against local governments that have attempted to shield those assets from a possible "fire sale" if and when agencies are liquidated. 

These measures are due to be heard May 11 in the Assembly Local Government Committee. 

--Josh Stephens

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