Now that the California state budget is mostly out of the way, it's time to see what – if anything – the state will do this year to plug the redevelopment gap.
And as redevelopment bills move forward, it's pretty much shaping up like this: The legislature is likely to pass something. The question is whether Gov. Jerry Brown will sign anything.
So-called "policy" bills were required to clear their house of origin in the legislature by June 1. For the most part, the redevelopment-related bills sponsored by the two legislative leaders – Assembly Speaker John Perez and Senate President Pro Tem Darrell Steinberg – cleared their own houses and are now awaiting a hearing in the opposite house. It's pretty clear that some package of bills will wind up on Brown's desk in September.
In general, there are three types of bills:
The first set of bills deals with affordable housing.
The second would bring back tax-increment financing in some form.
The third would replace tax-increment financing with some other funding source.
Especially with the second and third types of bills, there's a clear trend: Tie the funding opportunities to the regional sustainable communities strategies that are being created under SB 375, Steinberg's regional planning/greenhouse gas emissions reduction bill.
Each leader got an affordable housing bill through their own house – AB 1585 for Perez and SB 654 for Steinberg. In different ways, both bills try to protect the 20% affordable housing setaside money that was part of the redevelopment system. Both bills seek to ensure that about $1.4 billion in "unencumbered" affordable housing money that was sitting in redevelopment agency bank accounts on February 1 stays with housing agencies, rather than being distributed to all local government agencies for general purposes.
The second set of bills – which would create a new, much more focused redevelopment effort – is the centerpiece of Steinberg's efforts. SB 1151 and SB 1156 would construct a replacement system for redevelopment, requiring more cooperation with counties and tying those efforts to implementation of sustainable community efforts.
These "asset bills" are probably the most controversial redevelopment bills – and the ones that would seem to stand the least chance of success. Nevertheless, Steinberg – who has made no secret of his commitment to redevelopment – is pushing them hard.
Both bills target assets formerly owned by redevelopment agencies – possibly as much as $2 billion in cash and an undetermined amount of value in real estate assets. SB 1156 would allow cities and counties to jointly create a "Sustainable Communities Investment Authority," which could pursue activities under the old redevelopment law. But this arrangement would not require a finding of blight. Rather, the new authority could pursue transit- and pedestrian-oriented developments that conform with the regional sustainable communities strategy adopted under SB 375.
SB 1156 would allow the use of the city-county portion of the tax increment to be dedicated to redevelopment, thus holding the state harmless because school property taxes are not included. SB 1151 would allow these authorities to also use the assets that redevelopment agencies had on hand on February 1. There is considerable debate as to whether RDA real estate assets were worth much by the end because so many RDAs transferred assets to their host city government in 2011.
Steinberg managed to get both 1151 and 1156 out of the Senate before the deadline for policy bills at the end of May. The vote was fairly close – 22-15 in one case and 21-15 in the other. And it was mostly a straight party-line vote. All the yes votes were Democrats and all the no votes were Republicans except for two -- Democrats Lou Correa of Orange County and Rod Wright of South Los Angeles, both of whom often move in a conservative direction on sustainability issues. In theory, 1156 should not be objectionable, since it holds the state financially harmless and creates a voluntary process that requires county consent. But you never know. 1156 theoretically takes money that could be used to plug the state budget deficit.
The final category of bills involves so-called "new money". The first is AB 1532, the bill that will dictate how money derived from the state's new "cap-and-trade" greenhouse gas emissions reduction program will be spent. The bill – sponsored by Perez – would allow the money to go to public transportation and local sustainability efforts – again, if they conform to the sustainable communities strategy. The bill seems likely to pass.
The second bill is AB 2144, also sponsored by Perez, which would make it easier for local governments to set up an infrastructure financing district as an alternative to redevelopment. IFDs date back to the ‘90s. They permit the use of tax-increment financing for public infrastructure – but only with 2/3 voter approval. This bill would cut the approval required to 55%, as with school bonds. The new bill is especially targeted as military base reuse.
It may well be that Jerry Brown still believes that the redevelopment carcass is not cold enough and therefore won't sign any bills at all this year. But at least the legislature is going to give him some proposals that meet the criterion he laid out in January – that the state budget be held harmless. We'll see what he does.
