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Governor Brown Signs League-Supported Economic Development Measures; Vetoes Bill to Restore Funds to Recently Incorporated Cities

September 30, 2016
Earlier this week Gov. Jerry Brown took action on several bills important to cities.
The good news is that he signed AB 2492 (Alejo and E. Garcia) and AB 806 (Dodd and Frazier), which strengthen local economic development tools. Regrettably, the Governor vetoed SB 817 (Roth), the latest effort to restore funding to recently incorporated cities.

AB 2492 makes several additional improvements to last year’s AB 2 (Alejo and E. Garcia), which authorized the creation of Community Revitalization and Investment Authorities (CRIA), and restored redevelopment authority to local agencies to assist poor and deteriorated areas within a community.
AB 2492 makes the following improvements to CRIA law:
  • Clarifies the ways to calculate employment and crime data, based on input from the Employment Development Department and Department of Justice;
  • Authorizes CRIA’s to access several additional forms of financing that are available to Enhanced Infrastructure Financing Districts;
  • Allows countywide and citywide income data to be used when designating areas, in addition to statewide income data; and
  • Allows census tracks and blocks within disadvantaged community identified by the state Cal Enviro Screen to use the tool.  
AB 806 (Dodd and Frazier) provides additional flexibility to local communities seeking to expand economic development.
The measure:
  • Clarifies that loan, lease and sale agreements and property acquisition are included in the range of options a community may employ to advance economic development.
  • Clarifies that cities and counties may make loans to rehabilitate commercial buildings and structures when financial assistance is found to be necessary for the economically feasibility of a project, and clarifies that such decisions must be approved after a public hearing with appropriate loan repayment terms and other safeguards.
  • Expands a provision that has operated well for the disposal of city/county-acquired property from former redevelopment properties for “fair reuse value,” so that all other communities can use these options to acquire and dispose of other properties to create economic opportunities. 
The League thanks Assembly Members Luis Alejo, Eduardo Garcia, Bill Dodd, Jim Frazier and Governor Brown for their support of these measures that will provide needed support to local governments undertaking economic development projects.
Governor Vetoes Latest Effort to Assist Recently Incorporated Cities
Governor Brown vetoed SB 817 (Roth), a repeated effort to restore funding stability to recently incorporated cities, citing concern for long-term general fund commitments. The veto continues the funding challenges for these cities created by SB 89 (2011), which diverted critical Vehicle License Fee (VLF) revenues away from newly incorporated cities-compounding the challenges facing new and future incorporations.
SB 817 sought to resolve this problem with a statutory formula that provides cities that incorporated between 2004 and 2012 with shares of property tax to offset the amount of VLF revenue they would have received.
Unresolved Policy Issues Affecting Future Incorporations
The issues raised by SB 817 also touch on larger policy issues for the state. When SB 89 was adopted as part of the response to the budget crisis in 2011, it also undermined the economic viability of incorporations in California. 
The typical pattern of city formation in California has been for pockets of growth to begin in unincorporated areas, then — at some point — the residents explore city formation to better manage their community. 
Neglecting this issue can have growth and climate impacts as well, because city formation has been a way to further compact growth. Once cities are established, their future growth tends to be compact and is regulated by local agency formation commission (LAFCO) policies. In contrast, unincorporated development patterns are typically less dense and not regulated by LAFCO. 
The League looks forward to establishing a dialogue with the Administration where the role of new city formation in the state’s future, and their contributions to sustainable development patterns and local quality of life can be further explored. 

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