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“New Tools” Infrastructure and Redevelopment Bills May Stall Again

Governor’s Office Requests Authors to Hold Bills; Decisions Pending

September 9, 2013
Following the demise of redevelopment legislators have been busy crafting bills allowing the use of tax increment for infrastructure or redevelopment purposes as partial replacement tools. The Governor vetoed three such measures last session with his office signaling bill authors that their legislation could again experience a similar fate this year.
There are two main legislative approaches:
  • Improve Infrastructure Financing District Law (IFD).  Current law authorizing the use of tax increment to fund infrastructure development has been on the books for nearly 30 years; however, it has been rarely used principally due to two separate two-thirds voter approval requirements. League-supported SB 33 (Wolk) outlines numerous improvements to the current law including removing voter approval requirements and replacing them with alternative accountability requirements.  A relatively similar bill, AB 243 (Dickinson), proposes to reduce the current two-thirds voter threshold to 55 percent. AB 229 by Speaker John Pérez, also supported by the League, focuses only on base closures.
  • Re-authorize Redevelopment Powers. While former redevelopment agencies were eliminated, statutes remain on the books as related provisions of the Constitution.  Two pending bills, SB 1 (Steinberg) and AB 1080 (Alejo), reauthorize the establishment of local agencies with redevelopment powers. Each has a different approach, with the key difference being where this authority could be used.  SB 1 focuses on areas adjacent to commuter rail and transit corridors, while League-supported AB 1080 can be utilized in deteriorated areas similar to previous redevelopment areas. 
For communities looking to move on from redevelopment elimination such tools can be helpful. All of these proposals require the consent of affected taxing entities before increment can be captured from their respective shares of the property tax. None would allow increment from the school’s share of property tax to be captured. Most of these measures also include a provision that requires a city or a county with a former redevelopment agency to have received a “finding of completion” from the Department of Finance (DOF), before having access to the new tool.  
Commentary in a recent DOF analysis highlights issues that the League understands have also been shared with other authors. 

Key points in that analysis include:
  • The enactment of this tool would be premature and could divert local agencies away from focusing on redevelopment dissolution;
  • Efforts by DOF and the State Controller to recoup funds are not complete;
  • Concerns are expressed with definitions of “blight” and the use of eminent domain, and
  • Interest is expressed in elements of the bill, while hinting that a more acceptable proposal should foster collaboration on regional economic development efforts with voter approval, while limiting burdens on property owners.
These arguments contain echoes of issues mentioned in the previous veto messages; making it unclear if the Administration will be ready to approve such measures this session.  Some authors may choose to send their legislation to the Governor anyway, but decisions will need to be made prior to the Legislature’s adjournment.
The ability for communities to move on from redevelopment elimination should not be delayed any further. Intentions behind delaying such tools are unclear at best given the benefits they would provide to communities that never had redevelopment agencies, or have already settled up with DOF and received a finding of completion, or are looking to help finance needed infrastructure with an improved IFD tool. Legislators have developed a variety of options and what’s needed now is engagement from the Administration to develop workable tools.

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