California Redevelopment Law E159U: Local Economic Development

California Community Redevelopment Act of 1945 Allows local governments (cities & counties) to create a redevelopment agency

What is Redevelopment? “Redevelopment means the planning, development, replanning, redesign, clearance, reconstruction, or rehabilitation, or any combination of these, of all or part of a survey area, and the provision of those residential, commercial, industrial, public, or other structures or spaces as may be appropriate or necessary in the interest of the general welfare…”

What is Blight? An area that is predominantly urbanized…and…it constitutes a serious physical and economic burden on the community which cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment (from CDL §33030).

Blight: Physical Conditions Unsafe or unhealthy building conditions Unsafe or unhealthy building conditions Inadequate building or lot design Inadequate building or lot design Incompatible adjacent uses Incompatible adjacent uses Irregular lots (size and/or shape) Irregular lots (size and/or shape)

Blight: Economic Conditions Stagnant or depreciated property values Stagnant or depreciated property values High business vacancies, high turnover rates, abandoned buildings High business vacancies, high turnover rates, abandoned buildings Lack of typical neighborhood businesses Lack of typical neighborhood businesses High number of “adult” businesses High number of “adult” businesses Residential overcrowding Residential overcrowding High crime rate High crime rate

Examples of Blight

Redevelopment Agencies Local legislative body must adopt an ordinance declaring the need for a RDA Local legislative body must adopt an ordinance declaring the need for a RDA Usually, the local legislative body also sits as the redevelopment board/decisionmaking body Usually, the local legislative body also sits as the redevelopment board/decisionmaking body Usually, the RDA has a staff which will vary on size of the agency Usually, the RDA has a staff which will vary on size of the agency

Redevelopment Project Areas A plan is required for every redevelopment project area A plan is required for every redevelopment project area Must be consistent with the locality’s general plan Must be consistent with the locality’s general plan Time limit for establishing indebtedness cannot exceed 20 years Time limit for establishing indebtedness cannot exceed 20 years

Power of Redevelopment Eminent Domain Eminent Domain Tax Increment Financing Tax Increment Financing

Eminent Domain Government’s right to seize private property for a public use including the health and safety of community -- the government must pay “fair market value” for any property acquired with this power.

Tax Increment Financing Financing based on tax revenue increases from some base period through life of project

Tax Increment

Tax Increment Financing Tax increment funds can be spent directly on projects Tax increment funds can be spent directly on projects Tax allocation bonds can be issued to be paid off from future tax increment revenues Tax allocation bonds can be issued to be paid off from future tax increment revenues

Affordable Housing Set-Aside Redevelopment Law requires every agency to set-aside 20% of its redevelopment funds for low- and moderate-income housing.

Criticisms of Redevelopment in California  Areas designated as redevelopment projects were not “blighted”  RDAs contributed to competition among jurisdictions  RDAs took “unearned” property tax  RDAs are not using their set-aside funds to create affordable housing